Sitting of 4 May 1966

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

PRIVATE BUSINESS
GLASGOW CORPORATION (CARNOUSTIE STREET) BRIDGE ORDER CONFIRMATION BILL
Read the Third time and passed.

ORAL ANSWERS TO QUESTIONS
  TRANSPORT

    Motor Cars (Seat Belts)
    Sir Clive Bossomasked the Minister of Transport whether she has come to a decision about making safety belts compulsory equipment on the front seats of all new motor cars.
    Dr. David Kerrasked the Minister of Transport what steps she is taking to encourage the installation and use of seat belts in private motor cars.
    The Minister of Transport (Mrs. Barbara Castle): I intend soon to circulate to interested organisations proposals for regulations which would make the fitting of seat belts compulsory on the front seats of new motor cars and light vans. In the meantime I am about to make regulations which will require these vehicles to be fitted with anchorage points for seat belts.
    I am continually using all forms of publicity, including Press and television, to encourage the fitting and use of seat belts.
    Sir Clive Bossom: Will the right hon. Lady consider further important publicity about the vital need of having seat belts and also wearing them? I understand that only 15 per cent. of cars are so fitted and that only half the drivers of these cars wear them regularly.
    Mrs. Castle: I take every opportunity, in my own speeches, through Press publicity generally and particularly through the television, to publicise this. We have public service films which are shown as fillers on television. The present film has been shown about 450 times in the past two years. We are doing our best.

    Written-Off Motor Vehicles
    Dame Joan Vickersasked the Minister of Transport whether she will take action to ensure that, where a vehicle has been written off by an insurance company and the owner paid, the insurers should be compelled to surrender the registration book to the appropriate taxation authority and the vehicle cut up, in order to stop the current practice of rebuilding such cars.
    The Joint Parliamentary Secretary to the Ministry of Transport (Mr. John Morris): For the reasons given to my hon. Friend the Member for Don Valley (Mr. Kelley) on 26th April, this would not be justified. It would also conflict with fiscal requirements.
    Dame Joan Vickers: I did not agree with that reply to the hon. Gentleman's hon. Friend. It seems most unreasonable that people should be allowed to buy cars which have been patched up in this way and without a certificate to show they are roadworthy. If the hon. Gentleman is to allow such sales, will he ensure that a certificate must be produced to show that the cars have been tested and are roadworthy?
    Mr. Morris: A vehicle has to be roadworthy and an offence is committed if it is not, but very few cases of this kind have been brought to our attention.

    Motor Vehicles (Exhaust Fumes)
    Mrs. Joyce Butlerasked the Minister of Transport if she will seek power to require manufacturers to fit devices to control car exhaust fumes emission.
    Mr. John Morris: It is already unlawful for a motor vehicle to discharge excessive smoke or vapour. Existing powers would enable my right hon. Friend to strengthen the regulations on this if current studies show that further control is necessary.
    Mrs. Butler: In view of the health hazards from a concentration of carbon

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    monoxide and sulphur dioxide in the exhaust fumes, and as our manufacturers will increasingly have to fit anti-pollution devices to cars for export to countries which recognise these health dangers, will my right hon. Friend use her power to make sure that these devices are fitted to all future models?
    Mr. Morris: I can assure my hon. Friend that British manufacturers, with the encouragement of the Ministry, are actively and urgently investigating means of reducing pollution from vehicle emissions and are ensuring that all the appropriate steps are taken to deal with any health hazards.
    Sir G. Nabarro: Is the hon. Gentleman aware that next Monday is the tenth anniversary of the passing of the Clean Air Act and that all the beneficial effects of the Statute have been offset by the increasing concentration of carbon monoxide in the atmosphere from the exhausts of motor vehicles?
    Mr. Morris: I am sure that the hon. Gentleman will be well aware—I know his interest in the Clean Air Act and I had a little to do with it when I was at the Ministry of Power—that the Council of Europe sub-committee on air pollution has suggested that there should be more research before further steps are taken.

    Primary School Children (Road Accidents)
    Mr. Wellbelovedasked the Minister of Transport if she will publish the figures for the Greater London Council area of primary school children killed or injured as a result of road accidents while travelling to and from school.
    Mr. John Morris: The number killed or injured travelling to and from school is not known. Last year in the Metropolitan Police District 40 children between 5 and 12 years were killed and nearly 6,000 injured.
    Mr. Wellbeloved: Is my hon Friend aware that those figures will be received with dismay in the London area? Will his Ministry undertake to consider the procedures involved in the appointment of school crossing patrol attendants and the resiting of pedestrian crossings where much frustration and delay are now occurring?
    Mr. Morris: I agree that these are serious figures and I will bear in mind what my hon. Friend has said.

    Motor Cars (Safety Standards)
    Mr. William Hamiltonasked the Minister of Transport whether she will set up an independent committee of inquiry to investigate standards of car safety, on the lines of the United States Senate sub-committee currently investigating the subject in the United States of America.
    Mr. John Morris: No, Sir. One of the committees of the existing National Road Safety Advisory Council is specifically concerned with safety in vehicle design and use.
    Mr. Hamilton: Is my hon. Friend completely satisfied with current safety standards in British cars? Can he say whether the Committee which has been referred to has power, as an ad hoc Select Committee of this House would have power, to send for persons and papers and to cross-examine the motor manufacturers, as can be done by the Senate sub-committee in the United States? Is the Minister aware that the Senate sub-committee has done so and has revealed some startling defects in American cars?
    Mr. Morris: I am sure that my hon. Friend would not wish to duplicate existing committees, because the National Road Safety Advisory Council was set up as recently as 3rd March, 1965. We have our Regulations on the Construction and Use of Vehicles and the Lighting of Vehicles. These are constantly being reviewed.
    Mr. Gresham Cooke: Is the Minister aware that motor manufacturers are co-operating very closely with the Ministry over this question of safety and are fully prepared to do so in the future? Furthermore, is he aware that they are members of the Committee which has been referred to?
    Mr. Morris: Yes.
    Mr. Manuel: Is my hon. Friend satisfied with the progress made—there has very little—in car design? Is he aware that this is especially so in the case of commercial vehicles, the drivers of which have very little protection to prevent their

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    loads coming on top of them? Is he aware that there has been many deaths arising from such circumstances?
    Mr. Morris: I will certainly bear the remarks of my hon. Friend in mind.
    Mr. Costain: Has the Minister considered publishing statistics of accidents, giving some indication of the type of vehicle involved and whether safety belts were fitted and being used?
    Mr. Morris: A large number of statistics are being published, but that is a different question and I will certainly look at it.

    North-East (Grants)
    Mr. Milneasked the Minister of Transport whether she will state for the year ended 31st March, 1966, in respect of development districts in the North-East the number of applications for grants for which her Department is responsible for the improvement of basic services under section 7 of the Local Employment Act 1960, and the number and cost of those approved, rejected and under consideration, respectively.
    Mr. John Morris: Three such applications were submitted, involving an estimated total works cost of £322,100. They were still under consideration at the end of the financial year but one, involving an estimated works cost of £20,000, has since been approved.
    Mr. Milne: May I thank my hon. Friend for that reply and ask whether he is aware of the contribution that his Department could make to the continuing economic progress of the North-East? Will he keep this matter under review in the future?
    Mr. Morris: Yes.

    Havering Gardens Estate, Ilford (Bus Route)
    Mr. Iremongerasked the Minister of Transport what arrangements she proposes to make to give the residents of Havering Gardens Estate, Ilford, access to the main bus route that passes their doors, to save mothers with young children the 20-minute walk necessitated by the present layout imposed upon the developers by the planning authority at her behest.
    The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Stephen Swingler): The London Borough of Redbridge, at my right hon. Friend's request, is examining the possibility of providing more convenient pedestrian access between the estate and Eastern Avenue via Somerville Road and Havering Gardens.
    Mr. Iremonger: Is the Minister aware that this will not quite serve the purpose? Does he realise that what is happening and will continue to happen is that mothers and children are climbing over and through the so-called unclimbable fences, and that this is very bad for morale generally? Does she not agree that it would be far better to have a gate, with a lock, through which people could pass and be allowed to do what they are going to do anyway?
    Mr. Swingler: We think that the provision of proper footpaths could provide quicker access and would solve the problem, but the hon. Gentleman may be right. If it proves not to be so, we shall have to consider other solutions.

    Traffic, Harwich
    Mr. Ridsdaleasked the Minister of Transport what has been the increase in traffic to Harwich over the last five years; and how much she estimates this traffic is likely to expand over the next five years.
    Mr. Swingler: This information is not available but the expected national growth rate is about 30 per cent.
    Mr. Ridsdale: Is the Minister aware that I consider this to be an underestimate? Is he further aware that Harwich is becoming one of the major exporting ports of the country? Will he do everything he can to see that the road is improved as quickly as possible?
    Mr. Swingler: This is a very carefully calculated figure and we have no reason to suppose that East Anglia is different in this respect. We will certainly keep a watch on the situation. The problems of East Anglia are constantly being drawn to our attention and I can assure the hon. Gentleman that they will be carefully considered.

    Goods Vehicles (Licensing)
    Sir G. Nabarroasked the Minister of Transport if she will state her policy

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    concerning the Geddes Report on road goods vehicles licensing, notably C licences.
    Mrs. Castle: I am taking the Geddes Committee's Report into account in formulating my proposals for an integrated transport policy.
    Sir G. Nabarro: Can the right hon. Lady assure the House that she will not allow this White Paper upon every form of transport, about which she is in generic terms now pronouncing, to sublimate the admirable Geddes Report, with all of its constructive recommendations about private enterprise transport?
    Mrs. Castle: The Geddes Report contains some valuable information—
    Sir G. Nabarro: And recommendations.
    Mrs. Castle: —but unfortunately its terms of reference were too limited.
    Dame Irene Ward: Will the right hon. Lady give an assurance that in her new system of transport she will make it no more difficult for coastal shipping to operate?
    Mrs. Castle: Yes. I think that I can safely give the hon. Lady that assurance.

    National Freight Authority
    Mr. Straussasked the Minister of Transport if she will give particulars of the structure and purpose of the proposed National Freight Authority.
    Mrs. Castle: My purpose is to create a first-rate, expanding freight service, based on the integration of traffic by road and rail in the public sector, which will help to make full use of our railway services. I will explain my proposals in more detail in the forthcoming White Paper on transport policy.
    Mr. Strauss: Does my right hon. Friend appreciate that it is very tantalising to have this important announcement made some time ago and then have to wait months to find out what she has in mind? Would what she proposes involve legislation? If so, is there any chance of having that legislation this Session?
    Mrs. Castle: As my right hon. Friend knows, we are committed—this was in our election manifesto—to amending the
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    Transport Act, 1962, but whether that can be managed this Session is, I should have thought, extremely unlikely.
    Mr. Peter Walker: Would the Minister confirm that it will not be a case of British Railways offering lower rates when working in conjunction with the transport holding company than when they are working in conjunction with private hauliers?
    Mrs. Castle: The hon. Gentleman had better wait for the White Paper.
    Mr. Bagier: Is my right hon. Friend aware of the alarming number of goods sidings, depôts and marshalling yards being closed down under the authority of the 1962 Act? Will she ensure that British Railways do not close down too many, so that when traffic increases they will be able to handle it?
    Mrs. Castle: It is true that the British Railways Board is currently carrying out some rationalisation of its freight services. Some of these will be necessary, even with the setting up of the National Freight Authority, but I am already discussing the details of my proposals with the Railways Board and the other transport undertakings involved. The Railways Board is aware of the implications of my policy, and I am sure that it will bear them in mind.
    Mr. Galbraith: Has the right hon. Lady any idea how many more officials will be required and how much the Authority will cost? Is this just another attempt to frustrate private enterprise and to control everything from the centre?
    Mrs. Castle: The hon. Gentleman is asking for details which are clearly only appropriate to the White Paper.

    Integrated Transport Service
    Mr. William Hamiltonasked the Minister of Transport, if she will make a statement on the progress made towards an integrated transport service.
    Mrs. Castle: Good progress has been made with a reassessment of the rôle of the railways in national transport policy, with plans for a National Freight Authority, and with studies of the ways in which public passenger transport can be improved. The Chairmen of the Regional Economic Planning Councils are, at my request, urgently examining the

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    transport needs of their regions and conducting pilot studies into particular problems of integration. The Transport Co-ordinating Council for London, which I recently set up, is already tackling specific problems. I shall set out further details of my proposals in the forthcoming White Paper.
    Mr. Hamilton: If this matter is of extreme urgency, as my right hon. Friend would agree it is, for exports and increased productivity, would she explain why there is no mention of it in the Queen's Speech? Can she give an undertaking that she will produce the White Paper before the Summer Recess?
    Mrs. Castle: I expect that the reason it was not in the Queen's Speech is that if we were to put in it everything going on in every Government Department we would need a book, not a speech. The fact that it was not mentioned does not mean that work is not being urgently pursued on all these matters; it is. The House will realise that, with fundamental information of this nature, it is necessary for all kinds of consultations to take place in preparing the details of the policy. I hope to bring the White Paper before the House this summer.

  ROADS

    70 m.p.h. Limit1
    Sir Clive Bossomasked the Minister of Transport what were the factors which led her to extend the experimental 70 miles per hour speed limit for a further two months.
    Mrs. Castle: These were given in a Press notice dated 6th April, a copy of which is available in the Library. Broadly, the preliminary findings of the Road Research Laboratory showed that there was a significant reduction of accidents on rural main roads other than motorways and that a more extended trial was desirable on motorways.
    Sir Clive Bossom: Will the right hon. Lady bear in mind that several county police chiefs have stated that, in their opinion, the temporary limit of 70 m.p.h. is restrictive for motor vehicles on motorways? Will she give deep thought to removing the limit on the motorways, whatever else she decides after 12th June?
    Mrs. Castle: I am not prepared to give any undertaking before the end of the experiment. I shall make a statement to the House about the results of the experiment next month.
    Mr. Molloy: Will my right hon. Friend bear in mind that statistics show that the imposition of the 70 m.p.h. limit has reduced accidents, thereby reducing also unhappiness and grief? May we have an assurance that she will not give in to pressures to remove the limit until the exercise has been thoroughly carried out?
    Mrs. Castle: I give an undertaking that I will be guided by the evidence.

    Roundabout, Hampton Court
    Mr. Gresham Cookeasked the Minister of Transport whether, in view of traffic jams at holiday and other times, steps are being taken to enlarge the roundabout outside Hampton Court.
    Mr. Swingler: The Greater London Council as the highway authority has no present plans for enlarging the roundabout.
    Mr. Gresham Cooke: Will the hon. Gentleman draw the attention of the G.L.C. to the fact that this road is becoming a most important entry into London and that Hampton Court itself is congested? Is the hon. Gentleman aware that, at times, especially between 8 a.m. and 9 a.m., the road from Hampton Court to Kingston Bridge is becoming dangerous?
    Mr. Swingler: The G.L.C. is both the highway and the traffic authority. It reports that, for normal traffic conditions, the roundabout is adequate. The greatest problem concerns pedestrians. The ideal would be pedestrian segregation but the cost of doing that would be very substantial.

    A38 (Road (Improvements)
    Dame Joan Vickersasked the Minister of Transport whether, in view of the fact that no airport will be built near Plymouth in the immediate future, she will restore the cuts in expenditure on the A38.
    Mr. John Morris: Programmed improvements of the A38 in Devon will be

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    carried out in full. Three of the eight schemes originally deferred have now started and we hope work on the remaining five will start in a few months' time.
    Dame Joan Vickers: I thank the hon. Gentleman for that reply. I hope that he will see that this road is put into very good condition, especially in view of the unfortunate Budget which will deprive the West Country of many of the tourists who would otherwise use the road.
    Mr. Peter Mills: Will the hon. Gentleman also bear in mind that now that the air link between the West Country and London Airport has been closed, with the ending of the only airline operating the route, it is even more vital that there should be a restoration of the cuts in the rebuilding of the A38?
    Mr. Morris: I thought that I made it clear that the programmed improvements would be carried out in full.

    M11 (Route)
    Mr. Patrick Jenkinasked the Minister of Transport when she will announce the part of the route of the M11 motorway leading southwards from the North Circular Road, A406, and of the various associated road schemes, such as the Eastern Avenue extension, that will be necessary in the South Woodford and Wanstead areas.
    Mr. Biggs-Davisonasked the Minister of Transport when she expects to decide the route of the M11; and whether she will give an assurance that she will not do so without giving further opportunity for local authorities and others concerned to make representations.
    Mr. Swingler: My right hon. Friend hopes to publish a draft scheme for the route north of A406 this summer. There will then be the usual opportunity for objections and representations to be made and considered before a final decision is taken.
    Proposals for the future road pattern south of the North Circular will depend on the results of a detailed survey in North-East London now in progress.
    Mr. Jenkin: When does the hon. Gentleman expect to receive the results of that survey? There are many traffic
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    schemes now being held up until the survey has been completed and the delay is causing great uncertainty and some hardship in the area.
    Mr. Swingler: There will be no holdup in the publication of the draft line. What we have been doing is consulting the local authorities. Those consultations are now virtually complete and very soon my right hon. Friend will be announcing the draft line. We are awaiting a consultant's report about the situation further south, and that may take a bit longer.

    Motorways (70 m.p.h. Limit)
    Sir G. Nabarroasked the Minister of Transport whether she will state her policy concerning the future of the temporary 70 miles per hour limit on motorways.
    Mrs. Castle: This is not yet possible. I shall be making an announcement towards the end of May.
    Sir G. Nabarro: Will the right hon. Lady bear in mind that the last time this matter was debated was not on an affirmative Resolution from her Ministry, with the result that it was impossible for the House to express an opinion by a vote on this very important matter? Will she next time lay an Order so that we can all vote on this contentious matter?
    Mrs. Castle: If I wanted to extend the experiment still further after 15th June, I would have to lay an Order and it would be possible for the House to pray against it.

    South Coast Road (Bassett-Ower Section)
    Mr. David Priceasked the Minister of Transport when permission will be given to start work on the Bassett-Ower section of the south coast road with the Nursling link to Southampton Docks.
    Mr. Swingler: We cannot forecast a date for this scheme but it will be considered for inclusion in the future trunk road programme.
    Mr. Price: Is the hon. Gentleman aware that the construction of the Bassett-Ower section of the south coast road is a necessary consequence of the

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    current construction of the Chandler's Ford-Otterbourne bypass? In default of it, there will be very serious hold-ups at the Chilworth roundabout at the end of the new bypass.
    Mr. Swingler: This scheme is being considered in conjunction with others, but at the moment other schemes in Hampshire are considered to be more urgent—the hon. Gentleman will know to which I refer. We will consider this scheme urgently for the next stage of the trunk road programme.

    Road Communications (Southampton and the Midlands)
    Mr. David Priceasked the Minister of Transport what proposals she has for improving the road communications between Southampton and the Midlands; and in what years her proposals will feature in the road programme.
    Mr. Swingler: Major improvements of the trunk roads between Southampton and Oxford costing almost £4½ million are either in hand or have recently been completed. The programme for the period 1966–67—1969–70 contains schemes costing some £3 million.
    Mr. Price: Is the hon. Gentleman aware that that is very welcome news? He will be aware that the present extension to Southampton Docks requires, as the Rochdale Report recommended, major improvements in road communications between Southampton and the Midlands which, he will agree, will be of great benefit to the London area.
    Mr. Swingler: Yes, Sir. That is certainly taken into account and the hon. Gentleman can take it from me that if any new decision is taken on Southampton Docks, this programme will obviously have to be reviewed.

    A45 Road
    Mr. Eldon Griffithsasked the Minister of Transport what estimates she has made of the increase in traffic between the East and West Midlands and the East Anglian ports of Ipswich and Felixstowe over the next five, 10, and 20 years, respectively; and what plans she has for improving the A45 to cope with this additional traffic over the same approximate periods.
    Mr. Swingler: Traffic will increase by about 30 per cent., 75 per cent. and 175 per cent. respectively. The current roads programme includes a number of improvement schemes on the A45 appropriate to the expected volume of traffic. Further improvements required in the 'seventies are being studied.
    Mr. Griffiths: Do not those figures demonstrate that this is one of the key arteries of our future export trade? Will not the hon. Gentleman consider that what is needed is not tinkering about with particular projects, but an East Anglian east-west highway which will do the job properly?
    Mr. Swingler: No, Sir. We have to compare this build-up of traffic and traffic flow with the state of affairs in other roads in other parts of the country in deciding on our priorities and schemes, which the hon. Gentleman has described as tinkering, but which are quite expensive and which will make improvements to enable traffic to flow. However, we are now studying the needs of the 1970s which may provide for much more important developments.
    Sir H. Harrison: Will the hon. Gentleman bear in mind that where it joins my constituency at Stowmarket and Needham Market the A45 is not adequate for present traffic? I support what my hon. Friend has said.
    Mr. Swingler: I realise that it is not adequate and that is why improvements will certainly be made.
    Mr. Philip Noel-Baker: What plans are being made for developing rail transport for this traffic.
    Mr. Swingler: We want to develop rail transport to the East Anglian ports and that is why my right hon. Friend is engaged on schemes designed to attract more traffic to the railways.

    Motorways (Delays)
    Mr. Iremongerasked the Minister of Transport what delays there were during the recent holiday period on motorways; and what preparations she is making in this respect for Whitsun.
    Sir B. Jannerasked the Minister of Transport whether in order to prevent unnecessary delays to traffic on both two

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    and three-lane motorways resulting from carriageway maintenance and repairs, she will stipulate that a minimum of two lanes shall be provided for use in both directions whenever possible during such repairs; and if, for this purpose, she will experiment with the provision of temporary portable carriageways, as are used on German autobahns.
    Mr. Swingler: Delays occurred twice on the M1 over Easter.
    Our agent authorities are fully conscious of the need to keep at least two lanes of each carriageway open whenever peak traffic is expected, but circumstances which could not be foreseen prevented the reopening of the centre lanes in time for Easter week-end.
    The use of temporary portable carriageways cannot be justified on dual three-lane carriageways but we will consider their use in future if prolonged congestion on a dual two-lane road seems likely.
    Mr. Iremonger: Will the Minister make arrangements in advance of Whitsun? When it is obvious that the full width of the motorway is not going to be open, could not a reasonable diversion be arranged and clearly signposted well in advance so that motorists would not have to queue for about 10 miles when there is a blockage on the motorway?
    Mr. Swingler: We certainly will consider the hon. Gentleman's suggestion but I should say that we have now issued instructions that two lanes are to be kept open. A blockage occurred over Easter owing to the breakdown of an asphalt mixing plant and I trust it will not occur again. We have asked the agent authorities to ensure that two lanes should always be kept open.
    Mr. Spriggs: Is not the moral of this that more people should travel by rail?

    Colchester-Harwich Road
    Mr. Ridsdaleasked the Minister of Transport whether she will make a statement of the proposed works on the A604 between Colchester and Harwich, including the bypass of Dovercourt.
    Mr. Swingler: Four future schemes which Essex County Council, the highway authority, have in mind are the Poplar Hall diversion, Wix bypass, an improve-
    1610
    ment between Poplar Hall and Wix and the Elmstead Market bypass. Grant has been issued for the Poplar Hall diversion, but the remaining schemes have not yet been programmed. A diversion at Clingoe Hall has been programmed. The county council has yet made no formal proposals for a bypass of Dovercourt.
    Mr. Ridsdale: In view of the lack of urgency on the part of the Government on this matter, will the Minister see a deputation consisting of the Chairman of the Eastern Region of British Railways and the heads of the private port of Harwich and myself to discuss this question?
    Mr. Swingler: There is no lack of urgency. As I have said, several schemes are now in hand. We are awaiting proposals on others and we realise that they are very important. My right hon. Friend is prepared to consider representations from hon. Members at any time, but a fairly considerable programme of road improvements in East Anglia is now going forward.
    Mr. Eldon Griffiths: Would not the Minister accept that in her rolling programme the amount of money being made available for East Anglia, per head of population, is one of the lowest amounts in the country—and this against the background of an area where there is oil and gas nearby in the North Sea, the prospects of trade with the Common Market, and a great population increase?
    Mr. Swingler: The density population is only one of the factors which we have to take into account. We have to assess existing traffic volumes, prospects for future economic development and other factors. These are the factors which we are now analysing in relation to East Anglia. The priorities there are based on that assessment.

    A41 Road (Footbridge)
    Mr. Brooksasked the Minister of Transport what steps she will take to ensure that no unnecessary delay arises in providing a safe crossing over the A41 at Carlett Park College as a result of recent disagreements between the Cheshire County and Bebington Borough authorities over the form such a crossing should take.
    Mr. John Morris: My right hon. Friend proposes to provide a footbridge here. This is agreed by the Bebington Borough Council. I understand that the Further Education Sub-Committee of the county council is meeting on 10th May to consider a recommendation that the county council should also agree to a footbridge and make a contribution. We hope then to get ahead quickly. Design work is proceeding in the meantime.
    Mr. Brooks: May I thank my hon. Friend for that assurance, which I am sure will be very welcome to the hundreds of students who daily risk life and limb trying to get to this college? Does not my hon. Friend agree that this case illustrates the need for a fresh look at the whole machinery for taking urgent action on necessary road safety measures?
    Mr. Morris: So far as my right hon. Friend's Ministry is concerned, the record will show that we have taken very urgent action indeed. We had a very full debate on this on the last day of the last Parliament.

    South Orbital Road
    Sir G. Sinclairasked the Minister of Transport whether she will now make a statement on her plans for the south orbital road.
    Mr. Swingler: My right hon. Friend hopes to make a statement soon.
    Sir G. Sinclair: Is the Minister aware that there is strong local criticism of the delay in reaching decisions about the westward projection of the south orbital road from Pebble Hill, which is holding up important decisions on the realignment of the A25?
    Mr. Swingler: The hon. Gentleman will know that several important decisions have been made and announced. This is a very complex subject and, as he knows very well, the territory is not easy to traverse. We have been considering this very carefully and a statement will be made very soon indeed.

    Roads (Local Authority Representations)
    Mr. Frederic Harrisasked the Minister of Transport whether she will give an assurance that she will give full
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    consideration to the views of local authorities in deciding the road needs of their areas.
    Mr. Swingler: Yes, Sir.
    Mr. Harris: Will the hon. Gentleman resist any last-minute attempts to interfere with the development of the Croydon east-west flyover which is very necessary to Croydon and which was agreed between the Croydon authority and the Government Departments two years ago?
    Mr. Swingler: Of course, we do not interfere with those matters which are properly within the sphere of local highway authorities. The decisions are for them after consultation with us, and the Minister takes that fully into account.
    Rear-Admiral Morgan Giles: Does the Minister's reply mean that he will now take into consideration the views of the Winchester City Council on the Bar End crossing?
    Mr. Swingler: We are already doing so.
    Mr. Winnick: Mr. Speaker—
    Mr. Speaker: Order. The hon. Gentleman must not wave his Order Paper at the Chair.
    Mr. Winnick: I am sorry, Mr. Speaker. While appreciating the Minister's reply, may I ask him whether he will take into consideration the fact that many of these traffic schemes will create yet further traffic difficulties in other parts of the same town? Is my hon. Friend aware of the deep concern felt by many Croydon people over the proposed east-west flyover?
    Mr. Swingler: Yes, Sir. We know that there are objections. There has been an inquiry and these matters have been considered. My right hon. Friend is always prepared to consider the views of bodies of citizens, as of the local highway authorities. The decisions have to be taken by my right hon. Friend in conjunction with the local highway authority.

    New Bypasses
    Mr. Pymasked the Minister of Transport upon what basis she assesses the relative urgency of proposed new bypasses; and how the order of priority for constructing them is arrived at.
    Mr. Swingler: Priorities are based on relative levels of congestion, accidents, volume and character of traffic and the cost of improvement in relation to benefit.
    Mr. Pym: What special weight is given to special factors such as holiday traffic? Would not the Minister agree that in such a place as Newmarket, which becomes intolerably clogged up for miles on either side at weekends in summer, there is a very urgent need for a bypass there? What weight is given to such factors?
    Mr. Swingler: All traffic is taken into account. The volume all round the year is assessed. I think I know what lies behind the hon. Gentleman's Question. We are considering very seriously the case for a bypass at Newmarket, but he will appreciate that it is a very expensive scheme, and we have to be very sure about the benefits of it by comparison with certain other schemes which have been programmed.
    Sir H. Legge-Bourke: Is the hon. Gentleman aware that the East Anglian Regional Economic Development Council is already considering the question of the roads, but can we have an assurance that the Minister will, nevertheless, take action which may become necessary before bodies of that sort can report?
    Mr. Swingler: My right hon. Friend has asked regional planning councils to consider the road priorities of their regions and to report to her, and they will be reporting shortly, and the hon. Gentleman can rest assured that she will take into account fully the views of the priorities which they put forward.

  RAILWAYS

    Fares and Charges
    Mr. Edward M. Taylorasked the Minister of Transport if she is satisfied with the existing procedure whereby members of the public can make representations on proposed alterations in the rail fares and other charges imposed by British Railways; and if she will make a statement.
    Mrs. Castle: The existing procedure is determined by the Transport Act 1962. I am considering how that Act should be amended and, among other things, I
    1614
    shall be reviewing its provisions on railway fares and charges.
    Mr. Taylor: Is the right hon. Lady aware that British Railways in Scotland have imposed a 5s. charge on Glasgow folk whose only sin is that they have to take their holidays in Glasgow Fair Fortnight? What redress do people have against charges which appear to be unfair?
    Mrs. Castle: The Transport Act, 1962, introduced by the Conservative Government, removed from the Transport Users' Consultative Committees the right to make representations about railway charges and fares. That is why I am looking at the situation.

    Liner Trains
    Mr. Edward M. Taylorasked the Minister of Transport what discussions she and her predecessor have had with the transport unions about the admission of private road hauliers to liner train depôts; and what progress has been made.
    Mr. Fisherasked the Minister of Transport what results have been achieved in her negotiations with the trade unions concerned to allow private road haulage firms to use liner train depôts.
    Mrs. Castle: Negotiation on the liner train issue is primarily a matter for the Railways Board and the unions: but I have made it clear to both sides, as my predecessor did, that I hope there will be a decision in favour of "open" terminals, so that nothing will stand in the way of progress with this important new railway technique.
    Mr. Taylor: Is the right hon. Lady aware that this is just what she said on 9th February and what her predecessor, the right hon. Gentleman the Member for Hamilton (Mr. Tom Fraser), said six months ago? How long are she and the Railways Board going to live in hope? What will she do if the N.U.R. refuses to give up this crude and irresponsible restrictive practice?
    Mrs. Castle: I have entered into very happy relations with the railway and other transport unions in working out my new transport policy and I do not intend to add anything to my reply at this stage.
    Mr. Fisher: I appreciate very much the difficulty and what the right hon. Lady has said. But what is the point of the Prime Minister making splendid speeches in the country when the Government apparently are afraid or reluctant to face a really unjustifiable restrictive practice of this kind and, indeed, are afraid to face the whole issue of restrictive practices by the unions?
    Mrs. Castle: I am not afraid of this issue and I am confident that, in the new relations I am establishing with the unions, we shall be able to get a happy outcome of the problem.
    Mr. Peter Walker: Does not the right hon. Lady agree that six months is a very long time for this restrictive practice to have continued without a settlement? Is the investment programme in liner trains being delayed until this matter is settled?
    Mrs. Castle: As my predecessor told the House in April, 1965, he was authorising capital expenditure by the Railways Board to go ahead on this.
    Mr. Lubbock: Would it not help towards securing the agreement that the right hon. Lady is aiming at if the negotiation were not sabotaged by the kind of irresponsible talk about unions indulged in by the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor)?
    Mrs. Castle: Yes, Sir. I entirely agree that some of the attacks on the unions do not help the sort of work we are trying to do.
    Mr. Spriggs: Is my right hon. Friend aware that liner trains are operating and that the attacks upon the N.U.R. are completely unjustifiable?
    Mrs. Castle: Liner trains are operating but not as fully as I would like, because it is my firm intention to get more freight and more traffic on the railways. I would like advantage to be taken of this opportunity.
    Mr. Taylor: Owing to the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.
    Mr. Stodartasked the Minister of Transport how many liner trains are running daily between London and Glasgow and between Glasgow and London; and what percentage of its capacity load each train is carrying.
    Mr. John Morris: This service has one train in each direction nightly. The Railways Board tells me that in the week ended 23rd April the number of loaded containers carried represented about 66 per cent. of the available capacity.
    Mr. Stodart: Can the hon. Gentleman give any indication of what the restrictions on the liner trains are costing British Railways? Can he confirm the report that British Railways could draw about £4,000 a day more if the trains were running to capacity?
    Mr. Morris: I cannot give the figures without notice. All I can say is that there has been a substantial increase in the traffic attracted to the liner trains. There was 30 per cent. use at the beginning of February, and now the figure is about 66 per cent. They are proving very attractive indeed.
    Mr. Peter Walker: Will the hon. Gentleman not agree, though, that even though there is 66 per cent. use of liner trains, those trains were banned from use and that but for that there could have been 100 per cent. use the whole time, if it had not been for the action of the railwaymen's union?
    Mr. Morris: The hon. Gentleman should be aware that this is a new service. It is proving attractive, and my Minister has answered Questions on this issue earlier in the day.

    Financial Targets
    Mr. Patrick Jenkinasked the Minister of Transport what steps she has taken, in pursuance of the recommendation contained in paragraph 83(i) of the Eighth Report of the National Board for Prices and Incomes, to determine and make public a realistic annual target for the reduction and eventual elimination of the railways' working deficit.
    Mr. John Morris: My right hon. Friend proposes to establish realistic financial targets for the Railways Board, but this implies a change in the terms of reference

    1617
    given to the Board by the Transport Act, 1962. She will be dealing with this matter in detail in her forthcoming White Paper on Transport Policy.
    Mr. Jenkin: Does the Joint Parliamentary Secretary recognise that clear financial objectives are essential to good management? When can we expect this statement? How long will British Railways be without a proper objective?
    Mr. Morris: Of course, I accept that there should be clear financial objectives, but I also accept that there must be realistic financial objectives. Everyone now recognises that the Tory Transport Act of 1962 was completely unworkable, and that is what we intend to amend.
    Mr. Molloy: Will my hon. Friend also bear in mind the important aspect of social responsibility and will he assure the House that it will be taken fully into account?
    Mr. Morris: Yes. Social responsibilities are very important and one of them is for commuter services, as the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) should know, because these services cost a great deal of money, but it is very important to maintain them.

    Underground Line (Gloucester Road-London Airport)
    Mr. Lubbockasked the Minister of Transport what application for sanction of capital expenditure she has received for constructing an underground line between the Gloucester Road air terminal and London Airport.
    Mr. Swingler: None, Sir. But the London Transport Board is discussing with the Department and with other interested authorities the possibility of extending the Piccadilly line to London Airport.
    Mr. Lubbock: What would be the purpose of that? Anybody who wanted to come via the Piccadilly line from London Airport into the centre of London would have to take a stopping train. It would be a much longer journey than by bus. Does he really think that at the beginning of the 1970s, when 490-seat jets will be arriving at London Airport and the traffic will have doubled beyond what it is at present, buses are the most suitable means of getting passengers to the centre of London?
    Mr. Swiurigler: There are several proposals which we have to consider. All of them involve very substantial expenditure. There has been very substantial expenditure on the M4 in order to try to speed up transit to London Airport. We are not excluding any proposals. We are considering this proposal together with other proposals, including a monorail, for overground speed of transit and shall arrive at decisions shortly.
    Sir Ian Orr-Ewing: Will the hon. Gentleman make sure that the Minister of Aviation and other members of the Cabinet are made aware that, if we have to buy 490-seat American jet transport aircraft for civil purposes, it is not just the cost of the aircraft but the cost of alterations to the international airports of this country and, above all, to the road and rail services to these international airfields which should be taken into account as well as the customers' choice?
    Mr. Swingler: Of course, this is a mattter which we will take into account.
    Mr. Philip Noel-Baker: Will my hon. Friend give very careful attention to the advantages of a rail connection and perhaps study the experience of Brussels in this regard?
    Mr. Swingler: We are interested in the experience of other countries. As I say, there are these alternative proposals which have varying merits. It is not at all an easy matter to make a choice between them.

  PORTS

    Bristol Channel
    Mr. Robert Cookeasked the Minister of Transport whether she will now announce her decision on the Port-bury dock scheme.
    Mr. Roy Hughesasked the Minister of Transport when she will make a statement on the future organisation and development of docks facilities in the Bristol Channel.
    Mr. Deanasked the Minister of Transport when she will make her decision on the Portbury docks scheme.
    Mr. E. Rowlandsasked the Minister of Transport when a decision on the future of the Cardiff and South Wales docks will be announced.
    Mr. Gowerasked the Minister of Tranport when she will announce her decision regarding major port improvements in the Bristol Channel.
    Mr. Swingler: The Government have decided that, before they reach a final decision, they require short comparative studies of the possible alternative schemes. These will be completed as quickly as possible.
    Mr. Cooke: The hon. Gentleman has said that before. Is he aware that every responsible body in the west of England strongly favours this great and imaginative scheme, which has international possibilities and great national significance? Will he get on with the job and make a decision soon?
    Mr. Swingler: There is no doubt that the scheme recommended by the National Ports Council is greatly imaginative but since then a number of alternative proposals for large-scale capital investment, which would involve the destinies of considerable numbers of people, have been put to us. It is right and proper that these proposals should be examined, and they will be very quickly.
    Mr. Roy Hughes: What thought is being given to the economic effects of possible innovations bypassing the existing—[Horn. MEMBERS: "Reading."]—unpretentious facilities of South Wales ports?
    Mr. Swingler: These matters have to be assessed. We have to take into account the position of South Wales ports, where, in any case, very considerable capital investment amounting to £30 million will be made in the next five years. Proposals have been made on behalf of the South Wales ports and are being studied.
    Mr. Speaker: Order. I would point to new hon. Members that hon. Members must not read their supplementary questions.
    Mr. Dean: Is the hon. Gentleman aware that one of the disadvantages in not announcing a decision on the scheme is that a number of my constituents living and working in the area are considerably anxious about their future? Is not this another reason for advancing the decision?
    Mr. Swingler: We realise that a number of people in different ports are anxious
    1620
    about their future and desirous of having the large-scale capital investment involved in this scheme. That is what makes it so important that we should arrive at the right decision.
    Mr. Rowlands: Will my hon. Friend bear in mind that the development of the South Wales ports together would be cheaper than the Portbury scheme and that these ports are vital to the economy of South Wales?
    Mr. Swingler: The House now sees how these assertions and counter-assertions are made on behalf of different ports and authorities. The Government are at present making the economic and technical assessments on which they will report to the House shortly.
    Mr. Peter Walker: When was the decision taken to carry out the examination of alternative schemes? How many schemes are being looked into? How long will it go on?
    Mr. Swingler: Several alternative schemes from South Wales, Southampton and other places are being investigated. It was decided to examine these schemes at quite an early date after we had had the recommendation from the National Ports Council in favour of the Portbury scheme. The investigations will be completed in a few months' time.
    Mr. Wilkins: Is it not a fact that an announcement would have been made towards the end of January or the beginning of February giving consent to the Portbury scheme had it not been for the stimulation of the South Wales ports by the Conservative Members for Bristol?
    Mr. Swingler: We should be careful not to turn this discussion into the kicking around of a political football. One of the unfortunate aspects of the controversy is that it has become highly politically charged. One of the things we are anxious to do is to make an objective assessment of the economic and technical factors so as to arrive at the right decision.
    Mr. Wilkins: On a point of order. Is not my hon. Friend aware that it is a fact that he did say—
    Mr. Speaker: Order. That is not a point of order and the hon. Gentleman is aware of it.
    Mr. Webster: Is the hon. Gentleman aware that permission has been given to develop British Transport Docks Board ports in the Bristol Channel and elsewhere? Is it the policy to give consent only to nationalised ports?
    Mr. Swingler: No, Sir, of course not. We are considering several schemes from non-nationalised ports in which a considerable capital investment is being made. That is not a factor in our consideration. This port is under public ownership—it happens to be under municipal ownership—but that is not the determining factor. We are considering a third liner terminal and considerable capital investment and we want to be sure that we get value for money.

  PARLIAMENTARY QUESTIONS (SECRETARY OF STATE FOR SCOTLAND)
  Mr. Rankinasked the Lord President of the Council why Scottish Questions will not be reached till after Whit-sun; and if he will reconsider the existing priority arrangements.
  The Lord President of the Council and Leader of the House of Commons (Mr. Herbert Bowden): I would refer my hon. Friend to the replies I made on 27th April in answer to similar Questions.
  Mr. Rankin: Is my right hon. Friend aware that that was a very disappointing reply? Would he reconsider the matter in view of the fact that it is possible to put Oral Questions on Scottish affairs only roughly once in six weeks and that that is insufficient, because on that day we have to cover every single Department in Scotland? Would my right hon. Friend have another look at this matter in view of the fact that we also have—[HON. MEMBERS: "Too long."]
  Mr. Speaker: Order. Even Scotsmen must put their questions concisely.
  Mr. Bowden: My hon. Friend will appreciate that if we return to the old system of two Question days a week for some Departments, we shall be in no better position than we are at the moment. It is important to continue the experiment started 18 months ago to see where we get and certainly at all
  1622
  times to discuss the matter through the usual channels if any change is necessary.
  Mr. G. Campbell: Would not the right hon. Gentleman consider having Scottish Questions on Monday as well as Wednesday to take the place of the Minister of Land and Natural Resources—that short-lived Minister—when he disappears soon?
  Mr. Bowden: To have Scottish Questions on two days a week would only result in similar applications from Departments which at the moment attract more Questions than the Scottish Office.
  Mr. David Steel: Will the right hon. Gentleman consider holding some sessions of Scottish Questions in the Scottish Grand Committee in addition to those allocated to the Floor of the House? If he is at all sympathetic to this idea, will he ask the Select Committee on Procedure to examine it?
  Mr. Bowden: That suggestion seems to be acceptable to English Members, but not to all the Scots Members. We might have a look at this matter in the Select Committee on Procedure.
  Mr. Emrys Hughes: Will my right hon. Friend consider whether these Questions should be taken in the morning?
  Mr. Bowden: The question of hours of sitting is already before the Select Committee on Procedure. We look forward with interest to receiving the Committee's report.

  HOUSE OF COMMONS CATERING STAFF (WAGES AND CONDITIONS)
  Sir Knox Cunninghamasked the Lord President of the Council how the wages of the catering staff in the House of Commons compare with the rates of wages paid in catering establishments in London; and what steps are being taken to improve the conditions of work of such staff.
  Mr. Bowden: As a result of inquiries recently made, I find that the wages paid to the catering staff of the House of Commons compare favourably with

  1623
  wages paid in other catering establishments in London.
  Within the limitations of the accommodation available to the Refreshment Department and the catering services required by the House, the improvement of the conditions of work for the staff is constantly under review.
  Sir Knox Cunningham: Will the proposed Selective Employment Tax have any effect on the number of persons employed by the catering department? Would the Lord President of the Council ensure that there is an immediate improvement in their conditions of employment?
  Mr. Bowden: The second part of the hon. and learned Gentleman's question is a matter for the Select Committee on House of Commons (Services), which will be looking into the whole question of accommodation. The first part of the hon. and learned Gentleman's question ought perhaps to be addressed to the Chancellor of the Exchequer.

  PALACE OF WESTMINSTER VISITORS (HANSARD SALES)
  Sir Knox Cunninghamasked the Lord President of the Council if he will make arrangements for copies of HANSARD, covering the proceedings in both the House of Lords and the House of Commons, to be on sale to members of the public who visit the Palace of Westminster.
  Mr. Bowden: It has proved administratively impossible to adopt similar proposals when they have been made in the past. The Select Committee on House of Commons (Services) may, however, wish to look at the matter again when it is reconstituted.
  Sir Knox Cunningham: Would the right hon. Gentleman suggest that when the Committee is looking at the matter again it should consider an arrangement whereby, say, in the Post Office in the Central Lobby, a visitor to the House could leave his name and pay for a HANSARD covering the day of his visit which could be sent on by post?
  Mr. Bowden: This is the sort of suggestion we might consider. Obviously when this question has been reviewed at all one has always thought
  1624
  in terms of the bookstall in St. Stephens, which is not the appropriate place at which to purchase HANSARD. We could look at the whole question.

  ILLEGITIMATE PERSONS (LAW OF SUCCESSION)
  Mr. Abseasked the Attorney-General whether the report of the committee considering the law of succession in relation to illegitimate persons is complete; and when its recommendations will be published.
  The Solicitor-General (Sir Dingle Foot): I understand that the Report is very nearly complete and that it is likely to be submitted to my noble Friend, the Lord Chancellor, and my right hon. Friend, the Secretary of State for Scotland, within the next two weeks. I have no doubt that they will wish to publish it as soon as the necessary arrangements can be made.
  Mr. Abse: As a similar reply was given some weeks ago, could not the Attorney-General try to expedite the publication of this report, since its continued delay is causing distress to a very large number of people?
  The Solicitor-General: I am satisfied that this matter is being pursued with all possible dispatch.

  RACE RELATIONS ACT
  Mr. Huntasked the Attorney-General whether he proposes to institute proceedings under Section 6 of the Race Relations Act, 1965, against the Racial Preservation Society as publishers of the periodical, The British Independent.
  The Solicitor-General: My right hon. and learned Friend has consulted the Director of Public Prosecutions about the spring edition of this Periodical, and they have come to the conclusion that criminal proceedings under the Race Relations Act would not be justified in respect of this publication.
  Mr. Hunt: Is the Solicitor-General aware that that reply will cause great disappointment to Members of the House? Is he aware that this publication is widely distributed to Members of the House and others? Have we not reached an absurd

  1625
  situation when legislation passed by the House to deal with incitement to racial hatred is now found to be inadequate to stop the dissemination of this kind of racialist filth?
  The Solicitor-General: What my right hon. and learned Friend and the Director have to consider is not whether a particular publication is open to objection, but whether it comes within the precise terms of the Race Relations Act. My right hon. and learned Friend and the Director were satisfied in respect of this particular number of this publication—that was the document referred to them—that criminal proceedings would not be justified.
  Mr. Lubbock: Will the Solicitor-General therefore seek to amend the Race Relations Act as a matter of urgency to ensure that publications of this obnoxious nature which have given great offence to many hon. Members are covered?
  The Solicitor-General: There will always be obnoxious publications which do not come within the ambit of the criminal law.
  Mr. Freesonasked the Attorney-General if he will instruct the Director of Public Prosecutions to institute proceedings against leaders of the British Nazi Party, under the Race Relations Act, as a result of their incitements to violence and racial hatred.
  The Solicitor-General: No. In my opinion, there is not at present sufficient evidence to justify criminal proceedings under the Race Relations Act against the leaders of the British Nazi Party.
  Mr. Freeson: Is not this really nonsense? The police have agreed in court, the defendants agreed in court, and the court accepted—
  Hon. Members: Question.
  Mr. Freeson: Did not the court accept police evidence, the defendants' evidence—[Interruption.]
  Mr. Speaker: Order.
  Mr. Freeson: Did not the court accept the police evidence and defendants' evidence that there had been incitement to arson against synagogues in this country which resulted in their being burned down? If the court accepted it, why
  1626
  cannot my hon. and learned Friend accept it?
  The Solicitor-General: What has to be considered here is whether there was incitement to violence and racial hatred within the meaning of the Race Relations Act. This matter has been very fully considered, and I give it as my opinion, having looked at the matters to which my hon. Friend refers, that there is not sufficient evidence at the present time to justify proceedings.
  Sir Harmar Nicholls: On a point of order. Is another convention of the House being violated, Mr. Speaker, now that we see the second or P.P.S. bench attacking the Front Bench?
  Mr. Speaker: I hope that hon. Members will not waste time at Question Time with ridiculous points of order.
  Mr. Shinwell: Would my hon. and learned Friend indicate what is the nature of the evidence which would be required before the Attorney-General would take any action? Why are the Government so coy, so timid, so lacking in courage, in this particular matter?
  The Solicitor-General: In any case where it is clear that Section 6 of the Race Relations Act has been infringed, there will be no hesitation in instituting criminal proceedings.
  Dr. David Kerr: Would not my hon. and learned Friend agree that, if the facts outlined by my hon. Friend the Member for Willesden, East (Mr. Freeson) do not justify action, there is a clear case for amending the Race Relations Act?
  Mr. Braine: Would the hon. and learned Gentleman take note of the very deep feeling on this subject on both sides of the House that British citizens and property should be treated in this way? Would he consult his right hon. Friends to see whether some appropriate action can be taken? The House is very angry about this.
  The Solicitor-General: I fully appreciate and sympathise with the feelings on both sides of the House. After all, I was one of those who helped to secure the passage of the Race Relations Bill through the House. Whenever we find a case where we think a prosecution is

  1627
  justified, a prosecution will follow. However, it must inevitably happen that there are expressions from which many of us would dissent, but which do not come within the ambit of this Statute?
  Mr. Abse: Is the Solicitor-General aware that, apart from the Race Relations Act, when evidence is put before a court that people are inciting others to burn down synagogues the existing criminal law can deal with it? If the Race Relations Act is so feeble, would not my hon. and learned Friend review the evidence now to see whether, with synagogues and individuals being dealt with in the way which it is abundantly clear is happening, those responsible can be dealt with under the existing criminal law?
  The Solicitor-General: I can only say that, where in our view there is evidence to justify a prosecution, a prosecution will certainly follow.
  Mr. Freeson: In view of the unsatisfactory nature of the replies which we have had this afternoon, I shall seek leave to raise the matter on the Adjournment.

  TRANSPORT

    Old People (Concessionary Fares)
    Mr. Barnettasked the Minister of Transport if she will now give further consideration to extending the powers of local authorities to arrange for concessionary bus fares for old people; and if she will make a statement.
    Mrs. Castle: With permission, I would now like to answer Question No. 74.
    Our 1964 Travel Concessions Act restored to local authorities full freedom to arrange travel concessions on municipal buses and pay for them out of the rates. It has broadly achieved its purpose. But there are still some difficulties in arranging concessions on municipal buses where their services are closely linked with those of non-municipal operators. I have also had many representations that local authorities should be able to arrange for concessions on non-municipal buses, both in areas which are also served by municipal buses and in areas where there is no municipal transport.
    1628
    I therefore intend to review the working of the 1964 Act and to consider the anomalies which have arisen in its working. I will consider all the representations that have been made and will consult the associations representing local authorities and bus operators in order to see what amending legislation, if any, is necessary.
    Mr. Barnett: Is my right hon. Friend aware that there will be many old people in my constituency and elsewhere in the country who will warmly welcome this statement by her? There has been raised the anomaly—
    Mr. Speaker: Order. The hon. Member may only ask a Supplementary question.
    Mr. Barnett: Is my right hon. Friend aware that there has been a serious anomaly which has meant that many old people, old-age pensioners, have not been able to take advantage of the concession, and can she now tell us when we may expect the amending legislation to be introduced?
    Mrs. Castle: I appreciate that there have been anomalies. It is true, also, that the 1964 Act has brought a tremendous boon to old-age pensioners, such a great boon that the rest who have been excluded under the arrangements which I have mentioned are anxious to share in those benefits. I know the part which my hon. Friend has played in bringing these anomalies to my attention, but I cannot say at this stage when amending legislation will be introduced if, as a result of my review, it proves to be necessary.
    Dame Irene Ward: Is the right hon. Lady aware that the county borough of Tynemouth has already made representations—during the last Parliament—for action of this kind and that she will have its full support if she acts quickly?
    Mrs. Castle: I am aware that a large number of local authorities have made representations on this point, and that is why I am undertaking this review, but I have to consult the local authorities, and, therefore, the review will take a little time.
    Mr. Woodburn: Would my right hon. Friend, when she is considering this matter, try to find some standard by

    1629
    which the so-called losses accruing to transport authorities can be properly measured? At the moment it is calculated that when these old people travel by bus they cause a loss of anything between 5d. and 8d. per journey. Can my right hon. Friend. then, see that there is some reliable measure of the cost of their journeys, so that local authorities are not induced to suspend these arrangements because of exaggerated ideas of losses?
    Mrs. Castle: All these aspects, including costs, will, of course, be covered by the review.
    Sir S. McAdden: Would the right hon. Lady give us an assurance that, no matter what difficulties there may be, and difficulties where there are private bus companies and so on, she will get rid of the stupid anomaly which exists in the case of municipal undertakings competing with nationalised undertakings?
    Mrs. Castle: All these anomalies, of course, will be considered. That is the purpose of having the review. It will have to be a fairly detailed one.

DOCTORS' AND DENTISTS' REMUNERATION (REVIEW BODY'S REPORT)
The Prime Minister (Mr. Harold Wilson): With your permission, Mr. Speaker, and that of the House, I should like to make a statement about the latest Report of the Review Body on Doctors' and Dentists' Remuneration, covering the next two years, which is being published today.
I should like to express the Government's gratitude to the Review Body for the sustained and intensive work they have put into the conduct of this particularly difficult review.
The Government accept all the Review Body's recommendations in principle and are at once making arrangements to implement those for hospital doctors and dentists, and for general dental practitioners, in full, with effect from 1st April, 1966, at an estimated cost in the current financial year of about £12 million. The average percentage increases in net remuneration are 13·4 for hospital doctors and dentists and 10·6 for general dental practitioners.
1630
For general medical practitioners, it is estimated that full implementation of the recommendations would cost some £28 million this year and would involve an increase of about a third in aggregate net income. The Government agree with the Review Body that special considerations of workload and manpower in general practice justify an exceptionally large increase in remuneration for general practitioners. In the light, however, both of current economic difficulties and of their general policy for prices and incomes, the Government have decided that they would not be justified in implementing an increase of this magnitude in a single immediate step. They accordingly propose that the Review Body's recommendations should be implemented in two stages. The first stage would apply retrospectively from 1st April, 1966, and would be designed to increase net income by about half the full amount, or rather more than 15 per cent. The second stage, completing the implementation of the Review Body's recommendations, would take effect from 1st April, 1967. The. Government are willing to discuss with the profession how this can best be achieved and are putting forward their own proposals.
A third and final Report on the negotiations between the Health Departments and the profession about the proposed new contract for family doctors is also being published today, and my right hon. Friend the Minister of Health is today writing to the Chairman of the General. Medical Services Committee to convey the Government's proposals as regards both the contract and remuneration.
Mr. Heath: Is the Prime Minister aware that we shall, naturally, want to study these two Reports before pressing him with questions of detail? In the meantime, is the Prime Minister aware that we believe it is right that the Government should themselves take the responsibility for this decision in view of the importance of the Review Body and its status, rather than that they should refer it to the Prices and Incomes Board, as they did in the case of serving officers and the higher Civil Service?
I should like to ask the right hon. Gentleman two broad, general questions. First, does the additional cost take account of what was said in the Budget.

1631
Statement made to us by the Chancellor of the Exchequer yesterday?
Secondly, what will be the effect on the finances of the Health Service under the National Plan? Will there be a reduction in the resources which have been placed at the disposal of the Health Service under the National Plan, or will this mean an addition to the 3·9 per cent. of the gross national product?
The Prime Minister: I thank the right hon. Gentleman for what he has said. I think that the whole House will need time to study this very intricate and full Report. I agree that although it is difficult, it is right that we should have a straight decision on this case and not refer it to the Prices and Incomes Board.
With regard to cost, in respect of which figures have been quoted, I understand that these figures are not included in the current Estimates before the House, which were presented in February. With regard to resources for the National Plan, those were expressed in real terms, not in financial terms, and allowed something for increases in remuneration, though I would judge—but I should like time to consider this matter further—that they would not take account of quite so large an increase in remuneration as this.
Dr. David Kerr: Will my right hon. Friend note that the work of the Review Body, which has always been admired by the profession, will gain added status by virtue of the apparent generosity of this award? Will my right hon. Friend say something about the distribution of this award, which always seemed to be implicit in the reference to the Review Body of the projected contract between the Ministry of Health and the profession?
The Prime Minister: As my hon. Friend knows, the job which the Review Body had to do this time was a particularly difficult one because it involved the Review Body considering an entirely new contract and a new deal for the whole of the family doctor service, as well as doing its normal work. I made it clear that the question of distribution is one which my right hon. Friend will be discussing with the profession. As I think the House knows, I saw leaders of the profession this morning, and while they have fully reserved their position and the position of the profession on our decision to break the award into two
1632
separate years, I think they feel that, if they accept the Government's decision, they should press very strongly the right to have discussions as to the method of implementation within the overall figures which I have quoted, and indeed we have given a pledge that this will be done, largely at the request of the leaders of the profession.
Dr. Winstanley: May I ask the Prime Minister whether if it is necessary to phase the award to general practitioners over a period of two years, he will consider phasing it on a regional basis so that doctors practising in under-doctored areas can receive the whole award at once, thereby doing something to correct the maldistribution of doctors, which is adding to the overall shortage?
The Prime Minister: As the hon. Gentleman will see when he is able to study the Report in detail, this problem has been taken into account by the Review Body, but I have said that the method of implementation is a matter for discussion. The point mentioned by the hon. Gentleman, particularly the question of those doctors who, in areas where there is a shortage of doctors, have very large lists, was one of the points mentioned to us this morning by leaders of the profession, and is one reason why a certain elasticity will be required in the method of implementation.
Mr. Selwyn Lloyd: When using percentage figures, will the Prime Minister always give them in terms of annual increases in order to avoid giving a false impression?
The Prime Minister: The figures which I gave when I referred to the 10 per cent., 13 per cent., and rather more than 33 per cent. increases are overall average figures, and they cover—I think that this is the point which the right hon. and learned Gentleman has in mind—a two-year review and not the figure for a single year.
Mrs. Lena Jeger: Can my right hon. Friend assure us that the increases for family doctors will be on a general basis, and that there will not be any element of invidious or discriminatory so-called merit awards at a time when we are trying to develop the concept of group practice and health centres with a sharing of responsibility between doctors working together?
The Prime Minister: I think that the Review Body was very much alive to the new developments going on in the profession, but the exact implementation between doctors in very different circumstances, and also the point raised by my hon. Friend, are matters for discussion between my right hon. Friend and the profession.
Mr. Orme: Will my right hon. Friend take note that this award will cause grave concern among many manual workers and trade unionists throughout the country? I recognise the necessity for some increase, but these increases are quite extortionate. Can the Prime Minister say whether the basis of treating the professional classes differently from manual workers is to be continued by the Government?
The Prime Minister: In the first place, there has been no question of discriminating between the professional classes and manual workers. Recently there have been a number of cases in which the Government have played a leading part, both as employers and in other cases, where increases for professional workers have been well within the norm, and a good deal lower than the average wage increases for last year, so there is no general discrimination of that kind.
With regard to my hon. Friend's first point, I am sure that the House will realise the difficulties with which we were faced, taking into account the problems within the Health Service. This problem has been growing for five years, and it had to be settled. Taking all that on the one hand, and on the other the whole position of the prices and incomes policy, it was a very difficult decision, but, having regard to the acute shortage of doctors, and the work load on other doctors as a result—it is a pity that more doctors were not retrained earlier; it takes seven years or more to train them—we felt that this was a reasonable recommendation to accept.
Mr. Farr: Will the Prime Minister state the reasons which prompted him not to publish this Report some weeks ago, and whether or not he had these recommendations in his possession well before polling day?
The Prime Minister: I suppose that to satisfy an hon. Member with a mind like that—[Interruption.]
Mr. Farr: On a point of order. I protest. I merely asked the Prime Minister that question because a number of my constituents who are doctors understood that the Prime Minister was in possession of this Report well before polling day. I merely asked whether or not that was so.
Hon. Members: Withdraw.
The Prime Minister: There is nothing to withdraw. I am going to answer the hon. Gentleman's question in the spirit in which it was put. If the hon. Gentleman's doctor constituents understand that, they obviously do not know the facts as put out by the Review Body, which said that it intended to publish its Report as close to the end of March as possible. The Review Body felt, and it was its responsibility, with no pressure from the Government, Opposition, or any political party, that it would prefer the Report not to be bandied about in the middle of a General Election. That was the Review Body's decision. The Report reached me a day or two before Polling Day. This was well understood, and I had announced, I think in the House, but certainly a month before, that this was the programme to which the Review Body was working, and that we should need time to study its Report. The House will recognise that in several previous cases there was no question of immediate publication. Apart from the fact that the Report had to be printed, the Government had to consider their attitude to it, and in every previous case there has been a considerable delay in publication. We have brought it out with reasonable dispatch. We have had it for just over a month. It has been printed, we have considered it, and we had some consultations this morning, and any suggestion to the contrary is rather unworthy of the hon. Gentleman.
Miss Pike: In his consultation with the medical profession, will the Prime Minister bear in mind the work load on the general practitioner and on his wife, and also the great importance of maintaining a good career structure both in the hospital service and in general practice?
The Prime Minister: This was mentioned by the representatives of the profession when my right hon. Friend and I met them this morning, and I am sure that this will be taken into account by my

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right hon. Friend and the profession. These are important features in the discussions, and so, if I may say this because it was stressed this morning, is the position of younger doctors and, not least, young hospital doctors, of whom there is a great shortage. They are carrying a heavy load, and their numbers have been subject to considerable erosion for many years by emigration as a result of dissatisfaction with the present position.
Several Hon. Members rose—
Mr. Speaker: Order. We must get on with the business of the House.

BILLS PRESENTED
  PUBLIC WORKS LOANS BILL
  Bill to grant money for the purpose of certain local loans out of the Local Loans Fund, present by Mr. Niall MacDermot; supported by Mr. Ross, Mr. Richard Crossman, and Mr. Cledwyn Hughes; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 4.]

  INDUSTRIAL DEVELOPMENT
  Bill to provide for the making of grants out of moneys provided by Parliament towards expenditure on the provision of new business assets; to provide for the exercise of powers under the Local Employment Acts 1960 and 1963 in relation to new development areas and to
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  make other amendments in those Acts; to make new provision in relation to industrial development certificates; to amend section 3 of the Sea Fish Industry Act 1962; and for connected purposes, presented by Mr. Douglas Jay; supported by the Prime Minister, Mr. George Brown, the Chancellor of the Exchequer, Mr. Ross, Mr. Richard Crossman, Mr. Frank Cousins, Mr. Cledwyn Hughes, Mr. John Diamond, and Mr. George Darling; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 12.]

  LAND COMMISSION
  Bill to provide for the establishment of a Land Commission, to make provision as to the finances of the Commission and to confer on the Commission powers to acquire, manage and dispose of land; to impose a betterment levy in respect of land; to make further provision as to compensation in respect of land acquired by authorities possessing compulsory purchase powers; to amend section 28 of, and Schedule 2 to, the Finance Act 1931; and for purposes connected with the matters aforesaid, presented by Mr. Frederick Willey; supported by the Prime Minister, Mr. Herbert W. Bowden, Mr. Ross, Mr. Richard Crossman, Mr. Cledwyn Hughes, the Attorney-General, Mr. Niall Mac-Dermot, and Mr. Arthur Skeffington; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 11.]

WAYS AND MEANS
Considered in Committee [Progress, 3rd May].
[Sir ERIC FLETCHER in the Chair]

WAYS AND MEANS

  AMENDMENT OF THE LAW
  Question again proposed,
  That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance, so however, that this Resolution shall not extend to making—

  (a) amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description, or for all goods to which any of the several rates of tax at present applies;

  (b) amendments of the provisions of the Finance (No. 2) Act 1964 relating to temporary charges on imports so as to give relief from the duty imposed by those provisions, other than amendments making the same provision for all goods chargeable with that duty.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION
3.50 p.m.
Sir Douglas Glover: I will not detain the Committee for long but as I was in possession of the Floor when business terminated last night, I want to conclude my remarks, first, by saying that I should like to amend what appears in col. 1562 of yesterday's OFFICIAL REPORT, where I referred to subventing the employers by 12s. 6d. for every female employee. I thought that HANSARD would alter the figure, because it should be 3s. 9d.
I congratulate the Chancellor on the way in which he presented his Budget—with charm and an appearance of honesty. But these are the stock-in-trade of the bucket shop operator, and have been from time immemorial. The Budget is not quite so honest as the Chancellor made out when presenting it. It can be criticised because it provides no incentive to exporters, no incentive to efficiency or to greater efforts, and because it is inflationary and will be unfair in its operation.
It puts a general tax on food for the first time for 120 years. The Chancellor was misleading the Committee when he
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stated that the increase would be 1 per cent. I want to show hon. Members opposite that in fact the increases in food prices brought in by the Chancellor as a result of the Budget are much more likely to be between 5 per cent. and 6 per cent. We shall have to go into this question in a little more detail.
The manufacturing industries, which employ about 9 million people, are to receive a subvention of 7s. 6d. for each male employee and 3s. 9d. for each woman—so much for equal pay for equal work. This subvention will cost the Chancellor roughly £150 million a year. He has to raise that money not from the general body of taxpayers but from his Selective Employment Tax, which is really being levied only on those employed in what the Chancellor euphemistically referred to as "the services". Services include the whole of our distribution industry, and when the Chancellor said that these services, which spend £7,000 million, were taxed only at the rate of 1 per cent., he did not make it clear to the Committee that that £7,000 million includes all the food bought by our population over the retail shop counter.
The Chancellor, having to find £150 million as a subvention to the manufacturing industry, also wants to have £240 million as a net offtake from the consumer. In other words, the services and distribution part of our community will have to find £400 million in taxes. As the Chancellor says that that part of our community spends only £7,000 million, any hon. Member, on either side of the Committee, will be able to calculate that £400 million represents beween 5 per cent. and 6 per cent. of £7,000 million.
Hon. Members opposite, who made such play during the election campaign about Conservative policy putting up the price of food had better go back to their constituencies and say that, as a result of the Chancellor's measures, before the end of the year all their constituents can expect a rise in the price of food between 5 per cent. and 6 per cent. The Budget proposals will increase the cost of distribution of milk to the whole community, including nursing mothers, by about £5 million a year, put up the cost of meat probably by 6 per cent. or 7 per cent. and, far from the

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net charge working out at 1 per cent., this will be a very heavy burden on the poorer elements in the community.
It really is astonishing that the Government, who last year made so much play about increasing retirement pensions, will, at the rate they are going on, completely have wiped out that increase before next year's Budget. The proposals in this Budget alone will reduce the purchasing power of a single person's pension by at least 4s., and the inflation that took place last year had already reduced it by between 4s. and 5s. Therefore, the 12s. 6d. increase is being eroded almost out of existence, and I forecast that by next year's Budget there will be a strong campaign for an increase in pensions because the Government will have completely annihilated the increase they brought in in March, 1965. What a hollow ring the Budget must have for those on fixed incomes, including pensioners.
I ask the Chancellor for some very clear answers to my next point. Does the Selective Employment Tax apply to all part-time workers? We have a right to demand a clear answer to this question so that we can conduct this debate with a knowledge of the facts. Between 30 per cent. or 40 per cent. of the people employed in distribution are working on a part-time basis, and the Chancellor's proposals, far from getting people out of distribution—far from getting the milk roundsman into computerised industry—will have exactly the opposite effect. A shop employs a part-time worker perhaps for two full day's a week, and if it is now going to have to pay an extra 25s. for a man and 12s. 6d. for a woman, the tendency will be for distribution to organise itself upon a basis of the maximum number of full-time workers and the minimum number of part-time workers.
The tendency will then be not for people to be pulled out of distribution and to go into manufacturing industries. Hon. Members had better go to their constituencies and tell people that tens of thousands of semi-retired and retired people will be thrown out of their jobs because it is no longer economic to employ them. Not one, not two, not a thousand, but literally hundreds of thousands of part-time workers face the
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threat of the sack as a result of the Chancellor's measures. The Chancellor has also dealt a severe blow to agriculture, and I cannot see that anybody can believe that he will help and protect the horticultural industry. I hope that my right hon. and hon. Friends will put down Amendments when the Finance Bill is debated to put agriculture and horticulture in the neutral zone so that the amounts in tax will be repaid. Otherwise, this will be a very severe blow to all rural communities.
I hope also that my right hon. and hon. Friends will bring in an Amendment to exempt all part-time workers who work under 25 hours a week from the provisions of the Bill. Otherwise, literally hundreds of thousands of them will be facing either the sack or, even worse case, the prospect of having to go home and live solely on their pensions.
I cannot understand what the Chancellor was after in the subvention to manufacturing industries. We are talking about increased efficiency. How can efficiency be increased in any industry by saying to the employer, "We will give you 7s. 6d. for every chap on your payroll"? It will be an enormous incentive for increased wage rises. The First Secretary had better have a talk with the Chancellor about this, because if every employer gets 7s. 6d. I cannot see how any responsible trade union leader can help saying, "We had better have some of that right away". He would not be doing his job as a trade union organiser if he did not do that; but how will it increase efficiency? How will it get off any of the fat by way of hoarding labour?
Therefore, I hope that my right hon. and hon. Friends will bring in an Amendment to the Finance Bill to remove this incentive from manufacturing industries. I accept that it may be unpopular—nobody likes to lose something which is offered—but I think that that would lead to far greater efficiency. [An HON. MEMBER: "It is right across the field."] I do not mind if it is right across the field. I said last night, and I say it again now, that there is something to be said for a payroll tax, but what there is nothing to be said for is a payroll tax so ill-thought out and ill-considered as that presented by the Chancellor yesterday afternoon.

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I think that this Budget is inflationary. It is a smack in the eye for the farmer; it is a death blow for the small horticulturist; it is a severe strain on part-time workers; it is unfair in its effects, and it in no way solves the problems which the Chancellor posed at the start of his speech. It does not increase incentive, it does not increase efficiency, and it does not provide rewards for greater effort. Therefore, I hope that all my colleagues will oppose it, not only at the end of this debate, but also during the debates on the Finance Bill.
4.3 p.m.
Mr. Iain Macleod: One is inclined merely to second that admirable speech and to sit down. [An HON. MEMBER: "Reply to it.") But I could not reply to it: I agreed with it.
The Chancellor received many congratulations yesterday—they were sincerely meant—on his performance. His speech was lucid and mercifully brief, but, as he knows, congratulations from the Opposition on this occasion are limited to the manner and do not relate to the matter; they refer to the presentation rather than to the content. As he developed his theme. particularly that of the new tax, I became more and more convinced that he was making a serious and fundamental mistake in his appraisal. The relief, if relief it was, has been short lived. The facts, after all, are these. In Budget No. 1, in November 1964, £304 million a year was put on taxation; in Budget No. 2, in April 1965, the addition was £323 million; leaving out the restrictive Budgets Nos. 3 and 4, Budget No. 5 put on .£385 million. All those together total over £1,000 million.
This latest Budget is the most severe, however it may look, that the country has had to face since 1951, although the effect on the demand, that is to say, how much of this will really impinge on demand and how much will be met through bank borrowing, is very much more difficult to assess. The Chancellor yesterday, to soothe the patient—he did this also on T.V.—slipped into his old habit, which cost us a great deal last year, of double talk. We all remember the Bank Rate which was not going to work through to the domestic economy. We remember the resistance to further economic measures followed by those
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measures a fortnight later. And we remember the corner we were rounding well over a year ago now; yet we are still in this present crisis.
It is ingenuous to think that prices will not go up, and it is wrong to think that they will not go up substantially. I am certain that the rise will be formidable and far in excess of the 1 per cent. prophesied yesterday by the Chancellor.
For example, one heard someone on television yesterday rejoicing that the cost of his motoring was not to go up. Of course, he is wrong. The cost of his motoring will go up, because the cost of service and repairs and everything to do with a garage is going up, according to the Motor Agents' Association, by no less than 5s. an hour. What we must do is to study the Chancellor's Budget judgment and his solution and then its relevance to the problems we have today. I will take only very briefly the background, as I see it, to our problems, looking at the strong and weak elements in our economy. It is a great mistake to play down the elements of strength in our economy, and I shall start with those.
We have overseas assets that are vastly greater than our overseas liabilities, although the latter worry us a great deal. We have a situation in which exports grew strongly, particularly in the second half of last year. Investment in manufacturing rose, although there were some signs that 1966 will not be a particularly good year. We are still, then, a very wealthy nation, and our trading account, taking visible and invisible together, is in balance, year in and year out.
We should not, then, play down our strength, but it is the other side of the ledger which has been worrying the Chancellor. We have had stagnant production for a long time now, and the latest figure is one point lower than in January 1965. We expect a rise of growth in real demand in 1966 of something around 2½ per cent., which is, of course, well below all the targets towards which we are working. We have an exceptionally tight labour market, with which I shall deal in a moment. Last year was a bad year for savings generally, and a disastrous one for National Savings. The Chancellor said that the message was clear: more savings, less

1643
tax. If I may suggest to him, the opposite message is equally clear: more tax, less savings. There was a rise in the index from April last year to March this year of 4-3 per cent., against the average of 2½ per cent. over the last six years of Tory Government, and there is a prospective deficit this year of about £200 million, I would guess. The Chancellor's high hopes are gone. He is now talking about "the trend".
We have, finally, a formidable load of debt with sketchy, true visible reserves. However, I was delighted to hear the Chancellor speak yesterday about the repayment of the I.M.F. moneys due in November, 1967. To use a phrase which he used about a year ago, that will make very good hearing abroad. I understand—and I agree that he is right to do this—that he is keeping open the question of refinancing the second tranche because it is too early now for a decision or even comment on that.
These are the main factors which the Government, and the Chancellor in particular, must have considered. It has been an exceptionally difficult year for him to make an assessment, and it is particularly important that he gets it right. There has been a lot of advice given to him, but no concensus at all. We know the analogy of the "hawk" school and the "dove" school between the economists and their fierce arguments for months past.
As I see it, there are two great dangers. There is the danger of a Budget that may be thought to be—whether or not it is, is in a sense, almost secondary—too soft. The danger there is that confidence abroad would slip and we would have a new run on reserves. The danger of a Budget which is too tough is that it would punch an economy which is already on the turn and thus would aggravate a slide. This makes the Chancellor's decision particularly awkward, but I am convinced that the first danger is the more serious of the two and so, I judge from his speech yesterday, does the Chancellor.
The argument turns basically on one's view of the future course of unemployment. This seems so important that I will occupy the time of the House for a few minutes on it. We know the figures
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for 18th April. The figure was 1·3 per cent. However, the figures available at that date show a fall in unemployment for April less than the normal seasonal fall. The question is whether that is the beginning of a turn or whether the employment figure is so low that it is comparatively meaningless to read too much into it. My view is that the economy is at least as stretched as the figures would indicate.
When we get as low as this in unemployment, with a vast number of vacancies not being notified to the exchanges because employers see very little chance of these being filled, one is right to look at that turn with a good deal of caution, and I put a suggestion to the Chancellor about this. He would give a great deal, and so would I, to know what the May figures will be. From my experience at the Ministry of Labour, the May figures are collected on the second Monday, which, I believe, will be next Monday, and issued on an appropriate Thursday towards the end of the month.
I remember on one occasion, when it was of particular importance—as I judge the position today—to know whether or not the economy was turning, I asked on the Monday for a special check to be made from eight or 10 different exchanges which, I thought, would give me a bird's eye view of the position throughout the country. As I remember the exercise, it was extremely valuable. The Chancellor might like to consider doing something like that on Monday.
I leave the question of unemployment there, but I very much hope that we shall soon have a debate on the whole situation and our attitude towards unemployment, because politicians are so inhibited from discussing unemployment that we very rarely do this in the House. Yet it is not possible to understand the way the economy is going unless one discusses openly the level of unemployment; what is happening in the frictional employment sphere and how much of the unemployment figure is genuine and how much, in one sense or another, of that figure represents the unemployable. In short, we need—and perhaps at his leisure the Prime Minister will consider this—a new White Paper, a new 1944 White Paper, on unemployment, because the old thoughts and fears of pre-war years are

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now completely out of date and it would be a good thing if, in modern circumstances, we could see if we could redefine our attitude towards unemployment.
Before I come to the Selective Employment Tax, I will make a few comments about other proposals in the Budget. First, the gambling tax. On 1st March, I said that I thought that the Chancellor was sadly innocent in his approach, and I am afraid that I still thought so after his Budget speech yesterday. I was invited then to give my reasons, and I said that I would not anticipate my Budget statement. But, as I am now released from that inhibition, perhaps I may now tell the Chancellor where I have been led to as a result of making two different studies; one I was asked to do a few years ago by one of my right hon. Friends in Government, and one I did when appointed to this Shadow position a short time ago.
I believe that the right hon. Gentleman is right in some of his proposals and wrong in others because he has not followed consistently the one principle that matters, which is that one should always tax the physical asets and not try to tax the cash flow. If one sticks to that one can make sense of such proposals throughout the sphere of gambling generally. In other words, the right hon. Gentleman is 100 per cent. right, not necessarily in the amount, in the principle of taxing the one-armed bandit, but he would be wrong to try to keep track of the 6d. pieces going through the machine.
On casino gaming, his proposals are probably right for bingo in relation to rateable values, but I am sure that they can have a bad result indeed, and I would like him to think about this in relation to the casinos which have grown up in this country. The right hon. Gentleman said on 1st March:
"I believe that the levels at which I have fixed them will ensure that betting and other gambling are not driven underground, with still greater social problems in consequence."—[OFFICIAL REPORT, 1st March, 1966; Vol. 725, c. 1125.]
By having these enormous leaps in his rateable value table, the right hon. Gentleman has put a premium on having more gambling in any particular premises. He will get no more money out of it, but it will be necessary for the owners of a club which may have perhaps one table
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to put in more and more gambling tables in order to meet the Chancellor's requirements. We therefore have the curious result, which I do not believe the right hon. Gentleman means to achieve, of first creating more gambling and, secondly, of putting a premium on the sleezy club—the club with unattractive premises—because that would seem the inevitable result of this proposal.
The Chancellor is partly right, but where he is entirely wrong is in relation to the turnover tax on betting. He is wrong here because he is going for the cash flow rather than the physical assets. Of course, the Inland Revenue is extremely skilled in these matters, but, with respect, it is not the Inland Revenue's sphere. I am afraid that the opportunities for evasion are very large indeed, and if I might recommend to the Chancellor same leisure reading next week-end, now that his Budget is out of the way, he might care to get hold of a copy of a book by Edgar Wallace called "The Calendar", which became a film and a play. If I remember rightly, Gordon Harker was in it and the whole plot, the whole story, is about a method of beating the turnover tax as it then existed in this country.
There is, after all, no difference in principle between the two sides of the House here, and I suggest that the Chancellor takes our advice on this matter, because we agree that there should be a tax and we are, therefore, all concerned to achieve the right method. Remembering the principle that I have suggested—of the physical assets—he could tax the licence, the shop and the telephone, because the telephone is an exact measure of the amount of business that is done by a particular firm. If the right hon. Gentleman would listen to my hon. Friends and I this time and alter his Finance Bill accordingly, he will not make the mistake which Sir Winston Churchill made so long ago and which I know the Chancellor is anxious to avoid.
There are two more points, one about Corporation Tax. Naturally, a great deal of this debate will concentrate, as I shall, on the Selective Employment Tax. But it would be wrong not to comment on the level of the 40 per cent. Corporation Tax, because this is a very high rate indeed—quite different from the rate that we were led to believe, in all

1647
good faith naturally, by Treasury Ministers in the course of the 1965 Finance Bill. The danger of a 40 per cent. rate of accelerating the slow down in investment, which is something which is to be avoided at all costs, is a very real one indeed.
I should like to ask the Chief Secretary a question, and perhaps he will deal with it when he speaks tomorrow. It is impossible to find out from the figures and the papers with which we have been presented in the last 24 hours exactly how much more money the Government are taking in Corporation Tax. The question really is this. I may be wrong, but my own calculations indicate that the break-even point for Corporation Tax would be something like 36½ per cent. and that anything over 36½ per cent. would mean that the Government would be taking a very substantial extra sum in taxation from the companies.
I ask the right hon. Gentleman to answer this question as specifically as he can. I know that problems like the buoyancy of the revenue come into it and make it difficult to be exact, but what is his calculation of the extra amount which is being taken in Corporation Tax at 40 per cent. and Schedule F over what would have been taken by Income Tax and Profits Tax at the ruling rates?
Secondly—this is a detail, but it would be helpful to know this in advance—approximately how many amendments can we expect in the Finance Bill this year, to the nearest hundred or so? [Interruption.] I am talking about the ones which are going to he printed from the beginning, not the Amendments that we shall try to work into the Bill at later stages.
I have one other point to raise, and it is very serious. It is the question of the voluntary action to be taken in relation to investment in the developed sterling area—Australia, New Zealand, South Africa and the Irish Republic. Here the Chancellor is using—referring to the note that I made when he announced it—what one might call White House techniques, techniques developed by President Kennedy and President Johnson, of voluntary action in this field. Yesterday he said, after suggesting the procedure and the submission to the Bank of England of the schemes:
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"In any case, the benefit defined in this way should be large enough to equal the cost of the original investment in two to three years—
HON. MEMBERS: Oh!"—[OFFICIAL REPORT, 3rd May, 1966; Vol. 727, c. 1446.]
—and I am not surprised. Does he really mean that? I myself have some knowledge of this field. I am, in fact, a director of a very large firm which has considerable investments in three out of these four countries, and perhaps the Chief Secretary might like to take up this point in particular.
My last point is this. My right hon. Friend the Leader of the Opposition made some comments on these proposals yesterday. I am told that in Australia at least, the Chancellor's proposals have had a very unhappy reception indeed, and that in that country they see this as an expression of isolationism in this country. There are many other countries longing to put their money into these particular countries if we are not ready to do so. I find it deeply depressing that Little England has won again in so far as these proposals are concerned.
I now come to the Selective Employment Tax, which is the main proposal. Indeed, I shall devote the rest of my speech to it. I think that, far from this being modern, it contains within it a ludicrously old fashioned view of the structure of our economy. An explosive growth in services is the surest possible sign of a modern prosperous society. It has been so everywhere, and so it is here. In any case, services and manufactures, whatever may have been the truth long ago, can no longer be as tidily isolated as the White Paper suggests. Transport, for example, is part of production, part of the very production line.
The Labour Party is so obsessed with the attack on the "candy floss society" that it does not realise that what it is doing is to pay a premium to the manufacturers of pin tables, even in areas of high employment, and to penalise, say, banking and insurance, wherever they are situated, on which virtually all export in one way or another relies. We are convinced that our first thoughts on this were best, and my criticisms take up the general line of those which were made as an immediate reaction by my right hon. Friend the Leader of the Opposition.

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I should like to deal with one or two individual points and then comment on the entire concept. First of all, let me take some specific instances, beginning with agriculture. In paragraph 17 of the White Paper on Selective Employment Tax, it is said:
"In agriculture the Government intend to offset the effect of the tax on the industry, so far as practicable, through the normal machinery of the Annual Review."
That would be alarming enough without the words "so far as practicable". I urge the Government to think again. We shall certainly press it with all our strength.
For many people this is going to be a hideous burden. Let us take, for example, the situation of the dairy farmer who relies on his milk cheque to pay the wages bill. What will now happen to him is that from 5th September for at least six months he will be forced to give an interest-free loan to the Government of about £30 per man and will hope, with no undertaking at all, to get it back at the end of the period. As to the cereal grower, because of the length of time till the harvesting, he may be in an even worse position. This is the situation, wherever we look, and one can mention in particular forestry, to which only the vaguest reference is made and for which industry there is no specific price review. So I echo what has been said by my hon. Friend the Member for Ormskirk. We are completely dissatisfied with the treatment of agriculture, horticulture and forestry, and if the Government do not see the light we shall try to amend the Bill accordingly in due course.
Now a word about the Special Areas. The most obvious one is the Highlands of Scotland. There, in a sense, the services are the industry. Almost throughout the Highlands it is the service industries on which people rely for employment and which in turn attract the tourists, the foreign exchange and everything that goes with it that enables this industry to stay in the Highlands. As a result of this, if he does not amend the Bill, the Chancellor of the Exchequer will be responsible for a very serious lack of confidence in the Highlands, and some very worrying problems of emigration as well.
Apart from the Highlands, let me take as another instance the West Country as a whole. Virtually the only industries
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in the West Country—I believe there is a very small part of an aircraft industry—are clay mining and tin mining, and these, although they are producing essential raw materials for manufacturing industries, are extractive industries and do not qualify. Then there are sand and gravel, quarrying, the tourist trade and farming. This is the way life is built up there, and in every instance they are attacked savagely by the Government in their Budget.
I take the example of the china clay industry. It exports no less than 70 per cent. of its production, which is very valuable indeed to us. It is granted an export rebate at the top rate of 3¼ per cent. Yet it is to be penalised along with many others as a result of yesterday's measures. Perhaps the First Secretary of State, who is to follow me and who will, no doubt, deal with other matters, might care to remember what he said on 20th April, 1961, when there was a discussion on the Budget of the payroll tax proposed by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), then suggested at 4s. Incidentally, if the amount now proposed were spread without the premium, it would come out at something like 4s. The right hon. Gentleman then said:
"This is quite a frightening business for large areas of industry, for the development districts, for Scotland, and for Northern Ireland. Areas of heavy unemployment must be very frightened of a tax of this kind being imposed to discourage the employment of labour."—[OFFICIAL REPORT, 20th April, 1961: Vol. 638, c. 1507.]
If that had any truth in it at a level of 4s., what on earth can be the truth of it when the level is 25s., as it is to be?
I take next the hotel trade and construction industry. It seems absolutely certain that charges in hotels and catering establishments will go up. One curious result of this is that it will be made more attractive to holiday abroad and, consequently, the direct objective which the Chancellor put before us some time ago, particularly in a speech at the Boat Show, I think, will be frustrated, and frustrated by himself.
If the object be to squeeze labour out, one fact which we would all admit is that there is no hoarding of labour in the hotel trade in this country. On the contrary, there is a severe shortage. This is true also of very many shops. The

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figures for employment in shops are entirely misleading because, of course, they include many people who work only, perhaps, on Saturday mornings because the remainder of the employees are working a five-day week, but who are included on the list of those on the payroll.
As for the effect of the tax on construction, it is certain that building society rates to borrowers will be raised. We cannot blame the building societies, which have been patient for very long, if this should happen. The cost of a council house, according to the best estimates I can make, will go up by something between £80 and £100 as a result of the measures in the Budget, and this coming on top of a year in which housing costs have risen more steeply than in any year since records were kept.
I come now to a point which I hope we can clear out of the way at once, almost without waiting for the Finance Bill. The Chancellor will, no doubt, have noted the point about disabled persons made in a Motion put down on the Order Paper by some of my hon. Friends. I cannot think that he means to penalise the disabled in this way. I am sure that he will listen to representations. I take the very fact that this point is not cleared up as an admission that the tax has been thought of very swiftly in the last few weeks and that nothing like enough thought has been given to the details of it.
Quite apart from the disabled, there are the part-timers, the people to whom my hon. Friend the Member for Ormskirk (Sir D. Glover) referred. There is also the serious problem of those of pensionable age who are brought in and whose work is of great value to our economy. They do a small amount of work, but it really helps. Are we to penalise these people if they happen to be working, as almost certainly they will because of their age, in one of the service industries? I hope that the Minister without Portfolio will use some influence here. I do not believe that these matters—I put it as charitably as I can—have been thought out.
The Chancellor of the Exchequer (Mr. James Callaghan): Yes, they have.
Mr. Macleod: I am sorry to hear that, because it makes the Chancellor a much
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more callous man than I had thought if he is prepared—
Mr. Callaghan: With respect, I considered putting something into my speech, which the right hon. Gentleman said was short, about a number of these points. The Bill is to come. There are several matters which will have to be looked into. I can tell him now—I am sure that he will accept what I say—that I thought very carefully and am thinking now about the position of the disabled. It is an obvious point which occurs to anybody as soon as he considers a matter of this kind.
Mr. Macleod: Yes, there is still a Bill to come, but there are many answers given at this stage in the White Paper. We are told how the nationalised industries are to be treated—quite unnecessarily favourably, in my view. We are told what is to happen to the Civil Service, in respect of which the Government will pay all the money in and then draw it all out again. If the Chancellor found time to consider these sectors, he ought to have found time to consider the old and the disabled.
I come now to the whole subject of this selective tax. I believe that it will fail in its objectives, and I shall put the reasons very briefly. First, the battle which we have seen ever since October 1964 between the Chancellor of the Exchequer and the First Secretary of State is clearly going on. The key element in our economy now is what is to happen in the next round of wages or in wages during the months which lie ahead. This is more important than anything else. The Budget yesterday does not give either the First Secretary of State or private industry any encouragement whatever in the way of standing up, as we must—the Chancellor said this himself last night—to some of the wage claims which, unquestionably, will be made. Those who put their wage claims in will know that they will have to pay more for services, they will see that 7s. 6d. tantalisingly before them, and their bids will go in. It is of great importance that we do not have anything remotely like the runaway wage increases which we had last year, and the very first thing to do—[HON. MEMBERS: "The doctors."] The doctors' case has come at an awkward time. Let us admit

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that. The Prime Minister will admit it, too. There are always exceptions which should be made to any particular policy, and it was agreed long ago between the two sides of the House that doctors' pay should be treated in the way that the Prime Minister has honoured this afternoon. Subject to our study of it, I have no particular criticism of the announcement which he has made.
Second—and this is an important point—it is an innovation in our system that, for the first time, I think, we are having a tax which is not administered by the fiscal Department. With a good deal of knowledge and, even more, of respect for the Ministry of Labour, I do not consider that it is equipped to take on this task. The opportunities—here, of course, the Ministry does know something—for demarcation disputes under this White Paper will, literally, be endless. One can envisage the efforts which will be put in by management in order to be able to say that 51 per cent. of the personnel in any given establishment are outside services.
Third, there is the strange feature of the prize or premium to manufacturing industry. On television last night, the Chancellor seemed to hint—he could do no more than hint—that this was a sort of concealed subsidy to exports. That, of course, would be illegal, and it may well be that the present proposals will meet some criticism. But, in any case, the two convincing arguments against that are, first, that the premium goes to people whether they are efficient or not and, second, it goes to people whether they export or not.
It is true, of course, that no one will take on new labour at £20 a week per man, or whatever it may be, in order to save 7s. 6d. But the real danger is that it will actually encourage the hoarding of labour which is already there. There is a great deal of labour being hoarded in manufacturing industry at present. I know of no academic study of this matter, but I should not be in the least surprised if the amount of labour being hoarded in manufacturing industry was in excess of that being hoarded in the service industries of this country. It follows, then, that if there is no dishoarding of labour, the employment situation will become all the more critical.
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Now, a few words about what seems to be the reality of the speech yesterday and, yet, the unreality of the thinking behind it. The voice yesterday was the voice of Jacob, but it was the hand of Esau we were really worried about. [HON. MEMBERS: "Who is that?"] We know who Esau is. Jacob we know well, but until we have "Congressional" committees we shall not, I think, see Esau being interrogated in these matters.
I had the impression of someone almost playing chess with the economy of this country, shuffling people around as though they were pawns. For the whole of the Chancellor's approach takes no account whatever of the special areas or of the special categories, as I have shown, the disabled and the pensioners. All these are forgotten, and in every case the emphasis is straight on old-fashioned cap and muffler Socialism. [HON. MEMBERS: "Oh."] Indeed it is. This is the modern version of it, and it is one of the reasons why we are so distressed about it.
Now, with reference to the whole Budget, I ask the Chancellor quite seriously whether he does not think that he is taking a grave risk in his timing. I said earlier—I think that he will agree—that the danger of what is thought to be a "soft" Budget is of a drift of confidence. Yet practically nothing of what he announced yesterday happens until the autumn and the notorious third quarter of the year. The Selective Employment Tax comes in in September. The gaming tax comes in in October. The import surcharge goes—I am delighted to hear it—in November, and, of course, the Chancellor will be losing revenue because of the holding back which is bound to come following his announcement yesterday.
But, with all that, and, perhaps punching the jaw of an economy which may well have turned down to a considerable extent, suddenly, in September, there is an enormous amount of deflation. An enormous amount is taken out of the economy to be repaid in part, perhaps, six months later, after a good part of the winter has been spent. Is the Chancellor really satisfied that he has not taken a far greater risk than he ought to do in making these proposals? Perhaps he would like to have brought them in earlier—no doubt he would—but has he not created that risk by his proposals yesterday which do

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not operate at once on the level of demand in this country?
I said in the debate on the Address, and I say again now, that we judge these proposals entirely by the test of their relevance to the problems as I outlined them at the beginning of my speech today. The only item which I can find in the Budget which seems to me to help in the creation of a more competitive economy is the removal of the import surcharge. That certainly helps. I welcome it, and I am glad to see it.
But very much more is needed. I urge the President of the Board of Trade to press for time this Session for the reform of company law—a much wider Measure than that which was introduced in the last Parliament. As he knows, this was not in the Queen's Speech. We shall have to agree to differ—the Government having the say in the matter—on the question of trade union legislation, but I state my belief that what is needed is a real attack, not a paper attack, not just speeches by the Minister of Labour and the Prime Minister, on all harmful restrictive practices in labour management and the rest. We need more effort consciously devoted to the science of management, a genuine drive to get into Europe and—the Chancellor said little or nothing about this yesterday—a new attack on Government expenditure at home. There is a vast amount that he can do, and all he is doing every time is to produce new proposals—in steel, in the I.R.C. and in many other things—which will be a burden upon our economy.
This, as I said earlier, is a modern version of ancient Socialism. It has no ideas at all except those of more and more discrimination. That, I think, is a very dangerous course for a Government to embark upon. It has no ideas to meet any of our problems except always by higher and higher taxation, which has now reached the level of £1,000 million since the right hon. Gentleman became Chancellor of the Exchequer.
The better way lies through a competitive policy, as we have tried to outline to the House. It is because we think that the Chancellor of the Exchequer, ingenious though he may be, does not believe in a competitive policy,
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that we condemn the Budget which he put before the House and the country yesterday.
4.47 p.m.
The First Secretary of State and Secretary of State for Economic Affairs (Mr. George Brown): We have listened to a very attractive speech by the right hon. Member for Enfield, West (Mr. Iain Macleod). It seemed to me to be very contradictory, the end from the beginning and the middle from both beginning to end. I was not very clear whether he was arguing that my right hon. Friend had done too much in the way of deflating the economy at a time when we were already on the down-turn, as he said at one time, or whether he was arguing that my right hon. Friend had not done enough at a time when we were too stretched, which was the argument which he used at another stage. I was also rather puzzled to hear him representing a party which has just faced the electorate with a programme intended to put £900 million on the level of public expenditure, attacking us for not having cut expenditure more. Perhaps the best comment on the speech has been passed to me by my ever-resourceful researching hon. Friend the hon. Member for Manchester, Cheetham (Mr. Harold Lever), who points out that in the reference which the right hon. Gentleman made to the hands of Esau he was quoting the words first used by Isaac who was, of course, blind.
Mr. Iain Macleod: He was also right.
Mr. Brown: The right hon. Gentleman, not having been there at the time, is not a good witness.
Before I proceed further, may I be allowed by the House to say "Thank you" to the right hon. Gentleman and to the Leader of the Opposition, who has just left us, for the kind words they said about me while I was away last week. I was delighted to read them. Mark you, Mr. Speaker, had I been consulted in advance I could have perhaps put them a little more enthusiastically. The right hon. Gentleman was most anxious that I should read both parts of the quotation, one of which was that he had affection for me and the other of which was that he had the utmost distrust of me. The Leader of the Opposition said that when

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I was not here something was missing. I believe that both of those phrases fall pretty well into what people have called "Butlerian", but I am grateful for small mercies and I thank both right hon. Gentlemen.
The right hon. Gentleman has indicated, in a very acceptable and moderate statement, that now, as indeed throughout the last 18 months, he disagrees with pretty well all that we do. On this occasion, at any rate, he seems to have read what we were doing before he disagreed with it, which is an improvement on the past. I will deal with the main points which he raised as I go along, but I would point out to him at this stage that, as there was on the investment grants and as there was on the industrial reorganisation corporation, there is every time a very marked difference between the reaction to what we are proposing from industry and leaders of industry and the reaction from right hon. and hon. Gentlemen opposite. I suspect that he will find, as I found when consulting industry this morning, that the reaction of industry to our proposal is much nearer the position which he will himself reach when he has given himself a little more time to think about it.
The main measure in the Budget, to which he devoted most attention, must be seen as one of a number of continuing measures which we have been putting forward for the last 18 months. In order to examine and assess its value, it is important to look at the objectives of our economic policy, to assess the main problems which we face and to see how the measures already taken and now proposed form part of an overall strategy for achieving our objectives and overcoming the problems. One can always take an individual item and pick holes in it, and, particularly if it is novel and imaginative, one can find rough edges. But it is the totality of the measures and what they add up to in the form of a general pattern which was missing from the right hon. Gentleman's consideration in his speech, although he said that he would do this; and this invalidates much of the criticism which he made.
I should like to emphasise, as my right hon. Friend did yesterday, that one of the traditions of this place is the drama and the glamour associated with Budget Day. But economic advance at any time,
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and particularly in the situation in which the country has been living for some years, is not limited and should not be tied to any particular day in the year. There is no magic about a day in spring which means that at that time we ought to make our changes or to assess our policies. This is a matter of the continued management of our affair.
I suggest to the right hon. Gentleman that he should consider all our measures, all those taken over the past 18 months and now being taken, the fiscal and the physical measures, and consider them together. He will then get a very different picture from that which he painted of what is happening to British industry and the British economy. I have not time to develop it today, but I ask hon. Members to do so. They should consider what has been done already under our regional policies. The right hon. Gentleman said that the new proposal would have an effect on some of the regions, but he should consider what has happened in the hitherto under-used regions of the country and what we have done already or have caused to be done in the realm of industrial development through N.E.D.C. and the little Neddies, in the realm of labour market policies, if I may import a term, in the changes which we have made to encourage and make easier the mobility of labour, in the new investment inducements which we have introduced and in the new arrangements which we have made to encourage industrial reorganisation. If the right hon. Gentleman takes all those together, he will find that it is a very different picture of the dynamism which exists in this field.
The right hon. Gentleman talked about the total level of taxation and the increase in taxation for which my right hon. Friend was responsible yesterday. I must emphasise that financial and economic measures are not ends in themselves. It is possible to show that at one period taxation was reduced, but one has to consider what was going on in society in general at the same time or possibly as a result of what was done. It is not only a question of the taxation which one raises but also a question of the purposes for which it was raised. What is important is the extent to which this enables us to reconstruct the fabric of our lives and the kind of society in

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which we live. Much of what my right hon. Friend has done, in fact has been done to enable us collectively to ensure the social changes and social improvements which we judge to be right and which the country agreed with us were right when it was asked a few weeks ago.
The passing of economic measures, the level of efficiency and stability in the price level in our economy, however desirable, are not ends in themselves. They are the means and the prerequisites to the end, which is the kind of society in which we want to live. We can have all these things and still lack that kind of society. Broadly, while the Conservative Party were the Government, that was exactly the situation.
Mr. John M. Temple (City of Chester): I have been enthralled and interested in the economic strategy, but one point to which the right hon. Gentleman has not referred is the increase in production. Perhaps he will tell us when he expects production to rise.
Mr. Brown: It will take much longer if hon. Members interrupt me on points which I clearly have not yet reached. I shall deal with that matter.
The debate is, therefore, about the stated aims of policy—and our aims are different from those of hon. Members opposite. The right hon. Gentleman made that clear in the debate on the Queen's Speech and also when he spoke of what he called the right kind of choice and the right kind of choosers. One cannot debate the policies without taking into account the stated aims of the policies and the relevance of the measures which we are proposing as a means of achieving them.
Our economic strategy and the social aims which we want to achieve were set out in the National Plan which we published some time ago. This remains the blueprint for action and the central core of the Government's economic and financial policies. In the debate on the Queen's Speech, when I was not here, the right hon. Gentleman said that he would like me to explain what I meant by "implementing the National Plan". It means the Government and industry carrying out the action programme laid down at the end of the first section of the Plan in order to achieve the aims. A tremendous
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amount is now being done by industry, as well as in changing Government policies—and the major proposal in the Budget is one of these—in order to bring about the action which is required to enable the aims to be achieved.
It is clear that the Plan itself, as has always been stated, must be reassessed and revised in detail from time to time in the light of progress or the lack of it and in the light of developing information. This is being done this year. Indeed, it is being done currently with the participation of the National Economic Development Council and on the basis of the work and the inquiries which the Little Neddies are making. This will be discussed with industry, and the House and the nation will be told later in the year what is the assessment of the situation in the light of what we have done.
Next year we hope to roll, as I have explained, the whole five-year programme forward, and that will entail a major new industrial inquiry of the sort on which the first programme was based. The main task this year is to pursue with strength and determination the achievement of the action programme set out in the National Plan, and that is what I want industry as well as the Government Departments concerned to concentrate most on.
The right hon. Gentleman drew attention to the fact that the economy is growing more slowly than the average rate required to achieve the National Plan's objectives. That is true, and I do not dispute it. But it is not a new discovery. The total production last year compared with the previous year rose by about 2½ per cent. overall. It was higher than that for manufacturing industry and higher still for some parts of manufacturing industry, particularly engineering. But the fact that, overall, the average so far attained is less than we need, while worrying—and I do not hide that—and something that must act as a spur and not create complacency, is not new. Nor does it invalidate the aims we have set out for the period up to 1970. The National Plan itself clearly states this, and that is why I say that the right hon. Gentleman has not discovered anything new. The Plan says:
"The need to protect the balance of payments and the position of sterling … will involve some slowing down in the rate of expansion in the next year or so.

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The Plan will be kept under regular review in the light of developments …".
It was, therefore, very clear that this situation was bound to happen if we were to tackle sensibly in a short space of time the balance of payments problem. What is clear also is that the achievement of the aims of the National Plan—and I make no bones about this and will be ready to answer for it—is absolutely essential if the nation is to have the resources necessary to accomplish the rise in social standards as well as in personal standards of living that are set out in the Plan.
If we fail over these next five years, it will not be merely that the Plan has failed or that those in industry and Government associated with it will have failed. It will mean that resources will not be there for all the things we are seeking to do, whether by way of personal consumption, improvement in social standards or overseas expenditure of any kind.
Therefore, overcoming the limitations imposed by our balance of payments situation has had to be a major immediate prerequisite. Until now, right through the period when right hon. Gentlemen opposite were responsible for Government, the problem has been that we have never been able to take the brakes off and maintain a rising rate of growth without running into an intensified balance of payments problem, thus forcing the Government to put the brakes back on in order to ease imports, which in turn forced growth to a standstill with the result that we were worse off when we started again.
Overcoming that sort of situation, with all its difficulties and consequences, was a major immediate prerequisite for the Government, and it is no use, I suggest to the right hon. Gentleman—not that I think that he was particularly guilty of this today, although the Leader of the Opposition has been guilty of it on occasion—from time to time changing one's stance, sometimes making the balance of payments situation one's whole concentration and at other times making the rate of growth one's whole concentration. These two things impinge upon each other and one must take a balanced view of them.
What is so silly is this continued presentation, which I do not mind very much, for it adds to the gaiety of life, of an
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alleged conflict between my right hon. Friend the Chancellor of the Exchequer and myself that is supposed to be going on all the time. What in fact goes on is a balanced view of these two requirements and the need to see that one is dealt with without inhibiting the achievements of the other—which is as much my right hon. Friend's concern as it is mine.
The Committee will not need to be reminded of the unprecedented severity of the balance of payments crisis which the nation faced in 1964 at the end of a very long and tedious period. In the past, such crises were dealt with in one of two main ways, either by devaluing the currency, with all that that involves, or by imposing deflation—in other words, by deliberately reducing the country's ability to produce and so creating substantial unemployment.
Although I note the protestations of the right hon. Gentleman—in a television programme in which he and I took part some time ago he said that he thought that I had been unfair to him on this—and having heard the Leader of the Opposition yesterday, I still hold the view that the logic of their case is that they still believe that the second of these two courses is the one that ought to be adopted.
Rightly or wrongly, this time we were determined that we would do it differently. We recognised that we could solve the payments crisis if we wanted to by pushing deflation far enough. We also recognised what the cost would be. We have, therefore, tried for the first time to solve the balance of payments crisis without jeopardising the country's long-term advance.
None of us will deny the complicated nature of the struggle to avoid the short-term being the enemy of essential longer term policies. Nor will anyone deny the conflicts inherent in it. We have lived with the problem too much to be foolish enough to do that. But let the Committee also recognise that we have already gone a long way in managing to balance the two things. As my right hon. Friend said yesterday, we have halved the balance of payments deficit, maintained the rate of investment in industry, improved the social services, strengthened the country's growth potential and maintained full employment. We are proud of this achievement, and I say to the right hon.

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Gentleman that the picture he has presented is a traversy of what we have achieved, amidst all the difficulties, over the last 18 months or so.
But I do not deny, if it is any value to the right hon. Gentleman, that the battle for a permanent solution of our problems is still on and that we have some way to go before we can claim that we have solved it. The extent of our success so far is not a reason to get gloomy and pessimistic, however, but to be encouraged to believe that it can be maintained.
The further measures on the export of capital which my right hon. Friend announced yesterday are, of course, part of the whole consistent strategy. I noted the reaction opposite yesterday when these were announced, but frankly, I believe that the Opposition get this wrong. Of course, exports of capital building up new assets overseas can be very beneficial to the country in the right circumstances and at the right time. But it is no use borrowing long and lending short—[Interruption.] I beg your pardon—borrowing short and lending long for this purpose. Having made that verbal slip, I have no doubt brought the fact more clearly to the notice of right hon. and hon. Members opposite and I am encouraged by the speed with which they corrected me, which shows how they are following the argument. It is no use borrowing short and lending long. It is no good continuing to invest money that we have not got. One can do this for a time by borrowing from others, and that is exactly what the last Government did. But in the end one is forced to take action.
I say to the right hon. Member for Enfield, West that it seems pointless to argue for keeping our own people and our own assets at home under-employed and under-used in order to create new jobs and new assets overseas. I see the value of overseas capital investment, but in circumstances in which we cannot have both home and overseas investment the choice which the party opposite has made has been the opposite to the one that should have been made. If one does not take the right choice in these circumstances one has to impose restrictions of other kinds. The import surcharge was an example of a restrictive measure forced on us by pre-
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cisely the consequences of the kind of policy the right hon. Gentleman continues to advocate.
My right hon. Friend the Chancellor of the Exchequer and I, when we had the thankless task of announcing the import surcharge shortly after we took office, never saw the import surcharge as a desirable measure nor as a permanent measure. It simply seemed to us to be the least objectionable measure available to deal with part of a situation which could not be sustained and while longer-term measures had time to take effect. It has played its part in building the strength we have now got and therefore we have been able to decide that, in the interests of our trading relations, the surcharge should be removed at the end of November.
Our ability to do this reflects the strength we have built up since October 1964, but the necessary continued improvement in our position which will be required to sustain the situation without the surcharge is also, of course, partly dependent upon the other actions related to our balance of payments problem described by my right hon. Friend.
I think that the right hon. Gentleman did himself less than justice in his speech, because it is no good saying that one is pleased that the imports surcharge is to come off and then attacking the very policies that created the situation in which that could be done. Unless one pursued such policies, one would either have to retain the surcharge or replace it by something which might be equally or even more harmful to international trade. The ultimate and positive road to success is through an even better export performance.
Restrictions can never be a positive road to success in trade—that is clear. If my right hon. Friend the President of the Board of Trade catches your eye, Sir Eric, he will set out in detail ways and means that the Government have sought to give new assistance to manufacturers and to others to export. A great deal has been done during the last 18 months, as can be discovered from the reports from export promotion bodies and the National Economic Development Council.
I want to make it clear that the Government are actively considering now

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what further changes we can bring about to stimulate exports. We have to recognise the obligations that rest upon us under the General Agreement on Tariffs and Trade and other international agreements to which we are a party. Even so, we must find new ways, and are continually trying to do so, of giving more positive assistance to exporters. That is relevant to what we are discussing today.
It is clear that the nation is relieved that we are not adopting the old stale remedies. I think that the right hon. Gentleman was ill-advised to look down his nose at the idea that the country has this sense of relief. I think that it has. But I do agree with him that one wants the country clearly to understand that if we are to get our balance of payments right in the long-term and succeed in positive measures, it is no use just having a sense of relief because certain tax increases were not made. There must be a recognition by everyone in the country and in industry that we need urgently a much greater rise in productivity than we are currently getting.
Sir Harmar Nicholls: Can the right hon. Gentleman give any timetable for the talks with G.A.T.T.? Preferential treatment for exports is vital and something to be supported on both sides, but if the discussions with G.A.T.T. go on indefinitely we may well lose our chance to do anything.
Mr. Brown: I think that the hon. Gentleman may have misunderstood me. I said that we ourselves, given the obligations resting on us under G.A.T.T. and other international agreements, are trying to see what can be done to give our exporters the benefits, advantages and positive assistance which, I remind the Committee, some of our allies and competitors who watch us very closely are themselves able to give. What I said was that we were conducting an examination and were not content with the present situation.
As the National Plan made abundantly clear, if we are to get this substantial rise in productivity, fundamental changes are required—and there is no escape from this, even though the right hon. Gentleman seemed not to recognise it in his speech—in the industrial struc-
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ture in Britain today, in industrial attitudes, in industrial techniques, in the level and direction of industrial investment and in our manpower policies. We believe that the Government are changing the policies in the direction for which the Plan argues and which industry itself recognises. What we must say to the country is that to succeed, these changing policies must call forth a response from everybody in industry.
The National Plan reiterated again and again two clear requirements. First, industry ought to plan its investment programmes on a longer time scale, so that it continued to increase capacity even when the economy temporarily turned down. This it did not do in the years up to 1964 and that is one reason why we were always caught out whenever the brakes were taken off. Secondly, the Plan made it clear again and again that there was likely to be a continuing shortage of manpower as far ahead as could be seen, the so-called manpower gap. Discussing what we were doing and the probable effects in manufacturing industry, the right hon. Gentleman left out of account the clear picture which the National Plan gave of the manpower situation in the years ahead.
It is fair to say that our policies have been successful, in that private investment in manufacturing industry throughout the difficulties of the last two years has been maintained much better than on previous occasions when the growth of the economy has had to be slowed down to meet balance of payments requirements. We hope that the measures now proposed, with their positive help to manufacturing industry, which I shall seek to justify in a moment, coming on top of the special direct help already given, for example through the new investment grant system and the regional policies, will assist in this process of planning industrial investment on a longer scale and maintaining it at a higher level.
The second problem, the manpower gap, was plainly shown to be one of our major problems. In a way, we have probably been the victims of our own clear statement of the difficulties. I think that it is reasonable to conclude that employers in many industries—and I accept that this is probably true in parts of manufacturing industry, too—have

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hoarded labour, with effects both on productivity—this is one of the explanations of the industrial index figures which are otherwise very hard to equate with what else is happening—and cost inflation, and in this situation, of course, it is easy for them to do so. As a result, there are continuing serious shortages, particularly of skilled labour, which are restraining the expansion of output and exports in some manufacturing sectors and leading to inefficiencies in the use of plant and equipment. Basic to this has been the inadequate training provision by private industry in many sectors to upgrade people and overcome the shortage of skilled labour.
When discussing the cap and muffler concept of Socialism, the right hon. Gentleman was identifying himself as a very old-fashioned figure. To distinguish between services and industry in modern society as though industry were all cap and muffler and services all bowler hat and pin-stripe trousers suggested that the right hon. Gentleman had not visited many factories in recent times. It is he who is completely out of date. Nothing gave the game away more than that example. There is no doubt that the shortage of labour in sectors of manufacturing industry, and highly important sectors, has been exacerbated by the extent to which the scarce labour supply has been channelled into the services sector. The figures which my right hon. Friend gave yesterday showed that very clearly.
Of course, much of what happens in the so-called services sector is desirable, useful and important, and nobody would deny it. There can never be black and white divisions so that one can be sure that one has all the sheep on one side and all the goats on the other. But what is also true—and I ask right hon. and hon. Gentlemen opposite to get this into their minds—is that what happens in the services sector by and large is much less likely to provide the early answer needed to our balance of payments problem and to our low growth of productivity than is the case with what happens in manufacturing industry. The difference in the output of the services sector which represents foreign currency earnings and the output in manufacturing industry which represents
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foreign earnings stands out a mile as showing that, broadly speaking, it is in manufacturing industry that we can get the larger part of the answer which we need to these problems.
Mr. John Tilney: Surely that cannot be true of the merchant exporters, who are responsible for many of our exports.
Mr. Brown: If the hon. Gentleman is to take a particular part of the services sector, he must also take a particular part of the manufacturing sector. If he takes the best part of the services sector and compares it with the best of manufacturing, he will still get a picture like that which I have given. The test is not to take the best example in services and the worst in manufacturing, but to compare the two broad areas.
We must ensure that those industries on which our balance of payments mainly depends can expand when they need to do so. If hon. Members consider the figures in the annex to the White paper, they will see that whereas the natural growth and the accretion from declining industries in the last few years have given us more than 1,250,000 extra people, only 140,000 have gone into manufacturing industry, which clearly shows how unbalanced this is.
Of course, I agree with the right hon. Gentleman and others that the mere taking on of extra men and women is not a guarantee of extra production or extra efficiency, but we cannot ignore the repeated cries and advice and appeals from those managing and directing industry who tell us of the need to reduce orders and of lengthened delivery times, largely due to their inability in the present conditions of full employment to get the workers they need. I will not bore the House, but I could give case after case of companies, which would be accepted as efficient producers and managers and users of machines and labour, who say that this is absolutely true of their present situation.
Sir Spencer Summers: If the argument which the right hon. Gentleman is advancing and the evidence he is quoting are true, what is the sense of subsidising and giving incentives to those in manufacturing industry to continue to hoard labour?
Mr. Brown: That question shows precisely why I dislike giving way, because it has only anticipated what I was immediately about to say. As we have some more days of debate, it would be better if I were allowed to finish and I could then be criticised or attacked after my case had been heard in full.
It was thoughts of this kind which led us, not as the right hon. Gentleman said, hurriedly in the last few days, but over a very long time of discussion and looking for the whole package of new policies, to the idea of the Selective Employment Tax. The right hon. Gentleman quoted something I said in 1961 about the proposals then of the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) There is all the difference in the world between this Selective Employment Tax and the flat payroll tax applying to all industry which the right hon. and learned Gentleman proposed and all the difference in the world between the level of unemployment now and the level of unemployment then. If the situation now were as it was then, my arguments would be as valid and as powerful as they were when I made them. But the situation is different.
We have framed these proposals with the manpower shortage and the need to obtain a much greater rise in productivity very much in mind. It was necessary—and I did not gather that the right hon. Gentleman disagreed on balance, although he rather contradicted himself—to take some disinflationary action in the Budget, and we felt that the right action was to make use of the situation and to place a tax where it would most help to deal with the problem. In our view, a tax on employment in services should lead to a slowing down of the demand for manpower in that sector. It should lead to more efficient use of existing manpower and thus to higher productivity, and that should give us additional available manpower resources to overcome the current shortages in manufacturing industry.
We are not facing a situation in which we are afraid of unemployment, or where there are no jobs, either full-time or part-time, in manufacturing industry. Therefore, so long as we plan and phase the operation, it should give us the additional resources which can come from nowhere else. We believe that the pro-
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posals will give a positive encouragement to manufacturing industry so that costs will be slightly reduced, and this accounts for what the right hon. Gentleman found so inexplicable. If we are able in this way to give, however moderately, an edge to manufacturing costs which enables them to be reduced, it clearly must be an advantage to us in time to become more competitive both at home and overseas. The additional manpower made available in this way should enable economies of scale to be realised and better utilisation of plant throughout the hours of the day to be achieved. We believe that it will help, although moderately, to enable us to tackle our export markets more effectively, but I emphasise—and here perhaps the right hon. Gentleman and I walk together—that manufacturers in this situation must help themselves, too.
The Government can change policies and try to create a new climate and a new atmosphere, but that does not help if manufacturers or others act in a contrary way. The benefits of what my right hon. Friend is seeking to do will be lost if manufacturers merely seek to take on more workers without looking closely into their use of their existing labour force. Clearly, there may be and probably is misuse of labour, in manufacturing industries as well as elsewhere, and therefore a determined attack to get more productivity and thereby avoid the waste of workers is still necessary.
However, the right hon. Gentleman and his hon. Friends pushed the argument beyond the point of logicality. The right hon. Gentleman clearly recognised this himself, because in an aside he slipped it in. I do not believe for a moment that 7s. 6d. a week—and it is less than that, because some part will be osffet by the increased cost of services which manufacturers have to acquire—will make manufacturers employ additional workers at £17 or £25 a week. Nevertheless, I accept that it is up to manufacturing industry to recognise that it still has to make a determined attack to get more productivity in its establishments and to avoid the waste of workers.
Let me emphasise that even with this step we shall still be hard put to bridge the manpower gap in the years ahead. It is, broadly speaking, with all the rough edges and with all the problems to which the right hon. Gentleman drew attention,

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only in the manufacturing industries where our export improvements must largely come and where the manpower gap will be most inhibiting. Here the atttitude of industry to this is different from that which the right hon. Gentleman exhibited today, and I welcome very much the initiative which the C.B.I. is already taking to make its own study and attack upon the misuse and the hoarding of labour in industry.
This is why, both in our investment grant schemes and the Selective Employment Tax, we have deliberately made the measures discriminatory. In other words, we set out to help some sectors and not others. When one does this one creates the opportunity for the very kind of criticism that the right hon. Gentleman made. I make no excuse for this—it is the only way to get our economy right. We must tackle the problems in the sectors in which they arise and not by general measures with all their deadening results. In order to get the scheme going at all, we have inevitably had to use the weapons which were available to us.
This has inevitably led to a measure of rough justice and some very difficult borderline cases. In any discriminatory scheme it is very hard to avoid this. One of the problems from which this country has suffered repeatedly is the temptation to make the ideal the enemy of the good—never to get anything started because it is not too clear what complications arise from it. I would justify this, with all its imperfections on the grounds that one has to get this going this year, using the methods available.
We were inhibited by those methods which are available—the Ministry of Labour's classification, the Ministry of Pensions and National Insurance system. We had to work within these methods. As the Chancellor made clear, we have got it going, or we shall have soon. We shall have a new and imaginative, and ultimately a wholly acceptable new system of taxation in operation. In due course we can arrive at a more sophisticated scheme, as my hon. Friend said yesterday, which can deal with not only some of the problems raised by the right hon. Gentleman today, but also simplify the whole business of payment and refund. The important thing is not to
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wait for that—it is to get going. It is only the genuine reactionary, who is anxious to find difficulties in any scheme and come down against it.
The right hon. Gentleman spent a long time today talking about the effect on costs. I believe that he greatly exaggerated. I could not understand some of his figures—no doubt someone will clarify them for me. I saw the M.A.A.'s announcement, that putting 25s. a week on a garage mechanic will lead to an increase in cost to the motor car owner of 5s. an hour. Let me make of clear that if it does I shall regard that as a likely candidate for the Prices and Incomes Board because the mechanic could only be working a five hour week if 25 "bob" comes out at 5s. an hour.
That was the example given by the right hon. Gentleman. I saw it yesterday, but I did not fall for it as he did. If he divides 25s. by the normal working week of a garage mechanic, he will see it cannot come out at 5s. an hour. He quoted those who were pessimistic or gloomy. I am told that on the radio today, when some traders were interviewed, they gave quite a different reaction from that of the right hon. Gentleman as to what would be the effects on the prices which they would have to charge. They said that they would be unable to put up their prices. I draw the right hon. Gentleman's attention to an equally valid piece of evidence—I would have thought rather more so—in today's Daily Telegraph, where a spokesman for Marks and Spencer, who employ about 24,000 workers and have 239 stores in Britain, said that the company would try to absorb the payroll tax without passing increased costs on to the customer.
"Even in the most efficient companies it may be possible to absorb a little more increase in costs without increasing prices."
That is the reaction. It gets matters no further, but that is the reaction of one large company, the chairman, Lord Sieff, being a member of the Conservative Party Association in his Harrow residence. He is at least equally valid as evidence as that which the right hon. Gentleman gave, and I hope that that will be a more normal reaction.
Mr. Nigel Birch: Surely the right hon. Gentleman said that it was

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necessary to produce some deflationary effect and that is why the Chancellor imposed this tax. If no one puts up the prices there will be no deflationary effect.
Mr. Brown: Had the right hon. Gentleman been here earlier and heard my argument, he would realise that that question has been dealt with by me. It is usually better to be present if one wants to raise questions. The right hon. Gentleman greatly exaggerated the whole thing. The precise effect will depend upon the extent to which the service industries react to the tax, by attempting to save labour, increase productivity and reduce cost—such as Marks and Spencer—or by attempting to pass on the tax to their customers. We will do our very best to encourage companies to do the former.
I repeat what the Chancellor said yesterday—even if the bulk of them reacted the wrong way, taking into account all of the beneficial effects of this scheme on manufacturing costs, the effect on the cost of living would still be no more than two-thirds of one per cent. We would expect the increase to be much less and, as I pointed out to the party opposite, any form of deflationary action of a similar magnitude, taken through the old measures which it used, would have a far greater effect on the cost of living than this system can have. There are widespread opportunities for saving labour in the service industries and for using it more effectively. In the case of manufacturing industry there will be a reduction in costs, and in some cases it will help to offset recent unavoidable increases. In others it should enable prices to be reduced. We look to manufacturers to take the opportunity and we shall watch their actions very carefully indeed.
I would like to say a word about the problem of rising prices and of keeping money income and increasing national productivity in step. I accept what the right hon. Gentleman said. This is, as it has been throughout the last few years, a matter of paramount importance. Our policy for productivity, prices and incomes has been deliberately based on two main foundations. First, not to act as a temporary stop-gap or prices measure, but as a long-term policy, with
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all the difficulties which that involves, which would stand the test of time, and secondly, as a voluntary policy, based on co-operation, again with all the limitations that imposes.
On the same basis the T.U.C. and the C.B.I. have introduced important new arrangements designed, in their own sphere, to support and strengthen the policy. It is not exaggerating to say that there is a large measure of support in the country beyond the benches opposite for what we have been trying to do. Anyone who has looked at what has been happening at trades union conferences, even in the last few weeks, cannot have failed to have noticed this. It is only too clear, and the right hon. Gentleman never failed to mention the fact that money earnings have been continuing to increase. This is not only earnings from employment. Money incomes have been continuing to increase over the past year at a much faster rate than can be justified by the increased output.
It is no good pretending—and I do not pretend—that the policy is already solving our problems, but we should not disregard what has been achieved. The atmosphere on both sides of industry has changed and is changing markedly. There is a much wider understanding of the basic issues involved. I would commend a study of the debate at this year's meeting of the National Executive Committee of the Amalgamated Engineering Union compared with that of a year ago at Blackpool which I attended. There has been a marked change. This is true of the meeting of the Union of Shop, Distributive and Allied Workers a little while ago.
Secondly, we have in the N.B.P.I. an effective and generally acceptable instrument for assessing individual cases against the general policy background. Thirdly, we have, with the co-operation of employers and trade unions, an early warning system in operation which enables the Government to maintain a much more effective oversight of the whole field.
It would be very useful if right hon. and hon. Members opposite would pay tribute to this sometimes because their attitude to it is noted, but one of the most important developments has been the vetting procedure set up by the

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T.U.C. to consider the proposals of individual unions. That would not have been thought possible even twelve months ago. I have little doubt that in the years to come it will stand out as a landmark signalling the beginning of a vitally important development in the trade union movement. When right hon. and hon. Members opposite call for legislative action against trade unions, they should balance the case which they put by recognising the tremendous significance of this voluntary change.
As the Leader of the Opposition said yesterday, we have undoubtedly made some progress in slowing down the rate of increase in prices. I was not clear whether the Opposition were in favour of that or against it. It has been assumed much too easily that when costs go up it is right, proper and inevitable that prices should go up by an equal or, very often, greater amount. We cannot afford this kind of thing. Increases must be absorbed more and more by increased productivity instead of being passed on, and there is a much greater recognition of this.
I have some figures which have been circulated, but I should be happy to put put them in the OFFICIAL REPORT, showing what has happened to the wages and salaries bill in the last year and to retail prices which show how much progress we have been making. Therefore, from both aspects of the policy, we have achieved a a good deal more than is allowed for. We have a solid foundation on which to build for the future. But the need—and this can be regarded as common ground—is to have a solid foundation on which to build in consultation with the representatives of both sides of industry. With patience and good will, but with a good deal of determination, we have to develop the policy and to make it effective. At the same time, we must make it fair, and seem to be fair, between different sections of the community. This is why I deprecate excessive concentration by right hon. Members opposite on wages and salaries rather than on incomes as a whole.
Many of my friends in the trade union movement who are anxious to help are, nevertheless, genuinely worried lest, despite what I or my colleagues may say, the policy should in the end prove just to be another way of holding down wages.
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We are determined that it shall not be this. Indeed, one of its greatest claims for support—I say this to my hon. Friends in particular—is that it is the only way yet devised in which real incomes as distinct from paper incomes can rise. One has only to compare the notional increase which the trade unions have been securing over the last few years with the actual rise in real income to realise what nonsense the present situation is.
Secondly, it is the only way by which the lower-paid workers and those in exceptional circumstances, particularly in the social fields, can be identified and provided for without an advance over the whole sector which wipes out their gain. Dealing with one aspect of this point about fairness, we have been watching closely the substantial increase in the number of dividend payments made by companies in the first quarter of this year and the closing months of 1965 compared with previous years. It is clear that many companies paid extra dividends in the last fiscal year instead of waiting until the present year simply in order to secure tax advantage.
Sir Gerald Nabarro: Legitimately.
Mr. Brown: In so far as this is a matter of bringing forward by a few months dividends which would have been paid in any case, it can be regarded as a temporary phenomenon which may not matter very much. But I am glad that my right hon. Friend the Chancellor of the Exchequer made it clear yesterday that Surtax payers could not expect to be relieved of the consequences of these decisions. That will be generally regarded as an example of making the policy operate fairly. But I want to go further. I can see nothing to justify a widespread or substantial increase in the level of dividends at this time. We are keeping a close watch on the figures and will not hesitate to take further action if that seems necessary.
This leads me to our proposals for legislation. As I have said, this policy has been developed on the basis of voluntary co-operation. We all want to keep it on that basis. But we cannot ignore the risk that an unco-operative minority may undermine the effectiveness of the policy and thereby create unfairness as between those who are willing

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to co-operate and those who are not, and thus destroy the advantage which the co-operators are seeking to achieve. It is therefore with these thoughts in mind that the Government will be reintroducing the Prices and Incomes Bill, not in an attempt to impose statutory controls, not to supersede the ordinary processes of collective bargaining, but to reinforce the voluntary basis on which the policy rests and to provide the essential pause in all significant negotiations during which those concerned can take the national interest into account.
One respect in which there is scope for an improvement leading to greater efficiency concerns structural change in British industry. Whether in the form of mergers or rationalisation, or both, there are large sectors of industry in which there is considerable scope for this. Anyone with any real knowledge of British industry, apart from what the Geddes and Plowden Reports told us, will know that this is so. This is why we decided to set up the Industrial Reorganisation Corporation, which has been so much attacked by right hon. and hon. Members opposite. We want to give fresh impetus and urgency to the process of structural change in industry because we think that only in this way can we get the breakthrough in management and productive efficiency which we must have.
I recognise that the market has achieved a good deal on this, but I do not believe that we can leave it only to the free play of the market, otherwise the Geddes Committee would not have found what it did find. Despite the efforts of more progressive managements, in far too many cases the impetus to change is lacking. The Industrial Reorganisation Corporation will be operating on quite different criteria from those which often guide individual managements. We expect it to make profits, but its main job will be to provide the driving force to carry through the structural changes which we need, in particular those which can quickly benefit our balance of payments.
The House knows from the White Paper the basis on which the Corporation will operate. Hon. Members are already aware that Sir Frank Kearton has undertaken to be Chairman of the Industrial Reorganisation Corporation. I thought that the House would like to know at the
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earliest opportunity the names of the other people who have accepted my invitation to form the Board of the Corporation.
In addition to Sir Frank Kearton as Chairman, there will be a full-time Deputy Chairman and Managing Director. I am very happy to say that Mr. Ronald Grierson, at present Executive Director of S. G. Warburg and Company Limited, has undertaken at great sacrifice to perform this service. The others who will be members of the Board are Mr. J. P. Berkin, C.B.E., Managing Director of Shell Petroleum Co. Ltd.; Mr. Bernard Boxall, C.B.E., Director of Lindustries Ltd. and a man with wide Scottish interests; Mr. Leslie Cannon, General President of the Electrical Trades Union; Mr. B. R. Cant, Managing Director of Hamworthy Engineering Ltd. and Industrial Adviser to the Ministry of Technology; Sir Joseph Lockwood, Chairman of Electric and Musical Instruments Ltd.; Mr. W. G. McClelland, Director of the Manchester Business School; Mr. Frank Schon, Chairman and Managing Director of Marchon Products Ltd.; Sir Donald Stokes, Managing Director and Deputy Chairman of the Leyland Motor Corporation Ltd.; and Mr. C. R. Wheeler, C.B.E., Chairman of Associated Electrical Industries Ltd.
Hon. Members: All Socialists.
Mr. Brown: In view of the reaction which the announcement of the I.R.C. raised on the benches opposite, I thought that there would be, as there clearly is, special interest and delight over there when I was able to announce the names of the distinguished men who have agreed, out of a different sense of public values from those held by hon. Members opposite, to undertake this work. However, whatever has been said in the past, I am sure that I can assure Sir Frank and his colleagues of the wholehearted wish of the Committee that they should succeed in their task.
By a whole range of economic, manpower and financial policies, we are putting British industry into a position to reorganise, rationalise and improve its efficiency and performance. But let us not underestimate the urgency of this. Time is not on our side in this connection. [Interruption.] Too much time was lost when the right hon. Member and others were responsible for policy. We cannot in this connection ignore the developments

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in Europe and the opportunities and challenges which face us as a result. To be able to grasp the former—the opportunities—we must be in a position to meet the latter—the challenges that will face us. Both require a much higher level of industrial efficiency than we have yet reached. We must not be inhibited from taking the right action in our long-term interests because of delay in putting ourselves into a satisfactory industrial condition.
Therefore, I strongly emphasise that we should use the period immediately ahead of us in which probing goes on about the possibilities of our future relationship with the Common Market to make up for lost time and put our industry—in fact, our whole economic structure—into a condition which will enable us to advance the moment it is open to us to do so.
The whole theme running through the debate—my right hon. Friend's statement yesterday and this speech today, I hope—has been the need for greater efficiency to enable us to solve both our internal social problems and our external problems. That is the only way that we can satisfy the right hon. Gentleman, increase the rate of growth and at the same time manage the balance of payments problem and arrange that in future dealing with the latter shall not inhibit advance on the former.
This Budget carries forward the previous measures which this Government have been steadily embarking on over the past 18 months or so. Its general reception outside the benches opposite, like the other measures before it, has been that it is "bold and imaginative". I ask all who can affect the decisions in British industry to make the utmost use of it.
5.54 p.m.
Mr. J. Grimond: The First Secretary expressed some suspicion of the Tory Party bringing compliments, but the whole Committee will wish to welcome the right hon. Gentleman back. We are all very pleased that he is restored to health, and notice that his wind at any rate has not been impaired by his recent illness.
The First Secretary told us that we must look at the Government's strategy as a whole and that we should find then that it was all of one piece. This is exactly what I fail to find. I thought that the
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right hon. Gentleman was at his least happy in defending the new Selective Employment Tax, and I rather feel that there will be a few Amendments to the Finance Bill even in the name of the First Secretary of State this year.
The right hon. Gentleman told us that it was extremely important that manufacturing industry should weed out any surplus labour. He told us that it was part of the Government's long-term strategy that we should make the best use of our skilled man- and woman-power. He seemed to me to be making an appeal to manufacturing industry to act from a voluntary agreement, so to speak, with the Government in the same way as we have often heard these appeals made before The Government's policy would appear to run quite against this. After all, they are to pay manufacturing industry 7s. 6d. a week for every male employee. It is quite impossible to reconcile this with a desire that manufacturing industry should weed out its labour force.
Further, one of the results of the policies of the last 18 months has been an enormous increase in services within industry attempting to compete with the tax changes and in the number of people employed by the central Government and by local authorities. There has certainly been no weeding out there. There will be no weeding out brought about by the Budget.
Next let us look at regionalism. The First Secretary told us that the Government attached great importance to their regional policy. However, the effect of the latest tax will be to hit the very regions in which the Government want more employment. One cannot think of anything which could more effectively damage agriculture and tourism than the Selective Employment Tax. I need not remind the Committee that agriculture and tourism are very important employers in many of the regions which require more employment.
Further, the First Secretary told us that one of the difficulties which the country faces or will face is an overall lack of labour. However, we are told this by a Government who have actually been stiffening up the immigration regulations and not encouraging more people to enter the country.
Then the First Secretary asked us to take into account the type of society

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which the Labour Government were trying to create. I notice that one of the things which is left out of the aims of the Government is the curtailment of inflation. In my view, a society which has endemic inflation is by its nature unfair. Inflation bears very heavily on the pensioner, on the professional man, on the people with fixed incomes; and these are the sort of people whom we think should be rewarded and not penalised in a decent society.
Further, we heard nothing from the Government about the need to spread either wealth or power. Here, too, as a Liberal I would look forward to a society in which both wealth and power are much more widely spread and are not concentrated either in the hands of a few individuals or, indeed, in the hands of the Government themselves.
Turning to the Budget itself, I regard it as a tragedy. I say that because it began so well. I wholly approve of the determination to remove the surcharge. I believe that the overall balance is about right. I think that most people would agree that the aim of the Chancellor of the Exchequer this year should either have been to have maintained a fairly neutral position on tax increases or to have slightly increased taxation, as in fact he did. So I make no quarrel with that. I believe that the 40 per cent. Corporation Tax is extremely high, but that is a legacy of the last Budget and not this one. Few people, I believe, thought that in this Budget it would be any lower. I agree with the Chancellor's determination not to add to the old indirect taxes or direct taxes in this Budget. Many people offered up a prayer of thanks when he did not increase the licence duty on motor cars.
Then the Chancellor came to the dramatic moment in the Budget when he seemed to be going to do something which was both new and acceptable. That was to put some taxation on services, which I do not object to, and possibly to introduce a payroll tax. There is a good deal to be said for a payroll tax. But, of course, it should be accompanied by other measures such as competition, and, indeed, by wider measures for retraining the people whom it is desired to weed out from unnecessary occupations.
Let us look at what the purpose of a payroll tax should be. It is, of course,
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essentially to stop industry retaining labour which it is not using to the full and which is generally described as hoarding. But hoarding goes on in manufacturing industry just as much as in services, probably more so. We are now going to have extraordinary situations as, for instance, that of the man who, in the General Election, made known that he was getting £30 a week for doing very little in the motor car industry. Yet now his employers would get an extra 7s. 6d. a week for keeping him.
Of course, it is true that this tax may not make much difference, but the point of introducing it was that it should make some difference. There is no point in introducing it at all if it is not to make some difference.
Another point about introducing a payroll tax is that it could be used to attract firms in regions where employment is scarce, and away from the regions with very high employment. But with this tax we cannot do that. Indeed, as I have said, one of the features of this tax is that it will hit hardest the very regions where we want more employment. Moreover, it will fall heavily on both agriculture and tourism and general services in many districts where these are the main employment.
Further, one can manipulate certain forms of payroll tax, I think, within the G.A.T.T. to help exporters, but not this tax. We need only look at today's papers to see that a company like the Distillers Company, which makes an enormous contribution to exports, will be benefited by this arrangement very little. So it is a tax which only contradicts many of the advantages which should come from a payroll tax.
Then let us look at its effect on the construction industries. This quarter, the first quarter of this year, there are 5,000 houses fewer completed than there were last year. This is an industry which is in dire difficulties. What is to happen? This will make certain that the building of houses and other forms of construction will be more expensive and it will encourage the proliferation of small contractors—one-man contractors employing either no labour or the minimum amount of labour.
I draw the attention of the First Secretary to the speech made by the hon.

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Member for Bethnal Green (Mr. Hilton) who referred to this on Monday and said that
"we now have a number of what the unions term 'pirates' in the industry, the labour only sub-contractors, who employ about four men apiece. There are 50,000 of them in the country, which means that there are 120,000 employing agencies all competing with each other for labour."—[OFFICIAL REPORT, 2nd May, 1966; Vol. 727. c. 1264.]
When the Minister replied he referred to this and said that this was nothing short of horrifying.
This is going to encourage it. This tax will not stop it but will encourage it. Therefore, I would beg the Treasury to look at this whole tax again.
Furthermore, the method of collection, surely, cannot make sense. What is the object of collecting money from a nationalised industry to pay it back again? Why not let us make the tax neutral towards industry and not give a bonus for hoarding labour regardless of whether it is using it well, badly or indifferently?
I return to the point of this moral superiority which some people apparently feel manufacturing has over services. This seems quite incredible. Even Russia is coming to the point when it feels it must raise the status of people in services. There might be a case for extending Purchase Tax if it were desired to direct people away from services, but this discrimination against services while manufacturers are, indeed, paid a premium is indefensible. It seems a most extraordinary view that it is all very well to manufacture a motor car but not at all so good to put petrol into it, or that it is very good to make something but not so good to repair it, that repairing and servicing is not a very moral occupation—
Mr. Harold Lever rose—
Mr. Grimond: I should be delighted to give way in a moment to the hon. Member, whom we welcome upon his annual appearance—
Mr. Harold Lever: Oh.
Mr. Grimond: I omit the word "annual" and insert "summer" appearance on taxation matters.
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Why should we discriminate in favour of the man who makes a gambling machine as against a skilled executive in banking or anyone else who may be making a very great contribution to exports? Indeed, invisible exports are ignored.
Mr. Harold Lever: The right hon. Gentleman is as out of date in his comments on my attendances as he is in his economic thinking. The question I wanted to ask him was where it is he derives the argument—was it from the other side of the Committee?—that we are making a moral distinction between manufacturing industry and service industry. What has been said is that there is a general economic distinction to be drawn between them. It does not involve any moral distinction at all.
Mr. Grimond: If that is the argument, that there is an economic distinction, then it is even more a nonsense. It is conceivable that it might have been thought that manufacturing is a morally superior occupation, but to suggest that manufacturing a thing is economically superior to servicing it is folly, and the folly makes the argument worse. If the hon. Member would prefer that I should say that there is an economic distinction between them, then I will say that there are both distinctions and they are both equally wrong.
What exactly is the position of the various public authorities? Is it true, for instance, that the B.B.C. is going to have to pay this tax without its being refunded? Because that has been said in the papers. Or is it in the general category of nationalised industries, which, I understand, will pay the tax but get a refund?
Have we any idea of what the costs are to be of this tax—the costs of collection? There is already an increase in the number of civil servants and will not more be needed now? And, indeed, will not industry itself require additional staff to cope with the effects of this tax?
I have said that this tax is tragic. I think it is tragic because there was an opportunity for introducing a tax designed to increase the efficiency of labour. This could have been done, without this particular form of tax, which can be shot to bits, and will be shot to

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bits, and with it, therefore, the whole idea of a payroll tax.
There are one or two things I would say about the Budget. Most people would agree that if we can get further with German payments for defence costs that will be all to the good, but equally I think we should be told a little more as to what exactly it is hoped to achieve by making this further claim at the very moment we are hoping also to make an effort to get into Europe.
On investment in the sterling area, is the criterion laid down by the Chancellor to decide whether investment ought to be encouraged the only criterion? It has already been referred to by the right hon. Member for Enfield, West (Mr. Iain Macleod), who rightly questioned the idea of a full return in two or three years, but, even if it is possible, is it really the right criterion?
There is also the question whether such investment will enable us to forgo imports from other sources or make a substantial contribution to the balance of payments in other ways. There have been comments—the First Secretary himself made this comment—as to whether it is any longer useful to fix a certain day in the spring as the point when one estimates and lays down economic policy for the coming year. I fully agree with the First Secretary. I think it is not useful. What I think ought to take place is a much more continuing review of our economy, runing throughout the year.
But there is something more than that which needs doing. Conventional wisdom since Keynes considers that taxation is primarily levied to take some money out of the economy. Indeed, it has been argued that Budgets nowadays are not really concerned with raising revenue to pay for Government expenditure, but are much more concerned with getting the economy in balance. Now it is coming also to be widely said that if we attempt to take money out of the economy by raising indirect taxation the only result is to intensify wage, salary, profits claims. If this is so, of course it knocks the whole case for increased taxation on the head. The logic of this should be that at a time when we are faced with inflation we should reduce taxes. I certainly do not agree with that, but I do believe that
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we must have more information about what are likely to be the effects of increased taxation.
Have we reached that position where the only tax which will be effective within the incomes policy will be a direct tax? I believe that we should not put up direct taxation any more, and that we should try to move towards a wider base of indirect taxation, but if in doing that we destroy the chance of restraining incomes, it will be a serious matter for the First Secretary of State. I am sure that one of his difficulties is that instead of pushing in the same direction as budgetary policy, he is constantly trying to contain it.
The rise in the cost of living may be small or great owing to the effect of the Budget, but the Government have to decide whether they want some prices to rise as a consequence of the Budget and therefore take some money out of the economy, or to make less money available for buying other things. Most orthodox economists say that the purpose of extra taxation is to make some prices rise, but that will make the First Secretary's job even more difficult. This is a matter on which we need much more information. How far are wage claims based exclusively on the cost of living, and not by comparison with what other people are getting? How far is taxation any longer effective as a deflationary measure?
I do not know whether we shall be able to get round to considering the way in which we handle our financial affairs, but I believe that this is becoming more and more necessary. On this Budget I make no complaints about the overall balance. I make no complaint about the determination of the Chancellor to get away from the old automatic raising of tobacco and drink duty, Income Tax, and so forth, but I believe that having turned his thoughts in the right direction. it is a tragedy that he made an appalling muddle of his actual proposals.
6.12 p.m.
Mr. Donald Dewar: It is with some trepidation that I find myself on my feet at this early stage. Many of my hon. Friends counselled a longer wait, but a maiden speech is an ordeal which does not improve with contemplation and I decided to take my

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courage in both hands and rely on the traditional tolerance of the Committee.
I am the first Member of the Labour Party to be returned for South Aberdeen, and I suppose it is fair to ask why the people in that area have decided to turn their backs on a well-entrenched Conservative tradition which has been energetically represented for 20 years by my distinguished and in some ways rather formidable predecessor, Lady Tweedsmuir.
I think that the answer is fairly clear. It is that in South Aberdeen, as in many other parts of the country, they were impressed by the priorities and programmes of the last Labour Administration, and particularly in my area by an Administration which could deal energetically with a serious financial crisis and at the same time manage to reduce unemployment and so eliminate that endemic plague, the unemployment spiral dictated by external balance of payments difficulties. It is that in particular which ensured the return to Parliament of myself and many of my hon. Friends with increased majorities. It is because I think that the Budget will continue these sensible and flexible policies which have brought about this increase in prosperity and stability in my part of the world that I welcome the Budget.
I think it is only fair and right that the basis of the taxation system should be broadened. I think it is right that the imbalance which allowed the non-manufacturing sections of the economy to escape their fair share of the burden of taxation should be put right. It is equally right and convenient that the Chancellor's catchment area should be increased. It is difficult to quarrel with any of these things.
I am impressed with the general engineering of the tax which will bring about a desirable switch in the deployment of labour in this country. I do not think that it will be dramatic, but it will be a trend which we can all welcome. I am very clear in my own mind that the objections coming fierce and fast from the Opposition benches on the subject of hoarding of labour are misplaced and wildly exaggerated. We know that in British industry there are many firms with old-fashioned ideas. We know
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that there are people who are not interested in the desirable movement towards capital-intensive as distinct from labour-intensive firms, and we all accept that there are people with the old-fashioned idea that one cannot install a machine until the plant it replaces has been written off at a rate of depreciation which is often arbitrary and ill-advised. All these things we accept, but it is a long step from saying this to saying that a marginal supplement for the employment of labour in manufacturing industry will radically encourage this state of affairs. Taking the tax overall, and looking at the employment picture, and the Government's policy on, say, investment incentives, there is no doubt that the merits of the measure far outweigh what is a very marginal argument against it.
I enjoyed my first Budget, because when I arrived at the House I got the impression that many hon. Members opposite were coming to gloat. They were looking forward to hearing a Labour Chancellor of the Exchequer having the unfortunate experience of having once more to flog the old pack horses of the economy, to increase direct taxation, to "have a go" at tobacco, beer, and so on. I got the impression that their smugness—I think that that is a fair term to use—began to turn to dismay as the proceedings wore on and they realised that that was not happening, and their minds were being asked to grapple with something which was new, something which was modern, and which they began dimly to realise was tailor-made to meet the requirements of the British economy.
At the end they were bemused, and some of them have not recovered from the attack and are using the same arguments and the same slogans which they have shouted against every Labour Budget for many years, and the tragedy is that as the ground has shifted, and as the arguments are different, their old slogans are even less appropriate than in the past.
Having said that I welcome the Budget, I must make it clear that as the Member for South Aberdeen I have certain reservations about specific facets of it which it is only fair openly to express. Some of the reservations have been mentioned by the right hon. Member for Orkney

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and Shetland (Mr. Grimond). I accept them to some extent, but only to some extent. I am one of the representatives of a city of 180,000 people which is almost entirely dependent on administration and service industries connected with a considerable agricultural hinterland, and although we have two important, though small, shipyards—important in the local sense—whose future we watch over anxiously, and certain pockets of machine tools and paper manufacturing industries in the area, it is basically true that the number of employers who will get the premium can be counted on the fingers of one hand, and it is therefore fair to concede that this tax will be initially unpopular and much misunderstood in my constituency.
The second great pillar and prop of South Aberdeen is tourism, and already we have heard sounds of grumbling discontent from the tourist industry which has been excluded from the Government's incentives, and I have no doubt that in the near future the discontent and grumbling will increase and will be a considerable embarrassment to Members like myself.
With this I sympathise and must say that I am worried about the tourist industry. In a city like Aberdeen, there will be a temptation to pass on to the customer the increases due to this taxation. If that is done this tourist trade which basically depends on internal tourism with people coming from other parts of Britain to Aberdeen, will become even more vulnerable to the ever-increasing plethora of cheap Continental holidays. I hope that the people in the industry will realise that it is in their interests to try to absorb most of these costs. But, on the other hand, I hope that the Chancellor will be receptive to what I know will be a great deal of pressure from both sides of the House to try to do something to help the tourist trade, particularly in areas like this.
Again, the service industries may also be tempted to pass on the increased costs. I hope that they will not do so, because thanks to the efforts of a Labour Government, the real problem in Aberdeen is not unemployment. The real problem is uncompetitive rewards, and a man in the North-East knows that he can get half as much again for the same job, and the same hours, by going to the Midlands or
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to the prosperous south of England. The result is that we are an open society in the sense that we can be raided, and are being raided by foraging parties for labour which drain off on enormous amount of the skilled manpower in our part of the country. I.C.I. and Stewarts and Lloyds are two recent examples, and I am worried that people, by unthinkingly passing on these increases in the service industries, will raise costs, even if nothing like as spectacularly as people say, but still significantly so, with the result that the level of wages will be even more uncompetitive.
There is a further danger that employers will use this as an excuse for keeping down the level of wages. If there is one section of the Aberdeen community which deserves criticism it is the industrial and commercial community, which has for too long been willing to accept comfortably low labour costs at the price of continuing local stagnation and emigration. I hope that local employers who will be affected by this tax will carefully examine their profit margins and the situation in which they find themselves before they glibly victimise their customers and ultimately themselves by just raising prices.
It has been said that the answer is to attract manufacturing industries to areas like Aberdeen. This is easily said, and I pay tribute to the great success of the Labour Administration in this field. The fact that I am here is a tribute to that success. The First Secretary reeled off a very lengthy list of such measures this afternoon, and I do not wish to repeat it, because it is familiar to us all. But I feel this will inevitably be a long-term business. It is by no means hopeless to talk about diversifying industry in Aberdeen. We can do it ultimately, but the basic shape of our economy will remain unmodified for a considerable time. Because of that we cannot look for a quick change, and we must face the possibility that this tax will have some unfortunate repercussions in the short term.
This will sound like special pleading, and so it is, but it will be heard not only from people in the north-east of Scotland but in the Highlands, in the Scottish Borders and probably in many parts of England from areas with similar problems. I hope that these pleas will be listened to carefully by the Chancellor. There are the real difficulties for

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the tourist and also the fishing industry, the status of which I believe is still a matter of discussion in relation to the new tax. I hope that the Chancellor will look at the whole problem of regional development. This new and imaginative tax—this novel weapon in the Chancellor's armoury—is a great improvement on the old rigid deflationary machinery in terms of flexibility, and it is used at the moment to favour manufacturing as against service industries. It could be used to encourage regional development as against the over-eager growth in more geographically favoured parts of Britain.
The point to grasp is that these two objectives are not incompatible, and it is wrong to try to pretend that we cannot achieve both. I hope that in the near future the Chancellor will listen with sympathy to the plea of the development areas, and see whether he cannot make this kind of concession. We have made enormous progress in areas where there has been traditionally little Labour support, because we have been able to convince the electorate that we stand for a controlled steady and all embracing growth which will benefit all sections of the population. We have an enormous record of achievement in this respect.
While I welcome this enlightened and important tax, which will do something to increase mobility of labour, stimulate productivity and bring economic sanity to this country, I hope that my right hon. Friend will slant it in such a way that it will not interfere with the general trend of Labour policy, which has been to help regions like mine. My right hon. Friend has an enormous amount to his credit. He can increase this by a few minor adjustments in this Budget. I hope he will make the effort and continue to aid, encourage and inspire growth and effort in areas for which he has so rightly done so much in the last two years.
6.23 p.m.
Mr. Hugh Fraser: I sincerely congratulate the hon. Member for Aberdeen, South (Mr. Dewar) who, in his maiden speech, threw to the winds many of our conventions about being non-controversial. He did it with great success, and attacked equally my hon.
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Friends and myself and some of his right hon. Friends. I hope that we shall hear him on many occasions making as good a speech as he made this afternoon.
But he does not seem to be aware that some hon. Members on this side have advocated a payroll tax for several years. The burden of my speech this afternoon is that the conversion of hon. and right hon. Gentlemen opposite is late and rather ineffective. It is as though one had been teaching the pure gospel only to find that the first convert one made immediately lapsed into heresy. That is precisely what the Government have done. This is not a pay-roll tax in the proper sense of the word. It is a discriminatory poll tax, and has all the weaknesses of that form of taxation.
Many of the main points have already been made, but I want to make a few concerning the Budget in general and this tax in particular. Hon. Members must admit that there is absolutely no sense of urgency about the Budget in terms of the problems which face us today. Those problems remain. Listening to the Chancellor yesterday and the long speech from the First Secretary this afternoon, one could find no proper sense of urgency in facing the problems which still exist. The Chancellor of the Exchequer has done some juggling with the import flow by abandoning the surcharge.
The first payments under the new type of payroll tax will be a forced loan from a section of industry for the first few months, and what emerges quite clearly is that the Chancellor is pretending that the long-term effort will have swift results in terms of the deployment of labour. As the hon. Member for Aberdeen, South said, however, its effects will be slow, especially in the service industries, where people are very much more entrenched and will take time to move.
Secondly, there is the fact, which is not admitted by hon. Members opposite, that this tax will immediately increase costs and prices in those service industries which are concerned with our invisibles, such as the hotel industry, tourism, insurance, storage and export agencies. Costs in all these industries will immediately rise. Much more important, I suggest, as the right hon. Member for Orkney and Shetland (Mr. Grimond) suggested, is that a great opportunity has been missed by not making this an effective payroll

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tax. The first objective of such a tax is to ensure the movement of labour, but the second objective must be to see that there is a proper shift in order to make industry more labour-saving and capital-intensive. The third objective must be to use this tax as an instrument to simplify, by regional variation, all the masses of controls, regulations and contortions of the economy into which the Government have got themselves in trying to deal with regional problems.
The opportunity to achieve the last two objectives has been totally thrown away. There has been no effort to use the tax as a regional weapon. Indeed, as the right hon. Member for Orkney and Shetland has shown, this will lead to a positive depopulation, or the threat of depopulation, in certain areas.
As for building up labour-saving and capital-intensive industries, the Government have done precisely the wrong thing. The right thing would have been to put the burden of this tax on manfacturing industry at least to a higher degree than it is on services. It is a good thing that banks and insurance companies should use more computers. There should be some labour saving there. If we could devise schemes for making machines to cut our hair more effectively and at a greater speed, that would be very good, but there can be no saving in the hotel and hairdressing industries. The possibility of making a saving and of providing a new chance for investment where there is a need for investment is in the manufacturing industry. Investment there would be given a real boost if the people in it were also taxed on their over-use of labour. The whole thing is utterly upside down—
Dame Irene Ward: Chaotic.
Mr. Fraser: As regards the regional application, I believe that the Treasury has worked out a wrong system. This is not a payroll tax, but an additional tax on the national stamp. This inevitably means that little flexibility is possible, either regionally or nationally. It means that the use of part-time workers, especially women, becomes too heavy a burden for industry. It means that there is no control of excessive overtime, which would be possible by proper use of a payroll tax on the whole payroll. There
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can be no attempt to discriminate between sections of industry which hoard skilled labour and skilled management, as would emerge if there were a proper payroll tax as opposed to a tax on the stamp.
All these opportunities are being missed. I know that hon. Gentlemen would say that such a scheme as I propose would be too complicated. I do no believe that, because the proposed system is very complicated, and will mean an enormous load on the Ministry of Labour officials. I believe that a properly applied payroll tax could have had immense advantages over the clumsy method which the Chancellor proposes.
I will say nothing about the social priorities which have been laid down, but they seem essentially wrong in one point, quite apart from housing. The Minister of Housing and Local Government must be having a restless time, with the rate of house building apparently to be lowered, prices of houses going up and the building societies saying that they will have to increase their charges further. Nothing is done by the tax to assist—as the Prime Minister has insisted time and again—the native wealth of the country.
Nothing is done to assist forestry. In fact, it will be very badly hit. Little is done to assist agriculture and nothing to assist the extractive industries. All these things should have been fitted into the tax. They have not been fitted in, because the Government have adopted the simple principle that the sector to hit is the service industries. This has done great damage to the whole concept of a payroll tax. Such a tax had great possibilities, regionally, for general direction of the economy and, if needs be, for selected areas of the economy.
The Government have failed utterly to do this. Above all else, whatever has come out of the debate and in spite of the platitudes which the First Secretary issued—they seemed at times to be addressed to the C.B.I., at times to General de Gaulle, occasionally to the House, and generally to the world: a rodomontade both incomprehensible and totally immemorable—one fact has emerged. That is the inability of the Government to deal with the basic matter, the root of the economy: the question of restrictive practices, especially in manufacturing industries.

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I am convinced that, properly used, a payroll tax could be an instrument to force the hand of the manufacturer and make him stand up to restrictive practices, By not applying the tax to manufacturing industry, it follows automatically that the manufacturer and management will not be under the necessary pressure to break and defeat restrictive practices. This is the root of our problem today, whatever platitudes right hon. and hon. Gentlemen opposite may offer about this or that. The root of the matter lies in manufacturing industry, in the productivity of our manufacturing industries, whose ratios are declining relative to the productivity of manufacturing industries in Europe and America. Right the way through can be seen the inability of the Government and of management to stand up to restrictive practices and useless and destructive strikes.
This is where a payroll tax, if properly used, could have been of value, but it has not been properly used. It will be used only in those areas of the economy where business and trade union organisation are weak. It will not be used in areas where big business is strong and where the big unions are strong. This is the fact about this Government—that, in spite of their enormous majority, they are not able or willing to stand up to the main issue of the economy. They are not prepared to fight on the issue of restrictive practices. They are not prepared to fight at all.
This is where this Government stand condemned. They had, in the payroll tax, the possibility of a real instrument for improving the structure of our industry. They have not done so. They are not prepared to fight on restrictive practices, and for this they must be roundly and totally condemned.
6.35 p.m.
Mr. Robert Sheldon: The right hon. Member for Stafford and Stone (Mr. Hugh Fraser) seemed to favour a greater discrimination in the Selective Employment Tax as we have it. I would ask him whether he is sure that his right hon. and hon. Friends agree with him on this, because I heard yesterday and today considerable differences of opinion between what we on this side of the Committee want to see and what his right hon. and hon. Friends want to see.
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If he feels that he would be prepared to support further discrimination, I would advise him to wait until next year's Budget, by which time we will have had the experience of this measure in operation and when, perhaps, he could join us in the Division Lobbies.
Some of us were very pleased to hear the further names of members of the Board of the I.R.C. The fact that we were able to obtain men of such outstanding ability means that we are now sure that business has confidence in this Government, has confidence in the I.R.C. and has further confidence that the Labour Government are here to stay and intends to work with it. This is a great achievement and we should be very pleased with the work that the First Secretary has done in bringing this about.
For hon. Members opposite, one of the key facts of 1965 was the degree of inflation. This, as we know, coloured much of their thinking about the state of the economy and the sort of Budget they hoped to see. It is true, of course, that inflation was considerable last year, but in real terms, there was little diversion of our resources. Throughout the election, the Leader of the Opposition referred to the 9:5:1 ratio which suggested a gross imbalance between what we earn and how we spend it. The figures chosen were highly selective.
I would prefer to see a self-denying ordinance to the effect that statistics must not only be accurate but must be fair as well. However, I will not take this matter further on this occasion. But the 9:5:1 figures were grossly inaccurate, as well as being unfair. Like was decidedly not compared with like. The increases in hourly earnings should have been compared with the increases in hourly production, or earnings for the whole year should have been compared with production for the whole year. Also, in the figures quoted, production was given at constant prices, whereas earnings were not. Therefore, even accepting the period chosen, the figures should not have been 9:5:1, but 3:5:1, and for the year as a whole, in round figures, 3:5:3.
I apologise for bringing in figures like this, but I feel that they are important. They influenced many people in their view of our economic condition and their view of a Budget which they thought should be deflationary. The use of the

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grotesque figures 9:5:1 instead of 3:5:3 led many to the deflationary theories which I am pleased to see my right hon. Friend the Chancellor did not see fit to follow. The Chancellor was right to limit his tax increases to the Selective Employment Tax and the rise in Corporation Tax to 40 per cent.
The real increase in incomes last year was about 2½ per cent. and, with it, went a real increase in consumers' expenditure of 1·2 per cent. Those who wanted to see a severe deflationary Budget should, therefore, ask themselves what they would want to deflate. The 1·2 per cent. increase in consumers' expenditure? The level of consumer expenditure in Britain last year was not a problem—and increasing the surplus from £689 million to £1,047 million makes it less likely to be a problem this year. Throughout last year consumption and incomes were kept within the small increase in production. Our real problem, of course, is the slow increase in production. Our real problem is that of growth and our views on the Budget should be related primarily to that.
Any discussion about our economic position must be related to the need for rapid and sustained economic expansion. Growth, as we know, can be obtained by using machinery in factories to better advantage, by providing better ways of working and by the introduction of new techniques. But these are ways not easily open to Government to influence. However, what Government can do is encourage the modernisation of industry by providing certain incentives for investment. Growth, of course, is very closely related to investment; and the increase in manufacturing capacity should command our attention.
There has been among many people in industry a fear of surplus capacity which has influenced their investment decisions. These must be overcome. Surplus capacity, if it is created, can be a powerful weapon for increasing competition where little or none exists and the pressure of surplus capacity can lead manufacturers to seek further outlets overseas.
One of the major problems which we come up against time and again has been that early on in our business cycle production has too easily reached the limit of our capacity, and the consequence
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has been the lengthening of delivery dates, increased prices and the turning by manufacturers to a softer home market. This must be put right.
Page 55 of the National Plan states that investment lies at the heart of the Plan. To many of us this is what the National Plan is primarily about; and any action taken by the Government will be judged by its effect on growth and, hence, its effect on investment. In real terms, last year investment increased by 3·6 per cent. and I was dismayed to hear the Chancellor say yesterday that he expects little change in private industrial investment this year, although public investment will rise. The National Plan calls for a continual average increase of 5½ per cent. and unless there is a rapid improvement we may fail in what lies at the very heart of the Plan.
We have said many times that the National Plan is not a blueprint, but the increasing investment for which the Plan calls must remain a minimum commitment. Production may be lower, as the First Secretary said earlier, in the early stages of the Plan than what we hope regularly to achieve, but without such investment we will not provide for the production in subsequent years—and the hope which the Chancellor has for our increasing industrial strength may be unlikely to be realised.
The introduction of investment grants is of great importance in discriminating in favour of those investments which benefit industry. I welcome the extension of those grants to the construction industry and I will press for their extension to certain categories of business machinery as well. Investment grants are readily understood, act directly on investment decisions and are quickly paid. The Selective Employment Tax may help marginally to relieve manpower in manufacturing industry, and if this happens it could mean the more intensive use of our investment in plant and machinery.
Also of great help to our investment is the National Plan itself. The overall targets set by the Government are not likely to be completely ignored by industry in formulating its investment policy. This is one reason why it is important to keep faith by continuing a policy of growth and investment as shown in the National Plan. But however much we may persuade industry to invest in plant

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and machinery through investment incentives and however much industry may decide to invest because the National Plan encourages a longer view, fundamentally industry is not likely to expand for long if it sees little possibility of selling the increased products its new equipment is able to manufacture.
At the end of the day investment decisions are bound to depend on industry's assessment of the economic future and, hence, its assessment of the Budget statement yesterday. That is why increased Purchase Tax would almost certainly have been the worst way of providing for increased taxation, because it would have produced uncertainty in industry and encouraged the short-term view rather than the long one, with its hopes of increasing investment and saleable production.
Yesterday the Chancellor said that one of his Triple Objectives was a strong £. He said that the Government had a major responsibility to play by keeping overseas expenditure on defence and aid within the limits of our economic strength. It is a pity that the £500 million which our east of Suez rôle is costing us is thought to be within the limits of our economic strength and I hope that the dissipation of our resources over the next few months will become increasingly apparent to the Government.
I welcome the attempts to reduce capital investment in the developed sterling area. I realise the problems of compulsion, but I must confess to some doubts about the success of a voluntary scheme. I believe in further direct action to correct the balance of payments. What I think my right hon. Friend now needs are further measures, permitted under our treaty obligations, variable in their effect and certain in their impact on our balance of payments difficulties. Import quotas satisfy these requirements and we may ultimately have to introduce them.
Mr. J. Bruce-Gardyne: Is the hon. Gentleman serious suggesting that after 18 months or two years of an import surcharge which is against the rules, our foreign trading customers would accept an import quota over and above that?
Mr. Sheldon: I said that they were permitted under our treaty obligations, but I think the hon. Gentleman will find
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that I will answer the question he has in mind later.
By announcing the six months' period the Chancellor will, I believe, be able to cut down the import bill as imports slow down by November, and there will be a considerable relief afforded in these six months. But even now imports are more than we can afford and only an exceptional optimist would consider that our difficulties in this matter are likely to be over by November, so enabling us to accept a very much increased import bill which would accompany the removal of the surcharge.
I know of the frustration caused by the application of quota restrictions to the goods which we sell overseas. To world trade they are an undoubted evil. Although we may press for them to be operated flexibly, the flood of applications that the Board of Trade will receive claiming special consideration will make flexibility very difficult. So when I advocate quotas I understand fully the difficulties they bring.
But what we now require is certainty, and if we can control imports, then, as exports rise, quotas can be increased up to their eventual removal. Success in exports, when it comes, can lead to the relaxing of quotas. Imports can then keep in step with exports, and what we buy can be closely aligned with what we sell. This, then, is the certainty that import quotas can provide, within which expansion and growth can proceed. Before the next Budget of my right hon. Friend the Chancellor of the Exchequer I believe that he will want to turn towards such certainties.
6.51 p.m.
Mr. John Nott: In rising to address this House for the first time, I should like to ask for the indulgence of hon. Members. In accordance with tradition, I first want to mention my predecessor, Mr. Greville Howard. For over 15 years he represented the St. Ives division of Cornwall with loyalty, integrity and a high sense of duty. I know that the House will wish him well in his retirement and will also hope that he has a long and happy life.
Hon. Members: Hear, hear.
Mr. Nott: The St. Ives division of Cornwall, covering the Isles of Scilly and the Land's End and Lizard Peninsulas,

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together with the towns of Penzance, St. Ives, Helston and St. Just, must indeed be one of the most beautiful constituencies in the whole of this country. But, as well as beauty, it has a great and fascinating history, because for centuries the Cornish people were cut off from the mainstream of life in these islands, and they earned a bare living from the land, the sea and the tin which still lies unexploited in the granite rocks today.
Even today West Cornwall is in some strange way another world, because it has a sense of community life and a real feeling for religion which is so absent in some of the great towns of this nation. But I am afraid that men's stomachs cannot be filled with the view, nor can they be filled with history. The fact is that we in West Cornwall have about the lowest incomes of the whole of the country. The average wage, which is difficult to calculate in Cornwall, is somewhere in the region of £12 a week, against a national average of £19. We have a large elderly population whose savings have been eroded by constant inflation. This situation is aggravated by the fact that our distance from the main towns and centres of population means that the cost of living is also much higher than it is in most other parts of the country. There is, therefore, considerable poverty in West Cornwall, and I, of course, would like to see it corrected under the regional policies of the present Government. It is a sad commentary on the state of our communications that I find it quicker to go from my office in London to New York than I do to go from this House to my constituency which is only 300 miles away.
I hope that during the course of our coming debates I shall have an opportunity of raising a whole host of matters which touch upon the prosperity of West Cornwall and my constituency—in particular—communications, roads and railways. I hope to ask the Chancellor of the Exchequer, in due course, how it is possible to reconcile policies of regional development with the abolition of tax allowances for tourism and with the variable employment tax on services which was imposed yesterday. How is it possible to reconcile regional development with the abolition of tax allowances for tin mining, for sinking new
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mineshafts? Our tin saves about £2 million a year on foreign imports. I should like to ask why it is that our industry, primarily light industry, which was previously in a development district and is now in a development area, should be worse off than it was before. I welcome the Government's regional development policies, but I do not see as yet that we have derived any advantages from these policies during the last two years. However, these are controversial matters, as indeed is the variable employment tax, and, therefore, I will not touch on them today.
We are still a great nation in terms of national wealth, primarily due to the thrift and foresight of our ancestors. But much of our inheritance and, in particular, our investment in plant and machinery is woefully out of date. I also, like the hon. Member for Ashton-under-Lyne (Mr. Sheldon), was dismayed at yesterday's statement that private investment is holding up well. This is not good enough. What we require in this country is a vast increase in industrial investment so that our industry can be modernised and put on a more up-to-date footing.
The basic problem in this country is that although we are an inventive nation and although our businessmen are not as stupid nor our working men as lazy as some people would have us believe, every time industrial investment in this country really gets going, the economy overheats, imports rise and so we have another balance of payments crisis on our hands and a consequent deflationary Budget along the lines of the one presented yesterday.
For the past seven years I have worked in a City merchant bank, and I was delighted to hear the First Secretary say this afternoon that one of my colleagues has been appointed managing director of the proposed Industrial Reorganisation Corporation. Although I do not wish to prejudge or comment upon the idea of a State merchant bank, I nevertheless know that the Government have made an excellent appointment. I believe that the Government are in need of expert financial advice, because one small matter struck my eye in the newspapers of the last two days. It was the announcement that the British Government's holding of Amerada Petroleum shares, sold for

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approximately £30 million a few days ago by the Government, was bought by an American company called the Hess Oil Company, and yesterday on the New York Stock Exchange the shares of Hess Oil rose by nearly 30 per cent. The new York Stock Exchange went down yesterday by about 10 points, but the shares of the company which bought the British Government's holding of Amerada Petroleum shares rose by nearly 30 per cent. Certainly the American public seemed to think that the British Government conducted rather a poor transaction in this case.
I hope in coming debates to be able to play some part in financial, banking and fiscal matters of which I have some small experience. But today I should like to concentrate on the two basic problems which beset this country. First—I do not want to dwell on this matter—there is the whole problem of export incentives in this country. I do not believe that we yet have proper export incentives. But this is a whole subject in itself, and what I want to mention briefly now is the other side of the balance of payments, namely our imports into this country and the whole question of currency saving which is so vitally important.
This is vital because our imports and currency saving are so much more under our control—perhaps "influence" is a better word—than are the export markets into which we sell our goods. In 1963 we imported £700 million worth of temperate food products, and without much difficulty we could undoubtedly have grown in this country £250 million worth of these temperate food products ourselves. It seems to me that the days have gone when this country was the natural exporter of manufactured goods. If only we were to adopt a positive agricultural policy in this country, rather than a restrictive agricultural policy, there is little doubt that within a period of years we could grow at least £250 million worth of those temperate food products ourselves to the huge benefit of our balance of payments. We must give greater consideration to encouraging, by greater investment, those industries in this country—tourism is another example which would save us foreign currency in future years.
But, even assuming that export incentives and currency savings could really
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correct the basic disequilibrium in our balance of payments, there is then the second most important matter—the hon. Member for Ashton-under-Lyne referred to it—the whole question of encouraging industrial investment. This can be done only by a huge switch from consumption to investment, and I do not believe that the Budget presented to the House yesterday will achieve this object.
Today, the monopoly power of the unions is such that the wage earner is protected against inflation. I do not imagine that anyone will deny that that has been so, certainly over the past year. But savers in this country have no protection against inflation. When a person who has saved a few pounds out of his taxed income and done his best to invest them in order to protect himself against inflation comes to sell that investment, he has to pay tax again, Capital Gains Tax, on what, very often, is a loss in real terms. This is not generally realised. It is an absolute nonsense to have a situation in which people are paying a tax on losses, losses in terms of the real value of money. No amount of gimmicks with National Savings Certificates or anything else will correct this problem because National Savings Certificates draw savings out of one source into another.
What we must do is persuade the British public to save where it is not saving now. We must increase the propensity to save of the British public. This is the only way by which we can really encourage and expand industrial investment. It was the inability of the middle income groups in other countries—Germany and Austria are two examples—which caused the disintegration of these societies before the Second World War. It was the inability of the middle income groups to protect themselves against inflation which was among the prime causes as, I think, most historians will recognise, of the rise of Fascism in Germany. I do not for a moment suggest that that could happen here, but, if people are unable to save and protect themselves against inflation, it could have serious effects upon our whole society.
I fear that, in attempting to check and catch 300 speculators, we are in process of decimating 3 million small savers, yet it is upon these small savers that the economic survival and prosperity of this country will largely depend.
7.3 p.m.
Mr. Joel Barnett: I am delighted to follow the hon. Member for St. Ives (Mr. Nott) and to congratulate him on an excellent maiden speech, which showed him to be very knowledgeable and well informed on his subject. I am sure that we all greatly look forward to hearing him again during the course of our long Finance Bill debates. I am glad to have this opportunity to pay this tribute to the hon. Gentleman, because it was not so long ago that I made my own maiden speech, thought I must say that the last 18 months seems a long time, and we have had quite a few debates on financial matters in the period.
Due to the Chancellor's ingenuity, the Budget seems to be nothing like so bad as I had feared or as many people, both inside and outside the House, had feared. But, of course, the Budget cannot achieve everything. This is the mistake of many contributors to our debates. We cannot view the Budget in isolation. We must look at it together with all the other measures of the Department of Economic Affairs, the N.E.D.C., the "Little Neddies", the Prices and Incomes Board, the Ministry of Technology, and so on. Massive action once a year is no way to regulate the complex economy we have in this country.
We must get away from the rather silly jokes about this being my right hon. Friend's ninth or tenth Budget. The sure way to lurch from crisis to crisis is to regulate the economy, as we have done so often in the past, by one massive action once a year. There is a great deal to be said for regular Financial Statements. We could then, perhaps, demote the annual Financial Statement, and Budget Day, with all its pomp and tradition, could, perhaps, go, along with the trousers of the Serjeant at Arms.
In considering the Budget, it is right to ask how it deals with the various problems facing us, the problems of exports, imports, investment, savings, public expenditure, the balance of payments, and—perhaps most important of all—the question of growth and increasing production and productivity, without which we shall be back in the old dreary round. I am not one of those who believe or have believed that it was necessary in this Budget to take huge sums out of con-
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sumption. After all, according to the Financial Statement, we have taken about £694 million without any changes at all. Consumer expenditure has not increased by more than about 1 per cent. There is some evidence that activity is declining, and, as was said, in rather contradictory fashion, admittedly, by the right hon. Member for Enfield, West (Mr. Iain Macleod), there is the possibility of a further decline in the course of the next few months.
I am glad, therefore, that my right hon. Friend has resisted the siren voices which he must have been hearing to increase Purchase Tax, Income Tax, Surtax and the rest. But the increases have, none the less, been severe, and we should not be misled by the ingenuity of it into thinking that there is not a large measure of deflation here.
I shall come back to that in a moment, but I wish first to examine a few of the measures introduced by my right hon. Friend. First, the gambling tax. The other measures have tended to overshadow this and there has been little mention of it because we had a reference to it on an earlier occasion. I am sure that I am not alone in thinking—I imagine that there are some hon. Members opposite who take the same view—that this tax should, perhaps, have been rather heavier.
Sir G. Nabarro: Hear, hear. Well done.
Mr. Barnett: On the other hand, I think that the Chancellor may well have been right in fixing the level of this new type of tax rather low now. There is always room for improvement, as it were, on later occasions.
Sir G. Nabarro: While he is talking about the gambling tax, will the hon. Gentleman give us his view on why this new gambling tax should be at the nugatory rate of only 2½ per cent., that is, 6d. in the £, whereas the punter on the football pool pays 6s. in the £ and the punter on the greyhound track pays 3s. in the £?
Mr. Barnett: If he had been listening, the hon. Gentleman would have heard me say that I thought that it might usefully have been fixed at a higher level. But, clearly, the hon. Gentleman is concerned only with points which he himself

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might wish to raise, regardless of what he hears or does not hear.
The Corporation Tax has been fixed at 40 per cent., and, clearly, this is an increase. I think it might have been honest to have said so. The right hon. Member for Enfield, West asked a straight question on this, and it is certainly true that at 40 per cent. there is an element of increase. Having examined the Financial Statement since yesterday, I must say that I find it a little difficult to calculate just how much is represented by this increase. But, as I say, I feel that it would be honest to concede this, because, of course, there will be an effect on dividends by the Corporation Tax generally and by the rate. But, if they were to be fair, hon. Members opposite ought to concede that, if we are to ask workers, as I believe we should, to accept a prices and incomes policy, dividends too must make a contribution.
This Budget will of course, always be thought of in connection with the imaginative new tax, the Selective Employment Tax. My complaint about this new tax is that one of its main purposes is to raise revenue and restrain consumer demand this year. There can be little doubt that this is, as has been stated, one of the major purposes of the tax this year. While I welcome the broader base of this type of tax, therefore, I would have preferred there to have been rather more given back, perhaps by way of personal incentives, although I am aware that, psychologically, this is not exactly the best time for giving any tax concessions. Our creditors might misunderstand. But that, of course, is just one more reason for making sure that we get out of debt just as quickly as we can.
Another reason why I find the payroll tax attractive is the possibility—I put it no higher—that it may make for more effective use of labour. I do not expect miracles, but I believe that there will be a small, marginal but none the less important effect particularly in manufacturing companies. Every manufacturer I know and meet daily complains bitterly of how difficult it is to get labour. They spend thousands of pounds on advertising for new labour without any success at all. They may now, however, get just a few, perhaps some of the part-time people who may be put off from the service industries.
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As I say, I do not put it very high, but I think that there could be a small, marginal but none the less useful effect.
It is true that the premium will be an encouragement to hoarding. I do not think we should play with words. It will be an encouragement to hoarding. But, on the other hand, I can appreciate the Chancellor's dilemma here, faced with the need to offset any possible increases in manufacturing costs by increases which the service industries might pass on. Therefore, he wanted to try to help manufacturing companies. I should have thought that this could have been understood by hon. Members opposite. For my part, I would have much preferred to give the premium back by way of increased cash grants for investment in new plant rather than in the way proposed, and, moreover, my right hon. Friend might have brought forward the date when the payment of the new cash grants could be made. I feel that that might, perhaps, have been a more useful way of dealing with the matter.
I like the flexibility of the new tax, and I hope that the Chancellor will not hesitate to adjust it as and when he needs to, adjusting it by industries, by regions, by types of labour, male female and according to age. This is very important, but it is equally important to understand that, in introducing so new and revolutionary a tax, it was impossible to make it as refined as one would like. I readily accept that it was better to have the new tax brought in in its broad conception and wait for a later occasion to make the further refinements which I believe to be essential. I cannot understand why hon. Members opposite do not appreciate the value of this new measure in our system from both the financial and industrial point of view.
I believe that the Budget as a whole might marginally have been helpful to production, but, on the other hand, there is nothing new in the field of exports, savings and public expenditure. We have had a little on the restriction of capital outflow, and, here again, I cannot understand the attitude of hon. Members opposite. If we have a serious balance of payments problem, it is no use pretending that we can just leave things as they are. Everything that hon. and right hon. Members opposite have said in the past 18 months indicates that they would have

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made no changes whatever from the way they managed, or mismanaged, this sector of the economy before.
Yesterday, we were told that there would be further attempts to improve our balance of payments situation by negotiating with the West German Government to get back the £90 million a year by way of an offset agreement. I hope that my right hon. Friend will forgive me for being a trifle sceptical about this. We have been negotiating and waiting for a very long time, and we are still a long way short of having the money for the two years to 31st March, 1966. Of course, they might willingly concede by the autumn some figure to put in the accounts which we should have in the years 1967–68–69–70, but on this basis, by 1975 we shall still be waiting for the figure for 1967. I think that we shall have to be very tough in our attitude in the negotiations.
Nothing has been done in the Budget which will be particularly helpful to improve the imports situation. This situation is not likely to improve. I believe that we have taken too much in this Budget in extra taxation, and I hope that the Chancellor will not hesitate to take swift action by using other measures available to him to reverse any trend which he may see so that he ensures that we do not get into the situation which we have had so frequently in the past of a deflationary period, unemployment, and all the effects associated with it. In those circumstances in the past we have waited too long to take action. The Purchase Tax regulator may not have been intended for use in the opposite direction, but I hope that my right hon. Friend will bear in mind that it can be used downwards to reduce taxation. I hope that in the Finance Bill when the new selective tax is introduced, there will also be introduced a possibility of reducing it as and when we need to do so. The Chancellor has machinery which he can use by way of hire-purchase deposits, relaxation of the credit squeeze, the Bank Rate and so on—and all these things can nullify some of my fears about the amount of extra taxation which he has taken.
Yet despite the measures in the Budget and all that we have done in the past 18 months, we still have a serious balance-of-payments problem, and it is
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no use hon. Members opposite intervening to make petty political electioneering points. The balance-of-payments problem has a dampening effect particularly on growth, which is still at the very heart of our economic situation. Surely what we need is direct action. The old deflationary measures have failed in the past. Why on earth should we believe that they will now be any more successful? I hope that hon. Members opposite will get away from their idea of the past 18 months of always making electioneering speeches and will appreciate that we are making a genuine attempt to get away from the old, dreary, deflationary ideas.
But in order to deal with the balance of payments I believe that we must take direct action. We must do this in order to get the balance-of-payments situation straight so that we may get on with the job of increasing production and productivity. Like my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), and despite knowing all the defects, I would plump for import controls. I believe that they cannot be avoided at least for the next year or two. I am certainly not a protectionist and I realise the difficulties in which this action would involve us with E.F.T.A., the Commonwealth and other trading nations, but deflation, devaluation and recurring crises will help our trading neighbours no more, and direct action will at least provide some certainty in our economic position.
My right hon. Friend's announcement about the surcharge, while it will undoubtedly help considerably between now and November, is bound, I am afraid, to open up a flood immediately afterwards. I therefore cannot see how we shall be able to do other than take direct action about imports, along the lines I have suggested.
Turning to exports, none of us is happy that there was nothing in the Budget by way of additional export incentives. But it must be appreciated that export incentives cannot have an immediate effect on the balance of payments. Those with some knowledge of trying to sell abroad recognise that, incentives or no incentives, it takes time to sell abroad, and time is the one thing we do not have in this context.
I note the reference in the Budget to public expenditure. I agree with those

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who want to see it cut, but I do not want it cut in the social services. I should like to see a cut in defence, and at the risk of boring the Committee I would submit that maintaining an overseas force east of Suez is the worst of all possible worlds. A world rôle on borrowed money is not a rôle at all; it is a dream, and an unnatural desire in a Labour Government, a desire for long gone days of Imperial grandeur.
But perhaps the greatest disappointment of the Budget is that comparatively little has been done for savings. I welcome the new Post Office savings account, the National Development Bonds, and the new National Savings Certificates. The Chancellor rightly told us again that we can keep taxation down if we increase savings. Why not encourage savings on a massive scale? This seems to be a sensible way to look at it, and I hope that he will look at it in that way. To have State unit trusts purchasable in a post office would, I think, be a winner. In addition, amendments to the Finance Bill might be made to give some relief, perhaps on the first £100, from Capital Gains Tax. The cost would be small and the good will created very large. These are other small gestures of a similar nature which we could make and I hope we shall be able to make in the long days and evenings on the Finance Bill.
But because I put growth at the top of my priorities, while I am not perhaps as unhappy as I expected to be, I am nevertheless greatly concerned that in the three years from 1964 we seem likely to have a growth rate not as high as 2½ per cent. per annum. What will happen? Clearly it is not high enough. It is the measures which the Government can take which will help. Taking all these measures together, they can, I believe, be of some help in achieving the target which in fact can be achieved only, as my right hon. Friend said this afternoon, by industry itself.
Many organisations are, of course, dealing with precisely this problem. We have the Department of Economic Affairs, N.E.D.C., the Little Neddies, the Prices and Incomes Board, the Ministry of Technology, and the Treasury. It seems to me that we need some co-ordination. There seems to be a disturbing lack of control.
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We seem to be taking too much of a pragmatic approach. Too many of our economic problems seem to be handled on a day-to-day basis. I hope that we can co-ordinate the measures, many of them very good measures, which are being taken and which have been taken. I hope that we shall co-ordinate all these measures in one direction—the direction of a consistent and higher rate of growth, for without it all the measures would soon be irrelevant.
7.28 p.m.
Mr. J. E. B. Hill: I certainly agree with the hon. Member for Heywood and Royton (Mr. Barnett) in some of his strictures on Government policy. It is too pragmatic and it seems to be too opportunist. I should like to see much more emphasis on savings, and I am sorry that the Budget does not go nearly far enough in that respect.
We are all agreed that, whatever statistics we choose to use, they all point in one direction—to a shortage of labour and relative stagnation in production. I believe that it is essential to make more effective use of our manpower, and therefore to me some kind of payroll tax is broadly acceptable. I have grave doubts whether any such tax should be selective at all and I strongly oppose the Chancellor's first essay in selection.
It seems to me that the power to select administratively the incidence at which the tax should be levied could at its worst be wholly inconsistent with the maintenance of a free society and could arbitrarily penalise private enterprise and increase State intervention. In other words, it could be used as a Socialist weapon. But in practice and more immediately it is much more likely to produce economic distortion through mistakes or misjudgments on the part of the Government, whose errors tend to be grievous because of their large scale.
A further objection to the practice of selection seems to me to be that it results in endless controversy between who should and who should not be the object of favour or discrimination, and that means inevitably a great multiplication of administrative complexity. We know that still more civil servants are needed, and each civil servant has to be matched by at least one or more professional or clerical worker on the private side of the argument if we are to meet

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the growing requirements of regulations, restrictions, applications and all the rest. One has, therefore, the great disadvantage of thus using up some of the precious labour which is most in short supply.
Until yesterday secrecy precluded any discussion of this new Selective Employment Tax, but the wires were buzzing from the evening onwards, and it has been quickly apparent that there is very little support for the idea of discrimination in favour of manufacturing and against services. There is no merit in manufacturing as such unless it satisfies human needs. There is no more sense in buying and using raw materials and labour to make goods which people do not want to buy than there is in farmers growing food which people do not want to eat. It seems to me that it is just as important and useful—and sometimes easier—for Britain to sell services, including the tourist and hotel services, to foreign customers as it is for her to sell goods.
It has been said that an advanced society increasingly relies on efficient services to mark a rising standard of living, but it also generally enables people to give maximum time and effort to their own jobs. High taxation, especially taxation on services, may encourage a great deal more "do-it-yourself", but that discourages important marginal extra effort at work. If we did not subsidise manufacturing industries but had a level rate of employment tax it would have the advantage that the whole of the economy would bear a lower rate of tax. The scale of tax could be a good deal lower. Because we take out manufacturing industries and give them a subsidy, everyone else has to pay proportionately more. Broadly speaking, I believe that the Government ought to be neutral as to the use to which labour is put except where there is a clear national need. I accept that there may be a requirement for discrimination in respect of regional use and, obviously, to encourage exports.
I very much doubt whether the present proposals will do anything in particular for exports. After talking to the largest industrialist in my constituency, I suggest that what is wanted is a strong personal incentive to make it worth people's while to go out and get exports. The simple idea put to me was that if Income Tax were remitted on that pro-
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portion of a company's dividends which matched its export profits, that in itself would be a powerful incentive both to those in the company itself and certainly to the shareholders to keep up pressure for it to go for exports and to inquire why, if any, there was a falling off in effort.
When considering the incidence of this tax, I am worried by its likely impact on certain activities which are not in themselves profitable but are both highly prized and very beneficial to society. For example, the Government are rightly keen to encourage the arts and amenities. What is to be the position, therefore, of a large symphony orchestra, perhaps employing 100 musicians? This may be a detail but it is of the sort that requires urgent consideration.
Much greater is the effect on education. It is said that the tax will be offset for local authority finances, including all educational establishments maintained by the local authorities. Paragraph 27 of the White Paper says:
"Universities will receive a refund of the tax through the University Grants Committee."
It is the effect of the tax on the private sector of education that will be very important. The White Paper admits the need to consider special arrangements for grant-aided educational establishments. That is a reference, I take it, to direct grant schools, because they cannot increase their fees without sanction. As the tax begins to run next term, it is urgent that the problem should receive detailed consideration without delay.
The best solution would be to follow the pattern proposed for the universities and refund the tax, if, in the first instance, it has to be collected for administrative reasons, and it should be refunded in whole. Otherwise many good schools—certainly several in my constituency—will be very hard hit at a time when they are working continuously to improve standards while keeping cost increases down.
The impact of the tax will obviously hit hardest small enterprises working on narrow margins of profit, many of which are in the countryside. But the strongest opposition in the countryside, certainly in the rural areas, will arise from the proposed treatment of agriculture. Since this is a new Parliament, I re-declare

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my interest as a practising farmer. Paragraph 17 of the White Paper says:
"Agriculture, horticulture and forestry will not be exempted from the tax—though, as in other industries, this will not be charged in respect of the self-employed. In agriculture the Government intend to offset the effect of the tax on the industry, so far as practicable, through the normal machinery of the Annual Review."
The Annual Review will be a very imperfect instrument for making good to farmers the very heavy burden that is to fall on the industry. So far as I can calculate, it will not be less than about £25 million a year. That will be direct tax on the employed persons in agriculture. But, of course, there will he a further indirect burden arising from the effect of the tax in increasing the prices of the goods and services which agriculture purchases itself by way of input. These amount to as much as £1,000 million a year.
The first objection to the Annual Review procedure is the delay. The costs will run with effect from September, whereas any benefit coming back via the Review cannot take effect until at least the following year. But the Annual Review has never given full recoupment and therefore no farmer can operate on the basis that he is likely to avoid the penalty that the tax is bound to impose. Furthermore, the Annual Review only covers review commodities and much agricultural produce as well as horticultural produce is outside the Review. There will be no compensation for them.
There are great disadvantages in seeking to counteract the effects of the tax through the review because this can only result in increasing the guarantee payments. The effect of higher guaranteed prices is bound to increase the size of the deficiency payments, because the level of home market prices is largely dependent upon the wholesale prices of available imports, the production of which would be free of tax.
Therefore, there is bound to be an increase in the annual Treasury support bill at the end of each year, no doubt bringing in the remark so disliked by farmers, "Handing another £x million to the farmers". On these grounds alone, the method of payment—if that be the right word—is bound to be most unwelcome.
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The position of the British horticulturalist will be gravely weakened as against foreign imports, since his labour will become very much dearer, and one of the strongly competing factors which tariffs have only partly cancelled has been the cheaper labour enjoyed by foreign competitors. Therefore, the tax will force up costs for British horticulturalists unilaterally and it is not enough to say, as the White Paper says,
"… the effects of the tax will be taken into account in the development of horticultural policy."
How and when can it be taken into account? The tax will hit home producers in September. Because of the tax they will need a relatively higher market price than will their foreign competitors. Unless the Government have some scheme for the rapid upward adjustment of tariffs, I do not see how the British horticulturalists can possibly suffer anything but sad injury.
There are also longer-term ill effects which I hope the Government will consider before coming to any final conclusions. The effect of the tax will tend to cause neglect of the proper maintenance of our farm land, working against the rules of good husbandry and estate management. Maintenance is costly and it is the first thing that can be cut in the short term. I fear that putting a heavy direct tax on agricultural labour means that some of the things that ought to be done will be left undone at greater future cost.
There will be harmful social effects in the countryside. Undoubtedly there will be a tendency to dismiss the older and less skilled men, especially where, hitherto, they may have been kept on permanently through the winter and through bad weather. It is a bleak prospect for the pensioner who may want to remain working after the normal retirement age and, of course, for the disabled person. There is a strong case for exempting the disabled from the tax.
Moreover, the rural labour that is likely to be dismissed is largely immobile. There is little suitable alternative employment. Factories on the whole want the younger and abler workers. They will now be subsidised to take them from the farms at the farmers' expense as the farmers will be contributing to the manufacturing subsidy. It is clear that the

1717
suggested method of using the Annual Review instead of a direct refund has been chosen because it is the Government's intention only partially to compensate the effect of the tax on agriculture. There is pressure on farmers to sack their men presumably because it is thought to assist the National Plan, in which one of the main objectives of present agricultural policy is to run down the labour force in the industry.
But agriculture is not hoarding labour. Most farmers are desperately short of labour and have to go to the same anxious lengths of advertising and search as industry must do. They are short of labour largely because of the great disparity between agricultural and industrial earnings, which the tax is likely to accentuate.
Perhaps it was a slip of the tongue but it was certainly a revelation when the Secretary of State for Economic Affairs spoke of agriculture when referring to declining industries. Agriculture is not a declining industry—far from it. It is expanding and growing but with a declining labour force. That is very much to its credit. In the last five years, agriculture has increased its net output by 15 per cent. with a reduction in the labour force of 20 per cent. The output per man has averaged an increase in productivity of 6 per cent. annually.
The only conclusion one can fairly draw is that agriculture is making good use of its labour. It has no restrictive practices, despite a smaller margin of profit than in manufacturing and despite lower earnings for the agricultural workers for what I consider to be the greater volume of skill, energy and hours that they contribute.
Finally, agriculture is making an indispensable and still growing contribution to the solution of our balance of payments problem. Yet the present tax proposal is only the latest in a fair list of injuries which the Government are doing to agriculture. On Friday, no doubt, the Government will hear criticism of the effect of the new investment allowance, but already Corporation Tax and Capital Gains Tax are biting on the small farming company and the Selective Employment Tax may also fall on the wages paid to the farmer's wife and family. These all seem to be manifest errors which need correction. I do not know
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whether they arise from ignorance or intent.
Earlier in the day, the Prime Minister talked about the need for men guiding agriculture to have mud on their boots and wisdom in their heads. I do not believe that there is much mud on the Government's boots, and I have doubts about the soundness of the policy in their heads.
I am sorry in a sense to be critical, because agriculturists as a whole are conscious of the need for growth and greater efficiency in the national economy. Agriculture can fairly claim as much as any other industry that it has responded to the demands made upon it and conformed to the criteria of the prices and incomes policy. But such success should be rewarded by some more tangible encouragement. Like the rest of the nation, agriculture would respond more effectively to greater incentives and less penal taxation. Unfortunately, the Government are offering the reverse and that is why I am certain that substantial amendments must be made if great harm is not to be done to the countryside.
7.46 p.m.
Mr. Frank Judd: As the new Member for Portsmouth, West, I find it appropriate to speak in this Budget debate, because my constituents follow the remarks and concerns of the Chancellor of the Exchequer for two special reasons. First, he spent his youth in Portsmouth and was educated there. Secondly, during the war he served in the Navy.
During the recent campaign, we had the rare privilege of having the Chancellor in our midst. He attended a school meeting one evening, a very full and lively meeting, when, to everyone's delight, he spent a lot of time reminiscing about his early days in Portsmouth. The next day, the Portsmouth Evening News produced a cartoon on its front page depicting the Chancellor back at school. I am happy to say, having consulted a representative cross-section of my constituents since the Budget, that it is clear that they are highly pleased with his refresher course during the election.
Portsmouth, of course, is primarily a dockyard city and it is fair to say that my predecessor never permitted the House of

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Commons to forget that fact. In its capacity as a great naval dockyard it has served the nation extremely well in the past and it is the hope of all living there that ways will always be found in future for it to serve the nation in its new problems equally successfully.
There seem to be two outstanding characteristics about the dockyard city of Portsmouth. First, in its history it has built up a great reserve of skilled manpower. Secondly, on the other side it has a great and almost exclusive dependence on the dockyard as the only large-scale employer of labour in the area. It so happens that the Government's new plans for the Navy, with their concentration on highly versatile and modern forces, will provide full employment in the dockyard in the years ahead, but if we are considering the problems of this great city seriously, we should not permit present naval policy, or the present general prosperity within the south-east region, to conceal the inherent weakness in the city's economy, which is that it is largely dependent on one large-scale employer of labour.
The warning signs are already present. The city is not sharing in the region's general prosperity. The city's amenities lag behind many other centres of population in the region. Its social problems, particularly housing, are severe, because people with limited incomes there are constantly facing in their day-to-day lives the major problem of finding new accommodation as reconstruction and redevelopment sweep through the town. They also have to meet constantly rising and perhaps excessively high council house rents. Increasingly the young and well qualified people are beginning to look elsewhere in south-east England for future prospects.
None of these things needs to be so. The Chancellor has expressed concern about the insufficient emphasis within the economy on manufacturing industry. Clearly, with imagination and research it should be possible to use the skill and engineering experience of Portsmouth as a growth point in the economy. Partly this cart be done by attracting the right sort of new large-scale alternative industry to the area. This might be done through the scientific application of the Selective Employment Tax in ways not suggested
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by the Chancellor yesterday. But it could also partly be done by directly using the existing basic facilities of the dockyard itself.
It is not altogether a revolutionary thought that, with planning and leadership, the dockyard could be employed in producing capital goods for export and for overseas aid and even employed on industrialised building in the drive which we all want to see on the housing problem. By its very nature, as a naval dockyard it cannot be working to capacity on naval commitments in normal times. We must examine positive ways of overcoming this difficulty in the interests of the nation and the economy as a whole.
I am afraid that I am not a merchant banker. I lack the specialist experience of some of those who have spoken in the debate about finance. However, as a new Member I am deeply concerned with the human problems which lie at the basis of the economic difficulties with which we are confronted. In Portsmouth and elsewhere people are beginning to realise that productivity is the key to our future economic strength, and in the debate considerable stress has been laid upon the responsibility of management and workers operating in harmony to produce the results which are fundamental to our future strength.
In saying this, one must realise that an important distinction must be made in our observations on human reactions to the challenge being put to them. This distinction must be drawn between the importance of the personal involvement, psychological involvement, of employees in production, a sense of individual responsibility, and, on the other hand, the theory of consultation which is frequently so glibly mentioned, because in essence consultation is not really a method of partnership between management and employees.
Looking at this matter in a wider social context and considering the challenge of the whole social problem in Britain at the moment, it can be seen that we are living in a complex technological society. It has been suggested by the cynic that the key to success is to know more and more about less and less until finally, to be absolutely successful, one must know everything about nothing.

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It sometimes seems to be forgotten that basically the trouble which results from this situation is the breakdown in communications between those with technological "know how" and the mass of the population upon whom they are dependent. This is clear even in the operation of trade unions themselves. Trade unions have become complicated and large structures and it is clear that the ordinary individual members are increasingly feeling not involved in the deliberations of union policy. If we are to face this problem, we must fundamentally reconsider the relevance of the education policy and especially the Newsom recommendations as primarily concerned with the economic problems which we are now discussing.
The majority of young people leave school with the minimum of educational qualifications simply equipped with the minimum faculties to go unquestioningly into the economic machine, becoming smaller and smaller cogs in an ever bigger industrial and economic machine. If the majority going into industry, as the result of their lack of preparation for social responsibility, are inclined to put the responsibility for the success of the economy exclusively on the shoulders of the specialists, they cannot be altogether blamed.
Last weekend, I had the pleasure and interest of going round with the management a new and dynamic factory in the south of England. The management took great pride in employing the most modern management techniques. There were excellent working conditions and the best facilities in the buildings which were being erected. There were consultative committees, bonus schemes and schemes for workers' shares, everything one could possibly imagine. Yet the management was bewildered and puzzled because somehow it was still not getting from the employees the response it had expected.
I re-emphasise that fundamentally it was because the employees did not feel directly involved or in any way responsible for the success of the undertaking, let alone the success of the economy as a whole. They were consulted, but they believed that the final responsibility was not upon their shoulders.
We have heard earlier that the Government propose impersonally to move
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sections of the working population from one area to another. I put it to hon. Members opposite that their concentration on the frequently discussed management and modern techniques of management is the very same thing, because it is in this impersonal approach to industrial relations, this speaking of better methods of using workers by management, that we destroy the opportunity to enlist the full, positive and free co-operation of the working population in our economic plans.
In this situation, every serious politician must have nothing but admiration for Ministers who give their time and energy to touring the country and trying to work up a sense of responsibility for economic recovery, but in the long run we must start at grass root level and get the situation into perspective. Involvement is the key to the difficulty of the economic situation, but a general atmosphere of economic involvement is only one part of the whole picture.
Apart from action within the formal educational structure as recommended by Newsom and others, we must recognise the importance of a host of new experimental voluntary endeavours which are rapidly developing in Britain. These are offering opportunities for young people to accept positive social responsibility by taking a real part in society. At the local level, in my own constituency I have been very happy to see the activities of an organisation called Youth Action, in which young people from different areas in the city have been actively participating in their spare time in making a direct and personal contribution to social problems in the city. Of perhaps greater interest than this activity was the enterprising endeavour which they carried out recently in making a social survey of the needs of the elderly there.
Some hon. Members may say that this is all far removed from the debate on the Budget, but I am convinced all this is highly relevant because it is through techniques of this sort that we are engaging the imagination of young people. Once we have found a point of contact with them we can extend this into a wider sense of social responsibility and commitment. I should like to make one small observation on the function of these voluntary organisations. Their potential is increasing every day. There are many

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national organisations about which we frequently read in the Press. They have plans for still more rapid development to include a more representative cross-section of the community. It would be most unfortunate if the new employment tax hindered their development plans, because most of these organisations are working on minimal budgets. I am quite certain that the Chancellor will look at this problem if approached.
Any encouragement he can give to social mobilisation, particularly among younger people entering upon life, coupled with real and meaningful changes in management-worker relationship, will prove the soundest investment in progress and development for Britain and its economy.
8.2 p.m.
Mr. Geoffrey Wilson: It is my pleasant duty to congratulate the hon. Member for Portsmouth, West (Mr. Judd) on his maiden speech. His predecessor was a well-known figure in this House for many years and was popular, despite his rather forceful method of speaking. The hon. Member for Portsmouth, West has spoken fluently and we shall look forward to hearing him again on many occasions. If he serves this House as diligently as his predecessor, I am sure that we shall be glad to see him and hear him in the future.
Almost every speaker has concentrated almost entirely on the Selective Employment Tax, and it is inevitable that that should be so because it is controversial and novel. It is one which attracts the most attention in the Budget. I have grave doubts as to whether the principles behind this tax are sound. In an earlier part of the debate my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) remarked that he thought that this tax was a reversion to the "cloth cap and muffler" type of Socialism. That caused some derision on the benches opposite, I think through a misunderstanding.
As I understood it, my right hon. Friend was meaning, not that nowadays any factory worker is dressed in that costume, which was the traditional costume of 30 or 40 years ago, but that 30 or 40 years ago the Labour Party concentrated almost entirely on the belief that
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the factory worker was the important person and that other forms of employ—ment were more or less parasitic. It seems that there is some substance in the belief that the principles of this tax are rather a reversion to that theory, because it appears to be based on the supposition that only the manufacturing industries are concerned with exports, and balance of payments, and problems of that sort, and that the other forms of employment, particularly service employment, are of the "candy floss" nature, of which the Prime Minister so often complains.
I do not know that that is true anywhere. I very much doubt it, and it is certainly not true in the West Country, which has a very substantial contribution to make to exports and the balance of payments in three respects. There are, first, invisible exports, secondly, the export of raw materials and thirdly, the negative value of imports saved. One of my hon. Friends dealt at length with the problem of agriculture, which is a great saver of imports. It was pointed out how much could be saved if we increased agriculture. In my constituency, and in Cornwall generally, all the farms are very small. The average acreage in my constituency is 100 acres or less. Nevertheless, these small farmers, engaging in dairy work or mixed agriculture and horticulture, employ in most cases one or two men.
It is the small man who will find it difficult if he has to pay this tax, starting in September, in the vague hope that he will be recouped at some later date, as a result of the February Price Review the following year. He is likely to regard that as rather derisory, and certainly the horticulturalists will not be very enthusiastic about the wording of this White Paper, which gives a very vague promise that something will be done to help them to meet the tax. If there is any slackening-off in agriculture it will go against the balance of payments, because it will reduce the amount of agricultural production. It will really affect the small man, who is producing the bulk of this country's food.
The china clay industry has been discussed. This is a very big industry in my constituency with 75 per cent. of its two million tons' production being exported. When I came into the Chamber I received

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the following telegram from the china clay industry:
"First estimate of cost to English China Clays Group of Selective Employment Tax is in excess of £500,000 per annum. Consider this imposition gravely detrimental to our export trade. 75 per cent. of total output"—
that is the export trade of two million tons per annum—
"calculated to increase manufacturing costs in consumer industries of this vital raw material. Bulk of industry is concentrated in development district. Cannot but increase costs very significantly and exports must be affected. English China Clays is Queen's Award for Export, 1966."
That is what they think of it, and it would be most unfortunate if an industry like that, which is competing on pretty tight margins, and fighting for pennies, exporting to the most difficult areas, such as the United States, had to increase prices and decrease exports.
The third big industry concerned with exports and the balance of payments in the West Country is tourism. There have been many references to hotels and the tourist trade in speeches in this debate. I do not think that anyone has drawn attention to the size of this industry.
It is not generally appreciated that the tourist industry is our fourth biggest export earner. The number of foreign visitors to this country last year was 2,165,000, of whom 1,316,000 came from Europe and 674,000 from the United States. The tourist industry is a very big dollar earner. Last year it earned about £81 million worth of dollars, which is more than the value of the dollar sales of the motor car industry and aircraft industry put together. It is twice as much as the value of the sales of whisky to the United States and more than the earnings of any single manufacturing industry. It is astonishing that a bonus should be given to a manufacturing industry on the supposition, presumably, that it is helping the export trade when a very big earner like the tourist trade is to be hit even further.
Sir G. Nabarro: Would my hon. Friend add to his figure of £81 million in earnings from the United States last year the total earnings of tourism of £322 million last year?
Mr. Wilson: Certainly. I was talking about dollar earnings in particular. The
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figure which my hon. Friend mentioned includes earnings from other foreign visitors. The tourist industry is a much bigger industry than most people think.
Mr. William Baxter: Will the hon. Gentleman concede that visitors to New York or other parts of America are called upon to pay a tax when they go there not only in the hotels but in the restaurants? What is good for the goose is surely good for the gander.
Mr. Wilson: I am complaining not about the tax but about the general proposition that it is necessary to give a subsidy to a manufacturing firm in the Midlands when a much bigger export industry is penalised. It is done on a mistaken basis. If we want to tax the incoming tourist, that is different, but to assume that only industries which make things are concerned with the export trade is to return to the cloth cap and muffler type of Socialism which assumed that only the worker wielding a hammer was doing anything useful.
I have mentioned three industries which greatly affect my part of the country. It is extraordinary that a development area should come so badly out of the Budget.
I hope that it will he possible to give an answer to one point before we have the Finance Bill. In the definitions in the White Paper, use is made of a rather unusual expression. The White Paper reads:
"The unit of definition will generally be the establishment at which workers are employed."
In my experience, "establishment" is an unusual word to put in a legal document or statute. I do not know any definition of it. Further down the White Paper states:
"Manufacturing establishments making goods for use in non-manufacturing activities, for example materials, components and prefabricated units for use in the construction industry, will be classified as manufacturing."
That seems to imply that "establishment" applies to part of a premises and not the whole industry. Will the 7s. 6d. bonus which manufacturing industry will receive be in respect of people employed in buildings or parts of the works which are not in the factory premises? Very often the head office is miles from the factory works, and the factory itself may be situated in two or three different places.

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People employed on computers, for instance, will probably be at the headquarters and nowhere near the factory. Would employers receive the tax rebate in respect of those people? That is a small point which I mention in passing. I think that it will arise again and that people will be asking about it.
I hope that these matters will be looked into and that this tax will not work as unfairly as it appears it will work in my part of the country.
8.16 p.m.
Mr. David Watkins: Every hon. Member who rises, as I now do, to make his first contribution to the Committee's discussions does so against a most remarkable background of advice from hon. and right hon. Members as to how he should set about it. I have found that in the Palace of Westminster there is a grave shortage of desks and filing cabinets and many other essential facilities which are needed by hon. Members to discharge their functions. But one thing of which I have found there is no shortage is advice. [An HON. MEMBER: "Good advice."] As my hon. Friend says, "Good advice", and I would certainly not dispute that.
I have been advised to make my maiden speech at the earliest possible moment, and I have been equally advised to hold back to the last possible moment. I have been advised to make my speech short, and I have been equally advised that I must not hesitate to develop any arguments which I might wish to develop. I have been advised that I must be noncontroversial, and I have been advised that I should make a point of being controversial. I have come to the conclusion that the only way to deal with this advice is to weigh it most carefully in the balance and finally to make up one's own mind about how one should make his first contribution to the Committee's deliberations. It will be for the Committee to judge, as I know it will judge, how I have reacted in the face of the advice poured on me from all directions.
I have the honour to represent the constituency of Consett, and, before coming to the main part of my remarks, I want to pay a tribute to my predcessor, Mr William Stones, who for 11 years represented Consett and, in that time, made valiant efforts on behalf of his constituents. I use the word "valiant" particularly,
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because in the latter years of his membership of the House he suffered from increasing ill health which caused his comparatively premature retirement from membership. I am sure that all hon. Members will join me in paying tribute to his efforts on behalf of his constituents, particularly since they were latterly at least often conducted in the teeth of considerable personal ill health and discomfort.
The constituency of Consett has far too long been mainly dependent on only two major industries—steel and coal. With the changing pattern which is brought about by the impact of scientific advance in the present age and tae changing demands for fuels and the bringing in of new demands, it may well be that over the next five years every coalmine in my constituency could De closed. I emphasised that this is the result of the impact of scientific change.
It means, however, that the livelihood of many of my constituents is at stake. The matter upon which I want to concentrate the bulk of my remarks this evening is the development of existing industry and the bringing of new industry to my constituency. In his very able exposition of his Budget yesterday my right hon. Friend especially emphasised the need for growing economic strength and full employment and the need for labour in manufacturing industry. Notwithstanding the conflicting opinions held in some parts of the Committee, it seems that these are matters which are singularly relevant to the needs of my constituency and of my constituents.
Many of my constituents whose jobs will fold up under them with the reorganisation of the coal industry are men who are 55 to 60 years of age. It is not reasonable for us to expect men of that age who have worked all their lives and given of the best years of their lives to this industry, automatically to have to travel 20 to 30 miles daily, with not particularly adequate communications, in order to earn their livelihood; let alone that they should be expected to uproot themselves and move to another coalfield in another part of the country.
Many of my constituents so affected are also sufferers from pneumoconiosis, which I have recently heard described appropriately as the scourge of the coalfields. Many of them are disabled 20 per cent. or more. These are the people

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whose livelihood is very much at stake in the reorganisation to which I have referred. The imperative necessity for my constituency is that new and expanding manufacturing industries should be brought into the area to provide alternative employment.
I have often heard miners represented in some quarters as being Luddites who are opposed to change and to the modernisation of industry. Such a point of view often arises from a lack of knowledge of mining and of miners. I came into a mining constituency as one who had never been down a pit in his life. One of the very first things that I did on becoming associated with the constituency was to visit a pit. I took care to see that I was not just taken on a conducted tour but was shown the pit in its entirety, so far as that was possible.
It is a salutary experience to go down a coalmine for the first time in one's life. It is an experience which lives in the memory. There is the silence and the utter darkness of the seemingly endless tunnels through which one walks towards the coalface. At the coalface itself there are the roar and tumult of the cutting machinery as one crawls on one's stomach in the sludge and the muck of the 25-inch or even smaller coal seam. All around one the dust is like a dense fog and in one's mind is the knowledge that a fair proportion of that dust is in the lungs of every man who has worked for years in those conditions.
It is brought home to one as the cutting machinery moves into the coalface that every person there has a job to do and must know how to do it and when to do it. If he does not know that and does not do the right things at the right time, a situation disastrous to life and limb could very easily and quickly develop. I was told time and again by these people who are so often represented as being opposed to the changing nature of their industry—"This is no place to work. This is no way to earn a living".
I must report to the Committee that it was put to me in rather more unparliamentary language than that, but I know that the Committee will appreciate the point I am making and will understand what is meant.
Amongst the mining community in my constituency there is a realisation that
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change is taking place and that change must take place. There is also a realisation amongst my constituents—it is one in which I would most strongly support them—that their livelihood must be safeguarded in the future in the changing conditions which are taking place and that new industries and the training facilities to retrain people for those industries must be brought on a growing scale into the area which I have the honour and privilege to represent.
I am aware that the planning framework and the finance for the north-east of England were provided by the Government in the last Parliament. I know that new industry has gone and is going into the north-east region. The difficulty in relation to my constituency is that new industry wants to be located near the Al trunk road and the main London to Edinburgh railway line because of the obvious easy access of communication. This is 15 or 20 miles from my constituency. There is a special difficulty in my constituency in the matter of communications and particularly as regards roads. I take this opportunity of urging on my right hon. Friends in the Government the need to pay particular attention to the economic and employment problems of the Consett division.
I said in the earlier part of my remarks that steel and coal are the main industries in my constituency. I have not spoken about the steel industry, because I am given to understand that this may be a matter of some controversy and that one must not be too controversial in one's maiden speech. However, I hope that the Government will provide hon. Members with the opportunity to debate the future of the steel industry in the not too distant future, because I can assure the Committee that this is also a matter upon which my constituents have most strongly expressed themselves.
In conclusion, I emphasise that what is at stake is the very livelihood of my constituents, their families and their dependants. They look to this Committee to ensure that their position is safeguarded in this great era of change in which we are living and which they so much appreciate. They will judge this Committee, not on any fine words which might be uttered either by myself or by any other member of the Committee. In the final analysis, they will judge this Committee

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on the actions which it initiates which are relevant to their everyday lives.
8.28 p.m.
Sir Henry d'Avigdor-Goldsmid: It is always very agreeable to congratulate a maiden speaker, and it is particularly so in this case and to congratulate the hon. Member for Consett (Mr. David Watkins) because over the years we have appreciated the contribution which the mining community brings to us and the extremely well-informed speeches which Members from the mining community make when they do speak to us. I think we can say to the hon. Gentleman that he is keeping up the very high standards of the mining world which have always been such a feature of the House of Commons. I have no doubt that the next time he addresses us we shall have something to argue with him about, but for the time being, anyway, I should like to give him a very hearty welcome.
I should like to begin by saying it is a particular pleasure to us to see in front of us the Financial Secretary to the Treasury, because we have not had the pleasure of the presence of a Treasury Minister here for about an hour and a half. The Under-Secretary of State for the Colonies, who is now leaving us, is my neighbour Parliamentarily, but I still do not regard him yet as being a spokesman for either the Treasury or the Department of Economic Affairs, and I think it would be reasonable, when we consider that there are at least three Treasury Ministers and two or three of the Department of Economic Affairs, that one of them should spare the time to be present during these debates—these long-drawn-out debates, I know, we have to sit through; but the Treasury Ministers are lucky, for they have per year only one series of debates when they have to be here.
Sir G. Nabarro: Hear, hear. Dereliction of duty.
Sir H. d'Avigdor-Goldsmid: First, I should like to congratulate the Chancellor because we had a new style of Budget speech this year. We were spared a lot of history. He dived straight into what he proposed to do in future. I was slightly struck by the resemblance
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to the new form of company accounts one often sees, where instead of a rather plain profit and loss account one gets a large, elaborate brochure giving pictures of factories and chemical laboratories and that sort of decoration which, to me, rather tends to obscure some of the actual truth contained in the company's report. That was a little the case with the Chancellor's speech. If we go back over the past year I think we find things he ought to have dwelt on.
I am not going to say anything about the Selective Employment Tax, for that is something which has been dealt with very fully in the debate. I really doubt, after a lot of informed criticism which we have heard from both sides of the Committee whether this tax will stand up to legislation; it will have to be so severely modified that I think it a waste of time for me to start dwelling on its imperfections. However, I should like to congratulate the Chancellor on this, that at least this tax came to us without preliminary bombardment, without a preliminary barrage, without leaks, without special consultations with confidential officers of the Ministry. This was a great improvement, and, after all, there were no confidential advisers backing into the limelight this year, as we had last year, when, I think, we had three announcements of Corporation Tax and Capital Gains Tax before we actually got to the Budget. Then, when we remember the history of the four months which followed and the number of attempts to reshape it, it is quite clear that when the Chancellor got into his sledge with Corporation Tax and Capital Gains Tax last year the wolves began to chase the sledge and as they began to catch up two rather bulky passengers were dropped to the wolves and as the journey continued the number got thinner and thinner.
We saw this slimming course going on, and even some concessions will be made in the course of the coming months, I am glad to hear. I think the same thing may be said of this Selective Employment Tax. I only hope we shall have finished with it by this time next year. However, as I said, it has been very fully discussed, and many of my hon. Friends are hoping to speak, and so I shall not go over ground which has already been covered.

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I want to come to some of the things in the speech which attracted less attention. First, the removal of the import surcharge in November. I remember very well that when we had the import surcharge imposed 18 months ago I suggested that it was not the way to slim for a fat lady to put on a tight corset, because in fact the bulge is just transferred to another portion of her anatomy, and that the only way to get one's weight down, by my experience, was to reduce the food intake. There is no sign of that in the economy; the import bill is as high as ever it has been, and I see no sign of its being reduced.
We have given a clear warning to our overseas suppliers that in November the 10 per cent. surcharge is to be removed. I really think some crash slimming cure is absolutely essential if we are not then to be inundated with imports. I see no sign of that in anything that has come from the Treasury Bench though we had speeches about import quotas from two hon. Gentlemen opposite. I believe that these are dangerous weapons. They are of the two-bladed sort where there is no handle and where one stabs oneself if one tries to administer it to somebody else, so I feel that we cannot regard import quotas as a cure for this disease.
I want to draw attention to the Chancellor's words about the cost of keeping our Army in Germany. The cost is £90 million, and the Chancellor said that he was taking steps
"with a view to … securing relief from the whole of the foreign exchange cost of keeping our forces in Germany."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 727, c. 1449.]
I wonder how the Chancellor proposes to do this, because, first, we are under a treaty obligation to keep forces there. We are part of the N.A.T.O. Alliance. We have undertaken an obligation to do this, and we cannot unilaterally get out of that engagement, especially as we are flirting with the Continent of Europe in a way in which the right hon. Gentleman has not considered doing for a long time.
As one of my hon. Friends reminded us, £90 million represents a vast amount of goods to sell. It is as much as the total exports of cars and aeroplanes. How are we going to persuade the Germans to buy £90 million worth of cars and aeroplanes? How will we persuade them to take it up—in whisky, the total exports of which
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are less than that, £81 million? What does the Chancellor mean? Will he threaten to remove these forces? Surely it is not for the Chancellor to take this sort of action. This must be done by the Prime Minister, and by nobody else.
I still wonder what the position would be if the Germans said, "All right, we will pay". In the years after the war when we had an Army in occupation, it was living on the German economy. Following the independence of the Federal Republic, we had to pay the costs ourselves. The Germans are not a defeated nation now. They will not take us on their economy, and if they do we shall be in a position where we might be considered to be mercenaries. Are we to be the mercenaries of Germany?
This is a rather curious situation if one looks at it historically, because during the American War of Independence, 200 years ago, Lord North was severely criticised for using German mercenaries to fight our war in America. Are we now, in order to please the Americans, to become the mercenaries of the Germans? I expect the Committee will remember A. E. Housman's epitaph on the Army of Mercenaries. Perhaps I might bring it up to date:
"Their shoulders hold the pound suspended They are the Bank of England's stay What de Gaulle abandoned these defended And saved the N.A.T.O. pact for pay."
I propose to direct the main burden of my remarks to the question of savings. If we look at the Financial Statement for 1966–67, which was furnished to us after the Budget debate, on page 16, at Table 9, we see what is called the "National Accounts Classification of Central Government Transactions" and I want to go through this. It shows that in 1965–66 there was a reduction in National Savings of £115 million. There was a positive dis-saving of £115 million on National Savings, and a dis-saving of tax reserve certificates of £59 million. Direct borrowings from overseas Governments and institutions amounted to £403 million, and there was an increase in indebtedness to the Bank of England of £183 million. There was an increase in notes and coin in circulation of £193 million. This adds up to a sorry story. It does not add up to the prospect of a boom in National Savings this year. The Chancellor said that in this jubilee year of the National

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Savings Movement he wishes it well. I am sure that all hon. Members do. He said that he was confident that this jubilee year would be celebrated with new records. I hope that he has better cause for confidence in some of his other statements, because only today we learned that building societies are clearly having to increase their interest rates to 7 or 7¼ per cent. and it is idle to think that this will be a boom year in National Savings in circumstances in which we have national inflation and a rise in prices of 4 per cent. and probably 5 per cent. this year.
It is clear that the great truth has sunk in, and that our people have given up their interest in savings. The Chancellor said, "More savings, less tax", but we have the biggest tax burden ever this year, and it is clear that this is because the people are not saving. They are not saving because, through Government policies of one sort or another, they see the value of their savings deteriorating. My right hon. Friend the Leader of the Opposition made a very good point, when, in answer to the Budget speech, he pointed out that he noticed nothing in the Chancellor's intentions concerning the maintenance of stable prices. Without some attempt to maintain stable prices what hope is there for savings?
Are we, year after year, to be subject to this sort of pre-Budget buying boom, with everybody hurrying to get his money out of the banks and out of savings in order to buy commodities of one sort or another? This is an unhealthy state of affairs. I notice the Minister of State for Wales on the Government Front Bench—the former Minister at the Home Office. He cannot possibly approve of this programme, which lays no emphasis on the maintenance of stable prices.
The Government have every responsibility for and every interest in keeping prices stable, and I regret that the Chancellor did not see fit to include any mention of stable prices in his speech. I know that several hon. Members wish to speak and I shall refer only briefly to the action of the Chancellor in damping down investment in the sterling area. This is a disaster, because anyone with business experience must realise that it is nonsense to expect industrialists to earn 33 per cent. per annum. It does
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not make any sense at all. I do not know how this is to be interpreted, but I hope that whoever has the right to interpret the statements made by the Chancellor in these matters will be more forthcoming than merely to give an emphatic nod of the kind we had from the First Secretary and his Parliamentary Secretary today. When my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) raised this point, they nodded their determination that all investment should be recouped within three years. What sort of investment pays 33 per cent per annum? What investment can do that after paying taxes?
Sir G. Nabarro: There is not one.
Sir H. d'Avigdor-Goldsmid: My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) is an expert in these matters. It would be very much more honourable for the Chancellor to say, "I have decided to stop investment by companies in the sterling area". If he had said that I wonder what sort of crisis of confidence he would have had to face. The sterling area balances are up. The sterling area is free to take them away at any time. It is always understood that private capital and Government money is available for investment in the sterling area in suitable circumstances. If this is no longer to be the case, I cannot believe that the Australian Government, however well-intentioned, will keep the sort of sterling balances with us that they have today. What good is that money to them?
I should like to conclude by saying what pleasure I have in seeing sitting on the Front Bench three of my hon. Friends, two of whom have not been in the House 18 months, yet they are in this prominent position in these debates. I look forward to hearing from them and also from their charming companion, my hon. Friend the Member for Finchley (Mrs. Thatcher).
8.45 p.m.
Mr. Alexander W. Lyon: The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) will forgive me, I hope, if I do not follow him in his argument. By one of the curious conventions of the Committee and the House, where, according to the Leader of the House, I shall speak on only two or three occasions this Session, on the first occasion I

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must be so uncontroversial as to be meaningless. I shall eschew the temptation to follow the argument of the hon. Member for Walsall, South, because it seems to me that any discussion of the Selective Employment Tax is bound to be controversial. Therefore, I hope that the Committee will forgive me if I divert from the general line of the argument during the afternoon and evening.
I can spare the Committee a conducted tour of my constituency, at any rate. There must be few people in the House or without who have not at some stage in their lives been round my constituency. York is justly proclaimed as the second city in the land, and we in the constituency like to regard it as the first city in the land. Indeed, it enhances my trepidation in making this maiden speech that I am speaking in the long line of my illustrious predecessors, who go right back to the first Parliament of Simon de Montfort. I was interested to see in the Library of the House that when that Parliament was summoned only two cities were mentioned and one of them was York. The others were simply classed as also-rans, and this is how it should be.
I am intrigued to see that the third Parliament was called to sit at York itself, and it seems to me that we might very well revert to that practice on some occasion. There is a real need for a true devolution of the proceedings, not perhaps of this House, but at any rate of Government, into the regions. One of the places which would amply fit the bill would be York, with its central location in the Yorkshire region, its good transport facilities and, particularly, its excellent amenities.
Although I therefore pass over the conducted tour, I wish to say something about the constituency, because one of its disadvantages is simply that so many people call for the odd afternoon or day and see there a cathedral centre with its historic mediaeval centre and streets and they think that that is all there is to the city. In fact, of course, it is an industrial city of about 100,000 people, with very particular and peculiar problems of its own. I shall be ventilating these in the Chamber from time to time as long as I am here, but I should like to put some of them shortly tonight and to re-
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late them to the general discussion on the Budget Statement. So much of our problem can be solved only by assistance from central government and from central government funds.
One of the problems we face in my constituency is that there is a low rate of unemployment and a high demand for labour. It is in this context that I, at any rate, make no grumble on behalf of my constituents about the Selective Employment Tax. It will benefit particularly the chocolate industry in my constituency, remembering that this industry has had difficulty in trying to find labour in the surrounding areas. If this tax has the effect of shifting labour from the service to manufacturing industries, it will benefit the chocolate industry in my constituency considerably and it will, therefore, benefit our exports, because it has made a notable contribution to the export drive.
In addition, we have the difficulty that we in York have a few large employers of labour and that the general level of wages is about 6 per cent. below the national average. We therefore urgently require some diversification of industry in the constituency so that there may be more competition between employers of labour, thus pushing up the level of wages.
As the Financial Secretary will know, we in York are particularly interested in the siting of a P.A.Y.E. computer centre for the north-east region, which is within the ambit of the Treasury's approval. If we succeed in getting it sited in York—and I have high hopes that we shall—this will benefit the constituency by raising the general level of wages and by diversifying the opportunity of employment there.
The crucial question in York is transport and traffic. It is inevitable that, with a large rail centre, having within its boundaries the administrative headquarters of the north east region, the people of York should be primarily concerned about the effects of the rundown of the railway system and about the possible alternative policies which are now being prepared by my right hon. Friend the Minister of Transport. If she is successful in attracting back to the railway more freight and passengers, this will have a beneficial effect on the prospects for employment in my constituency.

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I come, finally, to the main problem I wish to ventilate; the question of buses in York and in the provinces generally. I will explain briefly how I came to be involved in this problem. We had in York, as in many other provincial areas, an application by the local bus undertaking for an increase in fares. This arose out of the recent award of a 40 hour week to the men and from a sickness pay scheme. The local Labour Party opposed it and I was instructed to appear before the Traffic Commissioners to put the case for the party.
I found, on investigation, this curious state of affairs; that the company would, even after it had paid the increased labour costs, be able to make—and this is directly relevant to today's discussion—a profit of £25,000 a year, but that it wanted to make a profit of £50,000 a year because it had been used to a return of 10 per cent. on its capital. This company, which is owned by British Transport Holdings, has 20,000 buses in its provincial fleet, although it owns in all 27,000 buses. If it had had its way, the company would have put up its fares to double its profits so that that profit could then go to my right hon. Friend the Chancellor and be used to lessen the burden of general taxation. So I looked into the result of this over the nation generally, and I find that the profit accruing to the British Transport Holding Company from this kind of service is about £7 million—in other words, a fleabite in the whole of the tax apparatus in this country. It would not be missed if my right hon. Friend were to say that he will in future do without that profit from buses in the provinces. But the effect upon individuals who use those buses would be tremendous.
When I was considering the case to put before the Traffic Commissioners I found that there were many people whose fare allowance out of their wages would rise by as much as 33⅓, per cent. This enormous increase in their outgoings could only be met by further pressure for wage increases in the constituency. This is directly relevant to the efforts of the First Secretary to try to promote a prices and incomes policy. Why should we take money out of the pocket of the bus passenger with one hand, in order that we can put it back into his pocket as a taxpayer, with the other?
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I have written to Mr. Aubrey Jones asking him to consider this matter in his appraisal of the provincial bus services which he is undertaking at the moment, and I raised it with my right hon. Friend the Minister of Transport when she came to speak in the constituency. We benefited much by her appearance there, and it seems that she also has benefited, because I notice that she has been talking about it in the country since. I hope that the Chancellor will consider this matter because it is relevant not only to my constituency but to the country outside, and it would be of direct benefit to many hard-pressed fare-paying passengers. For this reason I suggest that this matter should be taken up at the earliest opportunity.
I am grateful to the Committee for bearing with me for these few moments. I trust that I have not wasted my time in speaking and that I have not spoken for too long. I notice that it is a tendency which grows on one after being here for some time.
Hon. Members: Hear, hear.
8.58 p.m.
Mr. John Biffen: It is my very pleasant duty to congratulate the hon. Member for York (Mr. Alexander W. Lyon) on his maiden speech and, in particular, to congratulate him on his acute observation that brief speeches are extraordinarily welcome in the House, although I must confess that it is a rule about which one is prepared more to generalise on than to particularise in one's own instance. The hon. Member spoke with an engaging charm. As he rightly said, he set aside controversy, but I am sure we all look forward to hearing future speeches from the hon. Gentleman when he will marry charm with controversy.
The hon. Gentleman's speech reminded me in a sense of my own maiden speech way back early in 1962. I recall that thereafter I sat in silent contemplation on one of the benches opposite, and heard a succession of eloquent speeches from people such as the Home Secretary, the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), the Secretary of State for Education and Science, and a number of other spokesmen no less eloquent from the Labour Party, arguing that the strategy which Labour had for the solution of our economic difficulties lay in the rapid expansion of the

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economy. They argued that this remedy could be applied even if we were in balance of payments difficulties. Indeed, it was often argued that it was the futility and the timidity of the Conservative Party which led them to apply policies of restraint whenever confronted with a balance of payments situation. One of such tender years and experience as myself might, therefore, have been forgiven some surprise at the lack of enthusiasm with which the Labour Party tackled the economic inheritance in 1964, saying that, despite all that had been said hitherto, it was nevertheless reverting to the somewhat traditional methods of setting about it.
The more I meditate on these matters, the more convinced I am that it is a perfectly fair analysis to say that the Labour Party has argued that greater and more detailed economic planning would itself produce more rapid economic growth. That analysis has remained true today. It was reinforced only last week in the speech of the Minister of Technology, when he said:
"The basic decision which the country took in October. 1964 … was … to endorse instead a new and radical policy of selective intervention."—[OFFICIAL REPORT, 25th April, 1966; Vol. 727, c. 383.]
The right hon. Gentleman is undoubtedly right in arguing that this is a characteristic of the Labour Government. We saw it in the Queen's Speech. We saw it in the continuing commitment to an incomes policy and to a National Plan. We have seen it in arguments for a Selective Employment Tax, and we have heard it reinforced from the back benches opposite in calls from the hon. Members for Ashton-under-Lyne (Mr. Sheldon) and Heywood and Royton (Mr. Barnett) for import quotas.
My first observation on the argument that a Labour Government would produce more rapid and steady economic growth is to point out that it is not happening. This is the first simple but reasonably demonstrable observation. In fairness to hon. Members opposite, I take an area which is usually presented as being favourable to the Government's case, that of exports. We are often told, "Ah, but there has been a very significant rise in exports over the last year or so". This is true of export despatches, but what would be much more valid and helpful to
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know is what is happening to export orders. This is what will be reflected in our economic performance during the latter half of this year and next year, but we have no evidence. I am not blaming the First Secretary of State or the Government statistical service, because, by the very nature of things, these figures are difficult to come by. But the Government have published one figure which may help us to have some idea of what is happening on the export order front.
In the Board of Trade Journal, Vol. 190, published on 29th April, we are given some estimates of the volume of export orders and despatches for the engineering industry, which probably covers about 25 per cent. of our total exports. I say all this to put the matter in perspective and not in any sense to be accused of "knocking" Britain or our export performance. But the fact is that, comparing the index of export orders for 1965 against that for 1964, there is a fall in engineering export orders of about 4 per cent.
There is one other export order figure published, this time with rather more confidence because it is put in value terms and not as a volume index, and that is the one for machine tools. I was told from that Despatch Box yesterday that export orders for the machine tool industry for the second half of 1965 are something like 16 per cent. lower than for the second half of 1964. To my mind, this cast considerable doubt upon the extent to which we are booking export orders in anything like sufficient quantity.
The second and much more serious accusation against the Government, maintaining the observation that the economy is not expanding, as promised, arises from the Presumed overall growth of the economy. We know from the Preliminary Estimates of National Income that in 1965 the gross domestic product rose by rather less than 2½ per cent. This, of course, is well below whatever has been promised in the National Plan. But what would be interesting to know is the expected growth of the gross domestic product this year. On 10th February, the First Secretary of State was asked a question on this, and he then said:
"It would not be appropriate for me to forecast the expected increase during 1966."—[OFFICIAL REPORT, 10th February, 1966; Vol. 724, c. 602.]

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The right hon. Gentleman belongs to what I would call the Pentecostal school in economics and he is not normally averse to talking of the future and where we are going. I remember his classic words on the publication of the National Plan. "At last", he said, "we now know where we are going". All we want to know—it is a fairly simple request—is by what amount he expects the gross domestic product to increase in 1966. We have had no indication whatever from any authoritative Government source of what they think that increase will be.
But others are not necessarily so coy. We hear about the "Gnomes of Zurich," but my particular gnome comes from the Mid-West of the United States, a Mr. Bentley J. McCloud, senior vice-president of the First National Bank of Chicago. I quote from the Financial Times:
"A leading U.S. banker has forecast that Britain's gross national product may rise by only 1.5 per cent. this year."
That is a depressingly low figure, and I for one would not claim competence either to support or contest it. But at least we might expect from the First Secretary of State or whoever is to answer at some stage what the Government think the increase in the gross domestic product will be. Of one thing I am quite sure—it will not fulfil the expectations which might have been raised by confident Labour talk in 1962-63 and the expectations which might have been raised by the publication of the National Plan.
My second observation is that the failure of the economy to expand as we had been led to believe it would under treatment from a Labour Government is being tactfully ignored by the Government whenever they feel it suitable so to do. For example, there were two vital figures which were linked to the growth of 3.8 per cent. in the gross domestic product, which was the key figure in the National Plan, and those two figures which flowed from that central judgment was an incomes policy norm of 3 per cent. to 3½ per cent. and a public expenditure rate of increase of 4½ per cent. One is entitled to come back to this argument, because only this afternoon the First Secretary said that the National Plan remains the central core of the Government's policy. I took that remark down, and I think that it is a fair representation of what he said.
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What we want to know is, will either of those figures, the incomes policy norm or the public expenditure increase, be revised in the light of the failure of the economy to grow at anything like the rate suggested in the National Plan? Will the First Secretary of State still go round on his campaign for the incomes policy using a norm which has been totally invalidated by performance in the economy and add yet one further nonsense to the compound of nonsense in that policy?
More serious in the context of the debate upon the Budget is the trend in public expenditure. We are told in Command Paper 2915, Public Expenditure: Planning and Control, paragraph 70, that it might be slightly less than 4¼ per cent. On the figures which have so far been made available it looks as though this probably will be so, but not all the figures have yet been released. Only this afternoon we had the announcement on doctors' pay—I am not quarrelling about the decision—which must necessarily cast a great deal of doubt upon what might be the outcome of public expenditure during the coming year. One thing which is quite certain is that whatever may be the behaviour of the economy, inexorably public expenditure will go the way that has been forecast in the National Plan, quite independent of everything else.
This leads me to my third observation. If public expenditure continues at that rate it must mean higher taxation. A great deal of our discussion yesterday and this afternoon has been in terms of the increase in taxation as it affected the struggle for the balance of payments. This is a valuable consideration, but there are other and, to my mind, equally important considerations, one of which is that we need this increase in taxation to sustain the level of public expenditure on which the Government have set course.
To my mind high taxation is the most visible and ultimately the most hurtful manifestation of the philosophy that the State is so much better at doing things than are individual citizens, whether they are consumers or business men. It seemed to me that nothing had greater validity than the assertion by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) that there must be a new attack on Government expenditure.

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The area of Government expenditure which I think we need to scrutinise with the greatest care and the greatest scepticism is this growing welfare state for industry, which we have seen gradually evolve over the last 18 months, with the investment incentives, the Selective Employment Tax with its remission to manufacturing industry, the Industrial Reorganisation Corporation and the procurement activities of the Ministry of Technology. All these are adding up to a sizeable element of public expenditure extracted from industry and redirected to industry by Government on the philosophy that the Government know best and that by so reacting on industry they can produce a higher and more sustained rate of growth in the economy. In my view this Whitehall attitude is totally alien to what I believe is necessary in the economy, and one thing is quite certain—it will be a very expensive process.
The alternative, as I see it, must be to restrict the activities, the ambitions and the assumed responsibilities of Government, and I believe that this Parliament will give the Conservative Party an opportunity to deploy, to argue and to reassert the case for that alternative.
9.16 p.m.
Mr. Alfred Morris: It is not my intention to follow the hon. Member for Oswestry (Mr. Biffen) in his argument, except to say that he is, of course, a strong opponent of any kind of prices and incomes policy. He is also opposed to the whole idea of economic planning. But at least he is a very honest and straightforward opponent of such policies and at least we must honour him for that.
I think it was the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) during his time as Chancellor of the Exchequer who first prompted me to think about the logic of having more than one Budget a year. I remember speculating about the dates of Conservative Budgets and the way in which there was always one before Royal Ascot and one afterwards. Whatever the reasons for their choice of dates, it is not, in my view, wrong that there should be more than one Budget speech a year. Indeed, I hope that by the end of this Parliament we shall have cast away the false drama of the
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ritual that the Chancellor performed yesterday and will fit Budget speeches into a continuous process of purposive economic planning.
From the manner in which my right hon. Friend has comported himself, and the signs we have already seen of his willingness to cut through traditionalism, I am sure that he himself is not unsympathetic to this view. He has, of course, confounded those who took part in the psuedo-debate about how deflationary the Budget would have to be. One had scarcely ever heard such gloomy comment before a Budget, and the Jeremiahs have been proved wrong in their lamentations. The only consolation for them is that none of the Jeremiahs was as badly wrong as the hon. Member for Worcestershire, South (Sir G. Nabarro) in his literary jottings in the News of the World.
I want to refer to two of my right hon. Friend's proposals that are specially welcome to me. The first is his decision to initiate further negotiations with the West German Government about relieving Britain of all the drain of foreign exchange caused by the cost of having our troops there. My right hon. Friend the Chief Secretary, who I am pleased to see here, did an excellent job in the Anglo-German negotiations last year and one hopes now to see relief from the whole of the foreign exchange costs of keeping our Forces in Germany. If this is not achieved there will clearly be increasing pressure for the withdrawal of our troops.
It was Robert Lowe, one of the more distinguished vice-presidents of the Council on Education in the nineteenth century, who said that he would see to it that if education were not efficient it would be cheap and if it were not cheap it would be efficient. That approach could very usefully be applied to defence expenditure. Notwithstanding all the stress there has been on cost effectiveness, there is still a widespread feeling that our activities in this field are neither cheap nor efficient. I trust that there will be increasing vigilance to cut unnecessary expenditure on arms.
The second proposal that I applaud is that which provides for Income Tax and Surtax to be imposed on the difference between the price paid by directors for shares and the actual value of the shares

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at the time. There is considerable controversy about certain other methods used by directors to increase their remuneration.
Many people, including shareholders, have been deeply disquieted by recent disclosures concerning the Garda Trust and the Second Premier Investment Trust. It is hardly surprising that people should have posed the question of whether it makes sense for a public company to raise money at 7½ per cent. and then lend it to a privately-owned investment trust, in which the directors of the public company have a personal interest, at 5 per cent.
This is precisely what British Insulated Callender's Cables did in 1963. In May of that year, the group raised £6·2 million gross by a rights issue of ordinary shares. And in September it invested one-tenth of this sum in 5 per cent. debenture stock of the Garda Trust Company, a privately-owned investment trust of which Sir William McFadzean, Chairman of B.I.C.C., had become a director in the July of that year.
In my view, it is not the business of any public company, certainly not without the approval of its shareholders, to provide long-term finance for a private concern in which its directors have a personal interest affecting their remuneration. Nor is it becoming of any director whose income has benefited enormously from such a manoeuvre to be lecturing trade unionists on the need to put the national interest before their own private interests. It is incidents of this kind that debase any discussion of incomes policy and I know that the Government will keep a close watch on the activities of directors who seek unfair advantage by manoeuvres of the kind to which I have referred.
The Selective Employment Tax, while it says much for the willingness of my right hon. Friend to innovate, raises a number of important questions. In particular. there will be anxiety among those who know industry well about the relevance of this tax to the problem of curing the disease of overtime. One of our principal aims must be to relieve working people of the necessity to work long hours of overtime in order to earn a living wage. In the debate on the Budget Statement of 11th November, 1964, I informed the Committee that workpeople in my constituency were as
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apprehensive of losing their overtime as they used to be, or their fathers used to be, of losing their jobs. This remains true today.
As I have emphasised previously, he was an acute observer of contemporary industrial life who remarked that overtime is no longer the jam: it is the bread of life for millions of working people in Britain today. I am pleased that it is now more widely recognised that an industrial society based on excessive over-time could soon become a tired, ineffective and, if I may say so, an ugly and demoralised society. One of my fears about the Selective Employment Tax is that it is unlikely to make an early contribution to the solving of this important problem and in certain trades it may indeed exacerbate the problem.
My right hon. Friend does not claim that the new tax is a panacea for all our industrial ills, and he has rightly placed emphasis on the responsibilities of those in industry for tackling many of the industrial problems we confront. I am sure the whole Committee would like both sides of industry to tackle the problem of overtime and that all of us would like them to succeed. There is not much wisdom in saying to a man that he could do in 40 hours what he is now doing in 50 hours. In most cases today his answer would be that he could not live on 40 times his hourly rate of pay. If hon. Members refer to the overtime he works as contrived overtime, I am sure that his answer would be that it is necessary to contrive overtime in order to earn a living wage.
I now come to another serious aspect of informed discussion about this new tax. I refer to its implications for the distributive trades. These trades, by their very nature, are labour intensive. It is much easier to use labour-saving devices in manufacturing industry than it is in the distributive trades.
There are three criticisms of the tax which I should like to make from the standpoint of the distributive trades and, in particular, of the Co-operative movement, with which I am proud to be associated. First, the tax does not appear to discriminate between different types of manufacture: it is not selective enough. Secondly, it assumes that distribution is less desirable or less important than

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manufacture, whereas the one is essential to the other. Thirdly, it imposes a penalty on the distributive trades while denying them the financial assistance to become more efficient and labour-saving. I must emphasise here that the Co-operative movement has suffered very seriously indeed from the loss of investment incentives.
Sir D. Glover: Come and join us.
Mr. Morris: It is no good hon. Members opposite seeking to make petty points out of a serious matter of this kind.
Sir D. Glover: We agree with the hon. Gentleman.
Mr. Morris: The Co-operative movement stands to lose some £11 million from this Selective Employment Tax and it will find this a very difficult figure to meet. One cannot say that the Co-operative movement has not been prepared to save labour. Over the past six years, the labour force of the retail co-operative societies has declined by 15 per cent. It has declined steadily year by year. I hope that some consideration will be given to the problems of the movement as we consider the tax in more detail.
I say that because I regard the British Co-operative movement as one of our great agencies for social change and social ownership in this country. I believe that hon. Members will agree with me that the British Co-operative movement has a great tradition of service behind it and that it deserves a great future. I hope, therefore, that we can have some assurance that the effect of this tax on the movement will be seriously re-considered.
Finally, I hope that the Finance Bill will be published very soon. This may seem masochistic in view of our experience with the last, but I hope that we shall have the Finance Bill very soon so that we can see these proposals in far more detail, and I hope to see that there has been some acknowledgement of the points made in this Committee on behalf of the Co-operative movement.
9.28 p.m.
Mr. Patrick Jenkin: This has been a strange Budget and in some respects it has been
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a strange debate. As the debate has gone on, it has been apparent that the speeches from Government back benchers have become progressively more and more critical of the proposals of the Chancellor of the Exchequer, so that we finally had the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) devoting the last half of his powerful speech to a sustained attack on not one, but several measures of Government policy which he regarded, in my view quite rightly, as harmful to the economy.
We have also had a number of maiden speeches and, if I may do so without presumption, I should like to congratulate the hon. Members concerned. The hon. Member for Aberdeen, South (Mr. Dewar) spoke with extreme fluency and criticised the Selective Employment Tax which, he said, would be very unpopular in his constituency. I hope that it will. The hon. Member for Portsmouth, West (Mr. Judd) referred to his constituency. I was particularly pleased to hear from the hon. Member for Consett (Mr. David Watkins) and I enjoyed his graphic description of his first trip down a coal mine in that constituency. I have always felt that the market place in Consett was one of the coldest places in the world and on a date in mid-March, when the wind was blowing straight off the Polar Cap, I did my best to make sure that the hon. Gentleman was not returned to the House of Commons.
The hon. Member for York (Mr. Alexander W. Lyon) chose, very wisely, a Budget debate in which to make his maiden speech. I was reminded that York was the site of many of the original social surveys on which a great deal of early economic thinking was based. I should particularly like to congratulate my hon. Friend the Member for St. Ives (Mr. Nott) who made a most informed and valuable contribution to the debate. It was particularly interesting to hear that he was a colleague of the very distinguished gentleman who had been chosen to be Vice-Chairman and Managing Director of the Industrial Reorganisation Corporation. I should like to take this opportunity of saying on behalf of my hon. and right hon. Friends how much we welcome the list of distinguished businessmen whom the First Secretary has been able to persuade to join the Board of that Corporation.

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I should like to add that when we were in office it was a perfectly normal and regular thing for trade unionists, and others who certainly did not share our political views, to be invited—and they readily accepted—to join all sorts of boards, commissions and corporations, and no one suggested that by doing so they were agreeing with everything, or indeed anything, on which the Government were then engaged. The contrast with the fuss that is made on the other side of the House because they happen to get a few businessmen to join one of their corporations is very marked. We welcome this list and we wish these men well. The Government have, as my hon. Friend the Member for St. Ives said, a need of sound financial advice. The example he gave of what appears to be the recent mishandling of one transaction certainly points to that.
This has been a strange Budget. After all the speculation and all the conflicting advice, after all the apparently contradictory indications of recent weeks, after all the gloomy warnings of the risk of runaway inflation at home, of a deteriorating balance of payments overseas, the Budget seems to have left everyone, as one newspaper said this morning, "mildly stunned". I have sensed that this atmosphere has somewhat coloured our debate. Some people, inside and outside of the Committee, have been deeply confused by the Chancellor's proposals. The morning papers make this very clear.
A good many commentators, when asked by the Press for their comments on the Budget, flatly refused to give them, saying that they must have much more time to study it. For instance the Confederation of British Industry was extremely non-committal and would require much more study before opinion could be formed. One commentator, the President of the National Union of Small Shopkeepers, who, one might have thought, could have expressed some view upon the new tax, contented himself with saying that he welcomed the Chancellor's proposal to abolish the licence to sell postage stamps.
The debate has shown that the Budget poses many more questions than it answers. In the face of this it was surprising to read in HANSARD this morning,
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for such was the turmoil at the end of the Chancellor's speech that it was impossible to hear everything he was saying, that he said at the conclusion of his speech:
"& the message of this Budget is clear and unambiguous."—[OFFICIAL REPORT, 3rd May. 1966; Vol. 727, c. 1460.]
I must say that whatever else it is, it is certainly not that.
One must give credit where it is due, firstly for the removal of two major uncertainties, which we welcome for that fact alone. In the first place the future of the surcharge now appears to be tolerably clear. In the second place the rate of Corporation Tax is now fixed and known.
As has been made clear by my right hon. Friend the Leader of the Opposition and my right hon. Friend the Member for Enfield, West (Mr. lain Macleod) that we welcome the announcement that the surcharge is to be allowed to lapse next November. There is no doubt that it has had the effect of putting up industrial costs in this country, for, despite the lengthy debates we had at the beginning of the last Parliament, many of the products on which the surcharge was levied were industrial intermediates, raw materials in the sense that they were raw materials of industry in this country. The removal of the surcharge will help industry in that way.
But, worse than that, the surcharge infuriated our trading partners, even to the state of a mild case of incendiarism. It had the effect—this is its most severe criticism—of substantially reducing competition which our own industrialists should face in this country. Whatever the Government might have said about its intention, the effect of the surcharge was to operate as a protective duty. To that extent, for as long as it has been on—and it will be on for most of the rest of this year—it has been operating to defeat the Government's intention that industry should become more efficient. Anybody who talks to industrialists making products on which if exported the surcharge is levied must recognise that they regard it, in effect if not in intention, as a protective duty.
Welcome though the decision is that the surcharge should be allowed to lapse, has the Chancellor of the Exchequer

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really reckoned what the effect of his long early warning will be on imports? It may well be that he is looking forward to a substantial diminution in imports over the next few months—a sort of diminuendo as the date on which the surcharge is due to come off approaches. But what will be the effect the minute it has come off? On the last occasion that it was reduced, from 15 to 10 per cent., there was a substantial reduction in imports for the few weeks beforehand and the goods piled up at the docks, causing great congestion. There must be a grave risk that this will happen to a greater extent, partly because the surcharge will be, we hope, coming to an end for good, partly because the reduction will be double—10 per cent. and not 5 per cent.—and partly because of the very early warning. In addition, the Christmas trade, the tail end of which will still be in the docks in November, is likely to cause grave disruption of the handling of goods at the docks. I hope that the Government will give very careful thought to ways in which they can even out the flow in order to avoid this trouble.
I come now to the Corporation Tax. While the fixing of the rate will end the uncertainty, which has been very damaging over the last year—and the Government should be well aware of that—40 per cent. is depressingly high. The right hon. Member for Orkney and Shetland (Mr. Grimond) made this point very forcefully. We welcomed his support. The hon. Member for Heywood and Royton (Mr. Barnett) lent his support, as on so many other occasions, when he indicated that this was a high rate.
Mr. Barnett: I was making the point—and I am sure that the hon. Gentleman would not want to do me an injustice—that it represents an increase. But I went on to say that hon. Members opposite should be fair and recognise that dividends should also make a contribution to the incomes and prices policy.
Mr. Jenkin: I apologise to the hon. Gentleman if I misinterpreted his remarks. I wrote down the word "high", and I fancy that he must have said it at some stage, but I accept his explanation entirely. It represents an increase, and one of the criticisms which my right hon. Friend the Member for Enfield, West made, and which I hope the Chief
1754
Secretary will answer, is that we do not know how much the increase is because it is impossible to divine it from the Financial Statement.
The rate of 40 per cent. will cause increasing dismay among those in industry as they realise what the effect will be. At the moment the dismay is muted, because industrialists were led to believe that there was a chance that it would be 42½ per cent. Therefore, there is temporary relief that the rate is not as high as that. But 40 per cent. is high and it will certainly discourage investment; it must have this effect.
After all, we had these arguments nearly 12 months ago, but I wonder whether the Government even now realise the effect of a Corporation Tax at as high a rate as this, or, indeed, the whole impact that the new Corporation Tax system must have on investment. If the calculations are done entirely on a pre-tax basis, the new system does not make any difference. If tax is not taken into account, then it does not make any difference, or it does not appear to make any difference. If, on the other hand, as more and more companies are doing, advanced, sophisticated methods of quantifying returns are employed—discounted cash flow, or other techniques—it is at once apparent that the change to the new system has made a substantial difference to the relative attractiveness of investment projects. There is no doubt about that at all.
In one company where I have studied the calculations which the company does on a computer using discounted cash flow, the effect of the 40 per cent. Corporation Tax rate, the change from the pre-Corporation Tax to the new, has meant that the company has had to increase the required rate of return element in the calculations from 10 per cent. to 14 per cent. The Parliamentary Secretary to the Ministry of Power was good enough to show me another case. We entirely agreed on this. He was considering a case where the write-off period was rather longer, where the increase in the required rate of return was from 7 per cent. to 10½ per cent. On D.C.F. calculations those are very substantial increases indeed, and are entirely due to the change and the new system of Corporation Tax, coupled with a 40 per cent. rate.

1755
Some attempts have been made at giving answers to this.
The Chief Secretary to the Treasury (Mr. John Diamond): The hon. Gentleman says that these are due partly to the change in the system as well as to the increase in the rate. Is it now the Opposition's official view that they do not believe in the Corporation Tax?
Mr. Jenkin: I should have thought that the Chief Secretary had sat through our debates long enough last year to realise that we intensely dislike this Corporation Tax. The answers which have been put up to this are these. The first answer is that, although the investment allowances were devalued, the Government have now given us the investment grants. I should have thought that this has now become a pretty tatty answer, because it has become apparent that it is only industrial companies in manufacturing industry which are in development areas and not in development districts that stand to gain anything substantial out of the new grants. Almost everybody else is worse off.
Another answer has been to say, "Companies have it in their own hands. They can reduce that required rate of return figure by distributing a lower proportion of their profits and reduce their dividends". That answer entirely fails to understand how public companies, often with hundreds of thousands of shareholders, must conduct their affairs. It is totally impracticable for them, while they are continuing to make profits on, one hopes, an increasing scale representing the increasing capital in the business, to reduce their dividends. They have a duty to their shareholders, many of which are important institutions representing tens of thousands, if not millions, of small investors or insurers. They must maintain their dividends if they are to ensure the new capital they need.
Above all, it is certainly no answer, as might be suggested, to say that manufacturing industry will get the premium on the Selective Employment Tax. Some rather interesting figures were published in the Press this morning—the right hon. Member for Orkney and Shetland referred to one of them—showing just how little the premium is worth to certain big manufacturing companies. The example
1756
was given of I.C.I., to which the premium will be worth less than £2 million a year—about £1,800,000; whereas the difference between a 35 per cent. and 40 per cent. Corporation Tax represents about £4 million a year.
Another more extreme example, one which was mentioned by the right hon. Member for Orkney and Shetland, was that on a gross profit of about £45 million the difference between a 40 per cent. and a 35 per cent. rate of Corporation Tax represents £2¼ million. The amount of the premium which that company can expect to recover under the Selective Employment Tax is only £315,000, or just over one-eighth of the extra tax paid because the Corporation Tax is at a rate of 40 per cent. and not 35 per cent. So that is clearly no answer at all. I should add that none of these figures takes account of any extra costs which the premium is intended to offset.
The 40 per cent. is a disappointing—indeed, a depressingly high—level of Corporation Tax and will certainly inhibit investment. This is really one more nail in the First Secretary's coffin. I should, perhaps, hasten to add, not his own coffin, but the coffin in which the National Plan, which was so very powerfully attacked by my hon. Friend the Member for Oswestry (Mr. Biffen), must now lie. That Plan requires a 7 per cent. annual increase in manufacturing investment—every year from 1964 to 1970—if the target is to be achieved: 7 per cent. annual increase in real terms.
I would agree with those, including a number of hon. Members who have spoken in this debate, who have expressed grave disappointment at the increase in the level of investment last year. It was very substantially less than that in 1964, and, of course, the prognosis, the forecast, this year, 1966, is even more depressing, for it appears that there is to be no increase—not only not a 7 per cent. increase, but no increase at all—in industrial investment. The Board of Trade's own survey carried out last November showed that, and it was reinforced by a survey which the C.B.I. published in February, which showed quite clearly that "capital investment in plant and machinery is not expected to change substantially over the next 12 months."
The First Secretary was unwise enough to repeat again this afternoon that the Plan

1757
was a blueprint—a blueprint for action. He was directly contradicted by his hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) who said it was not a blueprint. I am bound to say that I must agree with the hon. Member rather than the right hon. Gentleman, because if the First Secretary really believes it is a blueprint he is rather like the man who proudly announces to his friends that in the next two years he is going to have three children, and announces it when he knows his wife is not immediately expecting a child and when there is no history of twins in the family. I am bound to say that the Chancellor has now finally put paid to any hopes that the right hon. Gentleman may have had of achieving his target. He seems to have called him up and sent him overseas for two years.
Having dealt with the certainties, and welcomed the news about the surcharge, and expressed disappointment with the Corporation Tax, let me turn to some areas of uncertainty and doubt and, indeed, of confusion. First, I should like to say a few words about the balance of payments. We are, I believe, inclined from time to time—and this has certainly been so in the last two or three years—to fall into the error of being too sensitive to the month-to-month or even quarter-to-quarter fluctuations in the balance of payments. I think we run the risk of turning ourselves into economic hypochondriacs. It does no good at all.
This point was very forcefully put the other day by Mr. John Davies, Director-General of the C.B.I., who, talking in Copenhagen, said:
"Britain persists in talking herself into an unnecessary state of crisis over external exchange problems. She is rather like wealthy men who give themselves the appearance of people in whom one should have little confidence."
He went on:
"Does anybody seriously imagine that Britain, backed by the immense strength of its overseas investment, is really on the rocks? What nonsense it all is—cooked up from a state of affairs which no self-respecting company would tolerate for five minutes."
There is a great deal more that Mr. John Davies said very much to the point, and which could well be laid at the door of hon. Members opposite who have so
1758
pictured it ever since they came into office in 1964.
While I agree we should not get all steamed up about the month-to-month fluctuations I believe that it is right that we should keep alert to the trend. My right hon. Friend the Leader of the Opposition referred yesterday to the rapid changes of forecasts which the Chancellor has been putting out in recent months as to his expectations whether we should be in balance at the end of this year or not. As he said yesterday, he seemed quite content with the trend. It is a fact that no one now seriously expects us to have struck the balance in the balance of payments by this year.
To look a little further ahead, what about 1967? In this connection perhaps I might draw the attention of the Committee to an important article in the Statist of 22nd April which drew attenttion to what appeared to be a marked connection between the level of increase in wages and the level of exports. The article illustrated the theme with a telling chart which showed how, over the last twelve years, the growth of our exports seems to have varied inversely with the rate of increase in earnings, though after a lag of about two years. If earnings rise very rapidly, then two years later one can expect the growth of exports to fall. If earnings remain stable, then two years later there follows a very encouraging surge in exports. This appears to have been the pattern over the last twelve years and it concludes that
"marked changes in hourly wage earnings appear to have a decisive effect upon the percentage growth in exports about one to two years later."
If one is to take the figures for earnings from the Economic Report—and here I am mindful of the remarks of the hon. Member for Ashton-under-Lyne who accused us on this side of the House of fiddling the figures—it is plain to see that the increase in 1965 over 1964 in average hourly wage earnings—this is on page 24, if the hon. Gentleman wants to check it—was 10·1 per cent., and in giving his figure, which he suggested should be much lower, he seemed to be indulging in the remarkable gambit of deflating this increase in earnings by reference to the Cost of Living Index, which seems an extraordinary way of dealing with it.

1759
The annual increase of 10 per cent. last year, which shows no sign of slackening off, appears to have the gravest possible implications for our exports in 1967. As the Report says:
"Last year was one in which our unit labour costs increased at above a trend rate",
which I should have thought was the understatement of the year. Stagnant output and soaring wage costs create a very serious situation indeed, and, as I understood the First Secretary, he did not seriously deny this.
What is the Chancellor's expectation of exports in 1967 and 1968? Is he banking on the present fairly encouraging trend continuing? My hon. Friend the Member for Oswestry also sounded a warning note. I ask that because on the figures in the Statist article there is no doubt that the increase which we had this year was due to the stable and encouraging conditions which existed two years ago, and by 1967 we may find that that trend has been reversed.
That brings me, inevitably, to the incomes policy, about which I have one or two comments to make. Apparently this is still to be the main bastion against inflation. It is still intended to be the main weapon which the Government are trying to use to keep the economy in check. The right hon. Gentleman may have had some success with prices, but he has had none, or virtually none, with earnings, with the result that increased demand has been injected into the economy, and the Chancellor has had to come along with his Budget and take it out again. The First Secretary lets it go in, and the Chancellor takes it out.
As I saw the First Secretary sitting beside the Chancellor while he was making his Budget Speech yesterday afternoon, I could not help feeling that he, at any rate, was conscious that the measure of deflation which the Chancellor had to introduce was to some extent due to the failure of the incomes policy. Indeed, he may still be smarting under the unkindest cut of all, in that the President of U.S.D.A.W., Mr. Hanes, justified his union's decision to back the incomes policy by saying it was splendid, and they had had the biggest increase they had ever had in the history of the union.
I can tell my hon. Friends that all that is to be changed. An entirely new broom
1760
is to come in to deal with this whole problem. The First Secretary has at last decided to recruit an expert on prices and incomes to the Department of Economic Affairs. On 27th April, last Wednesday, the following advertisement appeared in the Financial Times:
"Prices and Incomes Policy. A new appointment in The Department of Economic Affairs … concerned primarily with the further development of prices and incomes policy."
This paragon will no doubt be a welcome reinforcement to the First Secretary's armoury, but it comes just at a time when the day-to-day responsibility for the prices and incomes policy has been entrusted to other Ministers.
On a more serious note, I want to make one observation, which picks up the point made this afternoon about unemployment by my right hon. Friend the Member for Enfield, West. With an unemployment level as low as 1·2 per cent. or 1·3 per cent. it is idle to expect any sort of incomes policy to keep prices and wages in check. It just cannot be done, especially when one remembers that according to the Minister of Labour Survey a substantial number of the roughly 300,000 registered unemployed are virtually unemployable, for personal reasons—people who cannot be expected to do any job. This means that we are trying to run our economy on a frictional unemployment level of about 0·5 per cent. I put it to the First Secretary: how can be expect his incomes policy to work in those circumstances?—because if he does, he is doomed to failure.
Mr. James Tinn: Would the hon. Member care to say what level of unemployment he would recommend?
Mr. Jenkin: The hon. Member for Cleveland (Mr. Tinn) should have been here this afternoon, when he would have heard my right hon. Friend suggest that what we want is a new 1944 White Paper in order to try to get a more realistic definition of full employment. I say that on our present definition we cannot hope for an incomes policy to succeed with the level of unemployment on which we have been trying to run it.
The Selective Employment Tax has been exhaustively discussed and powerfully criticised by hon. Members on both sides of the Committee. There are many

1761
other points which could be made and which will no doubt be made in this debate.
My last point concerns the new restrictions on overseas investment in the sterling area. This point was covered by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), whom I thank for his compliment to myself and my hon. Friends on the Front Bench. I can understand the logic of the Chancellor's move, but I believe that it is misguided. The study that is being carried out will show that the return on foreign investment is vastly greater than anything on which the Chancellor based his decision last year and his recommendations this year. The real return has been considerably underestimated.
This attitude to overseas investment is indicative of a much wider and deeper issue of principle between the two sides of the Committee. It affects not only our attitude to overseas investment but to the home economy. Are we to develop into a closed, self-sufficient, insulated, inward-looking economy, restricting all investment overseas, hostile to foreign investment in this country, casting admonitory eyes at overseas travellers—those who holiday abroad—keeping high tariffs against imports, and trying increasingly to plan, manipulate and manage our own economy, insulated from the economic influences in the rest of the world—or are we to become an outward-looking, competitive economy, welcoming the free flow of goods and the flow of capital round the
1762
world, and opening our ports to trade from the rest of the world, seeking to sell our products in fair and free competition with the rest of the world?
That is the choice, and that is the real issue between the two sides of the Committee, though that may be a matter of degree rather than of principle. We have had welcome signs from the Government in the Budget. They will scrap the surcharge and make a determined effort to join the Common Market. These are welcome signs. But are they conclusive? Are they really going to espouse a liberal philosophy? The key is the Government's long term attitude to foreign investment. From the Chancellor we would like to know whether the restrictions on foreign investment and the relief from double taxation are intended to be transitional and temporary measures, or permanent measures, because it is on his answer to those question that the issue will be truly tested.
It being Ten o'clock, The CHAIRMAN, left the Chair to report Progress and ask leave to sit again.
Committee report Progress; to sit again Tomorrow.

BUSINESS OF THE HOUSE
Ordered,
That the Proceedings on the Guyana Independence Bill may be entered upon and proceeded with at this day's Sitting at any hour though opposed.—[Mr. Harper.]

GUYANA INDEPENDENCE BILL
Considered in Committee.
[Sir ERIC FLETCHER in the Chair]

GUYANA INDEPENDENCE BILL

  Clause 1.—(FULLY RESPONSIBLE STATUS OF GUYANA.)
  10.1 p.m.
  The Chairman: In calling the first Amendment, may I say that I think it would be convenient if the second Amendment were discussed with it.
  Mr. Julius Silverman (Birmingham, Aston): I beg to move, in page 1, line 5, after "1966", to insert "except as here-inafter provided".
  This Amendment is, of course, consequential upon the second, in page 1, line 10, at the end to insert:
  "This Bill shall only come into operation on such day on or after 26th May that the Minister shall certify that no person in British Guiana continues to be detained without charge and without trial."
  That is the substantive Amendment, which you, Sir Eric, have suggested should be discussed with the first Amendment.
  Those hon. Members who were present on Friday or who have read the report in HANSARD of Friday's debate will know that we complained then about 15 men who are imprisoned in British Guiana without trial and without any charge having been made against them. Some of them have been in prison for two years and there is no indication of how long they will remain there. This is a matter in which this House and this Parliament have a responsibility and an obligation.
  The Under-Secretary of State for the Colonies did not specify in his reply what were the accusations against these men. Even if it is not possible to bring these men to trial, at any rate this House is entitled to know why they are in gaol and what is the nature of the charges being brought against them. Some of these men about whom I know are men of the highest reputation. I have mentioned Vernon Nunes, whom I know and whose wife and three children reside in Birmingham. He is well known in Birmingham University and has taught in Birmingham. He is a man of the highest reputation. If it is suggested that he is
  1764
  throwing bombs or threatening to do so, I would answer that that is sheer nonsense.
  I will mention others. I mention Jardin. Some of these men I do not know, but the least the House is entitled to expect is that the allegations made, upon the basis of which these men are deprived of their liberty, should be specified. They have not been specified. I understand that since Friday's debate one man has been released. He is what I would call one of the smaller fish, and I understand that there is the possibility of another man being released.
  I do not consider this an adequate response to the plea which was made by my hon. Friends and myself and, I believe, by the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) on Monday. Vernon Nunes has not been released and, as far as I know, there is not at present a suggestion that he should be released.
  Sir William Teeling: The hon. Gentleman is rather implying that this release took place because of Friday's debate. As he told us on Friday, it takes quite a long time for these things to be dealt with in Guiana, and presumably this release was settled long before Friday's debate. Indeed, I doubt whether they had heard of our debate when the release took place.
  Mr. Silverman: I said since Friday's debate. I used the word "since" advisedly. I believe that these releases were made in response to a message which was sent by the Colonial Secretary. A number of my hon. Friends and I saw the Colonial Secretary on Wednesday, made certain representations to him and, I understand, he made certain representations to Mr. Burnham. It is almost certain that because of those representations this man has been released and another will be released. However, I do not consider this to be an adequate response to the representations which the Colonial Secretary made.
  I regard the men who have or will be released as small fish. While I rejoice at their liberation, however humble they may be, the chief and most important political personalities—who, I still maintain, as I am entitled to maintain in the absence of evidence to the contrary—solely because of their political views

  1765
  and activities are still in gaol and will remain in gaol. This is something for which the House has a serious responsibility.
  Moreover, these imprisonments are in flagrant contravention of a resolution of the United Nations of 10th December which called for an end to the state of emergency and for the liberation of these men. The Government of British Guiana have a responsibility to the United Nations, whose resolutions are supported by many countries. The resolution of 10th December was supported by 87 nations, and while it was not supported by Britain, we have a responsibility to see that it is carried out. After all, U.N. resolutions are not passed lightly and we cannot be satisfied with what has happened to date in Guiana.
  This Amendment does not delay the operation of independence for British Guiana. According to the Bill, in 24 days time the Writ of Her Majesty's Government ceases to run in that country and the laws passed by this Parliament cease to be binding. Therefore, action must be taken quickly in these last 24 days. The Amendment proposes that the appointed day should be delayed until these men are released. If the Amendment is carried it need not, however, delay independence. If Mr. Burnham, by an act of statesmanship, decides that these men shall be set free, there is no reason why independence should be delayed a single day.
  It has been said—and I do not dispute this—that there is a history of violence in British Guiana over the past few years. That is perfectly true, and there has indeed been a dreadful history of violence. On Friday I mentioned a document which, until that day, had had only one reference in a newspaper in this country. The Birmingham Post mentioned it about 12 months after the document was issued. The document was prepared, so I am advised, by the British Senior Superintendent of the Guiana Police for the British Commissioner of the Guiana Police. Commissioner Peter Owen is now in Aden. This is an almost incredible document, headed "Secret". I am told that if I used this document in British Guiana or if I had it in my possession, under the State of Emergency I could be imprisoned for six months. For-
  1766
  tunately I am a British Member of Parliament and am not in British Guiana.
  The document is headed "Police Headquarters", and then appear the words "Assistant Commissioner of Crime". It then says:
  "I have investigated 19 reports of crimes which occurred between 8th June, 1963 and 21st July, 1963, which include placing explosives in buildings and destroying buildings with explosives and arson. I am of opinion that there is evidence to support a charge of conspiracy contrary to Section 34 of the Criminal Law Offence Ordinance, Chapter 10."
  It then say:
  "The following persons are involved in these crimes."
  It deals with a number of explosions and acts of arson which took place in 1963, such as the blowing up of the Transport and Harbours Department office, blowing up the Campbell Ville Government School, arson and fire at the Georgetown ferry stelling, an attempt to demolish by explosives the Ministry of Home Affairs, the Ministry of Labour, Health and Housing, an attempt to blow up the Central Housing Planning Department, and an attempt to blow up the Education Department in Georgetown. Many of these buildings were demolished. In the case of the Rice Marketing Board a large quantity of dynamite was placed under a wharf where 200 workmen were engaged in loading rice on to a ship.
  An interesting point about this document, which was prepared as recently as 11th December, 1963, is that there are 25 people whose names are set down, and in these cases it is not a question of suspicion but the police have formulated charges. I do not want to read the whole of the document. It sets out circumstantial details. The evidence is set out, and it is suggested that there is sufficient evidence of a criminal conspiracy under the Criminal Law Offence Ordinance. Was any action taken about this by the Governor? Were there any detentions? No. Was there any trial? No. One action only was taken. The document was suppressed. At that time the Government in power, or nominally in power, against which these actions were taken was Mr. Jagan's Government.
  It is interesting to examine some of the 25 names in the document. One of them is the present Prime Minister, Mr. Burnham. Another is Mr. Graham, now head of the Marketing Division of the Government. Mr. Hamilton Green is

  1767
  the Secretary of the P.N.C., the party now in power. Mr. Llewellyn John is the Minister of Agriculture. Dr. Reid is the Minister of Home Affairs in whose house detonators were found. He is now Minister of Home Affairs. Twelve months before it was suggested that he should be prosecuted for conspiracy, arson and carrying explosives. This is an extraordinary metamorphosis. It is like making Guy Fawkes the Serjeant at Arms of this House. Mr. Richard Ishmail is a large hotel owner, President of the Trades Union Congress and also a supporter of the present Administration.
  Does the Minister deny that this is an authentic document? I take it that he does not. I think that I am entitled to ask him why no action was taken on it. Perhaps the hon. Member for Surbiton (Mr. Fisher), whom I see in his place and who was responsible Ministerially at that time, can enlighten the House as to why no action was taken.
  10.15 p.m.
  I should not have raised this matter, and I should have been content to close this passage in the history of British Guiana, if there had been a response to the appeal which we have made and which, I am sure, the Minister has made to the Government of British Guiana. But, as the response has been so meagre, I am entitled to ask whether these men should be the gaolers of the fourteen who are in prison at present. This is a shocking history for which, I regret to say, this Government also bear a share of responsibility. We are responsible for seeing that these men do not linger in gaol.
  I believe that the problem of the future of Guyana can be solved as it could have been solved if there had been no intervention by foreign States, if there had been no intervention by the United States of America. One of the regrettable features of these events is that there have, undoubtedly, been interventions by powerful American unions which, during the Jagan regime, financed subversion and strikes. There is even an accusation which is widely believed—I know not whether it is true—that the Central Intelligence Agency of America also has participated in these activities.
  It is a dreadful passage in British Guiana's history, and it is no part of my
  1768
  duty to revive it. I wish it were possible to close the door upon it. But if the door on the past is to be closed, if the people of British Guiana of all political parties and all races are to live in peace together, if we are to say "Goodbye" to the past, one thing is absolutely essential: these men should be released.
  Mr. Will Griffiths: I have been thinking about what my hon. Friend said of the police report, and I should like to have a point made clear. He said that the report was suppressed. By whom was it suppressed?
  Mr. Silverman: I am afraid that I cannot say by whom it was suppressed. I do not know at what stage it was suppressed, or whether it was presented to the Governor. Perhaps we may learn tonight whether it was presented to the Governor. I know that it was not presented to the Minister of Home Affairs.
  By all means let us say "Goodbye" to the past. All hon. Members would desire that the people of Guyana, of all parties and all races, should live together in peace. I shall not raise the question of the elections. They have taken place. History has moved on. We cannot turn the wheel back. But, if the people of Guyana are to live in peace, it is essential that these men be released.
  I appeal to the Colonial Secretary and to the Under-Secretary of State. I appeal to Mr. Burnham for this act of statesmanship, an act of statesmanship which would mean so much more than any risk in not keeping these people in prison and which could be the prelude to a new Guyana really independent, really free and really peaceful.
  Mr. Leslie Hale: I associate myself with almost every word said by my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman), dissociating myself from one word only on academic grounds. He said that some of these people were men of good character. Let us start right and say that all people are men of good character until they have been brought to public trial and evidence has been given and proved against them. That, at least, is the rule which we apply in any consideration of the administration of justice or of human rights.

  1769
  I first met my hon. Friend the Under-Secretary of State in Uganda and he was there my host. I got to know and admire his real interest and devotion, in difficult circumstances, to the cause of colonial freedom. Therefore, he is the last man with whom I would wish to have anything which even sounded like a quarrel. In referring to what he said on Friday—which is what has brought me here today—I shall do it, therefore, with the utmost—not diffidence, because it is too important—but restraint.
  I am sorry that I shall have to say things which sound a little discourteous, but my hon. Friend said: "These people are under arrest, not for political views, not for discrimination. They have done something. They have committed crimes. They have not been brought to trial because the witnesses will not come, but we know that they are guilty." This is Mussolini and Matteotti. This is Senator McCarthy. I know that my hon. Friend does not mean that. He is not that type of "bloke". I am making no personal attack on him, but we must avoid saying these things in this House, where men died for freedom of conscience, where men were prepared to go to the block to protect what some people now call academic principles.
  These people have not been tried. There is a wretched history behind it all. I shall be out of order in five minutes, and I give warning to the Chair that it may call me to order now. I came into this first after the burning of Georgetown in 1953, when the present Viscount Chandos said that it was necessary to suspend the British Guiana Constitution. We had a debate about it and it opened—forgive my mentioning it—by the hon. Member for Oldham, West being thanked because he had been much more vigilant and active than he is now. He had spotted that an Order of the Privy Council had been made—I forget the precise circumstances. One knows how these Orders of the Privy Council are made. Usually, in the grouse and salmon season, someone travels to Balmoral and asks whether the shooting is all right, the thing is passed across, people have a glass of sherry, and back he comes on the next train. Nobody ever knows that the constitution of British Guiana has gone at all.
  1770
  And then we put down a Question for written answer and then we have a debate.
  I remember the debate. It was opened by the late Lord Chuter Ede, whom we all revered and respected. I think that Clem took part in it. There was a great deal of cacophony about a plot to burn down Georgetown—all nonsense, of course. The former Attorney-General of Ghana, with all his diligence, was engaged in a great deal of research to find out what was the evidence of the plot to burn down Georgetown. It was said that petrol at some of the garages had gone up. As far as I know, it was the motoring season. Anyway, the constitution was suspended.
  Everyone can understand the Parliamentary Secretary and his colleagues now saying, "We want to finish all this". Indeed some of the more intelligent newspapers have been saying for the last three years, "Let us get rid of British Guiana at any price and on any terms, and the quicker the better, because it has become a hot potato."
  I was told some years ago, and it has been repeated constantly ever since, "We do not intend to have a Communist taking over in British Guiana." This is the most dangerous and difficult thing of all. Not being one of those who dash up and down the corridors of this building every five minutes signing motions about American imperialism, I would say that if I were President Johnson I would probably take the same view. But I am not President Johnson. I am the Member for Oldham, West. This is a British Colony, and these are people for whom we have had some responsibility and care to exercise for a long time.
  I am not in favour of letting them remain locked up and handing them over to their enemies, particularly as there is some evidence for my hon. Friend in support of his reference to Mr. Owen. Mr. Owen gave evidence in the trial in British Guiana 12 months ago. I have some papers here about what Mr. Owen said, if I can find it—although I shall be surprised if I do in all this lot. He said in evidence before the trial that there was a plot. This report states that Police Commissioner Owen during the Supreme Court case made allegations about the Burnham People's National

  1771
  Congress. May I interrupt to say that Mr. Owen was a man sent out from London, selected and appointed in London. I have nothing whatever against him and make no criticism of him. I do not know him and have never had a chance of seeing him. At any rate, he was not a tool of Mr. Burnham or of Mr. Jagan, or of anyone else. He was sent out with all the wealth of authority of London, possibly of Scotland Yard.
  He said in evidence that the Burnham People's National Congress had a terrorist gang responsible for a series of crimes such as murder, arson, causing explosions to buildings and subversive and criminal activities. My hon. Friend said that there had been something like a censorship somewhere. That is true when this sort of thing is stated in evidence and we have to find it in an American digest of facts with no newspaper quotations to support it.
  The most serious of the bomb attacks, the most terrible attack, was that in which several children lost their lives, but the victim of the next most serious attack recorded was Mrs. Jagan. I am sure that she will not mind my saying that she is not reputed to enjoy a universal popularity and that the people who dislike her most are easy to identify. One day we may be told—we might have been told it ten years ago—that she blew herself and her associates up.
  This matter is serious—a good deal more serious than has been suggested, for a number of associated reasons. When the House talks about Black South America it starts talking about ten o'clock at night. When it talks about a White Government in Black Africa, it does so for day after day ad nauseam. Admittedly this is a distant comparison, but one of the reasons we give why we cannot negotiate with Mr. Smith is that we cannot do so while there are two African political leaders imprisoned without trial. Of course this is not comparable. I do not suggest that it is comparable. Of course it is a different story. But what is our case against Mr. Smith for locking up African leaders without trial when we are doing it ourselves in Guyana and handing these prisoners over to their enemies?
  On Friday the Parliamentary Secretary said, "The real trouble is that we
  1772
  cannot get witnesses to give evidence because they are frightened." This is the usual excuse which a rather tough and hardboiled policeman gives to persuade a magistrate to refuse bail, and most intelligent magistrates say, "You have no right to say anything of the sort, and I hope that you will never say it again."
  10.30 p.m.
  What is the position? Mr. Burnham was arrested and charged with having an offensive weapon and not declaring it under the Emergency Regulations. He was brought to trial and acquitted. The witnesses were not afraid to give evidence on his behalf. His people, the same people who might be giving evidence against the detainees, were not frightened to give evidence for him.
  If in a country it is publicly said, "We cannot put these people on trial because the state of terror means that it is impossible to hold our courts, to have public hearings and to persuade witnesses to appear because they fear for their lives so we must detain the defendants instead", what is the case for giving it independence? It is indefensible.
  Quite properly, my hon. Friend the Member for Aston has said that he is not trying to prevent self-government. None of us are. This has gone on too long. This has been the story in all colonial affairs. Arguments that can suddenly be put now ought to have been put 20 years ago, and now it is too late because too much water has gone under the bridge, too many mistakes have been made, too many hearts have been broken and too many aspirations have been stuffed away. Let us be frank about it at least. We may be doing the only thing we can. But it is not a very good situation when one party represents one race and another party represents another race, when the balance of race is 350,000 to 250,000 or so, when antagonisms have grown, and when everyone knows that Mr. Burnham and Dr. Jagan should be working together for the good of British Guiana and no one knows whose fault it is that they are not. Each of us can go through the history of British Guiana and find Mr. Burnham saying "I won't" or Dr. Jagan saying "I won't". But when I first met them in 1953 they were working together. This is the sort of political

  1773
  operation that cannot operate without good will.
  No one would have thought a few years ago that Harold and George would join David and Jonathan and Derry and Toms as inseparable allies supporting each other and working together for the common good. My right hon. Friend the Prime Minister did a magnificent service to Britain and the Labour Party when he united the party in this way, when he followed the Christian doctrine of turning the other cheek. No one has shown more generosity to his enemies in these circumstances. Perhaps it is regrettable that the New Testament does not give very much direction on how one treats one's friends. But it can be done, has been done in the common interest and should be done.
  I have too great an affection for hon. Members from Northern Ireland to mention their election in detail, but in British Guiana there was a strange happening. On 2nd December, half way through the election there, the Governor poked his nose in and said that he would not necessarily send for the man who got the most votes to form a Government. That was the old-fashioned procedure to show that Her Majesty has uncontrolled discretion in these matters.
  The election results were about 44 seats for one party, 42 for another and twelve for others. Dr. Jagan's party had the largest number of seats. But the independent committee which observed the election said that it was a pretty good election for British Guiana and that it did not see much wrong, but that quite a lot of people might have voted differently because of the Governor's intervention. So Dr. Jagan finds that getting 44 per cent. of the votes brings him jolly near to gaol, and Mr. Burnham, by getting about 42 per cent., finds himself Prime Minister, not because of the agreement between him and Mr. Peter d'Aquiar, but because the Governor had already said that if they came to an agreement it would be all right. It is a question of order and priority in these things.
  Fifteen men are in gaol in British Guiana. They are in detention in circumstances which have been described as deplorable. Letters have been read to show that the food is disgraceful and that the provisions are contemptible, that they are being treated as detainees have
  1774
  been treated, and in the last resort it is by Her Majesty's Government, for we are the people who are still responsible. Heaven knows that we have been doing it for years! There is hardly a Prime Minister of an emergent country who has not been imprisoned by us somewhere, and I thought that we had come to the end.
  There are fifteen men imprisoned without trial, and some of them have been there for many months. Some of them are men who are beginning to take an active part in political life. We are told that we cannot be told what the charges are and that witnesses cannot be called to give evidence. It is said that we cannot say, "Before you have self-government, why not let them out?". What is it thought that these men will do if they are let out—form a trade union, or something? Have a meeting? Discuss some form of action? It is a disgrace if this state of affairs continues when everybody knows that a firm telegram to Mr. Burnham—it is probably a matter for the Governor—or to whomever may be in authority, would procure their release. We do not have the right to let this occasion pass without referring to one or two other matters.
  As has been said, this state of affairs is against the unanimous vote, at least the decision nemine contradicente of the United Nations Council. It is not so long ago that we were appealing to the United Nations for action in support of the British Government. What is our position with the United Nations if it is watching what we are doing about these things?
  Secondly, we know that at the conference convened by the former Secretary of State for the Colonies, my right hon. Friend the Member for Rossendale (Mr. Greenwood), in 1965, a draft constitution, or at least a plan for a constitution was prepared. The first item was a declaration of human rights in British Guiana. What happens about that? Is that just a comedy turn? Is that a bit of padding? Is it a sort of sweetener for something to come? Does it mean anything? Can it mean anything? Does it mean that once again we shall be told that the White Cliffs of Dover are the place where organised hypocrisy starts, as has been unfairly said so often in the past. What is it they are there

  1775
  for? Why are these people locked up without trial? The Minister said that they cannot be brought to trial, that they have not any evidence, except "I have seen some private documents—I cannot bring them to trial because I have not got witnesses."
  Mr. Julius Silverman: In fairness to the Minister, he has never said that he has seen any private documents, or anything at all.
  Mr. Hale: With respect, that is rather more unfair to the Minister than my observation, because the Minister said to the House that they were not detained because of political views, but because of acts they have been involved in. This included Mr. Nunes. I am quite sure that the Minister would not have said that unless he had some assurance, either written or verbal, that there was something in it. I do not know where he got the information or whether it was the Central Intelligence Agency. "There is no criticism of their political views," he added. That was one in the eye for Ike. The other strange thing about all this is that when things were going really well, when we had had a conference, when we had had a successful election, and everything was going to be changed, the then Foreign Secretary, the right hon. Member for Leyton (Mr. Gordon Walker), went to Washington on a blanket deal about saving the £, selling the aircraft industry and British Guiana.
  This was quite frankly reported in the American papers. They said that, from their point of view, and this is perfectly reasonable, "We cannot have this here. This chap Jagan is a Communist, and if he is not then he looks like one, and what is worse, both he and his missis talk like Communists. We cannot have it."
  I do not blame them. If I were President of the United States I would not give President Castro a ticker-tape welcome in New York—not unless I thought that it might serve a useful purpose. I am not criticising the United States over this. It is perfectly fair that as far as aid or generous terms to developing countries are concerned, the United States should make this condition. It is a little hard when they are creating a new democracy, because half
  1776
  the voters know very well that if they vote for Jagan they will not get any American aid, and if they vote for Mr. Burnham they may, provided Mr. Burnham is prepared to agree to one or two conditions, which may or may not be worthwhile.
  10.45 p.m.
  I am not saying this to criticise the United States. I am just looking at this rather strange world as I see it. In conclusion, the House has had some principles in the past, cherished over the centuries. To go on with this, without some assurance, is a sad breach of those principles.
  Mr. Hugh Jenkins: I rise to support the Amendment put down by my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman). I do so in the hope that the Parliamentary Secretary will accept it. If he does not, I hope the Amendment will be pressed to a vote and that the Government will be forced to accept it. I say this because I find myself in the position of very deeply regretting that my hon. Friend the Parliamentary Secretary, whose record in these matters is known to all of us, and is respected, should find himself in the position of defending the indefensible.
  The Government's case has been put very ably by my hon. Friend. I think it is this: There is a history of violence and bloodshed in British Guiana; there are faults on both sides; there has been violence on both sides; the position of these men is that they cannot be assured of a fair trial; for this reason we have to hand over independence to a Government with emergency powers in force. This, I think, is what the Government are saying: "We do not like this, but we have no alternative. We cannot put off handing over independence; the United Nations have told us to do so; although we ourselves did not vote for the motion which told us to do so, we must, nevertheless, respect it, and the whole process cannot be held up any longer." I believe myself that most of us in this House would accept that last statement—that the whole process cannot be held up much longer.
  But what is the truth of the position? The truth, I think, is this, that so far as violence and proof and evidence are concerned, there is some evidence—which

  1777
  has not been produced in a court of law, and therefore is not proved—but there is some evidence against members of the present Government in Guiana. So far as the other side is concerned, there is at the moment no evidence at all. The Under-Secretary of State has said that he is convinced that these men who are in gaol without trial have been guilty of some offences, but he has not said what. At no time at all has anybody said, "We cannot prove it; we cannot bring these men to justice, but this is what they are said to have done." Nobody has even said that. if that were said it would be something. If somebody could say, "These are the matters they are accused of, though we cannot give them a trial", if at least we were told what they are supposed to have done, that would be something.
  Can we possibly hand over power to a Government who are holding men without trial and are not even in a position to say precisely what the charges are? We cannot do this. I believe there is a widespread sentiment in the House tonight that this is something which we cannot bring ourselves to do. It is not that we do not understand the problem. When I went and discussed this with my right hon. Friend the Member for Rossendale (Mr. Greenwood), who was previously responsible, he told me—and I am sure this was true—that he thought of this business of detention without trial with the utmost repugnance; it was something which caused him great unease. I am absolutely sure it still causes my hon. Friend now sitting on the Front Bench equal unease.
  He told me, however, that the reason the men could not be brought to trial was that they could not be convicted, that a jury could not be found who would convict these men. Since then we have been told the opposite. We are now told that witnesses cannot be found to give evidence against these men. At first we are told that these men cannot be convicted; now we are told, apparently, that the men cannot be tried. Where is the truth?
  The truth of the matter is that they cannot be brought to trial, and we are bound to ask ourselves, is there not considerable substance in what my hon.
  1778
  Friend the Member for Oldham, West (Mr. Hale) has said? Can we really hand over authority to a Government if that Government are unable to uphold the rule of law in their own country without emergency powers?
  My hon. Friend the Under-Secretary of State may well say that this is not the case so far as these men are concerned. There were originally 44; the number came down: so gradually the rule of law is being established in Guyana, and there are now only—10 is it, 11, 13, 14?—14 exceptions to the general operation of the law which otherwise applies in Guyana.
  Cannot we say, as the Amendment suggests, that these 14 exceptions shall be removed, and that there is to be no exception to the operation of the rule of law in Guyana? If we can say that, we shall all be happy to say, "Let us take a chance", and it is a chance. Every country which enters into independence takes a chance. We know of cases in which independence has been handed over, and after the event the rule of law has been lost, and it has been regretted on both sides of the House.
  To hand over independence at a time when emergency powers are in force is without precedent. I do not believe that there is a case in which the Government have handed over power to any other Government at a time when emergency powers were in force. Sometimes they have been in force before the hand over. Sometimes they have been taken afterwards, but as far as I can see there has been no case in which, at the time of hand over, we were able to say, "We are handing over to a Government which cannot enforce the rule of law in its own country without the operation of emergency powers".
  If no evidence is produced against these men, why are they being held in gaol? I can say precisely why in one case. I have here the text of the detention order which was used in the case of Cedric Vernon Nunes, who has been mentioned. It is an order made under the Emergency Powers Regulations, 1964, and the Governor says:
  "Whereas I am satisfied with respect to Cedric Vernon Nunes of 110, Bonasika Street … that with a view to preventing him acting in a manner prejudicial to public safety and order it is necessary to make an Order directing that he be detained.

  1779
  Now, therefore, in pursuance of the power … I do hereby order and direct that the said Cedric Vernon Nunes be detained".
  That is all. That was on 25th January, 1965, and he has been there ever since.
  He is detained to prevent him acting in a manner prejudicial to public safety. This could apply to anyone in this House. We could be put in gaol to prevent us acting in a manner prejudicial to public safety. On this basis, who is safe? Which man cannot be put in gaol to prevent him doing something that he might do? For these reasons, it seems to me that we are not talking about something of party importance. We are talking about something which I know disturbs hon. Members on both sides of the House, and I believe that if my hon. Friend were to take the action which would reflect great credit on him, if he were to take his Parliamentary career in his hands and say that in his position tonight, having considered the situation as it has been illustrated to him, having given thought to his own excellent record in this matter, he feels that he ought to accept the Amendment, he would do a great service to the House, and a very great service to freedom.
  I hope that my hon. Friend will feel able to follow that course. If he does not, it will be with great reluctance, but if my hon. Friend the Member for Aston pursues his Amendment to a Division, as if need be I hope he will, I shall, unhappily, be forced to support him in the Lobby.
  Sir Frederic Bennett: For some little time now many of us have been very interested to hear some of the remarks made from the benches opposite. Perhaps some of us have wondered whether precisely the same sort of speeches would have been made had there been a triumphant Left-wing Jagan régime and some of his political opponents had been detained at the present time. I hope that perhaps the same force, the same enthusiasm, would have been shown tonight if that event had taken place. Perhaps I can be forgiven if I have my personal very sincere doubts whether the same—
  Mr. Will Griffiths rose—
  Mr. Stanley Orme rose—
  Sir F. Bennett: I shall not give way.
  Mr. Griffiths: Will the hon. Gentleman—
  Mr. Orme: The hon. Gentleman is insinuating—
  The Deputy Chairman (Mr. Sydney Irving): Order. If the hon. Member who has the Floor of the House does not give way, the hon. Members who are seeking to intervene must resume their seats.
  Hon. Members: Withdraw.
  Sir F. Bennett: If you ask me to withdraw anything I have said, Mr. Irving, you will so direct me.
  Mr. Orme: We have just heard insinuations made against Members, Mr. Irving. The hon. Member is smiling now. That smile should be wiped off his face. He has made insinuations against hon. Members of this House and will not allow Members to answer back. I ask for your Ruling on the point.
  The Deputy Chairman: I am afraid that the hon. Member has said nothing that is out of order.
  Sir F. Bennett: Thank you very much, Mr. Irving, for what I expected would be your answer, because there is no need for a great deal of giving way tonight. There is plenty of opportunity for any hon. Members who catch the eye of the Chair to reply in any way they wish to what they may interpret as an insult. Hon. Members on this side are quite prepared to see the Government Benches go through the formalities of co-operation between their two wings. We are not worried, and anything we want to say will be said.
  Mr. Will Griffiths: Are you afraid to give way?
  Sir F. Bennett: There is no reason for me to give way, because later any hon. Member can make any speech he wishes to make. I repeat that I am very doubtful whether there would have been the same show here tonight had the political situation in British Guiana been rather different from what it is.
  I say straight away, after those introductory remarks, that I have no intention of allowing the smile to be wiped

  1781
  off my face at any stage tonight. All I would say is that I support the Minister in his somewhat difficult task, because I well remember another occasion when he came to my aid, when he and I were members of the same "club" in that we had been declared persona non grata by Governments on the way to independence. On that occasion, although we were on different sides, he forgot all party preoccupations and came to my aid and expressed strong disapproval of this sort of arbitrary act before independence. I support him tonight quite genuinely, without any wish to cause him any embarrassment. [Laughter.] Hon. Members who want to interrupt will find that I am quite prepared to go on indefinitely, so if they want to speak later they had better remain quiet now.
  I would like to know the purpose of this move tonight. Do those hon. Members opposite who are making these criticisms really think that they will have any practical effect at all—except an adverse one—on what is likely to happen in British Guiana at present? I ask hon. Members opposite to remember that if these sort of speeches are made the only effect will be to prevent the sort of moderating and softening of the situation which we would all like to see. I cannot help believing—and again I hope that this will not be interpreted as an insult—that no such speech made here tonight will do other than harden attitudes in British Guiana at this late stage.
  We have had debates before this on the eve of other countries' independence. I can remember a Second Reading debate on the Bill granting independence to Uganda. At that time there was a distinct dispute, for which the British Government were responsible, between the Kingdom of Uganda, and a number of hon. Members on both sides of the House thought that Britain should take the responsibility of putting right something which we felt should be put right before independence was granted. One of my right hon. Friends, then the Minister responsible, will remember that occasion. But having made our protest, when the matter reached Committee everybody, on both sides, realised that we could do only more harm by pursuing an adverse criticism about a Government that was about to become independent.
  1782
  I say to those hon. Members tonight who say that they will go into the Lobbies that I hope they will if they want to do so, but whether they go into the Lobbies or not—the Minister knows this, and so does his opposite number on my Front Bench—nothing will stop British Guiana becoming independent at the end of this month, and the most we can hope for is to send Guiana into independence with or without the good wishes, co-operation and fellow-feeling of this House of Commons.
  11.0 p.m.
  If we are to achieve anything along the lines suggested tonight, it can only be done by unanimous good wishes going out from the House, both during the Committee stage and during Third Reading. Hon. Members opposite know that if they went into the Lobbies tonight and if by chance this Amendment were carried, this would not have the effect they desire. Guyana would still become independent at the end of the month, but with a feeling of frustration and resentment against this country and the House of Commons. The Under-Secretary knows this. This is a point of complete unanimity between both sides—that we cannot prevent detentions by any self-governing régime anywhere.
  I have been doing a little research, and I am sorry if I am not completely accurate over the data, but the hon. Member for Putney (Mr. Hugh Jenkins) said that this was without precedent. In contradiction, I would say that it is almost without precedent for an independent Commonwealth country not to transpose the preventive detention arbitrary powers it inherited from the colonial Power into its permanent legislation almost the day after independence. I will read the list. India and Pakistan, both of whom received independence before the hon. Member for Putney or I came into the House, both have the most rigid form of Preventive Detention Acts, and I can remember no occasion like tonight when an attempt was made from the benches opposite to hold up the independence of either country. Ghana and Nigeria went into independence with preventive detention arbitrary legislation—[Interruption] I will give the name of the Acts, if required, which they incorporated in their permanent legislation after independence. It may be that there has been 24 hours

  1783
  and 48 hours legislative delay, but I doubt whether any hon. Member would seriously suggest that we are having a battle to let people out for 48 hours. What we are talking about is whether a Commonwealth country ought to have the powers at all.
  I will continue with the list. Sierra Leone has had the Emergency Detention Act since its independence. Malawi and Singapore have had their Preservation of Public Security Acts, giving the power of arbitrary arrest and detention without trial. The Gambia has the Emergency Powers Act. Ceylon has the emergency Public Security Act, which allows detention without trial. Malaysia has its Internal Security Act which allows these same powers. Trinidad and Uganda have Emergency Powers Acts which give the same powers. Malta, Cyprus, Kenya and Zambia are all examples which I could find.
  My hon. Friend and others remember the number of independence debates which we have had in Committee, and we do not remember one like tonight. Why was there never this fuss about these other countries which went into independence with, if not these Acts actually in being—
  An Hon. Member: There are people actually in prison. That is the difference.
  Sir F. Bennett: That is not really borne out by the facts, although I cannot give the exact details. In every case, whether these countries actually transposed this legislation immediately upon independence into these powers or actually carried them over, this is a fact about all the countries I have mentioned.
  Mr. Hugh Jenkins: I think the hon. Gentleman has missed the point. I agree that what he has said is most regrettable. But I hope that he is not suggesting that this sad history is something which should give us cause for satisfaction. It is true that country after country has reintroduced such measures. I am suggesting that the present case is unique and entails actually handing over emergency powers. I agree that it is possible that the Burnham Government may reintroduce these powers and rearrest these men, but they should be released now and we should hope that there will be no rearrest.
  Sir F. Bennett: Is what the hon. Gentleman is trying for in tonight's exercise the release of these men for 48 hours' jollification during the independence celebrations—
  An Hon. Member: Have you no faith in Burnham?
  Sir F. Bennett: It is not a question of having faith in Burnham. Our task has become clear during the past few years, that, when these emergent territories gain their independence, for all sorts of reasons, for some of which we bear responsibility, we send them into independence with a whole variety of internal strains. In order to try to solve these problems, they resort to legislation of the sort to which the hon. Gentleman and I both object in principle. If we are talking about objecting to insults, I say at once that I have no liking at all for any of this sort of legislation. I have spoken—
  Several Hon. Members rose—
  Sir F. Bennett—against it, whatever country it might have been, which introduces it.
  Hon. Members: When?
  Sir F. Bennett: As far back as 1951. Hon. Gentlemen opposite will have plenty of opportunities to study what I have said in the past on this issue. Time and again my hon. Friends and I have objected in the House of Commons to arbitrary forms of detention and arrest. I say straight away that I will continue to object in principle to this type of legislation. I am seeking tonight—
  Several Hon. Members rose—
  Sir F. Bennett: I want hon. Gentlemen opposite to know this. I am seeking tonight to discover why—I want them to give me one reason why—other than a natural fellow feeling for those who are detained at present, we are having this exercise now. Why, in the list of other countries I detailed, did we not have Amendments intended to delay independence?
  This is what the people of Guiana will be asking tomorrow and the morning after. I am willing to lay a heavy bet that the Guinanese will ask, "What has happened to this county? Why are we having our independence held up through

  1785
  the determination of a section of Her Majesty's Government when we are doing what, almost without exception, every other Commonwealth country did on becoming independent"?
  I ask hon. Gentlemen opposite to tell me why they are taking this line in view of the number of debates we have had in the past, often on Fridays with hardly any hon. Members here—certainly not with Amendments of this nature, supported by so many hon. Gentlemen opposite—as one country after another was granted independence. They went into independence with this country hoping that they would follow our example by having the minimum possible amount of restrictive legislation.
  I am pleased to have this opportunity of telling the Committee that in Guiana today there is an enormous fund of good will towards Britain. My hon. Friends who know the country will agree with that. They will also agree that by the sort of action proposed by some hon. Gentlemen opposite tonight, we will not do any good for those who are detained there in prison. I may be anticipating the Minister's reply when I say that nothing that we do tonight by way of attacking the Guiana Government could possibly help to secure the release of the detained men.
  I am willing to support Her Majesty's Government on this issue because, whatever some hon. Gentlemen opposite may say, independence will come to Guiana at the end of the month. Undue sniping at the Government of that country at this stage is not only malicious but ineffective.
  Mr. Will Griffiths: The hon. Member for Torquay (Sir F. Bennett) has been in the House of Commons for a number of years—long enough to know that debates are conducted in a civilised manner, preserving the practice of giving way to one's opponents when one has made an outrageous charge against them. However, despite his years of service here, the hon. Gentleman does not seem to appreciate that agreeable Parliamentary custom. As he does so often, he takes refuge in his cowardice by refusing to give way to the hon. Members against whom he made the most outrageous charges.
  He accused my hon. Friend the Member for Oldham, West (Mr. Hale), my
  1786
  hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) and others of discriminating in their concern for freedom and liberty. When the hon. Gentleman has anything approaching one iota of the record which my hon. Friends have for showing concern for the freedom and liberty of others, he will be a much more respected libertarian in the House of Commons than he is tonight.
  Having said that—and I will give way to the hon. Member or to anybody else who wishes me to do so, with your permission, Mr. Irving—I want to turn to the Second Reading debate on Friday, which unfortunately I was unable to attend. I read the report of the debate, and I was very shocked indeed by the speech of my hon. Friend the Under-Secretary. I was shocked because, like others, I know something of his attitudes and his record before he took office. I am one of those old-fashioned Parliamentarians—old-fashioned Socialists, if you like—who believe that one's performance in office ought to approximate one's performance in opposition. It seems to me to be a good sort of democratic practice to bear in mind.
  Before I deal with what brings me here tonight to support my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) and to refer to the Under-Secretary's speech on Friday, I want to refer to the very extraordinary revelations made in the speech of my hon. Friend the Member for Aston tonight. Let us see what we are discussing. On both sides of the Committee, with the possible exception of the hon. Member for Torquay, we are concerned about the detention of people without trial in British Guiana, and we are anxious to see whether it is possible for the British House of Commons to exercise an influence on the side of liberty in these matters. I do not think there is anything between us on that—on the Liberal benches, some of the Opposition Members, and ourselves on the Government benches.
  What we have to consider and give enormous weight to—unless they are refuted—are the revelations made by my hon. Friend the Member for Aston tonight. He has quoted from a document which he says—and I had not heard of it before I heard his speech—was compiled by expatriates, British officers

  1787
  employed by the then Governor in British Guiana. This document says that Ministers of the present Government were guilty, in the opinion of the investigating officers, of conspiracy to murder, to commit acts of arson and offences against the then Government of British Guiana. This. I think, is what my hon. Friend said.
  Mr. Julius Silverman indicated assent
  Mr. Griffiths: He said that some of the individuals named in that document are, in fact, Ministers in Mr. Burnham's Government at the moment. Therefore, I say to hon. Members that, on the face of it, if my hon. Friend's document is one which cannot be challenged, we are entitled to be suspicious of the people at present in the Government of British Guiana who are responsible for the safety and welfare of their detainees, their fellow countrymen, whether they be Indian or African.
  What my hon. Friend said tonight is very serious. There was an exchange between my hon. Friend the Member for Oldham, West and my hon. Friend the Member for Aston, and I gather from what they said that my hon. Friend the Under-Secretary had not seen this document. I hope that when he comes to reply he will tell us whether he has seen it. As I have already said, in previous years he and I have been abroad looking into questions of political prisoners. We did not have the hon. Member for Torquay with us. But my hon. Friend and I were in Africa a few years ago looking into this very question of people imprisoned without trial. We did our best, and together we were reasonably successful.
  In the OFFICIAL REPORT of Friday's debate, in col. 1179, I see that my hon. Friend the Under-Secretary said:
  "I repeat that Mr. Nunes is not under detention because of his political views or his race. He is committed because he was or could be immediately associated with acts of violence."
  Whereupon my hon. Friend the Member for Aston intervened to say:
  "… but it is clear that, to satisfy hon. Members, the nature of the allegation being made against Mr. Nunes should at least be stated."—[OFFICIAL REPORT, 29th April, 1966; Vol. 727, c. 1179.]
  1788
  Of course, they should. If it is not possible in British Guiana, because of racial tensions or political differences, to make the charges stick in the courts, what is to prevent my hon. Friend the Under-Secretary of State or other British Ministers expressing their view on the matter in the House of Commons? What is wrong with that? If my hon. Friend really believes that Mr. Nunes or any other of the detainees is a threat to public order in British Guiana, as he implied in the debate on Friday last, he should give the House of Commons some explanation.
  11.15 p.m.
  The Under-Secretary of States says, "I cannot give you these details because the courts in British Guiana cannot prove the case. The witnesses cannot be produced and the charges cannot be made to stick." That may be the situation in British Guiana, but it does not let my hon. Friend out in the House from giving an explanation. He cannot have it both ways. He cannot say, on the one hand, "We have no jurisdiction over British Guiana, and we have no real power. Therefore, I cannot intervene," and then act in the House as though he is just a mouthpiece for the present Government in British Guiana. He said that Mr. Nunes was committed
  "because he was or could be immediately associated with acts of violence."
  My hon. Friend the Member for Aston then said that the Under-Secretary of State ought to bring the charges, and the Under-Secretary went on to say:
  "I am not in a position to give details of this case. We are satisfied that the general point I am making—that none of these 15 men is detained on racial or political grounds—is correct."—[OFFICIAL REPORT, 29th April. 1966; Vol. 727, c. 1179.]
  If he believes that it is correct, let him at least give in the House of Commons chapter and verse to sustain that view.
  None of us wants to hold up the independence of British Guiana. I say to the hon. Member for Torquay and anybody who thinks like him—happily, in the House of Commons they are few and a disappearing race—that we fully understand that in every former British colonial territory which becomes independent there are unpleasant hang-overs of imperialism which are inherited and sometimes used by nationalist leaders. We

  1789
  fully understand that, but hon. Members on this side of the Committee—there is chapter and verse for this through the years—have time and again protested against people's liberty being withheld from them without trial in every former British colonial territory. If the hon. Member for Torquay does not believe that, let him go to his friends in the Library and do a little research to see how many times in this connection the names of my hon. Friends on the front bench below the Gangway are mentioned and compare their record with his own.
  I hope that, when British Guiana has its independence, it will prosper, but I feel that Mr. Burnham and his friends, with the suspicions attached to their own past record, would do well to bear in mind the voices which have been raised in the House and in this Committee. I hope that they will give a good send-off to independence by releasing the detainees or bringing them to trial.
  I hope that, apart from the message which I send out from the House of Commons to Mr. Burnham, by hon. Friend the Under-Secretary of State will carry the case a little further tonight and defend his position rather more explicitly than he did on Friday last.
  Mr. Michael Foot: Part of the discussion tonight and part of the discussion last Friday has been directed to the question whether we should have a discussion about this matter at all. Some hon. Members opposite seem to take the curious view that a discussion of this kind in some way does harm. No discussion about the protection of people's individual liberty ever did any harm. There is never a wrong time for discussing it, and I am sure that my hon. Friend the Under-Secretary of State will agree with that. It is absolutely right that the House of Commons should sustain the tradition which it has had for generations of having debates on questions of individual liberties.
  On general grounds I cannot understand how anybody should claim that this debate would do any harm. The Hon. Member for Torquay (Sir F. Bennett) has said that nobody is going to take any notice of what happens in this debate. He said a most insulting thing. I think it is insulting to Mr. Burnham
  1790
  himself. I do not think Mr. Burnham would advance that proposition. Therefore the hon. Member for Torquay has not done any service to the cause he was supporting. Nobody wants to discuss the hon. Member for Torquay. So we come to the hon. Member for Surbiton (Mr. Fisher), a very different, a very much more honourable, Member.
  The hon. Member for Surbiton also suggested in the debate last Friday that he did not think it was quite right that we should have this discussion. He would not say he was going to suppress it, but he did not think it would perform any good service. The impression he gave was that when we got to this stage of an independence Bill the proper thing was to let it get through without debate. That is not correct. I can remember quite a number of debates on the eve of independence when we have discussed precisely these questions. There was the debate about the independence of Malta, when some of us were very concerned up to the very last moment that we should take every step we could in the House to protect the liberties of the people of Malta. Events that have occurred since have justified everything we were seeking to do at that time.
  We have had evidence of how things we were seeking to protect in Malta have been denied to them, and their liberties have been suppressed in the manner we were then trying to prevent. At that time members of the present Government, including the Commonwealth Secretary, moved an Amendment to the Malta Independence Bill at the last moment to try to extract from right hon. Members on the other side who were then on this side protection for the people of Malta. So it is no good trying to pretend that there is anything unconstitutional, out of the ordinary or out of keeping with the traditions of this House, that we should discuss this matter up to the last moment.
  Of course, if we had received more satisfaction from Her Majesty's Government or from Mr. Burnham in response to the debate on Friday, it would not have been so necessary to proceed with these Amendments today. It is precisely because we were not satisfied with the reply given by the Government and there was not sufficient response from British Guiana that we think it right to proceed with this debate and make clear to everybody in British Guiana how deeply we

  1791
  are ccncerned about the situation there, and how much we believe they can contribute to the future welfare of independent Guyana by listening to what we have to say on prisoners.
  On general grounds, everyone, I would think, who cares about liberty—and nobody includes the hon. Member for Torquay in that category—should wish to see the Preventive Detention Acts abolished and no action taken to keep people in prison without trial. It is most deplorable that in some former British territories the independent States have continued these Acts which have been operated in the past by British Governments, but certainly nobody on this side of the House will defend preventive detention Acts on that account. We think that they are odious, and I am sure that my hon. Friend the Parliamentary Secretary thinks so, too. The basis of our liberties is that people should not be imprisoned without trial, and therefore only exceptional circumstances could justify such measures.
  What are the exceptional circumstances in British Guiana? I think that the arguments there are all the other way round. There may be a case, although most of us would find it detestable, for saying that in certain circumstances people may have to be imprisoned without trial, but we should wish to examine all such cases with the utmost care and to be given the most overwhelming evidence. We have not been given the evidence about British Guiana. From what has been said—and this is the significance of the very important evidence presented by my hon. Friend the Member for Aston on Second Reading and today—the offence of continuing imprisonment without trial is made all the worse because the Government in British Guiana which is doing it is composed partly of persons who themselves were suspected of these crimes and who have been suspected of committing exactly the crimes of which they are accusing these men. That makes it all the worse. It should make them all the more eager to wipe the slate clean. Members of the present Government, who have known what conditions in British Guiana have been and how violence has been threatened and may be used on both sides, should be all the more eager to be magnanimous now that power is so nearly in their hands.
  1792
  There has not been the slightest scrap of evidence given by the Minister on which we can make up our minds. The Parliamentary Secretary would never have accepted the situation, when he was in Opposition, that merely on a Minister's assurance we should agree that people should be kept in prison. The evidence provided by the Minister himself is contradictory. In an attempt to reassure the House he said at the end of his speech,
  "I have every confidence that, within the next weeks or months, more of the detainees will be released. …"—[OFFICIAL REPORT, 29th April 1966; Vol. 727, c. 1182.]
  That is a most astonishing statement. If he has every confidence that they will be released, has he been given some assurance by Mr. Burnham? If so, we should like to know, because we are responsible as well as he. If he has an assurance that although it cannot be done before independence, it will be done afterwards, we should like to know. He says that he is confident that it will happen. Earlier in his speech, however, he said: "These are very dangerous and wicked men who will blow up the place." At the end of his speech he says that he is confident that they will be released. Which one? How many? Which are we to believe? Are we to believe what my hon. Friend said at the end of his speech, that he is confident that more of them will be released or what he said at the beginning, and what the Minister has said previously—that these are very dangerous men and that that is why they are kept in prison?
  11.30 p.m.
  It does not fit. My hon. Friend contradicted himself in that speech. Which case is he making? Is it that these men are still so dangerous that they must be kept in prison? If so, he makes nonsense of that appeal towards the end of his speech. We all have great sympathy for my hon. Friend. I do not believe that he has altered his views because he has become a Minister. He has not been at the Department very long and, as realists, we know that the whole decision about independence for British Guiana was settled before he and my right hon. Friend the Secretary of State arrived at their new posts. It was signed, sealed and delivered and only the formalities, apparently, were left to them to carry through.

  1793
  But that does not mean to say that my hon. Friend must not tell us what he means. I think that he was trying to say in his Second Reading speech that he would like to see more of these prisoners released and that he does not think that their release would destroy stability and peace. Perhaps this was his way of making an appeal. Let him make it more strongly or tell us that the Government since Second Reading have made direct representations on behalf of the House of Commons and probably the majority of hon. Members on this side. I hope the Government have made such an appeal. If they have not, I hope they will assure us tonight that they will do so. I hope my hon. Friend will tell us that he has been impressed by our arguments.
  There are other factors which make it so important that the situation should be understood. I shall not go into detail again. We all know that the United States Government have had considerable interest, of course, in what has happened in British Guiana. There is nothing secret about that. It has all been published in the American press. Indeed, some American papers have alleged that the Central Intelligence Agency has played a considerable part in British Guiana and that when President Kennedy came to England in July 1963 part of his mission was to make representations to Mr. Harold Macmillan about British Guiana in order, so it is claimed, that it should not go the same way as Cuba. All these allegations have been made by Mr. Drew Pearson in his newspaper on 22nd March, 1964.
  All this makes it all the more important that we should clear up the matter as far as we can before independence comes. We are not trying to hold up independence. There might have been an argument which perhaps we should have pressed earlier for holding it up, and some of us may have been lax in failing to press that argument earlier. There was an element in the last Government and there is an element in this who think that perhaps the best way to deal with the problem of British Guiana is to put it out of the way for it is too difficult for us to solve.
  Many of us remember over the years, however, how appeal after appeal has
  1794
  been made to Dr. Jagan and Mr. Burnham to come together in some form of coalition. When we were in opposition this appeal was backed by prominent right hon. and hon. Gentlemen on behalf of the Labour Party who had had most detailed and continuous association with our colonial territories.
  I remember the appeal made by my right hon. Friend the Member for Llanelly (Mr. James Griffiths). I remember the appeal made by Lord Brockway. I remember the appeal which was made by the present Commonwealth Secretary from the Opposition Front Bench prior to the election of 1964 when the Commonwealth Secretary in the Conservative Government had decided that the elections should be on proportional representation. As my hon. Friend knows perfectly well, at that time the Labour Party was unanimously opposed to the form of constitution which was being imposed on the people of British Guiana. We protested against it most strongly. The present Prime Minister protested against it.
  I am not saying that all that can now be reopened, but no one can come along and say that what has happened is all Dr. Jagan's fault, because up to that point he had the overwhelming majority of Labour Party opinion on his side. Indeed, although he may have been mistaken in thinking that it could happen he was entitled to believe that it was a possibility that when the Labour Party won the 1964 election, it might hold up the elections in British Guiana. I believe that it was very difficult for my right hon. Friend to do so, because the election here was within a week or two of the elections there. We all know that Dr. Jagan asked the previous Colonial Secretary to intervene and arbitrate about the form of constitution.
  But what I am emphasising is that Dr. Jagan has every right to say on many of these matters that his view was overwhelmingly accepted by the Labour Party and that he has now been abandoned by those who had previously supported his view and who, for one reason or another, good or bad, have changed theirs while he has held to the same view. He and his party think that they have been gravely ill-used. Looking at the facts, I think that they have a very strong case for that view.

  1795
  But whatever might be thought about who is right and who wrong, nobody can deny that Dr. Jagan and the overwhelming bulk of his party suffer from a deep burning sense of grievance. My point is that at this critical moment in the history of British Guiana a wise Government should do everything it can to try to remove that sense of grievance. We cannot remove it all. We will not be able to wipe from their memories all that has happened during these years, but we can take some steps to ease it. This is the first.
  Some of these men who are in prison are comrades of Dr. Jagan, his political associates. It is no good the Under-Secretary or anybody else saying that they are not in prison for their political opinions. They have not been tried for their political opinions because they have not been tried for anything, but everybody in British Guiana inevitably thinks that that is why they are in prison.
  I want us to use all our influence to make independence successful. Although Dr. Jagan and his party are against what the Labour Government have done and what the British Government have done over the years, whenever I have met him—and I have known him now for ten years or more—I have said, particularly since the disputes of October 1964, "Despite all your grievances, your right course is to try to make the constitution work and to go into Parliament". This was at a time when he and his party were absenting themselves from Parliament. I still urge him to do so.
  That would be the wisest course for Dr. Jagan and his party, despite all their grievances and hardships. They must make independence succeed and they must make the present constitution work, even under this unfair system of election which was imposed upon them. I believe that he could regain power in a few years' time and rule in Guyana. He has every right to hope for that, and I am sure that that is the proper course for him to take. It is a lot to ask, but I hope that is what he will do, and I hope that my hon. Friends on this side of the House would also urge him to do the same. Even if we do not succeed with this plea tonight, I would still urge him to do it because the safety of the people of British Guiana rests upon it. One
  1796
  cannot work British Guiana with the biggest party opposed to the whole system.
  Because of this I plead with Dr. Jagan to make it work, to do his best to make it work. If we are going to plead with Dr. Jagan to do that, and all the House agrees that it is right to do so, then we have every right to ask, to demand, that Mr. Burnham shall make his contribution. He can do it. He can help. We have an even greater right to demand that the Government should use all their power with Mr. Burnham to see this is done. This is the way for the Government to be magnanimous. I do not think that it will solve everything, but I believe that they can ease the situation. So I plead with the Government, at this very late hour, to speak to Mr. Burnham and to make it clear that they are speaking on behalf of the British House of Commons.
  Sir John Rodgers: They are not.
  Mr. Foot: The hon. Gentleman has not been here very long. We are trying to have a serious debate, to ensure that the future of British Guiana shall be a prosperous and peaceful one, and we do not believe, at least I do not believe, that it can be done on the basis of keeping these people imprisoned on the kind of trumpery evidence which is all that we have been offered. One cannot be expected to believe this stuff. It has not been tested anywhere, and I am not prepared to accept evidence of that nature. In any case, this is a time when something has to be done for the people who speak for the biggest party in British Guiana, and without whose co-operation the country's future can be even more bloody than the last few years.
  Since October, 1964, the British Government in almost every action they have taken over British Guiana have favoured or have appeared to favour, Mr. Burnham as against Dr. Jagan. Almost every action has appeared to have that result. That is certainly the sense in which it has been interpreted by Dr. Jagan and his party. I plead with the Government to use their imagination, to try to see this, and to make sure that we do not miss this opportunity to do the last thing that we can to help British Guiana. We cannot do anything more

  1797
  after this. We are responsible for the circumstances in which they go ahead, and there could be outbreaks of bloodshed.
  There will not be such outbreaks, in my opinion, because there are 15 dangerous people in British Guiana. More people are capable of stirring up trouble than those 15. On my hon. Friend's own showing, he is hoping that some of these 15 are going to be let out within a few weeks or months. If these dangerous men can be let out, this is all the more reason why he should use his influence before independence comes in the middle of May to make it clear in the name of the House of Commons that there is a readiness to heal old wounds. The hon. Gentleman the Member for Sevenoaks (Sir J. Rodgers), who came in for a moment, intervened, and has fortunately lapsed into quietness, should know that we on this side of the House speak on behalf of the country, in what I hope is a voice speaking in the interests of magnanimity. One cannot heal old wounds on the basis of saying that we are going to keep these people locked up behind bars, without putting them on any charge.
  11.45 p.m.
  Mr. Nigel Fisher: I appreciated very much the eloquent and moving appeal of the hon. Member for Ebbw Vale (Mr. Michael Foot) for racial tolerance and peace in British Guiana, and also his very genuine appeal to Dr. Jagan to co-operate, but I must say that all the evidence of our own eyes shows that Mr. Burnham's Government have made a far greater contribution to the easement of racial tension in the Colony than Dr. Jagan did when he was in that position as Premier.
  In my view, despite the arguments of the hon. Member for Ebbw Vale, this is really a totally unrealistic Amendment to bring before us. We have already argued it in principle, and in detail, on Second Reading. Everyone interested in the matter has made his points, both for and against, and nothing anybody may say this evening is likely to bridge the difference between our points of view. Of course we all dislike the need for preventive detention. I think everybody in the House of Commons feels that, but, with a little personal knowledge of British
  1798
  Guiana, I must say that I share the view of the Government in this matter.
  Without, so far as I know, very much personal knowledge of British Guiana, hon. Members below the Gangway on the other side take, perfectly genuinely, a very different view. They are arguing on the basis, I believe, of very sincere moral conviction. The Under-Secretary of State, if I anticipate correctly—I hope I do—is going to take, broadly, the same attitude as I, and we are arguing on a less emotive basis; we are arguing on the realism of the facts of the situation in British Guiana, as it has been and as it now is.
  Whatever our views—and I do not propose to repeat what I said on Second Reading last Friday—the fact remains that this is an unrealistic Amendment, because the matter at issue falls within the jurisdiction of the Government of British Guiana and not of the British Government. Under the existing 1961 Constitution, that is the position purely and simply. We have no possible right to intervene, even if we wished to do so. If we wanted to intervene we should have to alter the 1961 Constitution of British Guiana within three weeks of independence.
  Mr. Hale: I always listen to the hon. Member with, I hope, courtesy and attention. Surely he is at the moment mistaken about the Amendment. The Amendment says unless the Government of British Guiana, acting within their powers under the 1961 Constitution, do release these prisoners, then the House of Commons should not go further on the road to the self-government of British Guiana. It has been presented in that way; the Amendment is moved in that way. It is perfectly within our rights. All of us recognise, of course, that if we refuse self-government at this stage that is a very serious step to have to take. All we are saying is that we think the Colonial Secretary should say, "The House of Commons has taken the view that we ought not to give self-government unless you are in a position to restore freedom from persecution, freedom from imprisonment without trial, and so on." Anything wrong with that?
  Mr. Fisher: I entirely follow the hon. Member's point. There are two alternative actions on the part of the British

  1799
  Government which could arise out of this Amendment if it were carried. The first is the one I was on at the moment, that we should have to alter the Constitution of British Guiana. The other is that we should delay independence.
  Mr. Hale: No.
  Mr. Fisher: I am coming to that point in a moment. I believe that to seek to alter the Constitution of British Guiana—which was the point I was on—within three weeks of independence, and to take powers to do so which we do not at present possess, is not a very realistic thing to suggest at this time.
  What could fairly be said is, that for the sake of those—I think it is now 13 or 15 people—who are, on the evidence which was always put to me at the time of their original detention, a danger to peace and public safety in British Guiana, the Amendment suggests we should take powers which we do not possess at the present time in order to deny to 500,000 people the independence which they expect on 26th May.
  I think that it was the hon. Member for Oldham, West himself who called in aid the United Nations resolution, but that resolution also says that we should not delay the granting of independence to any colony. One can pick which part of the resolution one likes best; but even the P.P.P., so far as I know, do not suggest that independence should be delayed.
  If the Amendment were carried, I believe that it would create a great sense of frustration in British Guiana if independence were delayed as a result, and it might indeed create a situation almost of chaos if we tried to take powers which we do not possess to alter the Constitution and force British Guiana to take this step. It might even lead to a return to the conditions of racial tension and strife, and almost of civil war, which used to be a feature of life in British Guiana, but which, happily, has not been so during the past year or two. The Amendment therefore seems to be not only unrealistic, but, if I may say so without sounding offensive, irresponsible and dangerous.
  The hon. Member for Oldham, West said that a firm telegram to Mr. Forbes
  1800
  Burnham would bring about the immediate release of the detainees, but what could possibly make the hon. Gentleman think that? There is no foundation at all for that view. It is pure wishful thinking on the part of the hon. Gentleman.
  I do not know whether hon. Gentlemen below the Gangway opposite will force this Amendment to a Division. If they do, and if they win, they will do a great disservice to British Guiana. If they do not, this whole debate is a mere charade.
  Mr. John Lee: I do not propose at this late hour to speak for more than a few minutes, but there are a number of things which I should like to say.
  I am sorry that the hon. Member for Torquay (Sir F. Bennett) is no longer in his place, because I think that some of his remarks with reference to hon. Members on this side of the Committee were resented, and I have a particular reason for so doing. It so happens that a few years ago I was an administrative officer in the Colonial Service. Nearly 10 years ago I was serving in Ghana, and I had a part to play—though perhaps quite a humble one—in the preparation of the independence of that country.
  Hon. Members will remember that Ghana became independent in 1957. There were long discussions in the months before that when people were trying to find a proper way to provide safeguards for civil liberties, for the independence of the judiciary, and for the independence of the Civil Service from corruption or undue influence, without at the same time stultifying the whole purpose of independence, or making conditions for government intolerable for a new country. We managed, I think, to provide quite a good constitution. Certainly most of the things that were in our memorandum—and I had a hand in drafting it—were incorporated in the Ghana Constitution which was promulgated in, I think, February, 1957.
  It was a melancholy task, for more than one reason. First, because if one genuinely believes in colonial independence, one hated doing things which might seem almost insultingly to circumscribe the powers of a new independent

  1801
  country. Secondly, because most of us believed that some kind of restraint was necessary. It was a melancholy task for me as a Socialist, though a member of the Civil Service, because I agreed, and still agree, with much of the domestic policy which Dr. Nkrumah's Government carried out, or were due to carry out and continue to execute in the years ahead, until this year when he was overthrown.
  I do not regret the fact that we made this attempt, even though it failed in the end. I do not regret that among the many things enshrined in the first constitution of Ghana were provisions against detention without trial. It forced upon the new Ghana Government moral responsibility for reintroducing the powers that all of us ought to regard as abhorrent. At least we had done our duty, and if there is one good thing that Lord Boyd of Merton did in his long and singularly disreputable reign as Colonial Secretary it was in the preparation of the Ghana Constitution.
  Even if we regard this as a mere academic exercise—as some hon. Members opposite seem to think it is—and even if the hon. Member for Torquay were right to ask, "What is the use of releasing people for a 48 hours' junket in celebration of the attainment of independence," this would still give them, at worst, an opportunity to flee the country and get away before they could be put in prison again. But the argument does not end there. Even if Mr. Burnham were so minded as to re-arrest them after independence—and I am putting the worst possible interpretation on the situation—it would be rather a rash man who would do this immediately following independence, and Mr. Burnham does not answer to that description.
  Again taking the example of Ghana, when Dr. Nkrumah set about un-rooting the safeguards that we had placed in the constitution it took him a full two years. There was a two-year period of respite. I therefore hope that my hon. Friends will press this matter tonight. I hope that my hon. Friend the Parliamentary Secretary, who has had a splendid record during his years on Opposition—especially in matters connected with Cen-
  1802
  tral Africa, during that melancholy and disgraceful episode—will reconsider these matters. I hope that Mr. Burnham will take our criticisms in the spirit that we intend them. Mr. Burnham is already a Left-winger; indeed, this dispute in British Guiana is an ideological one between two parties of very much the same political persuasion, where other problems have exacerbated the situation.
  Merely because we are about to discharge our responsibilities once and for all we cannot push them on one side and say that the fate of a handful of people is not our concern, when even now it is possible for us to do something to help them.
  12 m.
  Mr. Richard Wood: We have listened during the last two hours to a number of very sincere speeches, and we have just heard the hon. Member for Reading (Mr. John Lee) give the Committee the benefit of his personal experience in what I thought was an excellent speech, unfortunately spoilt by a quite unnecessary reference to a former hon. Member who I believe—and I think the House believes—to have been a great Colonial Secretary. We have been discussing for the last two hours the position of 15 men in detention in British Guiana, one of whom, I understand—and perhaps the Minister will corroborate this—has been released since our last discussion of the matter on Friday. Perhaps the assumption that one of his hon. Friends made was not correct. Mr. Nunes has been particularly mentioned. My hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) has been taking a very active interest in Mr. Nunes' position, because Mrs. Nunes lives in her constituency.
  As I listened to the hon. Member for Ebbw Vale (Mr. Michael Foot), I seemed to detect, at the beginning of his speech, a certain self-consciousness about the Amendment. It surprised me very much. I do not believe, and from what he said later on in his speech I gather that he does not believe either, that there is any need for self-consciousness about an Amendment of this kind. It is on occasions like this, when the House of Commons has spoken sincerely about the liberty of the individual, that the House, over the centuries, has been at its best.

  1803
  I think that one message has been made perfectly clear by the Committee, and that is that detention of this kind is an object of our universal and unanimous dislike—
  Mr. Michael Foot: There is no question of self-consciousness. I merely raised the matter because one of the right hon. Gentleman's hon. Friends had said that we were actuated by malice—I am sure that the right hon. Gentleman will repudiate that—and a much more honourable Gentleman, the hon. Member for Surbiton (Mr. Fisher), had also questioned the wisdom of having the debate. That is why I raised the matter.
  Mr. Wood: I will come to the question of the wisdom of the conclusion of the debate in a moment. But I must apologise to the hon. Member for Ebbw Vale if I have misrepresented his attitude. I thought that he was talking with self-consciousness. I shall learn to do better in future—
  Mr. Archie Manuel: You do not know him.
  Mr. Wood: Well, I am getting to know him better.
  The Committee has very clearly made its view apparent tonight, that it universally dislikes detention of this kind, whether it is preventive detention or the deprivation of liberty without trial. All these things are offensive to our ideas of justice, wherever we sit in the House. I am nonetheless certain that it is essential for this Committee and the House of Commons at all times to be prepared to face the realities of any given situation.
  The Committee needs no reminding that a very few months ago British Guiana was in the grip of violent disturbances which caused us great distress and anxiety. The Committee is just as well aware that these violent disturbances have now, thank goodness, given way to relative calm and peace. All that I have observed—this is only a personal conviction: there is no possible way of proving it—leads me to the conclusion that this relative calm is no mere coincidence and that the detention of at least some of these 15 men has contributed to the improvement of this situation. This is something which it is impossible to prove. It is a conviction which I and a number
  1804
  of other hon. Gentlemen happen to hold and I believe that it is one of the realities which we have to face tonight.
  The hon. Member for Oldham, West (Mr. Hale) made, as was his wont in previous Parliaments in which I have sat, not only a most entertaining speech but a speech, as I have come to expect of him, full of deep human feeling. I have no doubt, and I do not think that he would deny it, that his speech would have been considerably less light-hearted if this debate instead of taking place in the calm of the House of Commons was taking place in the context and the vicinity of some of the abominable crimes which took place in British Guiana not long ago.
  I hope I am not entirely lacking in the moral conviction which has informed a good many of the speeches tonight. In the circumstances which exist today in the Colony, it is unavoidable, as it is often unavoidable, to try to balance two things which we all recognise as evil—the evil, which I mentioned, of continuing preventive detention against the other evil, the evil of the violent disturbances which very nearly wrecked the prospects for the country a short time ago.
  The hon. Member for Ebbw Vale used a phrase with which I profoundly agreed. He said that the object of us all—the object of the Amendment—was to try to use all our influence to try to make independence successful. I can only assure him that I sincerely share the objective which he stated. But I understand, as my hon. Friend the Member for Surbiton mentioned, that there is no difference of opinion in British Guiana among all the political parties about their anxiety for independence in the near future.
  I am convinced that the results of postponing this grant of independence, even if there were justification for doing so, would be not only highly unwise but might well be extremely dangerous. I say that because, if the Amendment were carried, I cannot see any alternative to the beginning of the life of Guyana taking place in an atmosphere of deep bitterness. I cannot see that an attempt by Great Britain at this stage and in these circumstances to tell the Government of British Guiana and the future Government of Guyana how to administer their affairs would help Guyana smoothly to overcome the very real difficulties

  1805
  which the Colony will have ahead of it after independence. Nor do I believe that it would be of help to the men in detention if this course were adopted.
  I sincerely hope that, for these reasons, the Amendment will not be pressed to a Division. If it is, I would find myself bound to support the view of Her Majesty's Government, and I expect that a number of my hon. Friends would join me. But I feel that great damage would be likely to be done to the future of the Colony if we proceeded to a Division on this matter and I therefore very much hope that, after the Minister's reply, those who tabled the Amendment will be willing to withdraw it.
  Mr. Orme: I shall be brief at this late hour. The right hon. Member for Bridlington (Mr. Wood) spoke in moderate terms, but within that moderation—although he did condemn preventive detention as such—he might have extended his remarks to call for the release of the 15 detainees. That is the crux of the problem with which we are dealing.
  The hon. Member for Surbiton (Mr. Fisher) pointed out that while he and others were familiar with the conditions in Guiana, other hon. Members might possibly not be, and that is perfectly true. However, we are familiar with Mr. Jagan, who is the leader of the P.P.P., and we have met Mr. Forbes Burnham. We met him at a Labour Party rally at the time of one of the party's conferences. Mr. Burnham made the type of speech on that occasion which would have turned the hon. Member for Torquay (Sir F. Bennett) grey, so revolutionary was he in the Socialist context of his remarks. From his speech, one could say that Mr. Burnham was at that time to the left of any Trotskyist in this country. This is absolutely true. Hon. Members can remember this. That was at a time when Dr. Jagan appeared to be a very moderate Socialist.
  We have seen a change of events in British Guiana which have led to some of the unhappy circumstances to which reference has been made by the right hon. Member for Bridlington and the hon. Member for Surbiton. I happened to meet Dr. Jagan last year in Germany, and he was very concerned not only for his own life but for the lives of many
  1806
  of his supporters in British Guiana. I agree with my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) that possibly he placed too much importance on the return of a Labour Government in 1964 and he expected too much from that Government. I believe that he expected the elections to be postponed so that the inequalities, as he believed them to be, in the Constitution could be rectified. But, as we know, the elections went forward and, under proportional representation, Mr. Burnham was elected Prime Minister.
  It is worth noting that when Dr. Jagan was Prime Minister, while affairs were very much under the old Constitution, under the Governor, people were not placed in preventive detention as they are now when Mr. Burnham is Prime Minister.
  This debate has certainly done no damage. It has not damaged those people who are in preventive detention. It will not damage the people of British Guiana when independence is granted. We have urged Dr. Jagan, despite the bitterness, to try to make this Constitution work and to play his part in the Government because we can see a greater danger of racial conflict between the African and Indian communities in that country. This bitterness has been inflamed in the past by elements particularly from the United States, including the C.I.A., which is not to their credit, and we do not want to see this situation exacerbated.
  I appeal to my hon. Friend the Under-Secretary. Many things have been said about his position as Under-Secretary and about his past stand on colonial matters. I join with my hon. Friends in acknowledging that his convictions are as strong as, if not stronger than, they ever were. But it is imperative that the Government should send out the word to Mr. Burnham that we want something done about these detainees before independence is granted. It would be wrong of us to grant independence when we know that there are political detainees of a major party, people who have been in detention for many months, with no reason given, with no chance of a trial.
  We are debating this matter tonight because we know that what we say will get through to the people and leaders

  1807
  of public opinion in British Guiana. We know that they will take heed. They know that the British connection will not be entirely broken with the granting of independence and we are to reserve certain rights in relation to troops, bases and so on.
  Those of us who signed the Amendment and have pursued this matter tonight have done so because we believed that it was right in the interests of the people of British Guiana as a whole. It is our hope to prevent racial discrimination and to see the majority Government continuing to rule, with Dr. Jagan and the P.P.P. themselves also playing a part in it. We have a right to ask that independence be started on a proper footing, and, if we ask that of Dr. Jagan, we must ask, equally, for the removal of preventive detention as it exists today.
  That is the case we make to the Colonial Secretary and to his UnderSecretary of State. It is the case, we feel, which should go out from the House of Commons tonight. We believe that, if it goes out firmly and clearly enough, it will have the desired effect. But it must not be muffled, and we must not try to dodge or hide the facts.
  12.15 a.m.
  The Under-Secretary of State for the Colonies (Mr. John Stonehouse): I regret that the hon. Member for Torquay (Sir F. Bennett) has had to leave the Committee because there were two points in his speech which I wish to take up at the outset. The first was an implication conveyed throughout his speech, and the second was something which he specifically said.
  The hon. Gentleman seemed to imply that, because other countries had preventive detention ordinances or Acts or had emergency powers, this somehow was a justification for the situation in British Guiana. I do not accept that at all. The fact that other countries have seen the need to operate certain emergency powers is no excuse and no reason for British Guiana to operate such powers. The reasons, as I hope to convince the Committee, are not in other countries; the reasons are in British Guiana itself. That is the case I ask the Committee to accept tonight, not a
  1808
  justification because it has been done elsewhere, as seemed to be implied in the hon. Gentleman's speech.
  The other point on which I disagree profoundly with the hon. Member for Torquay is his argument that the debate should not take place. It is in the best traditions of the House of Commons that this sort of debate should take place, that hon. Members should stay here till gone midnight, after many hours of debate on the Budget, in order to discuss, with such sincerity, the imprisonment without trial of a few—13 or 14 men—in British Guiana, a country many thousands of miles away. This is in the best traditions of the House, and although I do not agree with the speeches which have been made by my hon. Friends in support of the Amendment, I do deny that their speeches should not have been made or that they should not have debated this question with such moving sincerity.
  Nor do I believe that this debate as a debate should necessarily do any harm. It may do some good. But what I do believe is that, if the debate resulted in the Amendment being forced to a vote and if, by some mischance, it were passed, it would do a very great deal of harm to British Guiana. It would embitter relations there. I shall develop that point, but I do not disagree with the putting forward of the views which have been expressed. Hon. Members have been moved by much sincerity, most of them by genuine emotion, and I thoroughly applaud their energy instimulating and speaking in the debate. My hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) moved an Amendment which I was glad to see omitted the words which he used in his Amendment on Friday—" for political purposes". This is important. It seems that he is beginning to accept the case which we are putting from the Box that these people are not in prison because of their political views.
  Mr. Julius Silverman: While those words are not in the Amendment—for very definite reasons—I made it clear in my speech that I still believe that these people are in prison for political reasons.
  Mr. Stonehouse: I do not agree with my hon. Friend. These men are not in prison for their political views. They are

  1809
  in prison because at the time they were detained they could have been, and in the opinion of the Ministers responsible in British Guiana at this time they could be, a danger to public order and safety. That is why they are there—not because of their political views. If these men are being imprisoned for their political views, why is it that only one of them is a man of any great political significance—Mr. Nunes? He is the only man of any considerable political influence. The others may have political opinions but they have no political influence.
  Mr. Julius Silverman: What about Mr. Jardin?
  Mr. Stonehouse: One or two may be political activists, but Mr. Nunes is the man with the political influence. Most of the men are comparatively young men. They may have political views but they cannot be said to be of any great political weight yet in Guiana. Dr. Jagan and his associates are completely free to campaign and to boycott if they wish. These are not men who have been detained. If Mr. Burnham's Government were anxious to use their powers in a Draconian way to inhibit and control the opposition, there are men of greater political weight than those who have been detained who would be in jail today. I therefore refute the case which has been built up on the basis that these men are in prison for their political views. They are not. They are there because of the acts for which they have been responsible or could be responsible if they were released.
  Mr. Julius Silverman: Which acts?
  Mr. Stonehouse: The acts for which they have been responsible and which have been reported on and which they would have an opportunity to refute before the tribunal which has been set up if they chose to take advantage of the opportunity to be heard.
  Nobody in the debate has denied that the background to the story in British Guiana has been most unhappy, with much violence, racial conflicts and many dead. It would be a terrible thing which would be very heavy on our consciences if, as a result of holding up independence by passing the Amendment, we helped to contribute to a return of that violence and racial conflict.
  1810
  I do not disguise from the Committee that I am profoundly unhappy that in a territory for which we are ultimately responsible, and remain responsible until 26th May, there are any men in jail without any charge being brought against them in public. But, as I said on Friday, I do not believe for one moment that if we were to hold up independence it would help these men to be released. ft would probably mean that they would be kept in jail longer, and because of the violence building up as a result of holding back independence, it would probably mean that other men would be put in detention.
  I repeat what I said on Friday—a point picked up by my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot): I believe that more of these men will be released. One man was released over the weekend. I can confirm that he is already out. I confirm that another is about to be released within a very short time, which would reduce the number from 15 to 13. I have every confidence that more of these men will be released, not because they were not dangerous at the time they were imprisoned—I believe they were—but because circumstances have changed and, with the improved stability, particularly with the advent of independence, it is possible for more of these men to be released. I believe that to be true.
  Mr. Manuel: On that point, I wonder whether the Under-Secretary can go a little further? He is saying that he does not think that, if independence is granted, they will be in any more danger; but can he give a guarantee that because independence is granted there will not be a great deal more hardship when we will have no say at all?
  Mr. Stonehouse: I believe that there is a good deal of good will on the part of Mr. Burnham and his colleagues. Those hon. Members who have met him and know other Ministers in British Guiana would agree with me that there is more likelihood of these men being released than there is that their conditions will be worsened as a result of independence.
  I should like to repeat what I said and invite anybody to dispute it if they will. Can it be denied that to hold up independence would add to racial

  1811
  conflicts in British Guiana? The effect of the Amendment if passed up independence. There is no doubt about that.
  I know that my hon. Friend the Member for Putney (Mr. Hugh Jenkins) has said that he does not want to hold up independence, but the effect of passing the Amendment would be that unless Ministers agree to release the men forthwith, which they do not intend to, independence cannot come on 26th May.
  Then the position is either deadlock, or that we revoke the powers transferred to the British Guiana Ministers and take them back into our own hands so that Her Majesty's Government are responsible, through the Governor, to see that these men are released. We would have to take the power back.
  Is it suggested that if we had that sequence of events, we would be adding to stability in British Guiana? I do not think that anybody would sustain that point of view.
  My hon. Friend the member for Aston said that history has moved on and we cannot turn the wheel back. He is right, but if we pass the Amendment, we will be turning the wheel back two or three years to when there was violent disagreement between communities, death and rioting; turning it back and perhaps preventing British Guiana having independence for many years. It would keep these men in jail. I ask the Committee to reject this Amendment because its rejection will contribute to stability, the improvement of stability and eventually to the release of these men.
  I was asked specifically by my hon. Friend the Member for Putney—
  Mr. Julius Silverman: I wonder whether the Under-Secretary can tell us why these men are in jail. That was the real question I asked and it has not been replied to.
  Mr. Stonehouse: I want to go on in a moment to the tribunal procedure, but they were responsible for acts or could be responsible for acts which would contribute to the breakdown of law and order and public safety. I will come, in the course of my speech, to the stage in the tribunal when it is possible to
  1812
  reveal to the men in question and counsel who act on their behalf the acts for which the men were held responnosible.
  In reply to my hon. Friend the Member for Putney, who asked what precedent there was for a country proceeding to independence in a state of emergency, I refer him to two. There was Sierra Leone, where there was a state of emergency and six prisoners were detained at the time of independence. In Malaya also there was a state of emergency and about 250 people were in detention at the time of independence.
  12.30 a.m.
  Now I come to the question of the tribunal. This matter has been neglected by my hon. Friends. The Tribunal of Inquiry set up in British Guiana is completely non-political and independent of the Government. The Chairman is a very responsible and respected Queen's Counsel, an ex-judge, a man who has had very much experience at the British Guiana Bar. He is Mr. Van B. Stafford, appointed by the Chief Justice.
  Mr. Stafford is sitting as Chairman, with Mr. Nasir, a senior solicitor who has, incidentally, acted for members of the P.P.P. in the past. Although he is non-political, no one would suggest that he is against it as such. The other member is Mr. George King, who is one of the oldest practising solicitors in Georgetown.
  These three non-political lawyers sit on this tribunal which has been set up to consider the cases of any of the detainees who choose to use its facilities. Only two have chosen to appeal to it. We would appeal to the detainees to use the opportunity of having their cases heard by the tribunal. I accept that it is not as good as a court of law, where everything can be heard in public and witnesses can be called and cross-examined before the public eye.
  Mr. Hale: It is not as good as the sort of tribunals Mussolini set up in the early days after the march on Rome. It is not as good as any that preceded the loss of liberty in the world anywhere. My hon. Friend says that these people are charged with something that is not a crime, or with some remote approach to a crime, or with preparatory activity

  1813
  in the direction of doing something that could be a breach of some sort of law if there were such a law. They do not know what it is and cannot say anything about it and must be locked up. We are asked to pass a blank constitution that we have not seen. Most of us have read the speeches in 1906 about what would happen in South Africa after independence. We are getting a little cynical.
  Mr. Stonehouse: If my hon. Friend is suggesting that the three gentlemen I have mentioned are Fascist I profoundly disagree with him. They are honourable lawyers with distinguished records and I believe that they can be trusted to do the job they have been given, which is to act as an independent tribunal.
  Mr. Hale: I said nothing about personalities.
  Mr. Stonehouse: My hon. Friend said some exaggerated things and referred to Mussolini, and I would ask him to reconsider.
  The position is that if a detainee chooses to have his case heard by the tribunal, he is given a copy of the case against him and can have counsel to act for him to present his case to the tribunal. Witnesses on his behalf can be called, including character witnesses. This opportunity is available but I repeat that only two of the detainees now in prison have taken advantage of this facility. We very much hope that more of them will choose to do so.
  Mr. Julius Silverman: Is it not a fact that the Governor did not accept a decision of this tribunal? My hon. Friend says this aspect has been neglected but I remind him that, on Friday, I dealt with the procedure of the tribunal in great detail. It is not a judicial body. On its own admission it is an administrative body. It is obvious that the chance an appellant gets to submit his case is minimal if it exists at all.
  Mr. Stonehouse: I acknowledge that my hon. Friend referred to the procedure of the tribunal on Friday and I replied to some of the points he raised. The procedures were chosen by the tribunal itself and in the circumstances it considered them to be the best procedures which could be adopted.
  1814
  I confirm that the decisions of the tribunal at this point are only advisory and that the Government does not have to act upon them, but the British Guiana Ministers have given an undertaking that after independence they will do away with the general emergency powers and, if there is need to have anybody detained, introduce a Preventive Detention Bill which will then make the findings of the tribunal binding on the Executive rather than advisory as they are now. This new procedure will also make it possible to control individuals without subjecting the whole community to emergency rule.
  There is another point about this. It will also ensure that the cases are automatically heard by this independent tribunal. There will not have to be an initiative on the part of the detainees. The tribunal by law will have to hear the cases of the detainees and, having heard them, if the tribunal advises that the men should be released, the Governments of Guyana will have to act on that advice. This will be some improvement on the existing position, although one hopes that all the men will be released by executive act by the Ministers concerned before or after independence. I give this information to the Committee because it demonstrates that the Guyanan Ministers are anxious to improve the position in their country.
  Sir W. Teeling: Who appointed the tribunal? Was it not the Chief Justice, who is considered to be one of the most respected Chief Justices in the Commonwealth?
  Mr. Stonehouse: Yes. As I have already said, the Chairman is appointed by the Chief Justice and two other members are appointed by the Judicial Service Commission. Nobody will deny that they are independently appointed. They are not political appointees in any way.
  Mr. Hugh Jenkins: Is it not the case that the proceedings of the tribunal are held in camera? Is it not the case that the accused are required to apply and to prove their innocence even though no charge has been made against them? Is not the tribunal specifically against the Human Rights Convention of the United Nations?
  Mr. Stonehouse: The detainees are given a copy of the charges against them so that they know to what it is they are replying. They are allowed to have counsel appear on their behalf and argue their case before the tribunal, and witnesses can be called, if they so desire, to speak on their behalf. I freely acknowledge that this is not as good a procedure as a court of law and I am not suggesting that it is. But I am saying that it is available and that it is regrettable that only two of the detainees have chosen to take advantage of it. I hope that in time all will, and that will contribute to an improvement of the position and perhaps reduce some of the suspicions.
  My hon. Friend the Member for Oldham, West (Mr. Hale) said something which I should like to take up and which demonstrated a fundamental misunderstanding about the situation in British Guiana. He said that one party represented one race and one party represented another. That is entirely wrong. The party of Mr. Burnham includes a number of Indians, not only in the rank and file, but as Ministers. On Friday, I gave some details of the portfolios they hold. The Attorney-General himself is an Indian. It is, therefore, not correct to say that one party represents one race. Indeed, Mr. Nunes, whose case has been mentioned tonight, is a non-Indian and a member of the opposition party. It is, therefore, not correct to say that there is a sharp racial division between the two political groups.
  Indeed, we should not say such things, because it contributes to the climate of opinion which encourages this division. We want both these parties to act in a non-racial way and to encourage members of all communities to play their part. I believe that that is what is developing.
  One of the unfortunate aspects about the public service in British Guiana has been that its racial composition has been largely non-Indian. This was investigated by the International Commission of Jurists, in a remarkable report, which I have here. I would recommend any hon. Members who are interested in this development in British Guiana to read this report. It has been said that the Constitution has not been seen. It is available if Members will inquire. One
  1816
  interesting point about the Constitution is that which would allow the only discrimination between races. It is that by which Indians will be recruited for the police force in the ratio of 75 per cent. Indian and 25 per cent. the rest. This is in order to try to correct the imbalance that has existed in the police force, so that the Indian community in British Guiana would have more confidence in the force. This will be the only discriminatory aspect of the Constitution and I think that the Committee will agree that it is a right one.
  The Committee has had a long debate on this Amendment and I do not regret that it has proceeded last night and this morning. It is a tribute to this House that we have had it. I respect the sincerity of my hon. Friends who have spoken to this Amendment. I know that they want these men released and I am with them in that. Where I disagree with them is on the method they are pursuing. I want these men released but I do not believe that if this Amendment is passed it will contribute to their release. It will set it back and add to the frustration and to the racial tension. It will make instability greater.
  The way to get these men released is to allow independence to take place on 26th May. We have already had a demonstration of the good will of the British Guiana Ministers, in that most of the men detained have been released. More are being released all the time, one during the last week and another in a few days' time. I repeat what I said on Friday, that I have confidence that more will be released. Having transferred, as we have done, the power in regard to detention to British Guiana Ministers, who should now act responsibly, British Ministers are not responsible.
  We cannot, just before independence, begin to take that power back. We must allow British Guiana Ministers to operate responsibly. If we do not believe that they can behave responsibly then we should deny them independence. Any Member who knows the background of violence and disorder in British Guiana would agree that in the circumstances, regrettable as they are, there was no alternative but that a few of these fellows should be detained.
  Mr. Will Griffiths: My hon. Friend is coming to the end of his speech and I

  1817
  have been waiting with great patience to hear him deal with a certain point. He keeps on saying that he is satisfied that these people were properly detained, but he has not yet advanced one scrap of evidence to support his conclusion. He has also not met the charges made by my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman). He has said that Ministers in the present Government were judged guilty of plotting to commit murder, arson and other things. If my hon. Friend believes this, let him advance some support for this, and not go on smearing these people without evidence.
  Mr. Stonehouse: What I am saying is that these men were detained, not as political prisoners, but because of the acts for which they were responsible. That is something which, according to the legal situation in British Guiana, should be judged by the tribunal set up in British Guiana.
  12.45 a.m.
  The fact is that these men are being detained without trial because of the circumstances—we all regret them, but it is because of the circumstances—in British Guiana. Of course, it would be more satisfactory if they were brought before a court of law. Of course, it would be more satisfactory if here tonight I could read out a long list of things they were said to have been responsible for. But, of course, the Committee will recognise in all fairness that it would be more unfair of me to read out a list of charges here tonight without any chance of their being refuted or debated, than to refer to them in the way I have.
  The fact of the matter is—I repeat what I said a few moments ago—that the responsibility for these detentions is in the hands of the British Guiana Ministers with the powers we have transferred. If the Committee suggests we should take those powers back, let the Committee be frank about it. It would put independence back two or three years. I do not believe this would be the right course.
  My hon. Friend referred to a statement in a document which my hon. Friend read out when he moved the Amendment. I do not believe that that document has any relevance to this debate. It comes from 1963. That is not a final police report. If I heard it correctly, it sounded
  1818
  to me as though it was a preliminary police report. I do not think it assists the Committee in its deliberations on this Amendment to refer to a document of that character. I have no doubt, bearing in mind the situation in British Guiana over the past years, that there must be dozens of documents like it. If we were to dig in the files what should we find about President Kenyatta, about President Banda, about President Kaunda, and all the rest of them?
  Mr. Julius Silverman: Let us deal with British Guiana—
  The Chairman (Sir Eric Fletcher): Order. Unless the Minister gives way the hon. Member for Birmingham, Aston (Mr. Julius Silverman) must resume his seat.
  Mr. Stonehouse: I will give way.
  Mr. Julius Silverman: Is the Minister suggesting that there are hundreds of documents like this which affect responsible Ministers of the present Government of British Guiana, including the Minister for Home Affairs, who is responsible for these men's detention?
  Mr. Stonehouse: My hon. Friend the Member for Putney (Mr. Hugh Jenkins) said in his intervention something about smearing. I think it unfortunate that a document going back some three years was referred to in this debate; bearing in mind the situation over the last few years in British Guiana there are probably several documents concerning various individuals. Surely, we can regard them as past, and not keep bringing them up to the surface and make the situation worse?
  If we have, as I believe we have, confidence in Mr. Forbes Burnham now, and in his Ministers now—and I have heard no hon. Member in this Committee tonight say he has not got that confidence—then let this independence go through on 26th May, and let us allow the people of Guyana to operate in a country which has achieved what is the ambition of almost everybody in that country, political sovereignty and independence. Let them operate that, without feeling the ties of supervision from the United Kingdom. Let them have that political independence which, I think, many of them, in Opposition as well as in the present Administration, have fought for for so

  1819
  many years. If they have that independence, which I trust this Committee will allow them to have on 26th May, there is every possibility—and every Member in this Committee in his right mind will acknowledge this—that the races in British Guiana will come together. There will be a dying away of this racial tension. There will be improvement in stability, and then it will be possible for more of these men to be released and to play their rightful part in peaceful political campaigning in their own country.
  That is the way ahead for Guyana. and I commend it to the Committee and ask the Committee not to support the Amendment.
  Amendment negatived.
  Clause ordered to stand part of the Bill.
  Clauses 2 to 4 ordered to stand part of the Bill.

Clause 5.—(CONSEQUENTIAL MODIFICATION OF OTHER ENACTMENTS.)
Mr. Stonehouse: I beg to move, in page 3, line 41, after "but", to insert "section 129 and".
I think that it might be convenient if with that Amendment we discuss the Amendment in line 42, leave out "sections 108" and insert "section 105 and sections 107".
These two Amendments have been tabled because of an error in the original drafting of the Bill. There were some omissions, and I should like to explain them, if the Committee will allow me a few moments at this late hour.
By agreement British troops are remaining in Guyana until October of this year, and it is considered desirable that certain Sections of the Army Act, 1955, which relate to deserters and absentees without leave, and provide for arrest by civil or military authorities, for proceedings before civil courts, for detention in civil prisons, and for delivery into military custody, should continue to apply as if Guyana were a colony. The sections of the Act must therefore be included in the Bill.
I hope that with that explanation the Committee will accept the Amendment.
Amendment agreed to.
Further Amendment made: In page 3, line 42, leave out "sections 108" and insert "section 105 and sections 107".—[Mr. Storehouse.]
Clause 5, as amended, ordered to stand part of the Bill.
Clauses 6 to 9 ordered to stand part of the Bill.
Schedules agreed to.
Bill reported, with Amendments; as amended, considered.
12.54 a.m.
Mr. Stonehouse: I beg to move, That the Bill be now read the Third time.
I do not wish to delay the House, but I think that in moving this Motion it would be the unanimous wish of the House that I should send the people of Guyana and the Ministers who will assume responsibility on 26th May all good wishes for their success, their progress towards real prosperity, the improvement in racial friendship, and stability. We wish them well in their success in achieving independence. That is the unanimous wish of this House.
12.55 a.m.
Sir F. Bennett: We had some very hard words earlier this evening. At this stage it would be entirely inappropriate, even if it were in order, to refer to them. I endorse what the Minister has said. From my personal experience I know that there is an enormous fund of good will in British Guiana towards this country. I know that hon. Members will agree, irrespective of party, that it is one of the Commonwealth territories which still have an enormous amount of personal friendship and respect for this country, which has been shown over and over again in the last few years, despite the difficulties. I hope that in spite of our earlier arguments we can now quite unanimously wish the country every success under its present leadership.
It has enormous potential riches, quite apart from its political possibilities, and it is a grand thing that at the end of the day we, as a united House of Commons, without any further attacks or remarks about those concerned, should be able to wish the country well.
12.56 a.m.
Mr. Christopher Rowland: I want to detain the House only briefly because there has been no speech from

1821
this side on this matter other than speeches connected with the detention of 15 people. It would be a pity if, even inadvertently, the impression was conveyed to the 600,000 people of British Guiana that the British Government were granting independence only with the reluctant consent of their supporters, and that the Conservative Opposition was the more enthusiastic party in its support for independence.
I think I should declare an interest in the matter. I first met Mr. Burnham and Dr. Jagan in 1953 when chairman of the Labour Party's national student body, and I got them to speak at Oxford, against the wishes of the Labour Party of the day, I believe. In more recent years, by the turn of the wheel of fortune I have been closely connected with the commercial life of the country. I hope that that qualifies me rather than disqualifies me from adding this footnote to the historic event which is enshrined in the Bill.
British Guiana has come late to independence—late by the time-table of the West Indies and particularly late in comparison with States in other parts of the world less well endowed in the skills of their people or the sophistication of their leaders.
Much praise has been given to the present Prime Minister of British Guiana, Mr. Burnham, and deservedly so, in my opinion. He has brought administrative order to his country. Under his Government—and it is more than coincidental—there has been an abatement of violence. In the history of British Guiana to him will always go the honour of being Prime Minister at the point of independence.
As my hon. Friend the Member for Salford, West (Mr. Orme) has pointed out, he is also a Socialist, and I believe that in British Guiana in the next few years there will be more effective State planning than in the past, and more participation by the Government of Guyana in its industries. But on this occasion we should not forget—and many hon. Members have not forgotten—the rôle played by Dr. Jagan. For a decade he has been a symbol in his own country, and in the world outside, of the struggle for independence. His reported decision to boycott the independence celebrations
1822
is the current working-out of a personal tragedy. I share the views expressed by the hon. Member for Ebbw Vale (Mr. Michael Foot) that he should play his part in the political future of his country, because he has a great part to play in respect of the Indian community of which he is still regarded as a champion.
But it is not for this House, at this stage, to pontificate and say what Dr. Jagan, or Mr. Burnham, should do. There is a great danger that, unintentionally, we shall end up being neocolonialist telling a former colonial territory how it should behave. We should not do that. In 22 days hence it will be for the Guyanese to decide what to do, in every conceivable matter. It is for the elected Government of Guyana to decide what happens about the 15 people about whom there has been so much comment in the last few days. It is for the elected Government to tackle their considerable unemployment, to deal with internal security, to secure foreign aid and to work out Guyana's relationships with the rest of the West Indies.
I hope that what goes out from this House—which is widely reported in the Guyanese Press—is not only a word of concern about the 15 people who are detained, although I have no objection to that, but also a word of real welcome to a new sister member of the Commonwealth with which I have had a long association for many years and which I hope we shall continue to have in the future.
1.1 a.m.
Mr. Wood: I think that with the final words of the hon. Member for Meriden (Mr. Rowland) we should all agree, and I should merely like on my own behalf and that of my hon. Friends to endorse what the Under-Secretary of State said in moving the Third Reading. I spoke at an earlier stage with enthusiasm about the future which could lie ahead of Guyana and I think that it is our sincere wish that they should realise that future to the full.
1.2 a.m.
Mr. David Steel: Without detaining the House, I should like to add that the Liberal Members would like to associate

1823
themselves with the good wishes sent to Guyana on this occasion.
Question put and agreed to.
Bill accordingly read the Third time and passed.

HOUSE OF COMMONS MEMBERS' FUND
Mr. Bellenger, Mr. Herbert W. Bowden, Sir Robert Cary, Colonel Sir Oliver Crosthwaite-Eyre, Mr. James Davidson, and Mr. Richard Wood appointed Managing Trustees of the House of Commons Members' Fund in pursuance of Section 2 of the House of Commons Members' Fund Act 1939.—[Mr. Fitch.]
HOUSE OF COMMONS MEMBERS' CONTRIBUTORY PENSIONS FUND
Mr. Bellenger, Mr. Herbert W. Bowden, Sir Robert Cary, Colonel Sir Oliver Crosthwaite-Eyre, Mr. James Davidson, and Mr. Richard Wood appointed Managing Trustees of the House of Commons Members' Contributory Pensions Fund and that the Public Trustee be appointed Custodian Trustee of the said Fund in pursuance of Section 4 of the Ministerial Salaries and Members' Pensions Act 1965.—[Mr. Fitch.]

TONGA
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fitch.]
1.3 a.m.
Dame Joan Vickers: I am glad to have this opportunity to talk about another part of the world, Tonga, because late last year I visited these beautiful islands and this gives me the opportunity to say a "thank you" for the generous hospitality and warm welcome I received. I was grateful to be able to stay with a Tongan family, who made me feel really welcome.
One realises that the people of Tonga are proud and independent. At the moment they are mourning their queen, Queen Salote, and everyone will remember the impression she made at the Coronation, when she put these islands on the map. I hope tonight to ask Her Majesty's Government if they will pay a tribute to Queen Salote in a practical way, by some form of aid. The Under-Secretary of State will realise that in 1961 there was a very bad hurricane from which the islands never fully recovered.
The main assets of the islands are their agricultural lands. It is an agricultural country. Since I was there, I believe an adviser has been sent out to help them with their agriculture. I should like to see the stock breeds improved. I hope that we may be able to persuade New Zealand to send some bulls, some better boars and perhaps some better cocks in order to improve the stock, which appears to need the aid. There seem to be few sheep and no goats, both of which animals would be an asset to the country. In the past some stock has come from New Zealand, and perhaps further aid from this source could be provided to Tonga in future.
I understand that the soil is fertile and rich, although traditional methods of agriculture are still employed. A study of more modern methods is necessary if intensive cultivation is to take place. My hon. Friend the Member for Torrington (Mr. Peter Mills) is, unfortunately, not in his place. He is interested in farming and, while he and I were in Tonga, we were shown some of the best farms and what could be done with more intensive cultivation. I was struck

1825
by the lack of machinery, and I hope that this lack will be rectified, perhaps by the grant of aid for this purpose in future. Many of the farms are extremely small. It would be beneficial if more co-operative farming were done, because at present the acreages are split into farms which are far too small.
I was greatly interested to find a United Nations team helping to overcome the shortage of water supplies. The supply of water is a particularly difficult problem, and this team was providing special wells, with either automatic or windmill pumps, and these will be a great asset to the people generally and to agriculture in particular.
I hope that the Under-Secretary will comment on the social services in that country, particularly the hospital. I understand that there is a chance of obtaining a grant from the Commonwealth Development and Welfare Fund. Although the hospital is doing an excellent job, it is primitive in many respects. The Under-Secretary will understand what I mean when I say that men and women are side by side in the wards and families of patients bring in food each day. The families often sleep beneath or beside the beds. This cannot be the best way to run a hospital.
I was most impressed with the work of the excellent Tongan doctor, the Australian matron and the nurses. If Tonga is to improve the health of its people, it must have better hospital accommodation and better conditions. The mortality rate, particularly the infant mortality rate, has decreased considerably since 1953, the earliest figures I was able to obtain, but there is room for improvement.
If the Under-Secretary is able to announce that there will be a donation or some other form of financial assistance for the hospital, the medical authorities will want to run it on more modern lines. I discussed the matter with the matron and the Minister of Finance. They told me that they had decided that they needed at least 20 more nurses. I understand that to train one nurse for one year costs £135. So to train 20 nurses for three years would cost about £7,100. This cannot be considered to be a great sum for training 20 girls for three years. Having been trained, the nurses will receive a salary
1826
of £84 to begin with, rising to a maximum of £276. Perhaps some money could be placed towards the Queen Salote Training School for Nurses. There is already a small training school available there, and this extra money would be of great help. If the standard of living of the people of Tonga is to improve, it is vital that conditions at the hospital are improved.
I was particularly worried by the fact that mental patients must be nursed and looked after in the prison. I hope that the Under-Secretary will look into this matter and, if a new hospital is to be built, a special ward or other provision will be made for the care of mental patients.
Education of the people of Tonga began in 1828 by the Wesleyan Mission and later, in 1842, by the Roman Catholics. Tonga has had compulsory education since 1929. From the age of six to 14, all Tongan children should go to school, but unfortunately the provisions in this respect are not followed accurately. There is control of these schools by the Government and church organisations, and I am pleased to report that the schools have the same syllabuses; that is, with the exception of the College of the Latter Day Saints, which follows its own syllabus, rather on the American lines. I visited a number of the schools, which are very short of equipment. I saw the books, which very often had to be written and illustrated by the teachers before the lessons could be begun. They have lessons in the Tongan and English languages, and in the usual subjects, but the shortage of books and of all kinds of equipment makes teaching extremely difficult. I thought the teachers were doing an excellent job, despite these difficulties.
I would like the Under-Secretary to help in obtaining further books. I have here a list of books, which was given to me by the very enthusiastic principal of the small teachers training college, and I should like to hand it to the Under-Secretary afterwards. I visited the teachers training college and I found that there were quite a number of books, but I felt that they were a waste of shipping space. They were mostly old. Many of them were second-hand and were old copies which were no longer needed in other schools.

1827
Having seen the enthusiastic Englishman who is running the college, I thought it would be worth supporting him in trying to make his work easier. As he pointed out in his letter to me, and from what I saw for myself, there are no wall maps. As far as I could see, there are no maps at all on any of the walls of the convent school. I do not believe they have even got a map of Tonga, and it would be a great advantage if they could have such a map.
In the training college, there is no tape recorder, no radio and no record player. In fact, he said they would like office equipment, such as a filing cabinet and a stapling machine for papers, art materials, a microscope and an atlas. He suggested they would particularly like books on science and geography. When he mentioned science, he meant the formal basic knowledge. They want to know something about the weather and how plants grow. They cannot carry out weather observations because they have no rain or wind gauges or thermometers. He felt it would be a great asset if they could have some of this equipment. Of course the real need is for a printing press—this is perhaps rather overambitious—on which they could print their own books relating to their own country. They have books dealing with England and New Zealand, of which some of them have knowledge because the older students go to that country for their senior training, usually in Auckland, where there is a hostel. But their books do not relate to their own type of life and they cannot really absorb all that they should. With this compulsory education and the necessity to keep the students in school for such a long period, it is not easy to keep them adequately occupied if there are not the where-withal or the books.
The question which worries me is what some of them are going to do when they leave school, with the sort of half-knowledge that they obtain. Some of those who are able to go on to the grammar school get a chance to go to New Zealand, but others are not fully educated. Therefore, some of them, particularly the girls, find it difficult to get any kind of work.
1828
I should also like to see another factory built there. I went to see a dessicated coconut factory. It was small but excellent. The coconuts were excellent. The product is shipped to New Zealand and Japan and, I believe, a little comes here to this country. If another factory could be built on these lines it would be a tremendous help.
I should also like to pay a tribute to the work done by the Legislative Assembly, the Privy Councillors and the Cabinet. They are a very hard-working body and they try to ensure that all the people of these extremely friendly islands, well known to Captain Cook, are looked after. But, of course, they have their difficulties on a very short budget.
The new King has been very energetic. He now has a new hotel—it was not open when I was there—and he hopes to attract tourists. This will be beneficial to the islands. If the tourists are willing just to meet the friendly people and not to want too sophisticated pleasures, it should be a very happy stay for them.
I pay a tribute to the Tongan Women's Progress Association. Although they are very cut off in these little islands, these women arranged, with great courage, I think, a meeting of the Pan-Pacific Women's Organisation, which I understand was a great success. They were kind enough to entertain us and demonstrated how much they work for the benefit of other people on the islands. Many of them are members of social groups like the Red Cross, which help a good deal. The Red Cross is sent a lot of clothes, some of which have been found extremely useful. However, I must mention that the hospital had no bandages when I was there. I was able to have some sent in from both Fiji and New Zealand, and I gather that the matter was to be looked into. Women were actually tearing up sheets to make bandages at the time I was there, and making an excellent job of it, but it was not a satisfactory state of affairs.
I pay a tribute also to the interest taken by the officials of the Colonial Office. I had the pleasure of meeting one while I was there, and I spoke to him about conditions when I came back.

1829
I realise that, as these people are completely independent, we can act only as their advisers. They are perfectly capable of running their own islands in a quite splendid manner, but they are so isolated and they have very few facilities for earning money among themselves. If we could aid them, perhaps as a memorial to their late Queen, it would be a great asset.
The British High Commissioner is doing a very good job indeed. He is a very sympathetic and understanding man, and any advice and help he can give is always willingly given. I am sure that it is thoroughly sound advice. He is much admired and liked. I discussed several matters with him and talked over several points which, if I had the opportunity which I now have, I would make in a speech in the House. I hope that the Under-Secretary of State will be able to give an assurance that these islands will get a friendly look from the Treasury.
1.17 a.m.
The Under-Secretary of State for the Colonies (Mr. John Stonehouse): I am grateful to the hon. Lady the Member for Plymouth, Devonport (Dame Joan Vickers) for having initiated this debate because it gives me an opportunity, which is all too rarely available, to tell the House something of our relations with the Kingdom of Tonga and the various fields in which they are developing. I am only sorry to say that I cannot do this on the basis of first-hand experience of the kind the hon. Lady has because I have not yet had an opportunity to visit the islands, which, I am told, are very attractive indeed.
Hon. Members will know that Tonga and Britain have long been associated through a series of treaties of friendship. The first was concluded as early as 1879. Under the terms of the present treaty, which was signed in 1958, the Government of Tonga conduct virtually all internal affairs. We would not, of course, seek to interfere in this sphere in any way. We are responsible for most of Tonga's external relations and her defence, although in the second we share the duty with New Zealand.
The cordial relation which has always existed between Britain and Tonga was
1830
greatly strengthened during the illustrious reign of Her late Majesty Queen Salote, who was held in such high esteem and affection in this country. Hon. Members will recall, as the hon. Lady did in her speech, the very great impression of warmth and friendship made by Her Majesty during the coronation ceremonies of our own Queen. Queen Salote's death in December last year was an occasion of great sadness to very many people in all walks of life here. Queen Salote was succeeded by her son, His Majesty King Taufa'ahau Tupou IV. King Taufa'ahau Tupou has visted this country a number of times and I am confident that under his guidance Tonga will enter into a period of further development and increased prosperity.
Like many of the other island States in the Pacific—an ocean which has not been at all pacific—Tonga has recently had to face a number of problems as well as natural disasters which so often befall these islands. As the hon. Lady said, in March, 1961, a hurricane decimated the coconut palms which provide Tonga with her main source of revenue. Other natural resources are limited or require extensive development, and with a rapidly expanding population and a growing shortage of land, it became clear to the Tonga authorities in 1963 that steps would have to be taken to overcome the setbacks to the economy. I am very glad to say that Tonga has turned to this country for help and that we have been able to offer assistance which we believe will contribute to the re-establishment of prosperity.
It may be of interest to the House if I give a few details of what Tonga hopes to achieve. We have been able to make an allocation of £350,000 from Colonial Development and Welfare Funds for the period 1965 to 1968 as a contribution to the financing of Tonga's development programme. This programme, final details of which have not yet been fully worked out by the Tonga Ministers, is on a considerable scale and includes schemes for the rehabilitation of the coconut industry and for the rebuilding of Vaiola Hospital in Nuku'alofa which, as the hon. Lady said, is very old and is in urgent need of replacing. Most of the cost of these two projects will, in fact, be met from Colonial Development and Welfare grant funds available.

1831
Also in the plan is a scheme for a new Training College building to accommodate more student teachers for Tonga's primary schools. I am sure that hon. Members agree that that is extremely important. I will look into the question of further training, particularly for hospitals, which has been raised. This requirement in the schools will be financed from Tonga's own funds. Other schemes are likely to be the development of the airfield and new roads. The airfield will be very important. We hope that it will be possible to make available a further allocation of Colonial Development and Welfare money for the period 1968–70. In addition to these grants, the British Government are making available a loan to meet half the cost of construction of a new wharf at Nuku'alofa, which is badly needed and which should greatly help to expand Tonga's economy.
Hon. Members will appreciate that the great majority of these development projects fall entirely within the responsibility of the Tonga Government under the terms of the Treaty of Friendship. The only reason that I have presumed to go into some detail on them tonight is that we in this country have been able to offer some assistance to the Government of Tonga in financing some of them in the hope that, as a result, developments which are necessary and which are desired by the Government and people of Tonga can be got under way more quickly. What is in hand indeed is a co-operative development effort on an appreciable scale to meet as many as possible of the economic and social needs of Tonga, and we are proud to have a share in it. That we should do so seems to me entirely in accord with the spirit of close friendship which, despite the great distance between us, has always animated relations between our two countries.
The same spirit animates us in another closely related field in which it has recently been possible for some assistance to be given. Our Technical Assistance Programme has allowed the British Government to provide Tonga with a financial adviser. He has been in post since December last and is advising the Tongan Minister concerned on various questions, including drawing up the Development Plan. There is a British police
1832
adviser in post, and it is also hoped to provide within the next few months an adviser on civil aviation and to assist in strengthening Tonga's Agricultural Department with particular reference to coconut rehabilitation.
This is extremely important for the development of the Tonga economy. Under the technical assistance programme, a visit to Tonga was also arranged of a member of the B.B.C. Overseas Training Organisation. The recommendation contained in his report is now under examination.
Also, that we have been glad to have a number of Tongans here in Britain as students. For obvious reasons most students go to New Zealand, but in recent years some eleven Tongans have been granted training awards in this country. I very much hope that the number coming here will continue to grow. We are delighted that King Taufa'ahau's eldest son, the Crown Prince Taufa, is here at school. We wish him well in his work here and hope that he has a most enjoyable stay. Incidentally, yesterday was his birthday. It is a pity that the last debate took so long because otherwise we would have been able to wish him many happy returns of the day. We are about an hour and a half late for that. I hope that when he completes his studies he will carry home to Tonga memories of Britain as a pleasant place; we hope as pleasant as the memory that visitors from Britain have of Tonga.
The story would not be complete if I did not stress the great appreciation which has been expressed by the Government of Tonga on a number of occasions for what we are doing. A number of officials from my Department have been there in the last year or so and the warmth and friendliness of the reception accorded to them in those, the Friendly Islands, is a matter on which they have all remarked. I am sure that the hon. Lady, who spoke so charmingly, must have had the same experience when she went to Tonga last November. I am very grateful to her for the various tributes she paid in her speech tonight.
Dame Joan Vickers: May I say "thank you" to the hon. Gentleman for what he said. I stayed with a Tongan

1833
family and had a most interesting experience. Apparently when they say fare-well to a guest the whole choir moves into the sitting room and they sing to one all night through, as long as the Kava lasts. I sat up for it as late as this hour and was congratulated on my staying powers. I said I had had plenty of practice in the House of Commons. These are some of the most charming and hos-
1834
pitable people in the world. I hope the hon. Gentleman will do his best to see that all the points I mentioned are looked into and that many of the suggestions will be carried out as soon as possible.
Question put and agreed to.
Adjourned accordingly at twenty-eight minutes past One o'clock.

TRANSPORT
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  Transport Services (Aberdeen and Northern European Ports)

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwark
Several Lords—Took the Oath

MESSAGE FROM THE QUEEN
2.35 p.m.
LORD COBBOLD: My Lords, I have the honour to present to your Lordships a Message from Her Majesty The Queen, signed by Her own hand.
The Message is as follows:
"I have received with great satisfaction the loyal and dutiful expression of your thanks for the Speech with which I opened the present Session of Parliament."

DEFENCE EXPENDITURE
2.36 p.m.
LORD BOOTHBY: 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 realise that we are no longer a Great Power; that we can no longer police the world; and that our present expenditure on defence no longer bears any relationship to our national resources.]
THE MINISTER OF DEFENCE FOR THE ROYAL AIR FORCE (LORD SHACKLETON): My Lords, the noble Lord makes three propositions. As to the first, the term "Great Power" is too imprecise for useful comment, but my right honourable friend the Foreign Secretary did point out in another place recently that this country is still a very considerable Power with great responsibilities in the world. As to the second, I do not know
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in which particular period of recent history we thought we could police the world alone. However, the limitations which we accept on our contribution to peace-keeping were fully set out in the Statement on the Defence Review which was published last February. As for resources, the whole object of the Defence Review has been to bring defence expenditure into line with them.
LORD BOOTHBY: My Lords, arising out of that reply may I say that I am sure your Lordships will all agree—
SEVERAL NOBLE LORDS: Order, order!
LORD BOOTHBY: May I ask whether your Lordships do not agree that it was with relief that we heard the statement of the Chancellor of the Exchequer yesterday that something was to be done about the enormous expense of our Armed Forces in Germany, which are to many of us not serving any very useful purpose? Furthermore, may I ask your Lordships—
LORD SALTOUN: My Lords, I am sorry to interrupt the noble Lord. He is empowered to ask a supplementary question of the Government, but he is not empowered to ask a supplementary question of the House.
LORD BOOTHBY: I do not know what I am empowered to do, but I am certainly going to be empowered to ask my next question, which is whether Her Majesty's Government think that, while there is no question about our duty to protect our oil interests in the Persian Gulf and in Malyasia so long as confrontation exists and we are needed there, it is necessary to maintain at full strength this enormous complex of obsolescent bases sprawling all over the world from Gibraltar to Singapore, and whether they do not think they could cut down a little without jeopardising vital defence interests?
LORD SHACKLETON: My Lords, I think it is a pity that the noble Lord did not take part in our recent Defence debate. The issues that he raises are so wide, and need such detailed consideration, that I do not think I can usefully comment upon them now.

OIL FROM COAL
2.43 p.m.
LORD LEATHERLAND: 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 progress is being made in this country in the production of oil from coal, in view of the need to ensure full use of indigenous materials in the interest of the balance of payments; and whether inquiries are being made into a report that the U.S. Department of the Interior claims to have developed a process to make petrol from coal at prices below those of extracting it from crude oil, i.e., at 10½ to 13 cents a U.S. gallon against 12½ to 14 cents from crude oil.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE, HOME OFFICE (LORD STONHAM): My Lords, technological work on making oil from coal in this country was suspended in 1960 in implementation of a recommendation of the Wilson Committee on Coal Derivatives which found that the prospects of doing so economically were remote. There is close co-operation between the National Coal Board and those responsible for planning coal research in the U.S.A., and my right honourable friend is kept informed of the progress of American experiments. The process under examination in the U.S.A., to which my noble friend refers, was one of those inquired into by a delegation which visited the United States last October under these arrangements for collaboration. The delegation concluded that the process in question would not be capable of economic application in our own country, where the ratio of coal to oil prices is different from that obtaining in U.S.A.
LORD LEATHERLAND: My Lords, I thank my noble friend for that Answer. There is little else that can be said, and I believe it is quite obvious that this matter is being kept under attention.
LORD PEDDIE: My Lords, could my noble friend give an assurance that before consideration is given to vast capital expenditure upon the extraction of oil from coal, there will be an assessment of the full potentialities of obtaining gas from under the North Sea?
LORD STONHAM: My Lords, of course assessments of the potentialities of all fuels are kept constantly in mind, but I think it should be said that the key factor in the question put by my noble friend Lord Leatherland is a comparison between coal and oil prices in the United Kingdom and in the United States of America. Crude oil prices are about the same in both countries; that is approximately £ 6 to £ 7 per ton, which works out at 3½ to 4d. a therm; but whereas the average pithead coal price in the United States of America is about 1½d. a therm, the cheapest grade in Great Britain is just under 4d. a therm—more than double—and that is the governing factor.
LORD PEDDIE: My Lords, may I ask my noble friend whether he will kindly reply to the question which I put to him?
LORD STONHAM: My Lords, the question which my noble friend put to me related to North Sea gas. I answered it by saying that all means of power and fuel were kept under consideration. That of course includes the supplies of North Sea gas.
LORD BLYTON: My Lords, is my noble friend aware that while prices may be lower to-day in the glut of world oil, this may not last for ever and it is imperative to continue to try to get oil from the carbon in coal economically?
LORD STONHAM: My Lords, I quite agree with my noble friend. I am merely stating the present position, which is that the difference between 1½d. and 4d., as far as the coal prices are concerned, is a not unimportant factor. But my right honourable friend's Department and the National Coal Board are keeping in close contact with these developments overseas and they will continue to be kept so informed. However, I would say to my noble friend that we must have regard both to these indisputable facts and to the expert views of the National Coal Board.

DOCTORS' AND DENTISTS' PAY
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, at a suitable moment after 3.30 my noble friend the Leader of the House will be making a statement on the Seventh Report of the Review Body on the Remuneration of Doctors and Dentists.

MATRIMONIAL HOMES BILL [H.L.]
BARONESS SUMMERSKILL: My Lords, I beg leave to introduce a Bill to amend the law of England and Wales as to the rights of a husband or wife to occupy a dwelling-house which has been the matrimonial home; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Baroness Summerskill.)
On Question Bill read 1a, and to be printed.

VIETNAM
2.49 p.m.
LORD BROCKWAY LORD BROCKWAY rose to ask Her Majesty's Government whether they will make a statement on their policy towards the war in Vietnam in view of the recent developments. The noble Lord: My Lords, I wish first to express appreciation to those who have co-operated in giving me the opportunity to put my Unstarred Question to-day, which will not only enable an exchange to be held between Ministers and Members of this House but will also give the opportunity for a debate. I appreciate especially the action of members of the Government who, despite great inconvenience, have agreed to the change in the procedure which has been accepted.
I wish to discuss the issue of the war in Vietnam, which is surely the most important event in international affairs to-day. Every one of us must be conscious of the responsibility which our words have in the present situation. I shall try to speak in that spirit. At this moment in Vietnam we are at the crossroads between an intensification of the war and its possible extension in Asia, and indeed in the world, and the tendencies which are now making themselves evident for progress towards peace.
The intensification of the war has been shown by a number of recent pronouncements. There is the statement of Mr. McNamara, the United States Secretary of Defence, that 50,000 tons of bombs were dropped in the one month of March upon North and South Vietnam, three times the monthly rate in the Korean War, and that
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it is planned to drop 638,000 tons of bombs during the present year. This fate is less than the use of a nuclear bomb, but it approaches it. In the Korean war three million civilians were killed and five million people were made homeless and destitute, and the rate of destruction and death in Vietnam to-day is three times this appalling holocaust. Moreover, my Lords, the destructive power of the bombs to-day is intensely increased. The "Lazy Dog" splinter bomb had not been invented at the time of the Korean War, and the napalm bomb did not cling so intimately and so devastatingly to burn human bodies which it touched. We now have the up-to-date weapon which destroys in the villages and among the population of Vietnam children and women as well as men, who are being sprayed and cruelly tortured to death by this infamously cruel weapon.
Quite apart from the inhuman tragedy of what is happening to the people of Vietnam, who have gone through 25 years of struggle for their own self-determination, against Japan, against France, previously to the present struggle, there are indications from at least the Pentagon—though I do not think it represents the whole of the American Government—of an extension of the bombing which is taking place. It is now nearing the suburbs of Hanoi in North Vietnam. It is nearing the port of Haiphong. It was officially announced this week, for the first time, that the American attack had gone over the frontiers of Cambodia. I recognise at once that the troops of the National Liberation Front may have withdrawn over that border and that in those circumstances the Americans were militarily justified in meeting their continued fire. Unfortunately neither the Government of Cambodia nor the Government of Laos is yet in a position to intern troops which cross into their territory. But this very fact illustrates the danger that the war in Vietnam may spread to new areas, into Cambodia, into Laos, over South-East Asia, challenging China. We have recently also had the disturbing news that in North Vietnam the American jet planes have been met by MiGs said to have been supplied from China (I think they are much more likely to have been supplied from Soviet Russia), and the threat that such assistance in the provision of planes would be met by retaliation on China.
My Lords, I am trying to take an objective view of the situation and I do not pretend for one moment that the intensification of the war is all due to the American side. There has been evidence in recent weeks of the growing infiltration of troops from North Vietnam into South Vietnam. And to-day we have to face the very serious position that there is an increased probability of external Communist intervention in the war in Vietnam. Soviet Russia is now succeeding for the first time in calling a representative international conference representing Communist countries at which North Vietnam will be present, despite the disapproval of China. We should be deluding ourselves if we did not expect at that conference greater pressure than ever for Communist intervention and support for North Vietnam and the National Liberation Front in South Vietnam. I say, with the utmost seriousness and gravity, that unless these tendencies to intensify and extend the war are met, the danger of world war will be real before the end of this year.
I want to look at the other side and the more hopeful picture of the progress towards peace. There has recently been, in the territories which are under the control of the American armies and the Saigon administration, what is no less than rebellion. It has been led by the Buddhist community, the majority community within South Vietnam. It is not, however, only a revolt by the Buddhist community against the Ky militarist régime supported by the United States of America. A most significant fact, which has not been widely reported in this country, is that two major groups of the Catholic community have now formed a national front with the Buddhists in the Saigon area of South Vietnam in order to overthrow this military régime.
The revolt has taken place, not only in Saigon but in every town in the whole of the area of South Vietnam which is under the control of the American forces and the Saigon Government, and we should be taking a short-sighted and limited view if we thought for one moment that this was merely a protest against the military régime of Marshal Ky. The people of South Vietnam, whether they are in the Saigon territory or in the much larger territory under the
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control of the National Liberation Front, have the same instinctive reactions to foreign occupation as any people in any country in the world have, and as we should have in similar circumstances.
Saigon and the other towns in the Saigon area are now among the most artificial and corrupt societies in the whole of the world. They are towns under American occupation; they are towns where the Americans have their camp followers in hotels, in restaurants, in the shops, in night clubs; where an American soldier renting a room at a hotel has a Vietnamese prostitute placed at his disposal. This is the most artificial, corrupt and immoral society in any part of the world to-day, and, except for those dependent upon American dollars, among the masses of the people there are rising prices, because of the American ability to spend; there is increasing poverty and distress, and there is increasing anger against these overlords in their towns and cities.
The protest that was reflected in the Buddhist revolt is a natural protest against people who are under alien domination. The strength of that protest is shown by the surrender of Marshal Ky to the Buddhist demands. There is to be an election in August of a National Assembly which is to meet in September. From all the experience there has been in Vietnam we must be a little reluctant to believe that that election of a National Assembly will be free and democratic. But our Government here has to face the fact which now the American Government is slowly beginning to face; that the case that was put by America, that the war in Vietnam is a war between the North and the South for the defence of the South against the North, is now crumbling to bits; and if there are free and democratic elections, even within the Saigon area, in August there is little doubt that a Government will be returned which will be seeking peace in Vietnam, and seeking peace negotiations with the National Liberation Front, to obtain self-determination for the people of South Vietnam, and the end of any foreign occupation of their territory.
I think it is worth while to-day to look at the American reaction to this situation. The whole case for American intervention in Vietnam is now collapsing. That case was the defence of South

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Vietnam against Communist North Vietnam. It is now becoming clear that the people of South Vietnam want peace, and are prepared to negotiate that peace with their fellow Vietnamese who are in the National Liberation Front. I will not dwell on this, but the proposal of the National Liberation Front in South Vietnam—called by the Americans Viet Cong—is for a Coalition Government in South Vietnam, representing not only the National Liberation Front but the Buddhists and the Catholics. On that basis, I have no hesitation whatsoever in saying that peace with national support can be secured in South Vietnam.
These events have caused new thinking in America. I am most impressed by what Senator Richard Russell, the Chairman of the Senate Defence Committee, has said. Senator Richard Russell has been regarded as one of the hawks, as distinct from the doves. Nevertheless, he says that if, on investigation, the majority of South Vietnamese people want America out, the United States should withdraw her forces. A large proportion of both Houses at the Capitol—it is said to be as large as 40 per cent. of Representatives and Senators—now wants a modification of Government policy. It is certainly backed by leading Americans, such as Robert Kennedy, Senator Fulbright, Senator Mansfield, Senator Jacob Javits and others.
The British Press has reported on the National Opinion Poll in America which indicates that the majority of Americans are still behind the policy of President Johnson. The most remarkable fact here is that over 30 per cent. of the people in the National Opinion Polls in America declared for the withdrawal of American forces from Vietnam. There has never been a war in modern times—a war in which one's Government is engaged in actual hostilities, when one's own boys are involved at the front—when such a proportion has been opposed to the continuation of the war. Something is happening to-day to American opinion of which our Government should be taking notice. I have no doubt whatsoever that President Johnson is now making an agonising reappraisal of the situation. I have no doubt that he is making efforts for peace between these two tendencies, that of the Pentagon and that manifested
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by the more reasonable elements in the Secretary of State's Department, which are now clashing. I welcome the news announced to-day, that Mr. Averell Harriman, President Johnson's special ambassador, and the Roumanian Prime Minister, Mr. Maurer, are meeting at the International Red Cross Centre in Geneva. It is expected that they will be discussing more than the condition of the prisoners on both sides, and I hope that this will be true.
I want to add one other element to this very deep modification of opinion in America itself. It is the new situation in South-East Asia as a whole; it is the new balance of forces. One saw South-East Asia, with great Communist China in the North, and with the great Indonesian archipelago of 100 million people in the South disposed towards China. There has now been a change in Indonesia. I am not for one moment going to endorse all that has happened, certainly not the appalling massacres which have taken place; but the new situation has now changed the whole balance of forces in South-East Asia. This must require a reconsideration of policies by the West, particularly by our own Government. I welcome the contribution made by the Government to Indonesia's economic development. I also welcome the fact that there is now on the part of our Government a new attitude towards the settlement of the Indonesia-Malaysia confrontation. I hope that it will take place on the basis of the Manila Agreement, which existed even before Malaysia was established. I submit to your Lordships that that change in the balance of power in South-East Asia must have a very considerable effect when we are thinking of developments in Vietnam.
I want to say this to my own Front Bench—and I have never doubted the sincerity of this Government in seeking peace in Vietnam; I have had my personal discussions both with the Prime Minister and with the Foreign Secretary, and that has been doubly evident to me. From the first I have taken the view that those efforts towards peace were prejudiced by the undiluted support given by our Government to the United States of America. I say this to our Government: not only can the United States not justify its actions in Vietnam on the

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ground that it is a defence of the South against the North; our own Government cannot now justify that argument. For it is becoming increasingly evident that the majority of the people of South Vietnam are against the war in which the Americans have been engaged and are against the Government which the Americans have propped up in South Vietnam.
I want to submit to our Government that in this new situation they should reconsider their policy. Because I so earnestly desire peace, I want to see pressure being put on the United States and upon the Government of North Vietnam and the National Liberation Front. Our Government can still influence the United States. The non-aligned Governments—Marshal Tito, and President Nasser are at this moment in consultation to call a new conference for this purpose—can influence North Vietnam and the National Liberation Front. France can bring influence to bear, as can Russia, because, despite its commitment to the cause of the North Vietnamese and the National Liberation Front, Russia sincerely desires peace in the world. I beg whoever replies to this debate for the Government not to point to past failures in this direction: I am aware of them; I have participated in them. But we now have a new situation in face of which our Government must take a constructive attitude towards peace.
I welcome the fact that, during the Election, spokesmen for our Government said that there was no intention to send British troops to Vietnam. I need not warn the Government of the strength of protest that would arise if any suggestion of that kind were to be considered. I want now to make one further appeal to the Government. We have British police in Saigon who, apparently, are responsible for the maintenance of law and order there; and in Saigon, and in all the other towns of the Saigonese territory (if I may coin a word) there are these popular demonstrations against the Government of Saigon. It would be absolutely disastrous to future good will in Asia if British police were ever used for the suppression of the will of the Vietnamese people. Incidentally, may I just add this comment? I have regretted that Australia and New Zealand have sent their troops there, but I have taken pride in the attitude of the Australian
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Labour Party, in the much more difficult circumstances of a country near to South-East Asia, opposing the sending of Australian soldiers to Vietnam. Also, in New Zealand, despite an approaching Election, the Labour leadership is saying, "We will reconsider sending troops to Vietnam, and at least will limit any aid to technical assistance."
My Lords, I want to conclude by making quite constructive proposals. There is to be an election in the Saigon area in August—at least, we hope that that pledge will be fulfilled and there is to be a meeting of the National Assembly in September. I want to ask the British Government to use the influence which I recognise is still in their power, particularly with their greater majority now, to urge upon the American Government that a truce should be called in the fighting in Vietnam during that election in August, and until the meeting of the National Assembly in September. I ask for a cease-fire, a truce, during the month of the election until the Assembly meets in Saigon in September. If that could be achieved, it would be the beginning of the end of the war.
I want to make another suggestion, and this is an appeal to the non-aligned Governments, and to those of France and Russia. It is that North Vietnam and the National Liberation Front should accept any proposal of this kind. They, to our regret, have previously declined opportunities of negotiation, but now they have everything on their side. They now have the rebellion in the Saigon area against the continuation of the war. I want to suggest to them, not only that the truce should be accepted in August and September, but that the National Liberation Front should agree to a simultaneous election in the area of South Vietnam controlled by them. I suggest, also, that that election should take place under the supervision of the International Control Commission of India, Poland and Canada. I believe that those constructive proposals, supported by our own Government and accepted by America, backed by the non-aligned Governments and by France and Russia, might bring us some hope that at this critical cross-roads of history Vietnam will move not towards the road of extended war but towards the road to peace.
3.25 p.m.
LORD MILFORD: My Lords, a lot has happened since we last had a debate on Vietnam in this House. Thousands and thousands of villagers have been killed, their homes burned, their children, if not dead, perhaps maimed for life. The gravest thing of all, as the noble Lord, Lord Brockway, said, is that the war is escalating. In this country the question of Vietnam was deliberately kept out of the General Election, but I suggest that the majority of people here are absolutely horrified by this war and would welcome Britain's dissociating herself from the American Pentagon so that she could help to make peace in Vietnam. I do not think President Johnson had any right at all to consider that the big victory of the Labour Party in the Election was a blank cheque for him and that the British people would support him in the war in Vietnam. I welcome very much a large advertisement in the middle page of The Times the other day, signed by people who are anything but Left, saying that they dissociated themselves from President Johnson's remarks.
In the Queen's Speech, Vietnam was glossed over. We were merely told that Her Majesty's Government are seeking ways for getting peace. I am absolutely sure that the British Government are quite sincere in this, but I do not see how they are going to manage to be taken seriously as an independent peacemaker as long as we are tied to the tails of the American Pentagon. I was sitting in the Gallery in the other place the other day when the Prime Minister was questioned about bombing getting very near Hanoi. I was disturbed at the way the questions were simply brushed aside by one sentence, such as "Hanoi is not bombed" and similar answers. I was also disturbed at our Foreign Secretary's not having budged one inch since we last discussed this matter in the House, and at the fact that we are still fully behind the American policy in Vietnam.
Meanwhile, things are stirring amongst the people in this country. The Scottish T.U.C. have come out against what is happening in Vietnam. There has been the action of the Shopworkers' Union. We have had large marches and demonstrations, very largely, of the youth; and although the youth may not have the vote before 21, I consider they are becom-
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ing more and more political, especially on foreign affairs and in their demand for decency and justice and real common sense. The Council of Churches has also raised its voice.
As the noble Lord, Lord Brockway, said, about 37 per cent. of the people in America are now questioning, or are against, the policy of their Pentagon on the war in Vietnam, and the Government has now been forced to recognise this opposition. In the past these people were treated more or less as unpatriotic traitors, but now, because the movement has grown so quickly and so large, the Government has to argue with them, reason with them and treat them as a legitimate opposition. The American Labour Movement is now stirring; and their Government Committees, as we have seen on our own television, are questioning some of McNamara's policies very openly and hard indeed. Yet on May 2 the United States Government said that it needed more napalm for the Vietnam war. It had recently awarded an 11-million dollar contract for the production of 100 million pounds of the stuff to a company in Redwood City, California, but the people from this city strongly objected to their city spawning what is believed to be the first large-scale production since the Korean war of this unpleasant fire-bomb. That is the sort of thing that is happening in America to-day. To think that they are going out to produce more and more and more of this horror!
Every week the American military build-up in Vietnam goes on. Last week, thousands more soldiers were drafted to Vietnam. The war is escalating. The noble Lord, Lord Brockway, has told us how many tons of bombs they plan to drop on Vietnam this year. What Lord Brockway did not quote were Mr. McNamara's following words. After boasting about the bombs, he said:
"We are a very peculiar people. We should be proud of what we are doing there, in applying an unlimited military power in pursuit of a limited political objective".
"Proud", my Lords! He said that the objective was
"simply to guarantee self-determination for the Vietnamese people."
Is that not exactly what the Vietnamese people have been trying to get all these years?

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However, there are some sane American voices in their Government. Senator Fulbright, chairman of the Foreign Relations Committee, said he found it difficult to be proud of American military power. He said.
"It is very difficult to think of any country in history which had comparable power and did not become very arrogant and self-righteous, and did not seek to impose its will on other people".
My Lords, the whole human spirit is losing its sensitivity to-day. More and more horrors are taken for granted. Men are being trained to perpetuate them and to accept them as part of their job. Perhaps some of your Lordships saw the two films recently shown on "Panorama", which showed American troops being taught all about torture and having their faces covered with red ink to make it more realistic.
The danger of escalation is very acute indeed, and that is the most serious and important thing to-day. Bombing is getting nearer and nearer to Hanoi, nearer and nearer to China. Air battles are now taking place right on the border of China. So much so that Senator Robert Kennedy has asked:
"…what would be the Chinese response if her territory is bombed or her air space invaded? Will the Chinese seek to strike at our bases—in Vietnam or Siam, or aboard our aircraft-carriers? And if they do, what then will our response be—further bombings? And if the scale of the bombing increases, will China confine herself to air fighting—or will she send her troops to engage ours on the ground in South Vietnam,?'…He viewed 'with the gravest concern' the recent clashes between the latest types of U.S. and Soviet-built fighter planes over North Vietnam and the reaffirmation that China would be no sanctuary."
He went on to say:
"This was a clear escalation of the war…"
A still different angle of the danger of the escalation of the war is seen by Senator Fulbright.
"A second danger foreseen by Mr. Fulbright is 'the stirring up of a war fever in the minds of our people and leaders,' which was likely to grow and cause mounting popular demand for an expanded war, 'for a lightning blow that will get it over at a stroke'. This way led to global war."
However, because of world opinion, public pressure inside America, the military bog-down and the tremendous hostility to the Saigon Government, President
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Johnson has now declared that he is ready for unconditional peace talks and a return to the Geneva Agreement. But, unfortunately, every time he says this one knows there is going to be increased bombing the next day. That has happened every time. It is always followed by intensified bombing. How can Hanoi come to the peace table or take things seriously when this happens? Hanoi is blamed for making no response to President Johnson's peace talks, and our Government echo these views in complete subservience. But what about General Ky in Honolulu the man that America is backing? He got very worried when President Johnson started to begin to talk about negotiating, and immediately put it out that the South Vietnam Government would not negotiate.
Now the answer always comes back that Hanoi is the aggressor. But are these not really some of the facts? In 1956 there were supposed to be elections to unify the country, which had previously always been one country; but by 1959 the patience of the South Vietnamese, the peasants, and the people of the country, was absolutely exhausted because there had not been any elections. Diem had refused to have them. So the National Liberation Front was formed to get rid of Diem. The American intervention in Vietnamese affairs followed, and afterwards a full-scale war broke out. Is Hanoi to be called the aggressor if she wants to help her own countrymen? Because it was one country. That is the point we must really keep in our minds. If England were in the same situation, if a foreign army were occupying Southern England, would you Scotsmen not come to our help, and would you not be furious at being called the aggressors?
Since our Government unfortunately go on echoing these American accusations against Hanoi, I think that the views of those in Hanoi should be looked at seriously—not in hot blood, but trying to treat them as human beings, as a Government of intelligent people. First of all, they say, "Stop the bombing", naturally, "and withdraw troops from the territory of our fellow countrymen in the South". Is that not absolutely natural? Then they say, "The affairs of South Vietnam must be settled by the South Vietnamese people themselves". Is

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that not all right? Then, "Pending peaceful reunification, as in the Geneva Agreement, neither zone must join any military alliance". Is that not an absolutely fair, safe, sane demand? And then they want reunification without any foreign interference.
The Americans say that the troops will be withdrawn once peace is assured. It seems to me that these are the two sides of the question: When is peace going to be assured? And how can one trust that they will retire when peace has been restored—since the Geneva Agreement was never allowed to be carried out? I can see that Hanoi has tremendous doubts and is terrified of falling into another trap. And what kind of "decision" would the South Vietnamese have in choosing their own Government if the elections were held under more than a quarter of a million American bayonets? But unfortunately, as I have said before, the British Government stick to the American Government under the slogan, more or less, of "My ally, right or wrong." But it is no longer a war between two Vietnamese régimes; it is war between America and the Vietnamese people. That is why Saigon, as the noble Lord, Lord Brockway told us, is now putting up slogans all over the place: "Yanks, go home!"
I feel it is descreditable—and I am sorry to say it—that, in spite of increased world revulsion, the Labour Government have not added their voice to the growing protests of the world to-day against all this bombing and what is happening. Mr. Wilson has denied—Thank goodness, it was not true!—that the reason we were behind the Americans was because of dollars. I am glad that that is not true; I am sure that it is not true. But I cannot understand what it is that does tie us so absolutely uncritically to the Americans' apron strings. This policy of ours, of unquestioned support of America is, I think, doing us tremendous harm in Asia and in Africa, and will continue to do so in the future as those countries develop; and one knows that the Americans themselves do not respect people who do not stand up to them. I feel convinced that this year other trade unions will be following the example of the Scottish T.U.C., that our youth will
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get more vociferous against this war as the year goes on; and that it will happen all over the world.
I am sure that we have got to stop accusing Hanoi of being the aggressor and to stop saying, "Hanoi will not negotiate"; and really try to understand the situation and get independence ourselves, so that we can do something about it as co-chairman of the Geneva Agreement. Thousands of thousands of tons of napalm and high explosive do not provide the atmosphere in which to negotiate; so, obviously, first of all the bombing has got to stop. Vietnam must be allowed to become one country and to settle what kind of régime they want for themselves. My Lords, there are two Americas to-day. One is a little smaller than the other (at the moment, 37 per cent.), but I think it is getting bigger all the time. I hope that our Government, our Socialist Government, will put all their efforts in support of that other America which agrees with the principle that all nations should settle their own affairs. If we could dissociate ourselves from the Pentagon side of America, we could at once make a reality of our Government's wish to go forward and help bring about peace.

DOCTORS' AND DENTISTS' PAY
3.45 p.m.
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, with permission, I should like to repeat a Statement which my right honourable friend the Prime Minister has just made in another place, about doctors' and dentists' pay. His words were:
"I should like to make a Statement about the latest Report of the Review Body on Doctors' and Dentists' Remuneration, covering the next two years, which is being published to-day. I should like to express the Government's gratitude to the Review Body for the sustained and intensive work they have put into the conduct of this particularly difficult review.
"The Government accept all the Review Body's recommendations in principle and are at once making arrangements to implement those for hospital doctors and dentists, and for general dental practitioners, in full

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with effect from April 1, 1966, at an estimated cost in the current financial year of about £ 12 million. The average percentage increases in net remuneration are 13·4 for hospital doctors and dentists and 10·6 for general dental practitioners.
"For general medical practitioners it is estimated that full implementation of the recommendations would cost some £ 28 million this year and would involve an increase of about a third in aggregate net income. The Government agree with the Review Body that special considerations of workload and manpower in general practice justify an exceptionally large increase in remuneration for general practitioners. In the light however both of current economic difficulties and of their general policy for prices and incomes, the Government have decided that they would not be justified in implementing an increase of this magnitude in a single immediate step. They accordingly propose that the Review Body's recommendations should be implemented in two stages. The first stage would apply retrospectively from April 1, 1966, and would be designed to increase net income by about half the full amount, or rather more than 15 per cent. The second stage, completing the implementation of the Review Body's recommendations, would take effect from April 1, 1967. The Government are willing to discuss with the profession how this can best be achieved and are putting forward their own proposals.
"A third and final Report on the negotiations between the Health Departments and the profession about the proposed new contract for family doctors is also being published to-day, and the Minister of Health is to-day writing to the Chairman of the General Medical Services Committee to convey the Government's proposals as regards both the contract and remuneration."
LORD NEWTON: My Lords, I am sure we are all very grateful to the noble Earl for repeating the Prime Minister's Statement to the House. It is a very important Statement and it deals with what is going to be a very expensive matter. I have no doubt that the medical profession as a whole is, and has been, of the opinion that the Gov-
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ernment were morally obliged to accept the recommendations, whatever they were, of the Review Body without referring them to the Prices and Incomes Board. Whether other wage and salary earners will think so is another matter, because the increases recommended by the Review Body are obviously far in excess of anything that could be reconciled with the Government's incomes policy as a whole.
May I ask the noble Earl just two general questions? First, what effect do the Government think their decision to accept in principle the Review Body's recommendations will have on the incomes policy as a whole? Secondly, I should like to ask whether the Government expect that the medical profession will accept that general medical practitioners alone of the doctors concerned should not get the whole of the recommended increase in one step?
THE EARL OF LONGFORD: My Lords, I am very grateful for the careful tone of the noble Lord, Lord Newton. I think that I can only give him a personal answer to the questions he has put. I feel that I cannot avoid them, but equally, I cannot commit the Government to my view of these rather speculative matters. I would hope that the line taken by the Government here is the one best calculated to assist the incomes policy. It shows that the Government pay great attention to the advice of very well qualified bodies of this kind. Moreover, it shows that they make tremendous efforts, as on this occasion, to soften any impact that might appear undesirable. As regards the attitude of the medical profession, there are distinguished members of that profession in this House whose opinions might be more valuable than my own, but I hope for the best.
LORD WADE: My Lords, may I join in expressing gratitude to the Review Body for the work which they have done? Would the noble Earl agree that general medical practitioners, as well as hospital doctors, have been leaving the country not only because of offers of better remuneration but often because of offers of far better working conditions? Therefore, may I ask whether the first stage to which reference has been made in the Statement applies only to net income; or whether it will also deal with requests for help

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for better treatment over ancillary assistance for doctors, and the improvement of premises, and other matters affecting working conditions? I should be obliged if the noble Earl could say to what extent that is covered in this first stage.
THE EARL OF LONGFORD: My Lords, I would rather have a little more notice of that question. As the noble Lord is aware, the arrangements being reached with the medical profession refer to a new system of remuneration as well as to the actual pricing within that system, and I would hope that, apart from the actual pricing, the new system, which certainly one hopes would be accepted, would itself be beneficial along the lines which the noble Lord has in mind.
LORD BLYTON: My Lords, can my noble friend say whether he expects the trade unions who represent the £ 9-a-week man to accept the 3½ per cent. norm in the light of this enormous increase?
THE EARL OF LONGFORD: My Lords, I appreciate the gravity of the point raised by the noble Lord, Lord Blyton. He will be aware that this extremely well qualified Review Body has taken that factor into account. They point to the special circumstances in the case of the medical profession. The incomes policy was never supposed to apply across the board without any qualification at all, but I recognise the gravity of what the noble Lord has in mind. If it were not for that kind of consideration I have no doubt there would not have been this delay in the implementation.
LORD STRATHCLYDE: My Lords, can the noble Earl say when the medical profession last received an increase in remuneration?
THE EARL OF LONGFORD: A large part of the profession received it last year.
BARONESS SUMMERSKILL: My Lords, may I anticipate for the noble Earl the criticisms of members of the medical profession? They will wonder why the general practitioner has been discriminated against for this reason. This Review Body has been sitting for some years, and during that time large numbers of young general practitioners have left the country. The result has been that the older general practitioners have been holding the fort. Postponing full
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implementation for the older men—for that is what it means—in this country will make them feel that they are being called upon to bear a hardship which perhaps the Government never considered.
THE EARL OF LONGFORD: My Lords, I should be much surprised if the present Minister of Health, who I think is perhaps as good a Minister of Health as we have had in this country, has not considered all these aspects. I feel quite certain that he has.

VIETNAM
3.56 p.m.
Debate resumed.
BARONESS SUMMERSKILL: My Lords, my political philosophy has been fairly well known in both Houses of Parliament. My political instincts prompt me always to oppose dictatorship of the Right and of the Left and to regard war as a means of settling disputes as a primitive conception. But perhaps that has to do with the fact that I belong to a sex which is not called on to indulge in the rather brutal scenes that are depicted on television in these days. Nevertheless, this television of ours does do this, and I think it serves a very useful purpose. It brings into our home a picture of what is happening in distant parts of the world, and it has brought the Vietnam war into our homes. I feel that no individual in this House, or in the other House, can feel he is not involved in it in any way.
Britain, my Lords, is not only a sleeping partner in this war, in this anachronism. The majority of American servicemen are European in origin and they speak our language. I believe that this diminishes us all. I would say, in parenthesis, that it seems paradoxical that one reads about crimes of violence and allied perversion in our newspapers and at the same time young soldiers are encouraged to regard killing and torture as part of their legitimate training in the military arts. All this makes a mockery of the debate we had yesterday, when speaker after speaker stood up and discussed how we could train our young men to think along lines which perhaps were more pacific than their usual approach to life. How can we reform

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the potential criminals in this country, in the United States, in Vietnam, or in any other country of the world while our young men are indoctrinated by such example?
I read in the Guardian yesterday (this is what prompted me to speak today) that information had reached the newspaper through Swedish diplomatic sources that the Soviet Union had managed to arrange a conference of Communist Powers to agree on a course of action on Vietnam. I confess that my first reaction was that of someone who had watched the bullying of a small man by a big man for too long and now another big man was coming along to pull him off. That was a primitive reaction. My second reaction, of course, was to picture the possibility of world involvement in a war which is arousing racial passions in every continent. These pictures we see in our homes go throughout the world, and men and women identify themselves with the men and women and children in those pictures.
The question we want to ask the Government at this stage—because I feel with my noble friends who have just spoken that we have reached a stage, surely, when we must look at the whole picture again—is, can we look forward to the end of this futile slaughter before other Powers are committed? We learn of the bombing of North Vietnam. Yet more North Vietnamese troops and supplies are entering South Vietnam than ever before. Officials in Washington wishfully think that the war can be won early next year, but this is wholly discounted by Saigon. General Westmorland has repeated on many occasions that the war will be long-drawn-out.
The figures are easy to remember. The Viet Cong now have about a quarter of a million men under arms in South Vietnam; the United States have approximately the same; and there are about three-quarters of a million in the South Vietnamese forces, including the police forces. But men and arms are not the sole determining factor—the French learned that to their cost. The monsoon season, the thick jungles and the mountain areas are formidable allies of the Viet Cong. However much we see these great, tough, pathetic Americans being taught jungle warfare, they cannot in a few weeks or a few months learn how to conduct war
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under those conditions. Furthermore, the Buddhists' political action—and the Buddhists command tremendous respect in the whole of South-East Asia is threatening to bring down the military dictatorship.
I want to ask my noble friend a question, and I hope he will try to answer. I am also trying to help. I think that taking part in a constructive way in this debate strengthens the hands of our spokesmen with the spokesmen of the United States. We know by now that there are many in the United States who feel as we do, if the elections are held—and the Buddhists will not tolerate undue delay—and the new Government asks the Americans to leave, what is to happen? I think we have a right to ask. After all, as has already been said, Britain has echoed the declaration of the United States that they are there to preserve democracy. We have sat here quietly in this House all these months because we have been told that the object is to preserve democracy. What can be their justification for staying if a democratically elected Government tells them to leave? Would the United States defy them and try to destroy the Viet Cong from a few coastal bases? At this stage I think we should be told what is to be the strategy. The French failed after six years of fighting—and I have forgotten the colossal number of young Frenchmen whose lives were sacrificed in that ridiculous and futile attempt to continue to occupy that country.
I suspect that the United States would like to withdraw now but fears to lose face, now that it has been announced during the last 48 hours that the Communist countries are coming together with a view to seeing what can be done about this situation, we should anticipate what might happen. I feel that it is not just a question of losing face but that the Government should, on what I am told is the "hot line" to President Johnson, tell him that it is better to lose face with dignity than to invite humiliation.
4.5 p.m.
LORD BALFOUR OF INCHRYE: My Lords, the noble Lord, Lord Brockway, when he commenced his speech, said that this was one of the most serious issues that we have to face. I agree with him. But it is an issue which is not going to be decided by student demonstrations; it is not going to be decided by public opinion

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polls; it is not going to be decided by slogans, nor even advertisements in The Times from ladies and gentlemen, however distinguished. Few things, I think, are more dangerous than a person who goes to a locality, spends a short time there, and then comes back posing as a "know-all" and possibly writing a book.
Nevertheless, it is possible to go to an area and gather authoritative opinions from all sides. Quite recently I had the opportunity of going to Singapore and Thailand and talking to many people of all nationalities represented in those places. One can get two views. One can get the view that if America pulled out of South Vietnam the Viet Cong would walk into the country, greeting their brothers. I must say that I found Lord Milford's view that Hanoi wishes to help their comrades slightly strange, having heard first-hand of the complete obliteration of a South Vietnamese village. It had been occupied by the Viet Cong, then the South Vietnamese had come back, and then again the Viet Cong had returned; and because the village had accepted the South Vietnamese, the Viet Cong took every man, woman and child and murdered them and burned the village down. I find that a difficult thing to accept as a method of helping your friends.
LORD MILFORD: My Lords, after two world wars. I think we have to be careful about atrocity stories.
LORD BALFOUR OF INCHRYE: I will let that go. You can get that view. It reminds me of Hitler saying: "This is my last territorial aim". Then you get the view, which I found much more widely held, that this is a war in aid, not of democracy, but of freedom, and that the issue is twofold: first, it is an issue local; and secondly, it is an issue almost global. The local issue is whether the South Vietnamese shall or shall not come under Communist domination. The global issue is that if this happened, would it be the start of the capture by the Communists of Thailand and then going further West right through to India? That seems to me to be the issue. It is a fringe war.
If one looks at history, one sees that Britain in the 19th century and early in the 20th century was doing very much
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more what America is having to do now: that is, fight a war on a fringe, on an outpost, on a frontier, in aid of a cause which they feel is vital. We did it in the 19th century, and we did it in Malaysia in the 20th century. America is doing it now. As such, I feel it is our task, if we can, to fight against a surrender to the Communist advancement throughout the free world, and to support America in her present policy, as Her Majesty's Government are doing. I would say at once that there is no final military solution; the final solution must be political. But let it be a political solution not under the threat and the shadow of Communism. The noble Baroness, Lady Summerskill, and other noble Lords, said, "Bombing must stop." I do not think one can isolate bombing. It is part of a military operation. It is part of an operation combined with action by ground troops, and possibly naval ships. If you say, "Stop the bombing", you are virtually saying, "Stop all fighting and surrender to the other side." I do not believe that that would be a wise or a sensible policy to follow in the interests of the Free World.
I sincerely hope that we in this House can express sympathy and not condemnation of the Americans—sympathy for the lives that are being lost, and for the mothers who are losing their sons in Vietnam in the ultimate cause which we share with them. I hope we can express admiration for the American troops. The noble Baroness, Lady Summerskill, talked about "fat young Americans". I believe she used that expression.
BARONESS SUMMERSKILL: I said that they were pathetic.
LORD BALFOUR OF INCHRYE: I think one ought to admire those young men who are being trained for jungle warfare for what they are doing, and not to criticise them in any shape or form.
I think Her Majesty's Government are in a difficult position. They are supporting American policy in its broadest terms, and yet we in this country are not sending any troops. I should not like to send troops; I entirely agree with Her Majesty's Government on that. But, nevertheless, we are now obtaining the benefit of the security of the fringe war which the Americans are conducting.

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Equally in the past they on their part have obtained the credit and security from the fringe wars that we have fought, particularly in Malaysia. I sincerely hope that your Lordships will take the view that, although there is no military solution in the long term, nevertheless it is a necessary part of the final solution which we hope will be arrived at, to continue to resist aggression which, if successful, would suppress liberty, not only in Vietnam, but probably throughout the whole of the Eastern World.
4.14 p.m.
THE EARL OF DUNDEE: My Lords, I had not intended to say anything in this debate because we have discussed this matter so often lately, including, in the debate on the Address. I intervene only for one moment because of what has just been said about discounting atrocities. I think I ought to say that all our information, both official and unofficial, is to the effect that the Viet Cong rule by terror. I do not know whether the noble Lord, Lord Milford, who talked in his intervention about discounting atrocities after two world wars, thinks we ought entirely to discount what happened at Lidice in the last war, and in more than one French village, in which the inhabitants were all massacred by the Nazis because they tried to support Resistance movements. That is an exact parallel to what is happening now in Vietnam, where the villagers want to be allowed to live their own lives in peace. They do not want to he conquered by anybody. The reason why they are often constrained, either to co-operate with the aggressor, or to refrain from resisting him, is exactly the same reason why so many wretched people in Czechoslovakia, France, and the other occupied territories, had to some extent to collaborate with the Nazis in the last war.
I do not want to add anything more. We believe that this is a case where a weak country is being invaded by an aggressor who is stronger than it is. I think it is a pity to obscure that principle by trying to make out that all the horrible things are being done by one side and not by the other. The truth is that the ultimate responsibility for all the horrible things that happen in any war must surely lie with the aggressor who refuses to negotiate.
4.16 p.m.
LORD WALSTON: My Lords, may I at the outset apologise to your Lordships, and in particular to my noble friend Lord Brockway, for my absence during the early stages of this debate. I explained the reasons to my noble friend, who was as usual very understanding. I can assure your Lordships that it was only an essential engagement which had been entered into prior to the change of programme which forced me to do so.
As usual, the debate on this subject has been carried on in a thoughtful, informed, and helpful manner, and for that I am grateful. My noble friend Lord Brockway in his original Question drew attention to the recent changes which have taken place in South Vietnam, and suggested that that was sufficient reason for a new look at this whole problem. I can assure my noble friend that there is a new look continuously going on at the whole of this area, and at the difficulties which confront it. It is not simply when a particular headline-striking event takes place that the old files are dug out and we say, "What can be done now?" We are weekly, and daily, studying the problem and seeing what can be done to bring the present state of affairs to an end.
The present situation in South Vietnam undoubtedly has changed the internal situation in South Vietnam itself with regard to the present Government and, of course, with regard to the future elections. I should like to assure noble Lords that, in spite of the difficulties which Marshal Ky's Government has experienced during these last weeks, there is no indication whatsoever that those in South Vietnam who are opposed to him, and in particular the Buddhists, are in any way anxious to hand their country over to a Communist-dominated Government of any kind. In fact, one of the more extreme Buddhist leaders has said:
"It is agreed by all that the struggle against Communism here must be met with the assistance of the Americans."
So I think it would be highly misleading if noble Lords and others went away with the impression that the opposition to Marshal Ky and his colleagues stems from those who would rather see a Communist Government take over.
As for the new elections, I share my noble friend's hopes in this. I should

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certainly share his desire that these might take place, not only in those areas which are controlled by the Government of Saigon, but also in those areas which are controlled by the Viet Cong. I think that that would be a highly important step forward. As my noble friend suggested, if these elections were supervised so that the world at large could be satisfied of their authenticity, by something like an International Control Commission, that of course would add inestimably to their value. If the Viet Cong showed any willingness to arrange for them to take place in their territories, to allow the International Control Commission to look after the elections, and were themselves prepared to enter into a truce during the period of those elections—and a truce, I would remind your Lordships, involves not only a truce in the actual fighting but a truce in the build-up of the materials of war and the supply routes also—if anything of that kind were at all possible, I can assure my noble friends and the House that Her Majesty's Government would use their strongest endeavours to persuade—if persuasion were indeed needed—the United States Government to accept such a situation and such an arrangement.
Assuming that such elections, or indeed any elections, were to take place, this does not in any way alter our desire to see that the people of South Vietnam are protected, and to see them enabled to lead the sort of lives they have chosen for themselves. If anything, our desire (and here I believe that the Americans and we are completely at one), our joint desire, would be even stronger when we were assured that the Government in South Vietnam was—I will not say truly representative of the will of the people, but at least more representative of the will of the people than is the present Government.
I was asked by my noble friend Lord Milford, I think in a somewhat rhetorical manner, and perhaps he did not expect an answer, what it is that ties us to the United States of America if it is not dollars, and I am glad to say that he was prepared to accept the fact that it is not dollars. What ties us to the United States is that we both share a belief in the rights of ordinary human beings to choose their own Governments and to
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lead the sort of lives that they want to lead, and that they choose for themselves. It is that that ties us to the United States and to many other countries.
LORD MILFORD: My Lords, if I may interrupt the noble Lord, did not Sir Anthony Eden (as he then was) negotiate and bring about the Geneva Agreement, which the Americans did not want and did not stand by?
LORD WALSTON: My Lords, I am discussing the present time, and I think it is better on these occasions not to delve back into the past. We have done that on many occasions in the past, and we all have our different ideas about it. What we now want is to arrive at a solution for the future. And I repeat that what we want to see in South Vietnam is freedom; and I believe that the United States also wants to see that—a freedom not only to choose their own Government, but also to paint slogans on the wall, to which the noble Lord referred; freedom to have the demonstrations which have recently been going on in South Vietnam. We want to see even freedoms of that kind.
Those are not freedoms which exist in Hanoi. Who has seen any slogans painted on the walls of Hanoi saying, "Chinks go home!"? They may be there, but we have not heard of them; and I do not suppose that many people would be allowed to see them. We have not heard of any disturbances in the towns of North Vietnam. Whether or not they take place, I do not know, but I rather doubt whether they do. These are essential freedoms which North Vietnam has not so far been prepared to allow in its own territories.
LORD BROCKWAY: My Lords, I should like to ask my noble friend one question. If he says that we stand for the right of people in South Vietnam democratically to decide their future, can he undertake, on behalf of the Government, that they would accept a decision by an elected National Assembly in September on the question of withdrawal of American troops and negotiation with the National Liberation Front?
LORD WALSTON: My Lords, I was about to come to that when I made reference and paid tribute to the restrained and helpful speech made by my noble

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friend Lady Summerskill. Before I come to that particular point, I should like to refer to what she said about small men being bullied by large men. Of course it is always our instinct, when we hear of such an action, or see these things happening, to rally to the support of the small man. I believe that is the right thing for us to do. But we have to be very careful who the small man is; and on that some of us have different ideas.
Is the small man South Vietnam, being attacked by North Vietnam? Is it the United States of America being attacked by China, or North Vietnam being attacked by the United States of America, or the Soviet Union lending its support? People can argue about who the small man may be in such circumstances, but to me the small man is literally the individual human being—the small man who lives in his village in Vietnam, in the delta. Some of them I have seen myself, and in a few weeks I hope to see some more: the people who are attacked by night by terrorists who come to demand food, and who will kill the headman of the village if it is not provided; the man who goes out to till his own plot of land, and plant his rice at the right season, and who may not come back because he has been set upon by others.
I am not saying it is only the Viet Cong who attack the freedom-loving people of South Vietnam. Of course it is not. There are the militarists on both sides. But those are the small men we must try to protect, and do not let us talk in large terms about little Vietnam being attacked by great China, Russia, or the United States. Let us think of the people we are really trying to protect and to look after.
The question was asked by both my noble friends, if these elections are held, and if the result is such-and-such, what shall we do? These are hypothetical questions, but the greatest question mark arising out of these elections is not so much what the result will be but whether all of us here, collectively, can be satisfied that these are genuine elections and that they represent the will of the people. If we are satisfied that the elections have been held throughout a great part of South Vietnam, that they have been justly held and represent the true wishes of the people; and if the Representative Assembly which comes into being as a result of those elections asks the United
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States Government to withdraw its troops, I believe that the United States Government will do so, because President Johnson has made it quite plain that the wish of his Government in these matters is simply to see that the people of South Vietnam can freely decide their future.
So, although I cannot give any undertaking on behalf of the American Government, I believe that it is what they would do; and I think they would be right to do that. We would encourage them and use such influence as we have to get them to do that. But I would ask, in return, that if these elections do in fact take place, and if we are satisfied that they are representative, and if that representative body asks the Americans to stay to help them, then my noble friends will support the Americans in doing that, because they are expressing the will of the people and helping them to lead their own lives. If that were to take place I do not know whether the war would end very much sooner, but at least we should all be satisfied that the fight was being carried on for the freedoms and for the democracy in which we all believe.
My noble friend Lord Milford said to us, "Let us treat Hanoi as if they are intelligent human beings", and I have no doubt they are intelligent human beings. How would any of us as intelligent human beings treat any other intelligent human being with whom we were involved in a struggle? What should we do? Of course we should say, "Let us talk about it, instead of going on fighting, which can do no one any good", and that is what has been happening, times out of number, over these years.
Unfortunately, we all know the response of Hanoi to this; they have not responded to any of the past approaches that have been made; nor, indeed, to the most recent one made in an indirect fashion by my noble friend Lord Chalfont when he was in Moscow in February and had talks with the Chargé d'Affaires of North Vietnam. No response came to his conversations or approaches. Nor was there any response at all when on April 18 Senator Mansfield proposed peace talks between the United States, North Vietnam, China and essential elements in South Vietnam. He then suggested possibly Japan or Burma as the correct place in which this should be done, and his proposals were endorsed

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by President Johnson. But North Vietnam, after this approach to intelligent people by intelligent people, rejected it as a new "peace trick", and the Chinese, too, dismissed it as another peace talk hoax".
The only reason I, as, I hope, an intelligent man, can see why they rejected this intelligent man-to-man approach and all those others, is because they believe that they are winning, that they can get their way without having to talk, without having to make any concessions. If that is true, what is the right answer to it? Surely the only answer can be to convince them that they are not winning and that they will not win. That can be the only intelligent way of dealing with this matter. First, and above all, we must convince them that they cannot win, and that is precisely what the South Vietnamese and their allies, prominently the Americans but also the Koreans and others too, the Australians, are attempting to do. In order to do that, they must use bombs and they must use other weapons of war, because this is the most effective way of bringing a realisation of the facts to these intelligent men who live in Hanoi.
And these bombs are directed, as I believe your Lordships know, solely at military objectives. Recently there was some bombing of sites within 17 miles of Hanoi. That is getting close. But, after all, Hanoi is not a city like London; it does not spread out over many miles. These sites were situated there by the North Vietnamese themselves, and they cannot expect that they can attempt to bring down hostile aircraft but have their anti-aircraft sites, their SAM sites, completely invulnerable. They must be prepared to be attacked and they will be attacked. But the attacks are always on military objectives and so they will remain.
I cannot hold out any very great hope of a speedy solution to what is going on
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there now. It has been with us now for many years and it is progressively getting more serious. But I reiterate once more that the most effective and most likely means of bringing the other side to talks is by convincing them they cannot win, and that entails military action. Secondly, I fully endorse my noble friend Lord Brockway's desire for the elections, and express my hope that these elections will be held over as wide an area as possible and in such a manner as will convince all of us, on both sides, that the results are truly representative of the will of the people; and I hope that the will thus expressed will guide the future activities of all those who are engaged in the country. Finally, let us never forget the individuals who live in Vietnam and that it is really for them and their future well-being that we are all engaged, in one way or another, in this struggle.

MANCHESTER SHIP CANAL BILL [H.L.]
Examiners Certificate that the further Standing Orders have been complied with: ordered to lie on the Table; Bill committed to the Committee on Unopposed Bills.
GREATER LONDON COUNCIL (MONEY) BILL
Examiners Certificate that the Standing Orders have been complied with: ordered to lie on the Table.

CONSOLIDATION BILLS
Message from the Commons, That they concur in the Resolution of this House communicated to them on Thursday last relative to Consolidation Bills, as desired by this House.
House adjourned at twenty-five minutes before five o'clock.