Sitting of 11 May 1966

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  MERSEY DOCKS AND HARBOUR BOARD BILL [Lords]
  Read a Second time and committed.
ORAL ANSWERS TO QUESTIONS
  MINISTRY OF AVIATION

    Transit of Animals
    Dame Joan Vickersasked the Minister of Aviation if he will take steps, by legislation or otherwise, to ensure that animals and birds transported by British aircraft are adequately protected so as to ensure their safe arrival in the United Kingdom.
    Mr. Burdenasked the Minister of Aviation if he will introduce legislation to prevent unnecessary suffering being caused to birds imported into this country by air.
    The Parliamentary Secretary to the Ministry of Aviation (Mr. Julian Snow): This is a problem that can most satisfactorily be resolved on an international basis and the International Air Transport Association has set up a study group to examine it. My Department will keep in touch with the Association, but in the meantime, bearing in mind the good practice and record of British operators, I do not propose to introduce legislation.
    Dame Joan Vickers: I thank the hon. Gentleman for that reply and also congratulate him on his first appearance in his new appointment.
    Would the hon. Gentleman consider trying to get a standard carrier, as is done for carrier pigeons, to suit the animals or birds concerned in order to be
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    certain that they have enough room during the journey?
    Mr. Snow: That sounds good sense to me. I will refer this matter to the Association, but I think the problem really starts at the consignor end; but we will take advice and give our views to the Association.
    Mr. Burden: Will the Parliamentary Secretary not agree that although most of these animals which suffer death and deplorable conditions of carriage are conveyed in foreign aircraft and our own operators have a very good record in this respect, it causes considerable unrest among many people in this country when it is disclosed that animals and birds which have been consigned to this country have been suffering en route? Will the hon. Gentleman, therefore, make the strongest possible representations to the Association?
    Mr. Snow: Yes, Sir.
    Mr. G. Campbell: Will the British Government take an initiative in promoting an international convention in view of the regrettable incidents that occur from time to time?
    Mr. Snow: The Association has already got this matter under consideration. When we examine the Association's views we will give it our views as well. We accept that there is a matter to be dealt with here.

    Airlines (Value of Output)
    Mr. Lubbockasked the Minister of Aviation if he will estimate the value of the output of United Kingdom airlines in the financial year 1965–66 in £ millions at 1964 prices.
    The Minister of Aviation (Mr. Frederick Mulley): About £250 million.
    Mr. Lubbock: Is the right hon. Gentleman aware that the estimate given in the National Plan for this year is only £236 million? Is he further aware that I wrote to his predecessor on 23rd November last year stating that B.O.A.C. had under-estimated its requirements for jet aircraft, and will he now press Sir Giles Guthrie and his Board to make sure that adequate aircraft are available to meet the capacity needs of the next few years?
    Mr. Mulley: I think there is a misunderstanding if the hon. Member thinks that the figure I gave relates to capacity. It is, of course, the actual revenue of all the airlines concerned. The National Plan forecasts are under review, and it may well be that there will be an upward revision in the National Plan target of £340 million for civil air transport in 1970.

    B.O.A.C. (VC10 Superb and Boeing 747 Aircraft)
    Mr. Lubbockasked the Minister of Aviation if he will make his permission for an order by the British Overseas Airways Corporation for the Boeing 747 conditional upon the British aircraft industry receiving substantial orders for sub-contract work on this project.
    Mr. Hamlingasked the Minister of Aviation if he intends to authorise the development of the VCIO Superb to meet the British Overseas Airways Corporation's requirement for large long-haul jets.
    Mr. Mulley: B.O.A.C. has not as yet submitted to me proposals for investment in large long-haul jets. In view of the time needed to develop aircraft, I have had, nevertheless, to consider meanwhile whether the Government could support the VC10 Superb. The whole cost of developing this aircraft would have fallen on the Exchequer, and the market prospects were not such as to hold out any prospects of recovering this expenditure over the limited number of sales foreseen. In all the circumstances, despite the magnificent reputation built up by the Super VC10, I have concluded with regret that the Government cannot support the Superb. Should B.O.A.C. propose to order the Boeing 747, the prospects of United Kingdom subcontracting and all other relevant matters will be borne in mind.
    Mr. Lubbock: Is the right hon. Gentleman aware that the Rolls Royce RB 178 is 120,000 dollars cheaper than the American engine which it is proposed to install in the Boeing 747, and that the value of the contract to the British aircraft industry, if we can get these engines installed, would be 570 million dollars? What action is the Minister taking with
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    the Americans to ensure that there is no discrimination against British suppliers?
    Mr. Mulley: I think the hon. Gentleman knows that we have done all in our power, and will continue to do so to support Rolls Royce. It is not a matter for me or for the American Government to determine what engines are used in American civil aircraft. Certainly the hon. Gentleman can rely upon me to do all I can to further the interests of Rolls Royce and this very fine engine.
    Mr. R. Carr: Does the Minister's statement mean that it is now a matter of Government policy that Britain should opt out of long-distance civil transport in the future?
    Mr. Mulley: The policy statement I have made is that I have not been able to undertake the entire launching and development costs of the Superb aircraft having regard to the very limited market which, on the best advice available, is foreseen for it.
    Mr. Rankin: Will my right hon. Friend have another thought in this matter as later today we shall be spending a huge amount of money on military aircraft? Could he not find a copper or two to advance civil aviation along the lines suggested?
    Mr. Mulley: My hon. Friend's arithmetic is none too accurate. In fact, the launching costs of this Superb aircraft would be in the region of £40 million on the airframe, with additional cost for development of the engine.
    Mr. Robert Howarth: Is my right hon. Friend prepared to say whether B.A.C. was prepared to put any of its own money forward for this project? Is he aware that, according to my understanding, the Boeing 747 project is being financed by the Boeing Company itself?
    Mr. Mulley: The fact that the whole cost would fall on the Exchequer means, as my hon. Friend suggests, that the company is not prepared to put any of its own money into the development of the aircraft.
    Mr. Onslow: How limited is the Minister's assessment of the market, and how far does his figure correspond with that produced by the company through its researches?
    Mr. Mulley: I cannot say exactly what figure the company has, but the kind of figure involved would be between 30 and 40 aircraft by 1975 and from 35 to 50 by 1980.

    Concord Aircraft
    Mr. Iremongerasked the Minister of Aviation what effect the plans for the new Boeing giant aircraft have had on the development programme of the Anglo-French Concord.
    Mr. Mulley: The recently announced plans for the Boeing 747 have had no effect upon the Concord development programme. The probable introduction of a very large subsonic jet aircraft in the 1970s is one of the factors which has always been taken into account.
    Mr. Iremonger: What are the market prospects for the Concord today, and are they affected at all by the fact that the American market seems to be pre-empted to some extent?
    Mr. Mulley: The market for supersonic travel is different from that for large long-haul subsonic jets. There is a later Question about the market prospects of the Concord. Perhaps I could wait till that comes.
    Mr. Biffenasked the Minister of Aviation what is the estimated total cost of the Concord project including work up to certificate of airworthiness standards and development flying.
    Mr. Mulley: We are still in the process of reviewing the costs of this project with our French partners and I am therefore not yet able to give a revised estimate.
    Mr. Biffen: Is the right hon. Gentleman aware that there is widespread expectation that the estimated total costs will be not less than £375 million? Is he sure that there will be sufficient sales of this aircraft to cover that cost?
    Mr. Mulley: I am afraid that I am not in a position to confirm or deny speculation which has occurred in the Press. One of the necessary ingredients of working with other countries is that when we are in consultation with them on matters of this sort, I must not seek to jump the gun by public statements of the kind which the hon. Member invites me to make. There will almost certainly be a substantial
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    increase on the former estimates, partly because of rising costs and changes of specification and partly because the new estimates will include the cost of post-certificate of airworthiness work. I cannot give a figure to the House. I am sorry.
    Mr. R. Carr: Will the Minister consider a method of giving regular reports to the House about progress in costs and other matters concerning this vast and important technological project?
    Mr. Mulley: My hon. Friend the former Parliamentary Secretary gave that assurance in the debate in February. We will, of course, keep the House fully informed, but it would be quite wrong of me to make ex parte statements while we are trying to agree figures—because the costs apply on both sides of the Channel—with my colleagues in Paris.
    Mr. Edwin Wainwrightasked the Minister of Aviation what was the number of firm orders for the Concord aircraft at the latest available date.
    Mr. Mulley: Sixteen aircraft have been reserved for B.O.A.C. and Air France. Options on a further 34 aircraft have been taken out by other airlines.
    Mr. Wainwright: Has there been any request from B.E.A.? Will my right hon. Friend do whatever he can to make certain that this aircraft is sold and firm orders are obtained?
    Mr. Mulley: I do not think that the Concord would be appropriate for the route pattern of B.E.A., much as I would like to see additional sales. We shall, of course, do all that we can to ensure that the orders which are placed become firm orders in due course.
    Mr. R. Carr: Is the Minister now telling the House that the reservations made by B.O.A.C. and Air France are now firm orders, which is what the Question asks?
    Mr. Mulley: In the case of B.O.A.C., a memorandum of understanding was signed by the Corporation and my Department in 1962 and, similarly, Air France made a declaration of intent. They are committed to coming to a firm decision when the characteristics of the aircraft are sufficiently advanced.
    Mr. Edwin Wainwrightasked the Minister of Aviation the total sum allocated, at the latest available date, for the building of the Concord supersonic aircraft.
    Mr. Mulley: Total commitments on the British side amount to about £70 million, of which about £32 million has already been spent.
    Mr. Wainwright: Does my right hon. Friend realise that articles have appeared in the Press stating that the cost was at least £280 million up to July of last year and is estimated to be £400 million before the end of this year? Will he look into this matter again and ensure that we are not spending money unnecessarily?
    Mr. Mulley: As I have already said, I can take no responsibility for speculation in the Press about either the amount already spent or what may be spent in the course of the programme. I have undertaken to give the House the fullest information as soon as the figures can be agreed with our French partners. I do not accept that those figures will have any relation to the figures quoted by my hon. Friend, which, I understood him to indicate, would be the total cost of the programme and not the amount spent to date.
    Mr. Burden: Would not the Minister agree that unless we go ahead, either ourselves or in partnership with other countries in producing aircraft of the future, and if we have to buy all our aircraft from America, there will be a terrible strain on our balance of payments?
    Mr. Mulley: I hardly think that that arises on this Question. I assure the hon. Member, however, that I accept that we should seek to produce for our own requirements as many aircraft as is technically and economically practicable.
    Mr. Onslowasked the Minister of Aviation what American firms have been awarded contracts in the development programme of the Concord project.
    Mr. Mulley: No contracts have been placed by my Department with American firms, but the two main contractors, the British Aircraft Corporation and Bristol Siddeley Engines, have placed a number of sub-contracts directly with American firms. The more important of these are with Rohr Corporation, Thompson-Ramo-Wooldridge,
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    Cameron Ironworks and Special Metals Incorporated, and Garrett Airesearch Manufacturing Company.
    I understand that the French main contractors have also placed some subcontracts with American firms. I should like to make it clear that it is the joint policy of both countries to avoid placing orders in a third country unless there is no acceptable alternative.
    Mr. Onslow: Can the Minister say why the contract for flight test recording systems was also placed with an American firm, Radiation Incorporated, of Florida? Was no British electronics company capable of carrying out this work?
    Mr. Mulley: I have no information about that contract. Perhaps the hon. Member will put down a Question.

    Dyce—Norway Service
    Mr. James Davidsonasked the Minister of Aviation what application he has received from British European Airways Corporation for assisting in establishing a direct airline service between Dyce Airport, Aberdeen, and Norway, to link with existing domestic flights.
    Mr. Snow: None, Sir.
    Mr. Davidson: Is the Minister aware that a direct service between Dyce and Stavanger would shorten the journey for everyone with a Scandinavian destination leaving from north of Birmingham, and that, unless B.E.A. does something about it, another concern will step in and start a service, as, for example, Faroes Airways already has between Kirkwall and Stavanger?
    Mr. Snow: These cases are, of course, within the commercial responsibility of any interested operator, subject to licensing.
    Mr. Hector Hughes: Does my hon. Friend realise that the Norwegians have shown very high appreciation of the value of links of this kind between Norway and Aberdeen at least, and will he, if necessary, take steps to encourage such links?
    Mr. Snow: We must leave it to the operators to use their commercial judgment in these matters. I appreciate that anyone would want to go to Aberdeen.
    Mr. Brewis: Is it not terribly important that a country of the size of Scotland should have much better air links with the Continent, and what is the Minister doing about it?
    Mr. Snow: There appears to be no obvious or immediate case on economic grounds, and my right hon. Friend has no power to subsidise uneconomic services.

    Boeing 707 Aircraft (Inspection)
    Mr. Kenneth Lewisasked the Minister of Aviation if he will make a statement on the withdrawal from service of the Boeing 707 jets by the British Overseas Airways Corporation because of tail cracks.
    Mr. Mulley: During inspection of the wreckage of the B.O.A.C. 707 which crashed in Japan, on 5th March, a small crack due to fatigue was found in part of the vertical tail fin attachment. As a precaution, B.O.A.C., in common with other operators of Boeing 707 aircraft, have been required to examine their aircraft for similar cracks. All B.O.A.C. 707s have now been examined and are back in service. The Air Registration Board, which has kept closely in touch with B.O.A.C., with the Federal Aviation Agency in the United States and with Boeing, is satisfied that this aircraft type is completely airworthy.
    Mr. Lewis: Can the Minister say what the cost of this was to B.O.A.C. and whether any other cracks were found on the other aircraft examined? Second, does not he agree that, if this had happened to the Super VC10, the adverse publicity in the United States would have been greater than the adverse publicity attending this incident involving the Boeing 707?
    Mr. Mulley: I have no responsibility for publicity. Without notice, I cannot give the actual cost, which, of course, is a matter for the company. I should want notice also to give the exact number of aircraft in which cracks were found, though I think that it was six.

    North Lanarkshire (Landing Strips)
    Mr. Dempseyasked the Minister of Aviation what consideration he has given to approval of landing strips for
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    aircraft in North Lanarkshire for the convenience of industrial interests.
    Mr. Snow: My Department has advised the Lanark County Council on the suitability of a number of sites for use by small aircraft of types commonly used for business purposes. No firm proposal has yet emerged.
    Mr. Dempsey: Are any of these sites in North Lanarkshire, which is the seat of industry in the county? Second, will my hon. Friend bear in mind that such a development would serve admirably the interests of the new town of Cumbernauld, and will he do his utmost to ensure that his Department co-operates to the full in having such landing strips provided in due course?
    Mr. Snow: Except for the fact that my Department has no funds for disposal for these purposes, we are, of course, very happy to provide technical advice and guidance as and when requested.

    F111B and F111A Aircraft
    Mr. Rankinasked the Minister of Aviation to what extent the faults and shortcomings of the F111B will be remedied in the F111A; and if he will make a statement on the matter.
    Mr. Hastingsasked the Minister of Aviation whether he is satisfied with the potential performance of the F111; and if he will make a statement.
    Mr. Mulley: As I said in answer to the hon. Member for Orpington (Mr. Lubbock) on 1st March, my right hon. Friend the Secretary of State for Defence and I are kept closely aware of development of the F111A and there is no reason to believe that this aircraft will not satisfy the R.A.F. requirement.
    Mr. Rankin: I thank my right hon. Friend for that Answer, but is he aware that there is a third version of this generation of aircraft, the FB111, of which President Johnson is ordering 200? Is he satisfied that this new version will not put the F111 somewhat out of date?
    Mr. Mulley: The FB111 version is a version for a strategic bombing rôle, a purpose quite different from that for which we require the F111A, as a Royal Air Force Canberra replacement.
    Mr. Hastings: Has the Minister seen a report by the United States House of Representatives Armed Services Committee, part of which was published only a week or two ago, which seemed to cast the gravest doubt on the capability of this aircraft, not only in the nuclear rôle but in the conventional bombing rôle, having regard to a number of criticisms? Is he still satisfied, and, if he cannot make a statement about it now, will he say something much more definite when we come to the debate later today on the F111?
    Mr. Mulley: The report to Congress to which tthe hon. Gentleman refers was about the FB111, and the criticisms against this aircraft do not seem to me to be relevant to a consideration of the one which we have ordered. All the information we have, which is, of course, supported by the fact that the United States Air Force is to have it in service two years before it comes to us, makes us quite satisfied that this aircraft will, as at present advised, meet the Royal Air Force requirement.
    Mr. Maxwell-Hyslop: Since the F111, the basic aircraft, has hardly begun its flight test programme and is in severe difficulties as regards both the compressor and the reheat system, what positive reasons are there for the Minister to believe that it will meet its performance guarantees?
    Mr. Mulley: The hon. Gentleman knows quite well that I cannot go into the actual ranges and other characteristics of an operational requirement. [HON. MEMBERS: "Why not?"] But, quite clearly, we, along with the United States Air Force, are taking a close interest in this, and the hon. Gentleman, who has acquaintance with the aircraft industry, knows quite well that one cannot wait until an aircraft is actually in service for some years before buying it without being charged with buying an obsolescent aircraft.
    Mr. R. Carr: In view of the continuing doubts about the performance of the F111, have the Government made arrangements, or, if they have not done so already, will they make arrangements, for some guarantee from the United States in case of, for example, a cancellation, as happened with Skybolt?
    Mr. Mulley: I think that we have all the guarantees for delivery of this aircraft and its meeting our requirements which any Government could reasonably request.

    B.E.A. Scottish Flights (Timings)
    Mr. G. Campbellasked the Minister of Aviation if, in the public interest, he will give a general direction to British European Airways to arrange their timetable of flights in Scotland to assist those who live and work there.
    Mr. Snow: No. Sir. The timing of B.E.A.'s Scottish flights is a matter for the Corporation, which takes into account local opinion and needs.
    Mr. Campbell: Will the Minister seek to alter or to increase the present flights to and from the Highlands, as now it is not possible for those who live and work in the Highlands to use the air services efficiently for business in the South?
    Mr. Snow: It is my understanding that B.E.A. is considering some suggestions from the Highlands Transport Board for improving its timings. As to suggestions about re-timing, the hon. Member will no doubt remember that there is a member of the B.E.A. Board specifically charged with meeting the requirements of the public.

    Prestwick Airport (U.S.A.F. Aircraft)
    Mr. Youngerasked the Minister of Aviation what arrangements he made, before handing over Prestwick Airport to the British Airports Authority, concerning reciprocal agreements between this country and foreign countries for the payment of landing fees for military aircraft.
    Mr. Emrys Hughesasked the Minister of Aviation what consultations he had, and what agreements were reached, with the United States authorities over the payment of landing fees, before the British Airports Authority assumed responsibility for Prestwick Airport.
    Mr. Mulley: Before the British Airports Authority took over Prestwick Airport it was decided that they could not be expected to continue the waiver on landing charges for certain military aircraft (including the Royal Air Force and U.S.A.F.) since they have a statutory

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    obligation to conduct their operations on a commercial basis. I am considering the implications of this with my noble Friend the Minister of Defence for the Royal Air Force. The U.S.A.F., of course, continue to enjoy the free use of navigation services and of land and buildings.
    Mr. Younger: Is the right hon. Gentleman aware that, as a result of no arrangement having been made about this before the hand-over, there is at present virtually no use of Prestwick Airport by the U.S. Air Force and the airport will lose about £150,000 a year? Will he see our Defence Department, which has a reciprocal agreement with the Americans, and make arrangements with the U.S. Air Force to bring it back to Prestwick?
    Mr. Mulley: As I said, I am discussing this with the Minister of Defence for the Royal Air Force but my information is that the U.S. Air Force has no immediate intention of ceasing operations at Prestwick.
    Mr. Emrys Hughes: Is my right hon. Friend aware that the Americans as well as anyone are entitled to pay a fair rent for Prestwick Airport and if no one pays a fair rent Prestwick Airport will close down, which will be to the great indignation of the hon. Member for Ayr (Mr. Younger)?
    Mr. Monro: Does the right hon. Gentleman agree that if the U.S. Air Force does leave Prestwick Airport, as seems likely, it will have a severe effect on the economy of Scotland?
    Mr. Mulley: The argument seems to be about whether the U.S. Air Force should pay or not, and that if it continues using the airport without paying any fees that would not help the airport. I am dealing with this matter and will report to the House on the conclusions reached.

    European Launcher Development Organisation
    Mr. Martenasked the Minister of Aviation if he will make a statement on the European Launcher Development Organisation meeting held in Paris during the last week of April.
    Mr. Biggs-Davisonasked the Minister of Aviation whether he will make a statement on the progress of the European Launcher Development Organisation.
    Sir J. Rodgersasked the Minister of Aviation what transpired at the recent European Launcher Development Organisation meeting; and if he will make a statement.
    Mr. Mulley: As I informed the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) on 4th May, after a thorough exchange of views with our partners on the problems facing E.L.D.O., the conference was adjourned until 9th June to allow time for further studies.
    Mr. Marten: In that reply the Minister referred to a study of user requirements being done between now and 9th July. Does that mean possible satellite communications? If so, why are the Government to come to some arrangement with America to use American satellite communications for defence purposes?
    Mr. Mulley: The hon. Member should know, as he was a member of the Government responsible at the time, that E.L.D.O. is by its convention and charter permitted only to engage in civil activities, so that the question of whether its launchers could be used for civil defence does not arise. The use of satellite communications is one of the uses which not only we but other countries have raised as needing further study before further decisions can be taken on 9th June.
    Mr. Biggs-Davison: May we take it from the reply that Her Majesty' Government have no intention of abandoning this project and are fully determined to press on in this sphere either with Europe, on a national basis, or both?
    Mr. Mulley: I do not see how it would further the cause of E.L.D.O. by pressing on on a national basis. The British Government, along with other Governments, want more information about the technical feasibility both of the E.L.D.O. programme and its possible use and the total cost involved before coming to any decisions about the future programme of E.L.D.O. This was by agreement the reason for the adjournment of the conference.
    Mr. Heffer: Is my right hon. Friend aware that many of my hon. Friends hope that the Government will approach this matter with a great deal of caution so

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    that we do not get too much involved in heavy expenditure on this project but approach it by way of getting better relations between Russia and America in relations to launcher developments?
    Mr. Mulley: I shall be interested in any suggestions as to how we can improve relations both with the Soviet Union and the United States in this field, but we are members of the Organisation and as such take a considerable responsibility for deciding its future programme. As my hon. Friend said, we have to apply the same tests to this as to national projects of our own, and our European collegaues agreed that this was a proper approach to make to the problem.
    Mr. Sandys: Does the right hon. Gentleman realise what a deplorable impression it would create a mong our European partners if Britain were to climb out of the E.L.D.O., which we played such a prominent part in establishing? Cannot he give a really firm, clear and unequivocal answer and assurance that Her Majesty's Government have no such intention?
    Mr. Mulley: I think that if I were the right hon. Member for Streatham (Mr. Sandys) I would not want to go into too much detail as to how this Organisation was set up, because the fraud involved in finding a use for Blue Streak is abundantly obvious to our European allies.
    Mr. Biggs-Davison: On a point of order, Mr. Speaker. Is it in order to accuse a right hon. Member of fraud?
    Mr. Speaker: I did not hear any such accusation.
    Mr. Mulley: It was not the right hon. Gentleman against whom I was making the accusation but the Government of the time. I have to answer for the fact that this Organisation was initially started to find a use for Blue Streak. Blue Streak in this rôle has been very useful. I think that is conceded, but in assessing this, like my colleagues of the other European member countries, I want to be satisfied that the programme proposed is worth while technically in terms of its use and in terms of the cost to which we are all asked to contribute.

    London Airport (Landings)
    Mr. Hugh Jenkinsasked the Minister of Aviation if he will set out the number of landings which have taken place each month at London Airport, Heathrow, from March, 1965 to date; and how many landings have taken place each month on the 28R runway compared with the 28L runway, the glidepath to which begins over Putney.
    Mr. Snow: As the reply contains a large number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Jenkins: Is my hon. Friend aware that if, as I suspect may be the case, the figures show no improvement, indeed that the slight improvement secured during the summer has gone off and more and more aircraft are coming over this area, I shall be moving, I hope, a Private Members' Bill on this matter, which I hope will receive widespread support in all parts of the House?
    Mr. Snow: Yes, Sir. The problem of noise is a very grave matter indeed, although my hon. Friend will, I trust, accept that the governing factors are climatic and weather conditions which it is very difficult to try to alter.
    Following are the figure:

    NUMBERS OF LANDINGS AT LONDON (HEATHROW) AIRPORT

    Total Landings on all runways

    Landings on Runway 28R

    Landings on Runway 28L

    March, 1965

    7,249

    498

    3,113

    April, 1965

    8,232

    915

    5,846

    May, 1965

    9,298

    830

    5,695

    June, 1965

    9,833

    1,184

    5,639

    July, 1965

    11,005

    2,208

    6,559

    August, 1965

    10,844

    2,129

    6,584

    September, 1965

    10,401

    3,165

    5,446

    October, 1965

    8,676

    970

    1,996

    November, 1965

    7,005

    1,925

    1,593

    December, 1965

    7,312

    2,335

    3,115

    January, 1966

    7,182

    1,628

    1,146

    February, 1966

    6,701

    1,447

    1,475

    March, 1966

    7,629

    462

    6,345

    April, 1966

    8,949

    719

    3,463

    B.E.A. (Aircraft Requirements)
    Mr. R. Carrasked the Minister of Aviation what action is being taken to ensure the availability of British or Anglo-European aircraft suitable to meet the future needs of British European Airways.
    Mr. Onslowasked the Minister of Aviation what discussions he has had with the Chairman of British European Airways and the management of the British Aircraft Corporation with a view to facilitating the purchase by British European Airways of an enlarged version of the Super VC10 aircraft; and if he will make a statement.
    Mr. Mulley: B.E.A. is still considering its fleet requirements from 1968 onwards. I am in touch with B.E.A. as well as with the British manufacturers, but the first step must be for B.E.A. to define its requirements, and I have asked it to do this.
    Mr. Carr: Can the right hon. Gentleman assure the House that he is aware of the urgency of a decision here from the point of view of B.E.A. since it has defined its requirements exactly? Can he also assure the House that he realises what very grave damage would be done to the British industry if B.E.A. were required to buy an American aircraft?
    Mr. Mulley: I think the right hon. Gentleman will concede that the urgency of the matter does not come to me until I get the proposals, but I appreciate the urgency of decisions and I am quite satisfied that B.E.A. will do its very best to buy British aircraft in future as in the past, and it will certainly have my full encouragement in that objective.
    Mr. Onslow: Will the Minister assure the House that if proposals reach him quickly he will consider them quickly and that he will not dally and ultimately damn this project, as he has done with the VC10 Super, by leaving it under consideration for a very long time? Will he say how much money is involved?
    Mr. Mulley: Until I hear from B.E.A. what their requirements are, it is impossible for me to give an estimate of the cost. The best evidence of my sense of urgency in this matter is that I have been pressing B.E.A. over a period of time to come forward with their requirements for this period.
    Sir Ian On-Ewing: Would the Minister get some sense of urgency in this? He has announced today that B.O.A.C. are to buy Boeing aircraft. It would be deplorable if we were not given an opportunity in this country of building and
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    developing the VC10 to meet the avowed needs of B.E.A. where traffic is growing much faster than anticipated.
    Mr. Mulley: I think that it will be conceded that I should not order aircraft for either of the Corporations without at least having the views of the Corporations. I accept the urgency. I did not announce today, and it would not be for me to announce today, that B.O.A.C. are buying Boeings. I made it clear that I have had no proposals from B.O.A.C. about their future aircraft requirements.

    Airports (Pilfering)
    Sir C. Osborneasked the Minister of Aviation, in view of the increasing theft and pilfering at airports, which is resulting in the loss of foreign business, if he will issue a general direction to the Airports Authority, after discussion with the leaders of the unions, who so far have opposed regular searches and spot checks on workers, to take steps to stop this organised pilfering; and if he will make a statement.
    Mr. Snow: No, Sir. This is a matter within the management responsibility of the British Airports Authority, and would not be an appropriate subject for a general direction under the Airports Authority Act, 1965. I appreciate however, the hon. Member's concern about this subject and I will draw his remarks to the attention of the Authority.
    Sir C. Osborne: Is the Minister aware that London Airport is getting such a bad name for thieving that one of the Swiss insurance companies advised its customers not to use London Airport and that this is giving our country a very bad name in Europe. Would the hon. Member—[HON. MEMBERS: "No."] Would the hon. Member—[HON. MEMBERS: "No."] Would the hon. Member—
    Mr. Speaker: Order. Hon. Members should not waste time by foolish interventions.
    Sir C. Osborne: I am obliged, Mr. Speaker, especially when they come from Scotland. Would the hon. Member look at the practical suggestions which were published in the Economist?
    Mr. W. Baxter: On a point of order. The hon. Member tried to cast a reflection

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    upon the honesty and integrity of Scottish Members by his remarks.
    Mr. Speaker: That is not a point of order for me. Mr. Snow.
    Mr. Snow: Yes, Sir. We knew about the observations of the Swiss insurance company, and we are taking its report into account and examining it. If the hon. Member refers to Section 11 of the Act which I have mentioned he will see that it gives powers to the Authority for the sort of stopping and searching about which he is talking.

    Woomera Rocket Range (Expenditure)
    Mr. Frank Allaunasked the Minister of Aviation what was the total expenditure on the Woomera rocket range from 1951 to October 1964, and from October 1964 to date; and what is the estimated future expenditure on this range.
    Mr. Mulley: Total expenditure by the United Kingdom, on payments to Australia and on equipment supplied from this country, was approximately £78 million from 1951 to October 1964 and £8 million from November 1964 to date. It is not possible to forecast total future expenditure, but payments are currently running at about £5¼ million per year. All these figures are in addition to considerable expenditure by Australia.
    Mr. Allaun: While thanking the Minister for that information, may I ask him to tell the House what is approximately the military share of this expenditure? Does it include, for instance, the testing of spy satellite and re-entry missiles?
    Mr. Mulley: I could not give my hon. Friend that information without notice. The testing of nuclear devices has been undertaken in Australia but not at Woomera.
    Mr. Biggs-Davison: What non-European and non-Commonwealth countries have the use of the facilities at Woomera?
    Mr. Mulley: I should want notice of that question, but as far as I am aware the only other proposed use of Woomera is by E.L.D.O., of which Australia is also a member.

    Turnhouse Airport (Second Runway)
    Mr. Stodartasked the Minister of Aviation when a feasibility survey of a second runway at Turnhouse Airport, Edinburgh, will be begun.
    Mr. Snow: Subject to obtaining access to the land it is hoped to start the feasibility survey of the runway this month.
    Mr. Stodart: Will the hon. Member give an assurance that he will show the same sense of priority to this as B.E.A., who have said that they regard this matter as one of absolutely top priority?
    Mr. Snow: Yes, Sir. The principle of a new runway has been accepted for a long time and the land is being kept under protection for this future requirement.

    Aldergrove Airport (Terminal Building)
    Sir Knox Cunninghamasked the Minister of Aviation when he expects the work of enlarging the civil air terminal building at Aldergrove in County Antrim to be completed; and what steps he is taking to prevent overcrowding at the airport during the summer, and particularly when flights are delayed owing to weather conditions or from other reasons.
    Mr. Snow: Work on the extension of the terminal building has now been started and it is expected to be completed in stages during the spring and summer of next year. Work on the main public areas—the departure lounge and the arrivals concourse—should be complete by the end of May, 1967. As my right hon. Friend informed the hon. Member on 25th February, some congestion at busy periods this summer will be inescapable, but by phasing and restricting the work in the public areas we hope to alleviate the inconvenience as far as possible.
    Sir Knox Cunningham: Would not the Minister expedite this work, bearing in mind the chaos in the passenger area which has happened in the past as a result of delayed flights? Cannot something be done a little earlier than the summer of 1967?
    Mr. Snow: My Department is very alive to this point and it has expedited the completion of this terminal building by one year. It has been brought forward accordingly.

    B.E.A. Flights (Alcoholic Drinks)
    Mr. Dalyellasked the Minister of Aviation whether he will give a general direction to British European Airways not to issue take-away bottles of free alcoholic drinks, and to reduce fares accordingly.
    Mr. Snow: No, Sir, this would not be appropriate. Provided there is compliance with the relevant tariff requirements, it is for B.E.A. to decide what hospitality to offer to their first-class passengers.
    Mr. Dalyell: Yes, but does not the Minister regard it as rather absurd that along with the sausage and egg on the Edinburgh and Glasgow routes there should also be the issue of free toddy?
    Mr. Snow: There is some doubt as to whether B.E.A. are acting strictly in accordance with regulations, and this is being examined.
    Mr. Speaker: Sir John Langford-Holt—next Question.
    Mr. Rankin: Is my hon. Friend aware—
    Mr. Speaker: Order. The hon. Member for Govan (Mr. Rankin) has no prescriptive right to be called.

    Duty-Free Spirits and Tobacco
    Sir J. Langford-Holtasked the Minister of Aviation, in view of the facts that conditions are imposed upon retail concessionaires at airports requiring a minimum price at which duty-free cigarettes are to be sold and that these conditions have resulted in 200 cigarettes of British manufacture being sold at a price 6s. 6d. above the price for which they are sold in European airports, if he will give a general direction, in the public interest, to the Airports Authority not to make similar conditions in future contracts.
    Mr. Ridleyasked the Minister of Aviation if he will give a general direction
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    to the Airports Authority to provide competing retail outlets for the sale of duty-free spirits and tobacco.
    Mr. Snow: No, Sir. The matters referred to are not appropriate to a general direction under Section 2(6) of the Airports Authority Act, 1965.
    Sir J. Langford-Holt: Is the Minister aware that virtually by contracts which his Ministry signed and which are merely being extended under the new dispensation British cigarettes are sold not, as is said in the Question, for 6s. 6d. more but for 7s. 4d. more than on the Continent of Europe? Is he aware that he is handing over a monopoly situation and telling the House that he proposes to do nothing about it? Would he look at it again?
    Mr. Snow: London Airport has the distinction of being the only major international airport in Europe which is not heavily subsidised, and we want to keep it that way.
    Mr. Ridley: Is the Minister aware that this is a restrictive practice of the most flagrant nature, being supported and endorsed by the Government? Will he have a word with the President of the Board of Trade with a view to referring the whole situation of the Monopolies Commission?
    Mr. Snow: On the face of it, I should not think that that was desirable. These matters are entirely within the commercial competence of the Authority.

    Helicopters (Anglo-French Collaboration)
    Mr. Ridleyasked the Minister of Aviation what progress was made in his discussions with the French last month on the possibility of collaboration on helicopters.
    Mr. Mulley: This subject was discussed at the meeting which my right hon. Friend the Secretary of State for Defence and I had with the French Minister for the Armed Forces on 6th May. We established that a basis for collaboration exists and further talks will shortly be held.
    Mr. Ridley: Would not the Minister agree that Europe has lost the capability

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    of producing an independent helicopter at the present time and that it is, therefore, vital that these talks not only succeed but are expedited? Will he, therefore, give an assurance that he will do all in his power to make sure that this project gets started and goes forward at a good speed?
    Mr. Mulley: We will certainly do all we can to further the possibility. As I have said, the talks took place only on 6th May. Steps to obtain a joint military requirement over a range of helicopters are already in progress. It is the intention of my right hon. Friend and myself to seek a further meeting with M. Messmer towards the end of July.

    V.T.O. Aircraft
    Mr. Wallasked the Minister of Aviation if he will make a statement about the development of British vertical-take-off aircraft.
    Mr. Mulley: The Statement on the Defence Estimates confirmed the development of the P1127 V.T.O.L. aircraft for part of the R.A.F. ground attack and Army close support rôle. The development programme is proceeding satisfactorily and initial orders related to production aircraft have been placed.
    Mr. Wall: Is it not a fact that the P1127 is subsonic and that because of delays in submitting the order it is now virtually obsolete? Is the Minister aware that our partners in the evaluation squadron, both America and Germany, have several new projects in hand? Are we to be left behind once again?
    Mr. Mulley: My experience is to the contrary and that in both Germany and the United States it is realised that this aircraft gives us a very real lead in this field. We have an aircraft that is already flying and on which there has been a lot of experience, and the development aircraft is shortly due to fly. I do not think that in the rôle for which the P1127 is designed supersonic speed is essential. As, however, the hon. Member probably knows, we are undertaking studies to see whether by plenum chamber burning we can increase the thrust of the engine.

    VFW614 Aircraft (Anglo-German Co-operation)
    Mr. McMasterasked the Minister of Aviation what support the Government are giving to the proposals for the joint design and construction by VFW Fokker and a British aircraft manufacturer of a new twin-jet feeder aircraft for sale to world airlines.
    Mr. Mulley: As I said on 25th February in the reply given to the hon. Member for Coventry, North (Mr. Edelman),
    "The Government have agreed, on the basis of a special funding arrangement proposed by the Federal German Government, to the development of the Bristol Siddeley M45H engine chosen by the German company for their VFW614 project.
    "Apart from this collaboration on the engine, we have decided that financial assistance from public funds cannot be made available to enable a British airframe manufacturer to participate as a principal on a risk-sharing basis in a project based on the VFW614 design."—[OFFICIAL REPORT, 25th February, 1966; Vol. 725, c. 163.]
    Mr. McMaster: Is the right hon. Gentleman aware that Britain has again lost out in an opportunity of sharing with Europe in what might be a valuable earner? In view of the unanimous recommendation of the Plowden Report that we should collaborate with Europe, will the Minister look at this matter again and see whether we cannot join in this project?
    Mr. Mulley: The Plowden recommendation, and certainly Government policy, is that we should seek profitable and satisfactory co-operative arrangements. This does not mean, and never can mean, that we most join every venture in which we are invited to join. I am not satisfied that the outcome of our participation in this venture would return to the taxpayer the substantial money that our participation on a principal basis would have involved.

    Warsaw Convention (The Hague Protocol)
    Mr. Maxwell-Hyslopasked the Minister of Aviation when he will ratify The Hague Protocol to the Warsaw Convention.
    Mr. Snow: Her Majesty's Government hope to do this very soon.
    Mr. Maxwell-Hyslop: Is the hon. Gentleman aware that nine months ago the former Parliamentary Secretary wrote to me:
    "The time has clearly come"—
    [HON. MEMBERS: "Reading."] I am reading a quotation.
    Mr. Speaker: The hon. Member must not read. He must tell us.
    Mr. Maxwell-Hyslop:
    "The time has clearly come when, one way or another, we should go ahead and ratify the Protocol."
    That was nine months ago. When will the Government take action?
    Mr. Snow: I shall as soon as possible, as soon as the necessary preparations have been made, invite the Foreign Office to deposit the instrument of ratification. The Protocol will come into effect for us three months after that has been done.
    Mr. Ronald Bell: Is there not a risk that the long delay which, for various reasons, has elapsed between the passing by Parliament of the enabling Act and ratification may have resulted in The Hague Protocol in respect of compensation for personal injury being already somewhat out-of-date? Will the hon. Gentleman consider this?
    Mr. Snow: There are extremes of thought about the limitations imposed or proposed under the Protocol. We think we have achieved the best solution we can. It has not been an easy matter. We are not the only parties to it.

  LITIGATION COSTS
  Mr. Fisherasked the Attorney-General whether he will take steps to reduce the cost of litigation to those not entitled to legal aid.
  The Attorney-General (Sir Elwyn Jones): My noble Friend the Lord Chancellor is always anxious to take whatever steps are practicable to reduce the cost of litigation. For example, a committee was recently set up under the chairmanship of Lord Justice Winn to consider the possibility of introducing a simpler
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  and more speedy procedure for the trial of actions for personal injuries. The Law Commission is also considering simplification of the law in various fields. Other action is also under consideration.
  Mr. Fisher: Would the right hon. and learned Gentleman agree that, although British justice is absolutely fair, it is so expensive if one loses in the High Court that only the richest and the poorest in the land can afford to go to the High Court? What positive proposals has he for dealing with this strange but in some ways very serious problem?
  The Attorney-General: I think the comparable figures will show that the cost of administration of justice in this country, both to the State and to the litigant, is probably less than that in any comparable legal system, but I have indicated certain measures which my noble Friend is contemplating. This is very much in our minds.
  Mr. Shinwell: How long is this consideration going to continue? When are we going to get some action to prevent lawyers, barristers and solicitors from getting away with the swag?
  The Attorney-General: Lawyers receive reasonable remuneration for the indispensable work they do.

  LAW OFFICERS (COURT CASES)
  Mr. Stratton Millsasked the Attorney-General if he will make a statement on the range of cases in which he appears personally as a Law Officer.
  The Attorney-General: Whether a Law Officer appears personally in any case is a matter for my judgment. The paramount consideration is the public importance of the case.
  Mr. Stratton Mills: While thanking the Attorney-General for that Answer, may I ask whether he would consider reviewing the range of cases in which the Attorney-General and the Solicitor-General appear, particularly having regard to their additional and heavy duties in Parliament and particularly their duties in law reform?
  The Attorney-General: All these factors are taken into account when my

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  hon. and learned Friend and I decide what cases we should personally undertake.
  Sir P. Rawlinson: Will the Attorney-General tell the House whether the absence of a Minister without Portfolio now to answer Questions about law reform matters will make any difference at all to the burden of the Law Officers?
  The Attorney-General: I think it will add something to the burden, but we shall do our best to cope.

  RENT ASSESSMENT CASES (LEGAL REPRESENTATION)
  Mr. Frank Allaunasked the Attorney-General if, in view of the difficulties of tenants when opposed by lawyers and chartered surveyors representing landlords, he will take steps to extend to tenants free legal aid when appearing before rent officers and rent assessment it committees.
  The Attorney-General: My noble Friend the Lord Chancellor does not consider that the provisions of the Legal Aid and Advice Act should be extended at the present time to proceedings before rent officers and rent assessment committees. However, my noble Friend will keep this matter under review.
  Mr. Allaun: But does not my right hon. and learned Friend, who is quite a high-powered lawyer himself, agree that as things are the dice are heavily loaded against the tenants, particularly when the big property companies are employing expensive professional representatives?
  The Attorney-General: I do not think there is any reason for anxiety on this score at the present time, but the matter is being carefully watched. The intention is that the proceedings before the rent officers and the committees should be somewhat informal. The issues are usually simple issues of fact, and in regard to the poorer houses, if I may so describe them, I do not think the problems of expert evidence very often are likely to arise.

  BOOK
  Sir C. Taylorasked the Attorney-General whether the Director of Public Prosecutions has decided to take criminal
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  proceedings against the printers, publishers and distributors of the book handed to the Solicitor-General by the hon. Member for Eastbourne.
  The Attorney-General: The Director of Public Prosecutions, after consultation with the Law Officers, has decided not to take criminal proceedings in respect of this book. He is not satisfied that a court would find that the effect of the book, unpleasant as it is, if taken as a whole, would tend to deprave and corrupt persons who are likely to read it, or that a defence that publication was for the public good on the grounds that it is in the interests of literature would fail. It would be deplorable if, as a result of publicity given to this book in the course of an unsuccessful prosecution, it was to become a best seller.
  Sir C. Taylor: I should certainly not mention the name of this book—[HON. MEMBERS: "Why not?"]—but in view of the very unsatisfactory nature of the reply, I beg to give notice that, without mentioning the name of the book, I shall raise the matter on the Adjournment at the earliest possible date.

  ARSON CASES (CRIMINAL PROCEEDINGS)
  Mr. Freesonasked the Attorney-General if he will instruct the Director of Public Prosecutions to institute criminal proceedings against leaders of the British Nazi Party for conspiracy at common law to commit arson and sacrilege against places of worship and other buildings.
  Mr. Abseasked the Attorney-General whether he is aware that the judge in a recent arson trial said that those convicted had been ensnared and used by unscrupulous persons, and that evidence was presented in the trial by the prosecution that a Mrs. Jordan had encouraged those convicted to burn down synagogues; and if he will instruct the Director of Public Prosecutions to proceed against those who by procuring and counselling those convicted were accessories before the fact to the felonies committed.
  The Attorney-General: The police are continuing their inquiries into these matters, and the Director of Public Prosecutions is considering whether further criminal proceedings in respect of them should

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  be instituted. I understand that Mrs. Jordan is at present outside the jurisdiction.
  Mr. Freeson: While thanking my right hon. and learned Friend for a much more sympathetic reply than the one which we had on a previous occasion, may I ask him if he will bear closely in mind that these people, members of the Nazi Party, together with other Fascist and anti-immigrant organisations, have, for the past 20 months or more, been organising arson, violence and even death against Jewish and coloured members of the community, and that there is a sense of urgency which should be kept in this matter?
  The Attorney-General: Of course, I have these matters very much in mind. The House will know that there have already been prosecutions in respect of these matters which have resulted, in certain cases, in the infliction of long terms of imprisonment. We certainly have the situation under very watchful eyes indeed.
  Mr. Abse: In view of the very great concern amongst the Jewish community in Britain after a judge has categorically stated that there are people behind those who have so far been convicted against whom no proceedings have continued, would my right hon. and learned Friend perhaps tell the House whether in the course of his investigation he is finding that the Race Relations Act is too weak to be able to deal with the situation? What talks is my right hon. and learned Friend having with the Lord President over the question of amending that Act?
  The Attorney-General: With respect, the Race Relations Act is not the weapon in the armoury of the criminal law one would call in aid to deal with arson or incitement to arson. Fortunately, the criminal law is well able to deal with that kind of criminality. The problem is to get the necessary evidence against the individual and to catch the individual.
  Sir B. Janner: Will my right hon. and learned Friend take into consideration the fact that no judge is likely to award the kind of judgment which was given in the case in question unless he is satisfied by actual evidence placed before him that the facts were such that this incitement did take place, and, in consequence of
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  that, would my right hon. and learned Friend get in touch with the learned judge to ask him if he will assist him in the inquiries which he is undertaking now?
  The Attorney-General: If I may say so, I am familiar with all the relevant facts of the matter. A person who was alleged to have been guilty of the incitement in that case has been expressly named in the Question, and, therefore, it is proper that I should refer to her, namely, Mrs. Jordan, and she is at the moment out of the jurisdiction of the courts of this country.
  Mr. Crowder: Can the Attorney-General say whether or not Treasury Counsel have been asked to advise on the evidence in this matter as is usual?
  The Attorney-General: This matter has, of course, been under the active consideration of the Director and myself. Whether or not Treasury Counsel are called in aid, if I may say so, their advice is not always necessary.

  WITNESSES (PAYMENTS BY NEWSPAPERS)
  Mr. Gresham Cookeasked Mr. Attorney-General if he will instruct the Director of Public Prosecutions to bring proceedings against the newspapers which made payments to witnesses in a recent murder trial for articles and stories, in view of the fact that such payments have the effect of suborning witnesses.
  The Attorney-General: There is no evidence that the testimony of any witness in the murder trial referred to was affected by the payments in question. After careful consideration, I have decided not to take proceedings in respect of the newspaper concerned. However, the practice of paying witnesses for information about the subject matter of a trial and interviewing them about that information before they give evidence does give rise to serious problems in relation to the administration of justice. Accordingly, the Government proposes to examine these problems with a view to making such changes in the law as may prove necessary.
  Mr. Gresham Cooke: While thanking the Attorney-General for the second part of his Answer, is he aware that many

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  people think that practices of this nature, as evidenced in the moors trial, should be stamped on very hard, because there is a belief that payments to witnesses in criminal trials, where they get bigger sums if convictions are secured, may lead to witnesses erring in the truth of the evidence that they give in trials?
  The Attorney-General: I am aware of this public concern, which I share myself. However, I should not by silence accept the suggestion that in this particular case a bigger sum was offered in the event of a conviction. If that were to remain without challenge, it might be unfair to the newspaper concerned.
  Mr. Strauss: Is my right hon. and learned Friend aware that there is a general appreciation of the admirable way in which he conducted this horrible case?
  Mr. Hogg: Did I understand from the right hon. and learned Gentleman, because he put his answer in the form of what I thought was a double negative, that the suggestion that the payment was contingent on a particular result is without foundation; because that is what particularly worried a great number of people, including myself?
  The Attorney-General: That was one of the matters that I had to consider. There was some evidence orally to the effect that that was the arrangement. However, other evidence that was obtained by the police was to the contrary effect, and the most important factor which decided me not to take proceedings was the knowledge that, in any event, the evidence of the two witnesses, Mr. and Mrs. Smith, was not affected by any of these payments at all. I will not weary the House with the matters which arose evidentially which enabled me to come to that conclusion.
  Mr. Grimond: Is the Attorney-General aware that there will be general satisfaction that he is going to look into this matter, and that there is wide disquiet over these matters, whether or not they are dependent upon a conviction? Will he also bear in mind when examining them that responsibility must surely lie on the proprietors and owners of newspapers, and must not be sloughed off on to editors and newspapermen?
  The Attorney-General: I am grateful to the right hon. Gentleman for that
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  intimation. This is a problem which the Press proprietors and, if I may say so, journalists have to face. It is essential that in this country there should be no trial by newspaper, and that the fountain of justice should not be polluted by external pressures.
  Mr. Carlisle: Is the Attorney-General aware that the important point is not so much whether the payment was contingent on the result as whether or not the witness thought that the payment was contingent on the result? Surely there was clear evidence in this case that that was the belief of the witness. Would he not agree that it is wholly monstrous for a payment to be made to an important witness prior to his giving evidence, and would he look at the matter?
  The Attorney-General: Those were the two matters to which I referred in my original Answer. They are important matters, and it seems to me that a long process of questioning a witness before he gives evidence, sometimes between committal proceedings' and his giving testimony at the trial proper, has possibilities of grave impropriety for the proper conduct of the trial.
  Mr. Blackburn: Is the Attorney-General aware that, whether the newspaper promised more or less, there is a great deal of resentment in my constituency, where these witnesses live?
  The Attorney-General: I am aware of the public feeling on this matter, and I am grateful that these questions and the opinions that have been expressed in the House have underlined the importance of the matter. I hope that, even before any Government action is taken, Fleet Street will now put its house in order.
  Mr. Paget: On a point of order, Mr. Speaker. I want to ask for your guidance with regard to the last four or five Questions. Is it not a fact that the decision whether or not to prosecute is an important judicial decision, and that a decision to prosecute, even if that prosecution should prove unsuccessful, is a decision to inflict a very severe penalty? How, then, do questions of this sort fit in with the general rule that there ought not to be political pressure exerted or attempted to be exerted, in this House or elsewhere, to decide a judicial point one way or the other?
  Mr. Speaker: The lego-political implications of what the hon. and learned Gentleman has asked me I must leave to the Attorney-General and to the Solicitor-General. But it has been the custom in the House for a long time that the action of the Director of Public Prosecutions in not instituting a public prosecution or instituting one is something which is raised in the House with the Law Officers.

HEAD OF DEFENCE SALES (APPOINTMENT)
The following Question stood upon the Order Paper:
Mr. JOSEPH KEVIN MCNAMARA: To ask the Secretary of State for Defence if he will now make a statement on the appointment of a Head of Defence Sales.
The Secretary of State for Defence (Mr. Denis Healey): With permission, I will now answer Question No. 83.
I am glad to inform the House that Mr. Raymond Brown, O.B.E., joint founder and Managing Director of the Racal Electronics Group has agreed to accept this post. He will start his duties on Monday next.
Mr. Brown will be responsible jointly to me and the Minister of Aviation. The appointment is for two years at a salary of £8,000 a year.
Mr. McNamara: While thanking my right hon. Friend for his Answer, may I ask him to assure the House that there will be no conflict of interest, that keen political control will be ensured to make certain that there are no sales of arms to areas where there might be a delicate balance, and that no arms will be sold directly or under licence to any parties engaged in the Vietnam conflict?
Mr. Healey: Mr. Brown has resigned his appointment as Chairman and Managing Director of Racal Electronics and has ceased to take any part in the business of the company. In his new post, he will have no contractual relationship with Racal, but occasions may arise in the course of export promotion when he may have to deal with matters affecting the interests of Racal as well as other firms. In such cases, it would be inappropriate for decisions to be made by him, and they will, therefore, be referred to
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the appropriate Permanent Secretary or his representative.
On the second part of the question, yes, Mer Majesty's Government will ensure that arms sales for which the Government are responsible take account of the possible political consequences of such sales.
On the third part of the question, about Vietnam, we regard the United States as a country to which we are perfectly free and indeed anxious to sell armaments, and we would not seek to impose any limitations on the use of the arms that we sold.
Mr. Powell: When the right hon. Gentleman made his original announcement on 25th January he will remember undertaking to ensure that the work of the new section and the gentleman appointed to it were open to the closest Parliamentary scrutiny. Could he now say how he intends to achieve that?
Mr. Healey: It will be open to right hon. and hon. Members to ask me or my right hon. Friend the Minister of Aviation questions about Mr. Brown's activities and the activities of the unit for which he is responsible; and we shall answer those questions.
Mr. W. Baxter: Is my right hon. Friend aware that this appointment has caused great concern throughout the length and breadth of our land? Is he further aware that it does not seem compatible with the appointment of a Minister of Disarmament? Will he look at the whole question again with a view to terminating the appointment before it is made?
Mr. Healey: On that last point, "No, Sir". It has been made clear on many occasions that we believe that it is not only our right, but our duty, to ensure that British defence industries have a market which enables them to survive and have a proper share of the international market, though I would assure my hon. Friend that the sooner that we can arrange for a multilateral abolition of the international traffic in arms at all levels through the operation of some disarmament agreement, the happier we shall be.
Mr. Marten: Can the right hon. Gentleman say what salary this gentleman is being paid? [HON. MEMBERS: "The Minister did say."] Will he also say

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whether the expenses he receives will be subject to minute examination? If they are, I am afraid that this will not be very helpful to the gentleman in his efforts to sell arms overseas.
Mr. Healey: On the question of expenses, as with other civil servants, Mr. Brown will be entitled to expenses for travelling, subsistence, and official entertainment in accordance with the approved scales. In addition, the new sales organisation will have its own funds for sales promotion, and we shall expect the industry to pull its weight in affording vigorous promotion to its own products. Mr. Brown is no amateur at selling defence equipment, and he is perfectly satisfied with the arrangements which have been made in this respect.
Mr. Rankin: Is my right hon. Friend aware that the appointment of Mr. Brown seems to be somewhat similar to a former appointment, that of Sir Basil Zaharoff, who earned a reputation in this country and in the Labour movement for his nefarious practices which were widely condemned by every member of the Labour movement?
Mr. Healey: With respect, I was not responsible for the activities of Sir Basil Zaharoff, nor were the British Government of the day. There is an immense difference between the activities of a private manufacturer of armaments and the activities of a Government servant in seeking to promote sales of British defence equipment in line with the policies of Her Majesty's Government.
Several Hon. Members rose—
Mr. Speaker: Order.
Mr. W. Baxter: In view of the unsatisfactory nature of the reply, I give notice that I shall endeavour to raise this matter on the Adjournment at the earliest opportunity.
Mr. Speaker: Perhaps I might say a word on the matter of order on Questions which are taken at the end of Question Time. This is done for the convenience of Ministers who wish to give slightly longer answers, or because the Question has not been reached, but, once the Question
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has been asked, it is subject to all the rules of short, snappy supplementary answers on the part of Ministers.

CHILD CARE, DORSET (ARRANGEMENTS)
3.44 p.m.
The Secretary of State for the Home Department (Mr. Roy Jenkins): With your permission, Mr. Speaker, I should like to make a statement about child care arrangements in Dorset.
Following my meeting with representatives of the Dorset County Council in February, a thorough inquiry has been made by my inspectors into the council's child care arrangements. Particular attention was given to all the circumstances surrounding the case of the boy who was injured while in the council's care.
Although my inspectors found no serious failures in the county's general standard of child care, or particular defects in the council's arrangements to which this distressing case could be attributed, the Report does disclose some shortcomings. I am asking the council to discuss these urgently with me. Among them is the need to ensure that the reporting to the full Children's Committee of any serious occurrence is not again overlooked. I also wish to direct attention to the need for additional children's residential accommodation in the county.
I further propose to ask all local authorities to issue new guidance to medical practitioners as to the information required in the periodic medical reports to be furnished on children in care.
In view of the special circumstances that led to this inspection, I am arranging for a copy of a letter I have sent to the council and of the chief inspector's Report to be placed in the Library, and for the publication of the Report as soon as possible.
Mr. Hogg: Will the right hon. Gentleman accept the apology of my hon. Friend the Member for Poole (Mr. Murton) who was prevented from being in his place owing to temporary indisposition?
May I ask the right hon. Gentleman whether he is aware that this case shocked the conscience of, I think, all kinds of public opinion in the country,

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not merely because of its particular circumstances, but because of doubts about the adequacy of recruitment of child care officers, and possibly of payments to foster parents, which may make it more difficult for the right hon. Gentleman to recruit a sufficient number of parents of adequate calibre?
Did the inquiry, the result of which the right hon. Gentleman has now published, involve a visit by his inspectors to the foster parents concerned? Can the right hon. Gentleman say what was the date of the last visit to the child before the incident was discovered? Is it not the case that the child's injury was such that a full medical examination would have revealed it, and was not a similar injury discovered as long ago as 1961?
Mr. Jenkins: I accept the apologies of the hon. Member for Poole (Mr. Murton), and I am sorry that he is not able to be here.
I was fully aware of the general disquiet which this case aroused, and it was precisely for that reason that I took the action which I have described.
Finally, I think that it would be better if the right hon. and learned Gentleman and hon. Members generally were to study the Report and raise any detailed questions subsequently.
Mr. Abse: Is my right hon. Friend aware that this case has only pinpointed the difficulties encountered by foster parents who receive inadequate payment, no money for holidays, and no maintenance grants of any kind? Is it not time that my right hon. Friend took notice of the Association of Foster Parents, and like bodies, who want to review the terms of service, and want to make certain that there are sufficient child care officers to give adequate support and time to the foster parents who have these difficult charges in their care?
Mr. Jenkins: I shall look into these matters. I do not think that the question of payment to foster parents is central to the difficulties in this case, though I shall consider this in the general context.
With regard to the number of child care officers, my hon. Friend will see that there is a reference to, and a recommendation on, this point in the Report.
Mr. Winnick: Would not my right hon. Friend agree that at the present time salaries for child care officers are completely and totally inadequate? Will he give some instruction to local children's authorities to upgrade child care officers so that these officers, who are doing such a valuable and essential job in the community, are properly paid?
Mr. Jenkins: I keep this matter under review, just as I endeavour to keep under review matters concerning other people in similar fields whose payment is also sometimes not regarded as overgenerous.

HEAD OF DEFENCE SALES (APPOINTMENT)
Mr. Mendelson: Mr. Speaker, I wish to ask permission to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
"the announcement by the Secretary of State for Defence that Her Majesty's Government have decided to supply arms to South Vietnam, and to parties fighting in that area."
I do so in view of the fact that Her Majesty's Government are a co-Chairman of the Geneva Conference and should be strictly neutral in this conflict.
Mr. Speaker, unlike what happens on other occasions, I have had no opportunity to give you any warning of my intention to move this Motion under Standing Order No. 9 because we had no knowledge that an announcement was to be made by my right hon. Friend the Secretary of State for Defence in reply to a Question at the end of Questions.
I want briefly to submit, strictly on the constitutional aspects of the matter, why, under Standing Order No. 9, I ask for your permission to have the leave of the House to move the Adjournment, without entering into the substance of the matter.
First, I think that this is the first time that this decision has been announced by a member of the Cabinet speaking on behalf of the Government, and, as you and the House know, it is essential under this Standing Order to seek to move the Adjournment at the earliest possible opportunity. That is why I am doing so now.

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Secondly, the matter is urgent because, according to all reports, many of the events in Vietnam are moving to a crisis, and it is, therefore, all the more essential that Britain, as one of the co-Chairmen, should be in a position to act quickly, if necessary, to help in bringing the conflict to an end. This decision to supply arms under certain circumstances will make it almost impossible for Her Majesty's Government to play any useful part as co-Chairman of the Geneva Conference.
Thirdly, the matter is definite because in the announcement contained in the statement made by my right hon. Friend there was an expression not only of the feeling of Executive decision but of Executive intention, so that it is quite conceivable that such arms might be supplied within the shortest possible time.
Finally, it is essential that we should all remember that when such announcements are made the House of Commons cannot exercise its function of affirming and asserting the Government's policies, so acting as a check on the Government's policies, unless there is an opportunity to debate the matter immediately after the announcement.
Mr. Speaker: The hon. Member seeks leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely,
"the announcement by the Secretary of State for Defence that Her Majesty's Government have decided to supply arms to South Vietnam and parties involved in a conflict in which Her Majesty's Government, as co-Chairman of the Geneva Conference, should be strictly neutral."
I make no complaint of the fact that I have had no previous notice of this Motion. It may be in the course of events that an hon. Member may seek to raise, under Standing Order No. 9, something of which it would be impossible to give Mr. Speaker previous notice. I would say, on the other hand, that it is also invaluable, from the point of view of the House and the nature of the important decisions that Mr. Speaker has to make, that he should, whenever possible, have previous indication of someone's intention to invoke Standing Order No. 9.
I am advised that the announcement to which the hon. Member refers is part of governmental administration; that
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there are opportunities for a debate on Government policy, including this aspect of Government policy, and that there are precedents which prevent me from allowing the application of Standing Order No. 9 for this purpose. Therefore, I must reject the hon. Member's application.
The Secretary of State for Defence (Mr. Denis Healey): On a point of order. I do not wish to comment on your decision, Mr. Speaker, but I want to make it clear that I made no announcement in the terms to which my hon. Friend has referred. Indeed, the statement that he has attributed to me was not made, and is not Government policy.
Mr. Speaker: That matter must arise in the course of some other kind of debate.
Mr. Frank Allaun: On a point of order. It has been announced that Britain is supplying military Hovercraft to South Vietnam—
Mr. Speaker: We cannot debate the issue whether the hon. Member who sought to raise this matter under Standing Order No. 9 was correct in the statement that he made about the Minister of Defence. We must leave it. That must be debated on some other occasion, and not in the guise of a point of order.
Mr. Rankin: On a point of order. Do I take it that during the course of the debate during the second half of today's business, when we are discussing the Bill on military aircraft, it will be possible to make some reference to the question of the Hovercraft?
Mr. Speaker: I never like ruling hypothetically on what will be in order on a debate. I will judge that at the time when the hon. Member seeks to make a reference to it. I will have to decide then whether or not it is in order.
Mr. Shinwell: On a point of order. I was under the impression that my hon. Friend the Member for West Stirlingshire (Mr. W. Baxter), after the announcement had been made, gave notice that he would raise it on the Adjournment.
Mr. Speaker: Possibly that will be done. An Adjournment is one of the Parliamentary opportunities to which I

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referred on which a Government decision can be questioned or opposed. But this has nothing to do with a Member's right to seek to raise a matter under Standing Order No. 9.
Mr. Shinwell: Do I understand, Sir, that once an hon. Member has given notice that he will raise a matter on the Adjournment it is still possible to raise it under Standing Order No. 9?
Mr. Speaker: I can conceive circumstances in which I can conceive that it would be possible. I shall have to look into that matter.

CONDUCT OF THE MINISTER OF AVIATION
3.55 p.m.
Mr. Enoch Powell: I beg to move,
That this House regrets that the Minister of Aviation misled the House on 7th March on a material point of fact, namely, by concealing from the House that the value of the Saudi Arabian contract announced on 21st December is included in the dollar offset arranged with the American Government for the cost of the F111A aircraft.
The matter to which this Motion directly relates is in itself narrow and simple, but the issues which it raises are of great importance; indeed, they are perhaps issues than which this House could not debate more important, for they go to the relationship of Her Majesty's Government with the House itself and to the manner in which Ministers deal with hon. Members in this House.
The facts which I shall adduce in support of the Motion are in themselves simple and plain, but their very simplicity and plainness renders the more shocking the deception which has been practised upon the House and to which the Motion draws attention.
It will be convenient to begin with the Defence White Paper, published on 22nd February, which conveyed the information, in paragraph 11, on page 11, that:
"We"—
that is, the Government—
"have taken steps to ensure that the foreign exchange cost of the F111A will be fully offset by sales of British equipment."
That was an announcement which, naturally, attracted great attention and to which much importance was attached. The Defence White Paper had announced at last the Government's decision on the long-debated question whether we should purchase any of these American aircraft, and one important factor which bore upon that decision was its effect upon our, balance of payments.
Consequently, the arrangements which might be made to offset any burden thereby falling upon our balance of payments were of exceptional importance, and there was great public interest in the nature and effectiveness of those arrangements. So one naturally read with great care and attention that part of

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the Defence White Paper which referred to those arrangements. It went on, in explanation of the sentence which I have read to the House, to refer to arrangements which had been made
"for British firms to compete without discrimination for United States defence contracts".
The whole of that paragraph—indeed, it was the only part of the Defence White Paper which referred to the offset arrangements—was concerned with the sale of equipment by this country to the United States Administration.
Therefore, many hon. Members, and, I think, many without the House, were extremely struck and very surprised by the further details of this arrangement which were given to the House in the course of debate on 7th March by the Minister of Aviation. As this passage is so important, I hope that the House will bear with me if I read the one sentence in quest on in extenso. It runs:
"The total dollar cost over the period has been stated as being £260 million over a 10-year period amounting in dollar terms to 725 million dollars, and we have the agreement of the United States"—
there are two parts to this agreement, the first only of which was referred to in the Defence White Paper—namely,
"that it"—
that is, the United States—
"will over the period buy directly British equipment to the value of 325 million dollars …"
That was the first part of the arrangements as then, on 7th March, expounded to the House by the right hon. Gentleman.
Then followed the second half, relating to the greater part of the total figure of 725 million dollars, which ran as follows:
"… and that it"—
the United States—
"will co-operate with us in sales to third countries, at least of a kind similar to that we have recently arranged with Saudi Arabia, to the value of 400 million dollars—covering the whole dollar cost of the purchase of these aircraft over the 10 years."—[OFFICIAL REPORT, 7th March. 1966; Vol. 725, c. 1861.]
From that statement, the House and the country learned of the bipartite nature of the agreement which had been made with the United States Government and which was the justification—if justification it
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be—for the statement in the Defence White Paper that the Government
"… have taken steps to ensure that the foreign exchange cost of the F111A will be fully offset by sales of British equipment."
We learned that the greater part of that offset was to be in the nature of American co-operation with us in sales to third countries. The Minister of Aviation gave an example of the sort of sales to third countries that he had in mind in the words:
"… at least of a kind similar to that we have recently arranged with Saudi Arabia …"
It could not occur to the mind of anyone hearing or reading that passage that the Saudi Arabian deal itself and the value of it were already included by this arrangement in that 400 million dollars.
If I might give an imaginary parallel—if you and I, Mr. Speaker, were in commercial relations and I were to say to you, "It is my intention to buy from you—I will buy from you—£100 worth of goods of the same sort as I recently purchased from you", it would not, it could not, enter your head that I intended only to buy £100 worth less the value of the goods which I had already purchased. Neither you, Mr. Speaker, nor any other rational human being, I submit, could suppose that that was meant. One was bound to assume—so far as I know, everyone did assume—that the plain meaning was that, in future, there would be sales to the value of 400 million dollars, in obtaining which the United States Administration would co-operate with this country, and that, by way of illustration of the kind of sales meant, a reference was made to a transaction in the recent past in which there had been, so the House was told, such co-operation. I would particularly ask the House to note the clear distinction of time in the right hon. Gentleman's Statement, that the United States
"… will co-operate with us"—
future tense, from now onwards—
"in sales … to the value of 400 million dollars"—
contrasting with the past tense in the reference to the deal—
"… recently arranged with Saudi Arabia …"
The reference was, of course, to the deal announced to the House by the

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hon. Member for Wednesbury (Mr. Stonehouse) on 21st December last. I will not quote more than the vital sentence of his statement on that occasion, which was:
"I have to tell the House that the Government of Saudi Arabia have this morning announced that a consortium of British firms has secured the major part of the order for their new complete air defence system."—[OFFICIAL REPORT, 21st December, 1965; Vol. 722, c. 1873–4.]
That was the known agreement, the known "recent sale", to use the adverb of the Minister of Aviation, to which he referred by way of analogy as the kind of co-operative sale which the United States, so he was telling the House, would organise with us to the value of 400 million dollars, the greater part of the total sum in question.
That was how matters stood when the right hon. Gentleman resumed his seat on 7th March. That was the meaning which had been conveyed by the right hon. Gentleman's statement, and not only to the House but to any reasonable person who read and studied his words. But during the month of March, towards the end of the month, it began to be bruited—I must confess that I received the rumours with incredulity—that the value of the Saudi Arabian deal was already included in the 400 million dollars part of the offset, that £75 million at least, which is the immediate foreign exchange gain to this country of the Saudi deal, as the hon. Member for Wednesbury said on 21st December—that 210 million dollars-worth—had already gone, had already been written off the 400 million dollars offset about which we were told on 7th March.
So, wishing to be clear on this matter, wishing to check these rumours which cast such a slur on the good faith of the Minister of Aviation and of the Government, I raised this point in the debate on the Address on 26th April and I put it to the right hon. Gentleman the Secretary of State for Defence that this was rumoured and had not been denied. He made no reference to this point at all when he replied to the debate, but on the following day, on 27th April, in answer to a supplementary Question after a long series of supplementary Questions, he said:
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"We agreed when we made the F111A deal that we should include the Saudi purchase arrangements, which had not then been concluded, in that part of the offset arrangements which related to sales to third countries."—[OFFICIAL REPORT, 27th April, 1966; Vol. 727, c. 689.]
Thus, there was eventually dragged out of the Government, almost two months after the Minister of Aviation spoke, the fact that the deal which he had led the House to believe was a past deal—mentioned for the sake of example and not included in the 400 million dollar offset—had already, in fact, been written off against that offset. It is the conflict between the facts about this agreement and the plain meaning of the statement of the Minister of Aviation which is the basis and the justification for this Motion of regret.
But before I come to examine the possible explanations of the Minister's behaviour in thus misleading the House on 7th March, I should like to ask a question. I may not get it answered this afternoon, but we shall, no doubt, learn the truth about this, too, in due course. The question is whether the value of the Saudi Arabian offset, which is being written off this 400 million dollars—written off the total 725 million dollar offset for the F111A—is limited to the initial foreign exchange earnings of £75 million or 210 million dollars, or whether the agreement to include it also includes the value of any future earnings, in terms of the supply of spares, and so on, which might be held to flow from the Saudi Arabian agreement. We might be told that as well. But whether we are told it now or, as is apparently usual with this Administration, a long time afterwards, it will no doubt in due course appear.
Now I come to the Minister of Aviation, who thus, on 7th March, led the House to believe the opposite of what we now know are the facts about the inclusion of the Saudi Arabian arrangement in the 400 million dollar offset by way of sales to third parties. There are three, and so far as I can see only three, explanations for the right hon. Gentleman's behaviour.
The first explanation I reject out of hand. It is that it was his intention, and his deliberate intention, knowing the facts and being conscious of the facts, to mislead the House. I repeat that I do not regard that as an acceptable explanation.

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I know the right hon. Gentleman well, as the House does. We have served in the House together for 16 years. We both entered it together. I do not entertain the suspicion that he came to the House on 7th March with the intention of deliberately misleading it by what he said. But, if that is so, then we must fall back upon one of two other explanations for his having thus misled the House.
The second possible explanation is that the Minister was guilty of a lapse of tongue, that he meant to tell the House that the Saudi Arabian deal was included, that that was the reason why he mentioned it and that it was only on account of some confusion in speaking, some clumsiness of grammar or diction, that he referred to it in a context which specifically excluded it, which plainly and to any understanding excluded it, from the 400 million dollar offset. That could happen to anyone.
But then, we generally read HANSARD the following day—I dare say that the right hon. Gentleman's officials also read HANSARD the following day, if not sometimes the same night—and it could not have escaped the right hon. Gentleman's attention in this case, or the attention of his officials, that he had given the opposite impression to that which he intended and the opposite impression to the truth. Therefore, if that is the explanation he is greatly at fault for not having come to the House at the earliest possible opportunity—and there are many opportunities for doing so—and put the record straight.
So far as I can see, there is only one remaining hypothesis which could account for the right hon. Gentleman's having misled the House as he did on 7th March. That is that he was not in the secret, that he did not know that the arrangement did include the Saudi deal, that it came as a shock to him afterwards, as it has come to the rest of us, to learn that this was so.
The Minister of Aviation (Mr. Frederick Mulley): Perhaps I can help the right hon. Gentleman. I accept that I was fully informed on 7th March as to the nature of the arrangement. I would not seek to let the right hon. Gentleman develop that theme. I knew the full arrangement when I spoke to the House that day.
Mr. Powell: Then in that case I have to say that the gravest censure and blame rests upon the right hon. Gentleman himself and upon all his colleagues who were concerned with this matter for not insisting that the record was brought into agreement with the facts which they knew but which no one else suspected until weeks afterwards.
If so, why did they have to wait week after week? Why did they let it pass by when these rumours and questions were being asked? Why did not the right hon. Gentleman, even in the debate on the Address when I asked this question, confirm what the facts were? Why did he wait until the last moment when the truth could not be withheld, was too blatant to be held back?
The right hon. Gentleman the Minister of Aviation has been greatly at fault. It is a fault which, unfortunately, now can only partly be retrieved. It can be partly retrieved—and I address myself to him personally and ask him to retrieve it to that extent this afternoon. This House can be a very cruel and a very critical place; but this House is always very ready to accept and acknowledge an admission of error, even if that admission is made, as this will be, belatedly. I beg the right hon. Gentleman, when he replies, at least to say now that he recognises that he misled the House on 7th March and that he regrets that he did so. That at least will make some amends to the House and the public for what has happened and I hope that he will do so.
But still there will remain irrevocably censurable the fact that the Treasury Bench opposite knowingly, consciously and deliberately on this material matter, on this point which might well have altered the view of the House and the country on the transaction itself, held out week after week and made no move whatever to correct the misleading knowledge which had been given and to substitute in its place the true facts.
The right hon. Gentleman the Minister of Aviation can do much for himself personally to mend what has been done amiss. I am afraid that, so far as the Government as a whole are concerned, this event will remain a lasting blot upon their reputation.
4.20 p.m.
The Minister of Aviation (Mr. Frederick Mulley): The right hon. Member for Wolverhampton, South-West (Mr. Powell), on behalf of the Opposition, has taken the unusual course of moving what amounts to a Motion of censure on my conduct as Minister of Aviation. The Motion alleges that I misled the House on 7th March on a material point of fact by concealing from the House that the value of the Saudi Arabian contract is included in the dollar offset arrangement concluded by my right hon. Friend the Secretary of State for Defence in connection with the purchase of the F111A aircraft.
The House will well understand the grave position for a right hon. Member finding himself, as I do, the subject of a rare personal Motion of this character; and after 16 years' membership of the House I much regret that I should be charged with discourtesy to the House for the first time.
I say at once, as my right hon. Friend the Secretary of State for Defence did on 27th April, that there was no intention to mislead the House and that I regret the fact if any words or omissions of mine caused any hon. or right hon. Member to be misled. I say to the right hon. Member for Wolverhampton, South-West that I appreciate that he very kindly acquitted me of any deliberate intent to deceive the House and that I am obliged for what he generally said about the way I have tried to behave in the House during the years we have served in it together.
At the same time, I am bound to say that I consider the Motion to be totally unjustified. Before coming to what I did or did not say in my speech of 7th March, on which the right hon. Gentleman rests most of his case, I think that I should briefly sketch the complicated history of the Saudi Arabian deal.
Since 1962, British firms have been engaged in efforts to sell a new air defence system consisting of aircraft, radar and communications and surface-to-air missiles to the Saudi Arabian Government. There was strong competition from both United States and French firms. Direct Ministerial assistance to British firms began in December, 1964, when my right hon. Friend the Secretary of State for Defence and my predecessor gave them
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their full support, and this continued throughout the negotiations. I would like, in particular, to pay tribute to the efforts of my former Parliamentary Secretary, my hon. Friend who is now Under Secretary of State for the Colonies.
In October of last year my hon. Friend heard that matters had come to a head and that the Saudi Arabian Government were on the point of deciding to accept the all-American proposal to meet their requirements. At this point it was clear to all concerned that there was no hope of an all-British sale and that the only chance of a substantial sale of British equipment rested on a co-operative arrangement.
As a result of an immediate examination of the situation to determine whether, even at this late date, some British equipment might be accepted, my predecessor decided to approach the Americans with a proposal that a joint United States-United Kingdom programme, consisting of British aircraft, British radar and communications—including some American components—and the American Hawk surface-to-air missiles might be offered as an alternative solution.
The Americans agreed that such a joint proposal should be made with their backing, but pointed out that it would, of course, not be possible to withdraw the all-American proposal which had so far found favour with the Saudi Arabian Government. My hon. Friend visited Saudi Arabia early in November and, with the full support of the American Government, presented the U.S.-U.K. proposal to the Saudi Arabian Government as an additional option for them to consider.
It was made clear that while the American Government gave their support to the joint U.S.-U.K. proposal, the all-American proposal was not being withdrawn and that it was entirely up to the Saudi Arabian Government, as the customer, to make the choice. Thus, while, on the one hand, we had the essential support of the American Government for the joint programme, there was genuine competition between the British and American firms throughout. In December, 1965, the Saudi Arabian Government decided to accept the joint U.S.-U.K. proposal and signed a Letter of Intent with the three main British contractors to this effect.

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As my hon. Friend announced on 21st December, the value of the British element of the joint programme is over £100 million, of which about £75 million will accrue as export earnings. I am pleased to tell the House that on Thursday last, 5th May, the detailed negotiations for the major part of the programme were completed and contracts signed. There will, over the next few months, be further negotiations on other elements of the deal, but the House will, I know, appreciate that it is not possible to go into any details.
Since my hon. Friend's statement of 21st December has been referred to, I would draw the attention of the House to his opening words:
"I have to tell the House that the Government of Saudi Arabia have this morning announced that a consortium of British firms has secured the major part of the order for their new complete air defence system. The remainder of the system will be provided by American firms and we have had valuable co-operation from the United States Administration in formulating the joint programme."
In reply to a Question from the right hon. Member for Mitcham (Mr. R. Carr) my hon. Friend said:
"There is no question of the agreement with the Americans to co-operate in giving technical and political support in this proposed deal being in any way linked with a commitment concerning the F111."—[OFFICIAL REPORT, 21st December. 1965; Vol. 722, c. 1873–5.]
Indeed, there could not have been any connection since no decision about purchasing the F111 had been made and during the previous week, on 13th December, both my predecessor and my right hon. Friend the Secretary of State for Defence had explained to the House that the option to buy this aircraft had been extended by two months, from 31st December to 1st March, because no decision had been or could be made until the conclusion of my right hon. Friend's Defence Review.
At no time during the Parliamentary Secretary's discussions with the Americans was there mention of the F111 or any other further British purchase. Subsequently, it was made absolutely clear to the Americans, in case there was any misunderstanding, that American assistance on the Saudi Arabian deal would have no influence whatever on any F111 purchase by Her Majesty's Government.
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The American Government's interest in assisting our sales, as well as their own was due to the fact that we had stressed the need for some reciprocity in respect of our foreign exchange position, which had been affected not only by the purchase of Phantoms for the Royal Air Force and the C130 transport planes, but also by the considerable dollar expenditure we inherited in orders placed by right hon. Gentlemen opposite for Polaris and the Royal Navy Phantoms.
Mr. Cranley Onslow: Perhaps it would be of some help if the right hon. Gentleman would say what precisely, in time, is meant by "subsequently" it was made out to the Americans that no influence would be allowed to be taken into account, and on whose initiative. Was this in response to impressions apparently gained on the American side, or was it felt necessary that we should make this clear from our side?
Mr. Mulley: The word "subsequent" means subsequent, in fact, to the actual meeting to which I referred that my hon. Friend had with the American Government. The clarity was introduced in discussions with officials. I do not usually like to bring official discussions into public statements, because Ministers must always be responsible to the House, but between the discussions that took place in which my hon. Friend put forward the idea of the joint proposal, and its being submitted and actually accepted—I have not the dates, but I would say that it would be about between mid-November and mid-December of last year.
When we entered into negotiations with the Americans for the purchase of the Phantom for the Royal Air Force and of the C130, we not only got their active support for the substitution on as large a scale as possible of British equipment and thereby reduced the dollar cost substantially—for example, British equipment and parts in the Phantom aircraft amount to over 45 per cent. in value—but we also got the Americans to examine whether there were items which they could buy from us and whether there could be co-operation in sales to other countries which would assist our industries.
These new and novel arrangements for establishing outlets for our industries,

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both in the United States and in the third countries, evolved over the past year. Acceptance, however, of the principle was not enough, and after more negotiations my right hon. Friend obtained the targets which I announced on 7th March, in addition to favourable credit terms and a fair price for the aircraft themselves.
In arriving at the target figures we took into account, on the one hand, the purchases of Polaris and the Phantoms by the Royal Navy on which the previous Government had made no attempt to negotiate any reciprocal arrangements, the Phantoms for the Royal Air Force, the C130 transport and the new F111 purchase, and, on the other hand, the expenditure by the United States forces in this country over the same period of time. The specific targets for sales to the United States and to third countries, amounting to 725 million dollars in all, were calculated to offset the dollar cost of the new F111A purchase alone.
It was, therefore, perfectly reasonable to include the Saudi Arabia deal in the overall arrangement which had given us a new market for British equipment that we would not otherwise have had.
Mr. Eric Lubbock: The Minister uses the words "we would not otherwise have had". Does he mean that we would not have had the Saudi Arabia market unless we had placed the order for the F111A?
Mr. Mulley: With great respect, I am standing here because of a half sentence by which it is claimed I misled the House. I am trying to put facts on record, and hon. Members do not seem to want to hear—[HON. MEMBERS: "Answer".] I have answered quite clearly.
I have already said that a point had been reached when it was agreed by all that there was no prospect of selling any substantial amount of British equipment. The only possibility was a joint arrangement of the kind my hon. Friend arranged with the American Government. Quite clearly, without such a joint arrangement there would not have been a substantial sale, and, therefore, it is absolutely correct, as I have just said, that this arrangement produced a new market for British equipment that we would not otherwise have had.
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The complex series of negotiations sought, therefore, to establish firmly the principle of quid pro quo, to work out detailed methods of procedure and to agree targets which, if no more is achieved, will offset the cost of the purchase of the F111A. These arrangements were summarised in the White Paper.
Complaint has been made—and the right hon. Gentleman himself made it again today—that no reference was made to sales to third countries until my speech of 7th March. Certainly, the right hon. Gentleman the Member for Mitcham and his right hon. Friend the Member for Barnet (Mr. Maudling) both behaved on the following day as though this was the first they had heard of it. Indeed, the point was made again by the right hon. Member for Wolverhampton, South-West in a speech, to which he has referred, on 26th April.
In fact, my right hon. Friend the Secretary of State for Defence, on 22nd February, spoke about
"… collaborative sales to third countries …"—[OFFICIAL REPORT, 22nd February, 1966; 725, c. 245.]
both in his introductory statement to the House on the Defence White Paper and in reply to questions posed by the Leader of the Opposition—[Interruption.] If hon. Gentlemen opposite will not listen and will not read the text in HANSARD—[Interruption.]—I think that they are in no position to complain. In reply to the first day's debate on the Defence White Paper on 7th March I sought to give the House further information in considerable detail of the offset arrangements my right hon. Friend had made with the United States Government.
In contrast to the criticism for not having given enough information, to which I am now subjected, I was then criticised by the right hon. Member for Barnet in the following day's debate for saying too much. As the right hon. Gentleman put it:
"The whole gaff was blown yesterday by the Minister of Aviation. He gave the whole show away."—[OFFICIAL REPORT, 8th March 1966; Vol. 725, c. 2032.]
Indeed, the right hon. Gentleman the Member for Wolverhampton, South-West—and I understand that he is now reproving his right hon. Friend—on 26th April when, he has just told the House, he

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was seized of the full circumstances, made exactly the same point but, I must say, in rather more eloquent language.
I have, of course, for the purpose of this debate reread my remarks with great care. I confess that I did not read them on the day following the debate. Perhaps I am at fault there, but I did not read them until the speech was brought at a later stage to my attention. But I have reread my remarks, particularly the section quoted by the right hon. Gentleman in which, in describing co-operative sales to third countries, I said:
"… at least of a kind similar to that we have recently arranged with Saudi Arabia …"—[OFFICIAL REPORT, 7th March, 1966; Vol.725, c. 1861.]
In retrospect, I recognise that this may have been an imprecise way of quoting the proposed sale to Saudi Arabia as an example of what was meant by collaborative sales. But it was not intended to mean—and in my view it is stretching language to suggest that it does mean—[HON. MEMBERS: "No."] that this deal was excluded—[HON. MEMBERS: "Nonsense."] I think that I should say, however, that: I was replying to a day's debate from notes taken during the debate, and not making a prepared statement.
I think, that any hon. Member who reads the OFFICIAL REPORT, and certainly those—a number of whom I see here today—who were present on that occasion, will concede that I was frequently interrupted, and was pressed for time. I make no complaint about that—it is part of the cut and thrust of debate, and we were on the eve of an election. [HON. MEMBERS: "Hear, hear."] Indeed, I recollect having difficulty in giving the House the information I did give to it, as it was clear that right hon. and hon. Members opposite were not anxious to have the details of how we had managed to get offset arrangements for dollar expenditure when they had failed to do so.
While I do not seek to excuse any shortcomings on my part, right hon. Members opposite must accept some responsibility if there was misunderstanding. [HON. MEMBERS: "Why?"] I must emphasise that after my speech there was a full day's further debate, in which any doubts might have been posed about what I said or what I did not say, and they could have been cleared up. The fact
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is that both the right hon. Member for Barnet and the right hon. Member for Mitcham made it abundantly clear in their speeches of 8th March—the evidence is there on the record—that they had not the slightest interest in the arrangements for sales to third countries. They condemned them root and branch and said that they were totally unacceptable.
I agree that their arguments lacked conviction, not merely because they had been members of a Government which had bought first Skybolt, then Polaris and, finally, Phantom aircraft without any offset arrangement whatever, without offsetting one dollar of the substantial foreign exchange involved. In each case they quoted the part of my speech of which complaint is now made, and they could have sought clarification had they deemed it to be material.
Mr. Robert Carr: Will the Minister accept from me that I would most certainly have sought clarification if I believed that his remarks were at all ambiguous?
Mr. Mulley: I accept that, of course. I am bound to say, however, that in rereading what I am reported to have said on that occasion, I found the final remarks ambiguous myself.
As I understand the Motion, the charge against me, in short, is a sin of omission rather than of commission. It is a charge that I gave the House insufficient information, and not that I gave the wrong information. This Government, unlike their predecessors, have sought to give the House as much information as possible on all aspects of defence, and I am sure that this is right. It will, however, be obvious that there are dangers if, at a later stage, there is to be a Motion of censure because information which was not requested at the time was not included. This could not have happened under a Conservative Government, because they withheld all facts from the House as a matter of policy, including their purchases from the United States.
The right hon. Member for Wolverhampton, South-West will recall being a member of a Government which, in 1963, produced a half-page Defence White Paper—in fact, a foreword followed immediately by a set of annexes. In the last defence debate during the time of

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the previous Administration, the then Minister of Defence, Mr. Thorneycroft, on 26th February, 1964, in reply to my right hon. Friend who is now Secretary of State for Defence, put his policy very shortly when he said:
"We never have stated the cost of an air-craft in advance. It has never been done in the history of any defence debate, and the hon. Gentleman knows it perfectly well."
Mr. Powell: Is the Minister now saying that the Government intend to withhold information from the House for fear that if that information proves to be false or misleading it will result in a Motion of censure?
Mr. Mulley: It would be interesting if the right hon. Gentleman were to extend his considerable textual analysis experience to some of the speeches of his right hon. Friends. I am glad to be able to point out that at column 453, on the same day, Mr. Thorneycroft made it even clearer in reply to one of his own hon. Friends when he was asked about purchases of the Phantom, the American aircraft which he had ordered for the Royal Navy. Mr. Thorneycroft was asked about its cost, its delivery and its price, and he said:
"I am not giving either the cost or the numbers, because such information has never been given in the House of Commons."—[OFFICIAL REPORT, 26th February, 1964; Vol. 690, c. 451, 453.]
The complaint of the Opposition is not that they were not given enough information, because they are in no position to sustain such a complaint. Their attack is on the offset agreement, which they could not themselves achieve. In pursuing this attack, they do untold damage to British industry. They do not believe that British industry can compete on equal terms with its American rivals. We believe that it can, and these arrangements are based on our confidence in British firms and on the support of the United States Government.
I have sought to give the House a full explanation of my conduct about which complaint is made. I hope very much that the House will find it acceptable.
4.46 p.m.
Mr. Eric Lubbock: The right hon. Gentleman for Wolverhampton, South-West (Mr. Powell) has
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explained with his usual clarity the reasons why the Opposition put down their Motion. As the right hon. Member said, everything depends upon the interpretation of the words used by the Minister in his speech on 7th March.
As the Minister knows, we on this bench look at every issue in the House on its merits, and we are not tied to voting with or against the Government for party political reasons. Therefore, my colleagues and I approach this question with an entirely open mind. We have studied the passage in HANSARD on which this debate centres and for my part I cannot understand how that passage could be construed in any other way than that in which the right hon. Member for Wolverhampton, South-West has construed it this afternoon.
There had been no public suggestion that the Saudi Arabian deal should form part of the offset arrangements until 27th April this year. The passage from the announcement by the hon. Member for Wednesbury (Mr. Stonehouse), now Joint Under-Secretary of State for the Colonies, which was quoted by the Minister, makes it clear that at that time, at least, there was no question of linking the Saudi Arabian deal with the subsequent offset arrangements.
The Minister did not quote the part of the question by the right hon. Member for Mitcham (Mr. R. Carr) to which he was giving the answer, and I should like to put this on the record from col. 1874. The right hon. Member for Mitcham asked:
"… is there a link of any kind—whether formal or informal—between the United States Administration's co-operation on this order and any possible order from us for the F111?"—[OFFICIAL REPORT, 21st December, 1965; Vol. 722, c. 1874.]
The Minister has already quoted the reply that at that time there was no question of any connection between these two issues.
What the Minister said this afternoon was a little bit ambiguous because he said that there was no question of our selling these Lightnings to Saudi Arabia unless the Americans withdrew. By saying that, he implied that at that time the offset agreements were already under discussion and that we had thrown this into the melting pot to help the Americans to

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make up their minds to withdraw from Saudi Arabia.
Mr. Mulley: I tried to explain to the House that over the previous year—since the first purchases that were made with the United States—we were seeking improvements in trying to get better foreign exchange arrangements by direct sales and through co-operative sales to third parties. These talks had been going on for a long time, for the general benefit of our foreign exchange policy. They were in no way related to the F111, because in the very week to which the hon. Member is now referring both my right hon. Friends explained to the House why we could not exercise the option—the hon. Member will remember this—on the F111 by the end of the year. So there was no link with the F111. Naturally, however, we were anxious to get an offset or reciprocal arrangement for our dollar expenditure.
Mr. Lubbock: I am most grateful to the Minister, because I think that what he has just said is of very great importance. It means that, when his right hon. Friend was talking with the Americans about the offset arrangements relating purely to the Polaris and the Phantom, they decided to throw in the Saudi Arabian deal which had not yet been concluded as part of the price which we were to pay. I remind the Minister that this conflicts with something that his hon. Friend said at his Press conference in announcing the Saudi Arabian deal. I have two quotations here, so I am sure that these must be accurate. The first is from The Guardian of 22nd December:
"Mr. Stonehouse emphasised at a Press Conference that the order has been acquired in the teeth of American competition. The United States, which so far has supplied almost all the aircraft to the Saudi Government, at no time withdrew its project for 100 per cent. American systems".
That was not a verbatim quote, but in the Daily Telegraph the hon. Gentleman's remarks are in inverted commas. He is reported as having said:
"Until the eleventh hour the Americans were trying every possible means to stop the order and substitute American equipment."
I must point out to the Minister that this is at variance with what the Secretary of State for Defence said in the Answer he gave on 27th April which has already been quoted. He then said that
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"… the Americans originally undertook to stand aside"—[OFFICIAL REPORT, 27th April, 1966; Vol. 727, c. 689.]
in the Saudi Arabian deal as part of the negotiations which were under way for the offset of our dollar expenditure on weapons as a whole including, as we have heard this afternoon, the Phantom and the Polaris.
The Secretary of State for Defence (Mr. Denis Healey): If the hon. Member reads what my right hon. Friend said in opening the debate, he will see that it is quite clear. The American Government were involved with us in making a joint effort to the Saudis and they put their official governmental support behind that joint effort; but they said they could not persuade the American firms concerned—particularly Lockheed—to withdraw their alternative offer and they must leave it to the Saudi Government to decide between the joint offer sponsored by the British and American Governments and the other American offer. My hon. Friend the present Under-Secretary of State for the Colonies was absolutely right in saying that competition from Lockheeds persisted to the very last moment and was very stiff indeed.
Mr. Lubbock: I am grateful to the right hon. Gentleman for making that clear, because his remarks on 27th April, 1966, caused some offence in the British aircraft industry. [Interruption.] Yes, they did, and particularly in the British Aircraft Corporation, which was upset by the implication that it had a free run to Saudi Arabia and that no American competition was involved. Further, the right hon. Gentleman's remarks have upset the Saudi Arabians, because from their point of view the implication is that they were getting something less than the best, whereas, as everybody will admit, the Lightning fighters which the Saudi Arabians decided to buy were infinitely better for their purposes than any American alternative they might have had.
I return to the main issue in this debate. I plead with the Minister to look even more carefully at the remarks he made on 7th March and to consider whether there is any possibility whatsoever that they could have been interpreted in the way he suggests. In my view, there is no such possibility. In view of what had

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gone before and some of the arrangements, particularly the Saudi Arabian one and the statements made on it in the House which I have already quoted, there was no doubt in my mind, and certainly not in the minds of any of the national commentators in the aviation scene, about what he meant in that passage of his speech.
Therefore, I am not at all surprised that the right hon. Member for Mitcham did not make any reference to it, as the Minister says, in the last day of the defence debate. I do not see any reason why he should have done. He must have been extremely relieved to hear from the speech of the Minister of Aviation that there was no question of any link between these two deals. It was with great satisfaction that many people concerned with the future of our aircraft industry learned that that was being left on one side and that we still had the whole of the 400 million dollars to be expected in the next 10 years as contracts which would be placed with the British aircraft industry by third countries.
That would have been an extremely satisfactory position for the British aircraft industry. I think that there is some merit in these arrangements for sales to third countries. But now, to their consternation, they learn that this amount of contracts which they might have expected to get is only one half of what it was. This is not at all a satisfactory position for the British aircraft industry to be in.
In conclusion, even though the Minister may have relaxed somewhat on the ridiculous secretiveness of his predecessors, he has not gone nearly far enough yet. If he is trying to give himself a pat on the back and say that he now is giving the House figures of the value of contracts which were not given by his predecessor, Mr. Thorneycroft, I can tell him that neither on this side of the House nor on his own will we accept the present position as being the end of the road. Many of us want to see a Select Committee charged with the responsibility of examining these matters, on similar lines to the committees they have in the United States, so that the House can be fully informed of all that is going on in defence, and particularly where hundreds of millions of £s are involved, as in this case. Until we reach that situation, we on this bench will not be satisfied; and I very much
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regret to have to tell the Minister that, in spite of the answer he gave this afternoon, we shall have to vote against him at 7 o'clock.
4.56 p.m.
Mr. Ronald Atkins: I am very grateful indeed, Mr. Deputy Speaker, to have this first opportunity of addressing the House. I represent a Preston constituency the north end of which has a football team, the team which drew with Manchester United and defeated Cardiff last week by nine goals to nil.
Preston is famous for other reasons, too. Before the 1832 Parliamentary Act, it shared with Westminster the distinction of being just about the only democratic constituency in the whole country. This was at a time when other constituencies were either in the landlords' pockets or had a tiny number of electors who sold their votes at every election.
In any comparison between Preston and Westminster I should say that Preston has the edge on Westminster, because I remember reading that during the election of Charles James Fox towards the end of the eighteenth century Charles bought votes by sending around the Duchess of Devonshire with kisses. There is no evidence of anything like that happening in Preston, no doubt because the men of Preston are so honest and because the women are so beautiful that any charms from any duchess would be quite superfluous.
The democratic tradition of Preston is probably reflected in the fact that this year we are celebrating the one hundredth anniversary of the existence of the Labour and Trades Council. Probably the early growth of this movement was associated with the early industrialisation of Preston. This part of England—Lanacashire—saw man's first great breakthrough in controlling the forces of nature—an event which raised human affluence to heights never dreamed of before. This was the result of great native genius expressing itself at first in the cotton industry, but remaining today in a great complex of industries, including the aircraft industry and its associated interests, an industry on which the future of Britain largely depends because of its ramifications.
This is why I speak in this debate. Unfortunately, it is a controversial subject

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for a maiden speech, when one is expected to be neutral. However, the people of Preston are forthright, like most Northerners. I draw courage from the words of another great Northerner, my right hon. Friend the Prime Minister, who not once but twice quoted the authority of Dante:
"The hottest places in hell are reserved for those who are neutral in a moral crisis."—[OFFICIAL REPORT, 21st December, 1965; Vol. 722, c. 1924.]
and would any hon. Member have a maiden neutral in a moral crisis?
This is about morality. This is a question whether we were misled on the matter of the offset agreement relating to foreign currency in connection with the F111A. Many thought that the Saudi Arabian agreement was not included in this offset agreement and, although my right hon. Friend was quite genuine in his earlier statements, one wonders whether or not the United States negotiated a change of mind. I am aware that the United States Government are hard bargainers in matters of this kind.
At least one right hon. Member, several hon. Members and even a noble Lord were given credit in my local newspaper for this deal, and I imagine that it was a deal which was concluded in the face of strong competition from America. The final credit was given in the local newspaper to a sales executive. According to this newspaper, the usual commission on the deal would be 1 per cent. which would have given the sales executive £1 million, though it was suggested that under the circumstances the commission might be somewhat less.
Nevertheless there is raised the question, who is to be paid this money? I am wondering whether it should go to President Johnson, if he helped to conclude the deal. We might do better in the future in selling aircraft if we had the kind of power that comes from the United States Administration in aircraft deals throughout the world. I do not think that they are inhibited in using political influence and strength in order to forward the American aircraft industry.
I have little sympathy with the crocodile tears which have been shed by some hon. Members opposite over the loss of foreign currency. They have shown little concern in the past about expenditure in connection either with foreign bases or
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with the British Army of the Rhine. It is very significant that they would probably increase the loss of foreign currency in defence expenditure in Aden. However, I am more concerned about the future of the aircraft industry and I wish Opposition Members would say more about that, as hon. Members on this side of the House have done. Are we to continue to lose foreign currency over aircraft purchases? It would be very serious if this were to continue.
I have some sympathy with some hon. Members opposite who have been expressing concern about the remarks of Mr. Richard Worcester. Some have asked the Minister publicly to disown the views of Mr. Worcester that the Anglo-French projects to which we are committed—or, at least, to which I thought we were committed—are to be shelved in favour of more co-operation with the United States. This has caused a great deal of alarm among aircraft workers throughout the country. I have received representations both personally and in writing from people, including the managing director of B.A.C., who are worried about Mr. Worcester's statement.
People have put their views to me and I believe they are important views which need to be answered. They believe that the British aircraft industry faces slow extinction if the Government and nationalised airlines place large orders in the United States. Our best designers, engineers and craftsmen—not just the un-skilled men—are departing in their hundreds to our competitors, chief of whom are the United States. We are losing the brains, not the fat.
I have been asked what we are to do with the aircraft of the 1970s which we have on British design boards. My constituents ask: will Britain get the orders with French co-operation, or will the orders go to the United States, or will we just drift so that in the end we shall have to go American? The aircraft workers say that those who talk merely of the economy are penny wise. If the British aircraft industry goes to the wall, British technology goes with it. How can Britain remain in the front of the computer age, if we withdraw aircraft from the main field of computer development? On the other hand, if we build under licence to American designs, what shall we design—fruit machines?

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B.E.A.'s great success for over 20 years has been based on British planes. The French know what they want. They want to make the planes that they use, if possible in co-operation with us. This way into Europe is wide open and is the most practical way of getting in. We—not the French—create the difficulties in this case. Dutch, Swedes, Germans and Italians, both inside and outside the Common Market, could be partners and customers in this huge market. This would be a market to match the Americans. Equal with our partners in aircraft and other projects, we could remain an independent industrial Power with high living standards and with some self-respect.
Prestonians ask not for words and plans. They ask for orders now.
5.7 p.m.
Mr. Aidan Crawley: It gives me great pleasure to follow the hon. Member for Preston, North (Mr. Ronald Atkins) in his maiden speech. There are many on this side of the House who regret the disappearance of his predecessor, but, after the hon. Gentleman's speech, I am sure we all welcome him very much indeed. He spoke with great fluency and competence. He was not controversial, although I thought he was brave in at least hinting at some criticisms of his own side. But he did it with such charm that I have no doubt they will be heeded. I am sure that the House will look forward very much to hearing the hon. Gentleman again.
The hon. Member touched on one point which concerns me. He mentioned Charles James Fox's custom of winning votes in his constituency by kissing the Duchess of Devonshire. I should tell the House that the present Duchess of Devonshire is a constituent of mine and, however much I should like to follow the example of Charles James Fox, I am afraid that it would not win me any votes today.
I think we were all pleased that the Minister of Aviation expressed regret if he had unintentionally misled the House, and I am sure we accept his expression of regret. On the other hand, I do not believe that anybody, when re-reading
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what the right hon. Gentleman said, could be in any doubt that unintentionally he did mislead the House. One should remember that we heard the statement from the hon. Member for Wednesbury (Mr. Stonehouse) who, in announcing the Saudi Arabian deal, said categorically that it was in no way linked with the F111, and indeed that this subject had never come up in his conversations with the United States.
On top of that, we then had the Minister of Aviation saying, in regard to sales to third parties, that he hoped that it would lead to co-operation in sales
"at least of a kind similar to that recently arranged with Saudi Arabia".—[OFFICIAL REPORT, 7th March, 1966; Vol. 725, c. 1861.]
I do not believe that anyone rereading those words now could conclude anything but that he was excluding the Saudi Arabian deal.
The Minister went on to relate some of the history of the deal. He said that the Saudi Arabian Government were on the point of accepting the across-the-board American offer and there was no chance of Britain getting the contract unless we came to an agreement with the Americans on a joint offer. I wonder exactly how accurate that is. I have no doubt that the Saudi Arabian Government were considering very carefully the across-the-board offer, but did they make no condition when they were considering its acceptance? Is the Minister absolutely sure that, if they did make conditions, the Americans would have agreed to them? Is he sure that there was no chance whatever of Britain getting the contract?
The Secretary of State for Defence then said that the Saudi Arabian Government decided to accept the joint proposals. Again, I wonder whether that is exactly the way to put it. Was not the position rather different? Was not the true position that not only had the American Government not been able to prevent—indeed, they had no powers to do so—the Lockheed group from pressing its claims as hard as it could right up to the last minute, but, towards the end, the Lockheed group had official backing? Was not the true position that the military representatives in Saudi Arabia were

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accompanying the Lockheed representatives when they were pressing their case, and does not this indicate that, whatever the original intention of the American Government had been, they were not in fact able to carry out their undertaking not to press the deal with the private companies?
If that is so, the truth is that we won this contract against intense competition. The Secretary of State for Defence told us, on 27th April, that
"When the original negotiations were undertaken … the Americans originally undertook to stand aside …"—[OFFICIAL REPORT, 27th April, 1966; Vol. 727, c. 689.]
In the end, however, they did not stand aside, and we won this contract against intense competition, the American Government having been unable to fulfil their intended undertaking not to support the deal. It had no connection with the contract for the F111, and there was no reason why it ever should. This is what is so incomprehensible. We won this concession on our merits, the American Government having been unable wholly to stand aside, but, in spite of this, the Secretary of State for Defence agreed, when he came to negotiate the F111 contract, to offset the dollar cost of that against the Saudi Arabian deal.
I wonder why he did this. There was no reason for it. We had the contract. The Americans were glad to get a share of it when we got it, but it was due to our own competition. It was not due to American collaboration. Yet the Minister gave away these dollars.
I suspect that the reason is that he is finding the whole problem of offsetting these dollars far more difficult than he expected. It should be remembered that both he and the Minister of Aviation had said in the Defence White Paper and in their speeches in the House that they had "taken steps to ensure" that these 725 million dollars would be "fully offset" by sales to the American Government and by sales to third parties, and they divided the total—rather surprisingly, I think—into 325 million dollars on the one hand and 400 million dollars in respect of sales to third parties.
If one has taken steps to ensure something, one presumably has in mind fairly clearly how one will ensure it. One must have some direct sales, some contracts,
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and some sales to third parties in view. In the Defence Review, the Minister mentioned one such sale. He said that we were tendering for auxiliary naval vessels. We now learn that that tender has failed and we have not got the contract. We have some sales of components, but I wonder what other sales are in view. We can carry on tendering, but it will not be easy to earn those 325 mill ion dollars.
What about sales to third parties? I think that the Secretary of State for Defence was much more confident of this. We were told about it in the newspapers, and there was a Parliamentary Answer on 9th May telling us that, since the F111 contract, there had been a sale which we might have expected to take some part in and which we might have expected to be able to set off against the F111. I refer to the sale of aircraft to Jordan. With our long connection with Jordan, one might have expected this country to have some claim to sell aircraft there. But, when the Minister of Aviation was asked on 9th May what representations he had made to the United States in order to get a share of this contract, he replied,
"None."—[OFFICIAL. REPORT, 9th May. 1966; Vol. 728, c. 24.]
I wonder why. Were no representations, suggestions or approaches ever made by Jordan to this country? Have we so lost contact there that we are not interested in such a contract?
Or is the reason that the Minister does not need any more foreign sales contracts? We should get a better idea of the true situation—perhaps the right hon. Gentleman will clear this up—if we knew exactly how much of the Saudi Arabian deal is being set off against the F111. Is it just the 200 million dollars, or is there, as there may well be, an additional sum for spares and further expenses to be incurred? If there is an additional sum, it is clear that the right hon. Gentleman is not much worried about any other contracts, because he has pretty well written off the whole of the 400 million dollars due to third party sales already. In other words, he has simply given the Americans something they never for one moment expected to have.

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There is not the slightest doubt that the Americans were deeply disappointed at losing this contract and were determined to do what they could to repair the position. I do not believe that they ever thought that the British Government would agree to count the Saudi Arabian contract in against the dollars for the F111, but they thought they would try it on, and they got away with it. They got away with it because the Secretary of State for Defence is a weak man and he simply gave it to them on a plate.
Mr. Healey: Wait till my reply.
Mr. Crawley: That being the case, what has happened is that we have lost an opportunity to boost British aircraft and British sales in return for the F111 contract. We have dealt another blow at the British aircraft industry, and the Secretary of State for Defence has shown that he is capable of misleading not only the House but the country.
5.18 p.m.
Mr. Nicholas Ridley: The decision to purchase the F111 and to cancel the TSR2 was a highly controversial one at the time, and many of my hon. and right hon. Friends and hon. Members opposite felt that it was a wrong decision. Apart from the military aspects of the decision, the Government's case rested on three main grounds. First, that it would cost £300 million less to buy these aircraft than to carry on with the TSR2; second, that the cost would be covered by credit which was being extended to us by the American authorities for the whole of the purchase of the American aircraft; third, that the dollar cost would be fully met at least in so far as the F111 went.
It seems to me that the whole transaction has been surrounded in mystery. The House has been given little bits of information on all these three points but never the complete picture. For instance, when we try to discover where the saving of £300 million has been made, the Government have been evasive throughout. It appears in the end that they did not allow in their figures for the effect of the cancellation charges and the abortive work on the TSR2, amounting to £195 million or perhaps more, which reduces the possible saving to barely £100 million. This omission has never been admitted.
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The Government have never come clean about it, and it takes endless questioning and badgering by my hon. Friends to elicit the truth on a simple matter such as that.
We are now told with regard to the credit arrangements that those parts of the aircraft which are to be made in Britain are not to be given credit coverage by the American authorities.
Why were we were not told this at the beginning? Why was it left to the middle of March this year before this information was given to the House? What we are debating today is the question of the dollar offsets. That is far the greatest consideration, apart from the military and strategic ones, which surrounds the whole controversy. If the House had not thought that the bulk of this £260 million spent in dollars could be got back in the form of export earnings of some other sort, this deal would have been an even more certainly bad one than it appeared on the surface.
I make one small point before coming to the main ground of the Motion of censure. It was obvious from the beginning that we should do everything possible to install in all these aircraft the maximum amount of British-made or British-built equipment. I was surprised, therefore, when visiting Lockheed to discover that the order had been placed for the C130 aircraft before any suggestion was made by the Minister of Aviation that British parts should be incorporated in it. The date when the order was first made public was 2nd February, 1965, and not until 2nd July of that year was any suggestion made to the Lockheed group that British parts should be incorporated.
This extraordinary time lag of four months puzzled me and I put a Question to the right hon. Gentleman on 9th March. He denied this time lag and said that it was in fact in March that the order was first placed for British parts to be incorporated. I shall leave it to him to sort out with the Lockheed company whether it was July or March. I am inclined to believe what I was told on the spot. But I wish to draw the attention of the House to the blind folly of ordering expensive aircraft, worth perhaps £100 million, and after placing the order making the condition that we would like to have British equipment incorporated.
Mr. F. A. Burden: Is my hon. Friend saying that the Lockheed company, when he was there, told him that the order was received in July and that the Minister said that it was placed in March?
Mr. Ridley: That is the position. I do not know where the error has occurred and I am not making any allegation, but it is puzzling that the decision, whether it was in March or July, should have happened after the date of ordering the aircraft in February in the first place.
The main point is the one which my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) raised so convincingly this afternoon. The first point I wish to dwell on is that raised by my hon. Friend the Member for Derbyshire, West (Mr. Crawley) in a very powerful speech. There was competition for the Saudi-Arabian deal. We have now been told this and we are no longer in any doubt. Therefore, I ask, how can this deal he called:
"co-operating with us in sales to third countries."—[OFFICIAL REPORT, 7th March, 1966; Vol. 725, c. 1861]
Those words were used by the Minister of Aviation when he wound up the debate on 7th March. He described the Saudi-Arabian deal as one similar to those which we expected to make and in which the Americans would co-operate with us in sales.
It is abundantly clear already that there was no ca-operation, because there was this independent private company, Lockheed, trying its very utmost to obtain the order against the competition of the joint project. So we must ask the Secretary of State to tell us how on earth he agreed to take this into account when agreeing the target for the offsets. The right hon. Gentleman said earlier this afternoon that his right hon. Friend agreed the target on 725 million dollars for the F111A after weighing up the pluses of the American bases in Great Britain and the minuses of Polaris and Skybolt and other historical events which I can see no justification for bringing into account at this stage.
Mr. Mulley: I made no reference at that point to bringing Skybolt in. Polaris was brought in because we are still paying dollars for Polaris.
Mr. Ridley: The figure which the right hon. Gentleman mentioned of £260 million exactly fits the bill for the F111A, so one can only presume that he has cancelled out, on the one hand, the American bases in Britain and, on the other hand, those weapons purchased long before he was responsible. It boils down to trying to get an offset for the value of the F111A alone.
The right hon. Gentleman concluded in his speech that it was perfectly reasonable to include the Saudi Arabian deal. We fought tooth and nail against American competitors to get that deal. The Parliamentary Secretary, who is now Joint Under-Secretary of State for the Colonies, claimed great credit and that this was a triumph for British contractors. Many of my hon. Friends congratulated the Government on this deal. We all, quite rightly, still do. It was a great success, yet the Secretary of State for Defence was all this time in Washington selling down the river this valuable dollar export by counting it against the purchase. It is the most extraordinary story.
Captain Walter Elliot: Does my hon. Friend recollect that when the hon. Member for Wednesbury (Mr. Stonehouse) announced the signing of this contract, I think on 21st December, he congratulated Lord Blyton and a Parliamentary delegation, which had played a small part in Saudi Arabia a few weeks previously, on the work they had done in getting the contract? I was a member of that delegation and I can fully support my hon. Friend in saying that the contract was being won in the face of fierce American competition.
Mr. Ridley: I think this has been admitted by the Government this afternoon. It raises a new hare which it would be inopportune for us to chase after today, but that hare will run on another occasion. It exposed the Secretary of State to a charge either of innocence or gullibility which none of us would have expected of him. I have often heard him called in my constituency, "The Cardboard McNamara", but I never knew that he was a sucker to boot. I am grateful to my hon. and gallant Friend the Member for Carshalton (Captain W. Elliot) for having confirmed the competition which surrounded this deal.

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The question which now must be answered by the Government is how they came to include this deal under American pressure when it had already been won in the teeth of competition from an American firm. If the Secretary of State had come clean and said, "I have done my best; I have not been able to make a good bargain, but I have succeeded in getting a certain amount of offset and the Americans will not agree to leave out of the offset the £75 million we have won in Saudi Arabia", the House would have been critical but not unforgiving. We would have known where we were. This seems a remarkable lapse on the part of the Secretary of State.
I should like to pursue a little further the right hon. Gentleman's position in all this. It was on 21st December, 1965, that the Saudi deal was first announced by the Joint Under-Secretary of State for the Colonies. On 27th April, about four months later, the Secretary of State answered a question by my right hon. Friend and said,
"We agreed when we made the F111A deal that we should include the Saudi purchase arrangements, which had not then been concluded, in that part of the offset arrangements which related to sales to third countries."—[OFFICIAL REPORT, 27th April, 1966; Vol. 727, c. 689.]
The bargaining was, therefore, going on before the Saudi deal had been fixed. That must have been before the Parliamentary Secretary made his announcement.
Mr. Mulley: Perhaps I may help the hon. Member. I see that he is trying to get the facts right. On the matter of dates, I made it clear that the main contracts had not been signed. They were not signed until Thursday of last week, and some contracts still remain to be signed.
Mr. Ridley: The point is that at the time the Secretary of State was selling us down the river in America on the question of this £75 million in exchange, the Parliamentary Secretary told the House,
"There is no question of the agreement with the Americans to co-operate in giving technical and political support in this proposed deal being in any way linked with a commitment concerning the F111."—[OFFICIAL REPORT, 21st December, 1965; Vol. 722, c. 1875.]
That was 21st December. The Secretary of State was in Washington before this.
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On 7th March the right hon. Gentleman repeated this when he said,
"at least of a kind similar to that we have recently arranged with Saudi Arabia. …"—[OFFICIAL REPORT, 7th March, 1966; Vol. 725, c. 1861.]
Thus, both the present Minister and the former Parliamentary Secretary repeated with complete assurance and complete certainty what the Secretary of State was busy undoing all this time in Washington.
The Minister has told us that he did not fail to know about this. The question which my right hon. Friend finally pinpointed this afternoon arises from the fact that the Minister did know. We know and respect the Minister personally and we utterly and entirely absolve him from any suggestion of deliberately lying to the House. The question is—how did he come to use those words on 7th March in winding up the debate?
This is a vital matter in support of the Government's whole policy in cancelling the TSR2 and buying the F111A. It is vitally important to our balance of payments at a time when the Government have rested their whole electoral case on stories of the inheritance which they took over from the Conservatives. Yet the Minister treated us in this cavalier manner by pretending that they had won a great victory for the balance of payments when in fact they were double counting and double bluffing on £75 million.
Mr. Burden: Double crossing.
Mr. Ridley: This is something which cannot be treated as a small point which the Opposition should not make too much fuss about and which they should not dig up with too much enthusiasm. I remind the House that we are dealing with £75 million and that the total value of F111A deal is £260 million. This is nearly one-third of the total. As my right hon. Friend said, it is more than half of the value of the offset which is to be placed against selling to third countries.
This is a matter of some gravity. It concerns the trustworthiness of the Government's word and the question of their being honest with the House. That is what disturbs my hon. and right hon. Friends most about this whole matter. Any reasonable man would agree that it is going too far to claim that the words

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which the right hon. Gentleman used could be interpreted in any other way than the way in which my right hon. and hon. Friends have interpreted them this afternoon. Whichever way we look at them, whether we come from England, Ireland, Scotland or Wales, we cannot believe that the right hon. Gentleman was admitting the Saudi Arabian deal as part of the offset.
The right hon. Gentleman said that any doubts could have been cleared up next day. The point is that there were no doubts and could have been no doubts about the singleness of the meaning of the words which he used. Nobody challenged them the next day and nobody had the lightest inclination to clear up any doubts because the words themselves left no doubts.
I ask the right hon. Gentleman to make a more fulsome apology to the House than that which he has made. I remind him of the example of the noble Lord, Lord Crathorne, who, on an occasion when the fault was not his own but that of some of the civil servants for whom he was responsible, made a very much bigger withdrawal and a very much humbler apology than that which the right hon. Gentleman has offered to the House this afternoon. I am sure that the House will forgive him for the slip which he has made, but I am not convinced with the explanation which he gave in his speech this afternoon, and I feel that he would have far better deserved the forgiveness of the House if he had come cleaner about what happened on the night of 7th March.
5.37 p.m.
Sir John Eden: I agree very much with the closing words of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). We are debating a deception, deliberate or accidental, perpetrated in the House by a Minister of the Crown, and this is a very grave matter. The right hon. Gentleman the Minister of Aviation was right to take it as seriously as he did, but I agree with my hon. Friend that it would have helped our proceedings considerably in this short debate if he had answered this Motion in a more straightforward and open manner. His attempt further to obscure the issue with futile references of a
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partisan nature merely served to debase his own position and to add to the doubts in our minds. Personally I was inclined sympathetically towards him before this debate began, but I do not feel at all in that position at the moment, having heard his speech.
I will not go over the ground which has been covered by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), the hon. Member for Orpington (Mr. Lubbock) and others, but it is quite clear that the words which the right hon. Gentleman used in the House and the words used by his hon. Friend the Member for Wednesbury (Mr. Stonehouse) clearly meant to imply that the Saudi deal stood on its own. No other interpretation could be placed on their words. It is also clear that the Secretary of State for Defence clearly intended to indicate that the Government had reached some new and special arrangement to offset in the future the dollar costs incurred in the purchase of the F111A.
It is also clear that the Parliamentary Secretary to the Ministry of Aviation, as he then was, took great pride in the fact that this order had been won in the teeth of competition. We have been helped somewhat this afternoon by his right hon. Friend in his further explanation of what he meant, on the one hand, by competition and of what he apparently now means, on the other hand, by offset arrangements with the Americans.
There are, I think, lessons here for all of us—first of all, that it is absolutely right that the Ministry of Aviation should help our aircraft industry and exporters in securing orders overseas. In so far as any credit goes to anybody, it certainly is right that it should go to the lucky incumbent at the time of the final conclusion of the negotiations. But these were negotiations which had been proceeding for three years or more. Like other hon. Members, I, too, have been to Saudi Arabia. I went there about two years ago. I found myself playing sortie small, minor, and wholly insignificant rôle in the labyrinthine confusion of the negotiations. I know something about it at first hand. I know the sort of thing that goes on. I know the nature of the competition. I also know the need for positive help.

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We were right to have secured positive help from the Ministry of Aviation. But if we are now to be told that in future we are always to have some kind of understanding with the United States Administration as to where or how or when we are going to be enabled to secure further orders in third countries, there are lessons here of great importance for the Foreign Office as well, and I hope that the Foreign Office will take note of the need actively to back British export efforts in this and other related deals.
These new offset arrangements mean, apparently, that the United States political offensive will be withdrawn when it suits it, but that tough commercial opposition will continue. Certainly tough commercial opposition continued in this case. It continued in relation to Lockheed, which was pressing its claims on the Saudi Arabian Government until the last moment. It was because we managed to secure this order that there was a general air of satisfaction and self-congratulation.
I do not altogether agree with the record that the Minister of Aviation spelt out to us today. The emphasis which I thought he gave to it was contrary to that which I have heard given to it elsewhere. Perhaps at a later stage in the debate some other Minister may develop the point a little further. The right hon. Gentleman made out that we were getting from the United States some real benefit from this deal, that it was to our advantage that we had initiated the proposals for a package deal. This is not the interpretation that I had put on it.
I may be wrong, but I strongly believe that we should have secured the order anyway, that there was a very real feeling on the part of the Saudi Arabians that they wished to do business with this country. However that may be, we must examine most carefully and most closely the exact nature of the commercial offset arrangements which the Government claim to have entered into with the United States Administration.
Reverting to the prime point of the debate, the Motion of censure on the right hon. Gentleman himself, I am not at all happy, as I have made clear, about the manner in which he replied to the debate. He tried to drag other issues across it and go back over old quarrels and arguments which are irrelevant at the
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present time. However, although the censure Motion is directed against the Minister of Aviation personally, I believe that the Minister of Defence should not escape. He is every bit as much a guilty party.
Since they came into office, he and other Ministers have developed an arrogance towards the House which I and many other hon. Members on both sides find highly offensive. It is clear that by their slackness and "smart aleck." approach, particularly at Question Time, they are trying to fob off questions to which they do not wish to give the answers. I hope very much that this short debate, if it has done nothing else, will at any rate have caused the right hon. Gentleman and his hon. Friends to have a higher regard for Parliament and for the need always to preserve absolute integrity and honesty in their dealings with it.
5.45 p.m.
Mr. Cyril Bence: I apologise for not having been in the Chamber when my right hon. Friend was answering this quite unwarranted Motion of censure against him.
Mr. Powell: Did the right hon. Gentleman send for the hon. Gentleman?
Mr. Bence: No, but I have the capacity sometimes to speak in defence of my colleagues.
Mr. Powell: Without knowing what has gone before?
Mr. Bence: I know what happened. I know something about defence. I spoke in the debate on the decision to purchase the F111. I am perfectly entitled to come here and discover that on the Order Paper there is a Motion of censure against my right hon. Friend. I am sure that right hon. and hon. Gentlemen opposite have no doubt at all about my right hon. Friend's integrity and have tabled the Motion merely as a tactical device. My right hon. Friend has been in the House a good many years, a couple of years longer than I have. I have never known anyone question his integrity. I am shocked that the hon. Member for Bournemouth, West (Sir J. Eden) should question his integrity.
I rise to defend, however inefficiently, my right hon. Friend. Let us be clear

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what we are talking about. [HON. MEMBERS: "Hear, hear."] I am clear what I am talking about. I have been in the House for 15 years. I heard the hon. Member for Bournemouth, West suggest that answers given by my right hon. Friends are too slick and too "smart aleck". In the last two years I have seen on the Order Paper some of the slickest and most "smart aleck" Questions that I have ever seen in my 15 years here. What is happening is that on certain matters we are not given as much information as some hon. Members would like. But over the last two years we have been accused of talking too much and giving too much information.
Mr. Burden: The hon. Member should get it right when he intervenes. It is a question not of giving too much or too little information but of giving entirely incorrect information. That is what is being debated.
Mr. Bence: I am coming to the point about incorrect information. Often the value of information is a matter of the interpretation of the person who receives it. Questions are often put on the Order Paper in such a manner that a supplementary question can be put which is out of order. That is part of the technique of politics in the House of Commons. Sometimes hon. Members table Questions which appear to be innocent, but the motive emerges when they put their supplementary questions. So it is not a matter of the Minister giving false information. Indeed, I have heard supplementary questions from right hon. Gentlemen opposite which have had no relevance to the Question on the Order Paper.
The hon. Member for Gillingham (Mr. Burden) has no right to suggest that Ministers—no matter what their party may be—give false information just because they do not give the answer that the questioner wants. We all receive answers that we do not expect, but we have no right to say then that the Minister is not acting honestly and with integrity. We make our own interpretation of the answer. This is a political institution. We are concerned with questioning the Executive. Naturally, one gets this sort of argument. I strongly objected when I heard previous speakers question the integrity of my right hon. Friend, and I felt
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that I should say something in support of him.
I am surprised that when the Saudi Arabian deal was going through or being negotiated with the Americans hon. Gentlemen opposite should complain about the ruthless and efficient competition of American business. [HON. MEMBERS: "No."] It is no use complaining about that. In other words, what hon. Members opposite are saying is that this was British business and private enterprise being inefficient in salesmanship and in the marketing of products, compared with the Americans. [HON. MEMBERS: "No."] Oh, yes. That is what they are saying. American selling and marketing institutions are powerful, are strong, are efficient, are able. I admit that they offer strong competition to British manufacturers. Of course they do. So do the Japanese. So does everybody else. It is up to our manufacturers to match them in competition.
If one reads the information available about the discussions with the Saudi Arabian authorities over the selling to them of British and American products it is obvious that my right hon. Friend negotiated a reasonably good bargain in supplying them with aircraft components and parts. I think it was a very good deal, in co-operation with American manufacturers and the American Government. This was long before the decision was made to buy the F111—long before.
Mr. Maurice Macmillan: The hon. Member has made it very clear that this was against strong competition by American manufacturers. That is what he is saying. But it was not.
Mr. Bence: The hon. Member was not here when this happened. There was strong competition. One of his hon. Friends said that it was.
Mr. Maurice Macmillan: I said that there was not.
Mr. Bence: The hon. Member for Bournemouth, West said very effectively that American marketing and competition were strong and were active everywhere. I presume that in Saudi Arabia the same thing applied. This is how I interpreted it, and I thought it was a very competent and able negotiation, that rather than lose the whole of the order

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we got some of it. I thought at the time that this was a very successful action on the part of the British Government, on the part of British manufacturers, where before British manufacturers themselves could not break in.
Sir William Robson Brown: You have missed the whole point of the argument, unfortunately.
Mr. Deputy Speaker (Sir Eric Fletcher): The hon. Member must not say that I have missed the whole point of the argument.
Sir W. Robson Brown: I am sorry, Mr. Deputy Speaker. The point which I want to make to you—
Hon. Members: To whom?
Sir W. Robson Brown: Oh, never mind.
Mr. Bence: I am sorry. This is very unfortunate, because I was relying on a little more assistance from the hon. Gentleman.
Sir Douglas Glover: The hon. Member needs it.
Mr. Bence: I am glad to have assistance from any part of the House. I am sure that many hon. Members opposite could give me assistance in defending the integrity of a member of the Government who is known to everyone to be of the highest integrity. I am shocked at these aspersions which have been made against him as they have been made. Hon. Gentlemen opposite know very well that in matters of military exchanges, of defence purchases, defence issues, of movements between allies, a Minister at the Dispatch Box in answering a question cannot always go into every detail. This sort of thing has happened time and time again. Obviously, a Minister speaking for the Armed Forces cannot mention every dot and comma in negotiations. Of course he cannot.
Ministers give the maximum information they are entitled to give, and in this case it was given, and hon. Gentlemen opposite know as well as I do that they are putting into juxtaposition two events which did seem superficially to make my right hon. Friend's statement not quite as clear as they would have liked it to
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have been—[HON. MEMBERS: "Oh."] But that, of course, is what all Ministers have done.
Sir D. Glover: Oh.
Mr. Bence: In fact, when they have to answer questions they steer as near as they possibly can. We have all seen it. Some right hon. Members opposite were artists at this when they were in power, real artists. There was a former Prime Minister who was adept at the Dispatch Box, an artist in saying what might come to two paragraphs in HANSARD, but not answering the question. He was most efficient in not giving any information at all. And he was admired by hon. Gentlemen opposite. I refer to Mr. Harold Macmillan
Mr. Ridley: Our complaint about the present Minister is that he gave a great deal of information in answering the question, but was really inefficient. It was the other way round.
Mr. Bence: Well, there were Ministers from 1951 to 1964 who were very efficient in giving no information at all. We have had this sort of thing time and time again.
I am shocked that this Motion should have been put down. I am absolutely certain that if hon. Members opposite had been on this side, and the same events had taken place, there would have been an outcry if a Motion against the integrity of a Minister had been put down. I have known my right hon. Friend for many years, apart from his being a member of the Executive. So have other hon. Members. I resent a Motion which implies—not an error in judgment: that would be fair enough—but a challenge to his integrity.
Mr. Lubbock: The Motion actually says
"that the Minister of Aviation misled the House … on a material point of fact".
It does not say that he did it deliberately, or by omission.
Mr. Bence: No, but to say that he misled implies that. I heard the words of the hon. Member for Bournemouth, West and of a previous speaker, the hon. Member for Cirencester and Tewkesbury, (Mr. Ridley) and they implied it was a lack of integrity. To say, in a Motion of censure, that a Minister misled the

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House is to imply that he did it deliberately. [HON. MEMBERS: "No."] Oh, yes. To say that a Minister "misled" is to suggest that he gave an answer, or dealt with a matter, in such a form as—and the intention—to mislead the House.
I do not believe that my right hon. Friend did. I believe that he answered those questions genuinely. He made a statement on 7th March—was it?—and one previously, on 21st December, or about that date—offhand, I cannot remember precisely. What I am concerned about, and what I am defending, is the Minister's integrity. To put down a Motion as this has been put down is challenging his integrity, as I see it. It must be read that way.
Sir D. Glover: If the hon. Gentleman had had the advantage of listening to the debate today he would know that my right hon. Friend quoted from a speech made by the right hon. Gentleman on 7th March, and the Minister then, instead of admitting to the House that he could have been misunderstood—which the House would have accepted—justified what he did. Then, unfortunately, the hon. Gentleman did not hear the Minister.
Mr. Bence: The point is, of course, that he justified what he did because he takes the view, as he is entitled to take the view, that what he did was quite right and quite in order. I do not see why he should not take that point of view.
I have no objection to people saying that in their estimation my right hon. Friend was wrong. That is fair enough. But I strongly object to hon. Members opposite, who know my right hon. Friend very well indeed. As a man of the highest integrity, imputing, not that that he was wrong, that he made an error of judgment, but that he deliberately set out to mislead the House. That is what I am criticizing. It is on those grounds I am defending my right hon. Friend. I hope that the right hon. Gentleman the Member for Mitcham (Mr. R. Carr) will wipe the slate clean, and will say that the Opposite are not challenging my right hon. Friend's integrity, that they are not asserting that my right hon. Friend made a deliberate and conscious attempt to mislead the House. That is
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what I am asking, and that is what I should have thought would have come from the Opposition benches.
6.0 p.m.
Mr. Cranley Onslow: I do not believe that the right hon. Gentleman or his colleagues have the slightest cause to feel gratitude to the hon. Member for Dunbartonshire, East (Mr. Bence). He has brought an element of low farce, irrelevance and foolery into the debate which does no credit to his side or the Government to which I understand he gives support. If he had been concerned to defend the right hon. Gentleman and could not be here to hear the debate opened, he would have done better not to have been here at all.
Sir D. Glover rose—
Mr. Onslow: I hope that my hon. Friend will forgive me if I do not give way.
I will not say the same for the hon. Member for Preston, North (Mr. Ronald Atkins), who intervened in the debate with considerable courage to make his maiden speech. He went in off the deep end in a debate in which the atmosphere is fairly highly charged with tension and may become more so. We listened to him with attention and agreed, perhaps more than he suspects, with much of what he said. I hope that, as he takes a closer interest in our proceedings, he will find that the tears which are shed for the aviation industry from this side of the House are not crocodile tears, but genuine ones. One of the reasons why that is so is summed up in this afternoon's debate.
The right hon. Gentleman would have won much more sympathy from us if he had sat down after the first five minutes of his speech. It was delivered with modesty and humanity, and I think that it captured the attention of the House. In an intervention, the Minister admitted to my right hon. Friend when he opened that he had knowledge of the state of affairs before he made the statement about which we complain. He apologised to us for such omissions or ambiguities as there might appear to be in what he said.
Then he spoiled it, because he went on to make out that it was a totally unjustified Motion. But I cannot see that anyone who understands the English language as it is commonly spoken in this

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country can say that the Motion is unjustified in any way. The facts are not seriously in dispute, the meaning of the English language is not in dispute, and the Minister has not prayed in aid any grammatical inadequacies in it.
We have a position where a Motion has been put down quite properly. It is not an attack on the integrity of the right hon. Gentleman. It is an attack on what occurred, and it seeks agreement that we, as a House, regret that it should have occurred. But, as my right hon. Friend made plain in his opening, which the hon. Member for Dunbartonshire, East did not have the advantage of hearing, there was no attack in it on the integrity of the right hon. Gentleman.
Much of the right hon. Gentleman's defence of himself was irrelevant, dragged up from past history, and, as my hon. Friend the Member for Bournemouth, West (Sir J. Eden) said, presented in a very partisan and biased fashion. It did nothing to strengthen his case—in fact, he lost our sympathy. He lost it in making an attack on my right hon. Friends for not having seized upon his statement and questioned him upon it, when anyone can see in the first place that its meaning is transparently obvious, and when everyone concerned with it was aware of the previous statement made by the hon. Member for Wednesbury (Mr. Stonehouse). With that statement in our minds, we took the right hon. Gentleman's statement as confirmation of something that we had already been told and believed, and, therefore, we had not the slightest reason to suppose that we were in any way being misled at that time.
Unless the right hon. Gentleman is putting forward the proposition—and, if he is, we shall have to note it—that we should never believe anything said by the Front Bench opposite, he can have no cause for complaint that, on the following day, my right hon. Friends did not seek to return to a matter upon which they must have thought themselves, justifiably, satisfied. Again, it is a sign of weakness in the Minister that he sought to pray that in his own defence.
Now he tells us that the Saudi Arabian deal had been thrown in, and he describes it as something which is reasonable and which, by implication, any reasonable
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man taking an interest in matters would have assumed to be the case. That seems to be about the most unreasonable proposition which has been put before us in the whole debate.
To forgo an advantage which had already been gained, to throw it into a deal which we are told was subsequently concluded, is an entirely unreasonable and inexplicable action. I think that we might be told on what interpretation of the word "reasonable" the Minister is here relying. Was it reasonable on the ground that the United States Government were expected to insist that it should occur? We have been told that there was no formal agreement and that, although the United States Government were probably aware of the fact that the TSR2 had been cancelled, since it received much publicity on this side of the Atlantic, it was unreasonable to suppose that they would not have taken that into account.
Was it reasonable subsequently, even? That is the point on which I took up the Minister in his speech. Why was it subsequently necessary to make it clear to the American Government in the negotiations conducted by the Parliamentary Secretary that the co-operation which they gave us on the Saudi deal would not make any difference to our commitment, problematical at that point, we are led to believe, to buy the F111? Why was it not made clear to them at the outset? What terrible second thoughts ran through someone's mind after those discussions? Who said to whom, "The Americans may think that we were offering them a quid pro quo here. We must get this cleared up." Perhaps that happened and, if the Parliamentary Secretary tells us that that is what happened, we shall believe it.
However, it indicates a good deal of naïvety, and I think that naïvety and incompetence in other matters are things of which the right hon. Gentleman will find it difficult to clear himself.
Why should we have assumed it to be reasonable? Was it because a reasonable man would know that to sell large quantities of British arms round the world would offend certain hon. Members opposite who sit below the Gangway? Should we have inferred that the Minister would seek to limit the sale of certain

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arms under that agreement? Should we have assumed that the Minister had so little faith in the capacity of the British aircraft industry to compete in world markets that he did not believe that it would be able to meet the full offset value unless the Saudi Arabian deal were thrown into it? Ought we to have assumed that, and ought we now? Should we assume that there is something in this which upsets the National Plan? I do not know. For the Minister to use the word "reasonable" to describe this entirely gratuitous and insane action of throwing a deal which had already been concluded into the F111 transaction is astonishing. By no stretch of the imagination can it be described as "reasonable".
That is why I say that the Minister has proved himself to be a very naïve man. Perhaps the House may remember how naïvely he found himself in a situation where he had to come to us on the last day of the last Parliament to tell us that the B.O.A.C. Super VC10s were going to be cancelled. That was a very naïve situation into which to be driven.
Mr. Harold Gurden: Does my hon. Friend also recall that, at the same time, there was a large placard on the way to the airport saying, "Fly B.O.A.C. VC10—the finest jet airliner in the world"?
Mr. Onslow: I have no doubt that the Minister reads it and recites it to himself daily, but it does not get B.O.A.C. to buy the VC10s.
Mr. Robert Howarth: Is the hon. Gentleman aware that there are independent British airlines which have not ordered the VC10 but are hoping to place orders for Boeings?
Mr. Onslow: I am aware that the VC10 is a very fine aircraft, and that it has been ordered by an independent Thai airline.
I am also aware that, in making the statement that he did, the Minister allowed himself to be put in a situation where many people might have thought that he had deliberately tried to conceal this from the House and the country before a General Election.
This the action of a very naïve man, and he will not wriggle out of the accusation on this ground, whatever the
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result of the Motion. We know him now as a very naïve man, and he has done one thing by his action in this business. By the inclusion of the Saudi Arabian deal, he has gravely undermined the pride which the aircraft industry and the people of this country took in that deal, because it has been devalued. It has been cast in as part of another deal. [HON. MEMBERS: "No."] Yes, it has. It has been used as a counter in a not particularly creditable manæuvre, and it has been devalued. This is the fact, and it is right that B.A.C. should be very indignant about this. It has done the aircraft industry no good, and the Minister knows it.
I believe that the Minister did mislead the House, but I do not believe that he did it intentionally. I acquit him of that, but I think that he will find hon. Members reluctant to acquit him on the charge that he misled the House unintentionally, and that he is too naïve to know it.
6.12 p.m.
Mr. Stephen Hastings: I think that it is perhaps noticeable how few hon. Members on the other side of the House have sprung to the defence of the Minister of Aviation when this very grave charge lies before us, with the exception of the hon. Member for Dunbartonshire. East (Mr. Bence), who dropped from the clouds, so to speak, and made his usual agreeable speech. We always enjoy listening to him, but I am not convinced that he did the case for the right hon. Gentleman much good in the process.
The hon. Gentleman complained that this was an attack on the right hon. Gentleman's personal integrity. I do not believe that any of my right hon. Friends who have spoken in this debate have said anything to indicate that this is so. Indeed, my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), specifically made it clear that this was not so. He said that he did not accept that as an explanation. But what my right hon. Friend said afterwards, and in my submission had every right to say, was that when this mistake was discovered—and I think that the hon. Gentleman referred to a mistake—on reading HANSARD, or it was brought to his attention by his officials, it was then his duty to come straight to the House

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and explain what went wrong. The burden of our charge is that that never happened for weeks and weeks, and this lies at the root of the accusation of misleading the House.
This has been a rather long debate, and I do not want to detain the House unduly, but there are one or two things only that I want to say. First, I believe that the right hon. Gentleman is the victim of the muddle and confusion which has been brought about by the decision originally to cancel the TSR2. There have been plenty of victims—and who can say the extent to which the country will suffer as a result of this in the future?—but the latest victim is the Minister of Aviation. It is necessary to say that it was clear to me—just as it has been clear to my hon. Friends who have taken part in this debate—from what the hon. Member for Wednesbury (Mr. Stonehouse) said, and from what the Minister subsequently said, that the Saudi deal was won independently.
That was the reason for the congratulations which were offered to the hon. Gentleman by a number of us on this side of the House—and I think that we would be prepared to offer them again today—for the efforts which he and others made to secure this deal. There was an air of euphoria in the House, and quite understandably so.
Anyone connected with the industry knows something of the protracted, bitter struggle which there was to secure these contracts in Saudi Arabia. It ought not to be necessary for anybody to say this to the Minister, but I believe that the American aviation industry—or American aviation interests—does not give up if it thinks that it has a chance. Thus, if it agreed to include this Saudi deal in the offset agreement in some form, it was done after it knew that it was beaten.
This is the burden of the attack made by a number of my hon. Friends on an aspect of this debate, and it is a very important one. As my hon. Friends the Members for Woking (Mr. Onslow), and Bournemouth, West (Sir J. Eden) said this is most discouraging for the sales staff in B.A.C., for the agents in Saudi Arabia who played an extraordinarily valuable part in all this, for the officials
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of his own Ministry and for the visiting delegation of which my hon. Friend the Member for Bournemouth, West was a member.
All those who took part in the Saudi negotiations have had their achievements belittled and downgraded as a result of this affair. It will not help us to sell our aircraft abroad in future if it is suspected that the only way we can do it is by making some deal to keep the Americans off. This is precisely the opposite of the kind of impression which the right hon. Gentleman should be seeking to create on behalf of the British aviation industry, and I would be surprised if the hon. Member for Wednesbury did not agree wholeheartedly in his heart with what I have said in that connection.
My first point is that there was no need to make this deal as part of the F111 contract, and if it was made in this way, we ought to know a lot more about this contract, because it has the gravest implications for future attempts to sell British aircraft abroad.
My second and last point concerns the Motion of censure itself. This is a question of the confidence of the House of Commons in the right hon. Gentleman. Many compliments have been paid to his character and integrity, and I should like wholeheartedly to associate myself with them. But it is not only a question of the confidence of the House of Commons. It is also a question of the confidence of the British aviation industry in the Minister, and I do not think that his explanation was adequate. I think that my hon. Friend the Member for Woking was right. If the Minister had concluded his speech after the first five minutes of it this afternoon, our feelings would have been vastly different from what they are now. I hope that, for the sake of confidence in this House, for the sake of the future conduct of his affairs so long as he is at the Ministry, and for the sake of the confidence of the industry itself in him—in so far as confidence can be said to exist at all in him as an individual after what has happened over these last two years—he will go further when he replies to this debate and turn back to the spirit of his first remarks and not to the things that he said afterwards.
6.18 p.m.
Mr. Robert Carr: The first thing that I wish to do is to congratulate

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the hon. Member for Preston, North (Mr. Ronald Atkins) on his maiden speech. It is unusual to make a maiden speech in a censure debate, and I congratulate the hon. Gentleman on the way in which he achieved the neutrality which is demanded on these occasions by, shall I say, attacking both sides equally. We shall look forward to hearing him again.
In this debate we have, inevitably, heard something about the basic merits of the Saudi Arabian agreement, about the F111, and all the rest of it. These are very interesting and important matters. We have debated them before in this House, and I have little doubt that there will be cause to debate them again, but I want to bring the House back to the precise and rather narrow line of the Motion before us.
It is never pleasant, whichever side are the Government or the Opposition, to move a Motion of censure on the conduct of a fellow Member, and like my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), I acquit the Minister of Aviation absolutely of any deliberate intention to mislead the House. We acquit him absolutely of any charge of that kind. Nevertheless, he misled the House and that is why we had to table the Motion. He has today in his speech expressed regret and said that if, inadvertently, he misled us, he is sorry about it and admits that, in retrospect, his words may have been imprecise.
We welcome that, as far as it goes, but it does not go nearly far enough. I must say at this stage quite definitely that so little does it meet our case that we have no alternative but to divide the House on the Motion, because the charge against the Minister is not the one with which he seemed to be dealing in part of his speech—of giving us insufficient information—and not even one of giving us no information at all. It is a charge of giving us false information.
We feel that it is disgraceful, whatever may have been his intentions and however inadvertently he may have acted, that even at this late stage no full explanation or apology has been made to the House by the right hon. Gentleman. I hope that the Secretary of State for Defence will put right that omission when he winds up the debate. I am sorry to say about the Minister of Aviation
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that, having made his very limited expression of regret, he lost some respect and sympathy which he might otherwise have had by the bombastic, partisan and superficial nature of the last part of his speech. This was the way of a man who knew that he had a bad case and who could not answer the charge. As I say, it was not a deliberate misleading of the House, but a misleading which could not be denied.
I think that it is noteworthy—even more than noteworthy: remarkable and unique, anyhow in recent years—that, with the exception of one maiden speech, there was only one speech from the Minister's own back benchers in his support. That was from an hon. Member who had heard neither of the opening speeches, either that of my right hon. Friend or the Minister's reply—[HON. MEMBERS: "He is not here now."]—and who is not here now.
As I have said, I want to bring the House back to the precise and narrow terms of the Motion. I ask the Secretary of State to address himself to these points. The other matters of great national interest and importance can be dealt with on another occasion. We are concerned with a Motion of censure on misleading the House and it is on that matter that we want a reply from the Secretary of State. To make sure that he knows what we want, I must recapitulate some of the arguments which have been put forward.
One of the many powerful objections to the purchase of the F111A aircraft was its heavy dollar cost, the great burden which this would place on the British balance of payments. It is because of that that one of the most powerful and important arguments put forward by the Government to justify their decision to purchase the F111A was their claim to have reached an agreement with the United States that the dollar cost would be fully offset by the sale of British equipment.
Therefore, this was a most important matter in judging the F111A issue, a matter on which the House and the country had the right to expect the fullest frankness and an impeccable degree of honesty from the Government. Instead, the Government have been guilty of dishonesty. I am sorry to use that word, but it is dishonesty that we have been given.

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I want to refer, first of all, as did my right hon. Friend, to what was said in Part I of the Defence White Paper, in paragraph 11, where we have the assurance that the Government
"… have taken steps to ensure that the foreign exchange cost of the F111A will be fully offset by sales of British equipment."
This, in our view, was the first stage of the deception of the House. No mention was made in this White Paper of sales to third countries. The only example given was by the possibility of quoting for naval tugs for the United States Navy. The implication behind this was clearly that the offsetting sales were to be direct sales to the United States.
If there was room to mention naval tugs, surely there was room in this text to mention both the principle of sales to third countries and the particular example of this important sale to Saudi Arabia. Therefore, what was said or not said in that White Paper was the first part of the deception.
However, the Minister of Aviation soon disabused us in his speech in the defence debate on 7th March, of at least the general hope that the offset would be completely met by sales to the United States. He told us not that just a little of it was to be met by sales to third countries but that more than half of the dollar offset was to be in the form of sales to third countries and he gave the recently arranged Saudi Arabian example of what such orders would be.
We must again examine the words that the Minister of Aviation actually used. The use of the future tense—"it will co-operate", not "it has co-operated", "it" being the United States, with us in sales to third countries—referred to something in the future. There could not be any doubt about it. Then the Minister went on to give the Saudi Arabian order which, as he said, had recently been arranged as an example of the sort of sales to third countries which we could expect.
We submit that these words, even standing on their own, with no amplification or background, could have only one meaning, and that is that the deals which were to be offset were future deals—the words used were, "The United States will co-operate": in future—and that the example of this deal which had
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already been made was merely an example from the past of similar deals which we were to expect in future. That, I believe—as do all of us on this side of the House: the hon. Member for Orpington (Mr. Lubbock) made clear that he, too, felt this way—was the only interpretation which could be put on the Minister's words, even standing on their own.
But the Minister's words did not stand on their own. They stood in the context of what the House was told by the hon. Member for Wednesbury (Mr. Stonehouse), then Parliamentary Secretary to the Ministry of Aviation, on 21st December. Here again, I should like to quote. I particularly asked the Parliamentary Secretary, in a supplementary Question, when he had made his welcome statement about the Saudi Arabian order whether there was a link of any kind, whether formal or informal, between the United States' Administration's co-operation on this order and any possible order from us for the F111A. He replied:
"There is no question of the agreement with the Americans to co-operate in giving technical and political support in this proposed deal being in any way linked with a commitment concerning the F111."—[OFFICIAL REPORT, 21st December, 1965; Vol. 722, c. 1875.]
I say quite clearly that we on this side believe that the then Parliamentary Secretary was speaking the truth, the whole truth and nothing but the truth as he saw it at that time. He also went on to say at his Press conference—not in the House—that the order had been achieved in the teeth of American competition.
When one has been told, as the House was told, that there was no link of any kind with the F111A, when the country has been told at a Press conference that the order has been won in the teeth of American competition, it is only natural and reasonable for all of us, in the House and without, to assume that this has nothing to do with the dollar offset for the F111A order when it came two months later. I repeat that the Minister's words of 7th March to us in the House, even standing on their own, could have meant only that. But when we took them in the context of the previous statements it was impossible for them to mean anything else.
If there had been some change after 21st December the onus was clearly on

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the Government to tell the House so. The onus for clarification was on them, and it is ridiculous—to put it mildly—for the Minister, in trying to defend himself today, to ask, "Why did not you ask for some clarification on the second day of the Defence debate?" The evidence that I have given shows clearly that any reasonable man would be drawn to the conclusion which we came to. If we had had any idea at all that there was any doubt about this I can assure him that both in my speech in opening for the Opposition on the second day of the defence debate and in the speech of my right hon. Friend the Member for Barnet (Mr. Maudling) in closing, clarification would have been sought. The onus for clarification was on the Government.
They had plenty of opportunity to discharge that onus. They had the whole of the second day of the defence debate, and they have had two months since. They have seen rumours about this in the Press. Did they deny them? Of course they could not, because the rumours have turned out to be true. Did they confirm them? No. Why? Perhaps because there was an election. But even after the election—even after 1st April—we still had to wait for another 25 days before the Government finally "came clean".
It is disgraceful. Although our Motion is moved on the basis of the words of the right hon. Gentleman the Minister of Aviation in the Defence debate on 7th March—because he is the one who actually uttered the words which misled the House—our censure is perhaps even more on the Secretary of State for Defence, and on the Government as a whole.
Let us be sure that the House will not be misled any further on this matter. So that there is no misunderstanding on this matter in the future, I therefore ask the Secretary of State for Defence to give the House, here and now, a categorical reply to the question as to the amount which is to be credited to the dollar offset account in respect of the Saudi Arabian order. So that there is no possibility of his charging us with not having sought clarification, let me say what our clear understanding of it is at the moment. It is that the amount to be offset is about £75 million, which is the figure given to the House by the then
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Parliamentary Secretary concerning the export content of the Saudi Arabian order when he made his statement to the House on 21st December last. If there is any difference from that at all, let the Secretary of State come clean and tell us now. Let us not have to have another Motion of censure in order to extract the truth.
The House has been misled. I hope, for the honour of the House as well as for the honour of the right hon. Gentleman who is being put up in the front of the firing line on this occasion, that the Government will now have the honesty, decency and respect for the House to give a full and complete apology.
6.33 p.m.
The Secretary of State for Defence (Mr. Denis Healey): I can at least agree with the right hon. Member for Mitcham (Mr. R. Carr) on one matter; I, too, congratulate my hon. Friend the Member for Preston, North (Mr. Ronald Atkins) on an excellent maiden speech. It was a very happy thing that he chose to participate for the first time in a debate on matters concerning the aircraft industry, in respect of which his predecessor played such a lively and sometimes controversial rôle.
I also congratulate my hon. Friend on making a speech which was forthright, agreeable and witty, and which showed a real devotion to his constituency and to the major industry in which his constituents are employed.
I shall be glad to tell the House, in answer to one point raised by my hon. Friend, that I have never met Mr. Richard Worcester. I have never had any contact with him and, so far as I know, he has never had the slightest influence on the Government's policy on aviation matters. But Mr. Worcester's reported views on Anglo-French co-operation in aircraft are diametrically opposed to the views of Her Majesty's Government.
I am glad to tell the House that my right hon. Friend and I had a most successful meeting with M. Messmer and his team in Paris last week, and took a major step forward in the development of both the major projects on which we are engaged. We hope to make further collaborative progress on other projects in the next few months.
Mr. Hastings: I wonder whether the right hon. Gentleman has read the paper that was read to the Royal Aeronautical Society by Mr. Worcester, at Mr. Worcester's request. It would be interesting to hear his comment, if he has not, when he has.
Mr. Healey: I dare say that it would be interesting to hear my comments, but I do not regard Mr. Worcester as a major problem for Her Majesty's Government. He may be a major problem for the hon. Member.
I join the House in congratulating my hon. Friend the Member for Preston, North, but I cannot congratulate the right hon. Member for Wolverhampton, West (Mr. Powell)—and I do not think that he would expect me to—on his opening speech. He spent half an hour on the meticulous construction of a logical edifice based on assertions which had no relation to reality. He spent five minutes—as did his right hon. Friend the Member for Mitcham in asserting that the Government misled the House as to the fact that part of the offset was concerned with third party sales for a fortnight after the publication of the Defence White Paper.
Yet he himself and his right hon. Friend were present on the day when the White Paper was published, when I made a statement in the House on the White Paper, and referred twice—once in my opening statement and once in answer to a question by the Leader of the Opposition—to the fact that collaborative sales to third parties were included in the offset arrangements for the F111A purchase. The Opposition Front Bench must do their homework if they expect to be taken seriously in the House.
Mr. Powell: Will the right hon. Gentleman tell the House—if he dares—why there was no reference at all in the White Paper to third party sales?
Mr. Healey: There was no reference to third party sales, as there was no reference to many other things; but in my statement to the House that afternoon, and in reply to an intervention, I referred twice to third party sales, and the right hon. Gentleman was so tortured by his suspicions of Her Majesty's Government that he could not have
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understood what I was saying. On 22nd February, 1966, a fortnight before my right hon. Friend spoke in the defence debate, I said:
"The foreign exchange cost of the F111A purchase will be met by sales of British equipment to the United States and to third countries."
In answer to an intervention by the Leader of the Opposition, I said:
"As regards sales of equipment to the United States and collaborative sales to third countries, we have set ceiling totals for sales which together will cover the total cost of the F111A."—[OFFICIAL REPORT, 22nd February, 1966; Vol. 725, c. 241–5.]
How can the House and the country be expected to take seriously accusations based on a total refusal to accept the facts?
Mr. R. Carr: Does the right hon. Gentleman admit that in his own quotation he used the word "will", indicating future dealings, and did not refer to the Saudi Arabian deal, which was something in the past?
Mr. Healey: I shall come to that matter. I shall come to all these matters in a moment. I am merely pointing out that on this matter, in respect of which the Opposition have put down a Motion of censure personally against the conduct of one of my right hon. Friends, they have done their homework in a sloppy fashion, which has affected the whole conduct of the Opposition since the right hon. Member for Bexley (Mr. Heath) took over the party opposite.
There was no question—and both the right hon. Member for Wolverhampton, South-West and the right hon. Member for Mitcham agreed on this—of my right hon. Friend deliberately seeking to mislead the House. There was also no question of his giving false information. As my right hon. Friend himself has pointed out, he knew the facts and did not seek to mislead the House, and if his choice of words was unfortunate—and he has said that it was—he has apologised for that.
The real essence of the Motion, as the right hon. Member for Wolverhampton, South-West rightly said, is the claim to which I shall reply in detail, that, if the House had been told at the time in detail and unequivocally about the inclusion of the Saudi Arabian sale in the offset agreement, the verdict of the House and the

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country on this aspect of the Defence Review would have been different.
I welcome an opportunity of stating the full facts in detail before the House on this matter, but this time I hope I shall not be interrupted in doing so as I was at the end of the defence debate before the General Election, when I was subjected to 10 minutes organised yelping led by the Leader of the Opposition as I sought to give these facts.
Let me put all the facts in detail and in their context. The story started, as several hon. Members opposite pointed out, when we cancelled the Conservative programme for the TSR2 a year ago. We cancelled it because it would have cost the nation over the next 12 years more than £1,200 million and I do not believe that any Government in their senses—including right hon. Members opposite if the nation had been so unfortunate as to have had them still in power last year—would have taken any other decision.
At the time that we cancelled the TSR2 programme, we took an option on the F111A in case the Defence Review showed that there was a requirement for some aircraft with a performance comparable to that of the TSR2; and, after nine months of continuous and exhaustive study, we concluded that the sort of operations our commitments might involve us in would require the R.A.F. to have 50 F111As for tactical strike and reconnaissance.
We also discovered, in negotiations with the United States and through a prolonged period of negotiation with Mr. McNamara, that we could hope to buy these aircraft at a unit cost of £2½ million each, including the changes required by the R.A.F., as against £9 million for the unit cost for a similar number of TSR2s.
I must make it clear that we did not decide to buy the F111A as a favour to the American Government. Of course we did not. We decided to buy it to meet the operational needs of the R.A.F., and also to help achieve a saving to the British taxpayer of nearly £1,000 million when compared with the defence programme that we inherited from the Conservatives and £300 million compared with a similar number of TSR2s.
Mr. Ridley: In reaching the figure of £300 million, has the right hon. Gentleman or has he not deducted £195 million for abortive work and cancellation charges of the TSR2? I believe that, if he does his arithmetic again, he will find the saving to be £105 million. Will he please stop misleading the House?
Mr. Healey: That is untrue. The figures I have given make allowance for abortive expenditure on the TSR2 and for the cancellation charges. I explained this in detail in a letter to The Times some months ago, in answer to an absurd letter from Mr. Julian Amery and an hon. Member opposite.
As against this tremendous saving in expenditure, the purchase of the F111A would involve over the next 12 years a foreign exchange cost of 725 million dollars—about £260 million. This includes not only the full capital cost of the aircraft themselves, but also the spares and running costs—and interest payments because, to relieve the burden on the balance of payments during these next few critical years, we obtained credit facilities from the American Government which would ensure that we would not be required to make any substantial dollar payment until well after the first aircraft were delivered in 1968, and we also obtained an exceptionally favourable rate of interest for this credit arrangement of 4¾ per cent.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) asked why we did not ask for credit to cover the British components in the Phantom and other aircraft we are buying. The obvious reason was that this credit was intended to relieve the burden on our foreign exchange. We have no desire to borrow money from the Americans in order to pay sterling in this country. Nor, I imagine, would the American Government have agreed to allow us to do so.
Nevertheless, although we had this credit arrangement which saved us a heavy incidence of dollar expenditure as a result of purchases over the next few years, we were concerned, so far as possible, to make sure that, by the end of the whole 12-year period, there would be no net loss of dollars falling on the British Government as a result of the F111A purchase.

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One basic objective of the Government's defence policy is to ensure that the British balance of payments does not suffer unfair damage simply because of Britain's contribution to the security of the free world. We believe that it is quite wrong for one ally to benefit at the expense of another in foreign exchange solely as a result of co-operation for their common security. Right hon. Members opposite when in power tried to apply this principle for some years to our defence relations with West Germany; but, until we negotiated this agreement, there had never been any attempt to apply it to our defence relations with the United States.
I must remind the House of the point made by my right hon. Friend. The Conservative Government, some years ago, abandoned British aircraft as a means of delivering the strategic deterrent and cancelled the British P1154 aircraft as a means of providing air defence for the Royal Navy. They went to the United States for alternatives and permitted themselves to spend £410 million worth of dollars for Polaris submarines and naval Phantoms without making any attempt to see that the British defence industry or the British balance of payments received any concessions in return.
We took a different view. I had already, in negotiating the purchase of the C130 and the R.A.F. Phantoms, obtained the commitment from the United States Government to co-operate with us in seeking British equipment for American purchases. When I came to negotiate the F111A purchase, I was determined to obtain something far more concrete and specific. My basic objective was to ensure that the British balance of payments did not suffer as a result of our defence co-operation with the United States in N.A.T.O. and other parts of the world.
When we came to consider this matter in Washington, the first question was to decide how wide a field of defence expenditure in foreign exchange we could cover in our agreement. For example—and this was a critical point—should the United States be able to count on its side of the ledger the dollars spent by its forces in Britain, as we ourselves seek to cover our stationing costs in Germany in our offset agreement with the Federal Republic? I looked into this and found
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that, to have done so, would more than have covered the whole cost of the F111A agreement if American stationing costs continued at anything like their present level.
On the other hand, it is impossible to forecast precisely how America's expenditure on her forces in Britain will move over the next 12 years. It may go up or it may go down. I therefore thought it better to ask the Americans to count this expenditure against our dollar payments to them on weapons already ordered, like the Polaris programme, the Phantom, and the C130.
Moreover, I was not only concerned with foreign exchange: I also wanted to help Britain's own defence industry and to find markets abroad to compensate for the outlets that it was losing in Britain as a result of our purchases from the United States. As I said earlier today, the Government are determined to ensure that we have a viable industry in our own country based on international as well as national markets.
Mr. Edward Heath: I see that we cannot project into the future on this matter, but can the Secretary of State tell us what the American expenditure in this country is running at?
Mr. Healey: At about £40 million a year in dollars. If it continued at this level, it would be £400 million in the next ten years, vastly in excess of the dollar cost of the F111A.
Mr. Hugh Fraser rose—
Mr. Healey: I must get on. This is a short debate and I have already given way a great deal. The right hon. Gentleman was not present during most of the debate.
As I was saying, this is the reason why we agreed to separate the F111A deal from other purchases of equipment from the United States, and to concentrate on obtaining a direct offset for the F111A purchase by sales of British defence equipment to either the United States or third countries.
With respect to what has been said by hon. Gentlemen opposite, the Americans are by far our most formidable competitors for defence equipment in foreign markets. We have learned this time and again throughout the world, and if we can

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have their co-operation, rather than competition, it is something which, honestly, every aircraft firm in this country will welcome, and the industry will not ride away on the sort of flagwagging, jelly-belly Chauvinism shown by hon. Gentlement opposite—
Several Hon. Members rose—
Mr. Speaker: Order.
Mr. Hugh Fraser: On a point of order. A few moments ago the right hon. Gentleman referred to a letter which I wrote to The Times. Would it not be appropriate for him to give way?
Mr. Speaker: That is not a point of order.
Mr. Healey: I also have a duty to the House to make these points, and I remind hon. Gentlemen opposite that it is no good their complaining that they do not get the facts if they prevent me from giving them by behaving like a lot of schoolboys.
Hon. Members: Oh.
Mr. Hugh Fraser rose—
Mr. Healey: As the House knows, we fixed a target of 325 million dollars—
Several Hon. Members rose—
Mr. Healey: —a target of 325 million dollars—[Interruption.]
Mr. Speaker: Order. I want to hear the cut and thrust of debate. I have heard the cut. I want to hear the thrust.
Mr. Healey: I hope to satisfy you, Mr. Speaker.
As the House knows, we fixed a target—
Sir D. Glover: On a point of order. The right hon. Gentleman seems to be under the impression that this debate must finish at seven o'clock when it is not necessary for it to do so.
Mr. Speaker: That is not a point of order.
Mr. Healey: —a target of 325 million dollars for direct sales to the United States and 400 million dollars for collaborative sales to third countries. I should, perhaps, make one or two things clear, because they have been raised by hon. Gentlemen opposite. These are
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separate targets and they are not ceilings. They cover a 12-year period. There is not, as the hon. Member for Woking (Mr. Onslow) seemed to suggest, any limit to what we can sell, but these are targets which both Governments undertake to achieve. I believe that we will succeed in getting well above both of them, particularly since our sales to the United States, unlike our sales to Western Germany—under the German offset agreement—will be free from all artificial preferences imposed by the American Government under the Buy-American Act and balance of payments restrictions.
The target total of 325 million dollars for direct British sales to the United States is, at first sight, a formidable one, but it is to be achieved over a 12-year period and, indeed, represents little more than an average sale of about £12 million worth of equipment a year. Moreover, since our own payments for the F111A do not become significant under the credit terms until 1969 and 1970, we still have three or four years to make progress before our real need for dollars arises.
I have been asked to give details of concrete progress by way of achievements so far. We have already jointly identified about 50 items of equipment which the Americans think may meet their military needs and which we have, we believe, a good chance of providing on competitive terms. The American Department of Defense has just decided to buy 2 million dollars worth of assault tracking; American tests of our 105 mm. tank ammunition are now nearing completion; the American Navy is testing our 2 in. rockets; a number of invitations to tender are on their way; and the Department of Defense is now considering other items including, I am glad to say, the Hawker Siddeley 125 aircraft, which we are pressing very hard on them.
It is perfectly true that we have had a disappointment over the first small batch of naval tugs, but, contrary to what has been suggested, this small batch represents only £750,000 out of the potential £17 million which we hope to earn through the sale of naval auxiliaries to the United States in the current programme.
We have already learned a good deal from our experience, and I hope that the House will have noted that Brooke Marine Ltd., the British firm which put in the

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tender, said that it had every assistance from the Americans in making the tender; and are willing to try again. But there will always be difficulties. I do not disguise this fact. [Interruption.] If some hon. Gentlemen opposite had more knowledge and experience of trying to sell equipment abroad, they would snigger a little less when I make these points.
Mr. J. Bruce-Gardyne: Surely the right hon. Gentleman recognises that on each occasion, both in the case of the Jordan deal and in this latest case, no representations, apparently, were made to the American Government on these matters. Is this the way to achieve co-operation?
Mr. Healey: The hon. Gentleman is totally wrong. The tender for the naval tugs to which I have been referring arose directly out of co-operation between the British Ministry of Defence, the American Navy Department and the American Department of Defence. Brooke Marine was given every assistance at the Washington end and at the British end at every stage of the negotiations.
There will always be difficulties for British firms producing for the first time a small batch of equipment in competition with American firms which have been producing such equipment for some time. I do not say that it will always be easy to win these tenders, even though there is no preference against us; but we cannot expect the Americans to give us a preference over their own manufacturers.
I am convinced, on the basis of our progress so far—and I know that Mr. McNamara shares this view—that there are many British manufacturers who can compete with the Americans on their own ground, both in terms of cost and performance, provided they are able, as they are under this arrangement, to compete without the artificial discrimination which all other foreign firms, except the Canadians, must face. This is a new challenge to British industry and I hope that our firms will accept it in that spirit. I know that many are already doing so.
I come now to the Saudi deal. Naturally enough, the Americans insisted that if we were to offset the F111A purchase exclusively by sales of British equipment, then the Saudi Arabian deal
476
should be included in the target figure as a contribution towards the 400 million dollars for collaborative sales to third countries.
I will run through some of the points made during the debate. We could not have made the offer to the Saudis without American co-operation. This was made absolutely clear by my hon. Friend who is now the Under-Secretary of State for the Colonies when he spoke in the House on 21st December and gave details of the deal. As I understand it, this was really accepted—not necessarily agreed, but accepted as a fact—by the right hon. Member for Mitcham because he asked a lot of questions about what the Americans were getting from us in return for this type of co-operation.
We could not have made the offer, never mind won the contract, without American co-operation. But, of course, although the Saudis gave a written agreement that they would take up our offer rather than the competing Lockheed offer, the first contract was not signed until last week. The dollars resulting from it will be flowing into Britain during the period when we are paying for the F111A.
We expect—and this answers the question asked by several hon. Gentlemen opposite—that the total of foreign exchange resulting from our sales to Saudi Arabia will be about £100 million in foreign exchange, which is £25 million more than the £75 million which arises from the initial contracts because, as hon. Gentlemen opposite have rightly suggested, we hope to get "follow-up" in the form of spares and other equipment.
I must make it clear—and I hope that the right hon. Gentleman, with his vast experience of these matters, will accept it—that we cannot tell for certain whether it will fall short of £100 million in foreign exchange or go over, because we do not now know precisely how much "follow-up" there will be. The Saudis have so far only placed the first of the main contracts, and there are a very large number of other contracts to be placed in the coming months before we have even the first part of the deal amounting to £75 million of foreign exchange tied up.
Mr. Powell: The Secretary of State has now indicated that the amount to be written off the 400 million dollars for sales to third countries in respect of the Saudi agreement is at present anticipated to be about 280 million dollars. Do I understand from the last part of the right hon. Gentleman's narrative that although a letter of intent was signed in December, which was the basis of the announcement made by the hon. Member for Wednesbury (Mr. Stonehouse) on 21st December, the American Government gave him to understand that they would prevent that from eventuating in a contract unless it was included in the 400 million dollar offset?
Mr. Healey: Certainly not—of course not. The Americans gave the undertaking to co-operate with us, I think I am right in saying, as far back as last October. They have never in any way deviated from that. We have always made it clear to them that we did not consider that as imposing any obligation on us to buy the F111A, and they have always made it clear to us that they did not consider it as imposing an obligation, either.
There has never been any question of the American Government defaulting on their undertaking of October last. They have played perfectly fairly throughout, and even if, as I think, the right hon. Gentleman was about to point out, we get £100 million of foreign exchange out of the Saudi sale, it will leave a very substantial amount still to be covered by further collaborative sales to third countries.
I do not disguise from the House the fact that it would have been a great triumph for me if I had been able to persuade the Americans to exclude the Saudi sales from the target, but the whole justification of this operation of trying to balance our foreign exchange expenditure on a bilateral basis was to reach an overall balance between the countries in foreign exchange on defence. I would remind the House that America's foreign exchange problems are as serious as ours, and arise in even greater degree than ours from defence expenditure overseas. So the American Government had a reasonable argument for including the deal. I would very much have preferred to confine the agreement to mutual sales of defence equipment even if it meant including the Saudi sale in the collaborative
478
target rather than open the way to the inclusion of stationing costs in the agreement, which would have left British industry far worse off.
I do not claim that the arrangement with the United States was perfect. What I do say is that it was infinitely better than the previous Government had ever attempted—still less achieved. When they were in power they committed themselves to spend 410 million dollars on American defence equipment to replace British weapons, and they did not even raise the issue of the foreign exchange expenditure involved. We have. This is just one more example of what I think the right hon. Gentleman calls "action, not words."
Quite frankly, looking back at this whole story, I am staggered that the Opposition should have picked on this issue to try to knock the Government about. I am shocked—but, I confess, not surprised—that they should have tried to camouflage the operation with a disgraceful personal attack on my right hon. Friend. But this is typical of the behaviour of the Opposition over the whole range of major issues where they themselves are hopelessly divided—like Rhodesia, economic and social policies, and defence. They can never agree a basis for an attack on what we do, so they confine themselves to pinpricking us on how we do it.
I ask the House to reject the Motion as decisively as the country rejected its sponsors nearly six weeks ago.
7.5 p.m.
Mr. Edward Heath: I want to deal with the point of this Motion of censure on the right hon. Gentleman the Minister of Aviation. It is that the Saudi deal was made and settled before the F111A deal was completed. We are agreed on that. The then Parliamentary Secretary to the Ministry of Aviation told the House quite clearly that there was no connection with the F111, and we are agreed on that. The Minister of Aviation said that offsets would be of a similar kind. We on this side, including the Liberal Party, believe that there is only one interpretation of that, which is that it does not include the Saudi deal. There can be no other interpretation.
The right hon. Gentleman said just now that, looking back, he thinks that there was some ambiguity about it. I do

479
not believe, in fairness to him, that anyone in the House could see ambiguity in those words. That is why we never questioned them, because we accepted what he said; that this was a good deal—as the Secretary of State would have it—and that the Saudi deal was excluded. As the situation now is the Secretary of State has since said that the Americans insisted that the Saudi deal should be included. This is a recent development. It shows that the Government have changed their policy.
The Minister of Aviation was quite right in the first instance—the Saudi deal was not included—and so was the Parliamentary Secretary to the Ministry of Aviation, but the Secretary of State has now shown that as a result of the Americans insisting—I use his own words, I think—the Saudi deal has now to be included against the offset. That is the situation, and he has said—
Mr. Healey: On a point of order, Mr. Speaker. May I have a little guidance? I am not quite clear whether the right hon. Gentleman is interrupting before I sit down, or whether he is making a speech. If he is making a speech, I hope that the House will give me the right to reply, because this is an absolutely ludicrous misrepresentation of the facts and what I said. I did not suggest anything of the kind that the right hon. Gentleman is suggesting.
Mr. Speaker: Order. The right hon. Gentleman must not, under the guise of a point of order, start arguing the merits of what has been said. What I gather is that as I was about to put the Question the right hon. Gentleman the Leader of the Opposition sought to speak in the debate. He is doing that at the moment. If the Secretary of State for Defence seeks to reply to him, he can do so if he obtains the leave of the House.
Mr. Heath: Thank you, Mr. Speaker. I will continue with my few words.
The Secretary of State has now said that as a result of the Americans' insistence
—I believe that the right hon. Gentleman used these words, for I took a note of them; I think that he will find that he did so if he refers to HANSARD—as a result of his discussions with the Americans, he decided that it was to the advantage of the country that the Saudi deal should now be used as an offset, because he did not wish to have the Americans claiming the cost of their forces in this country as an offset against the F111A deal. Therefore, the Government decided—in their own lights, rightly—that this was the best way of handling the situation.
I do not know whether the Secretary of State wants to challenge that, but this is what he has just told the House—
Mr. Healey: I am sorry if I am intervening in the right hon. Gentleman's speech now. I hope that I am in order. I had the impression that the right hon. Gentleman was trying to suggest that this insistence of the Americans followed the publication of the F111A agreement, and that there had been some change in the situation since my right hon. Friend spoke to the House. Of course, all these discussions took place in January and February.
Hon. Members: Oh.
Mr. Heath: That makes it even more difficult as regards the Minister of Aviation's speech, because his statement, which cannot be interpreted in any other way, was clear. If that was the position, it was not conveyed to the House. So the situation is either that the wrong information was given to the House by the Minister of Aviation, or that the Government have changed their position, for reasons which the Secretary of State has given to us, since the Minister of Aviation made his statement. Those are the two counts on which we condemn the Government and condemn the Minister of Aviation. That is why we intend to vote on the Motion of censure.
Question put:—
The house divided: Ayes 241, Noes 337.

Division No. 7.]

AYES

[7.9 p.m.

Alison, Michael (Barkston Ash)

Balniel, Lord

Bennett, Dr. Reginald (Gos & Fhm)

Allason, James (Hemel Hempstead)

Barber, Rt. Hn. Anthony

Berry, Hn. Anthony

Astor, John

Batsford, Brian

Bessell, Peter

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

Beamish, Col. Sir Tufton

Biffen, John

Awdry, Daniel

Bell, Ronald

Biggs-Davison, John

Baker, W. H. K.

Bennett, Sir Frederic (Torquay)

Birch, Rt. Hn. Nigel

Black, Sir Cyril

Harris, Reader (Heston)

Onslow, Cranley

Blaker, Peter

Harrison, Brian (Maldon)

Orr-Ewing, Sir Ian

Body, R.

Harrison, Col. Sir Harwood (Eye)

Osborn, John (Hallam)

Bossom, Sir Clive

Harvey, Sir Arthur Vere

Osborne, Sir Cyril (Louth)

Boyd-Carpenter, Rt. Hn. J.

Harvie Anderson, Miss

Page, R. Graham (Crosby)

Boyle, Rt. Hn. Sir Edward

Hastings, Stephen

Pardoe, J. W.

Braine, Bernard

Hawkins, Paul

Pearson, Sir Frank (Clitheroe)

Brewis, John

Hay, John

Percival, Ian

Brinton, Sir Tatton

Heald, Rt. Hn. Sir Lionel

Peyton, John

Bromley-Davenport, Lt. Col. Sir Walter

Heath, Rt. Hn. Edward

Pink, R. Bonner

Brown, Sir Edward (Bath)

Heseltine, Michael

Pounder, Rafton

Bruce-Gardyne, J.

Higgins, Terence L.

Powell, Rt. Hn. J. Enoch

Bryan, Paul

Hiley, Joseph

Price, David (Eastleigh)

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

Hill, J. E. B.

Prior, J. M. L.

Bullus, Sir Eric

Hirst, Geoffrey

Quennell, Miss J. M.

Burden, F. A.

Hogg, Rt. Hn. Quintin

Ramsden, Rt. Hn. James

Campbell, Gordon

Holland, Philip

Rawlinson, Rt. Hn. Sir Peter

Carlisle, Mark

Hordern, Peter

Rees-Davies, W. R.

Carr, Rt. Hn. Robert

Hornby, Richard

Renton, Rt. Hn. Sir David

Cary, Sir Robert

Howell, David (Guildford)

Ridley, Hn. Nicholas

Channon, H. P. G.

Hunt, John

Ridsdale, Julian

Chichester-Clark, R.

Hutchison, Michael Clark

Robson Brown, Sir William

Clark, Henry

Iremonger, T. L.

Rodgers, Sir John (Sevenoaks)

Clegg, Walter

Jenkin, Patrick (Woodford)

Roots, William

Cooke, Robert

Jennings, J. C. (Burton)

Rossi, Hugh (Hornsey)

Cooper-Key, Sir Neill

Johnson Smith, G. (E. Grinstead)

Royle, Anthony

Corfield, F. V.

Johnston, Russell (Inverness)

Russell, Sir Ronald

Costain, A. P.

Jones, Arthur (Northants, S.)

St. John-Stevas, Norman

Craddock, Sir Beresford (Spelthorne)

Jopling, Michael

Sandys, Rt. Hn. D.

Crawley, Aidan

Joseph, Rt. Hn. Sir Keith

Scott, Nicholas

Crosthwaite-Eyre, Sir Oliver

Kaberry, Sir Donald

Sharples, Richard

Crouch, David

Kerby, Capt. Henry

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

Crowder, F. P.

Kimball, Marcus

Sinclair, Sir George

Cunningham, Sir Knox

King, Evelyn (Dorset, S.)

Smith, John

Currie, G. B. H.

Kirk, Peter

Stainton, Keith

Dalkeith, Earl of

Kitson, Timothy

Steel, David (Roxburgh)

Dance, James

Knight, Mrs. Jill

Stodart, Anthony

Davidson, James (Aberdeenshire, W.)

Lambton, Viscount

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

d'Avigdor-Goldsmid, Sir Henry

Lancaster, Col. C. G.

Summers, Sir Spencer

Dean, Paul (Somerset, N.)

Langford-Holt, Sir John

Taibot, John E.

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

Legge-Bourke, Sir Harry

Tapsell, Peter

Digby, Simon Wingfield

Lewis, Kenneth (Rutland)

Taylor, Sir Charles (Eastbourne)

Dodds-Parker, Douglas

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

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

Doughty, Charles

Lloyd, Rt. Hn. Selwyn (Wirral)

Taylor, Frank (Moss Side)

Douglas-Home, Rt. Hn. Sir Alec

Longden, Gilbert

Teeling, Sir William

Drayson, G. B.

Loveys, W. H.

Temple, John M.

du Cann, Rt. Hn. Edward

Lubbock, Eric

Thatcher, Mrs. Margaret

Eden, Sir John

McAdden, Sir Stephen

Thorpe, Jeremy

Elliot, Capt. Walter (Carshalton)

MacArthur, Ian

Tilney, John

Errington, Sir Eric

Mackenzie, Alasdair (Ross & Crom'ty)

Turton, Rt. Hn. R. H.

Eyre, Reginald

Macleod, Rt. Hn. Iain

van Straubenzee, W. R.

Farr, John

McMaster, Stanley

Vaughan-Morgan, Rt. Hn. Sir John

Fisher, Nigel

Macmillan, Maurice (Farnham)

Vickers, Dame Joan

Fletcher-Cooke, Charles

Maginnis, John E.

Wainwright, Richard (Colne Valley)

Forrest, George

Marples, Rt. Hn. Ernest

Walker, Peter (Worcester)

Fortescue, Tim

Marten, Neil

Walker-Smith, Rt. Hn. Sir Derek

Foster, Sir John

Maude, Angus

Wall, Patrick

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

Maudling, Rt. Hn. Reginald

Walters, Denis

Galbraith, Hn. T. G.

Mawby, Ray

Ward, Dame Irene

Gibson-Watt, David

Maxwell-Hyslop, R. J.

Weatherill, Bernard

Gilmour, Ian (Norfolk, C.)

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

Webster, David

Glover, Sir Douglas

Mills, Peter (Torrington)

Wells, John (Maidstone)

Godber, Rt. Hn. J. B.

Mills, Stratton (Belfast, N.)

Whitelaw, William

Gower, Raymond

Miscampbell, Norman

Wilson, Geoffrey (Truro)

Grant, Anthony

Mitchell, David (Basingstoke)

Winstanley, Dr. M. P.

Grant-Ferris, R.

Monro, Hector

Wolrige-Gordon, Patrick

Gresham Cooke, R.

More, Jasper

Wood, Rt. Hn. Richard

Grieve, Percy

Morgan, W. G. (Denbigh)

Woodnutt, Mark

Griffiths, Eldon (Bury St. Edmunds)

Morrison, Charles (Devizes)

Worsley, W. M.

Grimond, Rt. Hn. J.

Mott-Radclyffe, Sir Charles

Wylie, N. R.

Gurden, Harold

Munro-Lucas-Tooth, Sir Hugh

Younger, Hn. George

Hall, John (Wycombe)

Nabarro, Sir Gerald

Hall-Davis, A. G. F.

Neave, Airey

TELLERS FOR THE AYES:

Hamilton, Marquess of (Fermanagh)

Nicholls, Sir Harmar

Mr. Francis Pym and

Hamilton, M. (Salisbury)

Noble, Rt. Hn. Michael

Mr. R. W. Elliott.

Harris, Frederic (Croydon, N. W.)

Nott, John

NOES

Abse, Leo

Archer, Peter

Bacon, Rt. Hn. Alice

Albu, Austen

Armstrong, Ernest

Bagier, Gordon A. T.

Allaun, Frank (Salford, E.)

Ashley, Jack

Barnes, Michael

Alldritt, Walter

Atkins, Ronald (Preston, N.)

Barnett, Joel

Anderson, Donald

Atkinson, Norman (Tottenham)

Baxter, William

482

483

Beaney, Alan

Foley, Maurice

Luard, Evan

Bellenger, Rt. Hn. F. J.

Foot, Sir Dingle (Ipswich)

Lyon, Alexander W. (York)

Bence, Cyril

Foot, Michael (Ebbw Vale)

Lyons, Edward (Bradford, E.)

Benn, Rt. Hn. Anthony Wedgwood

Ford, Ben

Mabon, Dr. J. Dickson

Bennett, James (G'gow, Bridgeton)

Forrester, John

McBride, Neil

Bidwell, Sydney

Fowler, Gerry

McCann, John

Binns, John

Fraser, J. D. (Norwood)

MacColl, James

Bishop, E. S.

Fraser, Rt. Hn. Tom (Hamilton)

MacDermot, Niall

Blackburn, F.

Freeson, Reginald

Macdonald, A. H.

Blenkinsop, Arthur

Galpern, Sir Myer

McGuire, Michael

Boardman, H.

Gardner, A. J.

McKay, Mrs. Margaret

Booth, Albert

Garrett, W. E.

Mackenzie, Gregor (Rutherglen)

Boston, Terence

Garrow, Alex

Mackie, John

Bottomley, Rt. Hn. Arthur

Ginsburg, David

Mackintosh, John P.

Bowden, Rt. Hn. Herbert

Gordon Walker, Rt. Hn. P. C.

Maclennan, Robert

Boyden, James

Gourlay, Harry

MacMillan, Malcolm (Western Isles)

Braddock, Mrs. E. M.

Gray, Dr. Hugh

McMillan, Tom (Glasgow, C.)

Bradley, Tom

Greenwood, Rt. Hn. Anthony

McNamara, J. K.

Bray, Dr. Jeremy

Gregory, Arnold

MacPherson, Malcolm

Brooks, Edwin

Grey, Charles

Mahon, Peter (Preston, S.)

Broughton, Dr. A. D. D.

Griffiths, David (Rother Valley)

Mahon, Simon (Bootle)

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

Griffiths, Rt. Hn. James (Llanelly)

Mallalieu, E. L. (Brigg)

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

Griffiths, Will (Exchange)

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

Buchan, Norman

Gunter, Rt. Hn. R. J.

Manuel, Archie

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

Hale, Leslie (Oldham, W.)

Mapp, Charles

Butler, Herbert (Hackney, C.)

Hamilton, James (Bothwell)

Marquand, David

Butler, Mrs. Joyce (Wood Green)

Hamilton, William (Fife, W.)

Marsh, Rt. Hn. Richard

Callaghan, Rt. Hn. James

Hamling, William

Mason, Roy

Cant, R. B.

Hannan, William

Mayhew, Christopher

Carmichael, Neil

Harper, Joseph

Mellish, Robert

Carter-Jones, Lewis

Harrison, Walter (Wakefield)

Mendelson, J. J.

Castle, Rt. Hn. Barbara

Hart, Mrs. Judith

Mikardo, Ian

Chapman, Donald

Haseldine, Norman

Millan, Bruce

Coe, Denis

Hazell, Bert

Miller, Dr. M. S.

Coleman, Donald

Healey, Rt. Hn. Denis

Milne, Edward (Blyth)

Concannon, J. D.

Heffer, Eric S.

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

Conlan, Bernard

Henig, Stanley

Moonman, Eric

Corbet, Mrs. Freda

Herbison, Rt. Hn. Margaret

Morgan, Elystan (Cardiganshire)

Craddock, George (Bradford, S.)

Hilton, W. S.

Morris, Alfred (Wythenshawe)

Cronin, John

Hobden, Dennis (Brighton, K'town)

Morris, Charles R. (Openshaw)

Crosland, Rt. Hn. Anthony

Hooley, Frank

Morris, John (Aberavon)

Crossman, Rt. Hn. Richard

Horner, John

Moyle, Roland

Cullen, Mrs. Alice

Houghton, Rt. Hn. Douglas

Mulley, Rt. Hn. Frederick

Dalyell, Tam

Howarth, Harry (Wellingborough)

Murray, Albert

Darling, George

Howarth, Robert L. (Bolton, E.)

Neal, Harold

Davidson, Arthur (Accrington)

Howell, Denis (Small Heath)

Newens, Stan

Davies, Dr. Ernest (Stretford)

Howie, W.

Norwood, Christopher

Davies, G. Elfed (Rhondda, E.)

Hoy, James

Oakes, Gordon

Davies, Ednyfed Hudson (Conway)

Hughes, Rt. Hn. Cledwyn (Anglesey)

Ogden, Eric

Davies, Harold (Leek)

Hughes, Emrys (Ayrshire, S.)

O'Malley, Brian

Davies, Ifor (Gower)

Hughes, Hector

Oram, Albert E.

Davies, Robert (Cambridge)

Hughes, Roy (Newport)

Orbach, Maurice

Davies, S. O. (Merthyr)

Hunter, Adam

Orme, Stanley

Delargy, Hugh

Hynd, John

Oswald, Thomas

Dell, Edmund

Irvine, A. J. (Edge Hill)

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

Dempsey, James

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

Padley, Walter

Dewar, D. C.

Jackson, Peter M. (High Peak)

Page, Derek (King's Lynn)

Diamond, Rt. Hn. John

Janner, Sir Barnett

Paget, R. T.

Dickens, James

Jeger, George (Goole)

Palmer, Arthur

Dobson, Ray

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

Pannell, Rt. Hn. Charles

Doig, Peter

Jenkins, Hugh (Putney)

Park, Trevor

Donnelly, Desmond

Jenkins, Rt. Hn. Roy (Stechford)

Parker, John (Dagenham)

Driberg, Tom

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

Parkyn, Brian (Bedford)

Dunn, James A.

Jones, Dan (Burnley)

Pavitt, Laurence

Dunnett, Jack

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

Pearson, Arthur (Pontypridd)

Dunwoody, Mrs. Gwyneth (Exeter)

Jones, J. Idwal (Wrexham)

Peart, Rt. Hn. Fred

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

Judd, Frank

Pentland, Norman

Eadie, Alex

Kelley, Richard

Perry, Ernest C. (Battersea, S.)

Edelman, Maurice

Kenyon, Clifford

Perry, George H. (Nottingham, S.)

Edwards, Rt. Hn. Ness (Caerphilly)

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

Prentice, Rt. Hn. R. E.

Edwards, Robert (Bilston)

Kerr, Dr. David (W'worth, Central)

Price, Christopher (Perry Barr)

Edwards, William (Merioneth)

Kerr, Russell (Feltham)

Price, J. T. (Westhoughton)

Ellis, John

Leadbitter, Ted

Price, William (Rugby)

English, Michael

Ledger, Ron

Probert, Arthur

Ennals, David

Lee, Rt. Hn. Frederick (Newton)

Pursey, Cmdr. Harry

Ensor, David

Lee, Miss Jennie (Cannock)

Randall, Harry

Evans, Albert (Islington, S. W.)

Lee, John (Reading)

Rankin, John

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

Lestor, Miss Joan

Redhead, Edward

Faulds, Andrew

Lever, Harold (Cheetham)

Rees, Merlyn

Fernyhough, E.

Lever, L. M. (Ardwick)

Reynolds, G. W.

Finch, Harold

Lewis, Arthur (W. Ham, N.)

Rhodes, Geoffrey

Fitch, Alan (Wigan)

Lewis, Ron (Carlisle)

Richard, Ivor

Fletcher, Raymond (Ilkeston)

Lipton, Marcus

Roberts, Albert (Normanton)

Fletcher, Ted (Darlington)

Lomas, Kenneth

Roberts, Goronwy (Caernarvon)

Floud, Bernard

Loughlin, Charles

Roberts, Gwilym (Bedfordshire, S.)

484

485

Robertson, John (Paisley)

Stonehouse, John

White, Mrs. Eirene

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

Strauss, Rt. Hn. G. R.

Whitlock, William

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

Summerskill, Hn. Dr. Shirley

Wigg, Rt. Hn. George

Rodgers, William (Stockton)

Swain, Thomas

Wilkins, W. A.

Roebuck, Roy

Swingler, Stephen

Willey, Rt. Hn. Frederick

Rogers, George

Symonds, J. B.

Williams, Alan (Swansea, W.)

Rose, Paul

Taverne, Dick

Williams, Alan Lee (Hornchurch)

Ross, Rt. Hn. William

Thomas, George (Cardiff, W.)

Williams, Clifford (Abertillery)

Rowland, Christopher (Meriden)

Thomas, Iorwerth (Rhondda, W.)

Williams, Mrs. Shirley (Hitchin)

Rowlands, E. (Cardiff, N.)

Tinn, James

Williams, W. T. (Warrington)

Ryan, John

Tomney, Frank

Willis, George (Edinburgh, E.)

Shaw, Arnold (Ilford, S.)

Tuck, Raphael

Wilson, Rt. Hn. Harold (Huyton)

Sheldon, Robert

Urwin, T. W.

Wilson, William (Coventry, S.)

Shinwell, Rt. Hn. E.

Varley, Eric G.

Winnick, David

Shore, Peter (Stepney)

Wainwright, Edwin (Dearne Valley)

Woodburn, Rt. Hn. A.

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

Walden, Brian (All Saints)

Woof, Robert

Short, Mrs. Renée (W'hampton, N. E.)

Walker, Harold (Doncaster)

Wyatt, Woodrow

Silkin, S. C. (Dulwich)

Wallace, George

Yates, Victor

Silverman, Julius (Aston)

Watkins, David (Consett)

Zilliacus, K.

Skeffington, Arthur

Watkins, Tudor (Brecon & Radnor)

Small, William

Weitzman, David

TELLERS FOR THE NOES:

Snow, Julian

Wellbeloved, James

Mr. John Silkin and

Spriggs, Leslie

Wells, William (Walsall, N.)

Mr. George Lawson.

Steele, Thomas (Dunbartonshire, W.)

Whitaker, Ben

ORDERS OF THE DAY

  MILITARY AIRCRAFT (LOANS) BILL
  Order for Second Reading read.
  7.22 p.m.
  The Chief Secretary to the Treasury (Mr. John Diamond): I beg to move, That the Bill be now read a Second time.
  As the House is by now fully aware, the Government have entered into arrangements with the United States Government to acquire certain military aircraft for the Navy and the R.A.F. I refer to the three aircraft—the C130 Hercules Transport, the Phantom and the F111A. Part of the arrangements between the two Governments is that the American Government will make available credits amounting to 1,250 million dollars to cover the initial cost of these aircraft so far as this has to be paid in dollars.
  The House has been kept informed about these credits as agreement has been reached. On 11th February last year my right hon. Friend the Secretary of State for Defence informed the House that the United States Government would make available credit facilities to cover the dollar costs of the purchase of the Hercules and R.A.F. Phantoms. On 5th August he told the House that it had been agreed that the credit could be extended to cover the Phantoms for the Navy ordered in 1964 by the previous Administration, and in Part I of the Statement on Defence Estimates this year it was stated that 50 F111A aircraft would be bought for delivery by January, 1970, and that the production costs and a contribution to research and development costs would be met by credit terms. The purpose of the present Bill is to extend the Treasury's powers to borrow so that we can take advantage of these credit facilities.
  It may be suggested that the introduction of the Bill is perhaps unnecessary, in that essentially this transaction is one of borrowing money and, as such, is well within the Treasury's general powers of borrowing under the National Loans Act, 1939, which authorises the Treasury to raise money in such manner as it thinks fit for the repayment of maturing debt.
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  But where such borrowing is, as in the present case, earmarked for specific expenditure, it would be unrealistic to regard the transaction simply as a loan; for in fact what is really happening is the acquisition of certain American aircraft by means of a loan and it is surely proper that the House should be enabled to exercise the same powers of control over expenditure as if the aircraft were being bought out of money voted by the House.
  It is true that the passing of the necessary legislation inevitably consumes valuable Parliamentary time, but I feel sure that in this all important field of Supply the House must act in such a way as fully to preserve its rights vis-à-vis the Government of the day. It is in this spirit that the Government, rather than attempting to rely on their general borrowing powers, have introduced the Bill.
  Perhaps it would be convenient if I were first to outline the loan transaction, then to refer shortly to the detailed accounting procedures and their relation to the provisions of the Bill, and finally to put the whole matter in perspective by a short reference to the defence position.
  The initial dollar cost of the aircraft already described amounts to 1,250 million dollars or, in round figures, £450 million. Of this sum, 52 million dollars were spent last year, but we have borrowed these dollars under the general borrowing powers I have already mentioned, so as to get the benefit for our balance of payments. That leaves the sum of 1,200 million dollars, or approximately £430 million, which is the figure provided in the Bill. This is the sum which is to be spent during the six years ended 31st March, 1972; that is to say, the period during which the aircraft in question will be delivered and progress payments will be due. The expenditure is to be financed by borrowing from the American Government. The interest rate, as has already been announced, is 4¾ per cent. and the repayment terms are such as to keep the repayment of principal as low as possible up to 1968 and then spread fairly evenly up to 1978.
  It is by no means the case that the whole of this expenditure relates to purchases made by this Government. Indeed,

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  the additional dollar bill as compared with the programme we inherited from the Conservative Government is not in fact so very great. It is £165 million spread over the next 10 years, an average of about £16 million a year. I will explain a little later on the reasons why this additional cost is relatively small; but I thought it would be helpful for hon. Members to have this comparison in their minds when considering the accounting arrangements which I will now shortly describe.
  The purpose of the financial procedures is to enable Parliament to have the same measure of control over expenditure being incurred as if it were being met from our own resources in the normal way, instead of being met in the first place out of borrowed money. Accordingly, as progress payments are made each year through the United States Department of Defence to the American contractors, so each year will the equivalent sum be included in the Votes presented with the Estimates to Parliament. Similarly, the sums of money which are borrowed from the United States Government to enable these payments to be made each year will be mirrored in the corresponding sums being issued out of the Consolidated Fund as appropriations-in-aid of the relevant Vote. In this way, although the net amount remaining on the Vote will be only nominal, both the full cost being incurred and the full amount being borrowed will be subject to Parliamentary scrutiny for every year this process continues.
  Mr. John Hall: It is perhaps because the Chief Secretary is reading rather fast that I am not following him exactly. Did I understand him to say that the amount spent each year would come forward in the Vote for Parliamentary scrutiny? What power would Parliament have to alter that, because are not we already fully committed to the expenditure?
  Mr. Diamond: I am referring to the normal procedure of Parliament being able to control expenditure by means of debate on the Estimates and refusing Supply or refusing to vote for Supply. The point I wanted to make to the House is that those same rights are being preserved, even though this country is not being put to expense at that particular
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  point of time, because the money spent is coming out of borrowed money.
  It is quite a different point with regard to the contractual position. The House is in exactly the same position as it would be about any other kind of contract. It can refuse Supply, but if a Government have entered into a contract—either the previous Government or this Government—and if Supply is refused, problems about cancellation and the usual problems arise. However, this Bill deals not with that aspect but with maintaining the full rights of this House, as if the money were not borrowed money but actual expenditure spent on the Votes.
  Mr. Tam Dalyell: Can my hon. Friend confirm that the books will be open to the Comptroller and Auditor General and his staff?
  Mr. Diamond: I am not sure which books my hon. Friend refers to.
  Mr. Dalyell: The whole transaction.
  Mr. Diamond: Yes, of course, the whole transaction will be open to the Comptroller and Auditor General in the normal way, certainly.
  I was describing the procedure under which, in the early years, the transactions being met in cash in the United States would be mirrored in book-keeping transactions in this House. I described the Vote which is, in fact, the new Vote described as Ministry of Aviation (Purchase of United States Aircraft) Class IV, No. 9, which appeared for the first time in the 1966–67 Civil Estimates with an appropriate footnote. That Vote already exists.
  When repayments of principal and interest under the loan are made by the Exchequer, matching repayments will be made to the Exchequer out of the normal Votes, that is to say, out of Defence Votes in respect of production and out of the Ministry of Aviation Vote in respect of research and development. Accordingly, the cost of these aircraft will fall on the defence budget when the real burden of their purchase falls on our economy, that is to say, when repayments of the loan and interest take place.
  I hope that the provisions of the Bill itself will now fall into place. Clause 1(1) authorises the Treasury during the six years ended 31st March, 1972, when the

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  planes are being delivered, to issue out of the Consolidated Fund sums not exceeding a total of £430 million to be applied as appropriations-in-aid of moneys provided by Parliament both for the purchase of American aircraft and to cover our share of the expenditure on research and development incurred in the United States.
  Subsection (2) of Clause 1 protects Parliament in two ways. It provides that no issues from the Consolidated Fund may be made for the purposes I have described until Parliament has passed the necessary Supply Resolution covering the Estimate; and also that the amount so issued for any year is limited to what is specified in the Estimates for that year. It is those two provisions which securely protect the rights of this House.
  Subsection (3) is in common form and authorises the Treasury to borrow for the purpose of making these issues. Authority is given to raise money in any manner provided by the National Loans Act, 1939, which in its turn refers,
  "to raising money either within or outside the United Kingdom and either in sterling or in any other currency."
  Clause 2 follows the precedent set by previous Acts, for example, the Armed Forces (Housing Loans) Acts 1949–1965. Subsection (1) provides for the repayment to the Exchequer of moneys advanced under subsection (1) of Clause 1 as appropriations-in-aid of the new Vote. Repayments of principal and interest will be a charge on Air and Navy Votes, for production, or on the Ministry of Aviation Vote, for research and development, having regard to which Department ought properly to bear each final charge.
  Subsection (2) enables the Treasury to use the interest and instalments of principal received from Departments to repay debt and to offset interest charges which would otherwise have to be met from the Consolidated Fund. In the present case, naturally, the sums paid by Departments will be used to service the American credit.
  So much, then, for the legal provisions and accounting procedures affecting the loan. I should now like to deal a little more fully with the Government's reshaped aircraft programme, and to show
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  that the provisions of the Bill are an essential means of reconciling our economic situation and our military needs. My hon. Friend the Under-Secretary of State for Defence for the Royal Air Force will be happy to reply to questions related especially to this aspect should he have the good fortune to catch your eye, Mr. Speaker, later on.
  When the Labour Government took over from the party opposite, they were confronted with an aircraft programme which was going to place an enormous load on the domestic economy, but nevertheless was going to come to fruition too late, in certain essential respects, to meet the military need. What we had to do was to evolve a programme which both met the military requirement on time and also reduced the call on domestic resources in respect of arms production by about £1,400 million over the next 10 years. This very large sum represents the costs of human skills and material facilities which we estimated could, without causing large-scale unemployment or great hardship to individuals, be re-engaged in industry so as to make a most useful contribution towards direct exports and towards reducing domestic demands for manufactured imports.
  Of course, we had to pay a price for this, and this price has largely taken the form of an increase in purchases of aircraft from the United States. But, as I said earlier, the additional dollar bill, as compared with the programme we inherited, is not in fact very great. Over the next 10 years it amounts to an average of about £16 million a year. The cost is relatively small for several reasons. First, we reduced the Polaris submarine programme from five to four. Secondly, we cut back the reconnaissance/strike aircraft order to 50, achieving in the process room for the co-operative Anglo-French development of an advanced variable geometry aircraft. Thirdly, we found it possible, partly as a result of the decisions we took about the carrier force, to satisfy our military needs with a combined Royal Navy and Royal Air Force Phantom order of about 200.
  But the timing of the total dollar payments would have produced unacceptable effects on our economy. In the next two or three years we shall be receiving very large quantities of United States equipment and, without some arrangement for

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  spreading the liability for payment, we should have been in some difficulty. This spreading is the fundamental purpose of the United States credit arrangements. Under them, we are able to borrow dollars and thus minimise the adverse effects of the whole transaction on our balance of payments. Between now and 1968, when we have other large liabilities to discharge, the sums due for repayment under the aircraft programme will be small. Thereafter they will be spread evenly over a period lasting beyond the mid-70's.
  As a result of all this, we shall, of course, incur interest liabilities which are included in the figure of £165 million which I mentioned earlier. But the rate of interest is relatively modest, and without the benefits the loan transaction affords we should have been unable, in the absence of further major sacrifices all round, to provide our forces with the equipment which they need. I have no doubt, therefore, that this Bill is in the best interests of our country.
  7.39 p.m.
  Mr. Robert Carr: The Chief Secretary, in moving the Second Reading of this Bill, concluded his remarks by going over some of the stale old arguments which we had heard before about the aircraft programme which the Labour Governor ant inherited. They do not convince us any more by repetition than they did the first time we heard them, and neither, as the Chief Secretary must know, do they convince many of his hon. Friends behind him.
  It really is nonsense to make this claim about the dollar bill for these aircraft being only £165 million more than the dollar programme the Government inherited when they get the reductions in other ways. We are talking about the aircraft programme at the moment. Of course, but for the present Government's policy towards the British aircraft industry, they could have made the other changes to which they refer and saved many more dollars as well. They cannot get over the fact that the replacement of British aircraft by American aircraft is, to the full extent of the cost of those aircraft, an added burden to the balance of payments and to the dollar cost. If one is able to make other savings, that is another matter and it affects the overall balance of payments, of course, but it is
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  quite unfair to compare the aircraft programme, on the one hand, with the overall programme, on the other. That is a very peculiar way of arguing.
  There is another matter which we ought to keep in mind. This Bill does not represent the whole of the dollar cost of this Government's programme for purchasing American aircraft. I expect that this is known to the House but, perhaps, it could he something about which we could make an error in our thinking and we might mistakenly imagine that the £430 million mentioned in Clause 1 represented the whole dollar content of the purchase of American planes. But this is not so, and it would be as well for the House to remind itself of the total dollar bill. This was revealed most recently by the Secretary of State for Defence in a Written Answer shortly before the General Election. It appears in Written Answers in cols. 396–7 of HANSARD of 4th March, and it shows that the total dollar cost of purchasing the F111A, the Phantom and the C130 amounts to £660 million.
  The Under-Secretary of State for Defence for the Royal Air Force (Mr. Merlyn Rees)indicated assent.
  Mr. Carr: I am glad to see the Under-Secretary of State agreeing with that. As I say, I am sure that there is no dispute between us, but it is as well to be clear about it. The figure of £430 million mentioned in the Bill might give some hon. Members and people outside the House the idea that this was the total dollar cost involved, whereas, of course, it is not much more than about two-thirds of the total dollar cost altogether.
  In our view, that cost is likely to mount in the future. As we made clear in the defence debate at the beginning of March, we find the ordering of just 50 F111s rather incredible. The Chief Secretary takes credit for it now as one of the ways in which the dollar expenditure is kept down. But one must take account of inevitable wastage. Whatever precautions are taken, there is bound to be some wastage with any aircraft. Having regard also to the number of aircraft which have to be withdrawn from the front line at any given time for service, and so on, we are, to put it no higher, extremely sceptical about whether an order of 50 is

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  credible. The House should realise, therefore, that the dollar cost we are talking about is likely to be much more than the £430 million mentioned in the Bill.
  We regard the Bill as objectionable. It is abhorrent not only to us on this side of the House but also, as the Chief Secretary realises, I am sure, to a number of his hon. Friends as well. Those of us who detest it are, however, put in an awkward position, unless we take the view of a handful of hon. Members opposite. We are put in an awkward position because the Bill provides the machinery to enable the Government to carry out the agreement to which they are irretrievably committed to buy a whole range of American military aircraft. Following the cancellations and the castration of the British aircraft industry as a supplier of military aircraft in this range in the next few years, they have no alternative source of aircraft for the Royal Air Force. Therefore, if the House were to deny the Government this machinery, we should, in fact, be denying the Royal Air Force the aircraft it must have over the next few years. For this reason, however much we may detest the Bill, we cannot vote against it and we shall not do so.
  Neither do we see anything wrong with the machinery provided. We see little to quarrel with there, given the unpalatable fact that this business has got to, be done. However, before we pass the Bill, we have the right to ask the Government to answer for the House a number of questions, and I am sure that the Under-Secretary of State for the Royal Air Force, who, I understand, is to reply, will note these points and do his best to reply to them.
  First, we wonder whether the £430 million is enough. What assurances can the Government give us that it is likely to be enough? I have already mentioned our doubts about the credibility of ordering as few as 50 F111s, but I have more in mind than that. I wonder, for example, whether there are sufficient guarantees against price rises, against escalation. Let us take the F111 as an example. I take it as an example because we have had particular assurances that we really have a fixed-price contract for the F111 or, at least, we have been told that it is a ceiling price. Only a short time ago, in the previous debate, the Secretary of State
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  for Defence reiterated that this was a ceiling price of £2½ million per aircraft, even with the modifications required by the R.A.F.
  But what about spares for this aircraft? As we all know, spares over a period of years can make a substantial addition. The F111 seems, undoubtedly, to be having substantial development troubles. I am not suggesting that they will not be overcome, but the reports are too persistent to be swept aside. It seems highly probable that this aircraft is having substantial development troubles, and that to overcome them might well require heavy extra research and development expenditure over and above what has hitherto been budgeted for in the United States.
  The question we put on this aircraft is whether we have any safeguards against such extra research and development expenditure as may be necessary above that previously contemplated being recouped by the Americans in the price of the spares which we shall have to buy from them? If anything of that kind were to happen—we believe that examples of it have, unfortunately, happened to some of our European allies when they have purchased American aircraft—then the cost could mount greatly above what we are talking about now even though the unit price of the basic aircraft is a fixed one. Taking the example of the F111, but, naturally, seeking information about the other aircraft involved, we should like an assurance from the Government before we pass the Bill that this is an adequate amount and is safeguarded in a reasonable way against escalation.
  The second question which we put to the Government came up briefly in Questions to the Minister of Aviation earlier today. It is related to the troubles which the F111 appears to be having in its development. As we shall be dependent on this aircraft, we hope that these troubles will be overcome. There is no wish that they will not be behind anything I say, but there is the possibility that they might not be overcome. There is the possibility—we speak feelingly because we suffered it—that there could be another cancellation as there was of the Skybolt. Without any party partisan feeling but from the standpoint of, "Once bitten, twice shy", we want to know whether the Government have

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  obtained proper guarantees from the United States of financial compensation in the event of cancellation of the F111 by the United States if, unfortunately, its present development problems are not overcome. We expect and hope that they will be, but we think that, if they are, extra costs will be involved. Further, there is the possibility that they might not be, and the British Government ought in prudence to have proper safeguards and ought to be able to tell the House that they have secured them.
  Another question which we should like to probe a little deeper before we allow this Bill to go through is that of further information from the Government about the effect on our balance of payments. Here we come near to the subject matter of the earlier debate today. One thing which cannot be denied is that this Bill will add £430 million to the debit side of our balance of payments account. What we are concerned about is, what is the adequacy of the dollar offset agreements, and particularly the only complete dollar offset agreement the Government claim to have made, namely, on the F111? We need more information and assurance, because the present evidence seems very discouraging.
  There is the vexed matter, around which the previous debate centred, of inclusion of the Saudi Arabian order in this offset. We believe that order should have been obtained—indeed, according to the Government's own testimony before Christmas it had been obtained—without any connection with the F111. Now we know that it is included in the offset, included to the extent, as the Secretary of State for Defence agreed a short time ago, of 280 million dollars. Almost three-quarters of the dollar offset for the F111, concerning sales to third parties, is in this deal completed by Britain before the F111 order was placed.
  This does not encourage us very much. Nor, to be frank, are we much encouraged by some reports we hear of the kind of co-operation which we get from the United States even in obtaining the Saudi Arabian order. We understand that some co-operation agreement was made between the Government and the United States Administration. We also hear reports—it would be nice to have confirmation or denial, I hope a denial, of the reports—that, after we reached agreement
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  with the United States Administration, not only did the American Lockheed company go on trying to get the order, but that it was officially supported in its attempts by the United States Government.
  I ask this specific question. Is it true that following this agreement, this understanding with the United States Administration, a deputation went from the Lockheed company, headed by its Chairman, Mr. Gross, with the personal knowledge of President Johnson himself? Is it true that, having got to Saudi Arabia, that delegation was taken to see the Saudi Arabian Minister of Defence by officials of the United States embassy in Riadh? These are the sort of reports which are current. If they are true it gives us no faith at all in the value of United States co-operation in these matters.
  We fully understand that the United States Administration cannot give orders to American companies to hold off. We would not expect them to try. I do not think British companies would take it very kindly if the British Government tried to do so in this country. But what we are disturbed about is reports that the United States Administration, having come to an understanding with the British Government, should not only not refrain from telling American companies to hold off but should actually encourage and help them in doing the reverse. If that is true, this agreement with the United States is not of much value.
  I want to stress that these are reports and that reports can be untrue, but I think it better to bring these reports out into the open and have them denied, if denied they can be. If they are true it is also better, as well as honest to this House, for the Government to tell us that they are true so that we know the problem we are up against and can put the proper value on the offset agreements, which in that case would not be a very high value.
  Another bit of evidence which causes us worry about the worth-whileness of the balance of payments offset agreement, is the British failure to obtain the recent Jordanian order for aircraft. Here, we would have thought, was a classic example of the sort of order which was in mind in the dollar offset agreement

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  connected with the F111 purchase. Here was an order which, I think, came up later than the Saudi Arabian one. One would have thought this was the first example, the first test, of the worthwhileness of the sort of agreement we believed we had made with the United States Administration. As The Times commented in an editorial a few weeks ago, it was rather surprising that we did not seem to get anywhere near it.
  We should like to know from the Under-Secretary of State for Defence for the Royal Air Force some of the background of why we did not succeed in obtaining the Jordanian order. Did we have co-operation from the United States in trying to get it? Was it a matter of finance? Was it that we did not want the order because we felt that the Jordanians could not have paid us for it? Might there have been some possibility that when our Government were negotiating with the American Government over such a matter as the purchase of the F111 we should have used our great bargaining power and made some agreement that some of the aid moneys made available to Jordan by the United States should be made available for purchase of British aircraft when they wanted them? We were in a strong bargaining position. From all the information I can get, the United States in general and Mr. McNamara in particular were most anxious that they should get the British order for the F111. We cannot help feeling that our bargaining power was thrown away and not used as strongly as it should have been.
  Another bit of evidence which gives us discouragement about the value of the dollar offset agreement is the just recently reported failure to obtain orders for harbour tugs for the American Navy. This was thought to be a sufficiently important and hopeful item as to be mentioned specifically in the White Paper. The little matter of the Saudi Arabian deal was so minor that it could not be mentioned. The print ran out for this, but the tugs were thought to be so promising and important that they were specifically mentioned and now we hear nothing has come of it.
  These are just some examples of our concern about whether the much-vaunted
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  dollar offset agreements are as beneficial to this country as they are made out to be. There is also one other matter about which I should like to put a question to the Under-Secretary. What are the Government doing to keep down the dollar content of these aircraft purchases to a minimum? We know that sub-contracts, for example, for British components for the Phantom have been obtained. We are told that 40 per cent. to 50 per cent. of the cost of the Phantom is now represented by British parts. That is a good thing which we welcome. For example, we know how important the production of the Spey engines will be in this connection.
  But there are disturbing reports that the Government either have put or are putting pressure on British firms which have obtained such contracts for parts of these American planes to use as much American material as possible in order to get more of the planes' value on the American loan account. The point is that the American credit must be restricted to dollar expenditure and therefore the bigger the British component we can get into these planes, the smaller the American credit and the greater the amount of expenditure in sterling which has to be met as it arises by the Chancellor of the Exchequer and which cannot be put back on the "never-never" system for five years.
  Reports have been circulating that in order to keep down the expenditure of the next few years and to get as much as possible on the five-year credit, the Secretary of State for Defence—or, if not him, some other section of the Government—has been putting pressure on British firms to use as much American material as possible to keep the dollar content up. These, again, are reports. I hope that they are reports which will be firmly and categorically denied. But they are circulating. If they are true, they are disgraceful. If, as we hope, they are untrue, then it is far better to bring them out into the open and for them to be once and for all categorically denied without any doubt. I hope that the Under-Secretary will do that.
  I have two final comments to make. First, the House and the country must realise what the Government are up to in this respect. They are not just buying

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  a great many American planes. They are buying them on the "never-never" by paying the American costs on a five-year credit basis, and in this way they are able to get a "phoney" reduction in defence expenditure in the next few years, leaving whatever Government is in power in the 1970's to pick up the bulk of the bill.
  Mr. Diamond: It will not be a Conservative Government.
  Mr. Carr: We shall see about that. We feel very encouraged by the way in which things have been going in the last few weeks. But even if it were to be a Labour Government, what they are doing is merely pushing off the bulk of this expenditure into the 1970's, and to that extent the much-vaunted reductions in defence expenditure over the next few years are unreal and the House should recognise that fact.
  Secondly, the Government have been negligent in bringing in the Bill so late. That is the view not just of the Opposition but of the all-party Select Committee on Estimates. I think that those hon. Members who may not have read that Select Committee's Report should be made aware exactly what the Select Committee said. I am referring to paragraph 20 of the second Report of the Estimates Committee, Session 1965–66, Spring Supplementary Estimates, House of Commons Paper 108. It was published on 2nd March. It is particularly worth drawing it to the attention of the House because, as it was published on 2nd March, I suspect that it has not received the normal attention which it would get from hon. Members, who at that time were either engaged in or concerned with certain events and who are unlikely to have read this Report with their usual attention. Paragraph 20 of the Report reads:
  "Your Committee view with concern the fact that delays in introducing legislation have made necessary dollar expenditure of £6·7 million on the Ministry of Aviation's Vote this year and further dollar expenditure amounting to £15·8 million on other Votes, making a total of £22·5 million."
  I skip a sentence for brevity and conclude the paragraph:
  "… at a time when balance of payments difficulties are acute, over £22 million of dollar expenditure is being incurred which could have been avoided by the introduction of appropriate enabling legislation."
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  There could not be a stronger condemnation than that of the Government's incompetence and carelessness.
  Mr. Diamond: As I made clear in my speech, the £430 million being borrowed is after deducting £20 million, in round figures, which is the figure which the right hon. Gentleman has mentioned. That has been deducted from the £450 million of the full cost. As I said, that £20 million has not been spent. It has been borrowed.
  Mr. Carr: I was not a member of the Estimates Committee which took evidence on the subject, but I have been a member of the Select Committee of Estimates for five years and I know the care with which evidence is taken. I know that the Select Committee on Estimates is an all-party Committee which does not make critical comment of that kind without justification. If there is no justification for it, then I hope that an opportunity will be found by the Government for that Report: to be debated so that it may be made plain to the House that their Select Committee was wrong in that very strong criticism which it made.
  I repeat—we find this an objectionable Bill, but we cannot divide against it because in the circumstances the effect of denying the Government the machinery which they are seeking would be to deny the Royal Air Force the planes which we on this side of the House know they must have and which now, alas, they cannot obtain from the British aircraft industry in the period about which we are talking. With great reluctance we shall let the Bill pass, but I hope that, in view of the importance of the subject, the Under Secretary will do his best to reassure the House and the country on some of the questions which I have put to him.
  8.7 p.m.
  Mr. Russell Kerr: A new Member of the House who hopes to make his maiden speech finds himself the recipient of much advice from all sides. With all due modesty, I have decided to ignore all but two of these pieces of advice which I have received over the past few days.
  The advice which I propose to accept I have gleaned from the columns of the Daily Mail, from a celebrated columnist,

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  the right hon. Member for Enfield, West (Mr. Iain Macleod), who recently gave it as his opinion that it did not much matter whether or not a maiden speech was controversial so long as the maiden speaker did not "do a Hamlet" on the House and spend the first half of his speech thinking out loud as to whether his maiden speech should be controversial. I propose to follow the right hon. Gentleman's advice and to leave it to him and others to judge for themselves.
  The second piece of advice which I propose to follow is something which, along with other new Members of the House, I have already been incautious enough to suggest to the House—in the shape of an early day Motion seeking to keep the speeches of hon. Members on both front and back benches suitably short. I shall, therefore, be brief.
  I feel that in my speech I must follow convention to the extent of saying that I feel greatly honoured to have been elected to represent the people of Feltham in this House. Feltham is a constituency the qualities of which are many, but its main claim to fame is that, prior to the creation of the Greater London Council, by hon. Members opposite, it had achieved under a Labour-controlled Feltham Urban District Council perhaps the finest housing record of any comparable local authority in the country.
  The only other thing which I would say in this connection is that my constituents in Feltham, very many of whom are highly skilled workers at London Airport and on the surrounding industrial estates, are much too commonsensical and down-to-earth to be impressed by flowery phrases or "flannel" from their Member of Parliament, which is why I say no more about them on this occasion.
  However, a reference to Feltham would not be complete without a word about my predecessor, "Bob" Hunter, whom the House well knew as an assiduous and dedicated Member and whom I have known as a good comrade and a very good friend indeed. I speak for a great number of people in Feltham, where he has been greatly loved as well as respected, when I say that we wish him a long, happy and productive retirement in the years ahead.
  Aside from my natural and understandable pleasure at finding myself a
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  Member of this honourable House, I have in addition a special reason for gratification which I share, as far as I know, only with the hon. Member for Maldon (Mr. Brian Harrison). Like myself, he, too, is an Australian born and bred and he, too, I have no doubt, shares my pride in the fact that the ties of Commonwealth are still sufficiently strong to make possible the election to this British Parliament of one who is still unrepentantly proud of the land of his birth.
  I mention my Australian birth not merely for reasons of sentiment but also because I am old-fashioned enough to believe that the British Commonwealth has been a much under-estimated—and a much under-used—weapon in our political armoury. However, since this debate, though fairly wide-ranging, can hardly be held to include a discussion on the relations between Labour Britain and the Commonwealth, I will content myself by saying that I hope we shall not see a repetition of the quite shameful neglect of Commonwealth interests which occurred when some hon. Members opposite were hell-bent on getting Britain into the Common Market three or four years ago, irrespective of the terms available.
  None the less, there is one sense in which this debate, which I believe indirectly to be concerned with the future of the British aircraft industry, connects with the Commonwealth. I believe that a not inconsiderable part of the troubles which have afflicted this industry, on the civil as well as the military side, has been due to a quite staggering failure to develop the potentialities of the Commonweath, both as a market for our civil aircraft and as possible collaborators in terms of the development and procurement of such military aircraft as the Government, preferably acting as the agent of the United Nations, may judge to be required in the future.
  In my judgment, there is one consideration which should weigh above all others when we discuss the aircraft industry. The fact is that with every year that passes the aircraft industry of the Western world is becoming more and more of an American preserve. Helped by a scale of operation that we cannot hope to equal, with the enormously profitable defence contracts which are available to bear a large part of their development costs—

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  and with hidden subsidies ever-present to sweeten the mixture—the Americans could easily swallow all their foreign competitors in this industry within a few years, with the most dire consequences for this and other Western European countries.
  Such a development would be serious enough in terms of the livelihood of thousands of skilled workers in various parts of Britain, and, indeed, in such towns as. Toulouse, in Southern France; but the consequences for us in political and strategic terms would be infinitely worse. Any hopes which any of us may have entertained of an independent British foreign policy, including independent initiatives for peace, and so on, could safely be forgotten. Our dependence on America in strategic and political terms would he complete and final in that event.
  For that reason, I have been unhappy about the Government's recent decision to purchase the F111 as a tactical strike aircraft for cast-of-Suez theatres of war. I believe that this decision is one more nail in the coffin of an independent European aircraft industry—an earlier and even more disastrous coffin-nail being the decision of hon. Members opposite to buy the American Phantom instead of developing a British or, perhaps, an Anglo-French aircraft for that requirement.
  Unlike my right hon. Friend the Home Secretary, I am not a Common Marketeer. I happen to believe that that would involve selling our soul for a rather smelly mess of pottage. I certainly agree with my right hon. Friend, however, in a speech which he made in the House a year or so ago, when he pleaded for Anglo-French or, rather European collaboration in aircraft manufacture. If I understood him aright, my right hon. Friend, too, saw the dangers of an American-dominated industry, for this country above all others. I hope that his successor as Minister of Aviation will move energetically to bring together for the purposes of co-operative long-term planing and development the great array of potential customers among the airlines of the Commonwealth and of Europe.
  It is very sad to me to see so many of our Commonwealth airlines, in particular, heavily involved in the purchase of American aircraft—the more so since the
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  technical and scientific resources of both the British and French aircraft industries are in no sense inferior to the American and in several key respects are markedly superior.
  I believe that the necessary and overdue transformation of the aircraft industry of Britain could best be carried out under a plan which includes substantial public ownership of the industry, or even the outright nationalisation of the private sectors of that industry—which, incidentally, over the last 15 years or so, has been in receipt of about £4,000 million of public money in one form or another. If this were done, the British industry would, I believe, be able to compete on equal terms with the highly efficient French firms, such as Sud Aviation, which have long since been owned entirely by the French nation.
  I am well aware, however, that to pursue such a line of thought might well land me into an area of controversy, which is something I have tried hard to avoid. I therefore conclude my brief remarks by appealing to my colleagues and friends in the Government, at this very late hour in the crisis of the British aircraft industry, to open their eyes to the very real danger in the present situation.
  I feel sure that a Government who have so firmly nailed their colours to the twin masts of scientific and technological progress, on the one hand, and political independence on the other, will not lightly stand aside when the well-being of the country, and the very future of Britain as an independent and powerful agent for peace in the world, is so obviously involved.
  I thank you, Mr. Deputy Speaker, and Members of the House, for listening to me so patiently.
  8.18 p.m.
  Sir Lionel Heald: I regard myself as very fortunate indeed in being able to follow the hon. Member for Feltham (Mr. Russell Kerr), for two quite different reasons. The first is that we would all agree that he has proved during the last few minutes of his quite short speech that he will be a substantial addition to our debating forces and also to our instruction on many subjects, not the least of them being that of the Commonwealth. It is a very fine thing indeed

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  that we have such a splendid representative of the Commonwealth coming amongst us as a new Member.
  My other reason, which is purely personal, is that the hon. Member's predecessor, Mr. Hunter, was one of my earliest friends in this House and has been ever since what, I hope, I might describe as a very real and dear friend of mine. I have always been fortunate—it is seldom, perhaps, that one can say these things, but they ought to be said—in having a number of very good friends on the other side of the House, and Mr. Hunter was one of the very best.
  The only thing I would say is that I am afraid that his work here was becoming a great strain to him. There were some of us who were very concerned about his health, but from what I have recently heard I believe that he is gaining benefit from having a more restful time, although he will always be wanting to do something. I hope that I may be allowed to ask the hon. Member for Feltham to convey to him the kind regards of all of us, and particularly of myself. [HON. MEMBERS: "Hear, hear."]
  I am also fortunate, again in that my constituency and that of the hon. Member for Feltham have quite a number of things in common. We are virtually next-door neighbours, and he has a number of men who work in the aircraft industry, quite apart from London Airport. I know from Mr. Hunter that there are a number of people who go from Feltham every day to Weybridge, so that the hon. Member has a special interest in that side of it.
  Of course, we are very concerned about the aircraft industry, and we share that concern—apart from, perhaps we may say, minor differences which there are and must be between the hon. Member and myself. I could not go all the way with him, I am afraid; for instance, the word "nationalization" we on this side believe to be rather dirty. However, we look at the aircraft industry from entirely the same point of view, and, therefore, subject to trifling differences, I believe that what I have to say will apply as much to the hon. Member's constituency as to mine; and as, as I am sure he knows, more and more problems are arising, the more and more need there
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  is for those who can agree about these things to work in harmony, and to try to reduce to the minimum the necessary, but very important, political differences between us.
  Now, I am very grateful to the Chief Secretary for having explained, no doubt being responsible himself for, this Bill; because he explained very clearly that the purpose of it is to comply with the fundamental principle that Parliament should have an opportunity of discussion and of expressing grievances and demanding assurances before it agrees to a thing of this kind. When I say a thing of this kind it can be put in the simplest possible way in the very clear language of the Bill: during the next six financial years the Treasury may issue sums not exceeding in the aggregate £430 million to be applied in the purchase of United States aircraft.
  I do not believe that there is anybody in the House who would disagree that before we do that we require to consider it quite carefully and that we require to have certain assurances—some of us, perhaps, from different points of view, but all of us, I hope, from the point of view, first of all, that we require an assurance that this is not to be taken to imply the death of the British aircraft industry. Let me say here again that I very much welcome the atmosphere, following a maiden speech by a believer whom we have just heard, for I have taken the attitude for years in my constituency that the aircraft industry is not and should not be a political cockpit—leaving out, of course, the good old subject of nationalisation; but in my experience the very large number of people who make aircraft are not any more worried about nationalisation than they are about many other things. They want to get on with the job. What they want are orders and work. That is what they are concerned about at this present time.
  I rather want to follow the hon. Member in being as non-controversial as I can—for a change; but we cannot help, in my constituency at any rate, remembering that just before the General Election, on 7th March, 1966, a remarkable thing was said by the right hon. Gentleman the Minister of Aviation:
  "As the White Paper makes absolutely clear … we have provided the industry with the stability that it has been seeking for so long

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  in the programme that we have announced for the next five years. I am convinced that when our programme is put to the test of public discussion outside not only will my right hon. Friend's Defence Review be endorsed by the people, but, also, that the industry will accept that we have laid the foundation for a healthy aircraft industry and provided it with the stimulus by which it will save itself by its own exertions."—[OFFICIAL REPORT, 7th March, 1966; Vol. 725, c. 1862–3.]
  My constituents who are concerned, so many of them, directly or indirectly, with the aircraft industry were very disappointed that there was no reference to the aircraft industry in the election manifesto of the Labour Party and that there was no mention of it of any kind in the Gracious Speech. That has been a source of considerable concern to them, because they do not know where they are, and they do want to know what is the future. I am sure that, as I hope, I have the hon. Member with me, because I am sure he will find that those men employed in the aircraft industry, highly skilled craftsmen, are very gravely concerned about the future of this great industry.
  It is a great industry, when we think of the production at Weybridge, of the Wellington, which was a military aircraft, and very relevant to the sort of discussion we are having today, a magnificent aircraft, and of the Viscount, no fewer than 500 of which were sold, and the VC10, which I still maintain is as fine an aircraft as has ever been made in the world. That is the sort of thing that has been going on.
  Where are we today? I shall not be entitled to spend more than a few moments on it, but it ought to be realised that there is great concern and anxiety amongst those who work in the aircraft industry today. They ask, before we allow £400 million to be expended on American aircraft, for a statement from the Government of what they think about the British aircraft industry. We have not heard a single word about that since 7th March. We have not heard anything.
  There may be reasons for that. I do not know what they are, because we have not had an opportunity of hearing them. It would not be quite fair to ask the Under-Secretary of State for Defence for the Royal Air Force to give us an authoritative statement now, but he may possibly give us some guidance, and I
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  would also ask him and the Chief Secretary whether they would pass on to their colleagues the very real and strong desire and demand there is from everybody in the aircraft industry to get some idea of what the Government really intend with a view to giving that industry what it wants; that is to say, a feeling of stability and confidence and a feeling that it is worth while for the people who are in it to go on and for new men to come into it.
  Let me give one example of the kind of thing which has been giving grave anxiety to my constituents and, I am sure, those of the hon. Member for Feltham. Recently, a development has taken place of an extraordinary character. Men who are expert draughtsmen and designers in the aircraft industry are virtually working for America in this country. There are organisations which have been set up in the region of London Airport where British draughtsmen and designers of the highest ability are employed. They are not employed on making anything for this country.
  Elementary plans are brought over from the United States to the places where these men work, and into them is incorporated all the great skill of our British designers and draughtsmen. The plans then go back to the United States in order to be put into operation. That is an extraordinary way of avoiding the brain drain, yet, at the same time, sucking the blood of our best men. It is a very alarming fact.
  I only give that as an example. I assure you, Mr. Deputy Speaker, that I have no intention of making a lengthy speech, but I want to emphasise one or two points which are giving great anxiety to the industry.
  Surely it ought to be possible for us to have a clear and reassuring statement before long in which the very first point must be, as I emphasised every time I spoke on the subject during the General Election, that it is absolutely wrong to say that the British aircraft industry is dead. It is a very tempting thing to say, after some of the things that have happened in the last year or two. A number of people in my constituency who were employed in it wanted me to say that the Government have completely destroyed the industry. I am bound to say that I

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  told them that some unkind people would say that they had done their best to do so, but had not succeeded, and none of us thinks that they have.
  There is plenty of good morale and keenness still there, together with the desire to go ahead, but it must be stimulated and assisted. Therefore, I ask that we be given at any rate a preliminary assurance that the Government have these things in mind and that they will give us some definite idea of the future of the aircraft industry before too long. If that could be achieved, I believe that the fortunate coincidence of one hon. Member following another who has just made a maiden speech and finding that he comes from an adjoining constituency having very much the same interests may lead to great benefits for many other constituencies as well.
  8.32 p.m.
  Mr. John Rankin: I always listen to the right hon. and learned Member for Chertsey (Sir L. Heald) with pleasure and with profit. I had the good fortune to follow him on the last occasion that we debated aviation, when he pointed out that it was time we knew somehing about the future of the aviation industry. I agreed with him, but I was not so strong in my support for what he was saying when he tried to put the entire responsibility on the Government for some of the difficulties in the industry today.
  I am sure that he must have read the Plowden Report. Paragraph 125 of that Report gives us at least one reason why the industry is in difficulty today. It says:
  "Erratic Government policy in defence procurement during the last decade has denied the industry the consistent objectives and stable programme needed for success."
  That is the verdict of the Committee that inquired into the health of the industry. It lays the blame clearly and substantially on the Tory Government who went out of power in 1964, never, I hope, to return to that high office again.
  I do not want to be too controversial tonight. I agree generally with what the right hon. and learned Member for Chertsey said, because in 1960 the number of persons employed in this industry was 310,000; by 1964 it had come down
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  drastically to 250,000, and today it is in the region of 200,000. This drop must arrest our attention and demand some form of action.
  Sir Eric Errington: Does the hon. Gentleman realise that in March last year exports from the aerospace industry amounted to about £8 million, while today, according to the figures on the tape, they amount to £21 million? How does the hon. Gentleman square that with the decay of the industry?
  Mr. Rankin: I did not say that the industry was in decay. I pointed out that the industry had declined numerically, and I was about to point out that, while it had declined in numbers, methods of production had changed tremendously, and now, with the introduction of the latest methods of production, skilled labour is being dispensed with and the machine is doing jobs which were formerly done by individuals. This perhaps helps to produce the figure which the hon. Gentleman quoted.
  I want to confine myself as closely as possible to the Bill. Naturally, a Bill of this nature must disturb many of my hon. Friends, and I must confess that I was dismayed when I saw that its purpose was to
  "Provide money for the purchase of military aircraft, and parts, equipment and other articles for, or for use in connection with, military aircraft"
  and a whole lot of diverse and specified reasons, without any indication of what these parts, and so on, are.
  The Long Title ends with the words
  "and for connected purposes".
  These four concluding words give any Government the power to venture not merely into pastures new, but into fields which, from the point of view of some of us, might be very dangerous indeed. Any alliance or understanding which brings us into closer contact with America at the present time is bound to create some disturbance in our minds. It does in mine, because the Bill, taken in conjunction with what the Secretary of State for Defence said in the House earlier today, means that we are to get not merely 50 F111 aircraft from America, along with this great host of accompanying parts, but that we are to enter into closer relationships with

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  America than ever before. We are doing that at the very time when America is carrying out a foreign policy of the most despicable kind in the Far East.
  Everyone in this country—and, I should imagine, everyone throughout the world—has been roused, alarmed and shamed by what happened in Saigon this week. To see little children come out with their hands up before American soldiers was a shocking business in a Christian age. That disturbs us. I do not want to see this nation, to which I am proud to belong, entering into a relationship which is any closer than that defined by the treaty to which both America and ourselves subscribe. I do not want to see us entering into any closer relationship than is presently accepted.
  We have been told today that arms produced in this country are to be sold to America, and to further those sales we have agreed to make a special appointment of an individual. If these arms—aircraft and all their parts—are sold to America, will they be used against Vietnam? Are we now to be involved, indirectly, in the war in South-East Asia simply because military equipment of all kinds made in Britain is to be used in the war there? We have had assurances time and time again from the Dispatch Box, from the Prime Minister, that we will not put British soldiers into Vietnam. If we are to put military equipment into Vietnam, how can we refuse to put in soldiers?
  Mr. Deputy Speaker (Mr. Sydney Irving): I would remind the hon. Member that he must keep more narrowly to the Bill in hand.
  Mr. Rankin: I have the F111A in mind all the time. I can assure the House that it is not out of my mind. I do not want to see its being bought from America under this agreement and then used in Vietnam. If we can use an aircraft we can use soldiers. They are part and parcel of our armed might.
  If we are not to use soldiers, and pat our consciences on the back—which is an unusual English phrase—[HON. MEMBERS: "Scottish."] Scottish, all right; I never refuse to bring the best from Scotland—and it is not always in a bottle. If we say that we can use military
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  aircraft, how can we say that we will not use soldiers. If we say that we shall not use soldiers, how can we defend the use of military aircraft? I hope that if we build military aircraft or buy military aircraft they will not be used in Vietnam to slay innocent people.
  When my right hon. Friend was speaking I took one or two notes. He made an interesting statement. He said that the Bill enables us to reconcile our economic resources with our military needs. That is an achievement. However, when a Minister makes a statement like that—even when he sits on my own Front Bench—one should examine it with care. I am glad to see that my right hon. Friend has returned to the Chamber, because he and I are brothers—in the industrial sense. His statement assumes a constant if there is reconciliation of needs with resources and I should like to know whether that constant is embodied in our military needs.
  We can reconcile our existing economic resources with our military needs at any point only if our military needs are constant. Does what my right hon. Friend has said mean that, despite the Bill, our military needs will not expand? That is one of the dangers which I see. We want an assurance about the Bill, that, with this aircraft, our military needs will not expand.
  My right hon. Friend also had a kindly word for the Anglo-French variable geometry aircraft development. I was glad to hear that, because it is important that, when our Government are meditating on the possibility of entering Europe, we should say something to European people about a development of this nature.
  I wonder whether we could hear a little more about it. In January, I was at Dassault and was in contact with French Parliamentarians and members of the joint Anglo-French committee which is dealing with this matter. They were very disappointed at the progress being made in the development of this Anglo-French concept. I hope that we shall be able to give them some encouragement.
  I know that the debate is limited, and I do not want to speak too long, but this afternoon I raised the question of the F111 in another connection. I know that there is now a series of aircraft which all

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  have this sort of designation. One of the versions is the Navy version: I think that that is the F111B. There is another, which we are getting—the Air Force version—which is the F111A. But a third version, the FB111 has been developed and, as I said, about 200 aircraft of this type have been ordered by President Johnson.
  I am told that these aircraft will fulfil different purposes. That might not be true, but I think that it is generally accepted nowadays that aircraft like, say, the F111A or the FB111 might well do, if necessary, various types of jobs. They are strike aircraft and can be used for reconnaisance, and, in some cases, can be bombers as well.
  No sooner is one version produced than another one is on its way. We want to be completely sure that, if we are taking the F111A, it is cleared of all the faults that many of us have been led to believe still attach to it, and also that it will not be outmoded and outdated by another aircraft that is already coming to birth in the United States.
  I hope that, when we are spending the vast sum of £430 million, especially at a time when we are telling the nation that we have not too much to play about with, we shall get good value for that money, even although some of us are doubtful about the purpose. I understood from my right hon. Friend that we have adopted new methods in that no money changes hands—"ours today and unnumbered years to pay". It sounds attractive, but there is danger in that.
  8.52 p.m.
  Mr. Stanley R. McMaster: This has been a remarkable debate. We have had a number of speeches from both sides—including the excellent maiden speech of the hon. Member for Feltham (Mr, Russell Kerr)—and not one has praised the Bill. Hon. Members, including the hon. Member for Feltham in his non-controversial speech, have criticised the Bill, which proposes spending £430 million of the British taxpayers' money in supporting the American aircraft industry. There is no doubt that these purchases of aircraft from the United States do help to support the American aircraft industry.
  I want to join in protesting strongly about the proposal in the Bill. These
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  aircraft could well have been obtained in Britain. The British Aircraft Corporation, Hawker-Siddeley, Short Bros. and Harland and other companies could have produced aircraft which would have served the purpose just as well as the F111A and the C130 which the Government propose to buy. But the Government realised, when they cancelled the TSR2 and decided not to go ahead with the HS681 transport aircraft, that they would have to buy American aircraft. They decided that they would run down the British aircraft industry and that rundown is very serious.
  The hon. Member for Glasgow, Govan (Mr. Rankin) has already mentioned the rundown in employment from about 250,000 to about 200,000 that has already taken place in the aircraft industry. Just before he died, I was speaking to a close friend, Sir Sydney Camm, who designed the vertical take-off P1154. The Government have ordered the P1127 but not the venturesome P1154. Sir Sydney was very nervous about the state of affairs in Hawker-Siddeley. Many of the senior design staff were leaving. The 10,000 or more who have left in the past year consist of the cream of the industry. When there is a rundown on this scale the best men leave first. These men can easily find other employment. Some of them are already designing American aircraft in Britain. Many others have gone overseas; to America, South Africa and, perhaps, Australia.
  What is the net result of all this to Britain? It is that we are losing our balanced aircraft industry, and I stress the word "balanced". We not only need the facilities to manufacture aircraft. We need the design staff as well. Consider our export orders. British exports of aircraft and aircraft parts are running at about £150 million a year. The amount has varied during the past 10 years between £100 million and £150 million. We have already scored a record export figure in the past month and this reflects important orders for aircraft and equipment such as seats and so on—all won as a result of plans made four or five years ago by the former Government.
  For how long can we expect such sales from the aircraft industry? What are the Government doing? The answer is that they are merely exchanging sales for

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  aircraft rind parts, both civil and military—aircraft like the Lightning, which went to Saudi Arabia, the Hawker Hunter, which was sold widely throughout the world and was an excellent fighter, the Viscount, the VC10 and the BAC111.
  The aircraft industry in Britain depends, like most aircraft industries, on military orders. Indeed, 70 per cent. of purchases from the industry in Britain represent military orders. In America the figure is 80 per cent. Even in France it is 60 per cent. These purchases of military aircraft enable British aircraft manufacturers to maintain their design staff and go ahead breaking into new fields of aviation.
  It is an illusion to think that the Government can cut away the military orders and that the civil side of the industry will survive and flourish. That cannot happen if 70 per cent. of the industry's work is taken from it. Instead of earning exports by selling civil and military aircraft, we are having to pay £430 million for American aircraft. That is the first and most immediate loss and it will have a great effect on our balance of payments. In addition, we will lose the technological fall-out of the industry. It is an exciting industry which attracts the keenest and best brains. The men who possess these brains will not move to factories producing washing machines, cleaners or motor cars.
  These men are interested in breaking new bounds of knowledge. Their brains and the products of their research—aeronautical research, metallurgy, new uses for plastics and so on—are all being lost. A tremendous technological fall-out is being lost to this country. In addition, we lose our independence, for we become completely dependent on the United States for our military aircraft and, perhaps for a large part of our civil aircraft requirements.
  As the previous debate underlined, the House has been misled by the party opposite about the Government's intentions concerning the aircraft industry. The Prime Minister said in the House in February of last year:
  "What this House wants to ensure and what the state of our economy demands is a healthy and balanced aircraft industry, an industry which never again becomes virtually dependent for its existence on one highly costly venture …"—[OFFICIAL REPORT, 2nd February, 1965; Vol. 705, c. 936.]
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  He went on to stress the vital rôle to be played in our defences by the British aircraft industry and the contribution which it had to make to our national economy. The Secretary of State for Defence said in April of last year:
  "… it is the Government's firm intention to retain a lively and viable aircraft and equipment industry …"—[OFFICIAL REPORT, 6th April, 1965; Vol. 710, c. 338.]
  In a leaflet circulated in Preston before the 1964 election, the Labour Party stated:
  "There is a good future for the British aircraft industry under a Labour Government."
  Yet how do they act when they are in power? The Government cancel the main orders for our aircraft industry.
  In my constituency we have the firm of Short Bros. and Harland. That aircraft manufacturing firm is in an area of high unemployment. We are very concerned about employment in Northern Ireland—about 7 per cent. of the men are unemployed. What did the previous Minister of Aviation say about the rundown in the aircraft industry? I will quote what he said, and ask whether hon. Members consider it to be an honest statement of fact. The Minister referred to the shortage of skilled labour, and said:
  "… there is no point in releasing labour"—
  this was said on 9th February, 1965, with reference to the aircraft industry:
  "unless it is to be quickly reabsorbed in more productive work. In any changes we shall, therefore, have the fullest regard to where and how far that is possible. We are determined not to leave labour lying idle. If retraining is necessary it will be energetically provided. The aircraft industry is spread fairly widely over the country. Much, but not all of it, is in areas of very full employment. If redundancies are necessary, we shall look to the firms to consult fully with us—they live, after all, on public money—and concentrate these redundancies in the most labour-scarce areas."—[OFFICIAL REPORT, 9th February, 1965; Vol. 706, c. 236.]
  That was a plain statement of fact yet in an Answer today, when I asked about the future of Short Bros. and Harland at Belfast, I was told that by the end of December this year the number will be cut to 6,000 men—
  Mr. Dalyell: On a point of order, Mr. Deputy Speaker. Matters in Northern Ireland are obviously very important, but what have they to do with this Bill?
  Mr. McMaster: I am relating all these remarks directly to the Bill, because the expenditure of this money is at the cost of employment at Short Bros. and Harland, which has the Belfast—
  Mr. Deputy Speaker: I am grateful to the hon. Member for West Lothian (Mr. Dalyell) for his help, but I have as yet heard nothing that is out of order.
  Mr. McMaster: I apologise, Mr. Deputy Speaker, for jumping, in too quickly.
  The Answer I had today forecast a rundown of about 2,000 men in the next nine months, and in the following 12 months a further redundancy of 3,000 more, coming down in 1967 to just over 3,500 men at Short Bros. and Harland. Is that the way the Minister keeps his promise to concentrate redundancies "in the most labour-scarce areas"?
  On 28th May last, the First Secretary of State and Secretary of State for Economic Affairs said:
  "I would repeat the assurances given here"—
  he was speaking in Belfast at an apprentices' prize day, and a similar event will be held at the end of this week:
  "by my colleague, the Minister of Aviation, only the other day. 'Shorts is part of the British aircraft industry and will remain part of it.' I can assure you that Shorts will fulfil their commitments in the matter of delivery or after-sales service …"
  That assurance was repeated the following week by the present Home Secretary when the Financial Times reported him as saying on 19th May, 1965:
  "Shorts is part of the British aircraft industry and will remain part of it. He affirmed the Government's intention that the company should continue its work in the missile as well as the aircraft field."
  I do not want to weary the House, but I have one last important quotation. I believe that these quotations show that the Government were deliberately misleading, not only Members of this House but my constituents in Belfast. On 2nd February, 1965, the First Secretary of State said:
  "I am making a carefully considered statement and I think that he will find that Short Bros. and Harland, and Belfast, are looked after by this Government far better than by the last."—[OFFICIAL REPORT, 2nd February, 1965; Vol. 705, c. 1017.]
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  The right hon. Gentleman was referring to the Conservative Government. Yet the work force in Belfast has been halved in 18 months.
  I am glad to see the Chief Secretary to the Treasury here. I informed the Minister of Aviation this afternoon that I hoped to raise this point, and I am sorry that he is not here.
  There are three projects to which I should like to draw attention. First, there is the collaboration which Short Brothers has been carrying out with Fokker of Germany in producing the F28 aircraft. The Plowden Report emphasised that if the British aircraft industry is to survive it must collaborate with Europe. Based on this collaboration, which has been very successful, over the F28, there has been formed the V.F.W. Consortium, consisting of V.F.W. and Fokker, both Dutch and German firms, and the Consortium invited Short Brothers to take part by putting up 40 per cent. of the capital and producing a new twin-jet aircraft for which there is a great demand—the VFW 614, a small feeder jet which is intended to replace the Dakota, of which many hundreds were sold and used after the war. But the Government refused to support the project. Is this the way they support Short Brothers and Harland? The Government have refused to support a very promising project. Now the Germans and Dutch are carrying on on their own, and they will probably have great success.
  The Government should have looked carefully at the American attempt to sell out the British aircraft industry 'when it offered us the old C130E. The model started with A and they have gone through from A, B, C, D to E. It is a clapped-out old aircraft. The Government could instead have bought the Belfast, a new aircraft just coming into service. This aircraft could have been improved and developed. Why did not the Government take some of the Hercules on charter if they needed them urgently? They could have chartered this aircraft in order to fill the gaps. Ordinary civil air lines do this. In the meantime, the Government could have ordered further Belfasts in order to provide employment in Belfast and keep a viable aircraft industry in this country.

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  The last project is the Skyvan. It has just been reported in the Press that the Government will not support a promising approach from Indonesia to purchase 10 Skyvans. This might have earned this country and Short Bros. almost £1 million. I suggest that the Chief Secretary to the Treasury should reconsider this matter carefully. He was hoping to trade with Indonesia. It has just been announced that we are giving Indonesia a £1 million standby credit. If Indonesia does not buy the Skyvan, it is likely to buy the American aircraft, the Twin Otter. Short Bros. has just broken through into the toughest market in the world, the Australian market. Ansett, an Australian operator, has agreed to buy three Skyvans to be used in New Guinea. Here is a chance to bring work to the British aircraft industry and to a part of it which very much needs the work.
  I ask the Government to reconsider the whole proposition of spending £430 million in America. They should reconsider the position of our aircraft industry before it is too late, and look again at all the proposals which they are incorporating in the Bill to see whether it is not possible to give more help to our aircraft industry and to Short Bros. and Harland in so doing.
  9.9 p.m.
  Mr. John Hall: I am always impressed by the very wide knowledge of the aircraft industry shown by my hon. Friend the Member for Belfast, East (Mr. McMaster). I am sure that what he has said must commend itself to the attention of the House.
  Before I turn to my general remarks on the Bill, I have the very pleasant privilege of complimenting the hon. Member for Feltham (Mr. Russell Kerr) on his maiden speech. I only wish that when I made my maiden speech, about 13 years ago, I had made it with the same confidence and knowledge of my subject as he showed. He is a member of one of the few husband-and-wife teams in the House, his wife being the hon. Member for Rochester and Chatham (Mrs. Anne Kerr). I am sure that we all hope to hear the hon. Member on many future occasions. The only similarity, in a sense, between the hon. Gentleman's maiden speech and my own is that we were both critical of our respective Governments.
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  In my case, it was about a tax on furniture—not, perhaps, quite such an important subject.
  As my right hon. Friend the Member for Mitcham (Mr. R. Carr) said at the beginning of the debate, the Bill places us in a slightly difficult position. Clearly, it would be wrong for us to oppose it, for the reasons which have already been deployed. Nevertheless, we must examine very carefully, not only the future implications of the Bill, but the reasoning and the policy which has led up to it.
  My right hon. Friend asked many questions and I want to emphasise one or two of them. For example, my right hon. Friend asked whether the amount in the Bill of £430 million was likely to be enough. He pointed out the various things which would have to be covered. He made one point of great importance which must again be emphasised. Does the agreement cover guaranteed prices for spares and any future development which may be found necessary; or are we likely to be faced with the cost of new developments to overcome present problems? Will that be put on to the cost of spares in the future? This is an important point which I am sure the Under-Secretary will answer.
  My right hon. Friend also asked whether we were ordering enough of the F111s? He asked whether we were allowing for the kind of wastage which could conceivably occur. We have recently heard of the very unfortunate experience of the West German Air Force, where 54 Starfighters, which, I think, is the F104, have crashed during the last 18 months to two years. It is almost unprecedented in aviation history that this should happen. We know that this is a very sophisticated plane. It is supposed to be a very good plane. It is possible that it is its very sophistication which has created the problem which has produced the crashes. I wonder whether we have allowed for the possibility that with a very sophisticated plane like the F111 we may experience the same kind of casualty rate. If we do, this may well be disastrous for us.
  My right hon. Friend asked whether the dollar offset agreement is likely to prove adequate. He mentioned the failure of our attempts to get the tugs purchased recently. Remembering the power of the pressure lobbies in Washington on behalf

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  of the armament and defence industries in the United States, one sometimes wonders whether, with the best will in the world, the American Administration will be able to implement the offset agreement to the extent which Her Majesty's Government would like to persuade us will be the case.
  I want now to refer to a point which was brought out in an exchange which occurred towards the end of the speech made by the Chief Secretary. I must confess that I was not quite clear about it. This was the reference to the sums which have already been spent amounting to £22½ million and to which the Estimates Committee called attention. The Chief Secretary said that this amount of £22½ million has now been covered by borrowing. This puzzles me. On what authority was the borrowing carried out? We are now considering a Bill which covers £430 million of borrowing which excludes this £22½ million. Therefore, by what authority were the Government able to borrow the £22½ million? This is a point to which I hope the Under-Secretary will turn his attention and give the House an answer.
  My hon. Friend the Member for Belfast, East, in his excellent speech, drew attention to the fact that not one speaker has had a kind word to say for the Bill. Probably the strongest criticism has come from the Government benches. The hon. Member for Glasgow, Govan (Mr. Rankin) was very critical of the Bill and, indeed, of the thinking which lay behind it and of the reasons for it. We know that the hon. Gentleman has always been opposed to the defence policies followed, in the first place, by the Conservatives when we were responsible for government. At least the hon. Gentleman has been consistent. He has opposed the defence policy throughout. On the other hand, although right hon. Members opposite opposed it when they were in opposition, now that they have changed places they have adopted a similar policy.
  The hon. Member for Govan said that he hoped the F.111 would not be outdated and would not be almost immediately superseded by a more advanced aircraft. I ought set his mind at rest. It has been said quite recently that aircraft are now being built that can go so fast that they can cross the Atlantic
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  before they become obsolescent; so the hon. Gentleman need not fear too much.
  My hon. Friend the Member for Belfast, East drew attention to the very serious consequences that this decision to change to American aircraft could have on employment in this country, and in particular in Northern Ireland. This could have a very considerable effect on the economy of this country as well as on our position as a military power.
  The hon. Member for Feltham drew attention to the dangers into which we might put ourselves by making ourselves dependent almost entirely for our future fighter and bomber aircraft on the American aviation industry. He suggested that this would shackle us in the development of an independent foreign policy. This is a danger of which I am sure Her Majesty's Government are well aware. I took down the hon. Member's words and I thought they were interesting, coming as they did from the other side of the House. He said that we must open our eyes to the real dangers of the present situation. There is a lot to be said for this point of view.
  Perhaps I could give a brief survey of the aircraft situation. We are all aware of the decision of the Government to cancel the British aircraft, the TSR2, the Hawker VTO fighter and the Hawker Siddeley 681 which is the short take-off jet fighter. When these were being developed, they were, as I understand, part of an absolute pattern of defence. They were mutually supporting. In a sense, we have now disturbed this pattern. Whatever may be the reasons for choosing the F111 and increasing the order for the Phantoms, part of which I agree was placed when my party was in power, I find it hard to understand why we should buy the Hercules. If my memory serves me correctly, the Hercules was being offered to us before 1960 and we should have known a good deal about this aircraft. It was obsolescent then and I should think it is even more obsolescent now.
  Hon. Members on both sides of the House had an opportunity, I believe in June, 1960, to look at this aircraft and its performance. Several right hon. and hon. Members, including the First Secretary, the Minister of Agriculture, the Joint Parliamentary Secretary to the Ministry

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  of Housing and Local Government, the right hon. Member for Leyton (Mr. Gordon Walker) and some hon. Members on this side of the House, saw this plane demonstrated in Atlanta, Georgia, in 1960, and I do not think that at that time there was any noticeable enthusiasm on the part of any right hon. or hon. Member who was present to buy that aircraft. We believed that in this country we had planes existing or in course of development which would be as good as, and indeed better than, the Hercules as it then was. It is my conviction that today we have aircraft which could have been better than the Hercules which it has now been decided to buy.
  We have scrapped the Hawker Siddeley 681 A. I am not a technical expert. Aviation is not really my subject, but I am told by people who know about these things that that was a very good aircraft and, in the view of most experts, better than the Hercules.
  The Secretary of State for Defence (Mr. Denis Healey): Is the hon. Gentleman aware that there was no chance of getting the HS681 before 1972? The R.A.F. need a transport of this type next year and we shall get the Hercules next year. Nobody who is familiar with the problem that we have of deploying our forces in a hurry can doubt that we needed a vast increase in our medium transport fleet as fast as we could get it. There was no chance of waiting four years.
  Mr. Hall: As my hon. Friend the Member for Belfast, East said, we could have taken the Belfast on a short-term hire or a charter arrangement without scrapping this first-class aircraft. The consequences go far beyond the military field. I accept the view that there might have been an immediate military need, but what about the effect on the civilian market We have put ourselves out of the jet freighter business for the foreseeable future. We have made it impossible for us to compete in this market, by deciding to scrap an aircraft of this kind. This was a most unfortunate decision.
  The other outcome from the agreement is that we shall be importing into this country, over the next 10 years, American technology for the development of their own planes and we are restricting the development of our own technology very largely to assembly, repair and maintenance.
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  We have already seen the effect of this, and several hon. Members have referred to the way in which it affects their own constituencies where branches of the aircraft industry are situated. It affects employment in this country, although in a full employment society such as ours, by and large, a large number of the people who are put out of work may fairly readily he absorbed elsewhere.
  But what cannot be absorbed elsewhere and what we shall, in fact, be losing, is the skill of our designers and specialist craftsmen. As has been said already, these are now going overseas or being used by American firms in this country and are being denied to our British aircraft industry in consequence. This is one of the great dangers resulting from a policy of this kind.
  I realise that any Government faced with the difficult problem of mounting defence costs would look round to see in what way cuts could be made. It is natural to turn to aircraft, which are so very expensive, with costs rising all the time for development and the rest. It is quite understandable that this Government took that course to find a way by which they could reduce the overall cost of defence, but, in choosing this particular way, the machinery for which we see in the Bill now before us, they have struck a most damaging blow at the British aircraft industry, a damaging blow not only now but at its future development as well.
  The policy has now been decided on and it is there. There is nothing we can do to arrest its development. But the Government must steel themselves and attune their ears to what will be a growing high-pitched scream from the emasculated British aircraft industry of the future.
  My right hon. Friend asked several questions to which, I hope, we shall receive answers, but, even if we do have the answers, they will not detract from the fact that this Bill is, in the first place, the result of a failure to appreciate that legislation was necessary to give effect to the loan arrangements. This in itself is rather unfortunate. The Bill has come in late and, as we have heard, has in consequence attracted the censure of the Estimates Committee. We know that it imposes a further burden on our balance of payments. Already, £22;½ million have been spent in dollars at what is probably

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  a most critical time for our balance of payments. We now, also—there is nothing against saying it—that we are handing over the technical development of our aircraft industry in its main lines to the Americans.
  All this must have a dramatic effect upon the development of civil aircraft. As my hon. Friend the Member for Belfast, East said, to be able to develop civil aircraft one must have reasonable military orders as a basis for development and production. Cut those out, and it becomes almost impossible to develop a really worth while civil market and develop new planes with all the costs involved in research and development.
  The Government's policy is a bad one, ill-conceived and not thought out to its logical conclusion. In this respect, it resembles other equally important legislation put before us in the recent past. The Bill and the policy behind it will produce a situation which we shall bitterly regret. I very much wish that I could advise the House to reject the Bill, but we know that we cannot because, if we were to deny the Government the Bill tonight, they would not have the borrowing powers necessary to pay for the planes which they have already ordered. We are told that we shall have in our own hands power to debate and consider year by year the amounts expended in dollars under the Vote headings, and the House, as is its right, will have the power to throw them out if it wishes and refuse to vote the money.
  We know that this is true, but, under a Government with a very large majority, it is a rather empty protection. What is likely is that the Government will get what they want, so that this protection will be virtually illusory, until such time, of course, in another four or five years from now, when we shall have a change of Government and the situation will be quite different.
  I wish that I could advise the House to throw the Bill out, but I cannot do so. I only hope that when the Under-Secretary replies he will be able to remove from our minds some of the more serious anxieties we feel about the effect of the Bill, not as a piece of machinery for borrowing money and paying for orders already placed but on
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  the development of the aircraft industry and the effect upon the industry in this country.
  I also hope that he will turn his mind to the effect upon our independence of action. If we are to be dominated largely by the American aircraft industry in the provision of fighter and bomber aircraft and weapons of war of this kind, I should like him to consider the effect on defence and foreign policy. I can only advise my hon. Friends to let this Bill pass, but we do so with regret. It should not be taken by hon. Members opposite that by not dividing against the Bill we are in any way approving the policy which lies behind it.
  9.26 p.m.
  The Under-Secretary of State for Defence for the Royal Air Force (Mr. Merlyn Rees): I first offer congratulations to my hon. Friend the Member for Feltham (Mr. Russell Kerr). He represents a constituency which knows all about aircraft. His constituents can hardly stop listening to them at most times of the day and, as has been pointed out, large numbers of his constituents work in the industry. I should also like to add a word of praise to his predecessor, who was liked in all parts of the House and who served his constituents well.
  The new hon. Member has practical interests in the industry, both professionally and as an officer of one of the trade unions concerned with it. As he pointed out, he is an Australian, a sort of reverse immigrant, a reverse "Pommy", who served in the R.A.A.F. during the war and who was a Pathfinder. On his first trip today he has been "on target" and now is "home and dry". In my maiden speech as a Minister this evening I am still approaching target and have yet to get home.
  The debate tonight has been wide ranging and I shall try to answer all the points which have been made. Many controversial questions of policy raised in the last Parliament have been raised again tonight. Before looking into them, it would be as well to remind ourselves of the much more limited nature and purpose of the legislation before us. All the major decisions have already been taken and fully discussed in this House.

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  The decision to purchase Phantom aircraft for the Navy was taken by the Conservative Administration in 1964. The decision to cancel the P1154 and the HS68I and to purchase the Phantoms and the C130 was announced by my right hon. Friend the Prime Minister on 2nd February last year. On 6th April last year the Secretary of State for Defence told the House of the decision to cancel the TSR2. The 1966 White Paper announced the decision to buy the F111As.
  These matters have been discussed on many occasions, most recently on 7th March and 8th March this year. Hon. Members have had a very full opportunity to express their views about the merits of the new aircraft programme. The greater part of the decisions has been implemented. The capacity of the British aircraft industry has been, or is being, redeployed to take account of the cancellations, and firm orders have been placed for the American aircraft in the new programme, although not for the full quantity to be purchased in every case. To a considerable extent, therefore, we are contractually committed to the decisions that we have taken.
  In these circumstances, the Bill that is now before us is a technical Measure dealing with a straightforward although important financial problem. Its purpose is to avoid a sharply increased burden on the balance of payments during the particularly critical next two or three years in this respect. It is during that period that we shall be receiving large quantities of United States equipment, and unless we make these arrangements for spreading the burden we shall have to pay for it as the liabilities occur.
  To overcome this difficulty, we have negotiated an arrangement with the United States Government under which the Americans will make available credits to cover the dollar capital cost of the American aircraft which we are purchasing. The Bill is needed to extend the Treasury's borrowing powers so that we can take advantage of these credit facilities and to make it possible to use the borrowed money to relieve the Votes from which progress payments for the aircraft, their equipment, and so on, will be made.
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  The Bill is founded on the Resolution of last week. These two Measures authorise the Treasury to make loans to the Ministry of Aviation and the Ministry of Defence of up to £430 million in six years.
  Sir E. Errington: Does the £430 million include the £22 million which has already been borrowed and the 46 per cent. in respect of work that was done in this country?
  Mr. Rees: The 46 per cent. work done in this country is paid in sterling and, therefore, does not enter into this calculation. I will return presently to the point about money which has already been spent this year.
  The sum of £430 million is expected to cover the dollar capital element of the American aircraft, together with their associated weapons and specialised equipment and the initial lay-in of spares which come with the aircraft when new. It will also meet dollar expenditure on research and development and the training of aircrews and maintenance personnel.
  The figure does not include interest on the loan at what I regard as the very satisfactory rate of 4¾ per cent., nor does it include the dollar cost of spares replacements, as opposed to the initial purchase, which will be paid for in cash. The total dollar cost over the next 10 years works out at £660 million, as quoted in HANSARD of 4th March, 1966. This includes the £17½ million already borrowed, which, I believe, is the figure to which the hon. Member for Aldershot (Sir E. Errington) has referred.
  The Military Aircraft (Loans) Bill, which is before us tonight, could not be introduced earlier because its full implications could not have been explained to the House until the Defence Review was completed and until, in particular, the final decision had been made on the F111A. However, no additional dollar expenditure has been incurred, nor has there been any extra burden on the taxpayer as a result of this necessary delay, since the whole of the £17½ million involved was borrowed under a special arrangement, details of which have already been published.
  That was done under the National Loans Act, 1939. We considered that for this big purchase special arrangements

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  had to be made to bring it into the purview of the House annually, through the Estimates, but for the £17½ million, or approximately 50 million dollars, arrangements were made with the American Government and the Export Import Bank at the same rate of interest. Details of these were published recently.
  Mr. John Hall: This is an important point. I understand that the £17½ million which has already been committed and to which the hon. Gentleman has drawn attention was borrowed under the National Loans Act, 1939. I thought, however, that this kind of money could not be found under that Act and that the whole reason for the Bill was that it could not be done in that way. How, therefore, are we able to meet this expenditure under the 1939 Act?
  Mr. Rees: The greater part of the expenditure—the large sums involved—will in future be dealt with in this way. The £17½ million was dealt with in this manner in order to aid the balance of payments in the short run this year, and there is nothing under the National Loans Act, 1939, to prevent this. The Bill has been introduced to enable the House to have control over the large expenditure every year. The Bill is concerned only with the £430 million as payments ranking for credit terms. We expect to borrow this in periodical instalments between now and 31st March, 1972. The repayments on each individual borrowing will be spread over the seven-year period immediately following the borrowing transaction.
  My right hon. Friend has already given a clear explanation of the detailed working of the Bill. I suggest that any points of detail would better be left to the Committee stage. At this point I would merely re-emphasise that the Bill makes provision for Parliamentary control in the way suggested and explained by my right hon. Friend. It will, therefore, be seen that the Bill is concerned with the important financial problem of avoiding the over-burdening of the balance of payments in the years to come.
  Mr. R. Carr: Can the hon. Gentleman confirm that the balance of £230 million between the £430 million dealt with in the Bill and the total dollar cost of £660
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  million has to be paid for in cash as the liability arises and is not dealt with on credit at all?
  Mr. Rees: I am not sure that I understand the way in which the right hon. Gentleman puts it. Let me put it another way. The repayment of each individual sum of money which will be borrowed every year for the purchase of aircraft will be spread over the seven-year period following. So the borrowing of the first amount of money for the period 1966–67 will be spread over until 1974. Each one will go forward over a seven-year period in that way.
  Mr. John Hall: This is rather complicated. I thought that the hon. Gentleman was going on to the question of spares. He said that these figures included the spares that were delivered with the aircraft and that future spares would have to be paid for in cash. This does not quite answer the point raised by my right hon. Friend earlier. Is there any guarantee about the prices which will be charged for future spares?
  Mr. Rees: I shall come to that. I have made a note of all the questions and I hope to deal with them all in the course of the next 21 minutes. The hon. Gentleman can nudge me nearer the end of that time if I have missed them.
  I must now turn to some of the wider questions. Although, as I said, the main decisions have been taken, I can quite understand that, despite the fact that we have had a year of debate on this subject, right hon. and hon. Gentlemen opposite are anxious to return to matters which are of great importance.
  Sir E. Errington: I should like to press the hon. Gentleman as to what has happened between the £430 million that we are dealing with and the £660 million—that is, £230 million. One might lose that, but I do not know quite what has happened to it.
  Mr. Rees: Our credit terms are on the £430 million. That is what the Bill is about. This is our borrowing from the American Government. The other has to be paid for in the normal fashion, because there is no credit arrangement for it. As the right hon. Gentleman properly pointed out in his opening speech, the £430

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  million is only part of the total sum involved in the purchase of American aircraft, and there is credit only for the £430 million.
  I want to make one point straight away, speaking for the first time as Under-Secretary of State for Defence for the Royal Air Force. I should like to re-emphasise a point that was made very strongly by the Prime Minister in February, 1965. He said:
  "The first duty of any Government of any party is to ensure that the nation's defences are adequate and effective, that the nation's security is fully defended. This means that if this House as a matter of defence or foreign policy, puts British Service men into the field, or into the air, to fulfil national commitments, those who take up those burdens must have the right to feel that they are adequately equipped."—[OFFICIAL. REPORT, 2nd February, 1965; Vol. 705, c. 930.]
  It has been one of our prime aims in the Defence Review to give effect to this, and I believe we have now enabled the Royal Air Force for the first time in many years to see the way ahead clearly and to know for certain it will have the equipment it needs to carry out its commitments. I shall return to that point in a moment. It is a most important one.
  Having said that, we must also avoid the danger, and recognise it, of aiming too high in planning the future military aircraft programme and aiming for aircraft which are very desirable but not absolutely necessary for the rôles in which it is planned to use them. This inevitably leads to two consequences. One is that the aircraft take so long to develop that there is an unacceptably protracted period during which the Royal Air Force has to struggle on with obsolescent types; the other is that the aircraft, when they eventually reach the production line, are so costly that they face the Government with an unenviable choice, either to allow defence costs to rise far beyond what the country can sensibly afford, or else to cut the size of the front line to the point where it is no longer viable.
  When the Labour Government came to power we found we had inherited a programme which suffered from both these defects, and we set ourselves the task of remedying them. We are convinced we were right to grasp this nettle, and I believe, also, that the electorate agreed with us.
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  As my right hon. Friend the Secretary of State for Defence has said, the major savings resulting from the Defence Review will arise almost entirely from changes in our equipment programme, and the biggest saving will be in the Navy and the Royal Air Force aircraft programme, from which we shall save £1,200 million over the next 10 years.
  Much has been said tonight by hon. Members on both sides of the House about the effect on the aircraft industry. To achieve savings of this order of £1,200 million we have had to cancel projects in which the British aircraft industry had placed high hopes. These decisions were taken only with the deepest reluctance, but the plain fact is—and this came out clearly in the Plowden Report—that we cannot as a nation afford to go in for expensive aircraft development projects unless there are good prospects for exports and the possibility of spreading development costs over a much larger number of aircraft than our industry could expect to sell just to the Government.
  We have also accepted the view of the Plowden Committee—and this deals with a point raised by my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) and my hon. Friend the Member for Feltham—that the most promising future for the aircraft industry dies in collaboration with other countries, especially other European countries. This is particularly the case with aircraft of a highly sophisticated character, such as the Anglo-French VG aircraft, but it also applies to less sophisticated aircraft such as the Jaguar, where the wider sales prospects should result in a viable production line. It is thus a crucial feature—I emphasise this—of our aircraft programme that it prepares the way for these two important Anglo-French projects, which fit in so well with what the Plowden Committee had in mind for the future.
  Mr. Stephen Hastings: Can the hon. Gentleman tell the House what the market is for the Anglo-French VG project, and what rôle is envisaged for these aircraft in the Royal Air Force?
  Mr. Rees: I will come to the rôle of these aircraft in a moment.
  The effects of these cancellations on the aircraft industry have so far borne out

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  our predictions and not the predictions of hon. and right hon. Gentlemen on the other side of the House. There has been no large-scale unemployment. Aircraft factories have been closed, but this should make possible the redeployment of resources, both financial and of skilled manpower, to other industries where they are badly needed, and the aircraft industry has been able to devote a fair part of its capacity to other uses including work on the Maritime Comet, the P1127, the Spey engine for the Phantom, the Anglo-French collaborative projects, and the Saudi Arabian order. It seems clear that the very gloomy predictions made in some quarters are not being realised, and they certainly were not borne out at Preston.
  The right hon. Gentleman raised the point of pressure on British contractors to include components of United States manufacture so as to raise the dollar content in the price of the aircraft. I can deny categorically that there is any such pressure. In one or two isolated instances, a British contractor building to an American design may buy a few components from the American licencer so as to meet a delivery date, but that would be a matter for his commercial judgment. Generally speaking the items incorporated in these aircraft are entirely British, particularly in the case of the Phantom, where they account for 46 per cent. of its value.
  I want to turn now to the consequences of our decisions for the R.A.F., which is the prime responsibility of my right hon. Friend the Secretary of State. In so doing, I wish to emphasise that the savings on the R.A.F.'s aircraft programme are not being achieved by giving the R.A.F. equipment which is inadequate for its task. On the contrary, it will gain to the extent that we are speeding up the provision of new equipment for certain essential military rôles.
  Taking transport aircraft first, hon. Members will know that the R.A.F. still has to rely to a very large extent on the vintage Hastings and Beverley, which are unacceptably limited in speed, range and performance. The first Hastings saw R.A.F. service in 1949, and the first Beverley in 1956. If we were still looking
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  to the HS681 as a replacement, the R.A.F. would have had to make do with these old aircraft until 1971 or 1972, for it was not until then that the HS681 could possibly have been introduced. The C130, on the other hand, will be introduced next year. It is urgently needed now. The R.A.F.'s tasks in the Zambian oil airlift operation would have been much simpler had the C130 been available.
  Even when 1972 is at last reached, we do not believe that the R.A.F. will greatly miss the additional capability of the HS681. As my predecessor, my hon. Friend the Under-Secretary of State for Scotland, told the House, we have made a careful analysis of all the available airstrips in the various parts of the world where we are likely to operate with the C130, and we are convinced that it would be a perfectly satisfactory aircraft for the kind of task that the R.A.F. will want it to perform. Since we can buy three C130s for the price of one HS681, that is a classic example of the point that I tried to make earlier about not aiming too high.
  Mr. McMaster: I hope that the hon. Gentleman will deal with the point that I raised about the possibility of using the Belfast for that purpose—and with Shorts.
  Mr. Rees: The hon. Gentleman will forgive me if I do not go into the wider point about Shorts. As far as the Belfast is concerned, we can get three C130s at a fixed price for one Belfast. That is an important aspect and one which my right hon. Friend the Secretary of State has to bear very much in mind.
  So much for transport aircraft. I should like to go into the aircraft programme fairly fully, because that is the aspect of the Bill tonight that matters to the R.A.F. The Government as a whole have wider considerations to bear in mind, but my right hon. Friend's responsibility and, indirectly, my own is to see that we do not send British Service men into a task for which they have not adequate equipment. That is something about which I feel very strongly.
  Turning now to fighter ground attack aircraft, we find the same story. The P1154 would have been an excellent aircraft, but there was no chance of getting it until 1972. Meanwhile, the R.A.F. would have had to struggle on with the obsolescent Hunter, which would have

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  been in service for no less than 18 years and be inadequate in almost every respect.
  The major reason for our decision to go for the Phantom and the P1127 instead of the P1154 was simply that we could not accept leaving the Royal Air Force dependent on the Hunter for such a period. The Phantom will now be coming into service in 1968—I emphasise that date—and the P1127 in 1969. These two complementary aircraft will together fulfil the rôle which had been in mind for the P1154—the Phantom with its supersonic performance, extremely good weapon-carrying capability, and so on, and the P1127 with its vertical take-off and short take-off capability for close support to the Army. The P1127 will he employed during its life in the ground attack rôle with the Army, and the Phantom will be employed in this rôle until 1973–74, when it will be transferred to the air defence rôle and replaced in the ground attack rôle by the Anglo-French Jaguar which will then be coming into service.
  The Jaguar will be a light-weight supersonic aircraft for training as well as for ground attack. It will be a versatile aircraft, and its dual rôle, combined with its joint development, should enable us to obtain the maximum benefit from large production orders which my hon. Friend the Member for Govan, mentioned. Thus, the Phantom will not only close the operational gap earlier than would have been possible, but will pave the way—and we regard this as of great significance—towards the introduction of this important collaborative project.
  Incidentally—and I emphasise a point which has been made a number of times tonight—to describe the version of the Phantom which we are buying as an American aircraft is to some extent a misnomer, since 46 per cent. of it will be of British origin. The greater part of this is the Spey engine, which, while of itself a little more expensive than the U.S. engine, gives a better performance, and is therefore likely to add to the length of the Phantom's operational life.
  Now I turn to the strike-reconnaissance rôle of the F111A, and to many of the questions which were asked tonight. Our decision to cancel the TSR2 and to purchase 50 F111As was taken basically on cost grounds. There has been much discussion
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  on this over the past year or 18 months, but whether one is arguing about unit cost, or programme cost—whichever basis is taken there is much room for argument and discussion—the F111A comes out on top. It was a cost-effective decision which was taken.
  The requirement is to replace the Canberra in the reconnaissance and tactical strike rôles, in the latter case essentially as a conventional deterrent. As the Defence Review progressed, it became clear that the V-bomber force would be operationally acceptable in the tactical rôle, for which it will be available once the Polaris submarines are in service, until the Anglo-French variable geometry aircraft became available in about 1974, provided that a comparatively small number of tactical strike reconnaissance aircraft were available by about 1970 to penetrate the most sophisticated opposition.
  We certainly could not accept the suggestion of the right hon. Member for Wolverhampton, South-West (Mr. Powell), or that of his right hon. Friend who talked about incredibility concerning the number of 50 F111As. The right hon. Member for Wolverhampton, South-West said that by the mid-1970s the F111A force would virtually have wasted out. This question has been looked at most carefully, and while I cannot say on what annual wastage rate our calculations were based, I assure the House that we shall be able to maintain the front-line force until well after the V-bombers have been replaced by the variable geometry aircraft.
  A point which I should like to emphasise is that the accident rate in the R.A.F., I am very pleased to say, improves with every year. It is a credit to the pilots, and it is a great credit also to the servicing carried out on aircraft in the Royal Air Force.
  Mr. R. J. Maxwell-Hyslop: British aircraft.
  Mr. Rees: The hon. Gentleman says "British aircraft". Anyone would think that if one buys another aircraft one is knocking the British industry. All other considerations have to be taken into account.
  Mr. Maxwell-Hyslop rose—
  Mr. Rees: I hope that the hon. Gentleman will not mind my not giving way, but I have only five minutes in which to complete my speech.
  It will be seen that the keystone of our future aircraft programme will be the Anglo-French variable geometry aircraft. The F111A is intended primarily to tide us over an operational gap. The hon. Member asked a number of questions about this and I want to get these in before I finish. He asked whether we were satisfied that the total of £430 million provided in the Bill was enough to cover all our needs. The answer is that while there never can be any absolute certainty in these matters, as he will recall, we have a great deal more reason for confidence in this case than we have had with any other advanced military aircraft that we have ever ordered in the past. We have a ceiling price for the basic aircraft. This insures us against price escalation over the bulk of the capital cost and we hope soon to negotiate a ceiling price for the modifications needed to bring the aircraft to the Royal Air Force standard of configuration.
  Secondly, we have agreed that we will not, in respect of any items in the programme, pay more than the average price paid by the United States Government. This deals with the hon. Member's fear that any unforeseen research and development cost might be offloaded by the United States on to the price of spares, although the spares in general will not be financed by the loan arrangements, as I pointed out earlier.
  The hon. Member asked how we would stand in the event of cancellation, and suggested that the Skybolt decision, over which he and his hon. Friends were so grievously disappointed, might be repeated. I want to make it clear that there is no parallel at all. At the time of abandonment, Skybolt was not an approved and funded United States Government project. The money spent on it, by the United States standards, was marginal. The F111A project is not only approved and funded but is well on the way to completion. Orders for several hundred aircraft have been placed. Cancellation is therefore only the remotest possibility but certainly by the time we start disbursing significant sums on the aircraft any prospect of a general cancellation will be negligible. But we
  540
  considered it proper to include in our arrangement with the Americans provision for a proper joint review of the British Government's position even in this remote possibility.
  I now turn to the problems connected with the F111A, and here I must point out that there has been a great deal of mix-up between the FB111 and the F111A. The F111A is the aircraft that we are buying. We believe that any problems that existed are being solved, and we have every confidence in the project. That is the way that we look forward to the future.
  I have mentioned briefly the contractual arrangements that have been made. I will now turn briefly, in the last few minutes, to the Bill and the balance of payments. The main object of the Bill is to avoid overburdening the balance of payments in the particularly critical next two or three years. The total dollar expenditure resulting from the new programme will amount to £660 million over the next ten years. After taking credit for the reduced Polaris programme and for the offset purchases that we have already discussed, this works out at only £165 million more than the programme of the Conservative Administration, of which £90 million is interest.
  I was asked a number of questions about this and about Jordan. In connection with Jordan, the offset arrangement is for 10 years. It takes three to make a collaborative sale. Not all negotiations that are opened will be fruitful, but we are confident that in the long run the scheme will come to fruition in the way that we have suggested. Up to 1969–70 dollar expenditure will not be very different from that which would have been incurred under the old programme, because the naval Phantoms were to have been bought for cash.
  In short, the major decisions on our aircraft purchases have been taken. The purpose of the Bill is a financial one. It is a good Bill, which is in line with the aircraft decisions of the Government in the last 18 months. We have come to terms with the military aircraft problems. We are providing the aircraft when the Royal Air Force want them, and we are also looking at the needs of the aircraft industry. We have been right on this. We are right on the Bill this evening.
  Mr. R. Carr: Can the hon. Gentleman deny the rumours that have been referred to in connection with Lockheed representatives going to Rhayad with the support of the American Embassy?
  Mr. Rees: I have not been able to check on this, but it should be borne in mind that at the least, if the American Lockheed company went to Jeddah, or wherever else it may be, the American military attachè, out of courtesy, would have had to accompany it. I have not been able to look into this, but I do not think that it is for me to comment on the subject.
  10 p.m.
  Mr. Tam Dalyell: Normally, one takes the rough with the smooth in being called and does not take advantage of exempted business, but on this occasion I make no apology for taking advantage of exempted business to make a short speech—not necessarily because of the weight of what I am going to say, but because I think that it is deeply wrong that, in a debate of this kind, scheduled for three hours, back-benchers should have had a total of 62 minutes, or roughly a third of that time.
  I wish to congratulate my hon. Friend the Under-Secretary of State on his very full explanation of this complicated subject. However, there are three questions which I should like to put to him. When he talks of a guarantee, if prices rise, could we have rather more of an explanation on this question? This was raised by the right hon. Member for Mitcham (Mr. R. Carr) and some of us have a feeling that, in certain aspects of the Bill, there is something of an open-ended contract. What I am asking for is details of the contractual agreement, particularly in relation to spares, after first replacement.
  My hon. Friend used the phrase "the initial lay-in of spares". Precisely what does this initial lay-in mean? Does it mean a certain allocation? Does it mean the first spares? What is meant by the "heavy extra costs" of research and development? In his speech, which was spoken at a very fast rate, my hon. Friend made reference to clauses involving research and development contracts. As those of us who were guests of the General Dynamics Corporation of the United States when its representatives
  542
  were over here will know, there is no doubt that those research and development items could escalate into a major cost.
  The question I put to my hon. Friend, therefore, is, precisely what are the terms of the contract as they concern research and development costs? To be specific, supposing it is found that the developments in Britain in inertial navigation techniques or fire control systems turn out, as they may, to be rather better than those in the United States. What are the terms of contract which will allow British manufacturers of fire control systems or inertial navigation techniques to have them fitted into any F111A which we buy?
  Finally, there is another question. Supposing that over the next few years our commitments themselves change, what happens then to the contractual agreement? Some of us hope very much that, within two or three years, we will have a saner relationship with the Indonesians. We hope that our relationship with Jakarta will be much better. We hope that there might be a basic change in our relationships over the Singapore base. The world may look very different, from a defence point of view, in 1968, from how it looks in 1966. Perhaps, as our commitments change—east of Suez or elsewhere in the world—our defence needs will change.
  I wish to ask my hon. Friend about something which he cut short at the end of his speech, namely, what are the terms of contract in the event of the British Government wishing to have some kind of a cancellation? If matters change in the Far East and we establish a different relationship with Indonesia or any other country, we want to be clear how our commitments are tailored to our needs in terms of the contract we are discussing. Do we have to pay for aircraft which, in certain eventualities, we may not require? At least, this question is worthy of an answer.
  I am sticking narrowly to the Bill, and passing no kind of judgment. I have spoken in foreign affairs debates and there are other times to raise various matters of Far East policy. But tonight I offer no apology for asking precisely what the terms of contract are and just what we are letting ourselves in for in the event of a change in policy.
  10.5 p.m.
  Mr. Albert Booth: Hon. Members opposite have referred to the position of draughtsmen affected by aircraft cancellations involved in this programme. I speak as a member of the Draughtsmen's and Allied Technicians' Association and feel, therefore, that I must make it clear that draughtsmen look at this problem not only in the light of cancellations which have taken place in the last year or two and of the wisdom or otherwise of engaging in a deal involving hundreds of millions of pounds with the United States, but also in the light of all the cancellations that have taken place over the last 15 years.
  This problem started for the draughtsmen in the time of the post-war Labour Government, but it grew very much. I remind the House that it was in 1951 that the Sturgeon anti-submarine aircraft was cancelled. In 1952, the Brabazon transport was cancelled and this was followed by the DH fighter aircraft in 1952, the developed Hawker Hunter in 1953 and the Princess transport in 1954. But 1955 was a bumper year. Cancellations then included the Vickers military transport, the Swift fighter reconnaissance aircraft, the Swift photographic reconnaissance aircraft, the Swift crescent wing fighter, and the Avro rocket interceptor. The rate slowed down in 1956 when we had cancellation only of the thin-wing Javelin.
  In 1957, we had the cancellation of the Fairey supersonic fighter, bomber and naval interceptor, and in 1958 the Orion turbo-prop engine. In 1959, there was cancellation of the Scorpion rocket engine, in 1960 the Spectre rocket engine, in 1962 the rotodyne helicopter, and in 1963 the steel supersonic research plane.
  If I do not continue with the list and give all the cancellations, it is not because I do not wish to mention the aircraft cancelled by this Government, or because I may have a party bias in the matter—I have plenty of party bias. It is because those already mentioned should be sufficient for my case.
  Mr. William Baxter: Would my hon. Friend be prepared to accept the hope—
  Mr. Speaker: Order. If the hon. Gentleman will turn towards the Chair, the Official Reporter may hear it.
  Mr. Baxter: I am sorry, Mr. Speaker. I ask my hon. Friend whether he would express the hope and the expectation that the aircraft involved in the Bill may be cancelled, also.
  Mr. Booth: I am not prepared to express such hopes at this stage. Consideration of that involves certain wider issues.
  I have not included in the list the cancellations of missiles, which reaches a formidable total.
  I must put it to the House just what a demoralising effect a list of cancellations like this has on draughtsmen and allied technicians. The day may well be gone already when a man can take individual pride in having created something, but the day is coming when a man can take greater pride in team efforts in building highly sophisticated pieces of machinery. Just as men take a pride in seeing a ship they have built go down the slipway, so the draughtsmen and designers take an equal pride when seeing a plane on which they have been working take off and fly successfully for the first time.
  It does not take much imagination to realise how hard it is to maintain enthusiasm when one is working on the drawings and designs of a project which one feels may be cancelled in the next week or two. This is one of the effects of the cancellations, cancellations which have led us to the point tonight of debating the borrowing of a large sum from America to buy American planes.
  Despite all the cancellations I have mentioned, in the period 1958 to 1964 Great Britain never failed to export less than £88 million worth of airframes and engines each year. Sometimes the figure was much higher. This is an ideal field for Britain to increase its exports because these products involve the maximum amount of labour and the minimum amount of raw materials. We are not likely to increase our exports if we are, at this stage, borrowing £430 million to buy the work of the American aircraft industry.
  First, every military airframe we design and develop is a flying test-bed. This cannot be over-emphasised. In these frames is the most advanced forms of electronic equipment, the very latest

  545
  types of computers, the latest forms of hydraulic equipment and the most advanced metallurgy. This knowledge is unobtainable in practically any other form at the moment and it is knowledge which must result in enormous civil benefits.
  Secondly—and this is elementary—foreign customers are not likely to buy British when they see British buying American. They are likely to take the attitude, "If Britain thinks it is wise to buy United States' planes, it must think that American planes are better than British ones."
  It is wrong of hon. Gentlemen opposite to point out the problems that exist in the F111 as a flying machine. There are problems, and this is undeniable. However, it is a very advanced variable sweep plane and it is almost inevitable that any plane of this type will have problems. If one waits until those problems are all ironed out before deciding whether or not to buy, one might wait a very long time indeed. It is almost inevitable, because of the rate at which aviation is progressing, that problems will exist and a decision to buy must be taken before all of them are ironed out. If the Americans are at good at ironing out problems as they are at selling their planes, they will he ironed out very quickly indeed because when the Americans come here to sell they come like an army invading—and a very successful army at that.
  Although this is to some extent against the case I am making, it is also true that the F111 will probably be available—or can be available—before the Anglo-French Spey-Mirage could be. However, against this one must remember that we are proposing to buy Fills because of the cancellation of the TSR2.
  The TSR2 was damned on grounds of enormous costs, but those were costs which anybody with sufficient knowledge of design and development in the aircraft industry could have foreseen. The specification under which the TSR2 was being built was so tight and advanced that it was inevitable that its cost would rocket. It is, therefore, not fair to hold up the F111 as a cheaper alternative when it was not made to the same specification as the TSR2. It is alleged in the industry that
  546
  the specification has been altered to admit the F111 as an alternative.
  Much the same thing can be said of the Hawker-Siddeley 681. That was cancelled, and we have been told tonight that in its place there is an order for the Lockheed C130. The C130 does not meet the specification to which the Hawker-Siddeley 681 was being built. It is appreciably smaller in freight hold dimensions. The hon. Member for Belfast, East (Mr. McMaster) suggested the Belfast as an alternative. It has been pointed out the Belfast is three times as dear, but what has not been pointed out is that the Belfast has a far higher payload and far greater range.
  Such factors have to be taken into account when comparing costs. When we are buying American aircraft on grounds of cost we must compare like with like. It is not fair to say that we are buying them because they are cheaper when we do not look at whether they come up to the specifications to which the British planes they are meant to replace are designed. That is one of the industry's serious criticisms.
  It would not be fair for me to criticise my own Front Bench if I were to do it in a way that suggested that it was possible at this stage to overcome at one fell swoop the effect on the country's economy or military capabity of all those cancellations I have mentioned. That would be impossible. But, to recover from the detrimental effect of those cancellations on the industry, we must realise one or two things.
  We must realise, and realise quickly, that if we are to welcome a reduction in our armaments costs, we have to accept, if that is to be done without detrimental effect, a very serious limitation of our military commitments. That is essential. I cannot believe that the country wants to concel any British arms contracts merely to take up American ones, where it would be detrimental in any way to our economy. Two actions should flow from the reduction of British military commitment, on which is based the cost of our arms programme. One is the development of the U.N. peace-keeping rôle. If we are to reduce our own rôle, that is essential. Secondly, we should strengthen our economy with the reduction of our military expenditure.

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  Military advisers have very limited horizons, and, goodness knows, this country, under more than one Government, has suffered from them. It was probably a Japanese military adviser who advocated the use of suicide planes, and thought that even a limited military objective justified throwing away a plane and a pilot. I sincerely hope that we shall not have a Minister who becomes a suicide pilot of the British economy in order to gain the short-term objective of a higher military capability.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Gourlay.]
  Committee Tomorrow.

  RESERVE FORCES [MONEY]
  Resolution reported,
  That, for the purposes of any Act of the present Session to make further provision with respect to reserve forces, associations established for the purposes of the Auxiliary Forces Act 1953, the discharge of men of the regular army and air force and the qualifications for appointment as deputy lieutenant, it is expedient to authorise the payment out of moneys provided by Parliament of—

  (a) any expenses of the Secretary of State under the said Act of the present Session; and

  (b) any increase attributable to the provisions of that Act in the sums payable out of such moneys under any other Act.

  Resolution agreed to.

  SCOTLAND (BURRELL ART COLLECTION)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gourlay.]
  10.21 p.m.
  Mr. Richard Buchanan: The subject of this Adjournment debate is the housing of the Burrell Art Collection. It might be, "Why is the Burrell Collection not housed?" It seems a little grotesque that at this time we should be discussing a wonderful art collection which has not been housed because there may be a shortage of a few thousand pounds. We have just been dealing in terms of millions of pounds for military aircraft, and I hope that this debate will bring the House back to a vestige of sanity.
  The Burrell Collection was gifted by Sir William Burrell and Lady Burrell to the City of Glasgow in 1944. One of the restrictions involved in the gift was that the collection had to be 16 miles from the centre of Glasgow and within four miles of That was subsequently amended to 13 miles from Glasgow because of the difficulty in finding a site. This restriction is valid if one understands the type of collection. The prevailing winds in Glasgow are from the South-West, and Glasgow is an industrial city much affected by fog and smoke, although the Glasgow Health Committee is taking rigorous action to make the city smokeless. However, in 1944 this condition did not exist.
  The most priceless part of the Burrell Collection is the Gothic tapestries dating back to the 14th, 15th and 16th centuries. These tapestries are somewhat unique. Most Gothic tapestries are passionately Christian, but this collection is rendered unique and more attractive because of the number of secular subjects contained in it.
  I am expressing the views of experts when I say that this collection is one of the most important in the world. Looking back, one cannot cavil at the conditions laid down by Sir William Burrell. I think that it is my duty to stress the value of the collection in view of what I shall ask at the end of my speech. It contains the arts of the ancient civilisa-
  550
  tions, with examples of the early river civilisations dating from the fourth to the third millenium B.C. onwards. It has Persian earthenwares of the 11th, 12th and 13th centuries. There are almost 300 silver and gold and silver mounted items. There is a cross dating from 1300. There are Mazer bowls, pyxes, tankards, and so on, and there are 200 pieces of Chinese pottery from prehistoric times to the T'ang period and Chinese porcelain from Sung to K'ang Hsi.
  In all, there are about 500 paintings. There is an excellent representation of the 19th century French painters This represents amongst the 500 the only attempt at collecting a selective period of painting. In this excellent 19th century French collection we have examples of Renoir, Degas, Daumier, Manet, Courbet, Delacroix, Corot, Cezanne, Sisley, Millet, Gauguin, Ribot and Fantin Latour. It is an amazing collection, ranging through the classical and romantic phases and incur-porating experiments in colour and technique of the Impressionists and postimpressionists.
  Outside this group there are represented the 17th century by Velasquez, Rembrandt, Ribena, Hals and the 18th century by many of our own well-known English and Scottish painters—Hogarth, Hudson, Reynolds, Ramsay, Rzeburn, Romney and Gainsborough. To a later era belongs one of my own favourites, Peploe.
  There is a stained glass exhibition going on in Glasgow just now which is attracting great crowds. There are 587 windows of stained glass, 50 per cent. of which is heraldic, dating back to the 16th and 17th centuries. This is truly a universal appreciation of art throughout the ages. In range and quality it is probably the finest collection of its kind in the world.
  My purpose in stressing this and in spending some time on it is to let those who are not here to listen, those who are not Scots, those who are not Glaswegians, realise that this is not a twopenny ha'penny collection we are talking about. This is a collection which is insured for £2 million and which is probably worth

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  many millions of pounds in the open market.
  The trustees of this collection had a very grave responsibility, for its housing had to be forever. There would be no second shots. It had to be a building which was adequate. They took the necessary precautions. Many times I lost patience with them. Nevertheless, I appreciate that they are most sincere and dedicated people who are trying to do the best by the trust which was imposed in them.
  My hon. Friend the Member for Glasgow, Provan (Mr. Hugh D. Brown) was Chairman of the Art Galleries Committee when a gift was made to Glasgow by Mrs. Connell, of Dougalston Estate, near Glasgow. We all thought that this was a solution, because Sir William himself visited this estate and was delighted with what he saw there and approved the building of the galleries on the estate at Dougalston. The corporation acquired the site at Dougalston and spent a considerable amount of money on it.
  Then along came the National Coal Board. It started to sink bores in the area, with a proposal that mining should begin. Sir William, the trustees and ourselves took fright. We had to give up the Dougalston site. That was in 1954. So, in the modern vernacular, we were back to square one.
  Another site came to hand close to Dougalston, at Mugdock. This site was investigated thoroughly, but never "got off the ground." In these negotiations the various Lord Provosts of the City of Glasgow were concerned—Kerr, Hood, Galpern, Roberts, Meldrum, and the present Lord Provost John Johnson, with the City Treasurers and with my hon. Friend the Member for Provan as Chairman of the Art Galleries Committee. These responsible people were trying most sincerely to find a solution to what appeared to be an intractable problem.
  In 1962, I became the Chairman of the Special Committee on the Burrell Art Collection. Everything looked very, very bleak. It seemed that everything that could be tried had been tried. No solution seemed to be coming forward. Suddenly, it was spring again. Suddenly, in the midst of December, the sun shone, because a member of one of the families
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  near Glasgow, the Maxwell MacDonald family—Mrs. Anne Maxwell MacDonald, daughter of Sir John Stirling Maxwell—very much in the family tradition of public spirit and generosity, offered Pollok House and the estate at Pollok to the nation via the National Trust.
  Glasgow Corporation was party to a restrictive agreement between Sir John Stirling Maxwell, the National Trust and the corporation in 1939. This will come in later. The fact remains that this particular estate—Pollok House and all that it contained—was offered to the nation. Could a place be found for the Burrell Collection? It seemed too good to be true. On 16th December, 1963, the trustees, those concerned in the National Trust, and ourselves, visited the Pollok estate. On that grey December day Pollok estate still looked gorgeous. The trustees were impressed. They considered, they held meetings, and they agreed, subject to certain safeguards and conditions, that the Burrell Collection should be housed in Pollok.
  I shall remember that day for the rest of my life. The mixture of excitement and delight with which I was filled made me almost incoherent. It was a great thrill to be associated, even in a small and humble way, with anything that promised to make history for my native city. Pollok House was built in 1752 by William Adam, and is situated in beautiful parkland. I cannot believe that there is another site more appropriate for the housing of this collection anywhere else in the world. We have a historic and beautiful house built by one of Scotland's greatest architects in lovely parkland, and containing such an artistic collection, within three miles of the City of Glasgow.
  To give such a house to the nation is a tremendous thing. As I say, it was given completely in the family tradition of public spirit and generosity; and to add to this the Burrell Collection did not seem possible. But it was, for during friendly meetings it was agreed that if suitable arrangements could be made between the Government and the National Trust of Scotland for the Trust to become owner of Pollock House and policies, the Maxwell MacDonald family were in fullest sympathy with the aspirations of Glasgow Corporation that a part of the policies should be made available for the

  553
  housing of the Burrell Collection, and the National Trust for Scotland was of the same opinion.
  So, when I left Glasgow Corporation, the state of play was as follows. First, the Burrell trustees were in agreement, subject to certain safeguarding conditions, that Pollok be the site. Secondly, in terms of the restrictive agreement, Glasgow Corporation had a right of preemption which, if the property was to be transferred to the National Trust, the corporation would require to waive. Third, if satisfactory arrangements could be made for the National Trust to become owner of Pollok House and policies, it was understood that the corporation could have the site.
  It is the third item—the satisfactory arrangements—with which I am concerned. It is well known that the future care and maintenance of the property would place an impossible burden upon the Trust, for without financial help by way of endowment fund or annual grant, it could not carry on. At the beginning of 1964 such an application was made to the Treasury, via the Historic Buildings Council for Scotland and the right hon. Gentleman who was then Secretary of State for Scotland. There it seems to have stuck.
  There should not now be any reason for delay. Excuses will not do. This has been going on for 22 years. The collection is scattered throughout the city in six secret stores. For obvious reasons the stores must be secret. These priceless tapestries are unwound regularly to ascertain that no damage is occurring to them. But there obviously must be wear and tear, no matter how much care is taken in the examination. If it is the Government's fault I am disappointed that there should be this delay. But I am encouraged by the stimulus which the Government have given to the arts, not only in Scotland, but in Britain as a whole, to ask that they should do all in their power to make possible the housing of this wonderful collection.
  I implore my ex-colleagues of Glasgow Corporation to take their courage in both hands. Glasgow has always played her part in stimulating and encouraging the arts. In this respect a responsibility has been placed on them, and I ask them to
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  stop this delicate, dithering, dickering diplomacy. Delay simply plays into the hands of the Philistines in their midst. If the opportunity is lost here, it may never recur. I ask my former colleagues of Glasgow Corporation to "go it alone" if need be. They can do this sort of thing better than most.
  I hope that all obstacles to the housing of this fabulous collection may be removed and that it may yet be seen in its entirety in the gorgeous setting of Pollok, before this generation passes into oblivion.
  10.34 p.m.
  Miss Harvie Anderson: I congratulate the hon. Member for Glasgow, Springburn (Mr. Buchanan) on raising this very important subject tonight. Glasgow has long been prominent in the patronage of the arts, and some of my particular interest in the Burrell Collection may stem from the fact that my grandfather was chairman of the committee responsible for building the art gallery. But the importance of the Burrell Collection goes far beyond Glasgow.
  The fantastic generosity of Sir William Burrell caused him to donate these 8,000 objects to the City. The present insurance cover for them is £2 million, and is probably but a fraction of the collection's sale value. What is important now is that arrangements shall be made soon which can be reconciled with the terms of the donor's will. He could never have visualised that his treasures would remain hidden for 22 years. The prospect of a permanent home in Pollok must be welcomed by all concerned. No great city could offer a more wonderful setting within its bounds, and the long interest of the Stirling Maxwell family in the arts makes it an even more appropriate choice.
  As the hon. Member for Springburn reminded us, the collection includes the greatest collection of medieval tapestries in Europe, a unique collection of stained glass, and, apart from the pictures which he enumerated, the Oriental collection of Chinese bronze and early jade, with the Near East represented with perhaps the finest collection of Persian rugs and metal work in this country.
  Sir William Burrell had great skill in collecting, as did those associated with

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  him. It is more difficult to look after these treasures, scattered as they are, and we would all like to acknowledge our debt to the curator in whose care they have been. But the treasures are exposed inevitably to dangers. Moreover, they are only partly on show from time to time. I am sure that all hon. Members join in hoping that a universally acceptable solution to the present problem will be found, and found quickly.
  10.37 p.m.
  The Under-Secretary of State for Scotland (Mr. Bruce Millan): I am very pleased that my hon. Friend the Member for Glasgow, Springburn (Mr. Buchanan) has raised the question of the Burrell Collection, and I am particularly pleased that he has done so in such a very reasonable and helpful way. I know that this is a subject in which he has a deep interest and concern, and I hope that what I shall have to say will give him some ground for optimism.
  I am indebted to the hon. Lady the Member for Renfrew, East (Miss Harvie Anderson) for what she said and the way she put it, and I am delighted, too, that so many Glasgow Members are here tonight to hear this short debate, because their presence demonstrates the interest which, I know, hon. Members on both sides feel in the subject.
  As my hon. Friend said, the whole problem has become one which involves both the Burrell Collection itself and Pollok House, which also, incidentally, contains a very fine collection though on nothing like the scale or value of the Burrell Collection.
  I need not describe the collection in detail because my hon. Friend has already done so. It consists of a vast assembly of paintings, sculptures, tapestries and other objets d'art of very high quality. It is a very remarkable and valuable collection, and, as both hon. Members have pointed out, in many respects a unique one. It was amassed over a long period of years by Sir William Burrell, who, in 1944, 14 years before his death, gave virtually the entire collection to Glasgow Corporation, together with a large sum of money which now amounts to over £500,000, for the housing, care and enlargement of the collection.
  As my hon. Friend said, it was one of the conditions of the gift that the collection
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  should be housed in a suitable district and in separate buildings which would be specially erected for the purpose on a site provided by the corporation not less than 16 miles from Glasgow. The 16-mile limit was subsequently reduced to 13 miles, but the trustees have, quite understandably, been most anxious that the collection should not finally be housed where it would be exposed to damage from the smoky atmosphere of the City of Glasgow.
  My hon. Friend mentioned the number of unsuccessful attempts which have been made over the years to find a suitable home for the collection. I need not recount the history of that, and I come now to the present situation which has developed out of the proposition, first made in 1964, that a suitable site for the collection might be found in the grounds of Pollok House.
  The Burrell trustees have agreed that if the collection could be housed in buildings to be erected in the Pollok estate they would not enforce the obligation that it should be housed more than 13 miles from the city. We are very much further, therefore, than we were in 1964.
  I will say something about Pollok House itself. As my hon. Friend said, it is situated in Pollok estate, which is a very fine and extremely pleasant estate. I take the more pleasure in saying that as, incidentally, it is largely within my constituency of Craigton. It is only about three miles from the centre of Glasgow and the estate and house are owned by Nether Pollok Ltd., which is a family company. The house has a fine collection, a very notable collection, of Spanish paintings, 18th century furniture, silver and porcelain which has been built up by the Stirling-Maxwell family.
  The proposals under discussion are that the Burrell Collection should be suitably housed at Pollok estate. As my hon. Friend said, and I was very glad he said it, the present owners of Pollok estate have shown great generosity and public spiritedness over the years, particularly in this matter in their anxiety to ensure that the estate and the treasures of Pollok House should be available for the public at large to enjoy. There is already before us, therefore, the prospect that the two fine collections

  557
  could be housed near to each other in extremely pleasant surroundings, thus providing an unsurpassed amenity for the City of Glasgow.
  In the Scottish Grand Committee debate on 20th July, 1965, when the Committee was debating arts and amenities, my hon. Friend the Member for Lanark (Mrs. Hart), then the Joint Under-Secretary of State for Scotland, dealt briefly with the Burrell Collection. She said that at that time she was not able to give any final details or information about the negotiations which were then taking place. She went on to say that she had to be rather cautious because there were complex and delicate issues involved both for the private parties concerned and public bodies, Glasgow Corporation in particular. I am glad to say that since that time a good deal of progress has been made, but it is still true that the negotiations going on involving both private and public bodies are, naturally enough in view of the complexities of the subject and the variety of interests, at a delicate stage.
  My right hon. Friend the Secretary of State and myself have been kept in close touch with the progress of the negotiations by Glasgow Corporation and others who are involved. I think that all parties to the negotiations recognise that the Government are very ready to help. That does not exclude financial help, as my hon. Friend the Member for Lanark said last July. We are ready to help when a solution has been reached, but things are not yet at a stage where a solution has been reached by the other parties concerned. It would be premature, and I believe unhelpful, if I were to give the details of what is at present being discussed. Perhaps, however, I may mention one aspect of the problem to which my hon. Friend the Member for Spring-burn referred, the proposal that the National Trust for Scotland should become the owner of Pollok House and its immediate surroundings. It has become clear as negotiations have proceeded that maintenance of Pollok House, its contents and the estate would be a very heavy burden on the Trust which would necessitate their being substantially endowed for the purpose.
  This situation is not one which could appropriately be met by grant under the Historic Buildings Act. Various Governments
  558
  have taken this attitude. The discussions which have been going on recently, therefore, have not excluded the possibility that, in the event, the best solution might be one which did not involve placing Pollok House in the permanent care of the National Trust.
  I am not able to go much beyond that this evening, because we are dealing with private property and the legitimate interests of various public-spirited people. It would not be proper for me to say much more tonight. I emphasise, however, that the Government are very much interested in the outcome of the negotiations and are anxious to help. We are not, however, at present a major party to the negotiations. It is not for my right hon. Friend or myself to speak on behalf of the Burrell trustees or Nether Pollok Ltd., or for Glasgow Corporation or, indeed, the National Trust. In the first instance, it is for these bodies to see that a solution is worked out.
  In saying that, I am not trying in any way to conceal a lack of progress in this complicated matter. I repeat that considerable advances have been made in these private discussions, and I hope that they will be brought to a successful outcome. The preliminary exchanges seem to suggest that that will happen. We have to leave it now to the parties concerned to try to reach agreement. I know that they are all anxious to reach settlement and that there is a tremendous amount of good will on all sides.
  A great deal of time has elapsed since Sir William Burrell made this gift to the City of Glasgow, and many people feel strongly that not enough has been done over the years to have this problem solved and this great collection housed in a worthy gallery where it can be seen and enjoyed not only by the citizens of Glasgow, but by a wider public.
  For obvious reasons, I do not wish to go over the history of the whole problem, but, as both hon. Members who have spoken have pointed out, it is a considerable disappointment, to put it no higher, for all of us who are concerned about this matter that it should have dragged on for more than 20 years so that the benefits of the collection are not being made available to the public, as we should like them to be. Many people have become rather disillusioned that this difficult problem will ever be satisfactorily solved. I want

  559
  to make it clear, therefore, to my hon. Friend that I believe that we are now genuinely in sight of a solution to the problem. I hope that this debate will indicate to all the parties concerned the interest that, I know, hon. Members on both sides have in the matter and our concern that a solution should be reached.
  I repeat that the Government are certainly anxious that a solution should be reached. I assure my hon. Friend and other hon. Members that anything that we can do to facilitate a settlement, not as a major party to the negotiations but, obviously, as an interested party, we should be only too pleased to do.
  10.48 p.m.
  Mr. Edward M. Taylor: The Under-Secretary of State for Scotland has been very helpful and courteous in his reply to the debate. It is encouraging that something appears to be happening. It is also encouraging that the Minister will keep in touch with the parties concerned. As a member of the Glasgow Corporation for five years, I have had nothing like the experience of the hon. Member for Glasgow, Spring-burn (Mr. Buchanan) in being engaged in the negotiations.
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  I wish to make one brief point. I counsel the Minister against the feeling that the present time is a delicate stage in the negotiations and that something will happen. During the five years that I was on the council, we always had this feeling. Whenever there was a question of raising the subject in any way, we were told that negotiations were at a delicate stage and that something would happen soon. That is the situation now. We are told that something may happen soon.
  Everyone who has spoken tonight has accepted that this is a collection of international as well as national interest and is not simply a matter for Glasgow. The city, as we all appreciate, has an enormous financial burden at present, and looking to the future this may become more serious. If we are to approach this as a Glasgow problem, in which the corporation accepts responsibility for putting up buildings, I hope it will be possible for financial assistance to be given from the Government, because at present I feel that the resources are simply not there.
  Question put and agreed to.
  Adjourned accordingly at ten minutes to Eleven o'clock.

MINISTRY OF AVIATION
  British European Airways, Turnhouse Airport
  British European Airways, Turnhouse Airport
  VC10 Aircraft (Sale to Middle East Airlines)
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  Large Aircraft (Passenger Handling Facilities)
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  Aerobatic Championships, Moscow
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  Command Paper No. 23, 1956
  Command Paper No. 23, 1956
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  Population
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MINISTRY OF DEFENCE
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PENSIONS AND NATIONAL INSURANCE
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  Wandsworth and Battersea Local Advisory Committee
  Wandsworth and Battersea Local Advisory Committee

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

THE LORD BISHOP OF TRURO
John Maurice, Lord Bishop 0f Truro— was (in usual manner) introduced.
Several Lords—Took the Oath.

GENEVA DISARMAMENT CONFERENCE
2.45 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on the proceedings of the Disarmament Conference at Geneva.]
THE MINISTER OF STATE FOR FOREIGN AFFAIRS (LORD CHALFONT): My Lords, the Eighteen-Nation Disarmament Committee, which reconvened in Geneva in January, went into recess yesterday, May 10, and will meet again on June 14 for the summer session. During the present session, the Committee has concentrated its principal attention on the problems involved in reaching agreement on a treaty to prevent the spread of nuclear weapons and a comprehensive nuclear test ban treaty. These are, by general agreement, the really urgent steps that need to be taken in the disarmament field. The Committee has also discussed other arms control measures, as well as general and complete disarmament.
Progress has been slower than we should have wished. In the negotiations for a non-proliferation treaty—a treaty to prevent the further spread of nuclear weapons—the United States Government
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has suggested some amendments to the draft agreement which it tabled last year. We believe that these amendments help to narrow the dispute between the Western and Soviet positions; but serious differences remain. The principal obstacle to progress in achieving a comprehensive test ban treaty, which would extend the partial test ban treaty to cover underground tests, remains the question of how it should be verified.
During the recess we shall re-examine the position reached in the negotiations, in order to determine the best way to make progress. Other parties to the negotiations will also be taking stock. We hope that, as a result, it will be possible to advance when the Committee reconvenes for the summer session.
LORD BROCKWAY: My Lords, may I express in the presence of the Minister what I have expressed in his absence: my very great appreciation of his ability, dedication and independence.
SEVERAL NOBLE LORDS: Order! Question!
LORD BROCKWAY: My Lords, I am only following the courtesies of this House May I ask the noble Lord whether his statements in Geneva and at his Press conference mean that nuclear responsibility by consultation rather than by a collective force is to take a place in the British Government's policy? Does this not mean some reconsideration of the British retention of nuclear weapons? In that case, would not the best example as to proliferation of non-nuclear weapons be the discontinuance of nuclear weapons by our own Government?
LORD CHALFONT: My Lords, I am grateful to the noble Lord for the kind remarks he has made. So far as the question is concerned, the position of Her Majesty's Government on the questions of nuclear sharing and nonproliferation has, I think, been made clear before. It is that these are matters now under consideration. They are not, of course, entirely matters for Her Majesty's Government. In this we must often be guided by the views and opinions of our allies. Certainly what I said about the process of consultation over nuclear weapons represents the policy of Her Majesty's Government. I

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have no reason to believe that abandonment by Her Majesty's Government of the British nuclear capability would lead us much further from or much more quickly towards disarmament or effective measures of arms control.
LORD CARRINGTON: My Lords, may I ask the Leader of the House whether it is not a custom in this House that Statements come after 3.30 and certainly not during Questions?
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, if I may say so, I think that the point needs rather careful consideration. I have had the opportunity of giving it very brief consideration. On the information I have been able to acquire, I think that it would be very difficult for me to argue that Lord Brockway's Question was out of order; but I think the procedure does need a little investigation.
LORD CARRINGTON: Would the noble Earl look at it? Because when the Government are asked to make a Statement it is difficult for the Government not to make a Statement. I do not at all complain at what the noble Lord, Lord Chalfont, said I think he was in a very difficult situation; but this is inclined to be, or could be, an abuse of the Starred Question procedure of the House.
THE EARL OF LONGFORD: My Lords, I should not like to argue that anything that fell from the noble Lord, Lord Brockway, was an abuse of anything. But I see, and see very clearly, the point of the observations of the noble Lord who leads the Opposition.
LORD BROCKWAY: My Lords, may I say—
SEVERAL NOBLE LORDS: No!
LORD BROCKWAY:—that I am very willing to agree to the wishes of this House and to any discussion with the Leader of the House as to what the proper procedure should be.
LORD REA: My Lords, might I ask the Minister whether the Disarmament Conference, which we all wish so well, has had recent contact with China?
LORD CHALFONT: No, my Lords, there has been no direct contact with the People's Republic of China over disarma-
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ment. The Government of that country shows no interest whatsoever at the moment in international disarmament negotiations and has made no sort of reaction to any suggestion that there might be.
LORD BROCKWAY: My Lords, might I put a further question to the Minister? In view of the fact that China is prepared to consider nuclear disarmament on a total basis, is the prospect of Her Majesty's Government not only to gain immediate non-proliferation but subsequently the total abolition of nuclear arms?
LORD CHALFONT: My Lords, of course general and complete disarmament, including the abolition of nuclear weapons, remains the final aim of Her Majesty's Government. But we can negotiate only with people who are ready to negotiate with us.

ADEN AND THE SOUTH ARABIAN FEDERATION
2.52 p.m.
LORD BROCKWAY: My Lords, I apologise that I am asking for another statement in the second Question which I have on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on the situation in Aden and the South Arabian Federation.]
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR FOREIGN AFFAIRS (LORD WALSTON): My Lords, the Government of the Federation of South Arabia are addressing themselves to constitutional problems in the light of the declared policy of Her Majesty's Government that South Arabia shall attain independence as a single State by 1968. Representatives of the Federal Government have recently had discussions in Beirut with representatives of the South Arabian League and certain other nationalist leaders and they hope similarly to have discussions with the authorities of the States in the Eastern Protectorate which do not form part of the Federation. Her Majesty's Government are hopeful that these initiatives will lead to agreement on a basis for constitutional advance

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in accordance with the general wishes of the peoples of South Arabia.
The security situation in Aden State has deteriorated recently, although in the rest of the Federation the situation is relatively quiet. A five-weeks' lull in terrorist activities in Aden was broken on February 24 when the President of the Aden Trade Union Council was shot and killed in his house. This assassination was followed by a number of grenade attacks and shooting incidents involving death and personal injury which, I regret, still continue. These attacks, which are principally instigated and directed from outside the Federation, are no doubt intended to disrupt life in Aden and to make more difficult the achievement of the political agreement which is the immediate need if South Arabia is to attain independence in an orderly fashion by 1968. Her Majesty's Government will continue to take all practicable measures to ensure law and order in Aden and will at the same time support the efforts of the Federal Government and others to bring about constitutional arrangements which will be generally acceptable and suitable for the independent South Arabia.
LORD BROCKWAY: My Lords, may I thank my noble friend for that very full answer and ask him this? Would not the solution of the present tragic situation in Aden and South Arabia be facilitated by the evidence of a desire, both by members of the Federal Government and by the more moderate leaders of the liberation movement, to reach agreement? I am thinking of Al Asnag and others.
THE EARL OF LONGFORD: My Lords, I must ask the noble Lord to confine himself to questions. He is now passing right away from anything that can be called a question.
LORD BROCKWAY: My Lords, I will try to put questions. I thought I was only giving an explanation. Would it not help if the Government made clear that they propose to withdraw from all military commitments in 1968 when the bases are withdrawn, and to establish full democracy in the Protectorates as well as in Aden?
LORD WALSTON: My Lords, Her Majesty's Government have made their
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position completely clear, and it is well known to the world at large and to the people of Aden and the whole Federation, in particular. I certainly agree wholeheartedly with my noble friend when he says that the position would be greatly facilitated by all men of good will co-operating towards this end.
LORD CARRINGTON: My Lords, may I ask the noble Lord whether, if in 1968 the South Arabian Government asked Her Majesty's Government to enter into a defence agreement with them, they would be prepared to do so, and if not why not?
LORD WALSTON: My Lords, I think the noble Lord knows perfectly well that we cannot commit ourselves to anything of the form that he suggests, in a hypothetical event in two years' time. By that time, as my right honourable friend the Prime Minister said in another place, the Federation of South Arabia will be an independent country and probably, we hope, a member of the United Nations, and it is through collective security that we hope the peace of that area will be assured.
LORD CARRINGTON: My Lords, if the noble Lord is not, and if the Government are not, prepared to answer a hypothetical question, then I imagine that the issue is not closed and that it is possible they would be prepared to enter into a defence agreement.
LORD WALSTON: My Lords, it is not for me to say what is possible or impossible in 1968. I am sure the noble Lord agrees that that is going much too far. But I do not want to give him the impression that we are in any way reconsidering at this stage the statements which have already been made on the subject and which make the position completely clear.
LORD ALPORT: My Lords, may I ask the Minister whether he means that the British Government's policy is not to enter into any defence agreement with an independent Commonwealth or ex-Commonwealth country? I ask that because there are—are there not?—many precedents for defence agreements being concluded at the time that independence is granted to the country concerned.
LORD WALSTON: My Lords, there are certainly precedents, as the noble

659
Lord has suggested, but our general policy is to restrict our defence engagements so that they are in conformity with our economic potential and what we can do in defence and other spheres throughout the whole world. We wish as much as possible to encourage all peace and defence agreements to be on a multilateral basis, through the United Nations or other organisations, rather than to be simply on the bilateral basis of the sort the noble Lord suggests.

HYDE PARK LITTER
2.58 p.m.
LORD DERWENT: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what steps are being taken to control the throwing of litter on to the lawn of the Dell Restaurant and Café in Hyde Park and in the immediate vicinity of the restaurant and café.]
LORD HILTON OF UPTON: My Lords, the caterers have been asked to pay special attention to this problem within the restaurant area. Outside it more receptacles will be provided and more "No litter" notices erected. A look-out will be kept for offenders, and proceedings will be taken in appropriate cases. The problem will, however, be solved only with the co-operation of all sections of the public.
LORD DERWENT: My Lords, I thank the noble Lord for his Answer. Perhaps I may be allowed, without being out of order, to congratulate him on answering for the first time a Question. May I also say—I know that this is out of order, because it is not a question—that if he answers all the Questions as satisfactorily in the future as he has done to-day, we shall all be delighted.
LORD HILTON OF UPTON: My Lords, I am grateful for the kind words which the noble Lord has uttered.

CONTROL OF DRUGS
2.59 p.m.
LORD DERWENT: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what effect the passing of the Dangerous Drugs Act, 1965, has had on illegal drug trafficking.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE, HOME OFFICE (LORD STONHAM): My Lords, the Act of 1965 consolidated the Dangerous Drugs Acts of 1951 and 1964. These gave effect to international agreements for control of narcotic drugs now codified in the Single Convention on Narcotic Drugs, 1961. Until recently there has been virtually no evidence of trafficking in the United Kingdom in those narcotic drugs which are used for medical purposes. As, however, the noble Lord will be aware, the Interdepartmental Committee on Drug Addiction, in its Report published last November, found that there had been a disturbing increase in addiction to heroin and cocaine among young people, and that the main source of supply was the over-prescribing of these drugs by a small number of doctors.
The Committee's recommendations for new control over the prescribing of heroin and cocaine would require legislation and, with the other proposals made by the Committee, are now under urgent consideration by Her Majesty's Government. Trafficking in cannabis and raw or prepared opium continues to engage the vigilant attention of the enforcement authorities both in the United Kingdom and overseas.
LORD DERWENT: My Lords, I thank the noble Lord for his Answer. Will the noble Lord agree that, before this matter gets out of hand, as has occurred in some other countries, particularly the United States, any legislation that is necessary is also urgent? May I also ask him whether Her Majesty's Government have considered including in Part I of the Schedule to the Act the comparatively new drug LSD, which is causing such concern in the United States?
LORD STONHAM: My Lords, while deploring any increase in the illegal use

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of drugs or in drug trafficking, I would not agree that there is any evidence that it has yet got out of hand in the manner that the noble Lord suggests is the case in other countries. With regard to his particular inquiry relating to LSD.25, it is not possible to include it in the Schedule to the Dangerous Drugs Act 1965, because the power in Section 12 of the Act to add substances to the Schedule is contingent upon a decision, or the probability of a decision, of the United Nations Narcotics Commission or the World Health Organisation to add the substance to Schedule I or II of the Single Convention on Narcotics Drugs 1961. But LSD.25 is listed as a poison under Part I of the Poisons List, and can at present be sold only on prescription and under the supervision of a registered pharmacist. The Poison Board has recommended that the supply of LSD.25 should be restricted to duly qualified medical practitioners, and effect will be given to this recommendation in a new rule which will be included in consolidated Poisons Rules which my right honourable friend expects to make shortly.
LORD DERWENT: I thank the noble Lord. Will he bring to the attention of his right honourable friend the fact that any necessary action should be taken before the matter gets out of hand, rather than afterwards?
LORD STONHAM: My Lords, I have already said that in our view we have no evidence whatever—I would emphasise this—to suggest that the matter has got out of hand, whatever may have been suggested in some Press reports. We are watching the position very closely, and the question of LSD.25 is under consideration.
LORD SEGAL: My Lords, in view of the widespread concern that is felt about this matter of illegal drug trafficking, would my noble friend use his influence in the proper quarters to try to discuss the whole question on the Motion standing in the name of my noble friend Lord Taylor at a very early date?
LORD STONHAM: My Lords, I am hoping that the Motion standing in the name of my noble friend Lord Taylor may well be discussed at a very early date. This matter and all matters dealt with by the Brain Committee are under
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continuous, careful, anxious and urgent consideration, but we must proceed on evidence on not on statements, often made, which are not wholly supported by facts.

LAND REGISTRATION BILL [H.L.]
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg leave to introduce a Bill to alter the provisions of Part XI of the Land Registration Act 1925 relating to the making of orders creating areas of compulsory registration, to restrict the rights under that Act to register unregistered land in other areas, to amend its provisions relating to losses indemnifiable under that Act and to repeal Section 11 of the Small Holdings and Allotments Act 1926. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.

BUSINESS OF THE HOUSE
LORD SHEPHERD: My Lords, on behalf of my noble friend the Lord Privy Seal, I beg to move the Motion that stands in his name on the Order Paper.
Moved, that Standing! Order No. 41 (No two stages of a 13111 to be taken on one day) be dispensed with for the purpose of enabling the Guyana Independence Bill to be taken through its remaining stages to-morrow.—(Lord Shepherd.)
On Question, Motion agreed to.

USE OF MANPOWER
3.6 p.m.
LORD BYERS LORD BYERS rose to call attention to the need for increasing the efficiency of the use of manpower in Britain; and to move for Papers. The noble Lord said: My Lords. the recent Budget, with its emphasis on the use of manpower, has lent considerable topicality to the subject of to-day's debate and I am extremely appreciative of the number of distinguished and experienced noble Lords who have come here to-day and indicated their intention to take part. I believe that this problem is a serious one and an important one. Up to the beginning of the last war, this country, in common

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with many others, suffered from chronic unemployment. This is now recognised as a wicked waste in every sense. It is something which must never be repeated. But it has left a legacy of mental attitudes which are very deep-rooted indeed.
To-day we as a nation are suffering not from unemployment but from a serious misuse of manpower—and in this I include womanpower, too. It is this misuse which constantly deprives us of that rate of economic growth of which as a nation we are capable. I am glad to say that there is a slow but growing realisation that the wrong use, and particularly the under-employment, of manpower is at the root of many of our economic difficulties. Some progress has been made. To-day I shall concentrate mostly on the areas where insufficient progress has been made, but I do not want to imply that we have not made any progress in this country at all. We have indeed. At least we have identified the misuse of labour in some industries, and many of us believe that the instances which have been exposed are not untypical of what is happening over a much wider field.
I will refer briefly to a few of the industries where the misuse of manpower has been exposed. As early as 1963 a White Paper on B.O.A.C.'s financial problems compared B.O.A.C.'s performance with that of other international airlines, and on the manpower side it showed that Pan American had pushed up its revenue by 60 per cent. between 1958 and 1962 with an increase of only 8 per cent. in its total staff. B.O.A.C.'s revenue increased by just about the same amount, but the increase in staff was 14 per cent. B.O.A.C. came to the conclusion that if what they called "the traditions of the organisation" could be changed, and if they could use staff as they thought fit, the total staff could be cut over a period of one or two years by some 18 per cent. It was clear that the engineering departments, in particular, proved to be very heavily overstaffed. I know that a lot of progress has been made in this matter, and I do not know whether any more can be done in that field.
Then we had the Iron and Steel Board Report in 1964, which indicated that the productivity of the iron and steel industry in this country is probably only about 50 per cent. of the United States level and is lower than it is in Europe and
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Japan. A comparison between the United States and Britain shows that, while there is often comparability of staff employed on actual production, we use far more people on maintenance and administration than they do in a similar plant. This may to some extent be due to inefficiency of management, but it is also due to the attitudes of the trade unions. It is said that the Steel Company of Wales could manage with several thousand fewer men than they have at the present moment; and I believe that this is true of a number of large steel works in this country. The quotation has often been made of the difference between Stewarts and Lloyds employing 259 people to produce £1 million worth of steel compared with Youngstown Tube & Steel Co. in the United States of America employing only 95. This over-staffing on maintenance and administration, compared with North American firms, seems to me to be the common factor running through many of our industries.
Then we have the docks. I do not think that anybody is satisfied that we are getting the most efficient use of manpower in the docks. Rotterdam works round the clock, but I do not think this is common practice in this country. We have had the recent Geddes Report on shipbuilding. That pointed out very clearly indeed that "the use of labour in shipbuilding is wasteful" and that there was the need for an entirely new attitude to overtime work. On the railways, as recently as January of this year the National Board for Prices and Incomes, in a report on pay and conditions of service, advocated the establishment of pay and productivity councils which would have as their main objectives a more flexible and more economic use of manpower. A reduction of overtime was called for, too. It said, quite rightly, that management should seek the suggestions of the unions and the workers as to how these objectives could best be met, and it recommended negotiation of productivity agreements as a means of maintaining the earnings of railway workers who, it said, could perform the same amount of work with a shorter working week. The Report asked for extra pay in return for greater versatility and the elimination of demarcation lines, and pointed out specific places in which there could be a reduction of manpower and a redeployment of labour. I hope that this will lead to something useful in this field.
Where it is possible to make international comparisons—it is not always so—the indications are that we are lagging behind many other countries in this area. Volkswagen, in Germany, employ 75 men to produce £1 million-worth of vehicles; B.M.C. employs 82. A very useful report on the aircraft industry went into this matter very carefully and compared the British aircraft industry with the United States aircraft industry. It came to the conclusion that productivity in the United States was three times that of the industry in this country, and that the French productivity rate was 1½ times as much. I believe there is a tremendous amount of work still to be done on international comparisons of this sort. I believe that the Department of Economic Affairs, under Mr. George Brown, is already engaged on this. I hope that every possible support will be given to this type of research so that we can get proper comparisons with the various international companies— Britain versus U.S.A.; Britain versus Europe, and so on—as guide lines in looking for better use of manpower.
We know from a good deal of the evidence produced from these reports, which I think are pretty representative of many areas of British industry, that we have probably got 10 per cent, to 20 per cent. of our working population underemployed at the present time. It is very difficult to get accurate estimates; there have been estimates of 10 per cent., 15 per cent., 18 per cent., even as high as 20 per cent. But this means that there are between two million and four million people under-employed at the present moment. If these people were usefully organised the problem of the balance of payments, for instance, could, I believe, be solved overnight. The questions of the standard of living and the betterment of housing and more houses would fall into perspective if we could get real work from the people who, at the moment, perhaps through no fault of their own, are under-employed in British industry.
I think it must be clear to the majority of us that we have not got the rate of economic expansion that we could achieve in this country, and the reason is that we have not got the proper deployment of our manpower resources. The present Prime Minister pointed out in the 1964
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General Election—he made a lot of play with it, and rightly—that from 1951 onwards the average growth per annum had been only 2·36 per cent. instead of the 4 per cent. on which the country had been planning; and that in fact if the national income between 1951 and 1964 had grown at that rate of 4 per cent.—which was less than the European rate—the gross national product, the national income, would have increased to £31,500 million instead of the £26,000 million that we had achieved. In other words, there was the possibility of increasing the gross national product by £5,500 million by extra productivity, better efficiency or, as I have said, by better deployment of manpower. This means that, at the present rate of tax, the Chancellor of the Exchequer—before doing anything he did in the Budget could have had extra revenue from taxes of £1,500 million without raising a single tax—if only we had got efficient and proper use of manpower in this country. It is a target well worth going for and something which I think is vitally important.
Our failure in this field—it is very difficult to attribute blame; I am not seeking to be too critical in this—is due first, I think, with few exceptions, to the inability of management to grasp the need for manpower planning; it is due to the continuation of restrictive practices and demarcation lines, and to the historical insistence on the craftsman's mate. I know that a number of craftsmen do require a mate, but an estimate has been made that we have 500,000 craftsmen's mates walking around carrying the bag for the man who has passed out and graduated in his craft. I cannot believe it is right to use all of these people in this way. It is also due, I think, to the insistence by the worker on overtime as an integral part of his earnings. This is something which really has to be tackled because it is another fundamental. It is due also, to a great extent, to the fact that the Government—I do not want to be misunderstood—seem to be mesmerised by the need for preserving employment at a level which precludes proper redundancy, retraining and redeployment of labour into the expanding industries. I think it is, above all, due to the fact that neither the machinery nor the system exists for intelligent manpower deployment.
One of the major problems is that it is relatively easy to preach about waste

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or misuse of manpower and to go in for exhortation; but when it comes to action or to proposing solutions there is in many places neither the enthusiasm nor the knowledge to take things much further. But let us reflect on the advances which have been made. Case histories are beginning to emerge. I will mention only two of them. There was the Fawley agreement, which is certainly a landmark, and this is being followed by studies which are being made by I.C.I. and British Oxygen—and we wish them luck.
There is also the B.P. agreement with the unions, which I believe could represent a very great step forward indeed. As I understand it, in their Isle of Grain refinery agreement was reached to give a basic weekly salary, and virtually no additional payment at all, to 500 craftsmen from nine craft unions. Overtime payment was eliminated and, instead, if they have to work overtime in an emergency they are given time off at some other convenient period. I think this is a great step forward. They have limited the number of craftsmen's mates; they have extended the field in which one craftsman can do the job of another, which again is a step forward. It is true this is not a labour-intensive industry, but nevertheless I believe that these ideas could be adopted much more widely, if there were the will to do so. The unions, in particular, are to be congratulated on the way in which they have accepted these proposals. They have played, as I understand, a very important part in reaching this agreement.
Unfortunately, my Lords, there are very few firms in this country—the oil industry is very much a notable exception—who seem to understand how to plan their manpower needs. Firms will plan their capital programmes. They will estimate profitability for five or ten years ahead—the estimate is never right, but they plan it. They will have monetary and production budgets; but very few of them will have a short-term and a long-term manpower budget and manpower plan. Yet the skill of our manpower is the basic, priceless asset which we possess in every country. It is true that some firms put work study to very good use. Others have been gone over by manpower consultants. A few have
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made comparisons with similar works overseas, In some cases (and I think this is an important channel for further investigation), they have deliberately redesigned whole parts of their production system, not only to economise in process labour but to eliminate some of the time-consuming tasks which are involved in maintenance and replacement. The phrase is coming in, "Let's design it out". That is the sort of attitude we want in many more industries and firms.
On the other hand, we still have the appalling hoarding of labour, for instance, in the motor car industry. At a time like this how do we justify men, usually skilled men, working only three or four days a week? I believe that the Government have to show that they are determined to help industry to get labour redeployed, so that the optimum use is made of skilled people. We have to think much more in terms of the efficient use of manpower resources and far less of employment for the sake of employment. I do not want to be misunderstood. Full employment is good, but full useful employment is what we have to go for. I believe that this is a new attitude which must be developed. The last thing we want in this country is direction of labour, or anything like it: we do not need that sort of thing. What we do need is much more accurate information about how manpower is actually used, and how it is misused. We ought to know how the use of manpower compares as between different units of the same industry, and how our own firms compare with similar firms overseas. At present we can hardly make a start on these comparisons because there is no uniformity of job description. The word "fitter" means twenty or thirty different things, depending on the factory or industry with which one is dealing.
The House will remember that the Robbins Committee on Higher Education said that it was not possible, in what they called the existing state of knowledge, to make reliable estimates of the need, particularly in industry, for qualified manpower. Before one can estimate the qualified manpower we may need in the future, it is essential to know how our qualified manpower is being used at the present time and whether it is deployed relatively efficiently. There

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is very little one can do, as the noble and gallant Viscount, Lord Montgomery of Alamein, knows, in war or in business, unless the best possible information is available. I was not at all surprised when, during the General Election, I challenged the Chancellor of the Exchequer on productivity, and he admitted that none of the statistics on productivity was really reliable. I believe it. This is because the information-gathering machinery is out of date, and the co-ordination of it is not so good as it should be.
I believe (I shall be corrected if I am wrong) that the Board of Trade section which collects economic data is not interested in the manpower aspects of the information which it receives. The section in the Ministry of Labour dealing with manpower statistics is not required to consider very deeply the economic aspects of the information which it is bringing in. In my view, there is here a tremendous scope for an improvement in the information-gathering machinery. The whole system ought to be overhauled, and we ought to find out whether we are asking the right questions of industry, or in the educational field. Are we asking the relevant questions, or are we just allowing people in different Ministries to send out questionnaires to be filled in without any real overall co-ordination of the whole thing? If we are to tackle the manpower question properly, this is the sort of coordination that is vital.
One idea which has been put forward, and which I think has a great deal to commend it, is a Central Manpower Planning Agency. This is not as dictatorial as it may seem; it is certainly not intended to be. But because manpower is the fundamental raw material of our society, it makes some sense to know what it consists of at any one time, and what it is doing. It is possible to do a great deal more planning and encouragement, and secure a great deal more intelligent recruitment into different fields, if one is working on up-to-date information which has been dealt with professionally and produced for the job. I am not suggesting a new Ministry or a vast body of civil servants—far from it. I am suggesting the reorganisation and the sensible redeployment of those now responsible, whether in the Board of Trade, the Ministry
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of Labour or anywhere else, into a properly co-ordinated body able to provide reliable information, without which well-informed policies for education, training, productivity and the better use of manpower simply cannot be made.
Ten years ago this task would have been not nearly so easy. But we are now in the computer age. We are already using computers and other techniques as a tool in business to provide model profiles of the problems which confront us; and given fairly accurate information in an understandable form, I believe that it is possible in business to-day to make far better judgments than we were able to make even ten years ago. In the manpower field what is lacking is a reasonable picture or model of the way in which manpower is used. Once that is built up, surplus labour can be identified, and negotiations can take place at the proper level to attract people into industries and regions and firms which are genuinely short.
If manpower and production can be intelligently analysed, it becomes far easier to produce productivity measurements and ratios which really mean something. I would recommend to your Lordships the work now being undertaken at the London School of Economics by Professor Moser and Mr. Michael Hall on the study of manpower use in the electrical engineering industry. This is an ambitious piece of research which could lay the foundations for a revolution in the attitudes to manpower; and not only in the electrical engineering industry: it could serve as a pace-setter for other industries.
Information, however, is not everything. There is still the lack of machinery, and I believe that once we get reasonable information it may be possible to help with the redeployment of manpower by making more use of the "little Neddies". I hope that this is something which the Government may have in mind. If we are to get the better use of manpower, I believe that we have to get away from the industry-wide system of wage negotiations, which is very much ingrained in our system and get down to the local level of bargaining, trading higher wages for higher efficiency. I am quite sure that this is the policy of the Department of Economic Affairs. It is certainly the policy of the

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Prices and Incomes Board, but in the so-called two sides of industry there is a great deal of conservatism which seems to be standing in the way.
I believe that there is a great deal to be said for setting up, for instance, works councils in firms of a certain size, so that there is constant discussion of these problems; and as better communications are established, so that leads to an understanding of manpower, overtime, efficiency and so on. Above all, I think that it needs a tremendous new mass educational programme to get people to see that we can solve our economic problems if we can get the people doing the right jobs more efficiently. One day we shall get a new and different attitude to work, and that is what we have to aim for. It is against this general background of over-manning right across the board, in services and manufacturing industries alike, that the new selective employment tax seems to me to be so very ill-conceived.
I am told that the Chancellor of the Exchequer thought this one up himself. If that is so, then I think the Treasury should have its head examined. I give the Chancellor full marks for his intentions, which I am sure were right. Manpower has to be encouraged, and the manpower that we have must be used most efficiently. On that, I entirely agree with him. My colleagues and I, over the last few months and years, have advocated a pay-roll tax with the object of making labour more expensive, in the hope that it would be used more wisely and more economically. This can be achieved, in our view, by a percentage tax on the wage or salary. This tax can be varied regionally; it can be varied industry by industry, or even, getting down to detail, firm by firm. A rebate can, I believe, without offending the rules of GATT, be given for exports in relation to the total production of the particular firm.
Part of the revenue of a tax like this could be used to increase investment grants or allowances, or even to reduce corporation tax. Eventually, it could be replaced by a social security tax, which would be paid partly by the employer and partly by the employee. This is something for the far future. But to choose three broad categories, and to place a
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25s. a week tax on servicing, no matter what part the servicing industry plays in the economy, and then to give preferential treatment to manufacturing industry, no matter what is produced, cannot possibly, in my view, assist in the reduction and better use of manpower. A system which hands out money to the already overmanned manufacturing industries, provided that they do not reduce their numbers, must be wrong. I am sure that progressive firms like I.C.I. will go on increasing their numbers and increasing their productivity, but to grant them a per capita differential amounting to £2 ½ million a year is, with all respect to the Leader of the House, an Irishman's way of doing things. A measure which takes £100,000 per annum from Dr. Barnado's Homes and helps the manufacturer of "one-armed bandits" is something which one would have thought hilarious in a novel by Evelyn Waugh; but, coming from the Chancellor, it must be regarded as a fantastic state of affairs. Moreover, the method of collecting this tax and paying a refund is in itself a gross misuse of manpower. You take it in, and then you "dish" it out.
But the fact of the matter is that, from the point of view of overmanning, this tax is "haywire". There are productive industries where, as I have demonstrated in my speech, overmanning has been proved, without a doubt, after a public inquiry—shipbuilding and iron and steel—and these are the ones who are going to get a grant of nearly £20 a year for every employee they keep on their books. Transport, including railways, where overmanning has been exposed by Mr. Aubrey Jones, breaks even. To my mind, it is tragic that at a time when we should be making manpower expensive in order to make people think in terms of greater efficiency, automation, and providing new capital tools at the elbow of the worker, we offer inducements to further featherbedding.
With a tax such as this, geared to the National Insurance stamp—and it was attractive, in theory, to gear it to the National Insurance stamp—it is practically impossible to provide exemptions, for the simple reason that once the man is exempted he can go anywhere. If you are going to gear it to the National Insurance stamp, I do not think there is much hope of getting an exemption. The only

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thing you can hope for is to get a full repayment of the tax that you have already "coughed up". In the interests of the better use of manpower, I hope the Chancellor will think again about the favour that he has conferred indiscriminately on manufacturing industry.
What we need is some method of shaking out surplus manpower and encouraging its use in a more efficient and economical fashion. The efficient use of manpower is one of our major problems. We do not want to go back to the barbarous system of using unemployment and insecurity as a means to force men and women to give of their so-called best. This is what the French call the philosophy of citron press é. We now have the new techniques and new aids to make better judgments, and what we want to do is to harness these to see that we give our people the opportunity to make the maximum use of their natural skills. I hope that the Government will think again of the direction in which they are leading us on the selective employment tax. My Lords, I beg to move for Papers.
3.35 p.m.
LORD SHEPHERD: My Lords, I am sure the whole House will join with me in thanking the noble Lord, Lord Byers, for his constructive and, if I may say so, for him, rather more restrained speech than usual. Some weeks ago the noble Lord introduced a debate on computers, which I know, from the Government's point of view, was studied carefully. I may say to the House that we shall study with equal care the observations that will be made in this important debate. I have heard rumours that many savage attacks are likely to be launched upon this Bench in regard to the selective employment tax. We welcome them. But I hope that there will be a constructive element in the speeches. We have a problem, and it is easy to attack and criticise. What we now want is constructive assistance.
The noble Lord, Lord Byers, has referred to industry in a wide-ranging sense, not merely to manufacturing industry; and I could not help but feel that the noble Lord's stress on underemployment in some manufacturing industries might give the impression that that was the only element in British industry that is so under-employed. But we have also to face the fact—and there is now clear evidence of it—that we are
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going to have a shortage of labour generally. Therefore, I should like to deal with the whole field because I believe that to attain increased efficiency will take time, and we are now confronted with the stark fact of a labour shortage.
There is no doubt that in the years to come we shall have to invest increasing sums of money in machinery, because it will be the machines that will have to make up for the shortage of labour. I do not think we pay sufficient attention to modernisation, particularly of our factory lay-out. If one visited many British companies one would be appalled at the amount of handling of merchandise that takes place in the course of the manufacturing of goods. We have to redeploy our existing manpower. Here redeployment means something more than a man leaving one company in one road and moving to another company in the next road. We have to consider the redeployment of labour from one industry to another, and from one part of the country to another; and we must certainly develop our ability to train new entrants into industry, and our ability to retrain redundant and unskilled workers.
The basic requirement for all these things is an increasing number of highly qualified men in management and the speed with which we can get increased cooperation between Government and industry within industry itself, and, perhaps even more important, between industry and the universities and schools in the future. We must also bear in mind that we must create confidence in our workmen. Fear of the effects of unemployment still exists. We must make it absolutely clear to our workers that there need be no such fear now, subject of course to our keeping to a sound economic policy which will prevent long-term unemployment. In fact, the forecast for the years 1968–73 shows that there will be a slowing down of the growth of manpower in this country. The labour force is bound to change, and I think we should welcome it. I think we may see over the years an increasing number of men and women in the professional services, certainly within the service of local authorities, schools and hospitals, and perhaps a reduction in our manufacturing industry.
It will take time for us to produce the automation and machines, and we have

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an immediate problem to see that the machines we now have are fully manned. I do not believe we can possibly avoid that. In April, 1966, we had 432,000 vacancies in this country and the number of unemployed was 307,000. In the Midlands the position is perhaps more acute. In April there were 50,000 vacancies, with unemployment standing at only 16,000. And it varies from industry to industry. Let us take the machine tool industry, which we all regard as one of the key industries in our drive for exports. In the field of the lathe-setter and operator, we have 600 unemployed on our books to-day, and we have 6,700 unfilled vacancies. This is the starkness of the position of some of our industrial companies. I do not believe that in that type of industry there is the labour hoarding to which the noble Lord, Lord Byers, referred. Certainly in other spheres there are men who are capable of undertaking these jobs, and we must find a way of getting them to move.
The industrial plan indicated that if we were to achieve our 25 per cent. growth we should need 800,000 workers between now and 1970. Even if we were able fully to mobilise the workers in the less prosperous regions and were able to get the full resources of women and older workers, we should still be 200,000 workers short. In the field of the less prosperous regions, the regional planning councils and boards are doing a great deal of work, and now they have been joined by the "little Neddies", the economic development committees.
The House knows that the Government policy of giving special grants to industry to induce them to move into these areas will be before the House, and I believe that this will be a major stimulus in getting industry into those areas. As to the use of industrial development certificates, we have now increased the amount that has become available for new industrial building in these development areas, at the expense of other parts of the country. Those who know the task will recognise that we must move men and women from one part of the country to another, and it may seem strange that we have to think in terms of amenities, the livelihood, and the social resources of the area. Here we depend very much upon the regional councils.
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The noble Lord, Lord Byers, stressed—I think quite rightly—the importance of shift working. We are asking industry and financiers to place more and more sums of money by investment into machines. Undoubtedly, if we could obtain a 24-hour shift working on these modern machines, much of the present position could be transformed. I was very interested in what the noble Lord said about management forecasting. One has only to read the City Press to see companies forecasting profits two, three or five years ahead. We all know that they think in terms of investing. But when we had the industrial survey for the preparation of the National Plan, out of 300 companies, the largest organisations in the country, only half did any form of forecasting of labour, and only one in four looked beyond two years ahead. It certainly raises a doubt whether managements are fully aware of the need for economising in labour. Many of their excuses for late delivery arise from the fact that they have not forecast for labour and have been caught short. But the initiative in introducing changes which will bring about an effective use of manpower must come from management. It is no good passing it over to the trade unions or the Government; it is the responsibility of management. The first need is for managers, with stimulus coming from those at the top, to look critically at their work organisation, their existing manpower utilisation, and their productive processes, to see whether they can identify the areas where improvements can be made.
Let us have no doubt that there will be complex problems to be met. But already, as the noble Lord, Lord Byers, has said, there have been a number of notable achievements. The noble Lord referred to workmates, the craftsman's mates, and he mentioned, I believe, the Steel Company of Wales. He may be aware that this company, together with the unions, have an agreement whereby 1,000 craftsmen are being transferred to full-time work in the company. But this takes time. I do not think we should underestimate what is going on, but clearly the restrictions and the demarcation lines will have to disappear. The economic development committees are giving serious attention to productivity. Within the distributive trades, anxious thought is now being given to the better

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training of staff and the establishment of a career structure. In the rubber industry, there is now inter-firm comparisons in productivity. I think this is a major achievement, by which companies are prepared to open their books to each other to see whether they could learn from their competitiors. In the chemical industry, a team will shortly be going to the United States to see how things are done there, and I hope that the information that comes back from one "Neddy" to another "Neddy" will be passed on. This is only the beginning.
The noble Lord, Lord Byers, mentioned the question of training. The Industrial Training Act, passed by noble Lords opposite, is now getting under way. Thirteen training boards have been set up, and it is quite clear that they have accepted their responsibilities with enthusiasm. Statutory authority is there. But we need—I will not say far greater co-operation, but great co-operation between both sides of industry if this Act is to work properly. We shall be watching very carefully, but it is too soon to say whether that Act will require some adjustment.
In the field of Government training centres—and I sometimes think we tend to overlook what the Ministry of Labour are doing in this area—we have 30 centres now open. Seventeen were opened in the last three years, and we have now a total capacity for training about 12,000 men or women each year. By the end of 1967 a further eight centres will be commissioned, which will increase our capacity to 15,000. We are training about 40 different trades under factory conditions. The business schools in Manchester and London are now getting under way. Eventually, we hope that there will be about 400 post-graduates in training each year. We must not forget the area of the technical schools and colleges, and I am glad that my noble friend Lord Bowden is here this afternoon to tell us what advances have been made in the technical field.
I said earlier that we must give confidence to the workers if we are to get their willingness to transfer and move to other positions. The House will remember that in the last Parliament we passed the Redundancy Payments Act, the National Insurance Act, and the legislation of the previous Administration, the Contracts
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of Employment Act. The Report of the National Joint Advisory Council on the Preservation of Pension Rights has been received by the Minister of Labour, and it is now being carefully considered. I am quite sure the House will agree that the preservation of pension rights is vital if we are to achieve mobility of labour.
The noble Lord, Lord Byers, mentioned docks. He knows as well as I do—I had experience of this when I was in business—that the docks are a continuing thorn in the exporters' side. No doubt the noble Lord will be pleased to know that a Bill will shortly be placed before the other place to put into effect the Devlin Report on the Docks. I hope the new system of employment, the new amenities that will be provided in the docks, and above all else the sense of security for the dockers will result in bringing the British docks up to the standard of those we see on the Continent.
The Government are already active in helping those companies which have moved to the development areas. I will not go into detail, in view of the time, but we are doing all we possibly can, by the provision of qualified instructors and lecturers and trained personnel, to assist new companies when they move their factories into the development areas.
In regard to the problem of saving manpower, clearly the biggest saving will come from larger industrial units. It is this type of unit which will be able to employ computers in order to reduce the administrative and secretarial work. They will have greater financial resources for investment, they will be able to employ more highly trained staff, and I think they will have a greater opportunity for the flexible use of workpeople. This is why the Government are determined to proceed with the Industrial Reorganisation Corporation. But clearly there is a role for the smaller companies. Noble Lords may be interested to know that the new University of Aston now has a small-business centre—by which I mean a centre relating to small business and not a small centre. This has been approved and is receiving the support of the Ministry of Labour, the Department of Econonomic Affairs and the West Midlands Economic Planning Council, in order to give guidance to smaller companies in regard to the improvement of productivity. The Government will be watching

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this experiment with considerable interest to see whether the service could not be extended.
I now turn to the selective employment tax. True we shall have an opportunity to debate the machinery of the Finance Bill when it comes before us in July, but it is relevant to to-day's debate. The Government had a vital issue before them. They had to deal with the balance of payments and, at the same time, to look to the longer-term modernisation of our industrial structure. A good many of the past measures have corrected the balance of payments for a temporary period, but have prejudiced the long-term development of industry because investment was held back. We were faced with rising consumer demand. There was pressure on our resources which had to be relieved.
As the House knows, the Chancellor of the Exchequer could have imposed an increase in income tax, or could have increased purchase tax, but clearly it was the view of the Chancellor that the rates of tax were already high enough and further increase would really have hit the manufacturing industries. The service industries have undoubtedly been expanding very fast and in the past have been little affected by taxation. It is true to say that manufacturing industry has borne more than its fair share of taxes. The aim is to depress the level of production in order to relieve the labour shortage, we seek a solution to deal with the balance of payments and with inflation without causing a major setback to industry. The House may be interested, and I was certainly surprised, to hear these figures: the traditional methods of deflation require a 5 per cent. cut in output in order to achieve 1 per cent. of unemployment. This is an interesting and startling figure. I believe that the selective employment tax will have a beneficial effect in encouraging economy in the use of manpower.
I should like to refer to some of the figures mentioned in the White Paper which the noble Lord, Lord Byers, did not mention. During the years 1960–65 the labour force that became available to the whole of industry was 1,330,000; of that number, the professions, scientific work, catering and the like took 714,000 workers, the distributive trades took
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162,000, national and local government took 82,000, and power took 40,000. Of that figure of 1,330,000 new labour force, only 142,000 went into the manufacturing industry. The House knows that in The National Plan we forecast a natural increase in the labour force of 400,000. On that basis, between now and 1970 we should have 40,000 extra workers going into industry, and when one looks at the severe shortages that exist one recognises that if we fail to increase our production and the use of our machines exports will fall and imports will rise and we shall be in a serious balance-of-payments difficulty. Recognising this labour position, recognising the semi-privileged position of the distributive trades, and recognising the imposition of existing severe taxation on manufacturers, I believe that if further taxes had to be faced it was right to draw them from an area so that there would be the maximum effect upon the balance-of-payments position and a stimulus given to the manufacturing industry.
LORD BYERS: My Lords, before the noble Lord leaves that point will he say exactly how the Government see this grant to manufacturing industries achieving a better redeployment of labour, particularly in those industries which are over-manned?
LORD SHEPHERD: I will certainly come to that.
LORD STRATHCLYDE: My Lords, the noble Lord has given the House some most interesting figures as to the increase in the number of people employed in the various industries. I do not think he mentioned the agricultural industry. Could he tell us how many extra people have been taken on in that industry in recent years?
LORD SHEPHERD: I am afraid I could not give that figure. I just have here the figures in regard to the distributive trades, and they do not include agriculture. I will look it up and let the noble Lord know.
In the group to which the noble Lord, Lord Byers, referred, that is the group that will pay the tax and will not receive any refund, the number of workers involved is 9,848,000. In the manufacturing element, which will receive a premium, the number of workers is 8,846,000.
LORD BYERS: The noble Lord has been very good, but I did not ask for that information.
LORD SHEPHERD: No. I want to develop my argument, if I may. I must not be put off by the noble Lord.
LORD BYERS: Why not?
LORD SHEPHERD: All right, I will answer the noble Lord's question. The noble Lord wants to know in what way this giving of a premium to manufacturers will force out whatever hoarding there may be within the manufacturing industry. The noble Lord will appreciate that one of the basic reasons why there is hoarding in the manufacturing industry is that the manufacturer is anticipating an upsurge of his business and the need to retain workers in order to meet it. If you can remove the great fear of shortage of labour within the manufacturing industry I think you will remove the immediate impulse of a manufacturer to hoard labour. Inefficient management may be one of the causes of the hoarding of labour. Unless the inefficient managements become efficient they are not likely to realise they are hoarding labour, and one of the duties that have been accepted by the economic development committees is to go round the various managements to see what is going on and to give advice.
This is my own personal opinion. I should like to see more use made of the management consultative bodies, the private organisations that are available to give advice to management. I think the noble Lord, Lord Byers, was right when he said that many of our managements do not really appreciate what is going on. They may have difficulties in communicating with their own workpeople. I believe the management consultative bodies could play an important part in this field. The noble Lord, Lord Byers, was quite right: we do not live under a system of dictatorship; we are a democracy and we have to use influence and use the machinery which is available to us. This is a form of machinery which is being built up by the Government, and I would express a considerable word of satisfaction to both sides of industry who play a major part in the regional councils and the economic councils and boards.
There is much more that could be said about this selective employment tax. We
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shall have an opportunity of doing so on the Finance Bill. Noble Lords may chortle; it is easy to criticise what arises on a Budget Statement. I have heard many criticisms from noble Lords opposite during the last eighteen months, but when the facts eventually appeared they were not prepared to put on the red faces they should have done. I suggest that before noble Lords start criticising any particular point of detail they should wait until the Finance Bill has been printed and is available to Parliament. It is perfectly true that the tax in itself is a blunt instrument. Many other taxes in the past have been blunt instruments, but in the course of time—the noble Lord, Lord Byers, knows this applies very much to the corporation tax—we have had an element of refinement brought into it. It is easy to criticise, but what noble Lords opposite must say, if they disagree with this tax, is what they would put in its place.
The noble Lord, Lord Byers, agrees to a pay-roll tax. I should have thought that that would be infinitely more sweeping than what is being placed before Parliament to-day. It would certainly have an effect throughout the whole manufacturing industry, on top of the purchase tax and other forms of taxation. We take the view, and I believe it to be utterly right, that we had to give a stimulus to the manufacturing industry. We had to curtail a degree of consumption in this country, and this tax was the right method. We shall have plenty of opportunities to discuss it. Noble Lords never fail; they always enjoy debates on finance, even though it does not come within their terms, at least on the question of voting—there must be a degree of frustration. We look forward to this debate. There are many notable speakers who are going to take part. We shall watch and listen, and I will certainly see that the comments that are made, particularly if they are constructive, are put before my right honourable friends, the Minister of Labour and the First Secretary in the Department of Economic Affairs.
4.6 p.m.
LORD DRUMALBYN: My Lords, I should like first to echo what the noble Lord, Lord Shepherd, has said by way

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of gratitude to the noble Lord, Lord Byers, for having raised this subject today, which is of crucial importance to the country, and also for the very clear and vigorous way he set forward the issues. He saved us all a great deal of trouble by quoting many of the salient figures, which makes it unnecessary for us to go over them again. I would also say, at the outset, that I do not think that the noble Lord, Lord Shepherd, has sufficiently stressed the seriousness of the problem, and I propose to put to the House one or two figures which may be useful.
The National Plan, as the noble Lord said, indicated a manpower gap of 400,000, which might be halved if 50,000 unemployed men in the less prosperous regions were drawn back into employment, and if productivity rates in those regions could be raised to nearer the level of the more prosperous regions. The gap is due to the fact that for a number of reasons the working population is expected to increase between 1963 and 1973 by only 0 ·3 to 0 ·4 per cent., which is less fast than in the previous decade, when it increased at a rate of 0 ·7 per cent., and less fast than the growth in the population.
But what highlights this problem, and emphasises and underlines it still further (perhaps I may relate my remarks to the March figures because these were the ones in the Ministry of Labour Gazette) is that in mid-March there were, in round figures, 300,000 wholly unemployed, of whom four-fifths were men. According to the survey of the Ministry of Labour given, in the same Gazette—related undoubtedly to an earlier time; but no doubt the figures in general are relevant—three out of five of those men were unlikely, on personal grounds, to be placed in jobs. The other two-fifths, plus the 67,000 women—that is to say, about 150.000 in all—represent the numbers available to fill the vacancies. As the noble Lord said, the unfilled vacancies notified by employers amount to 400,000. So there are 150,000 to fill unfilled vacancies of over 400,000 notified by employers. And, of course, there must be many other vacancies that have not been notified by employers simply because employers see no likelihood of their
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being filled. That is the measure of the problem.
The noble Lord has referred to the action of the Government and I think perhaps I ought to start my remarks by referring to the way in which the Government themselves are setting an example and the proposals they are making. So far as I can find out from Table 14 the Monthly Digest of Statistics, the numbers employed by Central Government fell between June, 1963, and June, 1964, by 18,000. There was then a reclassification, and from June, 1964, to February, 1966, they rose by 20,000; and there are more increases to come—in the Inland Revenue, the Land Commission, the Ministry of Technology, the Board of Trade, the Ministry of Labour and so forth. In The National Plan public administration is shown as receiving an increase of nearly 100,000 employees between 1964 and 1970. What are the Government doing to economise in their own use of manpower? There are two questions: are the employees they have fully employed? And is what they are doing worth while?
The Chancellor said in his Budget speech that our prime problem is to economise in the use of manpower. He said this on the subject of the selective employment tax, the purpose of which seems to be to reduce the amount of labour in services without increasing the cost of production in manufacturing industries. The premium to be paid per employee in the manufacturing industries is supposed to offset any increase in the charges made to it by service industries as a result of the tax. I believe that is so. The Chancellor produced this tax like a rabbit out of a hat, or it may have been a. mortarboard. But ought a tax embodying new principles to be introduced in this way?
When Mr. Selwyn Lloyd put his payroll tax on the Statute Book he did not immediately impose the tax; he left time for consideration and discussion. After Mr. Maudling had raised the possibility of a turnover tax in his 1963 Budget, he then passed the matter to a committee of three, which reported the following February. Here we have a new tax. Mr. Callaghan himself has been at pains to distinguish it from the payroll tax, which was earnings-related

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and non-discriminatory, while the selective employment tax is flat-rate in incidence and surely discriminatory in effect. Surely it would have been right to allow this proposal to be carefully considered before we had Budget Resolutions about it. What a topsy-turvy world we live ina
The Chancellor gave long notice of an increase in income tax, which, after all, was "old hat", if I may stick to the hats. Admittedly, the notice was for the benefit of foreign bankers. But he refuses to give own economists the benefit of an opportunity to consider this new rabbit". Surely there is something wrong there.
LORD SHEPHERD: My Lords, can the noble Lord help me?—I ask merely for information. He quite rightly said that it might have been helpful if we had, shall we say, twelve months notice, such as we gave in regard to the corporation tax—although we got a great deal of abuse because we did it. Can the noble Lord say, if we had not used this method of raising this money, how we should have raised it? What was the alternative?
LORD DRUMALBYN: My Lords, the noble Lord is on a different point, but I am coming to that in a moment or two. The second objection to the tax is that, as it does not come into operation until later in the year, the Budget does not even try to do anything at all immediate to relieve the pressure in demand on goods, services, and particularly manpower; and what may happen between now and September is anyone's guess.
It is a pity the Chancellor has not responded to the call in The National Plan for a general attack on practices leading to under-employment, practices which are most notorious, as the noble Lord, Lord Byers, has pointed out, in some of the industries classified by the Chancellor as "manufacturing" and, being so classified, are entitled to the premium. Instead, he has given the inflationary spiral several sharp, but rather surreptitious twists. Perhaps the noble Lord can tell us how many people will be employed in collecting the money from those concerned and paying it back to them again. Some will have their contribution returned with a bonus. But if a firm is classified as a manufacturer,
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and hoarding labour, it will get a premium for every employee who ought to be released. The excuse for this manpower merry-go-round is that the National Insurance flat-rate system is there ready to act. All the employer has to do is to increase the value of the stamp, and hey prestoa the Chancellor has collected an undisclosed amount of hundreds of millions. The yield this year, he says, will be £315 million; but of course, he will be getting a forced loan considerably in excess of this.
I must concede that to make this tax more just and effective would have required more manpower. For example, the Chancellor is not going to return the tax to the farmers, although he knows he ought to do so; because I think I am right in saying that the farmers have economised to the extent of something like 200,000 in labour in recent years. He does not do it because it is too much trouble. Instead, he will take it into account in the Annual Price Review, which could mean that he will take it from the hill farmer and put it on wheat, or vice versa—manipulation and prestidigitation! It is one thing to play with grants and subsidies for farmers. Surely it is a different thing to play with the farmer's own money. The tax is bound to increase charges, mainly in areas, be it noted, that are not covered by the Incomes and Prices Board early-warning system. I have been told of a firm which will have to pay in tax almost exactly the equivalent of its present profits.
But the acid test is, will this tax achieve its purpose of getting greater efficiency in the use of manpower anywhere? I should like to give noble Lords an example of its operation. The Manpower Research Unit of the Ministry of Labour made computers in offices the subject of its Fourth Study. Of course, offices exist both in manufacturing and in service industries. Employers in service industries will pay a tax on their office staff, even if they are earning foreign exchange. Employers in manufacturing industries will receive a premium on their office staff, even if they do no exporting at all, either directly or indirectly. Nobody would deny the need to economise in office employment. I am told that comparisons have been made with the United States, and that in certain respects, in manufacturing, in particular, there are

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five times as many people employed in offices, doing comparable work, as there are in the United States, in certain circumstances. So no one will deny that there is room for economy in office employment, although this applies in manufacturing, as well as elsewhere.
Office jobs have been increasing at the rate of nearly 3 per cent. per year. As the Study points out, even if they were to increase by only 2 per cent. per year from now on, by 1974 there would be, but for computers, 700,000 more office jobs than there were in 1964. If, however, as the Study assumes, 6,000 computers are installed in offices by 1974, some 300,000 of the increase in employees which would otherwise take place could be dispensed with. This applies to manufacturing industries as well as to other parts of the economy. I may add, that at present the number of computers installed in Britain is estimated by Dr. Kendall, in an article in the March issue of the Three Banks, as 1,700, compared with 27,000 in the United States of America. Can the noble Lord tell me whether the manufacturers of computers are finding the manpower to train and employ, so as to keep up with this programme of expansion? This would seem to be extraordinarily important to enable us to economise in this startling amount of manpower. Presumably, they can afford to attract employees by good pay and conditions of work. If so, they will attract them in any case from other industries, service or otherwise, without the need for this tax.
The point I want to make is that firms can either install computers themselves—I understand that even quite small firms can install computers—or they can use computer facilities offered by service bureaux. As Dr. Kendall says, service bureaux accumulate a specialised knowledge which is not available inside the largest organisation. They possess trained staff with wide experience, system analysts, programmers and data processing managers, and such trained staff are scarce—in fact, I understand that they possess more than a quarter of the total supply. Yet they will have to pay the tax, whereas manufacturing companies which have computers in their offices will not. It is highly questionable whether computers are likely to be more fully and more efficiently used if the
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effect of the tax is to place service bureaux at a disadvantage.
The noble Lord questioned me as to what I would put in its place. When one reads carefully the Chancellor of the Exchequer's Budget speech, one finds that by implication his justification for the tax was that it took less preparation than would have been needed for a sales tax. A sales tax surely would have been more apt in present circumstances. That is the answer to the noble Lord.
LORD SHEPHERD: But, my Lords, we should need more staff to carry out a sales tax.
LORD DRUMALBYN: Heaven preserve us from allowing the Government to accumulate unnecessary staff! I quite agree with the noble Lord that one of the handicaps of a sales tax is the amount of staff it uses; but if it is true that you have under-employment in various parts, that also might help to meet the problem.
The snag about any rough and ready tax is that it interferes with the normal economic development of new labour saving services, such as computers. It interferes with normal economic developments in general. There are many examples one could quote of services afforded to manufacturing industry by organisations which, in Dr. Kendall's words, have accumulated a concentration of specialised knowledge. The danger of this tax is that it will tend to break down that kind of concentration of specialised knowledge. Perhaps chartered accountants are as good an example as any other. They can pass on their tax to the clients, and no doubt will. But is it sensible to tax employment in services that the Treasury itself regard as essential, especially when the Chancellor of the Exchequer himself has caused employment in them to be increased by his complicated tax provisions last year?
There are one or two points I should like to pick up from what the noble Lord said in his speech. I was very interested indeed in his remarks as to the need for information. He said that information-gathering, machinery is out of date, and he urged an overhaul of the machinery in the gathering of information as between the Board of Trade and the Ministry of Labour. I am sure that this would be very worth while. But there are dangers in over-simplifying this matter, and I hope

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that the noble Lord, Lord Winterbottom, who is to reply to-day—and I welcome him very much to the Front Bench—will be able to say something on this subject.
It is quite true that in some industries, even before the existence of the "little Neddies", methods had been developed for comparing costs anonymously as between different firms. This is extremely useful as a method of comparison. But I do not know the answer to this, and perhaps the noble Lord can tell me: how far is this kind of comparison useful as between industries? I ask this question because the noble Lord suggested that there should be, I think what he described as a Central Manpower Planning Agency which, among other things, would, I imagine, attempt to do this kind of comparison and arrange its availabilities of labour on that basis.
LORD BYERS: My Lords, is the noble Lord asking me?
LORD DRUMALBYN: No, I was not.
LORD BYERS: May I answer it? I would say that it is extremely useful to have international comparisons, industry with industry. It is also useful to have comparisons between firms. The problem arises of keeping the information completely confidential. This requires a good deal of thought. But with the computer you can get more confidentiality than you could in the past.
LORD DRUMALBYN: I am grateful to the noble Lord. I appreciate, as indeed I said, that this has very great use within industry, whether nationally or internationally. I see the point of view as to confidentiality, although I understand that this did not present a problem in the wool textile industry—at any rate, it was a problem which had been overcome. What I was saying was that the value was "across the board" as between industries. This is something which will have to be considered in assessing the relative value of industries where a crunch comes.
The central problems here—and I have not time to go into them in detail—are, first of all, existing over-manning on the basis of existing machinery, and, secondly, the redundancies which will arise out of new investment. On this I should like to say to the noble Lord, Lord Shepherd, that it is not only a question of giving
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confidence to workers. What also has to be done is to give confidence to employers; because unless an employer can see a return coming from the investment which he proposes to put in, he is not going to make that investment. Unless he can be sure that, having got an agreement, it will be kept, I do not think he is going to make the investment. I should like to say this because it is of the utmost importance. There is no doubt—one knows this from speaking to employers— that morale among employers can fall because of lack of confidence that an agreement, once made, will be carried out. I think the time has come—and I would ask the noble Lord, Lord Winterbottom, when he replies to deal with this—when there should be some means of ensuring that such contracts, once agreed, can be enforced by either party against the other. With respect, I do not think that we need to wait for the findings of the Royal Commission to provide for something which seems so absolutely elementary in a civilised society.
LORD SHEPHERD: My Lords, does the noble Lord mean against the unions?
LORD DRUMALBYN: I said either way.
LORD SHEPHERD: The workers themselves?
LORD DRUMALBYN: Whoever makes the agreement—it is an agreement between parties. All I am saying is that this is something which has been undermining confidence in the past. I am quite certain that any blame in this regard does not lie only one way, and I do not want to suggest that; but what also I am quite certain of is that in a matter of this kind you must get the rules of the game right and clearly understood. People will accept rules of the game so long as they are clearly laid down and understood, and I believe we are far too wary of changing the rules when almost everybody believes that the rules ought to be changed.
There are a number of other points which I wanted to make. I have mentioned the question of over-manning, and the need for more investment; also, the need for training is paramount. I am grateful to the noble Lord for the information which he has given regarding

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the developments under the Industrial Training Act and the further steps that are being taken in retraining, for both matters are extremely important. But it would be a mistake to assume that training should start only at the point where somebody enters into industry. A good deal of study requires to be done about fitting people to enter industry, about the training of young people, and about getting them into the right jobs to start with.
In this connection, I should like to mention that when I was at the Scottish Office I had a look at industrial training on the Continent, and I found that the French had what were called "orientation centres". The young people started at a fairly early age and these centres did a good deal more than the youth employment services. They tried to put the young people's feet on the right path to reach the jobs that really suited them. This is of great importance, and I would ask the noble Lord whether he would have a look at what might be described in general as "job orientation".
I was also much impressed by pre-apprenticeship training in engineering industries which I saw in Glasgow. This was originally designed to fill the gap between the school-leaving age and the age for entering industry. Now that gap of a year before apprenticeship age is going to be removed when the school-leaving age is raised. I think that this type of pre-apprenticeship training is something which ought, virtually, to be incorporated into the last year of education for the non-academically minded. I hope that that can be done. I cannot overstress the need for confidence on both sides, and I should like to end on this note. This is not only a question for management; it is a question of getting the rules of the game right. I believe that in Britain once the rules of the game are fixed people will play the game.
4.32 p.m.
LORD BOWDEN: My Lords, I should like to begin, if I may, by adding mine to the tributes which have been paid to the noble Lord, Lord Byers, for introducing this subject to us this afternoon. He displayed so many of our national shortcomings that much less is left for us to say. But there are some points, none
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the less, to which I would refer, and I hope to do so as briefly as possible because of the large number of speakers who wish to address your Lordships' House this afternoon.
The first thing which struck me is how apt we all are to regard manpower as other people, and efficiency as something with which other people should concern themselves. Manpower is all of us, and efficiency should be the problem of every one of us here this afternoon. The Government are, after all, probably the largest single employer in this country. The Civil Service, therefore, should be a model of efficiency and expedition and the envy of the world. I ask your Lordships: is it? Anyone who has wandered through Whitehall, as I have done, and has seen the filth of the buildings within which eminent men are housed, has penetrated within them and seen the tattiness of the curtains, the decrepitude of the carpets, the antiquity of the typewriters and the lack of any modern aids to office management, must marvel that any work is done at all. He must marvel that the morale of the Service is as high as it is, and he must compare it, to its enormous disadvantage, with the commonplaces of any modern office within a few hundred yards of this place.
I well remember, for example, that there was a time when the I.C.I. building on Millbank was taken over by a Government office. When the I.C.I. had it in the first instance it was splendid and clean and efficient, and a place into which one could enter with some sense of expectation, even of eagerness. Before the Government had had it for six years it was tatty, down at heel, the sort of place Professor Parkinson so aptly described as "suffering from the last stages of a mortal disease". There were notices all over the place, cups of tea here and there, no adequate equipment and no recent paint. How can staff maintain any sense of purpose, any sense of morale, in such circumstances? The Government then moved out, the I.C.I. moved back, and the place was cleaned immediately and transformed. It became its old self again. It may well be that the cost per employee was increased, but I cannot help thinking that the cost of each operation performed was spectacularly reduced when the I.C.I. moved back again.
VISCOUNT STUART OF FINDHORN: My Lords, the noble Lord would agree that it was in the war-time period that the Government occupied these premises.
LORD BOWDEN: It was, indeed, my Lords. This I remember only too well. But I believe, nevertheless, that much of the squalor in which the Civil Service had to live was unnecessary, and it is an extraordinary commentary on the way in which the Government conduct their affairs. I believe that much might be done to improve the efficiency of the Civil Service if the ordinary traditions of conventional business were applied to it, as they are in so many of the great firms of this country.
Then we might consider the efficiency of operations conducted even nearer home. What of the organisation of the vast enterprises which are conducted in this very Palace? Do we believe that either the operations of this House or the operations of another House are a model of efficiency which should inspire industry to emulate them? Exhortation will do little; example might do much. I believe that the Government have an extraordinary opportunity to transform themselves, and if they can do so by their own exertions I believe, verily, that they would inspire the country by their example.
Efficiency is a matter which concerns us all. The word "efficiency" should become known much more widely in the universities, in the schools, as well as in all other Government operations. Of course, it is difficult to know how universities can become more efficient. It is difficult to know how anything can become more efficient. But the problem must be studied, and I hope that in due course significant results will be achieved. For I believe that much of the overmanning to which the noble Lord, Lord Byers, referred—the fact that we need so many more men to make a ton of steel than the Americans do—is in large measure due to the fact that the Americans have educated their operatives so much better than we have.
I remember years ago discovering to my astonishment that the Americans produced, I think, three times as many metallurgists per ton of steel they make as we do, and the Russians produce something like five times as many metallurgists per ton of steel as we do. It is this kind
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of thing which, in the end, is responsible for overmanning and undermanning. If you contrast the operations in what we are pleased to call the backward or, perhaps, the underdeveloped countries, you find that they need even more men than we do. Our relative inefficiencies are in large measure an inevitable consequence of years of neglect of education, which has put us at a tremendous disadvantage compared with our industrial competitors.
It is more than sixty years since a delegation went to see the United States Steel Company and talked to Andrew Carnegie. They said to him: "It is not so much your extraordinary raw materials, your wonderful factories, which we have cause to envy; it is rather the young experts who man every department of your works. We have no such men in England." That was sixty years ago; the situation is much better to-day, but we are still, I fear, paying the price of the neglect of our forbears.
I have said that we are suffering from the results of educational neglect. Some years ago the Government accepted with pride, I think, the recommendations of Lord Robbins's Committee and commissioned the universities to engage in, and embark on, a major expansion programme. They have, as a result of their very considerable efforts at improving their own efficiency, done better than the Government asked them to do, and, as a result, the number of students in our universities this year is considerably greater than the number that was forecast a few years ago by Lord Robbins, who, after all, one must always remember, said when he drew up his plan that these were minimum figures rather than probable figures. The growth of the universities is, roughly speaking going along Lord Robbins's probable rather than his minimum curve.
As a consequence of this, it is very probable that in about three years' time the universities will achieve the student figures which were expected to be arrived at in 1971 or 1972—and here we come to what seems to me an administrative nonsense. I should like to read to your Lordships a paragraph from a letter which has been sent by the Chairman of the University Grants Committee to all English universities:
"It now looks as if the total student population in 1967–68 will be very significantly greater than the figure to which the Government are

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committed for that year. If so, it follows that the growth in the following period will not have to be as large as the 21,000 which have been proposed."
In other words, because of the efficiency of the universities they are to be told to stop their expansion programme in two years' time. This, my Lords, is nonsense, and it follows from the simple fact that the Government have not reconsidered the Robbins forecasts in the light of the universities' achievements. I should like to ask the noble Lord who is to wind up whether this is, in fact, Government policy, and, if so, whether it is due to an oversight, whether it is deliberate or whether it is just a mistake.
My Lords, in what I can describe only as a rather unfelicitous phrase, my right honourable friend the Secretary of State referred to the "socially responsive sections of the educational world", implying thereby that the universities have not been as socially responsive as they should have been. I cannot believe that any institution could have done more in the circumstances, and I feel that if the public sector of the education system can do as well it may indeed be proud. In fact, it should try to emulate the achievements of the universities. If it can do as much, then we shall have cause to be thankful to it. I have often speculated whether the Secretary of State, when he made this curious remark, felt that the University of Oxford, from which I believe no fewer than twelve members of the Cabinet have come, was being "socially responsive" in educating these men at the time. This is a phrase which has rankled very greatly with the universities, and I hope that the Government will at some time take an opportunity of making the point that they, too, have a social conscience, and that they, too, can do more than they have yet been allowed to do to bring this country into the 20th century.
I wish, though, to follow up this point of inadequate education, for I believe that we are now beginning to feel the results of what I can only call the grand fallacy of education in this country, the great mistake—the failure of comprehension. It is a failure of comprehension, my Lords, which is in large measure responsible in this country for the rigidity of the trade union structure, for demar-
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cation disputes and for lack of opportunity in later life. On the Continent, and particularly in Germany, it has had a slightly different effect, and it is in my view capable of doing serious damage to the whole of the German university world. It is curious that all this should come about from a simple failure to understand a very obvious fact of the modern world. We seem to believe that a man can be completely educated at some particular period of his life, and that when he has been so educated he can let well alone and assume that all will always be well.
We are familiar with the fact—and we often bitterly complain of it—that a skilled man in this country is defined as a man who has served his time as an apprentice, usually for five years, and has completed his training before the age of 21. Nothing that he does thereafter counts; and even if he learns another trade later in life, he can never become a skilled man, in the conventional sense. If he has been unfortunate enough to learn a trade which ceases to be important, he has no opportunity of becoming a skilled man again. If the firm with whom he was apprenticed goes bankrupt and he loses his indentures, he may for ever remain a technically unskilled man. This is a social absurdity, a grave social evil, and I hope very much that the Industrial Training Bill will do something to remedy it.
But we are familiar with this, and I should like to consider the implications of this same error on the education of graduates and their preparation for industry. For, my Lords, it is only too common to assume that a man who has learnt what he can in a university, has taken his scroll and has shaken hands with his professor, can go into the world and be forgotten by his university. In fact, the problem of converting the college graduate, as the Americans put it, into an engineer or a scientist is the most complex, the most difficult and, in many ways, the most frustrating—and it is certainly the least understood—of all the educational tasks with which we have to wrestle to-day in this country.
For many years the electrical engineering industry in this country depended almost entirely on a postgraduate apprenticeship scheme which was organised at Trafford Park by Sir Arthur Fleming

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and run, after him, by Sir Willis Jackson, and which educated nearly all the engineers who dominated the electrical engineering industry for many years. In fact, in the 'twenties it was commonly said that all the electrical engineers in England could be divided into two classes—those who worked for Metropolitan Vickers and those who used to work there. This was an extraordinary social service performed by a great company for the benefit of the country at large. We are planning to increase our output of engineers, but we have made no appropriate and corresponding attempt to increase the facilities in industry—to give them what is now known, not as a graduate apprenticeship but a graduate training.
Furthermore, many trades have never had any such scheme, and it has never been possible for graduates to go into them with confidence or to provide any method of keeping themselves up to date and any method of giving themselves any understanding of the real problems of their firm. Here again, I think, is a great opportunity. Many industries have been rationalised in an extraordinary way in the last few years. If I may take the case of the textile trade, ten years ago one needed the Albert Hall to have a representative meeting of the trade. Last week, I had in my own office a group of a dozen men who, between them, control almost the whole of it; and we were able to discuss the idea of organising some kind of graduate apprenticeship scheme for the textile trade which will, I hope, be introduced before long, and may serve—I hope it will—as a method by which young men can go into a trade of great and growing importance, in the expectation that they will be able to come back from time to time for refresher courses and keep themselves up to date in the rapidly changing, capital-intensive industry which the textile industry has become in the last few years.
I hope that many other similar schemes will be organised; but the point I must make is that it is now a commonplace to say that knowledge is increasing at a spectacular rate; that a man who is up to date to-day is bound to be out of date ten years from to-day, and that the only hope that we have of keeping our staff up to date is to bring them
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back from time to time for a course lasting a day, a week, a year, or any length of time you care to mention, from industry into the academic world. This is well understood in the United States. I was told, when last I was there, that although it is difficult to compute the total cost to the community of this kind of postgraduate, post-experience, education, it is probably of the order of one-third of the total cost of all forms of education in America, which amounts to something like 10,000 million dollars a year—the total cost of education being about 34,000 million dollars. My Lords, we have nothing to compare with this, on even the remotest scale, in this country.
We have an opportunity to engage the universities in a joint enterprise with industry to bring men up to date, to keep them up to date and to make it possible for industry to apply the latest techniques from wheresoever they may come. Here we find ourselves in what I might describe as a demarcation dispute of great complexity in Whitehall. The Industrial Training Bill is to be administered by the Minister of Labour, and any courses of the kind I describe are the responsibility of the Department of Education and Science, and, ultimately, of the Universities Grant Committee acting for this purpose as the agent of the Department. As recently as yesterday, the Chairman of the University Grants Committee had had no contact at all with the Minister of Labour on the organisation of courses of this kind.
Furthermore, an extremely complex problem of finance is involved. Who is to pay for this kind of thing? Should it be the Industrial Training Act, as administered by the Minister of Labour or the Department of Education and Science? And this Department has never bothered about middle-aged people before on this scale. I should like the noble Lord who is to wind up to assure us that it is, in fact, true that any expenditure involved in training of this kind will be a proper charge on the levy to be raised by the Industrial Training Bill. There are those who say that it will; and there are those that say it will not. This is a matter of very great importance, and it should be clarified lest the demarcation dispute ultimately wrecks the system.

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When I was last in the States I found that in the Harvard Medical School and the Johns Hopkins Medical School there were at any given moment twice as many people taking refresher courses as there were ordinary medical students. This is the kind of ratio with which we are utterly and completely unfamiliar; nevertheless, it is the proper ratio to find in the 20th century in an advanced country, and we must reconcile ourselves to it.
I should like to raise another administrative problem which bothers Whitehall. It is the question of bringing schoolmasters up to date. Science is changing, and schoolmasters must learn to teach new subjects. How are they to learn them? The Government are prepared to take enormous trouble and to bear the whole cost of the education of a schoolmaster up to his first degree. Thereafter, the Government are astonishingly uninterested in any enterprise required to keep him up to date. I believe that the Government must assume the same kind of responsibility for keeping schoolmasters up to date as they do for their initial university education. The transformation taking place in the teaching of science and in the teaching of mathematics, languages and other subjects is dramatic and extraordinarily exciting; and it should be known to the schoolmasters and to the children of the whole country. It will become known only if the opportunity is provided by the Government. I beg the Government to assume the kind of responsibility for refresher courses which 'they have always assumed for the first degree courses.
The Armed Services have always done this. The care with which the Staff College takes young men at various stages in their professional career and re-educates them should be a model to us all. I have learned in the course of the last few years to understand and enormously admire the educational achievements of the Services. The Army is capable of educating a butcher's boy to maintain a tank or an aeroplane: it does so with extraordinary efficiency. I believe that the techniques it has acquired could, with advantage, be learned, understood and copied by the rest of the educational world. Furthermore, the Army is capable of teaching a graduate engineer some extremely technical subjects which he
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would never encounter in the university; it does so with the same efficiency as it teaches the butcher's boy. Professional educationists have often looked askance at the educational efforts of the Army; but I think we have much to learn from them and I hope that the world will appreciate this.
While on the subject of efficient employment of manpower, I should like someone to explain to us why it is that in America the Army Engineers are able to undertake civil projects of immense complexity and cost, and to discharge them with great efficiency; whereas our own Army Engineers are never allowed to do this kind of thing. That seems to me to be extraordinary.
It has been well said by the noble Lord, Lord Robbins, that it is difficult, if not impossible, to make accurate forecasts of manpower. I am sure he was right. It is quite hopeless to decide now the type of work force we are going to need in ten to thirty years' time. No country has ever done this successfully. The Russians made a valiant attempt to do so some years ago, and I talked to Mr. Rudnev, who was in charge of this enterprise. He said, "We go to great trouble, but we always get the forecast wrong. Things always change faster than we expect. "In particular, they were completely thrown by the sudden introduction of electronics, which grew faster and was more important than they expected, and for which they were entirely unprepared.
Detailed manpower forecasting has defeated everyone who has studied it. Certain trends one can identify, and certain actions can be based on them; but detailed forecast is completely impossible. If we want our work force to be capable of applying modern ideas we must bring men up to date all the time: bring them back to school if need be, or take the school into the factory. For years this has been the tradition of America in industry, and of our own Armed Services.
My Lords, we are, as a nation, in a most difficult and, in some ways, frightening position. Nevertheless, anyone who has travelled the world and seen the problems which beset other countries must realise that they are usually worse than ours. One is reminded of Socrates' story that most men who brought their

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troubles and piled them in the market place to exchange for somebody else's would be glad to take their own pile home at the end of the day. We have our problems; but I think we are as well able as most people to solve them. I believe, in fact, that if we face the changing future we shall be able once again to set an example to the world.
4.58 p.m.
LORD SHAWCROSS: My Lords, in view of my interest in the universities and in educational matters, I should dearly have loved to follow the noble Lord who has just sat down into his interesting excursion into these subjects and, perhaps, pursue with him the effect of the selective employment tax on the universities and other independent organs of education. But on this occasion I think I must stick to a somewhat narrower interpretation of the Motion which the noble Lord, Lord Byers, has so well put before your Lordships' House.
I believe it is no exaggeration to say that this matter, the proper and efficient deployment of manpower, is one of the most important problems that our country has to face. Solve it—and with understanding and good will I believe it can be solved—and the rest of our economic problems, inflation, balance of payments, the bank rate and all the rest, will resolve themselves. Leave it unsolved, and no ingenuity in the manipulation of our monetary policy, no experimentation in new fiscal devices, will, in the end, save us from bankruptcy.
Is the problem, then, really one of immense difficulty? It is not. It is well, perhaps, to remember when considering it that on the ordinary trading account, taking both visibles and invisibles into our reckoning, we have for many years maintained a balance. What has put us in the red, of course, has been, in the main, Governmental expenditure abroad; not private investment, but Governmental expenditure largely on defence and on aid. I am not one of those who think that any significant reduction can be made in this expenditure without gravely harming this country's foreign policy and our international standing in the world. Indeed, in some areas I should like to see the expenditure actually increased. The problem we have to consider is whether we can build up our productive efficiency sufficiently to
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enable us to compete in price, in quality and in delivery dates so as to earn the balance which will put the country back into the black. The real question is not whether we can do it; of course we can do it. The real question is whether we will do it.
My Lords, I believe, as the noble Lord who opened this debate indicated was his belief, that the only real obstacle which stands in our way in dealing with this matter and in solving our problems is our gross inefficiency in the use of our available manpower. I think that this inefficiency stems from two main causes. One of them, not, I would have thought the most important, but one to which the noble Lord, Lord Shepherd, rightly referred, lies in the size of our industrial units. We in this country continue to do too much in penny numbers. We continue to have too many smallish concerns making similar products, working far under their factory capacity and competing with each other in a cut-throat way which leaves them with inefficient margins for further investment and insufficient output to employ the modern types of equipment which are increasingly becoming available for the larger units.
We should watch the great encouragement which is now being given on the Continent of Europe to large-scale mergers. The European Commission at this moment are considering the conception of what I think they are going to call the European Company; that is a company which is able to trade across the frontiers throughout the Community but which is subject to a single fiscal system. Our economy, too, ought to be based on industrial units large enough to operate with maximum efficiency in plant and manpower and to compete with the similar sized units which are increasingly coming into existence abroad.
For a long time bigness in industry has been considered— particularly, perhaps, among the Party to which I previously belonged—as rather indecent, and even last year the Monopolies and Mergers Act which we passed then, and which your Lordships will remember fixed an accession of capital of £5 million as the test of whether or not a merger should be subjected to the possibility of reference to the Monopolies Commission, set a totally wrong climate in regard to this

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matter. Of course that figure of £5 million, a capitalisation of £5 million, was far too low. It is good to know that wiser counsels are now prevailing. The Industrial Reorganisation Corporation which, as we know, is about to be set up by the Government, provided that it is not used as a sort of backdoor method of getting Governmental control over private enterprise, may well sometimes be able to act as a catalyst to bring about some of these larger-scale mergers which in my belief this country so badly needs. But important as this matter of bigness in industry is, important as it is for us to appreciate the great advantages, the great economic advantages, of scale, I think that more important are the restrictive practices to which the noble Lord. Lord Byers, referred in his opening speech.
The fact is that because of these restrictive practices British industry is really operating as if one hand were tied behind its back. These are practices which prevent, and it is notorious that they prevent, the full, competitive and efficient use of the manpower we possess. I do not for a moment say that it would not be possible for many employers to make better use of the manpower they have. I do not say for a moment that industry as a whole has reached anything like maximum efficiency even with the existing trade union rules and practices under which it has to operate. I agree that there is much that employers in industry could do to improve the existing situation. But, my Lords, while this is true and whilst it is true also that restrictive practices exist on both sides of industry, there really is, when one comes down to bedrock, a very basic difference between the two sides.
I agree that there are restrictive practices on the employers' side, just as there are on the trade union side. Nor are the trade unions alone to blame for the restrictive practices on their side. The continuance of some of them is, as I am quite sure, in many cases due to downright incompetence or sheer timidity on the part of the employers concerned. But there does remain this great difference. On the employers' side for some years now restrictive practices have been declared to be illegal by Statute. And
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quite rightly so. The result of that has been that in the vast majority of cases they have been abandoned. No doubt some continue—more or less secretly—to exist. That is a matter which I deplore.
But the Board of Trade, the Monopolies Commission and its Registrar, the Restrictive Trade Practices Court and its Registrar, indeed all the forces of the law are there to act as watchdogs to root out any remaining practices of a restrictive nature which may exist on the employers' side. There are no such watchdogs available on the trade union side. What is mainly—I do not say only but mainly—holding back our production, what is putting this country almost at the bottom of the league table in production per head among the industrialised countries of the world, what is keeping our unit costs at too high a figure to compete in the markets of the world, is the prevalence of restrictive practices on the labour side and perhaps, or so I think, to a much lesser extent the indiscipline which exists in carrying out procedural and other agreements.
As I have said, I am far from blaming the trade union leaders or the members of trade unions only for this state of affairs. As the noble Lord, Lord Shepherd, quite properly emphasised, the proper use of manpower is a function of management. Sometimes for reasons of complacency, sometimes for reasons of weakness, it is not always properly discharged. But we really must not exaggerate this suggestion that there is a great lack of management planning in manpower requirements. Certainly all managements of which I have knowledge do their best to attempt such forward planning as they can. Of coure, the assessment of manpower requirements in the future, and the cost of likely manpower requirements in the future, is an essential and basic part of every profit forecast which any company makes; and every company makes a profit forecast, often for a number of years ahead.
But one has to add this. How can any serious planning be attempted without the fullest co-operation with the trade unions and without the knowledge in advance of any investment that if investments are made in new types of machinery, perhaps requiring far less

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labour, that machinery will be used at once and with far less labour? That co-operation has not been forthcoming in the past as it should. In the absence of it managements do their best.
But perhaps there is not much advantage to be gained by trying to conduct an inquest into past causes. What I think one needs to ascertain is what are the present facts and what are the possibilities of future remedies. I ask at once whether it really is the fact, as the noble Lord, Lord Shepherd, stated, as so many others have said, and, indeed, as was indicated in the National Plan, that this country faces a grave shortage of manpower. That seems to me to put the whole matter in an entirely wrong light and to perpetuate something which is a complete myth. A great deal of study has been given to all this by many varied and independent institutions and individuals, and a great deal is known about it.
I agree with the noble Lord, Lord Byers, that it is true to say that, taking industry as a whole, we are employing to-day at least 10 per cent. more men and women than we need to employ in our existing productive activities. Those men and women, that 10 per cent., with proper organisation of industry, could be redeployed, most of them without any fresh training, into other jobs where there is a crying need for them. There is, putting it another way, a kind of concealed unemployment, for which, of course, industry is paying, of at least 2 million men and women; and that 10 per cent. figure, I believe, is an exceedingly conservative figure in this matter. If the redeployment of that 10 per cent. of men and women took place, and given the increasing use of new machinery, numerical controls automation, computers and all the rest, there would be ample manpower in this country, not only for our manufacturing industries, our productive industries, but also for the distribution and service industries, whose growth is, of course, a mark, and a proper mark, of a prosperous and progressive society.
One is always tempted to argue from one's own personal experience. I shall try not to draw too many general conclusions from particular examples. One industry which has not been mentioned, and which was until recently, I think, probably the worst offender in this field, is the print-
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ing industry. Some years ago a Royal Commission investigated its activities. It still remains a bad industry in this respect, but perhaps now not so untypical of industry generally. The Royal Commission, after hearing a vast amount of evidence, after getting the advice of management consultants and going to see for themselves, reached the firm, clear and unanimous conclusion that the newspaper printing industry was employing at least one-third too many people, and that this one-third could be dispensed with. One firm with a far-sighted and a firm management, that of the Daily Mirror,in time succeeded in doing just that: they dispensed with one-third of the employees that they had, and with the remainder they produced a significantly greater number of newspapers than they had ever produced before. Other employers were either not so tough or not so successful.
A few months ago we had the Report of the Prices and Incomes Board on the Printing Industry pointing out exactly the same restrictive practices that had been exposed by the Royal Commission three years before. Many of them were grotesque, and most of them will be familiar to your Lordships, but one, the overmanning of machines or the slow running of machines, is, I think, to be found almost throughout British industry to-day. In one concern with which I am connected the unions insist that each one of a particular class of machine which we have must be operated by a single male operator. In the United States, in an associated company, two similar machines are operated by one girl; and so easily does this one girl operate two machines that it is possible to take coffee breaks and tea breaks in rotation; when one girl goes out the remaining girls look after her two additional machines.
In another concern there is a machine which has a little button on it. You turn the button and the unit output per hour goes up from 70 to 90. There is no possible difficulty about it: it is just a question of turning the button. But the trade union concerned refuses to allow that button to be turned unless they are paid a clearly unjustifiable and, indeed, exorbitant increase in wages. So the button remains unturned and the machine does not function to its full and proper capacity.

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One could multiply these examples indefinitely. One could deal with the steel industry, to which the noble Lord, Lord Byers, referred, and the shipbuilding industry. Almost every major industry in this country provides examples of machinery overmanned or underemployed, and very often both. One could refer to the racket—it is a racket, and a dishonest racket—of overtime. One could refer to the absurd apprenticeship practices under which in some crafts newcomers have to spend five years learning something which any intelligent boy scout could learn in five weeks. You can produce a doctor in five years; you can produce an air pilot in a fraction of that time.
It can be all summed up, I think, by saying that in our manufacturing industries it takes three British workmen to produce what one workman produces in the United States of America. Allow something for better machinery, allow something for more automation and more up-to-date plant, but still that 10 per cent. of concealed unemployment remains a modest figure. I might quote to your Lordships how this was summed up in a newspaper which notoriously supports the Labour Party. I am referring to the same paper that I mentioned before, the Daily Mirror. It said:
"Allowing for the rough edges and statistical incompatibles, who can deny that the showing of our nation against those foreign competitors is appalling?"
How can this appalling state of affairs be put right? I do not myself think that it can be done by taxation, however ingenious, and I doubt whether the selective employment tax can really have been intended to produce any particular result in this field at all. As has been pointed out, this tax will actually subsidise the manufacturing side of industry, which is, of course, the very side on which manpower is being inefficiently used and in which the great over-employment of labour is taking place. A tax premium on production may be positively harmful. What is needed is a tax premium on productivity, which is a very different thing.
I again go back to this courageous Left Wing organ to which I have referred. In their series of articles—and one must say they were a very factual and, at the same time, courageous series of articles—they warned the trade unions, and warned
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them plainly, that unless there was real co-operation in this field there would have to be legislation. Certainly it would not be beyond the wit of man, I suppose, to devise enforceable and practicable legislation to deal with some of these matters. But I hope it will not be required.
This old fear that the use of machines will cause permanent unemployment is something which dies very hard. It led to the machine wreckers in the early stages of the Industrial Revolution; it led to the consolidation of these restrictive practices at the time of mass unemployment in the 'thirties. But it was nonsense then and, as the noble Lord, Lord Shepherd, has so well said, it is nonsense to-day. What we must do is to try to convince the workers in industry not, as I think—and here again I agree with what was said by the noble Lord, Lord Byers—by long-drawn out negotiations at the national level, at the top of industry, remote from the places where these restrictive practices actually exist, but on each shop floor, with the branch trade union officials, with the shop stewards, with the men themselves demonstrating to the men on their own shop floor how in that particular shop the removal of these restrictive practices, these demarcation lines, and all the rest of it, will lead to the improvement of their own prospects.
This would show the men how the ultimate objective of all this is not merely to get this country out of the red into the black again, but that in our society the machine will work harder, will work all round the clock so as to earn interest on the capital, and that the operatives will work shorter hours and will gain more money for what they do. It is too early yet to form any judgment about what is going on in the Fairfield Shipyard, but it may well be that the experiment which is presently being conducted there will provide a dramatic demonstration of what can be done when understanding and goodwill on both sides are brought to bear on this matter.
I conclude by observing that in recent months, particularly in the last few days, we have heard a great many speeches from economic Ministers and from their shadow opposite numbers, and from other people, discussing our difficulties often in language quite incomprehensible to the

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ordinary man in the street. But in two recent speeches the Prime Minister, in two succinct and courageous sentences, put the whole of this matter in language which all of us ought to be able to understand. In the first, he sought, perhaps, to reintroduce to this country and to all of us, whether with management or on the shop floor, the habit which, I am afraid, had long since fallen into desuetude: "Give a good day's work for a good day's pay," he said. In the second sentence, in a speech just before the Budget, he admonished one of the greatest of our trade unions by saying: "Let the Rule Book be put in the museum." Those brave words, if—and I underline if—they were translated into action, would quickly achieve far more than any Budget, however ingenious, can possibly hope to do.
5.26 p.m.
THE LORD BISHOP OF LEICESTER: My Lords, your Lordships will not expect very profound wisdom or detailed knowledge on this highly technical subject to come from these Benches, and the speeches that have immediately preceded this one are particularly difficult to follow. But on the principle that nothing that is human is alien to us, I will venture to inflict upon your Lordships a few considerations.
The first is to ask a question which, I am afraid, may stamp me in all parts of the House as an economic heretic, but I ask myself whether we are developing a kind of neurosis in our country by assuming that regular and uninterrupted growth in production at all times is either feasible or possible. Of course, we all know that we must have increases of production, both to meet the social needs of our own nation and also to meet many commitments in other countries, but I think we and our people need to remember sometimes that there are other forms of improving the standard of living than just drawing on the general rise of production and prosperity in the country as a whole. There is, for instance, the natural and almost normal rise, as maturity and manhood follow youth and immaturity, and there are the special opportunities that come through the exercise of special gifts and enterprise.
However, if we look at human individual development—I know it is not a perfect analogy—it is very unusual for
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normal, personal development of powers and prosperity to go on uninterruptedly through life. There are phases of much greater increase in power and prosperity, and there are phases where everything is moving at a much smoother rate. There are steep assents, and there are plateaux. I think it might help our country if we relaxed a little the idea that you can always keep going at exactly the same rate of advance. I think we need to remember that the quality of life that is lived need not depend entirely upon the outward material circumstances in which it is lived, and it might help our people to remember that occasionally.
Then there comes the impact of the new selective employment tax, about which should like to say just a word, not of any political character. I found myself thinking that it was an unfortunate division that we have been contemplating ever since this tax was announced—the division between manufacturing and service industries. It is an unhappy division. Nobody for one moment thinks that manufacturing is not itself providing one of the most valuable services to the community, to the people who buy the goods as well as the people who work in firms, but by taking out a number of industries, calling them" service industries "and then taxing them as a particular class rather suggests that service industries have something of the nature of a luxury or an indulgence about them. We know that cannot possibly be intended, for many of these services are absolutely essential even to the processes of manufacturing, and I think the general effect in the minds of the people is a little unfortunate. We must not run the risk of letting the word "service" become a dirty word. Service is absolutely essential throughout the whole range of our community life.
I cannot myself think that this tax is likely to do very much in improving the supply of labour to the industries where it is specially needed. In the Churches, of course, we are thinking a good deal about the effect upon charities, and if the effect is as we fear at the moment, that there will have to be a considerable reduction in the staff of many of these charities, there will be a very curious army of recruits lining up for industry. There will be a number of "Mrs. Mops", Salvation Army lasses, matrons from Dr. Barnardo's Homes, old-age pensioner

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gardeners who can no longer be maintained, and I think it will be a long time before that kind of transfer is of the slightest value to the industrial world.
I should like to say a word about the place in all this of appeals to patriotism and loyalty. We were told, I am sure rightly, by the noble Lord, Lord Byers, that exhortation does not do very much. I am reluctantly coming to that conclusion, although a professional preacher myself. The Minister of Labour visited my diocese recently. I do not suppose he knew it was my diocese, but he was actually addressing a May Day rally in Loughborough, which one of the vigorous industrial towns in Leicester-shire, and there he made a typical appeal on a basis of patriotism, which of course one would naturally want to echo. He said:
"Surely this country has not reached a stage where we are unable to give, in terms of patriotism, those voluntary disciplines that will enable us to get out of our economic problems. I suppose patriotism' and 'loyalty' and 'honesty' are words which. when used so often, occasion the cynical and the contemptuous remark. I am old-fashioned enough to believe that they are as necessary now as ever in our history."
Of course, one agrees with that, but I am afraid a hard-headed look at the situation suggests that appeals of that kind no longer have very much effect in the world of industry.
It seems very important to me, from the amateur angle, that the only cases where there is any clear improvement or alteration in the situation in industry is where there is some new plan in which the employers and the employed have both co-operated to bring it into existence, and where there are definite advantages for both sides in the scheme. We have heard of some of these from the noble Lord, Lord Byers, in his opening speech. I was going to mention a similar one at Milford Haven, the scheme in relation to the Esso refinery there. There was an interesting account of it, which I have no doubt many of your Lordships saw, in the Economist of November 19 last year, entitled "Practical Productivity".
This was one of the schemes where a firm agreement was given that almost all the craftsmen would be trained to do as many other things besides their original
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craft as was possible. This had the effect that men were able to turn from one job to another according to the need at the time. One of the principles was that there was to be no overtime worked at all under normal conditions. But then we come to the difficulties. The firm had to pay a rather high price for this great change in the situation, and had to increase the basic rate, as I understand it, by something like 20 per cent. If I have worked out the figures correctly, that basic rate now stands at £22 a week. I do not know whether that is a very high figure, but if one imagines a large number of firms moving up to that same level one begins to wonder how long industry will be able to produce goods at an economic price if it has to pay like that at the start of one of these arrangements. But here was at least one scheme where a new situation had been brought into effect, and I think that is far more valuable than any kind of exhortation or appeal.
Before I sit down I would echo the words of the noble and learned Lord, Lord Shawcross, in what he was saying about the use of language. I think we underrate the enormous harm done by the use of long, abstract words when we are trying to put across these matters to the ordinary members of our community. Many of these words have now become so familiar to us that we use them almost as though they were concrete terms and monosyllables. I am referring to words such as "productivity". As soon as you turn an idea into an abstract phrase of that sort you reduce the evocative power of it when it is used for those who are not used to that kind of language. Therefore I would echo entirely what the noble Lord, Lord Shawcross, said about the value of clear and concrete invitations and challenges to those whom we have to approach in these matters.
5.37 p.m.
LORD MCCORQUODALE OF NEWTON: My Lords, if it does not sound impertinent, I should like to say how much I have enjoyed the breath of fresh air and common sense which has been brought into this debate by the right reverend Prelate. I am sure we have very much enjoyed it. We are all indebted to the noble Lord, Lord Byers, for introducing the debate, and I have to apologise

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to him in advance, and also to the noble Lord, Lord Winterbottom, for the fact that, owing to a long-standing engagement, I may not be able to see the whole debate out if it runs very late. I hope that they will forgive me.
I should like to say one thing to the noble Lord, Lord Drumalbyn—I see he is not here at the moment. He quoted some figures that I cannot make out at all. He said there were five times as many office or service workers in this country, compared to manufacturing elements, as in America. I do not think he has his figures right. Actually, out of a total employment force in America, of men and women, 60 per cent. are used in the service industries, whereas in Britain only 48 per cent. are used in service industries, and in America only 40 per cent. are used in manufacturing while in Britain 52 per cent. are in manufacturing. Those appear to me to be rather different figures.
I would say also how very much I agree with the words the noble Lord, Lord Drumalbyn, used about the sanctity of agreements, once entered into, between management and the men. I was taught my industrial relations by no less a personage than my chief, Ernest Bevin, during the war, and Ernest Bevin's great instructions to everyone with whom he came into contact in the industrial world were: "If you make an agreement, stick to it." And it was his proud boast that in all his industrial life he had never made an agreement which he had been unable not only to keep himself but to make his men keep also. If we could get back to that position, I believe that a very great number of our industrial difficulties would immediately be solved.
To get to the subject of the debate (I apologise to the noble Lord, Lord Byers; I am afraid that I may have to leave before the end) we are all extremely grateful to the noble Lord, Lord Byers, for raising this vital subject at this time. The National Plan said some very wise words, if only in generalities, about the manpower in the country. I think it has been stated that the position at the moment is that there are some 435,000 notified vacancies and only 125,000 employable persons without a job who might fill them—and a great number of those are merely moving from job to job. The Plan suggests that this short-
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age is going to continue and that by 1970 we shall still be 200,000 or 400,000 short. Perhaps I may quote what The National Plan says on page 10, paragraphs 47 and 48:
"Britain's place in the world is going to rely increasingly on her technological skill. We cannot afford to have people working well below their capacities because of inadequate training and skill. The Industrial Inquiry revealed the rapidly growing demand for skills of many types. … The Industrial Inquiry also revealed the need for large movements of labour between industries."
It is on those two items that I want to say a few words, and especially the first: training for skills. It is skilled manpower that we are most grievously short of in industry, and with modern technology waiting to be used, advance technology in all types of industry, more highly trained manpower becomes ever more the necessity.
I was privileged to be the first Chairman of the Industrial Training Council which trade unions and employers set up about 1957–58 to consider these matters, and its task at that time was to endeavour to persuade industry, on both sides, to make places for, and accept more apprentices for, skills, especially as "the bulge" period was developing and boys and girls were coming out of their schools. We were moderately successful in that task. Sir George Lothian, a great trade union leader, was Vice-Chairman and followed me. The noble Lord, Lord Williamson, was also a member. I think we made some impact.
We also endeavoured, so far as we could, to impress upon all the then very novel idea that everybody—not only apprentices; not only skilled labour, but every type of labour and management throughout industry—would be better for some training. I think we were the forerunners of the present system of training boards and the National Training Council and all the paraphernalia which was set up in the last months of the Conservative Government and, I am glad to say, has been carried on and intensified under this Government. I regard the setting up and work of the training boards throughout industry as possibly the most vital step we can take to deal with our manpower shortage. I would urge the Government to let nothing impede them in urging forward this matter of training, training for skills, and encouraging more

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and more and better and better training boards in the different industries.
But training and education go hand in hand, and we cannot have just training or just education; for it seems to me that in this connection education has a vital task: that of dispelling the Luddite fears of unemployment among the young which at present underlie the restrictive practices we hear so much about. This is largely the task of education, and I hope that our educational system will be able to face up to that problem. We need to give the opportunity of a skilled job to everyone who wishes for it and who is able to manage it. I trust that the Government will speed up, so far as practicable, the work now proceeding on the training front of industry, training at all levels—for management needs training just as much as an operative.
One of the objects of these training boards should be, as the noble Lord, Lord Shawcross, said, to cut down the abnormally and quite unnecessarily long periods of apprenticeship in many industries. I would say that industry wants on the shop floor boys and girls who have sensibly stopped on at school till 16 or 17 years of age. If, after that long period at school, they then have to take on apprenticeship running five or more years, they simply will not come to the shop floor: they will look for other employment. I should like to see the years spent at school after the age of 15 or 16, or whatever the age is, count for apprenticeship, and I want to see that everybody who comes into industry should at least be trained and a journeyman by the time he is 21.
If I may digress for a moment, I am certainly not against grammar schools, but one of the things we have been suffering from is the fact of the grammar schools in this country. In the old days, among the apprentices coming into a works there would always be perhaps 10 per cent. who were ambitious, able, anxious to get on; management material, able to rise to supervisor and foreman and works foreman, and then to manager and director. But these boys and girls, owing to the 11-plus examinations, have largely been creamed off in the last few years into the grammar schools. Then the grammar schools encourage them to stay on until they are 16 or 17, and
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to apply for scholarships—quite rightly—and have not encouraged them to go into industry. And even when they have gone into industry there is the obstacle of the five-years apprenticeship. Consequently, we have lacked on the shop floor quite a number of boys who have gone into black-coated employment, or other possibly valuable employment, when it might have been much better, and much more profitable for themselves, to come to the shop floor and rise through the ranks to the top echelon in industry. I hope that, by going in for comprehensive schools, we shall get more of these young men.
But the fault lies chiefly not in the schools but with industry, for having this long period of apprenticeship. That is all I wish to say about training, but it is of vital importance and there is much more I could say. I hope that at some time one of your Lordships will put down a Motion on training, so that we may have a full day's discussion on that subject. I believe that it would be most valuable.
The National Plan went on to say that the other leg of the two legs in this shortage of manpower was mobility of manpower. I should like to quote what was said about this matter on page 5 of The National Plan:
"The inquiry revealed the need for large movements of labour, with three major sectors —agriculture, mining and inland transport—requiring some 400,000 less workers; other industries, including aircraft, textiles, clothing and footwear, 200,000 less; while other sectors were estimated to require an extra 1,400,000 workers, the major claimants being mechanical and electrical engineering, construction, public administration, health, education and other services."
I want to say just a word or two about that. Here is The National Plan saying what the nation requires and, let us face up to it, some people have tried to make fun of this, and even of of the term "National Plan" when it first came up. But it was a most admirable document for industry, and I am against those in industry who have made fun of it.
However, that is what The National Plan says. If it is so—and presumably, the Government believe it to be so, otherwise they would not have written it down—what an opportunity there was to do something about it in the Budget! The Chancellor thought he would do

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something about it in the Budget, and he thought of the selective employment tax. But it would seem to me, and to many others, that the Chancellor has gone out of his way to sabotage what the Plan said instead of working towards it.
Let me, if I may, just analyse this most important paragraph 20 of The National Plan. The nation requires some 400,000 less workers in agriculture, mining and inland transport. We do not quite know how agriculture is going to come out. It is a bit muddling. I believe they are going to be penalised and then be given some money back through the Annual Price Review—and most farmers know what that means. As to inland transport, one understands that they are going to have a lot taken away from them and then, in about six months' time, have just the same amount given back to them. Mining, which has got to give up all these men, is going to be bribed to keep on as many men as possible. This is just the opposite to what the Plan says ought to be done.
We come to the other sectors. Other industries, including aircraft, textiles, clothing and footwear should give up 200,000 workers. But the Chancellor bribes those people to keep on their workers. Firms in the sector which keep on their workers will get 7s. 6d. or 15s. a week, or whatever it may be, for each of them. The National Plan says that people should come out of these industries. The Chancellor is doing exactly the opposite to what The National Plan says. But then we go on further. One of the other sectors which require these extra people is engineering. That is quite all right. They want 285,000 men over the five years covered by the Plan, and they get the bribe, if I may so call it. But construction is going to have to pay. They are going to be penalised when they ought to have more people. I suppose that public administration is going to be all-square. Probably health and education are going to be all-square so far as the work is national; but anything of a voluntary character—the independent schools and voluntary hospitals and the like—is going to be penalised. The other services are all going to be penalised. Yet The National Plan says that the other major claimants require—I emphasise the word "require"—over 1,000,000 more men in the next five years. These are
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construction, public administration, health and other services. This is an extraordinary thing. It is a topsy-turvy idea that. When we need fewer men in the national interest, the Government bribe you to keep those you have. But when we need more in the national interest, the Government will do their best to penalise you for keeping them. It really seems to me, in the famous words of Mr. Neville Chamberlain, to be "midsummer madness".
It was asked from the Front Bench on the other side what would be done. It seems, at any rate to the Back Benchers, that if the Government really wanted the money it would be better to put on a universal employment tax of, say, 3s. or 4s. a week, which everybody would be willing to pay in the national interest. But this selective scheme, and these bribes, are surely not what are wanted. I would hope that the Chancellor will look at the whole position again.
There is just one other thing I want to say about it, because I think it is important. I happened to be listening to the radio at a quarter past six on Monday evening when I had come back from the office. I was listening to the local news. They were talking about strikes at Ford's and at Vauxhall's, and the spokesman for the men who are on strike, or threatening to go on strike about whether they would get 3d. an hour more, was asked by the B.B.C. commentator whether they thought that the firm could afford the extra £1½ million which it would cost them if they got their 3d. an hour and could sell their goods overseas; and he replied, "The employers can well afford it from what they are going to get in extra money out of the new tax scheme of the Minister." They are not going to get that until January or February of next year. Surely what the Chancellor has done is to issue an open invitation to the trade unions to say that if that money is going to be paid to the employers they are going to get it. I should believe the same myself if I were a good trade union leader. So much in respect of manpower tax, except that I hope that, if your Lordships have not already done so, you will spare a little time to look at The Times to-day and read Sir Geoffrey Crowther's letter on the subject. I am

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not going to quote it, but it is a little masterpiece.
Coming back to more serious things, I believe that what is needed, what we have to do, is to persevere in negotiations, both at national and at local level, between the employers and the unions, and not to bring down great weapons from Heaven, or wherever it may be, but to plot and endeavour to adjust the old ratios of craft and non-craft workmen; to adjust the manning of machines; to deal with the demarcation of jobs, and to negotiate about what is possibly the worst thing of the lot, which is the holding back of the production rate of men to that of the slowest worker or the slowest unit in the shop.
To do this will, in my belief, necessitate educating everyone to realise that discriminate and efficient use of manpower is greatly in everybody's interest; that unemployment is a thing of the past and, if we do become efficient, will never again recur; and that the standard of life of all the people in this country, and especially of the operatives, depends upon the success of this operation. If we can educate the people to recognise this, they will not be inclined to chase after the Jack Dashes and the other professional agitators who are always to be found in every large industrial establishment. If we can give them proper training, I believe a good deal may be done to solve these problems.
I was going to sit down at this point, but Lord Shawcross in his remarks (I am sorry he is not here at the moment) took up a question of the industry in which I have been engaged all my life, that of printing; and I cannot let him get away with all his remarks and let down my trade and industry. We have been much publicised—especially the newspaper side of the industry, of which I do not have any personal active experience—and have been criticised for "featherbedding", over-manning and all sorts of industrial vices. We have lately been investigated ad nauseam. We had the Royal Commission on the Press; we had an excellent little investigation by the Productivity, Prices and Incomes Board —and may I say, in passing, that I wish people would not leave out the word "Productivity"; I remember the noble Lord, Lord Byers, saying that it should be
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called the Productivity Council, and not the Prices and Incomes Council. We have a joint Manpower Commission, which we set up eighteen months ago, which was praised by the Productivity Council, and at last have an independent chairman. We have recently set up a "little Neddy", on which I have the honour to serve. Now, on top of all this, we have a wide inquiry by the Ministry of Labour.
Your Lordships will see that it is not for lack of advice from outside, and examination of what we do, that we have not yet solved all our problems; but we have some experience of these methods. In general, I do not think our trade is worse than any other. We are endeavouring to see that it is going to be better than a lot of others. Our training schemes are well ahead of many, and are being rapidly improved; and I hope that others will follow. We hope to have our Training Board running next year. We have for some time had an industry management ratio scheme, such as Lord Byers talked about, and we have consultation with our friends the printers on the continent to compare our output with theirs.
The printing trade, like so many other trades, is at the moment in the middle of technological revolution. This must mean —and we have to realise it—that the men's confidence in the future is bound to be somewhat shaken. Compositors, naturally, get rather worried when they hear the mostly wild, inaccurate stories about the wonders claimed for computer type-setting, and are anxious about what is going to happen. Understanding, education and training, and a patient and careful dealing with the relatively small frictions which so rapidly build up if they are not dealt with—these are the things that must be attended to. There is a whole lot to be done, but I believe that we are in an industry which is making progress, and really good progress, with our problems.
If I may express an opinion about industry as a whole in this country—because we are fond of running things down in this country; it is an unfortunate trait—I would say that I am quite sure that basically our industry is sound. Do not let us decry it, or run it down too much. This does not do any good for us at home, and it does a great deal of harm to our reputation abroad. While criticising—and criticism is necessary—I would

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urge that we should send a message of encouragement to industry, in spite of the Chancellor of the Exchequer, to say that we believe that they are, and will continue to be, on the whole good servants of this country.
6.4 p.m.
LORD SAINSBURY: My Lords, this Motion is certainly very topical, and I should like to congratulate the noble Lord, Lord Byers, on his fine sense of timing. I wish to concentrate my remarks on one aspect of the manpower problem —that related to the distributive trades, with which, as your Lordships know, I am closely associated. According to the Central Statistical Office, at the beginning of the year nearly 3 million people, over 13 per cent. of the total labour force, were employed in the distributive trades, a very large number indeed. But, as was so truly pointed out in The Times leader of last Wednesday to which the noble Lord, Lord Shawcross, has already referred:
"What has to be recognised is that every major industrial country reaches a point where its standard of living is reflected in the expansion in services of one kind or another."
However, despite the rapid increase in the demand for services referred to by The Times, distribution has not increased its labour force as rapidly as other sectors of the service industries. This is borne out by official statistics. According to Annex I of Command Paper 2986 on the selective employment tax, between the years 1960 and 1965 distribution increased its labour force by only 5·8 per cent., compared with an increase of 15·9 per cent. in financial, professional and scientific service, hotels, catering and miscellaneous services.
May I suggest that the reason for this relatively slow increase in employment in the distributive sector of the economy is that, in conditions of full employment, distribution has found it impossible to recruit all the staff that it requires? Thus, distribution, and retailing in particular, has faced serious manpower shortages for the last few years. This has had some beneficial effects. For example, it gave a powerful stimulus to the development of labour-saving techniques, such as self-service methods and pre-packing.
There have also been some very significant changes in the composition of man-
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power in distribution in the fifteen years between 1951 and 1966. The number of female employees rose by 58 per cent., while the increase in male workers was only 24 per cent. In the same period the number of part-time workers grew rapidly, and it is estimated that nearly one in three employed in retail distribution is now on a part-time basis. The problem is that, despite all these developments, there is still a severe staff shortage in distribution, and in view of the general manpower gap forecast by the National Plan for 1970 it is likely that the shortage will continue. Therefore, the Chancellor of the Exchequer will be disappointed if he expects a positive transfer of labour from distribution to manufacturing as a result of his new selective employment tax.
The task before the distributive trades, therefore, is to try to make its existing labour force more productive and tap reserves of labour, such as married women who can work only part-time near their home, many of whom for domestic reasons would be unlikely to work in factories. Incidentally, there is a disincentive in the new tax, as it now stands, to the employment of part-timers. Increased labour productivity in retailing involves both training and more capital investment. In spite of some notable exceptions there has been very little systematic training, and, regrettably, some sections of retailing are very much opposed to the application to distribution of the Industrial Training Act. This is a point of view with which I personally profoundly disagree. The difficulties are obvious, but the need to overcome them is equally obvious.
The rapid development of new techniques in retailing has made training more important than ever before, in an industry increasingly reliant on part-time workers; and for the application of highly-sophisticated techniques it is essential to train a core of highly-qualified executives and managers. These must be given the opportunity to learn not only about the art of selling, but also about the art of personnel management, scientific stock control, store layout and administration, to name only a few of the requirements.
The Education Act of 1944, with which the name of the noble Lord, Lord Butler of Saffron Walden, will always be

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associated, introduced the conception of day release for young people in employment. I hope that when the training board for distribution is set up, there will be a vast increase in the number of those attending day release courses as well as in places available to those wishing to receive training on a higher level.
The other important condition of increasing productivity in distribution is investment. Despite the high level of capital formation in retailing in the past few years, the increasing complexity of new techniques means that investment will have to be maintained at a high level if distribution is to keep up with the new developments. Although I appreciate the reasons for discrimination in the new investment grants, I am bound to say that this will have an adverse effect on the distributive trades, and I would ask the Government to look at this matter again. It has been estimated that an investment grant of 20 per cent. for distribution would cost the Treasury some £30 million, as compared with the £120 million to £140 million that they will be receiving from retailers alone under the selective employment tax as it now stands.
The Economic Development Committee for the Distributive Trades, on which I have the honour to serve, recognised from the start that its most important objective was to increase the efficiency of manpower by encouraging training and investment. On the basis of my personal experience, I am convinced that it has done extremely useful work in bringing together employers, trade unionists and members of Government Departments, for the joint consideration of all the problems affecting this sector of the economy. It is only fair to say, however, that certain recent Government actions, such as the withdrawal of the investment allowances and the imposition of the selective employment tax, have had a disheartening effect on most members of the Committee. They feel that the role of distribution in a modern mass-production economy is not fully appreciated in Government circles, and that their efforts to encourage the more efficient use of manpower are not helped, for example, by the withdrawal of the investment allowances.
6.15 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I share other noble Lords'
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gratitude to the noble Lord, Lord Byers, for giving us the opportunity of debating this subject to-day. It seems to me that the root of the matter is well defined in a report of a conference earlier this year of the British Employers' Federation, a paragraph of which reads:
"Serious shortages of labour for at least ten years are predicted by the Ministry of Labour's Manpower Research Unit. National need therefore demands, on this score alone, that we should use our labour force more efficiently. If this were achieved our labour force would be adequate to support a full measure of expansion."
Those are heartening words, coupled with one point which I would ask your Lordships to bear in mind whenever we discuss questions which affect the economy of this country: that is, the bonanza which has come from heaven in the way of the North Sea gas development, which may well alter the whole economic picture of this country, which may well alter our Middle East and Far East strategy, and save us some of those millions that the noble Lord, Lord Shawcross, was saying we have at present so wisely to spend.
For the more efficient use of manpower the Government have introduced the selective employment tax. I must say that it has found very few friends in your Lordships' House to-day. The only point of the noble Lord, Lord Shawcross, at issue between us was when he expressed doubts that the purpose of this tax was the redeployment of manpower. It is true that there are several aims and purposes in the mind of the Government, but one purpose has been clearly stated by more than one Cabinet Minister. It is that purpose of altering our manpower balance. I quote Mr. Brown who said:
"We have framed these proposals with the manpower shortage and the need to obtain much greater productivity very much in mind."
That being so, the Government can have no complaint when some noble Lords concentrate their remarks upon this tax and its effect, and I think we are entirely right this afternoon in examining how far this tax will go towards meeting the Government's aims.
The noble Lord, Lord Shepherd, said that he hoped there would be constructive criticism. I hope that was not a smokescreen for evasion of criticism, which is so easy to make in a destructive way and so difficult to make in a constructive way when one is faced with such a topsy-turvy affair as this tax. The Government's hope

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is that they will discourage labour where they think it should not be, and encourage labour where they think it should be, Both the noble Lord, Lord Byers, and the noble Lord, Lord Shepherd, rejected entirely, as I think we all do, direction of labour as a policy. But, surely, this is an attempt by the Government at the economic direction of labour in a community where physical direction would be entirely repugnant in times of peace.
The tax can be criticised on a wide landscape of anomaly and absurdity, and various instances have been given to-day. Let me take just one—the absurdity of subsidising to the extent of 7s. a week the employment of a gossip writer in a London picture paper, while taxing to the extent of £65 a year the employer of any person engaged in earning foreign currency in the "invisibles" of banking and insurance, upon which our balanceof-payments so much depends. I will not weary your Lordships by giving more instances of the absurdities which can be brought forward, but I do ask the Government: how is this really going to increase our national efficiency in the use of manpower?
Mr. Brown defends these absurdities by talking of "a measure of rough justice". I confess that those works, "rough justice", shocked me as a Parliamentarian. Surely Parliament's duty has always been, and is to-day, to see that real and not rough justice, true and not phoney justice, is dispensed to each individual citizen. Every individual constituent of all the Members of another place has a right to expect his representative to obtain for him fair and honest treatment, and every citizen is entitled to know how he stands in relation to the law. If he cannot get satisfaction from the Executive, he is entitled to go to the Judiciary. Really, to try to justify the absurdities by talking about "rough justice" is, I submit, a constitutional insult to Parliament; and if this crude doctrine—I repeat, this crude doctrine—is to be accepted by the Government and the Government's supporters, and railroaded through Parliament by use of a docile majority, I say it will be the worst day's work for Parliamentary government and democratic rights for many a day.
In my final word on this tax I will try to meet the wish of the noble Lord, Lord Shepherd, for constructive criticism by
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dealing with ways to remedy some of the weaknesses. My first constructive suggestion is that we should encourage, not discourage, in services of all kinds the use of those men over 65 and those women over 60 who have qualified for the contributory pension. If the Government at once announced an exemption of those people from the tax—it would not be administratively difficult—they might attract a great concentration of these older people. We should extend the exemption to those who are disabled or partially disabled, and we may get some releases. My second constructive suggestion is this. The noble Lord, Lord Shepherd, gave several figures of great increases in the numbers employed in what we term the service industries. Let the Government set an example by endeavouring to reduce the ever-growing Whitehall staffs, which increased by some 10,000 last year and are likely to go up still more. These are two possible ways in which the measure might be improved.
My last point is this. We have only a limited field of action, for in a highly competitive world it is quite wrong to think that Parliament can run industry. The noble Lord, Lord Shepherd, has rightly declared that manpower is essentially management's task, and I think we have to be careful about tendencies to lecture and heckle those who have spent their lives in management. What I believe we ought individually, as Members of your Lordships' House, to do—and the Ministers can do it even more so—is to help towards building one world in industry, not the three worlds of management, capital and labour. What we can do is to show sympathy and understanding in labour relations. My noble friend Lord McCorquodale of Newton spoke of restrictive practices. He and I were in Parliament in another place during the years of heavy unemployment, and I am quite sure that the bitterness of those years still remains in the memory of the older men in industry to-day. The lurking fear of unemployment, which all Parties admit must never come again, and which will never come again, is, I believe, the basic cause of a good deal of the trade union organisation's clinging to restrictive practices and its resistance to new methods and new machinery.
I was fascinated to read a lecture to the British Institute of Management, by

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the managing director for production of the United Steel Company, about what happened when they had to revolutionise entirely their furnace work, which brought with it redundancies and changes of employment. How they did it I will not enlarge upon, except to read the final sentence of that lecture:
"We thought we knew our industry, we thought we knew our workpeople and we thought that they and their leaders were at least as sensible as we were—and indeed they were."
It was because there were great efforts of communication between humans that the United Steel reorganisation succeeded. Human relations really depend upon communications. I serve on the board of a large nationalised corporation employing many thousands of men. One problem that always worries me is the difficulty of getting into personal contact and personal touch with so many of our men. We tend to build up a great personnel department and, alongside it, a great trade union organisation, and both of them tend to take responsibility away from the man who is running the shop. They tend to systemise relations, and you cannot systemise human relations beyond a certain degree. They depend upon individual trust, individual like and individual taste.
My Lords, I believe that a simplification of the bargaining machinery between employer and employee is a necessity if we are to obtain maximum efficiency in the use of our manpower by the introduction of new methods and the abolition of restrictive practices. I believe that by such means we can create on the part of management and of labour that brotherhood in endeavour and that comradeship in achievement which are the essential features of industry if we in this country are ever going to succeed in the tasks ahead.
6.30 p.m.
LORD WYNNE-JONES: My Lords, I should like to say a few words about the technological aspect of the manpower problem. It was not my intention to say anything at all about the selective employment tax, but a number of people, both in your Lordships' House and elsewhere, seem to have made comments about it. I must say that I have yet to read any coherent, cogent criticism of the tax. I
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have read criticisms, but I have seen little cogency—or, where there has been any cogency, little coherence—over the whole field of taxation. It seems to me that it is not very sensible on the one hand to criticise the tax as a blunt instrument incapable of discrimination and, on the other, to say that it is far too discriminatory. It is one thing or the other.
I suggest that the reason why people do not like the tax is that it is too flexible in its possibilities; that it is capable of being used to do many things with the economy, and those who do not like interference with the economy do not like it. But if we are to deal with the correct use of manpower in the future we must be able to discriminate; we must be able to make attempts to get manpower where it is wanted. Obviously, when one makes attempts of this sort, mistakes will also be made; but I do not think there is the slightest evidence that a mistake is about to be committed. Until we know a good deal more about the exact details, I find it rather extraordinary that people should come out with such positive assertions about the ill-effects of the tax.
However, it is not my intention to go further in that direction. Rather, I should like to call attention to the problems with which we are faced in this country with regard to manpower fromthe technological side. We have in this country a total employed manpower of approximately 25 million. This number increases, and has been increasing, by less than 1 per cent. per annum, and the rate of increase is slowing down. I do not think we always appreciate that the rate of growth is in some ways more important than the total amount one has available. One of the reasons why an economy may expand rapidly is that its manpower is expanding rapidly; and one of the reasons why in the United States they are able to do many things that we do not do is that their manpower is increasing enormously the whole time. This means they are all the time getting a large reserve of young people, and are carrying a smaller percentage of the older people, like ourselves, on the national economy.
I think this also applies to much of the development that has taken place in Europe. You will find in most of the European countries that the pool of manpower has been increasing, and that very

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often great credit is given to these countries for the astuteness with which they have managed the economy. I would say that it is due far more to the birth rate and to the fact that they have had this pool of manpower coming along, which has no doubt helped to get the economy moving fast. I think that we should have been in a far worse state than we are if we had not been fortunate enough to get a large number of people coming into this country. It seems to me that those who have criticised the intake of immigrants into this country have not always understood the important part this immigration has played in accelerating the development of our economy.
My Lords, the next point of concern technologically is the distribution of the manpower. At this stage I should like to refer to some of the historical background contained in a book by J. D. Bernal on The Development of Civilisation. In it the author points out that prior to the year 3000 B.C. (plus or minus a few hundred years) the world economy was essentially one of hunting. It was about this time that it began to become agricultural, and in a very short time became predominantly agricultural. The interesting thing is that this agricultural predominance lasted until almost yesterday; that is to say, for a period of nearly 5,000 years the world was essentially agricultural.
Manufacturing began to take over and very rapidly displaced agriculture, so that we have now reached the point that in the developed countries of the world the number employed in agriculture is very small and is always diminishing. We are also reaching the point—I do not think we have yet reached it—where the actual number employed in manufacturing will begin to diminish, because we are getting more and more automation and more and more technology, and so will require fewer people to produce a far greater volume of goods.
What is now happening is an enormous increase in the number of people employed in the technological field. That is why we find, in the case of the professional and scientific services (and I am taking a similar figure to that taken by my noble friend Lord Sainsbury) that the increase in their number between
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1953 and 1963 in this country was 38 per cent. We now have just over 2¼ million people employed in the professional and scientific services. This is an amazing figure; it is the most rapidly developing part of the whole of our manpower. That is why the problem of training, to which my noble friend Lord Bowden referred, becomes so important. I listened to him with interest. It is always fascinating to hear a gamekeeper turned poacher. He obviously enjoyed himself. But I agree very much with what he had to say and, as a born poacher myself, I am happy to carry on with the comments he was making.
We in this country have not yet begun to approach the position obtaining in a country like America, or in a country like the U.S.S.R., in regard to the percentage of the population given higher education. I am not now referring—and I do not want to cross swords with anyone over the question—to the differentiation between university education, technical education and other forms of education. Frankly, I regard them all as one, in the sense that they are all part of higher education—that is, education continued beyond the school age. In this country we have something like 11 per cent. of the students of any particular year going on for further education, for higher education. In the United States in 1962, 43 per cent. of all Americans in their age groups went to college.
The point at which I began to disagree with the noble Lord, Lord McCorquodale of Newton, was when he said that he felt that it was a disadvantage for industry that the bright boys were no longer leaving school and going on to the shop floor, but were going on to grammar schools and higher education. I would agree with him if one thinks of the higher education as a purely academic form of education, but there is no doubt that in this country we have not too many going on for further education, but far too few. I shall not be happy until 100 per cent. of the population are going on for higher education. Not only is this their right; in my view, it is an absolute necessity for the economy of the country that we have people trained in this way. Otherwise, the whole of our industry, the whole running of society, will fail to make the advance which we want it to do in the modern age.

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The Americans, of course, have not solved all the problems. Although 43 per cent. of all their youth go on to college, they are worried that only 4½per cent. of those who do go to college study physical science. As a result, they are sadly deficient; and they recognise it. Although we may say how well off the Americans are, they themselves recognise that they are sadly deficient; and this is one of the reasons why there has been, for a number of years now, the so-called "brain-drain". It is because the Americans themselves fail to produce enough people in the field of technology and physical science that they are always wanting to attract the best they can from all over the world.
Even in the field of medicine it is shattering to find that in America they are producing now 4,000 fewer doctors a year than they need to keep their medical services going. To keep up their own medical strength they depend upon recruiting doctors from all over the world; and they are very alarmed about it. Of course, the medical profession in America is an even closer trade union than in this country, and they have partly themselves to blame for having kept up restrictive practices with regard to the production of doctors. But in this connection we have to remember that the problem with which we are faced, that of producing a greater number of well-trained people, also carries with it the further problem of retaining those people when we have trained them.
My Lords, I was looking only last week at some figures in an American journal devoted to technical chemistry. It was stated in this journal that in 1964 a young Ph.D just graduated in chemistry or chemical engineering could expect to get immediately on employment a salary of 11,000 dollars a year; and that after 20 years' employment he would be getting, on average, at least 50 per cent. more than that. The rate at which these salaries are increasing led the writer of the article to state that by 1968 the mean salary on entry of a Ph.D. into industry would be 13,000 dollars. and that by 1972 it would be 15,000 dollar. Whatever sort of rate of exchange one cares to adopt, even if one takes the figure of 5 dollars to the £ (which is possibly not inaccurate if one tries to take into
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account the different standard of living), that still means that at £3,000 a year a young Ph.D. is paid very much more in America than here. Consequently, we are faced with this problem. It is really one of pulling ourselves up by our shoestrings. We have to produce more and better-trained technical people, and we have also got to advance our industry sufficiently rapidly to have the standard of living that will retain them.
6.45 p.m.
VISCOUNT MILLS: My Lords, I am sure that we are all greatly indebted to the noble Lord, Lord Byers for introducing a debate on a subject of such importance to our economy. It is only by using manpower efficiently that we can hope to keep down our costs in handling the materials which we have to import from abroad. It is important, if we are producing things for our own consumption, and it is essential if we are producing them for sale abroad, to keep our balance of payments right. But, my Lords, manufacturing industry is the largest user of imported materials, and I am sure that it is to this section that we should first of all look for improved efficiency in the use of manpower.
Before I deal with some of the root causes of the inefficiency to be found in manufacturing industry in the use of manpower, I should like to make one general observation. The failure of men and women to give of their best is not confined to any particular sector: it is a human failing. It may be found in the board room, in the office, in the laboratory, and on the shop floor. Nor can it be dealt with by legislation; or simply by increasing pay packets. Exhortation, which was of such great importance in time of war, does not seem to succeed here, either. I am sure that to have good conditions surrounding the work, to which the noble Lord, Lord Bowden, referred, is very important. This state of affairs usually exists where there is good leadership. If the employer is doing his job and facing his responsibilities, it should, I suggest, be easier to deal with this problem in the units of private enterprise rather than in the nationalisation of whole industries.
The noble and learned Lord, Lord Shawcross, suggested that the units of industry in private enterprise were too

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small, or that many of them were; and I am sure that he is right. Much of the inefficient use of manpower arises from this fact. I believe that the chief obstacle to efficiency in the use of labour in factories lies in the word "redundancy". In spite of all that the Government have done in respect of redundancy, it is still a very dirty word. In consequence, the outlook of the trade unions, and of employers, too, prevents the redeployment of labour which can be so necessary to its efficient use. Change in requirements; lack of orders; the necessity for further automation or labour-saving machinery, could all give rise to redundancy in certain sectors. But before changes can be made, management must consult the trade unions, and/or the shop stewards, to discuss the problems which can arise from redundancy.
It is rarely that agreement can be reached without much argument, without long delays and, I am sorry to say, perhaps ill-feeling. A ban on overtime is by no means uncommon, though the overtime may be required in sections completely removed from those where the redundancies have arisen. A ban on the removal of obsolete and bad machinery and the introduction of new machinery, also, often arise in connection with redundancy problems. The employer is often at fault: rather than face the troubles which may be in store for him by a declaration of redundancy, he will hang on to his labour, hoping that time will solve the problem, and, in any event, knowing that under present high taxation the Government bear a good deal of the cost.
Opposition to the introduction of labour-saving machinery is still to be found. Such opposition arises from the fear that employment may be affected, that earnings may be affected, or that less skilled labour may be required. I think that in many cases the present earnings structure is at the base of many of these questions. A system has grown up whereby the basic wage is established as only part of a man's earnings, and to that is added overtime at plus rates, and a bonus which often has no logic behind it but is simply the result of bargaining between management and men, in dealing with the introduction of labour-saving machinery, I think more regard should be had to this earnings
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structure than is at present the case, or it may prove fatal to the plan to introduce machinery.
I believe that, in spite of the apparent shortages of labour, there is probably surplus labour in both the manufacturing industries and the service trades. The noble Lord, Lord Shawcross, was bold enough to put it at 10 per cent. I wonder whether he was bold enough, and whether in fact it is not greater than this. If there be this surplus labour—and I believe there is—an employment tax applied to all occupations might have much to commend it, both as some restraint on the wasteful use of labour and as an additional means of revenue necessitated by the balance-of-payment troubles with which we are confronted. But we should not forget that, if it were applied to all labour, it would be much less per man, per woman, per boy, per girl than it is under the present proposals.
A lot has been said about the selective employment tax. Perhaps it is not within the scope of this debate to deal with the selective employment tax, other than as to its effect on the efficiency in the use of manpower. On its general effects, therefore, I will content myself by saying that I am fearful of the problems raised by this discrimination against the service occupations. I should have thought that they are so intermingled with productive processes as to make the whole plan impracticable. With a flourishing society, the growth of the service trades is inevitable and can be expected. If the intention, to cause the transfer of men from service occupations to manufacturing industry, can be fulfilled—and there are many reasons to doubt it—is the worker in the manufacturing industry going to be more keen and contented if he is denied or inconvenienced by the services to which he thinks he is entitled? I think that is a point that should be borne in mind.
In my view, the incentive which the selective employment tax provides, to ensure a more efficient use of labour in the service trades, if successful, has to be set off against the encouragement given to manufacturing industry to be inefficient in their use of manpower by means of the premium they are promised. The more I study the matter, my Lords, the more I doubt the extent of the experience in industry, manufacturing and

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services on the part of the author or authors of the selective employment tax, because it does not appear to me that it will add to efficiency in the use of manpower, but rather the reverse.
6.57 p.m.
LORD HAIRE OF WHITEABBEY: My Lords, I, too, should like to congratulate the noble Lord, Lord Byers, for introducing this debate this afternoon in his usual dynamic manner. I found myself in agreement with much of what he said, but of course I could not agree with him when he hit out so severely at the selective employment tax; though I find many of your Lordships have been tempted to follow him, including the noble Viscount who has just sat down.
There can be no doubt that the Budget of last week has given a new urgency to our debate today. Every employer is bound to challenge his use of manpower. The selective employment tax has been based on the White Paper (Cmd. 2986), which gives the basis for the argument that there is too much scarce labour going into the service industries, however one breaks them down, and there is too little going into manufacturing. The figures quoted in this White Paper have focused the position clearly. In the last five years 1,330,000 workers became available, either by new intake or displaced workers, and of that number only 10·7 per cent. went into manufacturing industry and over 80 per cent. went into services, which includes building and distribution—and, as my noble friend Lord Sainsbury has said, distribution may be a very small part. But clearly, in the light of these figures, we must divert more labour into manufacturing. It seems to me that that is the basis of the selective employment tax.
Though many of your Lordships have been most contentious about the tax, I think we must acknowledge that we need more employees in the manufacturing industries, and more, particularly, should be channelled into the export industries, in my view, this is an important point in the White Paper—the direction of labour into export industries in order to boost our exports which, as we all know, are the basis of our balance of payments at the present time. So we need to swell our export output we need to keep our
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delivery dates; we need to maintain quality. Therefore we need good, well-trained labour, and we must use this labour economically to maintain our competitiveness and to be priceworthy. Yet the surprising thing is that during the last few years we have often heard that manufacturers have been hoarding labour—that there was much over-employment. We have heard of workers in the distributive and agricultural trades who have been going into factories because it is said they can get better wages, and because there are better conditions. Yet these figures do not prove that case.
It seems that the selective employment tax might well solve this imbalance to some extent, and certainly without going to the extent of the only other method which I believe could be adopted to achieve it: that is, directed labour. If I may refer to London, there is certainly a great deal of imbalance in the employment of labour here. Take such a simple thing as the employment of female secretarial labour. There is a growing struggle for secretaries between the secretarial agencies and the use of temporaries, and direct employment by a firm. It is now practically impossible to get a good secretary in London without going through a secretarial agency and probably employing a girl for many weeks at a time as a temporary, paying something like £20 to £25 per week. Of course, it often helps the secretary. She has better conditions; she works from ten o'clock until five o'clock or even less; she works part-time; she has the choice of how many days a week she works, and the cost to her employer can be more than her father is getting in a craftsman's job.
This seems to me to be quite wrong in the employment of female labour. How distorted the wane scale is in London, when we consider that this girl can frequently earn as much in half a year as a full-time, directly employed, secretary can earn in a full year! But, of course, faced with the loss of a proved secretary, which one of us will not allow our arms to be twisted? Yet this cannot be an efficient use of female labour in London. We have dictaphones, copying machines and addressographs. We can have the wide use of many of the machines which are now available through the very progressive office equipment industry in this country. There is a further point. Formerly, there was a useful market for the

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supply of secretarial labour in the Commonwealth, but now this is restricted, unfortunately, owing to the introduction of the Commonwealth Immigrants Act, which restricts immigrants to 8,500 a year. I know of a case of a young Canadian girl, a graduate, who has been waiting for eight months to get her labour permit to work in this country, yet she would be a most efficient girl.
This leads me to my main point. To get more efficient use of labour in this country, I believe we need better management. I have no doubt about that. Management is the key to efficiency in the employment of labour in this country's industry. Many industries suffer from indifferent, untrained, inefficient management. There are far too few firms who are conscious of the need for trained personnel management, who not only plan the jobs but who build morale, get the understanding of the workers, and lay down the objectives of the firm. Many firms could well use management consultants and proper work studies in pursuing this aim.
I must now say a word about nationalised industries, because I feel that they have a responsibility to give a lead. Just because they are nationalised they must be so much better than the average. Take, for example, the Gas Board. Many of us know that the Gas Board works at a profit. It is not because it is the most efficient industry of all. I had a case in my own home not long ago, when my wife reported a defective appliance, a water heater. After several weeks an inspector turned up. Following that, after a further few weeks a fitter came along who said that it was not his job. After a further few weeks another operative came along and brought a part which turned out to be the wrong one. Several more weeks went by, and another operative brought the correct part which worked the appliance correctly for two days. I suppose the answer is that we should get a new appliance. But that is what goes on, and it is only one example. It happened in another case in my home, but I will not go into that.
There is another nationalised industry which I think the noble Lord, Lord Byers, mentioned, and that is aviation. There is quite clearly a need for streamlining this industry and for less featherbedding of it. Every one of us knows
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that at all our airports we are in need of an improvement in the efficiency of the manpower used. May I finally mention another semi-nationalised industry which has been much in the news of late, the British Broadcasting Corporation? I think Parkinson's Law is much in evidence in the B.B.C. It seems that the administrative tail wags the production dog in the B.B.C. With 8,000-odd on production and programme staff, excluding performers and those under programme contract, there are 2,500 engaged in administration services, and 5,750 in catering and manual services. The Overseas News Service, which is pa id for almost entirely by the Foreign Office, recently had a reorganisation which resulted in a large increase of highly-paid staff without any corresponding increase in output, and at a time when we could well cut down on our overseas output.
Now I turn to female labour. It is not generally appreciated that there are working in this country just over 23 million fully employed men and 14½ million women. That is about three men to every two women. But women generally are not trained and not used efficiently. It is considered by manufacturers a poor investment to train women for only a few years before marriage and before a family appears. We should have retraining schemes after women have re-turned to employment, after their family has been launched or provided for, and we should make better use of part-time female labour under better shift-work schemes. Many women need to work to maintain a standard of living, and manufacturers and other employers should plan on fifteen to twenty years of work from each trained woman.
That leads me to a word about overtime. Without an income from his wife, many a man feels compelled to work overtime. Overtime can be the curse of industry in this country. I find from the figures in this month's Digest that at least one-tenth of our male employees in all industries in this country work overtime—just over 2½ million—and they do an average of 8 hours weekly. Most of these men have come to expect this overtime and they budget accordingly. Yet the Fawley experiment, which the noble Lord, Lord Byers, spoke about this afternoon, and the B.P. agreement, show that wages can be regulated to

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provide a decent income for the men without overtime; and the result is that there are better labour relations, there are no strikes, no demarcation problems, and inter-union agreements can be obtained.
The long-term prospects for labour in our industry are not good, as many noble Lords have mentioned. Manpower is likely to become the bottle-neck in our industry very soon. During the next ten years our manpower will increase much more slowly than in recent years, yet in the United States of America between 1953 and 1963 the working population increased twice as fast as in Great Britain, and it is estimated that during 1963 to 1973—that is, the ten years' span we are now in—it will increase four times as fast.
When one is in America one cannot fail to get the impression that in the United States labour in industry is used more efficiently than it is here. This may be due to better management, which I believe is so, or it may be due to a greater sense of job requirement, or to more disciplined work, which is partly true. But the noble Lord, Lord Byers, this afternoon mentioned that productivity in the United States of America was three times that in Great Britain, and certainly there is clearly an example in the United States for us. We can well study their methods by sending teams representing management and trade unions in this country. This might well be the fastest way to increase the efficiency in our industry which we all want and which the country certainly needs.
7.13 p.m.
BARONESS EMMET OF AMBERLEY: My Lords, I am sorry to detain you at this rather late hour, but, as you know, as a rule I am, and will be to-day, quite brief in making the points I feel have been left to me to make. I am grateful to the noble Lord, Lord Byers, for giving me the opportunity of speaking about a matter which is very close to my heart, and to the noble Lord, Lord Haire of Whiteabbey, who has given me a lead-in. I want to deal particularly with that part of the labour force in this country which is composed of women. It represents, as I think has been said, one-third of the labour force of this country. There is all the difference in economic survival between the efficient and the inefficient use
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of labour, and so far as the women are concerned I think a profound study should be made now of their contribution, because I do not feel that their work is either efficiently used or is as efficient as it might be if certain training schemes were available to them. I do not know whether we have any historians left in the Chamber, but it is an interesting historical fact that the emancipation of slaves and coloured people has been paralleled by and has gone on step by step with the so-called emancipation of women. I think this might make a really interesting study if somebody would take it up.
There are many problems affecting women's work, starting with education. I think everybody would concede that girls are still not treated on a par with boys. Parents and local education authorities and universities, if they are short of cash are inclined to pinch on the girls and not on the boys, and far fewer girls than boys start with a definite idea from the beginning of a professional training. This attitude was understandable in the old days, when the ultimate object of every woman was marriage. The expectation of life was much shorter, families were larger and the scope of work for women outside the home was really restricted to domestic service or nursing or teaching, all of which were at sweated labour prices. Now that marriage and child-bearing come at younger ages, children leave their homes much earlier and the years of expectation of life for women stretch out into the seventies, the eighties and the nineties, I feel that these middle and old age years should be years of personal fulfilment, whether the woman is married or not.
At the moment a professional woman contemplating marriage really faces great problems, and I want to give an illustration from my own personal experience. Some years ago I took a delegation to see a bachelor Economic Secretary in his room in the House of Commons, in good time before the setting up of the Budget. The Economic Secretary listened with great sympathy to our problems, but what really made the deepest impression was what was said by an extremely attractive and able woman consulting engineer. She said, "I am engaged to be married. My husband-to-be is a professional man earning a very reasonable income, and I have to make up my mind to one of three alternatives: I can marry and give up

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my job, which seems a pity because my sort of consultants are in short supply and I like my work; secondly, I can marry and go on with my work, but we must then face surtax, and after having paid out for extra labour in the house we shall both be worse off than we were before we married; or we can live in sin and enjoy both our incomes"—and this lady, fixing our bachelor Economic Secretary with a very charming smile, said, "That is what I think we are going to do."
Subsequently to this interview, the level at which surtax is paid was raised, not to help the rich, as I think some of the members of the Party opposite went round the country saying, but really just to meet this particular kind of professional case, because the idea was to encourage professional women to come back into work. I think they would do so if the basis of taxation were altered to the single tax, which was recommended by the United Nations Committee on the Status of Women as long ago as 1960. Some of us have pressed the Treasury on this matter, but it is the Treasury which is standing in the way and is encouraging an immoral way of life in consequence. I am all for having a woman at the Treasury, as a Member of our side said in the House the other day, because we might get a little sense then and we certainly should have some savings. After all, we have a woman housekeeper in every home in the country, and it might not be a bad plan to have one for the nation.
Apart from this method of taxation, which undoubtedly militates against the professional women coming back to work, the rate of pay for women really needs looking into. They are still, in too many trades, cheap labour, and the new selective employment tax has accentuated this point of view. I want to know why the noble Lord the Chief Whip for the Opposition should be rated at 7s. 6d. from the point of view of repayment, if he were employed, and I should be rated at only 3s. 9d.
LORD SHEPHERD: My Lords, I would only say to the noble Baroness that I am not the Chief Whip for the Opposition.
BARONESS EMMET OF AMBERLEY: I am sorry; the Chief Whip for the Government.
LORD SHEPHERD: But to answer the main part of the question I can only say that there is no justice.
BARONESS EMMET OF AMBER LEY: I wonder how he would feel if it were the other way round and he was rated at 3s. 9d. and I at 7s. 6d. This selective tax has been produced by a Party which, at the moment, is under pressure by the unions to bring in equal pay, and has also given a pledge in its Election Manifesto to do so. Certainly this extra tax, which will fall on anybody employing a domestic at home, will be another disincentive to professional women coming back into the market. There was a very good leter in to-day's Times which I recommend everybody to read. It says:
"It is particularly regrettable that the new tax should be introduced just when the Government is trying to encourage the return of married women in particular to teaching and nursing."
The present rate of pay to women below the professional classes means that they cannot save for old age. I do not know whether that is why they are given their pensions earlier, or whether it is because people think they are worn out at 60; they certainly live a great deal longer than their menfolk. If they were paid at the higher rate it would allow them to save, and this would be ultimately to the great benefit of the nation.
There was a very thoughtful article in The Times on May 5 which I want to quote very shortly:
"It is estimated that…only one woman in 10 is receiving the rate for the job. Women are paid the same salary for doing the same work in medicine, dentistry, physiotherapy, radiography, teaching, journalism, broadcasting, architecture, and as Ministers of the Crown, Members of Parliament, salaried magistrates…civil servants and administrative, professional…workers in local government and…nationalised industries. In many other non-manual occupations, however, a woman…doing the same job as a man is paid less."
The average hourly earnings at mid-1965 as published by the Ministry of Labour, were for male workers 7s. 11·5d., and for females only 4s. 0·5d. It may well be—I think it is probably true to a certain extent—that women's labour is less skilled or requires less training than

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men's, but until this can be established one way or another, and the position remedied where necessary, women will remain cheap labour and second-class citizens.
I believe that in this second half of of our century we need a completely new look at the status of women in our country, especially if we are going into Europe where equal pay is one of the regulations in the Treaty of Rome. I should like to see an investigation set up to go into the whole question. It would have to take into its outlook the completely changed position of married life so far as women are concerned, the population explosion, and the fact that brain and not brawn is now going to carry us through, that we have got to the age of mechanisation. I think this is one of the really important points of our time and it alters the whole position of women, because so long as brawn, or in other words physical strength from the muscular point of view, dominated the world women could not and did not want to compete. Now that every intelligence that contributes to the nation's welfare should come into its own, women have in that respect an increasing role to play.
I hope I can appeal to the Government or to the Prime Minister—who, to give him his due, though one does not agree with everything else he may have done, has seen the value of giving women a place in politics—to take the whole problem of the employment of women out of the realm of feminist wrangles, either pro or against, and examine the subject dispassionately in the interests of the nation as a whole. After all, one third of the labour force in this country must be of national and public interest. I am sure that in a small and over-crowded nation, as we are, if we are going to compete with some of the giant nations around us we must use every brain and every pair of hands we have available to the best advantage. Women have been discouraged and, metaphorically, have been sat upon for so long that they will really need every encouragement and incentive to go forward; but, given these conditions, I believe that their contribution could be enormous and of great help, especially at the present time.
7.26 p.m.
LORD SIEFF: My Lords, I should like to join in the congratulations to the noble Lord, Lord Byers, for his speech this afternoon on the use of manpower. I believe that we have a lot of manpower still to be used, and I thought it might be a good idea if I were to put down on paper, for myself at least, some of the ideas which I have in regard to the use of manpower. In my experience I have visited a very large number of factories, both new and old, and have been able to assess in some measure how much manpower is wasted in quite a large number of stores. Where a factory exists without modern machinery it must of necessity be utilising its labour uneconomically and badly. When we have the situation which exists to-day—as far back as 1964 nearly two-thirds of the unemployed were, according to the Ministry of Labour survey, unemployable, and we have had a credit squeeze imposed upon us since then—is it any wonder that firms compete with each other for labour, that trade unions seem to have no limit on the wages which they wish to receive, and in consequence thereof the policy of the Government with regard to prices and wages has so far failed to succeed?
I think we must take up a different attitude to this problem of manpower, because, unhappily, both in theoretical economics as well as in practical life we still maintain a great many thoughts and principles which existed in the Victorian era, and one of them is the limited amount of labour available in the country at any given time. I think that this attitude on manpower has a dangerous effect both upon management and upon trade unions; it is an attitude which is extremely inflexible and it brings with it a lack of imagination. Therefore, there is a tremendous amount of waste and inefficiency in the utilisation of workers. This restriction of opportunity for salary and wage earners, in human terms and in human satisfaction, presents development of the relations between the employer or management and the employee. There is not the urge to study the effects of science and technology on the business, because employers are running after each other, trying to snatch a man from here and a man from there, a woman from here and a woman from there, in order to

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make up what they believe is the necessary amount of labour to meet their obligations, in many cases to meet their future obligations.
I do not think this ought to be regarded as a theory. We have ample evidence of the great changes which have already been seen in our country, by the use of modern machinery and the manner in which we have, in many cases, become much more competitive as a result of our studies in technology and in science. We are able to turn out much larger quantities of goods than we could ten years ago. We have modern instrumentation, modern gadgets, modern techniques of production. Although I say that a great deal of labour is wasted and used inefficiently, I do not mean to suggest that there are not many corners of our country full of plants which produce an extremely good quality article, and which are able, as a result of the efficiency of the producer, the manager and the production engineer to compete with goods produced throughout the whole world.
The studies I have made, although few (because I have to earn my living, too), have convinced me that those who see the supply of labour as a fixed quantity take a most pessimistic and unimaginative view of the wish of management and workers to participate in the benefits which arise from modern production methods, and of the ability of most of the human factors in industry to rise to the challenge, when it is properly offered to them, to do a better job and to accept responsibility for it.
The important point in all this relationship is that the workers, whether on the shop floor or in the office, whether dealing with transport or with actual manufacture, feel that they must be trusted. The importance of the sense of trust which the worker feels determines, to a large extent, his attitude towards management and towards his job. I believe that in a good many places in this country—in some of the firms I know well—firms fall short in this regard. It is a great pity. Few of them provide adequate training and decent working conditions or take enough care to enable their people to retire in comfort, free from financial worries.
I cannot emphasise too highly the importance of the sense of security of
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people who work in the business. During the 19th century, when labour was much in abundance—or a certain type of labour was much in abundance—and when managements, many of them without a sense of civic responsibility cared only for their profits and not for their people, it was impossible for them to place trust in their people, because they knew that they had not created the conditions whereby that trust would be maintained and enjoyed and would pay its return in the form of devoted service. I have heard it myself in the factory. There is a division between labour and staff. Again, it is the problem of the white-collar worker and the man with the dirty hands. Even in the board room, between "us" and "them", there still exist these worlds. So long as they exist, such firms will have no understanding of how to deal with the problem of their labour and their manpower.
It is too easy for us to say that we have not sufficient manpower. People look for a ready excuse. Even the Government sometimes look for some ready excuse. The truth of the matter is that the Government are not ready, or prepared, to make such a study of the problems to break into the inside life of the people who are engaged in industry. When I say "inside life", T mean inside them: what are they thinking here? How are they approaching their problems? After all, manpower is our most precious asset. It is equallyas important as capital as all the other things that go to make industry. I was so taken up by the idea that I wrote this phrase:
"If we learn this, we may be surprised at the hidden treasure of ability which we shall unlock."
Even in the traditional industries, where there are not the same opportunities for automation, much can be achieved by production engineers in streamlining the flow of work and by introducing better tools and gadgets. We can upgrade the quality of the product, and if we know how to use the best-quality raw materials, we get a bigger quantum as a result of their work.
Another point I want to make, which is little understood by manufacturers, is that a great deal of labour is wasted as a

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result of not exercising good quality control. In our business we have a production exhibition. Manufacturers, and even heads of production sections from other industries, such as the motor car industry and the engineering industry, come to have a look at it. The head of a production section of one of the most important transport manufacturers—car manufacturers, if you will—in this country, came down to see it. He said that 40 per cent. of the materials sent to him by the makers of the gadgets, clocks, pumps, wheels, et cetera had to be rejected by him. Just think of the waste that is involved. It is not only a waste of time and of money; it is also a waste of manpower. It is that which is the killing point, the waste of manpower.
I should like to tell your Lordships a little story. In 1956, we initiated in our business what we call "good housekeeping", a simplification of system. I will not describe to you all that went on, because it is not necessary, but two points emerged. One was that our workers, our salesgirls, the people in the office, all the employees, suddenly began to blossom out. I could see them blossoming out. They felt that we trusted them, because the systems we adopted gave them the freedom to do what they wanted in so far as goods were concerned. I remember going to a store and the manager saying to me, "I think that we have done a most wonderful thing. The girls are as happy as the clay is long. "That gave me great pleasure. We have a devoted staff; we have been able to deploy people to more productive work, which is most important for the soul of the person himself or herself. He or she is a worthwhile person and doing a worthwhile job, and that is tremendously important in the life of an individual.
Thus, in a short time, I have tried to point out what I think are the bases of my statement that we have not got a shortage of manpower. We can find it in the nooks and crannies, in the offices, and on the floors of many factories in this country. I say to the noble Lord, Lord Byers, that if he tries to discover them he will find them all easily. If we had an evangelising influence we should cry out to the manufacturers of the country. And it is not only a question of not having sufficient to pay our debts abroad. It is
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extremely important to save the people: that is the important thing. Then we shall begin to have a happy country, people will think it is worth while living, and perhaps delinquency will not be so prevalent as it is now, because there will be a different atmosphere.
Your Lordships may regard me as an idealist or a dreamer, but I have seen it happen and it is no longer a dream to me. I have seen people coming into the business who are aware only of what goes on outside, from what they have experienced, from what their fathers and mothers and brothers and sisters have experienced. They come in and see this different atmosphere. It is not that I am trying to be arrogant and blowing our own trumpet. It is simply that we have hit on a device which enables us to have a manpower problem in the sense that we have all the manpower we want and we can get all the manpower we want, because we treat our people with trust and confidence. I have a sentence in my notes here: "I am sure that this formula is right"—and it is right, too.
I should like to tell our Lordships a story of a building firm which has a great many difficult problems to solve, as most of its work has to be done outside, in the open-air. The rain comes down in torrents, and all the tarpaulins you put up cannot stand up to the force of the rain. The men have to work; they have to build. We went there, we saw the state of affairs, and we thought to ourselves, "This is the most primitive thing that one could possibly visualise. These men are working in pouring rain, and they look like drowned rats. It cannot be right; it must not be right. "We said to the builder," Why don't you put up a shed where the men can come in and take off their wet clothes? When they enter the site in the morning they can bring with them a spare cardigan and a pair of trousers, which they can change into if they get wet. "Then we discovered that they brought with them bread-and-cheese sandwiches, little things—I do not know how they could live on them when I saw them. We decided that there ought to be a dining room, and we decided that there had to be a lavatory—all they had was an ordinary tin bucket, a state of affairs which is a disgrace to any human being.

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This builder, who happens to be a Member of Parliament, the chairman of the company, came to my office the other day and discussed this matter. He told me that the rate of increase in regard to speed of building had gone up enormously. What was even more important, the casual labour turnover had dropped immensely. That is the saving of manpower. What they were doing before was utilising their manpower badly, without thought, without any sense of responsibility. We gave them drying rooms and dining rooms, washing facilities and clothing rooms, and it generated a tremendous amount of good will among them. What was even more important, and what is always more important in these cases, is that they learned to have self-respect and self-esteem.
I want to say a word or two on the selective employment tax. It is something of the future. All that has been said today may be true or may be untrue, but I know one thing—this is my experience —that distribution cannot be regarded as something on its own, something that hangs in mid-air completely independently: it is the last link in the chain of production. If you do anything to the last link, if you change it in some form or other, you are going to have some kind of a discordant note when you begin to ring the other links—they will be a bit twisted.
I should not expect a man who has not gone through the experience of this chain of production and distribution to understand all this. But distribution is not a separate business, and if this system goes through as it stands to-day it will be a misfortune to this country. It will bring up prices very considerably, because I can assure your Lordships that the 1¼ per cent. by which the tax is supposed to increase prices will be not 1¼ per cent. in a year's time, but something like 5 to 10 per cent. I do not want this Government, or any Government that we might have, to have that as a responsibility. The tax is a very good tax-collector—it is very effective as that. But, if we are thinking in terms of making our country strong and competitive, and if there is not to be this continual yearning for more and more, which we see both with managers and with workers, we shall have to look at all these matters again and study them much more closely than we have done hitherto.
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In all these things I believe that management, and only management, can take the lead. Management has to take the initiative, because power in industry, interpreted in modern terms, is capital, management and labour; and these three must have a common purpose and a common objective. If we, as managers, can find the language to explain these matters to the workers, which is one of the things we have to do, and say not "You, Bill", but just "Bill" (and by that I mean that one must show the man that one has respect for him), I think it will go a long way towards bringing this idea to fruition. I do not think I have spoken on this occasion as perhaps a Member of this great House should. I have spoken to your Lordships in the language of the ordinary individual on something that is so close to my heart, because I felt that fine language would spoil it. But for a great many people one of the verses of Shelley applies:
"We look before and after,
And pine for what is not."
It is in the life of all of us, and certainly it is in the life of the workers, on whose devotion, confidence and honesty we depend if we are going to become a strong nation.
7.53 p.m.
LORD AMPTHILL: My Lords, I apologise for rising so late in the evening to address your Lordships—in the Dog Watch, as is my usual form—but this time it is not my fault. I was higher on the list, but I surrendered my higher place in order that your Lordships might have the advantage of hearing one of my older colleagues who did not want to sit up too late.
I join with other noble Lords in thanking the noble Lord, Lord Byers, for putting this Motion on the Order Paper. I think he deserves our gratitude, and I am sure we all feel deep gratitude to him, because in my view—and I think it will be shared by those who have been here throughout the debate and by those who read Hansard to-morrow—we have had a remarkable debate, with outstanding and remarkable speeches. With many of the speeches I found myself in almost complete agreement. I do not want to hand out merit marks for speeches, because there were so many and it would be invidious to do so, but I must briefly refer to the speech of the noble Lord,

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Lord Sieff, who has just sat down, because the sentiments that he expressed are naturally very close to my own thinking, for, as many of your Lordships know, I am at the moment Chairman of the Industrial Society whose work in industry is entirely concerned with human relations.
The Motion of the noble Lord, Lord Byers, reads:
"To call attention to the need for increasing the efficiency of the use of manpower in Britain".
This need has been with us for as long as I can remember, certainly all the years that I have worked in industry, and many of us have been trying to do this very thing for many years. We may not have been so successful as we hoped, and no doubt we failed in many respects, but not all. Nevertheless, I should have preferred the Motion to read:
"To call attention to the special need for further efforts to increase the efficiency of manpower in Great Britain".
I think that this wording would be slightly more realistic. However, it is a small point.
As I said at the outset, these efforts have been going on for a very long time, and I can remember assisting at the introduction of a time and motion study in a chemical factory on the North-East coast. This was in the early 1930s, and your Lordships will appreciate that that was not an easy time to introduce what was then a completely novel thing, because the North-East coast was an area of very high unemployment. We all learned a lot from that operation, and when, a year or two later, I moved to work for my present company in Northern Ireland—another area of high unemployment—I endeavoured to apply the knowledge I had gained and to impart it to my colleagues and subordinates. This was in 1935, 1936 and 1937 and—I will be honest—one was regarded with considerable suspicion, not only by the workers but also by management at all levels. Then the war came and our work had to cease, although we had already had some successes. It was not until 1947–48, when I returned from my war service, that we were able to resume operations on a really planned scale, on a proper basis. But first of all we had to educate and train the men. These operations con-
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tinue to-day, and any factory with which I am concerned, or of which I have any knowledge, has its proper work study section which attends to all these matters, which are, of course, directly relevant to economy in the use of labour.
I have briefly recounted my own experiences because I think your Lordships should have some reason for my feeling justified in intervening in this debate. These experiences have taught me that this job simply cannot be done by chair-borne theorists, whether they be economists, whether they be civil servants, whether they be trade union officials or whether they be management. One has to get down to the brass roots on the factory floor, on to the construction side, just as the noble Lord, Lord Sieff, went down and cleared up a point which immediately had an effect on economy in the use of labour. Orations from political platforms, exhortations, appeals to the Dunkirk spirit, simply do not work in this matter. Anyway, Dunkirk was a smashing defeat, let us face it. I am sure that everybody in the country showed a wonderful spirit in the face of that defeat. But we are not facing a defeat now. We do not want to talk about the Dunkirk spirit.
This problem requires real hard work, application to detail, and—your Lordships will already appreciate this from what the noble Lord, Lord Sieff, has told us—great patience and great tolerance. But most of all it requires real understanding and real sympathy with the people employed, however they are employed, in whatever job they are employed, because it is people who determine the success of any enterprise. Without good human relations, which includes good leadership and good communications, it is impossible to gain the confidence of the people and their full co-operation, and without good leadership and good communications failure is inevitable.
There are many ways in which productivity (I use that word because that is a simpler expression than "efficiency in the use of manpower") can be improved, but few are easy and straightforward. In the forefront I put the steady or increasing rate of production. Violent fluctuations are most detrimental to productivity. Frequent Budgets, little Budgets", with alterations in purchase tax or Excise duties, or with general increases

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in taxation, are the most frequent causes of these violent fluctuations. In my experience these are the usual reasons for the so-called hoarding of labour. It is difficult enough to forecast consumer demand without the hazards caused by Government action of this sort. Lately, we have had all too much of this sort of thing.
Great increases in productivity can be achieved by what I call a simple rearrangement of the furniture. This work entails not stop-watches, not slide-rules and not high-powered consultants—just common sense. If your Lordships want to know what I mean, the next time you go to make your breakfast just look to see how many movements it takes you to boil an egg. There is a good deal of work that can be done towards what my family call, "Using your head to save your legs" —and these ideas can be applied to factories, not only to one's own kitchen. One example I remember very well, from long before the war, was that a simple rearrangement of the furniture just halved the numbers of a wrapping machine crew.
Further increases in productivity can frequently be made by increasing the speed of machines, and in many cases the speed of a machine can be increased quite easily and quite cheaply. It may not even require a new motor: it may be only a question of pulleys or belts. But here there is one word of caution, one word of warning: you must be sure, when you increase the speed of your machine, that quality will not suffer. From my own experience I could tell your Lordships of machines the speeds of which have been doubled within the last decade, but that was possible only because we undertook long, patient and difficult research into the raw product. Then, when that was successful, we were able to double the speeds and maintain the quality.
Then new types of machines can be invented, and this is something that is going on all the time in industry. Sometimes one can have a lucky break. I do not want to boast, but one morning before the war I had an idea when I was shaving. I cannot think why my brain worked so rapidly when I was shaving, but it did—for once, anyway. However, this idea took five to six years to develop, but when it was developed and the machine was put on the factory floor it
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enabled 2 men to do the work of 20. Sometimes you have a lucky break like that, but you cannot get to that position without long, patient and probably very expensive work on the development of the machine.
Schemes of this kind are going on in industry and in commerce all the time—many speakers this afternoon, and particularly the noble Lord, Lord Sieff, have instanced examples of it—but they largely go unrecorded. It is only the more spectacular achievements, such as those at the Fawley refinery, the United Steel works and such like that hit the headline news. This patient, zealous work of hundreds of people, men and women—managers, foremen, chargehands and, last but by no means least, many of the workpeople themselves—must go largely unrecorded except in the private annals of their own enterprise. It must be said here that this work could not take place, could not be going on as it is now, unless there was proper leadership from management—that, of course, is vital—co-operation from the trade unions, of course, and leadership by the trade unions within their own unions.
The people doing this work—and they were on the job this afternoon while we were sitting here, and in some cases they may still be on the job—need all the help and all the encouragement that we and the Government of the day can give them. These people, many of whom I know and count among my friends, take an enormous and justifiable pride in their job and in the achievements of their particular enterprise; but, human nature being what it is, they do need some incentives, and certainly proper encouragement. Our taxation system is such that most of the gilt is taken off the gingerbread of a merit bonus—I quote that as the simplest possible example—unless, of course, one gives an entirely disproportionate sum. Only last week I had a case—not in my manufacturing business—where a £25 merit bonus was recommended for many months of hard, additional work and special responsibility. But when tax was deducted, on a weekly basis, this did not make sense. In fact, it was derisory. I was instrumental in stepping it up to £50, which was a little better, although in my opinion still not enough. In any event much of it would go to the Chancellor.

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In talking of increases in productivity, one must face the fact that more often than not they bring in their train redundancies. Redundancy payments have long been a practice in many firms which I know well; and now, of course, we have legislation on the subject. But redundancy payments in themselves, my Lords, are not enough to produce the increase in mobility of labour which we require if people who are no longer required in one industry are to move to another. In my view, there are two additional "musts": more houses of the right sort, in the right places; and a more rapid approach to the interchangeability of pension schemes. Mention of pension schemes brings me to the subject of pensioners. There is an enormous boom of labour in cases where pensioners can come in for half a day or a few hours, but at the moment, because of our taxation system, there is no incentive for them to do so.
The noble Lord, Lord Haire of White-abbey, and my noble friend Lady Emmet of Amberley mentioned women, and I should like briefly to refer to this subject. In my own concern we have found that married women whose families are not very small—they are grown up, or more or less grown up—are only too willing and ready to work an evening shift. In fact, we work such evening shifts in my own factory, from 6 to 10 o'clock—and very merry occasions they are. I have called in on them many times and I can tell the noble Lady that the husbands drive their wives to work in their cars and take them away when they are finished. They are very pleasant occasions, with music while you work, and they result in very efficient production.
To go back to my main theme, it is in these two matters, the universality of pension schemes (if that is the right description) and housing, that the Government can help by lower and more rational taxation, by incentives for local authorities and private enterprise to build houses quickly and in the right places, and by encouragement, probably fiscal, to enable these private pension schemes to have a wider application over the whole country. But instead of tacking these matters (and others that I have not time to mention) what have this Government done? In their first eighteen months in
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office they have increased taxation by £1,000 million. They have utterly failed to check inflation. As a result, prices have gone up, are still going up and, so far as I can see, will continue to go up.
Now they are about to bring in the Selective Employment Bill. This has been referred to by a number of speakers and I am only going to refer briefly to it. There is only one thing I wish to say about it. I think it is an unsavoury mess, an ill-prepared, ill-cooked, and ill-served Hungarian goulash. The Government have vastly increased the number of totally unproductive civil servants—other noble Lords have referred to this—and this Bill will undoubtedly even further increase the number of those in the Government service. Parkinson's Law reigns unchallenged in Whitehall. There were, I think I read, 10,000 new civil servants last year. Now, through this Bill, you can "bet your boots" there will be another 5,000.
This rotten Bill is a thinly-disguised measure of compulsory direction of labour. Let us face it: it will vastly increase the cost of many things. Some of these have been mentioned by other noble Lords; I shall mention only one—I was reinforced in my desire to mention it by the speech of the noble Lord, Lord Bowden, from the Benches opposite—and that is the effect it is going to have on the cost of education. I do not refer to the education of our children, although I know I am going to get bigger school bills. But that is not the point to-night. We are talking about economy in the use of labour, and a big factor in helping management to economise in the use of labour is the services of these many educational establishments. The noble Lord, Lord Bowden, mentioned some of them. I can add to the list. There is the Management Administrative Staff College at Henley and there are the courses run by the Industrial Society of the British Institute of Management. I do not want to go on wasting your Lordships' time, but there are also the business colleges and the technical schools. Well, this Bill will apply to the lot—and up will go the charges. Is that any help to increasing productivity? No, my Lords, in my submission, it is not.
LORD WYNNE-JONES: My Lords, is the noble Lord suggesting that the tax is going to apply to such institutions?
LORD AMPTHILL: Yes, my Lords, I am.
LORD WYNNE-JONES: That is not how it has been stated.
LORD AMPTHILL: I am coming to this point a little later. I believe it is going to apply, and this is creating great uncertainty. I understand from what the Government spokesman said in another place, and from what the noble Lord, Lord Shepherd, said here this afternoon, that the Selective Employment Bill is coming to us in July. I am sure that I am speaking for noble Lords on this side of the House when I predict for it here a very rough passage. However, I cannot think why this Bill has not been published earlier. There is uncertainty and confusion over its application. For example, the noble Lord opposite asked me if I knew whether the Bill would apply to the institutions I have mentioned. I can only guess from what has been published that they will be included. The uncertainty and confusion is merely creating one of those conditions in industry which are so obstructive to any improvements in efficiency. I suspect, of course, that the preliminary reactions to the Bill have caused the Government to have some pretty careful thoughts on it. What I think is much more likely (to use the metaphor I used earlier) is that the cook will have to send back to Budapest for another recipe.
LORD HILTON OF UPTON: Cheap!
LORD AMPTHILL: My Lords, in general terms I support the Motion of the noble Lord, Lord Byers although I should have preferred some slight leeway. I hope that as a result of this remarkable debate the Government will concentrate their attention more on the grass root problems (some of which I ventured to mention this afternoon and some of which other speakers mentioned), and on producing reasonable methods to assist industry and commerce to overcome the problems which face them.
Lastly, I must say, in a further reference to the Selective Employment Bill, that I cannot see how the grabbing of hundreds of thousands of pounds from charities such as Dr. Barnado's Homes and the Mission to Seamen, and others —about which I had a letter to-day—is
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really going to help industry and commerce. Of course it is not—your Lordships will forgive me for saying this, but I feel strongly about this matter. It may be sound practice in Budapest, or in some other Communist country—
LORD HILTON OF UPTON: Cheap!
LORD AMPTHILL:—but to impose this tax on the deacons, curates and priests of our churches, and on the vergers, seems to me an absolute nonsense; and, worse, it is evil.
8.18 p.m.
LORD COLLISON: My Lords, it was with great personal regret that I was unable to hear the whole of this debate. I should like to thank the noble Lord, Lord Byers, for giving us the opportunity of discussing this most important matter at this point in time which I think is relevant. It is obviously a fact that we in industry need to consider how we can make more efficient use of the manpower available to us. I think the problem falls into two parts. First, there is unquestionably a shortage of men where they are really needed. The National Plan indicates that by 1970 there will be quite a substantial shortage of manpower which will be made up only by increased efficiency. Therefore, it is a question of getting people into the right places. Secondly, there is the problem of using the men you have in the right places more efficiently in order to achieve greater productivity and a greater national product. The movement of manpower from production industries to service industries has, I think, gone on too rapidly. I am going to mention the selective employment tax later, but it is one means of bringing some of them to where we think they should be.
But I want to emphasise that, besides the need to reverse this trend, we also have to step up the effective employment of those who are in the right place, who are, in fact, going into productive industry. There is also the need, if we are to achieve this, to increase the pace of technological change. I think we should welcome the measures taken by the Minister of Technology especially regarding the tools of technological change; that is to say, the use of computers, machine tools, electronics and electrical engineering. I believe that these tools are very

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necessary and appropriate to the development of greater productivity and the better use of the men in these productive industries. I think, too, that there could be even more extensive application of work study and associated techniques, a relatively cheap way to improve productivity.
I wish to make clear that the trade unions know of this and that there is no dispute about it. We are not opposed to change as such. Although we sometimes probe management and employers, because we believe that increased productivity and efficiency will help us in addition to helping the nation, the truth remains—and it must be the truth—that in the last resort it is for management to take the initiative, because without the willingness of management you cannot achieve anything.
May I deal with another matter, which I know concerns many people and I believe is misunderstood? I speak of the so-called restrictive practices. We should, I think, remember that men in industry still look at changes in techiniques and production processes as they affect them. I think it is perfectly proper that we should persuade people that they have a responsibility to the nation. But we cannot really have great concern for the broader issues unless we are satisfied about personal issues which are very close to individuals; and therefore reassurances about the total national position will not be very effective in respect of a man who thinks that he is going to be worse off, or that he is not being treated properly in relation to the technological change which the management intends to put into effect. That is why the T.U.C. emphasised, in its Report on Automation and Technological Change, which was published last December, the need for manpower forecasting as an essential prerequisite for regional and industrial policies, in order to provide for specific measures to deal with, before it occurred, any short-term unemployment which might happen. Of course, we also want to facilitate training and mobility. We argued that the Government should introduce measures to cushion the blow to those who found themselves, it might be for a short time, unemployed and should find means whereby those people could be retrained.
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I was glad to see how many noble Lords said the same thing, and I want to agree with them—the noble Lord, Lord McCorquodale of Newton, the noble Lord Lord Balfour of Inchrye, the noble Viscount, Lord Mills, and last but by no means least, the noble Lord, Lord Sieff. They all accepted that a sense of security is required to enable people to accept the challenge and the demands made by technological progress and change. Action along the lines of the T.U.C. policies has been taken by Government in the last two or three years, and I think that those policies are beginning to take effect. If industry is to build on the foundations already laid by legislation such as the Industrial Training Act and the Redundancy Payments Act, industry needs to tackle the basic causes of practices which impede efficiency.
Important among these, as I have said, is a sense of insecurity, and I wish to emphasise that here is a major factor in the so-called restrictive practices. The result is demarcation issues, ceilings on production and hanging on to jobs, overmanning, and all the rest of it. We should not forget that this is due to bad experiences in the past when there were long queues of unemployed, and men feared to lose their jobs; and a sense of comradeship made them unwilling to do rather more, as perhaps they might, so as to keep someone else in employment. If we approach the matter in this way I think we shall find the answer. It is not good enough simply to condemn; it is necessary to understand. Until one understands the problem it is impossible to find a solution to it.
I should like for a moment to turn to the question of the selective employment tax, the payroll tax. Among other things, it is aimed at reversing the trend from productive industry into the service industries. I think I can say, although the General Council of the T.U.C. has not yet discussed the payroll tax—it cannot do so as a Council until it meets—that I see no reason why it should oppose the principle of this tax, and I think that the Council will accept it. However, there will be a number of issues which will have to be raised, and I am quite sure that the T.U.C. would in no way wish to inhibit approaches made by unions to Government to get clarification and explanation, and perhaps to ask for changes in the details of the procedure.

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I should like to deal with the position of agriculture. So far as I can see, there will be a number of questions to be answered; indeed, they are already being asked, both in the National Farmers' Unions and in my own union, the National Union of Agricultural Workers. In the first place, it is a little difficult to understand how agriculture can be classified as anything other than a productive industry. Yet agriculture has been placed in the neutral zone. It is true—we all accept it—that there is no shortage of manpower in agriculture, but that is something about which questions will be asked. It has also been stated that the method of refunding the tax to the agriculture industry will be through the machinery of the Price Review. The words used were:
"so far as practicable through the machinery of the Price Review."
We find it difficult to understand how that can be made to operate. What will happen will be that individual farmers will pay the tax. Instead of getting it back in a lump sum payment, it is proposed to pay the tax back to them by a financial injection through the Price Review. I cannot see how this can be properly balanced between the people who deserve to have their money returned and those who do not.
May I remind the House that more than 50 per cent. of our farmers do not employ labour. They will not pay the tax. If the refund is made through the Price Review machinery, those farmers will benefit. They will get something back at the expense of other farmers. I am not saying whether this is a right or a wrong method of redistribution, but it is quite a different approach to the issue than applies in respect of other industries. I would also mention that horticulture is not dealt with in the Price Review. The products of horticulture are not Price Review products. Therefore, how can this method apply to farmers in the horticulture industry?
It seems to us that unless the money is to be made available to the right people in the form of a direct grant, in which case, it might just as well be paid back to agricultural employers in the same way as to other employers on a once a quarter basis, there is no way of ensuring that an individual employer who pays the tax on a given number of workers will receive
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a refund of an equivalent amount. Another point is that employers in agriculture would only receive their repayments, over a period of one year, having arrived at Price Review arrangements while other employers are going to get their return at quarterly intervals.
So I think the Government might well consider the points I have made in relation to agriculture. We are going to ask to be met by the Government in order to get clarification. I should like to make it clear, again speaking as a Trades Union Congress man, that this does not mean that the Trades Union Congress General Council is against this new taxation principle. We think it has a degree of flexibility contained within it which will enable the Government to redeploy labour and to redeploy other resources. We do not disapprove of it in principle. However, I believe that in certain industries, including my own, problems will arise which will deserve attention by the Government, and we shall be asking the Government to give particular problems in agriculture their attention.
8.32 p.m.
LORD ROCHESTER: My Lords, even at this late hour I should like, if I may, speaking as one who for a good many years now has been concerned with the management of people in large-scale industry, to mention a few of the major considerations influencing some of our manufacturing companies in their efforts to make manpower more effective, and to give some general indication as to how such firms are setting about the achievement of that objective. I do not propose to dwell on the political aspects of the problem; enough, I think, has been said about that already. However, I want to join with the critics in saying that whatever this selective employment tax may succeed in doing in increasing manpower in manufacturing industry, it seems to me most unlikely that it will do anything to increase efficiency in the use of that manpower.
I think it is now generally accepted that pious exhortations to greater productivity in industry are ineffective. If men are to accept improvements in the utilisation of manpower, and the consequent redeployment which it is the aim of such improvements to effect, then management I must be prepared to strike a bargain

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which will give the men a worthwhile return. It follows that it is necessary for employers, in making their plans, to take trade unions into their confidence and, so far as possible, tackle the problem jointly with them. That is why all the major advances in productivity which have been made in the last few years are, in effect, package agreements in which a series of specified changes in working practices have been linked with substantial improvements in pay and conditions.
It is sometimes said that such agreements have unfortunate repercussions in bringing pressure to bear on other employers to grant wage increases that are not matched by improvements in productivity. But, as Mr. Allan Flanders has recently remarked, why should it be taken for granted that employers have no option but to concede increases in rates to match productivity bargains when they are not being offered a return in terms of improved productivity? If, on the other hand, the wage pressure that arises from such bargains spurs other employers to find out how they can make improved use of their manpower, so much the better. It is surely for the critics of these package deals to tell us how productivity is to be improved if it is not by bargains of this kind.
In my view, British industry will increasingly have to act on these lines during the coming years, and there are a number of reasons why this is so. Enormous sums of money are being spent on plants which are continually becoming more instrumented and larger in scale, and causing significant changes in the nature of the work of the people manning them. At the same time, manufacturing industry is operating under increasingly competitive conditions in which there is a shortage of manpower of the required calibre. I emphasise the phrase "of the required calibre", because, like other speakers, I do not believe that there is an overall shortage of manpower in manufacturing industry. This factor, together with the rapidly increasing costs of employment, makes it essential that the contribution of each individual should be as full as possible.
Not all the obstacles in the way of the optimum use of manpower are imposed by trade union demarcations and restrictive practices. A great many are,
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but some arise from restrictions created by management through the form of organisation it has developed and maintained. Others result from narrow and defensive attitudes among the men themselves. Then, again, social changes, among them the rise in the general standard of living and the level of education, have led to a situation in which individual potential is nowadays much greater. If only we could harness this potential, it would meet the needs of both management and men; but to achieve such a desirable end, our traditional methods of close supervision need considerable modification.
A further factor influencing the position is the increasing awareness that the present division of industrial employees into monthly paid staff and weekly wage-earners is inconsistent with current social and economic conditions, and also militates against maximum flexibility in the use of manpower. This has led a number of large organisations to make changes in the conditions of weekly wage-earners aimed at the gradual elimination of such distinctions.
These, then, are some of the factors that have resulted in the making of the productivity bargains that we have observed in the last few years. I do not propose at this time to weary your Lordships with tedious instances of the efficient use of manpower which have given rise to the present situation. We have already heard a good many of those today, and many examples are all too readily apparent. Nor shall I offer suggestions as to detailed ways in which the utilisation of manpower can be improved. For these will vary so much with a particular organisation.
There are one or two general points that I should like to make. Reference has already been made to the desirability of sending teams from this country to American to study on a comparable basis the utilisation of manpower over there. I very much welcome this suggestion. My own firm has recently sent some teams over there, and it may interest your Lordships to know that membership of those teams is not confined to management, but includes also representatives of the men themselves. I think this can only help in giving those men a clearer understanding of the problems involved,

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and in gaining their co-operation in the solution of the problems.
Another general point I should like to make is that the first essential in any examination of the manning of industrial plants must be a study of the whole management structure of the particular working unit, because some of the existing organisation and manning will arise from separation of function at comparatively senior levels of management, possibly on a basis of technical disciplines rather than the overall needs of the company concerned. It is possible for management to make improvements in this field without reference to trade unions, and a willingness to reorganise on these lines is an essential preliminary to the negotiation of improved manning arrangements with the unions.
But, my Lords, it will not be sufficient for management then merely to offer more money in return for specified changes in working practices. Everything possible needs to be done to afford the men concerned safeguards against loss of employment. Moreover, effective improvements in manning can be achieved only with the right calibre of man, adequately trained for his task. This means that a major training effort is needed; and if that fails to achieve the required results there will have to be an improvement in the quality of recruitment, which in turn implies making use of the products of more advanced education in our schools and colleges.
Further, if men are to be more fully developed so that they can adequately operate and maintain the more complex plants of the future, they will largely supervise themselves. The most suitable form of payment for them will not be a basic weekly wage, supplemented by bonuses varying with the rate of work achieved over a limited period, but a stable salary graded according to overall performance in the job, and affording greater security of earnings during authorised absence from work. If such a stable salary is adopted, it follows that the financial incentive to maintain a satisfactory working rate, which has hitherto been provided by bonus payments varying directly with output or the rate of work, will no longer be available. Management will therefore have to find and make use of other forms of
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motivation that will enable continued improvements in productivity to be made. And this is indeed a formidable task. Fortunately, at just the time when the considerations I have mentioned are emphasising the need for men increasingly to supervise and develop themselves, current sociological thinking and experiment are pointing in precisely the same direction.
My Lords, it appears that management has for too long acted on the assumption that the average man is indolent, lacking in ambition, self-centred, resistant to change and passive; that he must have his thinking done for him; that he is indifferent to organizational needs, and that his activities must be controlled and supervised at every point. Modern sociologists remind us, however, that needs which have been satisfied are no longer motivators of behaviour, and that improved education, full employment and the affluence of present-day society have produced a situation where higher needs than basic physiological, safety and social requirements must now be satisfied if men are to give of their best. They suggest that people are not by nature passive or resistant to organisational needs: they have become so as a result of experience in organisations which insist that authority shall not be delegated, that decisions must invariably be taken by superiors, and that every operation should be standardised and each part of it specialised.
The truth is that the potential for development and the capacity for assuming responsibility are latent in all of us. But it has to be made possible for people to recognise and develop these human characteristics for themselves. Today, the essential task of management is so to arrange organisational conditions and methods of operation that people can achieve their own goals best by directing their own efforts towards the objectives of the organisation. This is a process of creating opportunities, releasing potential, removing obstacles, encouraging growth and providing guidance.
From the time of the renowned "Hawthorne Experiments", nearly forty years ago, it has been recognised that management concern and interest have an effect on output, and that there is a correlation between output and the satisfaction a man finds in his job. More recently, it has been demonstrated clearly enough

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that concentration by management on factors such as pay and working conditions do not give rise to positive satisfaction, though lack of attention to such items may well result in dissatisfaction. Rather, it is work itself, and factors such as achievement and its recognition, the possibility of personal growth and self-development, that have been shown to produce positive satisfaction. It is therefore to the creation of conditions in which factors such as these will thrive that management must increasingly direct its attention if work in industry is to prove satisfying and productivity is to advance.
My Lords, I apologise if, for the last few minutes, your Lordships have been treated to an unwanted lecture in the behavioural sciences. It has happened only because, in my view, this problem of how, under conditions of full employment, men can be motivated to give of their best is paramount in debating the need to improve efficiency in the use of manpower in British industry to-day.
8.46 p.m.
LORD ARWYN: My Lords, we are all grateful to the noble Lord, Lord Byers, for the opportunity to discuss one of our greatest problems. He and other noble Lords have covered so much ground in their speeches that I have had to scrap most of mine, which will probably be a source of comfort to those who remain. The noble Lord, Lord Byers, referred to a legacy of mental attitudes. I would use the word "fears". However thorough the time and motion studies and the analyses of manpower, these in themselves do not get rid of fear. Neither will the pet theories of all the economists. My noble friend Lord Shepherd said that the fear of unemployment has disappeared. We are short of labour, but the attitudes and fears still remain. There is always the lurking fear, "Will it last?" It is asking too much of human nature to adjust itself completely to new attitudes and new patterns of thinking without preparing the ground which will enable a change to take place.
There has been an appeal to trade unions to modernise their outlook. If I held a key position in a trade union I should be better encouraged to respond if I were convinced that management
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was taking definite, realistic steps in the same direction. Co-ordination of effort is impossible without the elimination of fear and suspicion. The noble Lord, Lord Byers, referred with regret to the reluctance in industry to encourage the development of works councils. Employers are largely responsible for this. Our ingrained fears of being exposed to criticism have proved too hard to master.
If we are to get the fullest co-operation between management and labour, we should start with the composition of boards. There is still far too much nepotism. There are too many directors of quite important companies who are not even able to understand the technical terms used in the production of their own products. Their appointments are often made in order to shelter other members of the board from any challenge to them or their authority.
It might be necessary, in the interests of the country, as well as that of shareholders, to require candidates for seats on boards to satisfy some authority that they are competent to sit on the board of any one company. We demand a master's certificate before a man can command a ship, and a certificate of competency before a man can be appointed as a colliery manager. The one is from the Board of Trade, and the other from the Home Office. Each profession has its own stringent examinations. But a fellowship of the Institute of Directors is not a certificate of competency, a master's ticket, or a professional qualification. It is more of an acknowledgment of a subscription to a nebulous trade union, and to ensure receipt of the monthly magazine, which is probably one of the best in the world. It is a mine of information to those who want to study the many subjects a director is supposed to understand.
In this much shortened version of the speech I intended to make I should not like to miss out another important point made by the noble Lord, Lord Byers, namely under-employment. This is a result of incompetent management—nothing else but that. If the figures given by the noble Lord were only halved the difference in the economy would be spectacular. We are in a fight for survival, and as each new nation takes its place in the industrial world we shall be faced

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with competition which we cannot yet assess. All we have to do in order to visualise what could happen to us is to study the rate of growth in productivity and in quality in Japan over the last twenty years.
My Lords, the formula for industrial efficiency is quite simple. Management in all its stages must respect labour and be respected by labour. It is difficult to expect highly skilled labour, especially, to respect incompetent, guinea-pig directors who do not understand the technical problems either in administration, production or sales. The second part of the problem is that management must at all times be continually aware of the value of communication lines and realise the value of consultation. With consultation and the bringing of everyone into the picture co-operation is established and mutual problems understood and solved. All this sounds much like a hotch-potch of platitudes, or too simple a solution, but once one has realised the truth in the formula and established the principles as the backbone of one's thinking and policy, the results can be astonishing. This is the trust to which my noble friend. Lord Sieff, referred. We have to establish that trust.
Ask any industrial consultant—I have been one myself—and he will tell you that very often 90 per cent. of the answers he is being asked to find have been gathered from within the firms which are the subject of investigation. The answers have always been there, but no one has had the sense to ask the right people, or they have been afraid to do so for fear of a loss of dignity, or some other excuse. This ludicrous idea that a barrier of total secrecy must always exist between management and labour has existed for too long. The basis of business philosophy has been altered. Until fairly recently directors were loath to part with much information, even to shareholders, until they were forced to do so by law. This is a case of fear masquerading as prudence.
In conclusion, I should like to say a few words on the new tax. I feel very hot about this, because I am involved. To ask the extractive productive industries to bear the maximum rate of this tax is a highly dangerous experiment, especially where exports are concerned. Having "blown my top" on that, I will now conclude. We should first be concerned
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with increasing efficiency in existing undertakings, with the existing labour force, before we consider the uprooting of people from their old homes. The determination we exercise in doing just that will decide the chances of success we shall have in the next five years.
8.55 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR THE ROYAL NAVY (LORD WINTER-BOTTOM): My Lords, one thing is certain, following this debate; and that is that the noble Lord, Lord Byers, must be pleased with the response which his Motion has awakened in this House. I have sat through most of the debate and have found it illuminating and educative. But I am certain also that the House is grateful to my noble friend Lord Shepherd for setting the framework of facts to help us in our discussion. Before I plunge into my speech I would also thank the noble Lord, Lord Drumalbyn, for his kind welcome to me at this Box, speaking in an economic debate for the first time.
Before I start answering various points arising from the debate I should like to clear this selective employment tax out of the way, in a brief paragraph or two. I think the noble Lord, Lord Byers, will not object to this, because his Motion was put on the Order Paper before the tax was born; so the issues which he was asking us to discuss exist well outside any potential impact which this new tax may have on the problems of manpower.
When we talk about the selective employment tax we should not forget that it has more than one purpose. The purpose may be, and in part is, to ensure a shift to a certain degree from the distributive industries to the productive industries. But, perhaps most important of all, its main purpose is to broaden the basis of tax collection, to prevent us from overloading certain existing taxes with even higher tax, and to enable us to spread the tax load over a wider basis of our economy. Listening to noble Lords to-day, I think that no one will disagree that some lowering of the pressure of steam within our economy is necessary. Figures have been given showing the great excess of demand over the supply of labour, but I must say that it is those

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economists who argue that these two factors should, in fact, be in pretty close balance who receive my support.
I believe that at the moment the demand for labour is somewhat too high for safety, and this particular new tax is a useful method of reducing this pressure, which I think we all agree has to be done, while spreading it very wide over the economy. In the past, when we altered the purchase tax on motor cars and semi-durables we hit key factors in our economic system unnecessarily hard. This particular reduction of pressure within our economy will reduce the pressure without particularly damaging key factors in our productive system. It will also, of course, enable us to draw some taxation from various services which, although making life more pleasant, are things for which, if we really want them, we shall be willing to pay some more money.
Nevertheless, I think we should not become unduly upset by the fact that the tax itself has arrived in a somewhat surprising manner, and that it may not seem to be as selective as its title suggests. We shall have plenty of time to discuss this measure. It will be discussed in another place when the tax is imposed, in the Finance Bill, and when the actual Refund Bill, which I think will be presented by the Minister of Labour, goes through the Houses, we shall have a good opportunity to discuss all the anomalies that various noble Lords have mentioned in the debate.
This is not being sprung on the country; we have plenty of time to consider the problems that it creates. I am certain —the Chancellor said it and the Prime Minister said it—that these representations will be listened to with care. We must be careful not to let the best be the enemy of the good. We have got to do something and this is what we are doing and we shall have plenty of time to discuss it. This is, after all, what this House is for.
I will try to touch on various points mentioned in the debate. I took as the central point in the speech of the noble Lord, Lord Byers, his concept of a central manpower agency, that in fact we should take all these bodies that are doing research into these problems and some-
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where, presumably within the Department of Economic Affairs, bring them into closer correlation and co-operation. I think it is sound sense and I am certain it will be studied with interest by my colleagues in the Department of Economic Affairs. Like the noble Lord's Party in this House, I recommended a straight payroll tax because I hoped a payroll tax would be used to give rebates to exporters, as I believe it can be used in the future. However, we have no alternative, and I am certain that he and his colleagues will use their critical abilities to see whether the existing substitute tax, which is what this is, can be improved when we come to put it on the Statute Book.
The noble Lord, Lord Drumalbyn, raised one of the questions that exercise us all: what are the Government doing about their own growing payroll? All I can say is that the Government are acutely conscious of this. We publish our figures; everybody knows the numbers who work for the central and local governments. As we demand more services from Central Government and local authorities we must expect more people to work for those authorities to provide the services demanded, and we must not be surprised if over the years employment by Central Government and local authorities rises. Nevertheless, it has to be watched, because Professor Parkinson is right on this subject, and we will keep a pretty close watch on this.
The point made about computer centres is, I think, of interest and I am certain will be studied by my colleagues. The question of job orientation and pre-apprenticeship training is very important. The idea of enabling a young man's apprenticeship to start in his last years at school is an idea which attracts me personally. The noble Lord, Lord Bowden, made, I thought, an excellent speech. He asked two rather difficult questions and I will arrange for the Departments concerned to send him answers in writing. The noble Lord, Lord Shawcross, made a very interesting speech. He raised a question, which I think must exercise us all, on the size of units in industry and in distribution. This matter is, of course, evolving anyway; the large are swallowing the small, though probably not fast enough for the need of growth in our country. The selective employment tax will, I think, help this.

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I also think that the various other measures of rationalisation which this Government are producing will help to speed this necessary evolution.
LORD DRUMALBYN: My Lords, if I may intervene, I am not quite clear how the selective employment tax will help that. Could the noble Lord explain it?
LORD WINTERBOTTOM: I think there must be some small businesses which are on a margin of productivity. If in the field of distribution the cost of their wages rises then it is more than probable, in my opinion, that they will have to go out of business and their business will be taken over by the large, highly capitalised and efficient multiple stores which are growing throughout the country. This is a natural evolution which will be speeded up by the new tax.
LORD AMPTHILL: My Lords, before the noble Lord leaves that point of size, there are great advantages in increasing the size of units; I accept that. There is, however, an optimum size of unit for which you can find a competent man to manage it. This is a matter which my colleagues in business and I have discussed a lot. When we arrive at a figure it might be right or wrong, but the problem is to find the man who can run the show, and, in passing, it seems to me that this is the big problem of nationalisation.
LORD WINTERBOTTOM: I would agree with the noble Lord and it is also partly a problem of education, training. The man of normal intelligence when properly trained can manage a bigger set-up than a man who has not had that training. The right reverend Prelate, the Bishop of Leicester, produced a slightly different slant on this problem. Unfortunately those of us in industry have to run just to stand where we are, and therefore we tend perhaps to take growth a little too seriously. However, this question of the impact of the selective employment tax on charities is something which I am certain must receive the consideration of the Government, and I am certain it will be raised by many charities during the Bill's gestation period before it becomes an Act.
The noble Lord, Lord McCorquodale of Newton, warmed my heart. I think he
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is entirely right when he says that we must not try to talk down our own industry too much. After all, there is a great deal of industry in this country that is in the first rank of industry in the world. What we are trying to do is to bring the below average or average industries up to a much higher level. I think the noble Lord was right to try to balance the general impression of howling incompetence which this debate might awaken in some uninformed minds if listened to by people who did not know the true facts.
I thought that the noble Lord, Lord Sainsbury, made an extremely interesting contribution. Probably he would agree with me that size, again, is a problem of the distributive industry. I was reading this morning what the Chairman of Unilever was saying on this subject. And we have had the figure that 40 per cent. of the groceries of this country are sold from multiple stores and self-service stores, whereas in the United States, where pressures of high wages and so on are much greater, 90 per cent. are sold in that way. This is the direction which we have to travel in the distributive trades.
The noble Lord made a point which I thought was valid. He complained that the Government, having made it more difficult for the industry to recruit labour, are at the same time making it more difficult for them to introduce the modern capital equipment required to replace that labour; and he argues that withdrawal of investment allowances in the distributive industry is a double blow which ought to be reconsidered. I am certain that my colleagues will listen to what he has to say. Lord Balfour of Inchrye was upset somewhat by my right honourable friend's remark "rough justice". This was only a speech, probably in the open air.
LORD BALFOUR OF INCHRYE: It was in Parliament. I have it here.
LORD WINTERBOTTOM: I beg the noble Lord's pardon, and I stand corrected. Nevertheless, this was poetry; it was not a statement of policy. This is an Act operating over a wide field. At the moment it has not been polished and refined, but I am reasonably certain that these selective elements will come.
Then my noble friend Lord Wynne-Jones, much more than the noble Lord, Lord Collison, gave a modified blessing

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to this selective employment tax. This cheered me up a great deal. I think they are right, and that the majority of this House, as is so often the case in all communities, is wrong. It is the creative minority that is right. Again, I thought the point that he made was of extreme importance, when we are talking of matching ourselves up, if we want to play in the first league in the world of industry: the fact that only 11 per cent. of our young men and women in this country are having a higher education, as opposed to 43 per cent. in the United States. I am in full agreement with him that education is a form of investment which we cannot scamp. This is something that we must approach with the utmost seriousness. I think that what he said supported what Lord Bowden said earlier in the debate. This point, again, cannot escape the attention of my colleagues.
I greatly regret that I was out of the Chamber when the noble Baroness, Lady Emmet of Amberley, was speaking. I have, however, received notes from my colleagues of what she said. I agree with her completely, that the most unused natural resource we have is our women. I am fairly certain that my noble friend Lady Summerskill will, when she returns, agree that the point of view of women has been properly presented in this Chamber. In point of fact she had some words on this subject with the Party meeting before she went away.
The noble Lord, Lord Sieff (he is, unfortunately, not here), made a speech which impressed me enormously. It was, I thought, a speech of deep humanity. He made a point which I believe in strongly. Again, from this debate one might gather that management and trade unions were constantly at loggerheads. This is far from the truth. My own experience has been that, on balance, enlightened management and enlightened trade union leaders work in harmony in carrying out the important job of educating the members of the industrial undertaking which both are operating; so both sides are giving leadership. People do not always want to follow leadership. I have always found that it is management and the trade unions together who are giving leadership to the community as a whole.
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The noble Lord, Lord Ampthill, was most forthright, though I must say that in the middle of his remarks he spoiled what had been a good speech, by an attack of xenophobia. Quite frankly, the policies as described are not the policies of some obscure gentlemen: they are the policies of Her Majesty's Government, and Her Majesty's Government stand by them. Because their parentage is not quite certain—and who does know the parentage of ideas?—It is no good making xenophobic remarks about individuals who are not here to defend themselves.
Then I was glad to hear from the noble Lord, Lord Collison, his own assessment that the future attitude of the General Council of the T.U.C. would be, on balance, favourable; but again questions have to be asked and will be answered. This we all understand. The noble Lord, Lord Rochester, apologised for speaking late in the debate. I do not know why he did this, because in my opinion I think he made a most important contribution to our discussion. Money is not the only thing in life. Many other things determine where men work and whether they enjoy their work. This question of motivation and, more important, study as to how to develop in ordinary men the latent gifts which they all possess is something to which we must give increasing attention. This is the difference between good and bad leadership—the capacity to pick on the gifts we all have and bring them out into the open and into their proper use.
Then the noble Lord, Lord Arwyn, winding up, had a good swipe at the wrong type of director. I have a good deal of sympathy with him on that point. The Manchester textile industry, which I know intimately, had, when I was young, too many grandsons of their grandfathers running its affairs. Thank goodness! this is a phase that is now behind us, but this situation did not do the industry any good. I have tried to answer everybody, but if I have missed anybody out I hope that they will forgive me.
My own feeling arising from this debate is that, basically, we are all agreed on our diagnosis and our objectives. What happens about the cure is the next question. Again, there is a broad measure of agreement. What it

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boils down to is a change of attitude throughout the whole of industry, in management and trade unions, with everyone working together and changing the attitudes from what they are to-day. These attitudes are changed primarily by better information. Comparing ourselves with Europe, how good are we? How good is firm A compared with firm B? If we know these things we are on the way to being able to produce solutions to our problems. The noble Lord, Lord Drumalbyn, raised a point about comparative information. He understood what the point was of comparing firm A with firm B in this country, and firm A in this country with firm Y abroad, but what was the point of comparing industry with industry? I am not a trained economist, but I should have thought that the answer was this. In order to produce £1 million of produce—
LORD DRUMALBYN: My Lords, if I may interrupt the noble Lord, may I say that I did not ask what was the point of it. I asked whether it was possible, and whether it was worth while in that sense.
LORD WINTERBOTTOM: My Lords, this is a difficult point. It is difficult to know, when one is seeking for information, whether it will be worth while or not. I should have thought that at the end of the day if you knew that it took 1,000 men and £100,000 of capital to produce £1 million of goods in one industry and twice as much in another, that would be helpful as information. I am all in favour of collecting facts. Some are useful and some are useless, but you have to have the facts and the knowledge before you can decide whether they are useful or not. They are very often useful, provided that one does not burden one's colleagues with them too much. A little pre-selection is important.
The removal of anxiety is something which was touched upon, I think either by the noble Viscount, Lord Mills, or by the noble Lord, Lord Collison. Everybody agrees that the memories of the 'twenties and the 'thirties still haunt and plague our industry. One noble Lord suggested that this fear was being handed on to the children. I think this is true. It is something which must be removed by education. At the same time, when we are talking about education I would never
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say that this cannot come back. If we do not solve the problems which we are now facing we may have to face unemployment and economic disruption. There is no absolute certainty that we are going to win. That is why this debate is so important. Although we want to try to remove unnecessary anxiety from the minds of our young people, nevertherless we have to inculcate in those minds their responsibility for finding a solution.
Arising from this is the question of a spirit of co-operation on both sides of industry. I have touched on that matter in reference to Lord Sieff's speech, and I consider it is of the first importance. I believe, however, that this is something which is growing, and as both sides of industry come together, in the "little Neddies" and in the wide fields of joint endeavours which are growing up, I think that this co-operation will grow and become a mellowing factor in the relationships within industry.
Finally, we come to this question of education in the widest sense. Here, again, everybody is agreed. Education for management, education for foremen, education for professionals, post-graduate training, better apprenticeship schemes and encouragement to children to stay at school and yet not lose the advantages of an apprenticeship, and so on—all these are matters which are under study, which we agree have to be dealt with, and we are starting to do so. This has been going on in this country for a number of years, and we have pinpointed the problems, made our diagnosis, and are starting to apply the cures which we believe are necessary.
LORD DRUMALBYN: My Lords, I am sorry to interrupt the noble Lord again, but he is making such a good and informative speech that one is encouraged to do so. The noble Lord, Lord Bowden, laid very great stress on the retraining and the refresher courses. I am sure that every noble Lord would like to know what the noble Lord, Lord Winterbottom, can tell us about that. Is he able to give any information to the House about what can be done in future?
LORD WINTERBOTTOM: My Lords, I wish I could. I am afraid that I have no exact knowledge on this question that would be of value to this House at

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this moment. The noble Lord, Lord McCorquodale of Newton, suggested that this was a subject on which we might have a debate, and perhaps I might suggest to the noble Lord that a debate when exact information could be given to the House might be welcomed if a Motion were brought forward at an appropriate time.
As I said, I think that there is a growing consensus of opinion in this country as to what our problem is and as to what should be done about it. Her Majesty's Government have done what they can to keep the momentum moving and growing. We are, after all, trying to do something, and in the process of trying to do something new we are from time to time going to make mistakes. But this will not deter us. I think that the whole range of legislation that has been brought in to underpin the National Plan, and the steadily improved applications of the techniques which are being developed, will enable us in due course to play our proper rôle—the rôle that all want this country to play—in the world. My Lords, I myself am in no way despondent. I have every faith in the capacity of this country to solve these problems, and to play the part that we all want to see us play in a difficult and dangerous world.
9.23 p.m.
LORD BYERS: My Lords, on behalf of myself and my noble friend Lord Rochester, I should like to thank the Government for the full, courteous and painstaking replies which they have given to this very important debate, from the noble Lord, Lord Shepherd, and the noble Lord, Lord Winterbottom. I would congratulate the noble Lord, Lord Winterbottom, on the admirable way in which he has discharged his responsibilities in speaking from the Front Bench for the first time. I should also like to commiserate with him upon having had, on this first occasion, to defend such a bad tax. But I can assure him that if he remains a member of the Government,
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as I am sure he will, this will not be the last time that he will have that sort of responsibility.
I should like to say how extremely pleased I am at the course which this debate has taken. I think we have had some very notable contributions and a very high general standard throughout the whole debate. It would be invidious of me to comment on any individual noble Lord's speech, because we have had so many useful and important contributions. I could, perhaps, say that they will all be noted down and action will be taken as soon as a Liberal Government is returned. In the meantime we have to rely on the present Government to do something. I think we have exposed a difference of view, in that there are many of us who are convinced that there are something in the region of 2 million people so badly under-employed that they must come out of the jobs they have now and be properly redeployed. I do not believe we should then be faced with a labour shortage of 800,000 or anything like it, as envisaged in the National Plan.
Finally, may I say that I do not think we have had a convincing answer as to how the new employment tax will manage to get people out of the over-manned industries by giving those industries a premium of £20 per head on every worker they employ. No doubt we shall have other opportunities, as the noble Lord said, of going into that matter in more detail. In the meantime, with your Lordships' permission, I would ask leave to withdraw this Motion.
Motion for Papers, by leave, withdrawn.

MERSEY DOCKS AND HARBOUR BOARD (SEAFORTH WORKS) BILL [H.L.]
The Queen's consent signified, and Bill reported from the Select Committee, with Amendments.
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