Sitting of 19 October 1966

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKAR in the Chair]
PRIVATE BUSINESS
  LEE VALLEY REGIONAL PARK BILL
  Read the Third time and passed.
ORAL ANSWERS TO QUESTIONS
  MINISTRY OF AVIATION

    Concord Project
    Mr. A. Royleasked the Minister of Aviation when he proposes to confirm the production order for the Concord; and if he will make a statement on his visit to Toulouse in September.
    The Minister of Aviation (Mr. Frederick Mulley): It is, of course, for the airlines to confirm the reservations and options which they have taken out for this aircraft. But if the hon. Member is referring to the question of production financing, this is a subject we are discussing with the firms concerned.
    I went to Toulouse at the invitation of M. Pisani, the French Minister of Equipment, to join him in a visit to the Sud Aviation factory engaged on Concord. I also took the oportunity of visiting the Breguet factory. I was much impressed with what I saw and with the evident enthusiasm of these firms to make a success of their Anglo-French projects.
    Mr. Royle: Is the right hon. Gentleman aware that his Answer is very unsatisfactory? Has not the time arrived when a firm decision should be taken by the British and French Governments to provide money so that the production line can be laid down? Unless this is done, inevitably we shall drop further
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    and further behind and will not hold the position of being two years ahead of any American development. Would the Minister give an assurance that he will continue to be responsible for the Concord programme and not the Ministry of Defence or the Ministry of Technology?
    Mr. Mulley: I cannot add to what my right hon. Friend the Prime Minister said about the future of the Ministry of Aviation. On the other points, it is quite wrong to assume that there has been any delay in the Concord programme, and, contrary to suggestions, there is no difference between the British and French Governments on the question of production financing. This is a matter which has to be discussed with the companies, because there was no such provision in the original treaty.
    Mr. R. Carr: Can the Minister assure the House that the Government understand that in this big project time really does mean money and that, if this project is to be a commercial success, getting it into the air one month earlier or six months earlier would make a very big commercial difference?
    Mr. Mulley: I am very well aware of the importance of avoiding slippage, but it is unrealistic to think that the Government are in any position to bring the programme forward. We are keeping to the time scale which the firms concerned say is the right time scale having regard to the very considerable problems which this aircraft poses.
    Mr. Royle: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible moment.
    Mr. Brooksasked the Minister of Aviation whether he will make a statement on the future of the Concord project.
    Mr. Barnesasked the Minister of Aviation whether, in view of the escalating cost of developing the Concord supersonic airliner, the Government will now withdraw from this project.
    Mr. Mulley: My right hon. Friend the Prime Minister confirmed with the French Prime Minister on 8th July our intention

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    of proceeding with the Concord programme while maintaining constant scrutiny of the financial aspects. That remains the position. I would add that the latest estimate of £500 million, of which the United Kingdom will pay half, covers, unlike the earlier estimate, the further work that will be needed after the standard required for the certificate of airworthiness and includes an overall contingency of £50 million. We shall keep a close watch on costs, and Monsieur Pisansi, the French Minister of Equipment, and I agreed at our meeting on 8th September steps to strengthen the control of the project. Airlines have already taken out 65 reservations and options for the aircraft, and I am glad to be able to report that the development programme is proceeding extremely well.
    Mr. Brooks: In view of the staggering increase in the development costs of this project, which is of the order of three times in three and a half years, would not my right hon. Friend agree that the whole commercial justification for this venture must now be regarded as suspect? Instead of having a lot of vague talk about technological fall-out, which is used to justify a lot of sloppy accounting, is it not time that the technological results of the extra £225 million which has been added since May, 1964, were assessed with careful scrutiny?
    Mr. Speaker: Order. Supplementary questions must be shorter.
    Mr. Mulley: As I said in my Answer, we are watching very carefully the financial aspects of the programme. To put the present estimate in proportion to that given by the then Minister, Mr. Amery, in July, 1964, it is proper to compare £275 million then with £370 million now, because this estimate two years ago did not include costs of £80 million for expense beyond the certificate of airworthiness, or the overall contingency which we have, in conjunction with the French Government, thought it prudent to allow.
    Mr. Barnes: Would the Minister not agree that the money which the British and French taxpapers must pay out would be much better spent pioneering more conventional aircraft to bring down the costs of travel for tourists and improve the standards of safety, and that this
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    would make a lot less noise than the Concord is likely to make?
    Mr. Mulley: It is always possible to make suggestions about spending money in different ways, but that option, as was explained in 1964, was not open to the present Government.
    Mr. Gresham Cooke: In view of the money being spent and the great effort being put into this project, would it not be ridiculous now to drop the Concord? Since two Concords would be equal in carrying capacity across the Atlantic to 25 "Queen Marys", is it not wise to go on with the project?
    Mr. Mulley: I have reported the confirmation given by both Prime Ministers in July.
    Mr. Brooksasked the Minister of Aviation on what date Her Majesty's Government's financial commitment to the Concord project will cease.
    Mr. Mulley: The estimate of £500 million, to which I referred in reply to the previous Question, covers the development of the Concord up to its full planned performance which it is expected to achieve in 1973. The subject of production financing is, as I said in my reply to the hon. Member for Richmond, Surrey (Mr. A. Royle), currently under discussion with the firms concerned.
    Mr. Brooks: Would my right hon. Friend say where, in the original agreement, there is any information given about the terminal date of this subject?
    Mr. Mulley: I could not without notice quote chapter and verse from the agreement. My recollection is that no firm date was put in the agreement because at that time it was not possible to forecast when the full development would be completed.
    Mr. Rankin: Is it not a fact that the Concord as originally projected now no longer exists and that we are dealing with a stretched version of it, and that this, in addition to causing the normal increase in costs, is also helping to increase the original figure that was mentioned?
    Mr. Mulley: It is perfectly true that the present specification is a vast improvement on the original one in terms of range, payload and the number of passengers to be carried.
    Mr. R. Carr: Can the right hon. Gentleman confirm that this amended version has a much bigger profit-earning capacity and justifies a larger investment?
    Mr. Mulley: It is difficult to go further on the profit aspect, although studies done by independent airlines suggest that it should be possible to run the Concord profitably when it comes into service.
    Mr. Dalyellasked the Minister of Aviation what study he is making of the efficiency and economy of the sharing arrangements between the British and French Governments in relation to the Concord project.
    Mr. Mulley: Before embarking on such a study, I think we need more experience of the way these arrangements work out in practice.
    Mr. Dalyell: What exactly is meant by the platitude used by the Minister in answer to a previous Question today: "constant scrutiny of the financial aspects"?
    Mr. Mulley: That hardly arises on this Question, but I can tell my hon. Friend that, in conjunction with the French, we have made substantial changes in the actual machinery for controlling the project. We now have a small executive on both sides of the Channel comprised of full-time personnel, and, in addition, a number of official discussions on the financial and economic aspects of the Concord are going on with the French.
    Mr. Hastings: Would the right hon. Gentleman not agree that any split of work on the project should be decided on an engineering and not on a political basis?
    Mr. Mulley: It is unfortunate that the hon. Gentleman did not convey that to his hon. and right hon. Friends when they were in Government at the time when they drew up the treaty. The division of work between ourselves and the French companies was laid down—how it should be divided—in very great detail in the treaty which we signed in 1962.
    Mr. Hale: Would my right hon. Friend bear in mind that Her Majesty's Government cancelled British military aircraft on the ground of escalating costs, delay in production and the necessity for speed? Have we not now reached the time in the present situation when a Ministry of Aircraft
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    Production might initiate a "buy British" policy on a much bigger scale?
    Mr. Mulley: I do not think it is possible to contemplate a project of the magnitude of Concord on a purely national basis.
    Sir A. V. Harvey: Would the right hon. Gentleman take into account the fact that, the contract having got so far successfully, it now requires immediate backing for production? Will he look into this matter urgently and instil confidence in his hon. Friends who have doubts about British craftsmanship, realising that this is a world achievement which needs the backing of every hon. Member, particularly since the world recognises this as a great development?
    Mr. Mulley: I am not only looking into the production aspect, but, as I have said, discussions are well advanced with the companies concerned.
    Mr. Dalyellasked the Minister of Aviation what steps he is taking to intro duce incentive contracts in the Concord project.
    Mr. Mulley: Incentive contracts will be introduced wherever possible.
    Mr. Dalyell: Does not the Minister agree that the Public Accounts Committee would require an answer that is more satisfactory than "wherever possible"? Could it not be "as soon as possible"?
    Mr. Mulley: It is not a question of "as soon as possible" in a complicated development programme concerning such an advanced project. Frankly, there are parts of the programme that are not susceptible to incentive contracts at an early stage. We are certainly anxious, as are our French colleagues, to use incentive arrangements as far as possible and as soon as possible, but it would be wrong to suggest that the whole of this development programme could immediately be put on an incentive basis.

    Plowden Committee (Report)
    Mr. R. Carrasked the Minister of Aviation whether the Government have yet completed their consideration of the recommendations of the Plowden Committee regarding the future structure and ownership of the airframe industry; and whether he will make a statement.
    Mr. Mulley: I am not yet able to announce a decision on these recommendations.
    Mr. Carr: Does the Minister realise that it is now 10 months since the Plowden Committee reported? How can he expect the industry to do its part—for example, in raising and committing capital and making plans for the future—when it has no idea what its future structure and ownership will be, or whether mergers and nationalisation will be forced on it? Would he not agree that this uncertainty must not be allowed to continue for another week?
    Mr. Mulley: The right hon. Gentleman misjudges the position, because the first part of the recommendations of Plowden, to which he referred, was to the effect that we should have discussions with the firms concerned. This we have done over a long period, and nobody has been suggesting at any time that anything should be forced on the firms. It is because of the views of the firms, and the conflict of views that exists, that it is reasonable for the Government to take time to try to reach the most satisfactory outcome. As for uncertainty in the aircraft world, I have always been told that what it is wanting is certainty about projects much more than about questions of reconstruction.
    Mr. Mikardo: Is my right hon. Friend aware that now, more than ever before, it is true that public funds are taking all the risks while the profits are going to private individuals? Does he recall that when the Labour Party was in Opposition some of its leading members, including my right hon. Friend, called this situation severely to question? When does he intend to do something about it?
    Mr. Mulley: Views similar to those expressed by my hon. Friend are among the views which the Government are considering.
    Mr. Carr: Will the Minister make quite clear that he meant what he said in his supplementary reply to me; to the effect that it is nobody's wish to force on the industry a decision which is unwelcome to it?
    Mr. Mulley: I said that I was having discussions with the industry. As I said in my speech in the Plowden debate last
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    February, we are seeking an arrangement acceptable to the firms concerned.

    Departmental Functions (Redistribution)
    Mr. Onslowasked the Minister of Aviation what economies of manpower within the Civil Service will result from the redistribution of his Department's functions.
    Mr. Mulley: No forecast can be given until decisions have been reached on the issues raised in the statement made by my right hon. Friend the Prime Minister on 16th June.
    Mr. Onslow: The Minister will agree that that is not a very satisfactory reply. Will he also agree that the only justification for employing any civil servants in his office must be that they help to obtain a worth-while, stable and secure future for the aerospace industry? So how much longer are we to wait for decisions about projects like the Anglo-French variable geometry aircraft?
    Mr. Mulley: That hardy arises from this Question——
    Mr. Onslow: Of course it does.
    Mr. Mulley:—but I can tell the hon. Gentleman that the Defence Secretary and I are meeting the French Ministers concerned very shortly, when we hope very much we shall be able to finalise plans for this aircraft.
    Mr. Lubbock: Can the right hon. Gentleman assure us that there are going to be no second thoughts about the redistribution of his Department's functions?
    Mr. Mulley: I should have thought that the hon. Gentleman would have appreciated that matters of the machinery of Government are not for the individual Ministers concerned, but for my right hon. Friend the Prime Minister. There are already Questions on the Order Paper to my right hon. Friend. I think the hon. Gentleman must await his reply.
    Mr. Maxwell-Hyslop: Can the right hon. Gentleman tell us when his own job comes to an end? Was it not to have been several months ago? What is postponing his departure from the Front Bench as Minister of Aviation?
    Mr. Mulley: As I said, it is not only questions about the machinery of government, but questions about the retiring of Ministers which must also be addressed to my right hon. Friend the Prime Minister.
    Mr. Onslow: In view of the unsatisfactory nature of the reply, I give notice that I shall raise the matter on the Adjournment.

  POST OFFICE

    Special Stamps
    Mr. Hector Hughesasked the Postmaster-General when he plans to issue a new series of postage stamps; and if he will, in preparation for doing so, consult beforehand Scottish educational, sporting, tourist and industrial authorities so that their views may be expressed in the new designs for the benefit of Scotland.
    Mr. Cordleasked the Postmaster-General what plans he has to issue a special stamp commemorating British Railways' technological achievements in connection with the large-scale electrification programme.
    The Postmaster-General (Mr. Edward Short): I am considering the various suggestions put forward for our future special stamp programme and shall make an announcement shortly. I have well in mind the aspirations of Scotland as of the other parts of the United Kingdom.
    Mr. Hughes: Will the Postmaster-General find some way of expressing on a postage stamp that Aberdeen, Scotland and also Britain have done exceptionally well in sport this year?
    Mr. Short: I will do my best, but I think I would have great difficulty in expressing some of my hon. Friend's supplementary questions on a postage stamp.
    Mr. Cordle: Is the right hon. Gentleman aware that it is 18 months since British Railways asked the Postmaster-General whether or not he would commemorate the £175 million scheme of electrification of the railway between London, Liverpool and Manchester, and that they were refused that particular issue because there were to be only four issues in 1966? Is the right hon. Gentleman
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    aware that there have been eight issues? Is it not possible, even at this late stage, to have a special issue—and commemorating the electrification of the Bournemouth line?
    Mr. Short: It is clearly too late in 1966. As I said, we are considering the programme for 1967. We have got 50 or 60 proposals. I hope to be able to announce this very shortly.
    Mr. Hogg: Is the right hon. Gentleman aware that what my constituents want is a better postal service and not new gimmicky postage stamps?
    Mr. Ridsdale: Could the right hon. Gentleman consider the issue of a rubber stamp to commemorate the obedience of his back benchers?

    Teddington Office (Closing Hours)
    Mr. Gresham Cookeasked the Postmaster-General whether he will re consider the closing of the Teddington Post Office from 12.30 p.m. to 1.30 p.m., in view of the great inconvenience to many members of the public and the numerous letters of protest which have been received.
    The Assistant-Postmaster-General (Mr. Joseph Slater): To meet local convenience, the period of closing has been changed and is now from 12 noon to I p.m.
    Mr. Gresham Cooke: Is the Assistant Postmaster-General aware that for a large number of people in offices and shops in Teddington their only chance of going to the post office is in the lunch hour? Is is not possible by means of a shift system to keep the post office open during the lunch hour between the hours of 12 noon and 1 p.m.?
    Mr. Slater: I think that the alteration of the times we have now introduced meets the hon. Member's point quite well

    World Cup Stamps
    Mr. Winnickasked the Postmaster General how many World Cup stamps were issued for public sale.
    Mr. Joseph Slater: 146 million four-penny, 8¼ million sixpenny, 8½ million at one-and-threepence, and 12½ million four-penny printed "England Winners".
    Mr. Winnick: Is my hon. Friend aware that there is keen disappointment among

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    many people that not more were printed? Could he explain why only this number was printed, and could he say whether there will be any possibility of a reprint?
    Mr. Slater: The answer to the latter part of my hon. Friend's supplementary question is, No. As to the first part, why only 12½ million victory stamps were printed, it was to avoid holding up the remainder of this year's special stamp issues.

    I.C.I. Stockholders (Forms)
    Sir G. Nabarroasked the Postmaster-General (1) whether he is aware that, of the 700,000 envelopes which were handed to the General Post Office at Mount Pleasant approximately 10 days before closure of application lists for Imperial Chemical Industries 8 per cent. Unsecured Loan Stock 1988–93, each envelope containing Preferential Form B to stockholders, many thousands failed to reach intending recipients, resulting in losses of rights; and whether he will make a statement on the postal deficiencies which contributed to such losses.
    (2) whether he is aware that an envelope posted to the home of the hon. Member for South Worcestershire by Imperial Chemical Industries Limited in September 1966 containing subscription application forms, including Preferential Stockholders' Form B for subscription to the Imperial Chemical Industries 8 per cent. Unsecured Loan Stock 1988–93 was never delivered, involving him in monetary loss, and that many similar envelopes were never delivered; and what redress he proposes to offer for such postal deficiencies.
    Mr. Short: I am sorry that the hon. Gentleman and other people did not receive their application forms. It had been agreed with I.C.I. and their printers that they should begin posting the forms at Mount Pleasant on Saturday, 10th September, and all our plans were made accordingly. In the event, the postings did not begin until Wednesday, 14th September, and so clashed with the heavy normal traffic on the Thursday and Friday. In addition to this delay, some 500 had to be sent back because of faults in addressing or enveloping. Nevertheless,
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    the Post Office dispatched all the forms it received in time for stockholders to return them to I.C.I. before the application lists closed. About 100 were returned because the addressees could not be traced.
    In a posting of about 600,000, I cannot rule out the possibility that a very small number may have gone astray. But all my enquiries—I have looked into this personally—have led me to the conclusion that if some thousands of people did not receive their forms the fault did not lie with the Post Office.
    Sir G. Nabarro: In the event of any similar circumstances arising in the future, as undoubtedly they will, with the large commercial despatches entailed, will the right hon. Gentleman arrange, first, that the envelopes are handed to the Post Office at least a month before application date, in view of the magnitude of the exercise, and, second, that all of them are sent by recorded delivery? Is it reasonable that £ notes should be sent through the post by unrecorded delivery?
    Mr. Short: The latter part of the hon. Gentleman's question is not a matter for me but for the people who send off these things. We will always co-operate with anyone sending off a large number of these kinds of letters. I would point out to him that 280,000 letters containing acceptances went off without a hitch and we had no complaints about them.
    Mr. Emrys Hughes: Does this not give the hon. Member for Worcestershire, South (Sir G. Nabarro) an opportunity to show his patronism by investing the money instead in Defence Bonds?

    Postal Delivery Services
    Mr. Ian Gilmourasked the Postmaster-General what steps he has taken to halt the deterioration of postal delivery services throughout the country.
    Mr. Short: There has been no deterioration recently in the postal delivery services taking the country as a whole—indeed, so far as letter are concerned there has been a slight improvement since the beginning of 1966. If the hon. Member will give me details of any particular cases which have come to his notice, I will gladly look into them; or any other hon. Member.
    Mr. Gilmour: Does not the right hon. Gentleman agree that that answer is in defiance of a great many people's experience? If he is really satisfied with how the postal service is working, why does he think the Southern Electricity Board delivers 1¼ million bills each quarter itself instead of using the postal services?
    Mr. Short: I am not satisfied with the way in which the postal services are working in some parts of the country; for example, the area which the right hon. and learned Member for St. Marylebone (Mr. Hogg) represents is badly hit because of labour shortage, and I am not satisfied with that. By our standards of measurement, which are pretty well worked out over many years, so far as letters are concerned, there has been a slight improvement this year.
    Mr. Hogg: Since the right hon. Gentleman recognises the special needs of the post offices in the district to which he has referred, can he give any news which would give my constituents any hope of an improvement in the near future?
    Mr. Short: Short of that, I can tell the right hon. and learned Gentleman what I think he knows already, that the new Western District office has been opened. Because of his complaints, I took the opportunity to visit it one evening, and I spent some hours there. There is a very great shortage of labour there, and we have had trouble with the new machinery. If the right hon. and learned Gentleman and any hon. Member who represents a neighbouring constituency likes to visit that office, I shall be very glad to arrange it. But there is a fairly rapid improvement in the Western District of London.
    Sir W. Bromley-Davenport: Is the Postmaster-General aware that postal deliveries are getting worse and worse all over the country, particularly in London, and is this not another example of the failure of nationalised industry, providing worse service at increased cost?
    Mr. Short: I have a Press cutting in which the hon. and gallant Gentleman compliments the postal workers in his district.

    Letters (Coding System)
    Mr. Gresham Cookeasked the Postmaster-General what consideration he has given to naming the new code system
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    for letters the Zip Code so as to fall in line with practice in the United States of America.
    Mr. Short: It would not be appropriate to do as the hon. Member suggests. The Zonal Improvement Plan, or Zip scheme, came after the experimental introduction of postal codes at Norwich and, unlike our coding system, was not designed specifically for automatic sorting purposes. It is in fact to facilitate manual sorting; our system is to help with automatic sorting.
    Mr. Gresham Cooke: Would the right hon. Gentleman consider giving his new code system some short, snappy name such as I have suggested, rather than selecting a sort of bureaucratic Socialist word?
    Mr. Short: We could certainly consider giving a short name. I am all in favour of short names.

  WIRELESS AND TELEVISION

    White Paper on Broadcasting
    Sir Knox Cunninghamasked the Postmaster-General what type of service he intends to introduce in place of that at present provided by the pirate radio stations; and when this change-over will take place.
    Mr. Ian Gilmourasked the Postmaster-General when Her Majesty's Government now expect to publish their White Paper on broadcasting policy.
    Mr. Stratton Millsasked the Postmaster-General if he will now make a statement on the White Paper on Broadcasting.
    Mr. Short: The Government's White Paper on broadcasting will be issued very shortly.
    Sir Knox Cunningham: Will the right hon. Gentleman bear in mind the numbers of the public, particularly teen-agers, who listen to pirate radio? It will not do merely to shut it down; he must provide some comparable service.
    Mr. Short: I am well aware of this consideration and of the other considerations. If the previous Administration had not bequeathed so many intractable problems about broadcasting, to which they

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    were quite unable to find any solution, the White Paper would have been out long ago.
    Mr. Gilmour: Is the Postmaster-General aware that, in view of the leaks which so far have taken place, it is highly unlikely that his White Paper will have been worth waiting for?
    Mr. Mills: When the right hon. Gentleman says "very shortly", will he be good enough to confirm that it is his intention to bring it forward before Christmas? Secondly, will he say whether or not he has yet made a final and irrevocable decision to exclude colour on 405 lines, which 98 per cent of the population watch television on?
    Mr. Short: The answer to the first part of the Question is, Yes. I certainly hope it will be out long before Christmas. With regard to colour, I am afraid that the hon. Member must wait for the White Paper. There will be a section dealing with colour.
    Mr. O'Malley: Will my right hon. Friend bear in mind that the services provided by pirate radio are based entirely on gramophone records? Will he resist any pressure from commercial radio which would mean that any new service provided would also be based on gramophone records?
    An Hon. Member: Why not?
    Mr. Short: I am afraid that my hon. Friend must wait for the White Paper. What he says is quite true, pirate radio stations operate outside the law, and any alternative which we provide must operate within it.
    Mr. Gresham Cooke: Has the Postmaster-General seen the B.B.C.'s poll this morning, which indicates that 6 million people listen to pirate radio, and does this not show that there is a real demand for local broadcasting which ought to be satisfied before those stations are shut down?
    Mr. Short: I think there is a demand for local broadcasting. I do not think it is connected with the number of people listening to pirate stations. They are outside the law and must be closed down.

    Bechuanaland Broadcast (Malawi)
    Mr. Hollandasked the Postmaster-General what information he has received
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    from the British Broadcasting Corporation about the programme inciting Africans to violence against white Rhodesians heard in Malawi on 11th August, 1966, and purporting to be broadcast from Bechuanaland, details of which were sent to him by the honourable Member for Carlton (Mr. Holland) on 30th August, 1966.
    Mr. Short: I understand that the hon. Gentleman has received a reply from the B.B.C. refuting this allegation, and also offering to allow him to look through their complete set of scripts.
    Mr. Holland: Yes, but would the Postmaster-General not agree that his public statement now that this broadcast did not emanate from a B.B.C. transmitter will help to allay some of the anxieties of people in this country with relatives and friends in Rhodesia?

    Pirate Radio Stations
    Mr. Dickensasked the Postmaster-General how many representations he has received from foreign Governments complaining about wavelength interference from pirate radio stations.
    Mr. Short: I have received 40 representations from nine countries.
    Mr. Dickens: Can my right hon. Friend tell the House what representations he in turn has made to the pirate radio stations and what response they have made to him, if any, on this urgent and important matter?
    Mr. Short: The pirate radio stations are operating outside the law, and they know it quite well. We have instituted proceedings against the ones in the Estuary. We have brought forward our Bill, which will come up for Second Reading shortly. Clearly this matter has to end, otherwise there will be chaos in broadcasting in Europe.
    Sir Ian Orr-Ewing: Could the right hon. Gentleman tell us what complaints he has furnished to European Governments concerning the 300 radio stations in Europe which are operating on unauthorised wavelengths not approved under the Copenhagen Plan?
    Mr. Short: There is a great deal of misunderstanding about the Copenhagen Plan. The more I look into it, the more complicated it becomes. Quite frequently,

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    it is alleged that someone is infringing the agreement when in fact they are not. It is quite possible for some countries to broadcast on wavelengths being used by other countries, but that is worked out by distance, the topography of Europe, and so or. But before any allegations are made about the Vatican or anywhere else, hon. Members ought to get their facts right.
    Mr. Ian Gilmour: Will the right hon. Gentleman enumerate in the OFFICIAL REPORT the representations that he has received from other countries?
    Mr. Short: I can tell the hon. Gentleman the countries from which I have received them. They are Belgium, Czechoslovakia, France, Germany, the Republic of Ireland, Italy, the Netherlands, Sweden and Yugoslavia. During the coming winter, the countries which are going to be affected very badly are Czechoslovakia, Hungary, Italy, Norway, Poland, Sweden and Yugoslavia. I may say that the 40 that I quoted included a very strongly worded note which we received from the Italian Government on 13th September.

  TELEPHONE SERVICE

    Glengormley Exchange Number (Directory Error)
    Sir Knox Cunninghamasked the Postmaster-General why the telephone number 3266 at the Glengormley exchange in County Antrim was allocated to a subscriber, when at the same time it appeared in the current telephone list as the number of a large manufacturing company; and what action he proposes to take.
    Mr. Joseph Slater: I am sorry that, owing to a mistake, the number appeared in the new directory, although it was no longer in use by the company. The new subscriber prefers not to change his number, and arrangements have been made to prevent him from being called when the company is wanted. The directory will be corrected at the next reprint.

    Folkestone and Hythe
    Mr. Costainasked the Postmaster-General how many people are awaiting telephone installations in the Folkestone
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    and Hythe area; and what is the average delay under the present installation programme.
    Mr. Joseph Slater: 271, of whom 136 cannot be given service until early 1967 owing to shortage of equipment. The remaining 135 should be connected shortly. Sixty per cent. of orders where plant is available are completed within 2 weeks, but I am sorry that figures for average delay are not available.
    Mr. Costain: Does the Postmaster-General realise the inconvenience that this is causing? Does he not think it unfair that people who move from larger flats to smaller ones to give preference to people wanting flats should be deprived of a telephone under his priority service?
    Mr. Slater: Three of the exchanges in the area covered by the hon. Gentleman's constituency have become short of equipment and line plant owing to the very heavy demand for the service. Relief measures are in hand and ought to be completed by early 1967. Those should ease the position.

  SCOTLAND

    Police Forces (Strength)
    Mr. Rankinasked the Secretary of State for Scotland what steps he is taking, in the public interest, to increase the strength of the police force in Scotland; and if he will make a statement on the matter, in view of the better prospects which are offered in Canada.
    The Secretary of State for Scotland (Mr. William Ross): Recruitment is at a high level, but this year it has been exceeded by wastage. Wastage is therefore the problem and this is being studied by the Police Advisory Board for Scotland.
    Mr. Rankin: While wastage is recognised as a problem, is my right hon. Friend convinced that the inducements to enter the police forces in Scotland are sufficiently attractive, in view of the fact that a salary commencing at £700 a year rising to £900 at the maximum does not compete with the wages offered in other industries? When the time comes, will he be prepared to reconsider the salary situation in Scotland?
    Mr. Ross: The salary situation may well be a factor, and that is a matter for

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    negotiation and examination. The causes of wastage may go more into the conditions of service, and already we have received recommendations from the Board. We have taken action on some in relation, say, to weekly leave, annual leave, the shift system and the rest of it. We have other items which are presently being discussed and considered. These are some of the matters that probably affect life in the service.
    Mr. Speaker: Will the right hon. Gentleman return to the Chair when he is answering Questions?
    Mr. Monro: Notwithstanding his answer, surely the right hon. Gentleman should make every effort to give the police in Scotland rates of pay which are related to the exceptionally fine service that they provide?
    Mr. Ross: Yes, indeed.

    Housing
    Mr. Edward M. Taylorasked the Secretary of State for Scotland what number of houses was completed in Scotland in the first eight months of this year; and what were the comparable figures for the first eight months of 1965 and 1964, respectively.
    Mr. Ross: Twenty-thousand, eight hundred and six compared with 22,275 in 1965 and 22,227 in 1964.
    Mr. Taylor: Are not those figures quite deplorable, showing as they do a steady deterioration year after year, and does not the right hon. Gentleman feel at all guilty knowing that he and his colleagues were elected with the help of homeless people who were promised an acceleration in house building and not a fall each year?
    Mr. Ross: If the hon. Gentleman looks at the figures which I have given, he will notice that last year there was an increase and not a fall, and if he bears in mind what the position is and what we inherited, he will realise that houses cannot be started until they have been aporoved by the Department, and that from March to October, 1964, there was a very considerable drop of over 6,000, which is being reflected in recent months. I hope that the hon. Gentleman will not be disappointed to learn that the figure
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    for September shows that this gap is narrowing and is within 64 of last year's figure in the public sector.
    Mr. William Hamilton: Can my right hon. Friend give us the comparable average figures for eight months in each of the years 1959 to 1963, nine years after we had a Tory Government?
    Mr. Ross: The figure was just over 17,000–17,200 to be exact.
    Mr. David Steel: Can the right hon. Gentleman say whether he has had information from local authorities that they have postponed some of their projects because of the economic squeeze, and can he say what advice and assistance he is able to give them to persuade them to carry on with their housing programmes?
    Mr. Ross: My hon. Friend is for the second time going to visit local authorities. We are concerned about this from the point of view of the house building programme one or two years ahead. There had not been much change in the position since about 1961, but it has now considerably improved, and local authorities are responding freely to our appeals to get on with decent responsible five-year programmes.

    School Building Projects
    Mr. Edward M. Taylorasked the Secretary of State for Scotland what was the value of all school building projects in Scotland approved in the year 1965; what was the average total of approvals for the previous four years; and if he will give comparable figures in respect of approvals for secondary schools only.
    Mr. Ross: For all school building, the figures are £10·2 million for 1965 and £19·7 million on average for the previous four years. For secondary schools, the figures are £3·8 million and £12·8 million, respectively.
    Mr. Taylor: Does the right hon. Gentleman realise that that means that approvals last year were the lowest for 10 years, and that for secondary schools amounts to one-quarter of the figure for 1962? How can he possibly justify his statement that the slump in school building was due to the failure of local authorities?
    Mr. Ross: The hon. Gentleman will appreciate that there was no slump in school building. In terms of work done, and in terms of schools completed, last year was better than anything for the average of the past four years. Approval means approval of sketch plans and costs. This has to be followed by a year's work in preparing plans, and so on, before one even gets to the point of starting. In 1964 the previous Administration announced the raising of the school-leaving age. I did not help by saying something about comprehensive schools. This has its effect on comprehensive schools and the plans for them. That is the real reason for it.
    Mr. Speaker: Order. Answers must be short.
    Mr. Monro: Can the right hon. Gentleman say how local authorities will be ready to raise the school-leaving age in September, 1970, if he will not accelerate permission to begin building now?
    Mr. Ross: I am presently accelerating permission to begin building. The figure for the last financial year was £17 million. This year it is £20 million, and next year it will be £26 million.
    Mr. Taylor: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.

    University Students (Financial Assistance)
    Mr. William Hamiltonasked the Secretary of State for Scotland if he will take steps, by legislation or otherwise, to ensure that all university students in receipt of public financial assistance repay their debts to the nation either by a specified minimum period of service in the United Kingdom after training or by actual repayment of the public investment involved.
    Mr. Ross: My right hon. Friend the Secretary of State for Education and Science and I are keeping this problem under review.
    Mr. Hamilton: Can my right hon. Friend tell us exactly what that means? Is it not the case that increasing amounts of public money are being invested in these people, and that the public have a
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    right to expect an adequate return from each individual? As this was raised at the Labour Party conference and not rejected out of hand from the platform, will my right hon. Friend make a statement on this at an early date in view of the public anxiety about the matter?
    Mr. Ross: I think that we appreciate the public anxiety about the matter, and this is why we are reviewing the situation. The hon. Gentleman should not think that this is an easy matter. Many people go abroad. Graduates go abroad with a view to extending their experience and even returning to this country. Others go to help under-developed areas. It is true that some may go for purely personal monetary reasons, but this is not an easy matter on which to have restriction by legislation.
    Mr. Hugh D. Brown: I hope that my right hon. Friend does not share the rigid pragmatic approach of my hon. Friend the Member for Fife, West (Mr. William Hamilton). Can my right hon. Friend say whether any formal permission or acknowledgment is sought by foreign Powers, whether they be English or Canadian, before a campaign is indulged in to poach the skills of Scotland?
    Mr. Ross: I am sure that no formal approval is sought for these campaigns. I am concerned about this, even in relation to the last Question about the police. I am concerned about this selective advertising for and poaching of our trained personnel.

    Uncertificated Teachers
    Mr. Buchananasked the Secretary of State for Scotland in view of the policy of the Scottish Secondary Teachers' Association not to advise their members to register with the General Teaching Council, and noting the reasons for such advice, what action he proposes to take.
    Mr. Ross: None at present. There are many questions about the setting up of the register still to be decided by the Council.
    Mr. Buchanan: My right hon. Friend is no doubt aware that this is the only statutory register of a profession which permits unqualified persons to practise that profession. The Scottish Secondary Teachers Association has submitted a reasonable plan for dealing with the

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    problem of the uncertificated teacher. Is not its views worthy of more serious consideration?
    Mr. Ross: Its views are always worthy of consideration. We have discussed these two separate matters, the question of the register and that of the employment of uncertificated teachers with the S.S.T.A., but what is wrong here is that we are getting a confusion of the two things, and we should deal with the register when the qualifications in respect of registration are drawn up.

  MINISTRY OF DEFENCE

    General Bor-Komorowski (Funeral and Memorial Service)
    Mr. John Biggs-Davisonasked the Secretary of State for Defence why Her Majesty's Government was not represented at the funeral of General Bor-Komorowski.
    Mr. Cordleasked the Secretary of State for Defence why an official representative was not sent to the funeral of General Bor-Komorowski.
    The Secretary of State for Defence (Mr. Denis Healey): I would refer to the Answer I gave to similar Questions yesterday.
    Mr. Biggs-Davison: Is the right hon. Gentleman aware that those arranging the Requiem to be held in Westminster Cathedral tomorrow are grateful for the co-operation of the Armed Forces, which makes some amends for an error damaging to Britain?
    Mr. Healey: I cannot accept that an error has been made in this matter, since it has never been the custom of the Government to be represented at privately arranged funerals of persons however eminent. But I accept with gratitude the hon. Gentleman's tribute to the help which our Armed Forces are giving in the matter.
    Mr. Cordle: Is the right hon. Gentleman aware that many people in this country were upset and annoyed to think that there was no Government representation at the formal but I gather rather private funeral? I am glad that the
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    right hon. Gentleman has gone a long way to ease that by the representation which will be at the memorial service.
    Mr. Healey: I thank the hon. Gentleman for what he has said. I think that any annoyance which was felt was very much inflamed by the way in which the matter was reported in certain newspapers. Her Majesty's Government were not represented, for example, at the private funeral of Lord Ismay. There is no reason why they should have been represented at the funeral of a distinguished and gallant leader of an allied country.
    Mr. Lipton: Would it not have saved a certain amount of misunderstanding and some distress if it had been made clear by my right hon. Friend at the time of the funeral why there was no Government representation? We all welcome the decision that the Government will be represented at the memorial service tomorrow.

    Far East and Germany (Service Men)
    Mr. Frank Allaunasked the Secretary of State for Defence how many Service men he intends to bring home from the Far East and Germany, respectively, and by what dates; what reduction he proposes in the total services strength of 445,000; and if he will make a statement.
    Mr. Healey: I have immediate plans for the withdrawal of at least 10,000 Service men from the Far East, most of whom will be home by April, 1967. I am considering the possibility of making further withdrawals after that. As for Germany, I cannot anticipate the outcome of the Tripartite talks with the United States and Federal Governments which begin tomorrow. I am not at present prepared to give a forecast of the total future strength of the Services.
    Mr. Allaun: But in view of the foreign exchange drain, the flat refusal of Bonn to pay its share and the coming withdrawals of American troops and the promise of the Prime Minister of massive reductions in the numbers of troops abroad, why could we not cut by half the 51,000 men and their dependants whom we have in B.A.O.R.?
    Mr. Healey: I think that my hon. Friend has made a number of assumptions which have yet to be verified.
    Mr. John Hynd: Will my right hon. Friend, however, bear in mind that if the extent of the N.A.T.O. dispositions in Europe were altered in the fashion suggested in the Question, we might run the very serious danger of driving Germany into having no alternative but the creation of a new national army?
    Mr. Healey: One consideration which we have to keep in mind on these matters is that N.A.T.O. is the core to the security and perhaps the survival of this country.
    Mr. Wingfield Digby: Could the right hon. Gentleman give any indication of where these 10,000 will come from?
    Mr. Healey: Yes, Sir. They are coming largely from Borneo.
    Mr. Barnett: In view of the changes forecast in the National Plan, what is my right hon. Friend's forecast of the percentage of the G.N.P. which he expects will be spent on defence by 1970?
    Mr. Healey: My hon. Friend should put down a separate Question on that matter.
    Sir C. Osborne: In view of the great change in the Russian policy with regard to Europe, what is the main purpose of keeping men in Germany and against whom are they supposed to be prepared to fight?
    Mr. Healey: One question which we must ask ourselves is how far the very welcome change in Soviet policy is due to the existence of N.A.T.O. and the forces in Germany.
    Mr. Michael Foot: What is the financial figure of saving involved in these reductions to which my right hon. Friend has referred? How much enters into the £100 million which was specified by the Prime Minister as being a saving on our overseas commitments when he mentioned it in July and how much is represented by earlier proposals?
    Mr. Healey: The financial savings from the immediate plans for the withdrawal of at least 10,000 Service men will be about £10 million in foreign exchange.
    Mr. Rankin: Do the troops to be brought back from the Far East include the four battalions now stationed in Hong Kong? Alternatively, is the Hong Kong Government prepared to pay for retaining them?
    Mr. Healey: That is a separate question. I have already made clear that the 10,000 troops which we shall have back in this country by 1st April next year will be largely from Eastern Malaysia or the Borneo territories.

  HOUSE OF COMMONS

    Royal Assent (Procedure)
    Mr. Winnickasked the Lord President of the Council what progress is being made in his consideration of proposals for changing the procedure of summoning the Commons to hear the Royal Assent to Bills.
    The Lord President of the Council and Leader of the House of Commons (Mr. Richard Crossman): Consultations are proceeding and I am hopeful of an early outcome. I ought perhaps to warn the House that a number of changes that they might find attractive would involve legislation.
    Mr. Winnick: I am grateful for that Answer, but can my right hon. Friend say whether he intends to be rather more radical than some of his predecessors in clearing away a lot of the ceremonial nonsense? Is my right hon. Friend aware that calls for modernisation in the country can never be taken seriously until we are willing to modernise our own place of work?
    Mr. Crossman: I can give that assurance. I should like to add that I am anxious for advance, but I do not want to prejudice it by any premature disclosure of what is going on.

    House of Commons Services (Prices)
    Mr. Rankinasked the Lord President of the Council if he will apply Government policy on prices to all service departments in the House of Commons.
    Mr. Crossman: Yes, Sir.
    Mr. Rankin: Is my right hon. Friend saying that the Government have a policy

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    on prices? If that be the case, why is it that there is a 10 per cent. increase in prices in the House of Commons when 3 per cent. is all that is necessary to meet the effect of the Selective Employment Tax? Is it because a loss of £18,000 has been incurred in the working of the Catering Department, and is my right hon. Friend going to inquire into that?
    Mr. Crossman: The answer to the first part of the supplementary question is "Yes" and the answer to thesecond part is also "Yes".
    Mr. Rankin: What about the third part?
    Mr. Speaker: Mr. Dickens.
    Mr. Rankin: On a point of order. Do I take it from my right hon. Friend's reply that the answer to the third part is also "Yes"?
    Mr. Speaker: That is not a point of order.

    Public Corporations (Debates on Reports and Accounts)
    Mr. Dickensasked the Lord President of the Council what proposals he has for ensuring that the annual reports and accounts of public corporations are debated more frequently in the House.
    Mr. Crossman: Three days each Session are allocated to debates on nationalised industries. I cannot promise extra opportunities in Government time.
    Mr. Dickens: Will my right hon. Friend bear in mind the fact that notwithstanding that reply this House has not debated the annual reports and accounts of many important public corporations for many years. For example, the annual report and accounts of the National Coal Board have not been discussed since 1961. Will he further pay particular attention to the need to debate the annual report and accounts of the Bank of England—a public corporation—which have not been debated since 1951?
    Mr. Crossman: I will pay attention to all those claims. There are many claims on Parliamentary time, over which the Government have the initiative. I think that on the whole our priorities are about right. I would also add that
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    we measure the question, to a certain extent, by the attendance at these debates.
    Mr. Shinwell: Will my right hon. Friend give this matter further consideration? He is no doubt aware that we are not allowed to ask Questions relating to the every-day administration of these public corporations. Members are frustrated because of that restriction. Will he therefore give the matter further consideration?
    Mr. Crossman: I certainly will. Indeed, I am most anxious to see that we get really full attention paid, for instance, to the work of our specialised Committee on Nationalised Industries. All I say is that when these debates are staged, one way in which we judge demand is by the number of Members who attend and the number who speak. I would like to see greater enthusiasm when such debates are staged.
    Sir A. V. Harvey: Will the right hon. Gentleman take into account the fact that some years ago the nationalised industries were told that they had to operate their business on commercial lines? Is it not extraordinary that these enormous industries, with no shareholders' meetings, go for year after year without being debated in this House, when we represent the shareholders? Will he look into the matter?
    Mr. Crossman: It is not true to say that these matters are not debated in this House year after year, as is shown by the three days devoted to them.

    Redeployment
    Sir C. Osborneasked the Lord President of the Council if he will place in the Library his plans for forestalling a return to the conditions of the 1930s, when three million were unemployed; under what conditions will those plans be put into operation; and if he will make a statement.
    Mr. Crossman: I do not accept that there is an immediate danger of a return to the conditions of the 1930s. The Government intend that the present shake-out, which has been necessitated by the balance of payments position and by the attack on the £, should be used for redeployment into those sectors of the economy on which our long-term prosperity depends. If the shake-out shows

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    signs of going too far, there are plenty of weapons that can be used to expand the economy.
    Sir C. Osborne: Since the Minister boasted in a recent speech that he had got such a plan up his sleeve, why cannot the House see it and see what is in it? Secondly, will he tell the House how he will guarantee 5 million jobs to the men employed in the export industries when he cannot make the foreigner buy British?
    Mr. Crossman: I would remind the hon. Gentleman of his Question. He asked about a return to the conditions of the 1930s. This is something to which I replied fairly by saying that in my view there is only a very remote danger of this, partly because all nations are now fully forewarned about these dangers and far more ready to prepare against them than they were before the war and—[Interruption.] I should like to be able to answer before the hon. Gentleman disagrees with me—and particularly because this country and this Government are aware of the dangers and have plans ready to meet them.
    Mr. Mikardo: On a point of order. May I ask your advice, Mr. Speaker? Would you be good enough to tell the House why it is that plans for forestalling a return to the conditions—presumably the economic conditions—of the 1930s are the responsibility of the Lord President of the Council?
    Mr. Speaker: Ministers have to make their own decisions as to which Minister answers each Question.

    Parliamentary Reform
    Mr. William Hamiltonasked the Lord President of the Council if he will make a statement on his plans for urgent measures of Parliamentary reform.
    Mr. Crossman: My hon. Friend should await the debate on procedure, which I hope to arrange shortly.
    Mr. Hamilton: Is my right hon. Friend aware that indications from public opinion polls are that the public is very concerned that we should reform and modernise our procedures, as indicated in the Sunday Times last week? Can he say whether there will be an early debate on the whole matter, since there are a great many reports from Select Committees,
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    including the Select Committee on Procedure, and on televising the House, and the rest, which need to be decided by this House?
    Mr. Crossman: If we are all keenly interested in the problem, it makes it all the more necessary that the measures we take are carefully prepared. I think that the reasonable order would be, first, to consider the Report of the experimental televising of the proceedings of the House and to deal with the Report of the Select Committee on Procedure afterwards. I propose to do it in that order.
    Mr. Strauss: Are we right in assuming that these matters will be left to a free vote in the House?
    Mr. Crossman: Yes, Sir.

    Privy Council Meetings (Ministers)
    Mr. Whitakerasked the Lord President of the Council how many manhours of Ministers of Her Majesty's Government were spent in travelling to and attending meetings of the Privy Council during the last year; and what plans he has for their reduction.
    Mr. Crossman: 26 meetings of the Privy Council were held during the period in question. 24 of these took place in London and occupied less than one hour of the time of each Privy Counsellor attending. On the other two occasions, both during the Recess, Ministers were effectively absent from London for one complete working day.
    Mr. Whitaker: Would not one more sensible means of obtaining the Royal Assent be for Measures to be taken, for instance, to Balmoral by a messenger, or an official of the Privy Council?
    Mr. Crossman: I suggest that all these proposals would require a change by legislation.
    Sir Knox Cunningham: Can the right hon. Gentleman say whether that answer applies to Cabinet meetings in Brighton?

  HIGH COURT (VACATION)
  Mr. Whitakerasked the Attorney General what would be the effect on the waiting delay for cases in the High Court if the High Court's vacation was reduced to the length of the national average length of annual holiday.
  The Attorney-General (Sir Elwyn Jones): While I am not sure what my hon. Friend means by "the national average length of annual holiday", it is, for various practical reasons, by no means certain that to reduce the High Court's vacation would necessarily produce a corresponding reduction in the interval between the setting down of cases for trial and their hearing. I should perhaps add that the Bar Council and the Law Society have set up a Joint Committee to investigate the question whether any changes should be made in the current arrangements for legal vacations.
  Mr. Whitaker: Since every lawyer knows that one reason for the bottlenecks and delays in hearings in the High Court is the fact that the courts are empty for two months in the year, why cannot we have staggered shift working, so that these courts are employed whole-time, as the Old Bailey ones are?
  The Attorney-General: That is by no means the unanimous view of lawyers. There are many practical reasons, including the use of court accommodation during vacations for other courts, like Quarter sessions; the fact that many Queen's Bench judges carry out public work during vacations, and the difficulty in having legal staff, expert witnesses and non-expert witnesses available for vacation cases, which would result in many applications for adjournment—quite apart from the work of maintenance and repair of frequently antiquated court buildings. All these are reasons which make it desirable that there should be an inquiry, and that is taking place.

  LAW REFORM
  Mr. Hector Hughesasked the Attorney-General what progress has been made with the problem of law reform, indicating the subjects already dealt with and also those which still await attention.
  The Attorney-General: May I first congratulate my hon. and learned Friend on his recent and happy nuptials?
  As the detailed Answer to this Question is necessarily lengthy, owing to the considerable amount of law reform already introduced and under preparation by the present Government, I am circulating that Answer in the OFFICIAL REPORT. The
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  most important step has been the setting up of the English and Scottish Law Commissions last year. Their Programmes and Annual Reports demonstrate the wide range of their activities and the energy with which they are tackling them.
  Mr. Hughes: As to the first part of my right hon. and learned Friend's Answer, I shall ask no supplementary question. As to the second part, does he realise that owing to the desired number and variety of reform which are proposed, chaos may ensue amongst the actual and prospective litigants unless some details, such as are asked for in this Question, are made public?
  The Attorney-General: I am glad that no chaos was indicated in the first part of my hon. and learned Frind's supplementary question. As to the second part, I hope that he will feel as reassured as he does about the first part of the supplementary question when he sees the full details in the Written Answer.
  Following is the information:

  BILLS PRESENTED
    BARBADOS INDEPENDENCE
    Bill to make provision for, and in connection with, the attainment by Barbados of fully responsible status within the Commonwealth, preesnted by Mr. Frederick Lee; supported by Mr. Bowden, Mr. Richard Crossman, the Attorney-General and Mr. John Stone-house; read the First time; to be read a Second time tomorrow and to be printed. [Bill 114.]
    HOUSING (FINANCIAL PROVISION, & C.) (SCOTLAND)
    Bill to make further provision for the giving of financial assistance towards the provision of houses in Scotland; to increase the amount of contributions payable in respect of hostels under section 89 of the Housing (Scotland) Act 1950; to replace certain provisions as to the withholding, reduction, suspension, postponement, discontinuing or transfer of certain contributions; to make further provision for he Scottish Special Housing Association; to make provision in certain cases for the discharge or modification by the sheriff of heritable securities, charges and agreements on or relating to an unfit house; to revive section 12(6) of the Rent Act 1957 in its application to Scotland; and for matters connected with the aforesaid purposes, presented by Mr. William Ross; supported by Dr. J. Dickson Mabon and Mr. Niall Mac-Dermot; read the First time; to be read a Second time tomorrow and to be printed. [Bill 113.]

INDUSTRIAL REORGANISATION CORPORATION BILL
3.34 p.m.
The First Secretary of State and Secretary of State for Economic Affairs (Mr. Michael Stewart): I beg to move. That the Bill be now read a Second time.
Before the House rose for the summer, we were closely preoccupied with immediate aspects of the economic situation. We have still to give our attention to those immediate aspects, but we should lose a very great opportunity if, at the same time, we did not concern ourselves with long-term measures for the improvement of our economy. Indeed, the difficulties which we are now experiencing, the sacrifices which many people are being called upon to make, would be wasted if we did not see that we come out of this difficult period stronger, better equipped, more competitive.
In this Bill we are concerned with one aspect, one factor, which can make for greater productivity and competitiveness for our industry. The aspect which I have in mind is that of the structure of industry, to what extent industry tends to produce of itself, and by what are called market forces, the optimum size of firm—the firm which is neither unwieldy nor menaces the consumer through the danger of monopoly, but which is able to obtain all the advantages of scale which modern conditions of industry make possible.
It is that, mainly—though, as I shall show, not wholly—with which the Bill is concerned. Since the publication of the White Paper about the Industrial Reorganisation Corporation, there has been a good deal of informed argument in the Press on the question of the value of size to a firm. It has been pointed out, quite truly, that size by itself need not be an advantage, that there are difficulties and problems, as well as opportunities, created by growth.
None the less, when all that argument has gone through, this remains. There are, first, some traditional arguments for the larger concerns which are still valid. For example, the industry which is so reorganised has to remove unnecessary variety in the range of products. It is possible for manufacturers to go on for longer runs. It is possible for them to

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reap the advantages of buying on a greater scale, and so on. Those traditional and well-known arguments still have validity, but in the world in which we now live they have been reinforced by the kind of arguments against the too small firm, which one can find in the Geddes Report and some of which were listed in the White Paper which explained the Corporation.
For example, an industry may be divided into firms none of which is of a sufficient size to employ an adequate team of designers, none of which has sufficient resources to undertake research and development on an adequate scale. Indeed, some hon. Members will remember that, nearly 40 years ago, at the time of the Samuel Report on the Coal Industry, this was one of the criticisms urged against the coal industry as then organised. There might also be a situation in which no firm has the resources to deal with such matters as the training of its staff and labour relations generally or with the study of markets.
There is, further, the point which one may find in an industry, that the firm which, by virtue of the quality of talent of its management could be the nucleus of a reorganisation of the industry, has not the resources to enable its managerial talent to be fully employed. There is, further, the wide range of general arguments showing the risks of allowing an industry to continue unrationalised and stressing the importance of securing an industry's optimum structure or the optimum size of firm.
The right hon. Member for Enfield, West (Mr. Iain Macleod), in the debate some time ago on the White Paper on this subject, poured cold water on the whole idea of the growth in the size of firms. I am sorry that the right hon. Gentleman is not with us at the moment, and that he will not take part in the debate, because he was very forthright when he said on 15th February:
"Our attitude towards the Industrial Reorganisation Corporation is that of the preacher about sin—we are against it."—[OFFICIAL REPORT, 15th February, 1966; Vol. 724, c. 1228.]
Of course, one cannot always be sure today that the preacher's attitude to sin will be as inflexible as that.
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It may be, of course—and this is why I should have liked to have seen him here—that the right hon. Member for Enfield, West has now taken, shall we say, a more flexible definition of what he does or does not regard as sinful because, broadly, at that time, his attitude towards the question of the structure of industry, and whether anything ought to be done to see that an industry is not unduly fragmented into firms of a size that cannot get the modern advantages that are available, and his attitude towards doing anything to promote the optimum structure of industry was—and I do not think that I am here unfairly paraphrasing—first, that it ought not to be done; secondly, that it was being done already and, thirdly, that it was being done already very competently—notably by the merchant banks—and that the Government ought not to have anything to do with it.
I have already dealt with the proposition that nothing ought to be done at all, but the question that can be argued more seriously than the right hon. Gentleman argued it then is: are we correct in supposing that what are commonly called market forces are sufficient to promote in each industry the optimum structure? That has been the real difference in the past over this Bill.
In speaking of market forces, one thinks particularly of the activity of the merchant banks, which have undoubtedly rendered a most valuable service in helping to promote reorganisations of industry. But we know, and surely hon. Members opposite know, that there are a very great many aspects of the economy now where one has to admit that market forces without some action by the Government do not produce the most desirable result for the consumer or for the nation.
After all, the right hon. Gentleman the Leader of the Opposition prides himself very much on the part he took in dealing with resale price maintenance, but the whole necessity of that Measure sprang from the fact that those who sup ported him in what he then did were arguing that if we left the market forces to work by themselves they produced results which were inimical to the public interest, and that the maintenance of competition required such governmental action——
Mr. Martin Maddan: The case that the right hon. Gentleman mentions is absolutely upside down. What resale price maintenance policy did was to restore the freedom of market forces.
Mr. Stewart: I do not think that the hon. Member has got right his concept of market forces. If we look at what actually happens, it will be seen that if we leave things to the working of market forces we do not get that degree of competition that is in the public interest. The hon. Gentleman is trying to equate the working of market forces with the results of a proper degree of competition. What I was pointing out is that one does not get that result without Government action.
This is not the only field in which that occurs. We can take, as an example, the recent history of the textile industry. It was as far back as the 1950s that it was recognised that a reorganisation of the structure of this industry was needed. It was in the 1960s that a Conservative Government took action to try to promote that reorganisation. The reorganisation did not actually occur until after the Government had acted, and until at least a decade after the necessity for it had become plain. With that example in front of us, it is difficult to maintain that to leave this question to market forces alone is an adequate way of dealing with it.
Mr. Cranley Onslow: Is it not true, at the same time, that one reason why the textile industry was slow to reorganise itself was the degree of protection it received against imports of cotton textiles from overseas?
Mr. Stewart: That may be true, but I do not think that it really invalidates the point that one cannot leave these matters to market forces alone. We can take, as another example, the aircraft industry. Hon. Members opposite will surely not argue, with their own record of action there, that we can leave the question of the structure of an industry and rely on getting the best results by the working of market forces—which is a polite way of saying "just waiting to see what happens without any positive action by Government".
We can look further. I do not want to make too long a speech, so I shall not retail to the House all the various
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forms of public assistance to private industry to which we have become accustomed over the last 10 or 15 years, but when one thinks, also, of the machine tool and the shipbuilding industries one is forced to the conclusion that it is really an abnegation of responsibility to say that we can leave this important problem to the working of market forces.
That, broadly, is why the Government have taken the view, and why industry and finance are taking the view, that there is need, not to supplant the present market forces, not to take the place of the valuable activity of merchant banks in this field, but to add to that by means of the work of this Corporation. There are certain reasons why a public corporation of this kind is particularly fitted to do the job. First of all, it will be a specialist in this field. The merchant banks have many other important functions to perform. They cannot give the same degree of attention to this aspect as the Corporation will be able to do.
Secondly, the Corporation will be able to be singleminded in this respect. The merchant bank provides many services to its clients. If it meets opposition to proposals for reorganisation there will be a limit, probably fairly quickly reached, beyond which it does not feel that it can press against that opposition. The Corporation will be in a better position to be persistent—because I believe that in a number of cases it will be found that the task of persuading industry along the road to reorganisation will be a task of overcoming personal difficulties; things that have their roots in the history of the industry—rather than anything that, in the nature of the case, cannot be overcome.
Apart from those two reasons, there is a third: the Corporation will be able to take a longer view of this problem. Although it will be—and the nature of the Bill makes this clear—an organisation that will earn profits, it will not be obliged to look so much to the immediate profitability of a transaction. It will be able to take a rather longer view into the future than that.
In earlier debates, the question was raised about the relationship between legislation of this type and legislation about monopolies, and, of course, part of the whole problem is: how do we secure that the structure of industry is

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such that firms are large enough to reap the advantages I mentioned earlier and, at the same time, how do we avoid the danger of monopolies or mergers which threaten the public interest?
It is, of course, for the Board of Trade to consider mergers and to decide whether to refer them to the Monopolies Commission. The way in which this will work is that the Corporation will keep the Board of Trade informed of what it is doing, and would not attempt to promote a merger of the kind which the Board of Trade said it would feel it right to refer to the Monopolies Commission. There will not, therefore, be a conflict in this field.
I have tried to set out the general case for the Bill I want now to consider the Clauses.
Sir Harry Legge-Bourke: In the light of what the right hon. Gentleman has just said, are we to assume that there is some reconsideration in the Government's mind of paragraph 11 of the White Paper, in which it is said that
"the resulting mergers will not be referred to the Monopolies Commission"?
May we have a categorical reassurance that once the Corporation has done anything, nothing that it has recommended which could otherwise have been considered monopolistic would be referred to the Monopolies Commission?
Mr. Stewart: It will not be referred to the Monopolies Commission because the necessity will not arise. The Corporation will have cleared what it is doing with the Board of Trade. If it appeared that anything that the Corporation was doing ought to be referred to the Monopolies Commission, it would not proceed with it. That is why the necessity for reference would not arise.
If I may now take the Clauses of the Bill, Clause 1 establishes the Corporation. As the House knows, the Government have been fortunate in securing the services of Sir Frank Kearton to be its Chairman and Mr. Ronald Grierson as Deputy-Chairman. Sir Frank and Mr. Grierson regard this as a public service for which they will not expect to be paid. There will be, in addition, nine other members of the Corporation, and
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the names were given to the House by my right hon. Friend who preceded me as First Secretary when he spoke in the debate on the Budget Resolutions.
Sir Arthur Vere Harvey: Could the right hon. Gentleman say whether Mr. Grierson is to be a full-time executive? If that is the case, is it not wrong that a full-time executive should not be paid?
Mr. Stewart: I have given the view that Sir Frank takes of this matter. I accept that we may have to consider how it is working, but I am describing to the House the position as it now is. Sir Frank has already begun——
Mr. John H. Osborn: I think that the right hon. Gentleman may have misunderstood my hon. Friend's question. My hon. Friend referred to Mr. Grierson and to his position, not that of Sir Frank.
Mr. Stewart: Both regard this as a public service for which they would not expect to be paid. They have begun——
Sir H. Legge-Bourke: I am sorry to have to pursue this matter further. The right hon. Gentleman just now was propounding the argument that the merchant banks cannot devote sufficiently whole-time attention to the sort of problems which will confront the Corporation and that, therefore, it has become necessary to set up the Corporation.
If that be the case, surely it is also an argument at once for saying that the managing director of the Corporation ought to be a full-time executive and, therefore, presumably would have no other source of income than what he ought to derive from his managing directorship of the Corporation. Is the right hon. Gentleman, therefore, saying that in order to enable anybody to carry out this function properly he should be denied payment from any other source and nevertheless, on the recommendation of the chairman, should not receive any remuneration from the Corporation either?
Mr. Stewart: I have not said that anyone should be denied payment. There is provision in the Schedule to the Bill for payment of salaries of members of this body. I have said that these two gentlemen regard this as a form of public

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service for which they will not expect to be paid. They have begun their preparatory work, although, of course, until the Act is passed and the Corporation is in existence it cannot move into top gear.
What is both significant and welcome is the fact that it has received many approaches from industry. Indeed, during the months between the publication of the White Paper and the present day, there has been, I think, despite some adverse comments when the White Paper was first published, a very widely growing recognition in industry and in the City of the necessity and importance of its work, leaving, if I may say so, the party opposite increasingly isolated in their opposition—if, indeed, they are persistent in their opposition today.
It is important that there should be these approaches because, to begin with, there will be two tasks immediately facing the Corporation. One will be to deal with projects that will be ripe for action straight away. The other will be to estimate priorities among a number of different possibilities, some of which may be long and complex. It is important, therefore, that firms and industries which wish to move with the times and to get the interest of the Corporation in them should make known their interest, as many of them are doing, at the earliest moment.
Clause 2(1,a) sets out the functions of the Corporation—the process of reorganisation or development which I have been describing. In paragraph (b) the Corporation is given power to
"establish or develop, or promote or assist the establishment or development of, any industrial enterprise."
Hon. Members will recollect the action of the last Government in promoting the expansion of an industrial enterprise in the form of a paper mill in the West Highlands. It is true that they were very careful in the form of financial assistance they gave, to ensure that if the enterprise became increasingly profitable the Government would not have a proportionate share in its increasing prosperity. That seemed to be a peculiar and doctrinaire view of the matter, but none the less they were not averse to the concept of the Government assisting in the establishment or development of a particular industrial enterprise. But since
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this is a field about which there can be argument and controversy, it is required in Clause 2(1,b) that the Corporation does this kind of thing if requested by the Secretary of State; whereas the reorganisation and rationalisation functions are part of its normal and regular work.
Subsection (2) sets out the general powers that the Corporation will have in order to carry out these functions, and gives certain examples. The Corporation will, of course, need to hold securities and it is provided that they can be either interest stock or equities. I gather that there has been some controversy about whether it should hold equities, and this I believe has worried the party opposite. I have never been quite able to understand the validity of this objection. When merchant banks engage in this kind of work, if they provide financial help to carry through a reorganisation, it often takes the form of their acquiring stock, including equity stock, in the enterprise. It will have the result, of course, that the Corporation will be a profit earner. But it seems to me difficult to object to it on that ground.
I am sure that it is not open to the party opposite to say that they disapprove of public money being advanced to private industry. They cannot possibly say that because they know very well that they have handed out public money by the bucketful over the years. If what they are saying is, "We are prepared to hand out public money to private industry, but we will take the greatest possible precautions to see that, if the money helps to earn an increasing profit, the public shall get no advantage," then I confess that I cannot see the reason or justification for this. This is being doctrinaire in the extreme.
I said earlier that a situation might arise in which a particular firm in an industry had the managerial talent which would justify its being the nucleus of a reorganisation, but may not have the financial resources to get it into that position. It is then that the Corporation can help. If it helps there is no reason why that help should not take the form of the acquisition of equity stock as well as of fixed interest.
The next few Clauses, from 3 to 7, are the financial provisions relating to the Corporation. The various ways in

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which the Corporation will get its resources are summarised in Clause 7. The total amount which the Corporation may borrow through any channel is absolutely limited, by the Bill, to £150 million. There is no power in the Bill to increase that total by Order. If, at any future time, any Government wished to increase that figure, it would have to come to the House for fresh legislation.
There has been argument about the size of this sum. Some people, as might be expected, take the view that it is too large and others that it is too small. But it is a sum which will enable the Corporation to carry on for several years, by which time it will probably be self-financing.
From what I have said earlier about the nature of its operations, it will be seen that in time the Corporation will be not only a borrower but an earner of money. It is not intended that it should be a general holding company and the £150 million limit on its resources would preclude it from being so. There will be a turnover, a continuing process of purchase and sale of stocks, but the Corporation would not be put under pressure to dispose of securities at a time or in circumstances when that was not a sensible commercial or financial thing to do.
First among the sources of finance is borrowing by overdraft, which is dealt with particularly in Clause 3. This will not be a significant source of finance and there are limitations, set out in Clause 3(2). Next, there are loans from the Consolidated Fund, as described in Clause 4. This will be the principle source from which the Corporation will borrow and it will have to pay a rate of interest no less than that which the Government would have to pay at the time that the loan was made.
Mr. David Price: There is no reference in Clause 7 to Clause 4, although Clause 4 refers to Clause 7. Is there a drafting omission? Is it not clear, reading Clause 7, that Clause 4 is included in the £150 million total.
Mr. Stewart: It is true that what is borrowed under Clause 4 is included in the total. I do not think that there is a drafting error in Clause 7, but I will look at this end, if there is, see that it is put
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right. The £150 million is an overall total.
Mr. William Baxter: Would the Corporation be prohibited from becoming a holding company in a limted respect?
Mr. Stewart: It will hold securities, but it should be made clear that its main purpose is to promote the reorganisation of industry, and any ownership that it has is a means to that end. It is not intended that the Corporation should become a general owner for the sake of ownership.
Mr. Baxter: But it would not be prohibited from being a general owner if it was in the best interests of the nation for it to be so?
Mr. Stewart: When my hon. Friend says "a general owner", I must say "No" to that. The extent to which it owns will be the extent to which it is necessary for it to own in order to perform its main function.
It has been argued that there ought to be either this body or another with the functions which my hon. Friend has in mind, but that is not what the Bill is about. The third source of revenue is Exchequer dividend capital. This means that the Government have an equity stake in the Corporation.
Again, that may cause some alarm on the benches opposite, or perhaps it would if they had not made a very similar provision in the Air Corporations Act. Since the Government are, by virtue of Exchequer dividend capital, holding an equity stake in the Corporation, it will be for the Corporation to make, periodically, what is described as a return.
One might call it a dividend. It will be for the Corporation to propose what rate of return it should make and it will be for the Government to decide whether to accept that proposal or to vary it, upwards or downwards. The Corporation will be expected to pay the proper rate of interest on loans from Consolidated Fund and to pay an appropriate rate of dividend, if one may call it that, on Exchequer dividend capital.
The fourth source of finance is rather different and arises from guarantees that the Corporation may give. For example it may enable a firm or firms to obtain resources, not by lending resources to that

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firm itself, but by getting someone else to do so, and guaranteeing the loan. The amounts of such guarantees are also included in the £150 million total.
Mr. Joel Barnett: I take it that the interest figures payable to the Government will be excluded from this £150 million, so that the figure could be in excess of £150 million?
Mr. Stewart: I do not think that this comes into the account at all. This is not what the Corporation has borrowed, but represents what is paid back.
Mr. John Hall: Would the right hon. Gentleman make clear to the House whether the profits earned by the Corporation would be available for reinvestment, so that at any one time there may be more than £150 million out in investment form?
Mr. Stewart: That would be so, but the Corporation is required to pay to the Government a rate of return on what it borrows through Exchequer dividend capital. Provided that it meets that obligation and the obligation on Consolidated Fund loans, and has a surplus beyond that, then that represents not what it has borrowed, but what it has earned. Clause 9 requires the Corporation to publish a report and to give information.
The House will notice that the requirements on the Corporation in this respect are more stringent than those which are imposed on ordinary companies by our present company legislation. This is right, because the work of the Corporation is to be of great importance. It has been a matter much argued about, and at the end of the day even some of the most learned commentators are reduced to such phrases as "The proof of the Corporation pudding will be in the eating", which, of course, is something which one could have said at the beginning of the argument as easily as at the end.
The Government are fully willing to accept that the nature of the Corporation's work should be fully open to public scrutiny. We have in this Corporation a body of which we can say that the national interest requires it, that industry understands the need for it, that in financial circles it is welcomed, that there is great and growing interest in the work which it will do. Amid this increasingly
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favourable atmosphere there still stands the Conservative Party, coy, hesitating, aloof and alone in this respect.
We do not quite know what hon. Members opposite are to do in the Lobbies tonight. Perhaps they do. In this, what they are saying is that here is something for which the national need has been shown—and this has been demonstrated by their own fumbling towards this idea piecemeal with one industry after another over the years—that here is something which, after some quite natural reactions of alarm to begin with, well informed and experienced people in industry and finance have now come to welcome, leaving the party opposite out on a limb. What they are saying is that, no matter how great the period of change in which we are living, there are certain ideas which the Conservative Party will never abandon.
Hon. Gentlemen opposite are saying that everyone else must modernise his ideas, that managements must accept change, the worker must give up restrictive practices, people must be willing to change their jobs, even if that means upheaval and inconvenience, but the Conservative Party sticks firmly—to what principle? It is to the principle that although public money can be shovelled out to private industry, one must be very careful that it is not done in a way which brings profit to the public.
I think better of the right hon. Gentleman who is to follow me, but if hon. Gentlemen opposite stick to this, they put themselves in an impossible position. They are showing themselves overwhelmingly doctrinaire, unable to understand the age in which they are living. It is because the Bill, although it deals only with a particular problem, is an important part of the machinery of modernisation that I now commend it to the House.
4.13 p.m.
Mr. Anthony Barber: We have just listened to the first Parliamentary speech of the right hon. Gentleman since he became Secretary of State for Economic Affairs. Naturally, I should like to congratulate him on his appointment. I wish that I could also congratulate him on his promotion, but in the presence of the Prime Minister I am not sure whether I dare do that.

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The House will recall that when, in August, the right hon. Gentleman swapped jobs with the man who is now Foreign Secretary, the right hon. Gentleman told the Press that he had been promoted, whereas his successor at the Foreign Office said, "I do not see it that way". However, I understand that the Prime Minister has now resolved the difficulties by giving guidance to the effect that although the Ministers have exchanged their portfolios, they have, in fact, both been promoted.
The Prime Minister (Mr. Harold Wilson): There is no doubt at all.
Mr. Barber: It is good to have that assurance.
The right hon. Gentleman now comes to a very different field of activity. When he was Foreign Secretary, he was to a large extent voicing opinions and pursuing policies which had the understanding and the support of Her Majesty's Opposition and certainly there were many of us on these benches who, when abroad, were pleased to speak up in defence of what the right hon. Gentleman was trying to achieve.
But in the field of industrial organisation and economic management the divide between the Socialist Party and the Conservative Party is deep and it is fundamental, as I shall show in a moment, and it is, therefore, inevitable that our differences with the right hon. Gentleman will be more pronounced. That is certainly the case with this Bill.
The effect of the Bill can be simply and factually stated. It empowers the State, without reference to Parliament, to acquire shares, including a majority holding and so a controlling interest, in any company throughout the length and breadth of Britain. [HON. MEMBERS: "What is wrong with that?"] That is the legal effect of the Bill.
Mr. M. Stewart Mr. M. Stewart indicated assent.
Mr. Barber: The right hon. Gentleman nods assent. It is in the context of these arbitrary and all-embracing powers that I want at the outset to draw the attention of the House to a speech which should be heeded by every citizen who believes that the strength and the prosperity of
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Britain depend on private enterprise. I quote:
"We may accept the view that there may be some sectors of the economy which should be privately owned, but among Socialists surely if a man advocates a scheme of private ownership the burden of proof is on him. We take the view that public ownership must be the rule and private ownership in certain specialised circumstances the exception."
Those are very significant words and, as the right hon. Gentleman knows, they are his words, the words of the right hon. Gentleman now responsible for our economic affairs.
Of course they are in complete harmony with the expressed views of the Prime Minister. I am pleased that he is here today, because I am sure that he will be happy to be reminded that he told the nation without equivocation and without apology:
"By our nationalisation policy and only by that policy can we carry out a plan essential for Britain's future".
That is what the two right hon. Gentlemen believe in. I do not doubt their sincerity and I never have done so on this score. That is that they believe in and that is the way they intend to operate economic policy under a Labour Government and that is the way they are to use this Bill. I shall come shortly to an analysis of the powers which the Bill confers on the State and to the way in which it is intended to be used by a Socialist Government. But first I should like to say something about the assumptions which underlie the Bill.
The principal justification for the proposal was put by the First Secretary of State, the present Minister's predecessor, when he announced the setting up of the I.R.C. He put it in this way:
"We want British industry to compete with industry overseas."
No one would quarrel with that, not even the right hon. Gentleman. But he continued with these words:
"One of the things which stops British industry competing at the moment is that we have far too many companies which are not of a size to have the facilities, the resources, the services to stand up to competition by these highly integrated corporations overseas."—[OFFICIAL REPORT, 25th January, 1966; Vol. 723, c. 58–59.]
This afternoon, the right hon. Gentleman again expatiated on the advantages of size. Nobody would deny the advantages

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of scale in a good many cases. I do not know of any of my hon. and right hon. Friends who would deny that in some industries there is a need for structural change. There is no difference between the two sides of the House on that, but I think that the Government are tending to ignore both the great changes which are taking place and the situation which has now been reached.
Perhaps I can give some figures to the right hon. Gentleman to illustrate what I mean. I know of no record of mergers between private companies, but Mr. Nicholas Stacey in an article in The Times recently pointed out that the number of recorded mergers of public companies in Britain rose from an average of 292 a year between 1954 and 1958 to no fewer than 885 in 1963. The result is that if one compares the United Kingdom with our main overseas competitors one finds that outside the United States of America more than one-quarter of the 200 largest companies are British. That is a considerable achievement, but the whole reasoning behind the Bill is that the ordinary economic and financial forces are not effective enough to bring about changes fast enough. I think that that was the main burden of the right hon. Gentleman's argument this afternoon.
It is said that there is a shortage of funds and that therefore this new State agency must have £150 million of public money at its disposal. But who is responsible for the shortage of funds? Every industrialist knows that it is a direct consequence of the Government's economic policies. Every Budget that this Government have introduced has hampered competition and has taxed enterprise. Why is the right hon. Gentleman so surprised that industry is short of finance, when the Labour Government in only two years have heaped a burden of £700 million of additional taxation on free enterprise industry? This is the deliberate policy of the Labour Government. It is their policy to cripple the free enterprise system to such an extent as to provide an excuse for more and more State intervention.
The purpose of the Government should be not to stifle the working of the market economy but to bring in measures to sharpen competition and stimulate enterprise.
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If the Government were really in earnest about industrial reorganisation we could already have had on the Statute Book a Companies Act providing for the disclosure of much more financial information. That would have been a far more realistic and effective means of stimulating useful company amalgamations which would benefit the nation.
Listening to the First Secretary of State this afternoon I thought that he grossly over-simplified the problem. I can best express my doubts by quoting from the Annual Report of the Industrial and Commercial Finance Corporation, which says that it has always been the policy of the Corporation to encourage amalgamations of firms where this was clearly beneficial to both parties. It goes on—and I hope that the right hon. Gentleman will listen, because this is very relevant to what he said:
"But the problem is a complex one, and it does not follow that a large unit is better managed, more efficient, or more profitable than a small unit. There are, indeed, plenty of examples to the contrary. It is sometimes thought that a small unit cannot afford the needed research and development at one end, or break into the export market at the other. Again, as the first list of Queen's Awards for export performance bears out, there are many examples to the contrary. Direct personal approach, initiative and inventiveness, short lines of command, greater flexibility, small administrative overheads—all these are positive advantages. They apply as much on the frontiers of modern technology as in the more settled regions behind them. Thus, while the trend towards merger and integration is in principle a healthy one, this is a matter on which generalisations are apt to be misleading."
The right hon. Gentleman said that he was not saying that every company in the country should be big. He did not want mergers for everybody, but he dwelt a little too much on the advantages of scale and did not seem to appreciate the sort of points which are made in this very sensible Report.
In order to speed the structural changes in industry which we agree are necessary the Government had a simple choice, either to foster competitive enterprise and the working of the market, as my right hon. Friend the Leader of the Opposition did when he provided for the abolition of resale price maintenance, or to set up a Government agency. It is typical of a Socialist Government that they have chosen the latter course.

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The result of the particular type of agency which they have selected will be twofold. First, it will lead to the misallocation of scarce national resources, and secondly to the subsidising by the State of one enterprise against another in direct competition with it. I am not saying that the Government should have no part to play in encouraging useful company mergers, but there is much more to the Bill than that.
When we debated the White Paper setting out the proposals for the Industrial Reorganisation Corporation, the First Secretary of State's predecessor, now the Foreign Secretary, had the audacity three times to pray in aid of his argument some remarks by Mr. John Davies, the Director-General of the Confederation of British Industry. When I intervened because I was so astonished, the then First Secretary of State replied that Mr. Davies had "been consulted throughout".
I am sorry to have to say this: that statement was completely untrue. Lest there should be any doubt about this and the general attitude of the Confederation of British Industry I shall read to the House what the C.B.I. said in the light of what was said in the House by the right hon. Gentleman's predecessor. I hope that the right hon. Gentleman will listen to this: I listened to his speech.
Mr. M. Stewart: I am listening.
Mr. Barber: It is a pity that the right hon. Gentleman did not mention this in the debate and apologise for his predecessor. The C.B.I. stated:
"The C.B.I. has not been consulted by the Government about its intention to set up an Industrial Reorganisation Corporation. The background against which the White Paper on this question is issued is coloured with suspicions regarding the Government's interventionist policies in industry."
There is the view of industry.
Mr. Stewart: What is the date of this?
Mr. Barber: This is 25th January, 1966. If the right hon. Gentleman would like to read the Financial Times of 20th April, after the debate, he will see expressed the views of Mr. Davies on the fact that the C.B.I. was not consulted at all about this.
Mr. Stewart: I asked for the date because I pointed out clearly in my speech that this was the subject of criticism and suspicion. The point I made, which was true, was that with further knowledge there has been very much a change of atmosphere. That was why I asked the right hon. Gentleman the date. His speech is not enriched by quotations we all read in the newspapers 10 months ago.
Mr. Barber: When we last debated this subject I asked the right hon. Gentleman's predecessor whether the C.B.I. was in favour of the proposals now in the Bill. The right hon. Gentleman's predecessor replied with the words which I quoted, that Mr. Davies had been consulted throughout. I ask the right hon. Gentleman now, after this lapse of nine months, if the C.B.I. is now in favour of the proposals in the Bill. Will the right hon. Gentleman answer? [HON. MEMBERS: "Answer."] With great respect the right hon. Gentleman did not enrich our proceedings when he rose a moment ago.
Mr. Tarn Dalvell: Will the right hon. Gentleman give way?
Mr. Barber: I will give way in a moment. It is incredible that a senior Government Minister, now the Foreign Secretary, could so have misled the House with no subsequent apology. It is even more incredible that on a matter of the utmost importance to industry, as the right hon. Gentleman said this afternoon, industry was not consulted before this proposal was put before the nation.
Mr. Dalyell: The choice to which the right hon. Gentleman refers is not simple at all. The right hon. Gentleman's Administration rightly or wrongly—rightly in my opinion—gave considerable Government help to the development at Fort William and of B.M.C. in Scotland. Even the C.B.I. in retrospect cannot be happy about the mechanisms by which this was done. Something has to be altered in these arrangements and the Bill offers a constructive alternative.
Mr. Barber: No doubt the hon. Member will have an opportunity of making his speech later.
Mr. Dalyell: The right hon. Gentleman has not faced up to the point I made.
Mr. Barber: I have faced up to that.
Mr. Barnett: In the remarks which the right hon. Gentleman made about my right hon. Friend the former First Secretary of State he did my right hon. Friend far too little justice for, as reported at col. 1126 of the OFFICIAL REPORT for 15th February, my right hon. Friend replied point blank when asked if the Director General was in favour or not, he said:
"I have not the slightest idea."—[OFFICIAL REPORT, 15th February, 1966; Vol. 724, c. 1126.]
Mr. Barber: Exactly. We knew then what the view of the C.B.I. was, but the First Secretary had not even read this at that time. [Interruption.] I will show how the First Secretary misled the House. [Interruption.] Does the Prime Minister wish to intervene? Although I was trying to answer the Secretary of State, if he wishes to intervene let him get up and do so.
The Prime Minister: The right hon. Gentleman, in company with all other hon. Members, is elected to pursue the national interest. It is our duty to consider what the C.B.I. and the T.U.C. and others say, but at the end of the day neither he nor we take orders from outside in deciding what the national interest is.
Mr. Barber: I am somewhat surprised that the Prime Minister has the audacity after all that he has been doing in these last few weeks to talk about the national interest. Since I gave way I will answer the right hon. Gentleman. The criticism I made of the First Secretary was very simple. It was that he said that Mr. John Davies had been consulted throughout. The C.B.I. had not been consulted. The House was misled. It is there in col. 1126 quite clearly and the House was misled. This is clear not only from the statement of the C.B.I., but also from the subsequent interview which Mr. John Davies gave to the Financial Times.
Mr. M. Stewart: Will the right hon. Gentleman allow me? This statement the right hon. Gentleman quoted from the C.B.I. was made on 25th January. There were full consultations in the latter part of January and in February with the C.B.I., and in the middle of February, after those consultations had taken place,
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my right hon. Friend my predecessor said that they had taken place. There is no substance, therefore, in the suggestion that he misled the House. The C.B.I. has been further consulted since on the drafting of the Bill and has not expressed a recent view on it one way or the other.
Hon. Members: Withdraw.
Mr. Barber: I draw the attention of the right hon. Gentleman to the Financial Times of 20th April——
Mr. Archie Manuel: No. The point has been made.
Hon. Members: Withdraw.
Mr. Barber: I am certainly not going to withdraw because what the right hon. Gentleman said was untrue. I will leave it at that. [HON. MEMBERS: "No."] Oh, yes. On 20th April, in an interview, Mr. John Davies referred to what he called the Government's behaviour over the Industrial Reorganisation Corporation and said that there was no consultation at all. There was no consultation before the White Paper was published. This is a fact and this is known by all concerned. Of course it is typical of this Government, because the investment grants, the Corporation Tax, the Selective Employment Tax as well as the Industrial Reorganisation Corporation were all introduced either without the knowledge of industry or against the advice of industry.
The Prime Minister: It will be interesting to hear what the Opposition think about the Bill and not what the Financial Times and others think. Two of the last three things quoted by the right hon. Gentleman were budgetary matters. Is he saying that we should get the views of industry about budgetary changes in advance of the Budget?
Mr. Barber: All I am saying as the Prime Minister knows full well is that there has been very considerable criticism of his Government for not consulting industry more—[HON. MEMBERS: "Answer the question."] I will answer the question; I am about to answer it if the Prime Minister will allow me to do so. There is no reason why on a number of taxation matters which are being considered generally by the Government industry should not be consulted—[HON. MEMBERS: "Oh."]—in general terms.

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After all, his own Chancellor of the Exchequer long before the Budget indicated that he was to introduce Corporation Tax. He did not wait for the Budget and, incidentally, the result was that he caused absolute chaos in the business world. That is the answer to the right hon. Gentleman.
The Prime Minister: If the right hon. Gentleman will not answer the question—Corporation Tax was announced in this House before consultation, that was right—if he will not answer whether on two of the three things he referred to there should have been prior consultation, will he answer this? In view of the fact—[Interruption.] If he will not answer my other question will the right hon. Gentleman answer this? In view of the fact that we have recently had a very important series of consultations with all parts of industry about productivity, will he tell us why his fellow Front Bench spokesman said before that industry should not co-operate in these consultations but should use these consultations for the purpose of attacking the Government?
Mr. Barber: I will answer the question put by the right hon. Gentleman about what I have just said, which is relevant to this debate. I will repeat what I said, word for word. I said that the investment grants, the Corporation Tax, the Selective Employment Tax and the Industrial Reorganisation Corporation were all introduced either without the knowledge of industry or against its advice. That is what I said. I have repeated it word for word and that is true and the right hon. Gentleman knows it.
I now turn to Clause 2 of the Bill. [HON. MEMBERS: "Hear, hear."] I have given way, which is my normal practice; I always give way to the Prime Minister. I now turn to Clause 2. Although the right hon. Gentleman said that we on these benches were a little coy about this proposal, I think he was a little coy about Clause 2. He did not tell us a great deal about it but instead concentrated on the technicalities concerning the provision of £150 million. On Clause 2 he was remarkably silent. Perhaps it would be as well if I were to tell the House what Clause 2 actually does.
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I will enumerate only a few of the powers which this State agency will have under Clause 2 and I invite the new Secretary of State to intervene if I am in the least inaccurate in any of the powers which I now say will exist under Clause 2. First of all, this State agency will have power to buy shares in any company. Two, it will have the power to control the commercial activities of any company. Three, it will have power to continue control of any company without time limit. Four, it will have power to form entirely new companies and to start entirely new enterprises in any field of industry, commerce or finance. Five, it will have power at its complete and unfettered discretion to subsidise any company although that company may be in direct competition with another unsubsidised company. Six, it will have power to build factories, plant and machinery and to place them at the disposal of any selected company for an uneconomic rent, or indeed for no rent at all, and it matters not that the favoured company is in direct competition with another company which is not so favoured by the State. Seven, it is specifically provided that all these powers can be exercised not only within the United Kingdom but anywhere else throughout the world.
In not a single case where these powers are exercised is there any provision for any approval whatsoever by Parliament. If there is a business man in this country who still thinks that the Government believe in private enterprise, he had better wake up—and wake up quickly. We have been told by one Government spokesman after another that we need have no fears on these benches because the Corporation is to be run by reputable and successful business men and financiers. It is true that the names of those who have agreed to serve command respect and that some of them, I know, will not hesitate to exert their independence. But if it comes to a dispute as to the way in which the general objectives of the Corporation are being carried out, these men will be powerless and the reason is not far to seek. I will read subsection (4), which the right hon. Gentleman did not mention, of Clause 2:
"The Secretary of State may, after consultation with the Corporation, give to the

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Corporation directions of a general character as to the exercise and performance by the Corporation of its functions, and it shall be the duty of the Corporation to give effect to any such directions."
In the end, of course, rightly or wrongly, it is the case that the Secretary of State has complete control. I do not doubt that, in those circumstances, some members of the Corporation would resign but, of course, in that event, the answer of the right hon. Gentleman or his successor would be simple, for the appointment of new members is wholly within his gift.
Mr. Barnett: The right hon. Gentleman was complaining just now that there was no responsibility to Parliament. Now he makes the point that the Secretary of State will be responsible to Parliament. Just exactly what does the right hon. Gentleman want?
Mr. Barber: I was saying that, in my view, when major transactions are undertaken or negotiations completed, they should be subject to Parliamentary approval—in the case of a take-over, for instance, of a major concern. The only time when Parliament comes into it at all is probably a year or 18 months afterwards, when it will merely be notified. There is no provision for approval by Parliament and that is unfortunate.
Several Hon. Members Several Hon. Members rose——
Mr. Barber: I have already given way a great deal.
I hope that the Government will now realise why we are not prepared to grant them these powers. Whatever the arguments may be about setting up a Government agency to give advice or some form of assistance to industry to help with amalgamations, the fact is that the arbitrary powers sought in Clause 2, and to which the right hon. Gentleman did not refer when he dealt with Clause 2, are far too wide and we are not prepared to grant them to the Government.
When the Conservatives were in office, there was a group of Ministers of which I was a member for a time when I was at the Treasury. The Lord Chancellor of the day presided and the two Law Officers were also members. One of their duties was to examine all legislation in order to ensure that the Executive were not granted excessive or unnecessarily arbitrary powers. It is sad for this
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country that the practice has now been abandoned.
But, of course, we are told that our fears are unfounded, that we need not concern outselves with the terms of the Bill. That is what the right hon. Gentleman's predecessor told us in effect. He gave us assurances. When introducing the White Paper, he told us, for example, that the Bill had nothing to do with nationalisation. But why should we on these benches or anyone else put our trust in right hon. Gentlemen opposite? After all, the right hon. Gentleman responsible for launching this told the nation that he would never have a hand in dictating wages and prices. But look at him now. I do not know whether he has been promoted or not to the Foreign Office, but he said it. Again, the Prime Minister promised the nation at the General Election that he would not create unemployment and now, of course, he is deliberately doing just that.
If the new Secretary of State for Economic Affairs tells us that he is more honest than his predecessor or more honest than the Prime Minister, what assurance have we that he will not be replaced in the next round of musical chairs in 1967? Our fears are not groundless. A short time ago, the Government announced the appointment of an additional economic adviser to the Government, an economist called Mr. Michael Posner. It is not without significance that, just before his appointment. Mr. Posner advocated the establishment of a State holding company. This is how he described its functions:
"… it could select new areas for public enterprise and expand into them; and it could ultimately act as a channel for the reallocation of investment funds between different enterprises within the public sector, so operating, as in Italy, as a device for the socialisation of the capital market."
This new Socialist civil servant went on—and this is relevant, because his pamphlet was published after the White Paper—
"… the establishment of the Industrial Re-organisation Corporation is a most important development. Once the Corporation is in existence there will be nothing to prevent it evolving into a State Holding Company of the type suggested earlier. This would be an entirely natural development…It would simply be doctrinaire for the Government not to use the Corporation to achieve those objections for which we have proposed that a State Holding Company be established."

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Within a matter of weeks after that publication Mr. Posner entered the Government service as another economic adviser—and, of course, what he wrote is the truth. This is why the Government and the Secretary of State insist on the carte blanche powers of Clause 2. But no one who has followed the policy of this Government and compared it with the nationalisation proposals in "Signposts for the Sixties" should be in the least surprised by what is happening. The simple fact is that this Government do not believe in competitive enterprise. They do not believe in the operation of a market economy. Many of them within the last few years have said so frankly. Their aim is more State ownership and more State control and regulation. It is an aim intrinsic to Socialism. It is inherent in this Bill and we reject it.
4.47 p.m.
Mr. Joel Barnett: Having listened to the right hon. Member for Altrincham and Sale (Mr. Barber), it is not difficult to apreciate why he got himself into such a mess. It is so easy to get into a mess when one has so little which is constructive to say. I must say that I was rather disturbed by his description of a civil servant as a "Socialist civil servant". I am sure that the right hon. Gentleman will agree that once we start describing civil servants as "Socialist" or "Conservative" we shall be in trouble. However, I do not want to be dragged into the sort of irrelevancies into which he entered.
Mr. Barber: I did not cast any aspersion on Mr. Posner's integrity or sincerity, but this pamphlet was published only in June, 1966, and Mr. Posner took up his appointment shortly afterwards. The document was published by the Fabian Society.
Mr. Barnett: That does not answer the point I have made.
I would have thought that most unbiased observers would have agreed with the objectives of the Bill. I would have preferred to hear the right hon. Gentleman deal with them but, right from the time when my right hon. Friend the present Foreign Secretary first made his statement on this proposal, the right hon. Gentleman the Member for Altrincham and Sale has shown himself to be so obsessed
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by the idea of nationalisation that he has been unable to let us have a coherent comment. That persisted in his speech today.
It is possible to disagree on whether the I.R.C. will achieve the objective set out in the Bill, and, while one expects at times from the Opposition some political prejudice, we did, in the debate on the White Paper, at least get from the right hon. Member for Enfield, West (Mr. Iain Macleod) some examination of whether or not this is a good idea.
When the right hon. Member for Enfield, West was examining the proposals, he came to some astonishing conclusions—astonishingly complacent conclusions one might say. He came to the conclusion that the market can deal with everything and that it has sufficient forces to be able to deal with the problem. I had intended to deal with one or two aspects of this, but there seems no need to repeat them as my right hon. Friend the First Secretary of State has already fully dealt with the points. The market clearly is not dealing with the situation. Any unbiased observer looking at our industrial economy could hardly help concluding that industrial efficiency leaves something to be desired. It may be that the Industrial Reorganisation Corporation is not the right vehicle to use to put it right, but to say that nothing needs to be done, which appears to be the conclusion of right hon. Members opposite, is to take their prejudice to the extreme.
The right hon. Member for Enfield, West, in column 1230 of HANSARD for 15th February, quoted in aid a report from the Observer that of 51 merger proposals examined by a reputable merchant bank 14 came off. I should have thought that that was a pretty high average. It depends on what one means by "examined", and the type of proposals, but one could go through the company cards in the Library and examine literally hundreds of mergers which are possible in the minds of the person examining them and come to the conclusion that perhaps only about one in a thousand can be concluded. My point is that the example given by the right hon. Gentleman clearly proves nothing except perhaps that the best prospects for mergers go to merchant banks. Nobody would deny that. It certainly does not prove that the market has dealt adequately with the problems.

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When I was speaking to a director of a reputable merchant bank the other day he made it clear to me that of the mergers in which his firm was successful, generally both sides had said, "We want to merge". However, those which failed or did not come to a satisfactory conclusion were largely cases in which perhaps they had taken a tentative initiative themselves or in which one side had taken the initative and the other side was unwilling to conclude the proposal. This was the example put forward by the right hon. Gentleman. I do not deny that, with a willing buyer and a willing seller, the merchant banks are, and I imagine will remain even under the new proposals, the best vehicle for concluding mergers. But that is not the reason for setting up the Corporation. If that were the only reason, we should not need to set it up.
In the other example which the right hon. Gentleman gave he quoted 112 companies which had merged over nine years. He was referring to 112 out of about 500 companies which, it had been stated, the Labour Party had its "beady eye" on. He made the point to prove that mergers were proceeding. The right hon. Member for Altrincham and Sale today also showed that, among the industrial countries, we have very many, if not the most, large companies. But, as he said, and as the right hon. Member for Enfield West said, it is not simply a matter of economies of scale. Size does not necessarily equal efficiency. But that is all the more reason why we need a Corporation of this sort. It is not just a matter of mergers; it is a matter of the right mergers which are in the national interest. This is why we need a Corporation of this sort.
Mr. John Hall: Am I to understand that the hon. Gentleman is saying that if there is not a willing buyer and a willing seller—two parties who wish to come together—the Corporation's duty will be to force a shotgun marriage?
Mr. Barnett: I hope that it will be the responsibility of the Corporation to try to bring about a merger, even if one side does not want to go ahead with it, if it is in the interests of the industry concerned and the nation. I hope that that is the intention behind setting up the Corporation. I certainly thought that that was the intention. Otherwise there would be no purpose in creating it.
Mr. David Price: Would the hon. Gentleman enlighten us as to what criteria the Corporation will use if the two firms concerned do not think it is in their interests to merge?
Mr. Barnett: Generally speaking, one side in a merger proposal thinks that it is in the interests of both parties to merge. In my experience, it invariably happens that one side, for various reasons which I propose to go into briefly, does not wish to proceed.
Sir H. Legge-Bourke: This is the argument of Naboth's vineyard.
Mr. Barnett: The hon. Gentleman can take the argument as he likes. If he does not mind, I will pursue the argument in my own way.
The argument of right hon. Members opposite illustrates a degree of complacency as to the state of our industrial efficiency which is quite astonishing. Perhaps the slogan which I believe they have been looking for to go with the word "Freedom" is "Freedom with Complacency", because it seems appropriate to their thinking.
The object of setting up the Corporation is set out in Clause 2 (1). It is
"for the purpose of promoting industrial efficiency and assisting the economy of the United Kingdom or any part of the United Kingdom."
I should not have thought that many people would disagree that that was what we want in this country.
My worry is whether, without compulsion—and there is no compulsion in the Bill—we shall achieve the objectives which we have in mind. For example, how will pressure be exerted if there is an unwilling seller? How will the merger which is needed be effected if one of the two parties does not wish to proceed? [AN. HON. MEMBER: "Or both."] There may be cases of the initiative being taken by the Corporation and both sides not wanting to proceed. Clearly, a great deal will have to be left to the initiative of the men on the board of the Corporation. One cannot know precisely how it will work, but there will have to be a great deal of persuasion used by members of the board when they do not have any compulsory powers.
A seller who refuses to merge may have genuine grounds for believing, and

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may be able to prove, that it would be against the interests, not only of his company, but of the industry generally that a merger should proceed. This is a fair enough argument, and there will be times when one could accept it. But my experience is that more often than not refusal to proceed with a merger comes from the type of board of directors who are not interested in the idea of change but who are happy to continue pursuing the policies which they have pursued over many years with the unfortunate effects on the economy which have taken place. It will be within the experience of hon. Members that there are boards of directors whose return to the shareholders is such as to make it little less than taking money out of the shareholders' pockets. We have a rather strange idea of what is or is not stealing in this country.
We would be appalled if we saw a man stealing a shilling and would probably immediately report him to the police. However, if a board of directors is sitting on the assets of a company and is literally wasting thousands of pounds a year of its shareholders money—and, very directly, of the nation's resources—we are prepared to say that it would be un-British to expose it. I do not go with that argument.
Having said that, I do not believe it will necessarily mean that the Corporation will succeed in making that type of board co-operate in a merger. But I hope that the I.R.C. will at least expose the facts of the situation, particularly under Clause 9, when it issues its annual reports. It will then be able to make clear why it has not been able to effect certain mergers when to do so would have been in the national interest.
Mr. David Price: How will the I.R.C. have this important information when a private company is concerned? The hon. Gentleman is an accountant and will be aware that, as a managing consultant, I. too, must do careful studies into the utilisation of assets. How does he consider that the I.R.C. will receive this information?
Mr. Barnett: As a professional man I receive certain information about the sort of private companies I have described. I have no doubt that there will be ways, through professional people and others,
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including shareholders in such private companies, which will enable the I.R.C. to receive this information. One or two such instances have come to my knowledge because of shareholders being disturbed about their assets not being utilised to their advantage. Thus, it may be that the shareholders themselves will report these matters to the I.R.C.
Mr. John Hall: Would the hon. Gentleman not agree that he is presenting a rather one-sided picture of the matter? Are there not many examples of go-ahead, efficient, small companies which some large and less efficient corporations might wish to take over and which, by their great powers, may succeed, as they no doubt have in the past, in taking over, thereby swallowing up efficient concerns? Should not such a take-over be resisted?
Mr. Barnett: That is one valid point which, of course, I have not discussed, but it is only one of many. We are at present discussing the I.R.C. and how it will work. There are many other points I have not mentioned and I am sure that if I attempted to mention them all I would be called to order. I do not deny that what the hon. Gentleman says could be true, although it would not be relevant to the type of merger to which I have been referring.
The important point is that there should be a great deal of flexibility in the hands of the board of the Corporation. Hon. Gentlemen opposite may not like that, but clearly success will depend primarily on how the board of the Corporation works. That is why I found quite the most insidious attacks on the setting up of the I.R.C. in the speech of the right hon. Member for Enfield, West on 15th February last when he talked of the likely high failure rate in the possible merger proposals that the Corporation would be examining. If the main concern of the Corporation's board will be its failure rate, it will completely lose sight of the objectives that the nation needs it to have in mind. I will not be looking simply at the profits of the Corporation when I read its first annual report 12 months after it has been set up.
The matter was not helped by some of the remarks of the former First Secretary in the debate on the White Paper because

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my right hon. Friend who is now the Foreign Secretary said:
"The Corporation will be able to take a longer view than the market…".
The present First Secretary referred to that again today. If the I.R.C. intends to take a longer view, it will obviously have to take greater risks. The present Foreign Secretary also said that the Corporation would use money only where the market was unwilling or unable to do so.
So the Corporation will be taking risks which the normal merchant bank would not be prepared to take. It may be because a merchant bank will not want to take a longer-term view of a transaction, although it seems, from the remarks of my right hon. Friend, there could be other reasons, too. The then First Secretary also said:
"In all its activities the Corporation will act as a responsible commercial body."—[OFFICIAL REPORT, 15th February, 1966; Vol. 724, c. 1127.]
That is not entirely compatible. If the Corporation is to take longer term risks—risks which other comparable commercial bodies will not take—then the two cannot be entirely compatible or be compatible with the national interest because it may be that the I.R.C. will have to invest in something from which it may not receive a return for a considerable time, if at all.
Mr. Harold Lever: I have been listening carefully to my hon. Friend's argument and I want to be sure that I understand it. He complains that the Government are expecting the Corporation to run on commercial lines while he feels that it will be taking greater risks than is consistent with that principle. What principle does he believe the Corporation should have in mind when investigating the public funds put at its disposal?
Mr. Barnett: It should have in mind the principle set out in Clause 2. Its main aim should be to help the national economy. This would seem self-evident and I believe that it should be prepared to put that as its first priority. But my right hon. Friend the Foreign Secretary said, when First Secretary, that its aim would be to make a surplus and to pay a dividend. I say that is not entirely compatible. It may not be able to pay a dividend and I would have thought that its main function should be that set out in Clause 2—to increase the pace of
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rationalisation compatible with the ideas set out in the Clause.
This is my real reason for supporting the Bill. I hope that it will be the vehicle to provide for greater rationalisation. However, it may not be fulfilled because everything in the last resort will depend on how the directors of the Corporation work and how they see their duties. I was not altogether happy with the idea of the chairman having a part-time post. Neither was I altogether happy with the idea of the two main people concerned not being paid for their duties because I see the Corporation as a body possessing tremendous potential and needing the full-time energies or its directors. In the last resort it will depend on how the chairman and directors of the Corporation pursue their duties. From all one knows of the appointments made, the nation seems to be very fortunate that the men in question have felt able to accept. I wish them every success.
5.6 p.m.
Sir Arthur Vere Harvey: I listened with interest to the speech of the hon. Member for Heywood and Roy-ton (Mr. Barnett) but was surprised when he referred to the speech of my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) as being complacent. My right hon. Friend's remarks were anything but complacent although he was apprehensive about what he had been told earlier.
I see some merit in the Bill. I am reasonably happy at the prospect of Sir Frank Kearton and Mr. Grierson being in charge, because I cannot think of two more brilliant and honourable men to do this work. I am sure that while they are running things, the Corporation will work on the right lines, but what will happen when they go? They will not last for ever and I will not blame them when they finally leave. If they give a spell of a few years it will be public spirited of them to have done so.
I remind hon. Gentlemen opposite that when the then Conservative Government appointed the late Sir Gerald d'Erlanger as part-time Chairman of B.O.A.C. they nearly tore the benches apart because it was a part-time post and because he was drawing only a nominal salary. It is public spirited of these two men to be willing to work for nothing, but it is not a good policy. They should draw their

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salaries in the normal way and bear the full responsibility for what they do.
I see the hon. Member for Heywood and Royton smiling. I do not know why he should be amused at these remarks. I do not imagine that he does his work in the House of Commons for nothing. I am sure that he draws his salary. I have raised what may seem a small point, but it is an important one and appears to conflict with the line taken by the party opposite in recent years.
The real trouble with this proposal is that the powers are far too wide to achieve what the Government want, or what we think they want. The Government have failed to make their case. I thought that the First Secretary, at the end of his speech, really became the headmaster again. He started to lecture these benches in no uncertain terms, and quite unnecessarily if he wants to set going the spirit of co-operation between the two sides of the House—and that is very important—on these matters which affect the nation a great deal. There are real problems facing the nation. Do not let anybody underestimate them, and the two sides of the House will have to work together in trying to solve them.
On the question of mergers, what would have happened if Sir Frank Kearton had not put forward the brilliant case he did on the proposal for a merger between Courtauld and I.C.I.? I can well remember what happened on that occasion. What will happen in future? Will a Corporation, like this here proposed, bring pressure on the chairman of such a company and say that in the national interest there should be a larger organisation?
There are, fortunately, always the shareholders, who can say something, as they did on the occasion of the Courtauld episode. I do not know whether the hon. Gentleman the Member for Heywood and Royton was present at Question Time today when the Lord President of the Council was being asked whether some of the nationalised industries would have their affairs debated in this House. Some of them do not have their affairs debated for three or four years at a time: there are no shareholders' meetings, no discussion in
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the House. At any rate, the shareholders of any company have the right to set up a committee or to appeal to the Board of Trade or to make a row at a meeting, as is frequently done, and they can get something moving. If the hon. Gentleman is so well-informed about private or public companies, he should know that this course is open to them, or to him or to anybody else.
My view on mergers is that frequently they are good for the employees. I think that one of the essential reasons for that is that they have to be good for the employees. Nobody should be hurt when a company is merged—nobody on either side when there is a take-over—for which there should be shown good economic reasons, such as that the business will be improved, that there will be increased turnover, and that this will be in the general national interest. Those are the necessary provisos, as I see it.
Reference has been made to the aircraft industry. I remember how my right hon. Friend the Member for Streatham (Mr. Sandys), who was the appropriate Minister at the time, got the airframe manufacturers together and more or less insisted upon mergers among them. He had every right to do it because 80 per cent. of the industry was involved on behalf of the Government—about 80 per cent.—and it was vital that we had large companies able to compete with the Americans and others, even the French. I thought his decision at that time was right. It was an important decision. The essential reason was that most of the work was being done for the Government themselves. I do not think this proposal here will help the economy very much. It will bring about far too many restrictions on industry.
I feel that today in this country, and even on the benches opposite, "nationalisation" has become almost a dirty word. Once they have got steel taken over we shall never hear the word "nationalisation" again, I think. It has been made clear in the booklets and pamphlets which the Labour Party over recent years has produced that it is to be participation. We have been told that. Mr. Gaitskell said so repeatedly. We shall not hear much more about this dirty word "nationalisation"; they do not like talking about it now.

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But there will be a drift to compulsion. We were told that the Prices and Incomes Act would be on a voluntary basis. Well, had we accepted the word of the Government at that time, only a few weeks ago, we should have been quite wrong, because we have now been led into compulsion. So it goes with this Government. They believe in compulsion. They like it. The speech of the hon. Gentleman the Member for Heywood and Royton was on compulsion. He likes controls. He is a good Socialist. They enjoy them. One saw it in the post-war years and even six years after the war they could not get rid of petrol rationing. Within a matter of weeks of the Conservative Government coming in, it was got rid of, and many other restrictions as well.
The country must be made aware of what the Government are really up to. I believe that this new organisation may be used for political rather than economic reasons. I really believe it. I think the country ought to know that. It is quite possible that the I.R.C. will prop up declining industries, which ought to go.
In "Signposts for the Sixties", to which my right hon. Friend referred this afternoon, much wider State participation in industry was envisaged. It was said that it would involve
"orderly control over the timing of major industrial and commercial projects."
But this new Bill gives enormous powers to the Corporation which may not just influence industry by buying and selling stocks and shares but also by acquisition, and placing at the disposal of others premises and machinery and other equipment. The I.R.C. need not deal with securities but could set up a company with State money in competition with private firms.
It is generally accepted that the word of this Government cannot be relied upon. In the last two years we have been given words and promises time and time again, and in two General Elections and in this House, and now the word of this Government must be discounted, for a time, at any rate. The trouble is that the Prime Minister and the Foreign Secretary like to behave like American statesmen. They rather model themselves on American statesmen. They are constantly quoting the United States. They are constantly going to the United States. We have one member of the Cabinet over there
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now making a fool of herself, the Minister of Transport, who gets into trouble almost daily by idiotic statements. The fact is that the United States' economy is run by free enterprise. I wonder what the American Government would say if a proposition like this were put up to them. Really, if the Government want to copy and imitate the Americans in so many matters they should recognise the fact that the American economy and the boom the Americans have had for five years is due almost entirely to free enterprise.
These proposals will not assist efficiency. They are more likely to harm the economy. I should like to see the Government set about the real needs and difficulties which hamper industry, to tighten up on the restrictive practices of all kinds in unions and in management. We require desperately a new Companies Act. Of course, the real answer and the real shake-up of our industry and of this country as a whole would be to get into the Common Market where there would be competition in every direction.
I personally oppose this Bill from every angle. I think it is dangerous, and I cannot see that it will help the country.
5.18 p.m.
Mr. Robert Sheldon: I thought the hon. Member for Macclesfield (Sir A. V. Harvey) started off by giving this Bill faint signs of approval, but he ended up by opposing it. Perhaps he was carried away by the strength of his own argument and by trying what seems to be the habitual posture of certain hon. Members opposite who seem to find reasons to oppose every turn the Government may take to improve our economic standing and economic performance. It is a great pity, because people who adopt this pose are in fact fighting a losing battle.
I think that this Bill is one of the most important developments by the Government in the areas of private enterprise, and I feel that the relationship between the Government and industry generally is a most important and developing one. I am not one of those who believe that it is the job of the Government to hold the stage while private industry gets on with the job, and is subject to no interference or action of any kind by the Government. The people

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of this country themselves do not accept so passive a view of the relationship between the Government and industry.
The people of this country hold that the Government determine the failure or success of the running of the economy, and that the prosperity of the country is the mark of the successful administration. That issue was settled in 1959 once and for all when the slogan "You never had it so good" was the claim by the Government of the day that they were responsible for the prosperity of the country at that time. That was accepted by a large part of the population and resulted in the return of the Conservative Government.
If Government claim the credit when the economy is going well, then Government are unable to deny responsibility for the economy when it goes wrong. And once the Government accept responsibility for the economy, they must acquire means of influencing it. Measures like the I.R.C. are not the result of Socialism. They are the result of democracy and of the people believing that the Government have the power to influence the economy for good. Those who oppose that view are likely to face a most unhappy political life ahead of them.
Sir Harmar Nicholls: Does not the hon. Gentleman see that the way in which the Government affect industry most of all is by the tax level? If he compares the tax level of 1959 with that of today, he will find why in those days we could talk about never having had it so good, as distinct from the failures of today.
Mr. Sheldon: That is taking far too simple a view of the tax system. The system can be used as an incentive and a means of encouraging the efficient and penalising the inefficient, as anyone who sits through the debates on the Finance Bill should know.
This is the age of the large organisation, but that does not mean that a small organisation cannot be efficient, cannot play a full part and, in many fields of industry, act as the spearhead for new ideas, methods and techniques. But, overall, the advantages are much more in favour of the large-scale organisation.
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They have the advantages of the ability to use modern methods and techniques of management which make smaller the disadvantage from which they used to suffer in their inability to communicate between management and workers. Those techniques of management whereby management decisions are handed down and information is fed up are expanding fields of management techniques and are overcoming the disadvantage of the very large firm. The large organisation can make use of the advantages of scale which give a greater volume of production at reduced cost.
Fundamentally, the I.R.C. will achieve success, not so much by the mergers which it enables industry to carry out but by the change that results from those mergers. If those mergers are seen as a prelude to the introduction of new techniques and new methods of organisation and production, in fitting together the various parts of the organisations and firms which are merged and eliminating the wasteful and the superfluous, the fullest advantage can be obtained.
Not only are firms growing in size in this country, but the increase in importance of the rôle of the international company is one which we should consider as very important. So much of the international competition in export markets in particular will be carried on by competing with these large international corporations with vast sums of money operating in many countries. Although a firm in this country may be considered to be large and efficient, nevertheless, faced with the growing strength of these international companies, even such a firm may appear small by comparison.
The area of Government involvement in industry, which is so much decried by hon. Members opposite, is expanding the world over. It is expanding for a number of reasons. The first is the same reason as here. As the expectations of the public in these countries rise, the people come to accept that the Government have power and the ability to give them the higher standards of prosperity which world conditions have led them to expect, and the pressure of the people upon the Governments of those countries encourages the relationship between Government and industry to be a much closer one than perhaps we have seen in the recent past.

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The second reason is that, as the large industrial organisation expands in power and influence, it is less constrained by the weak discipline of the market, which has to be supplemented by Government regulations. It is not hard to make out a case for leaving these matters to market forces, but, as individual companies extend in power and influence, inevitably the power of the market to control those companies becomes smaller, and when companies become as large as that, certain kinds of Government regulations become necessary.
The third reason for the increase in Government involvement in industry all over the world is that the techniques of public administration are themselves expanding rapidly. Statistics, information and understanding of how industry works are becoming more generally known, and coupled with them is the reduction in the number of firms which effectively control the economy of the country and the ability of the Government to deal with the smaller number of firms who play so important a part in the economy.
One particular point which I should like to make is that in many countries, though unfortunately not so much in our country, there is a growing area of background of people in Government and industry. The business man, with his university, management and administrative background, is becoming much more like the administrator in Government both in his work and in his training. That is leading to a much greater degree of cooperation between Government and industry, because like is able to converse with like and understand like. As industry works closer with Government, industry is able to understand Government, and that leads to certain very desirable features which we should try to follow up.
The fifth reason for the close and increasing involvement between government and industry is that there has been a moderate degree of success. I do not put it higher than that. There is a certain humility necessary in all those who try to interfere with economic forces. The certainty of success belongs only to the magician, and we all know what happened to the sorcerer's apprentice. Nevertheless, to become a sorcerer, one has to be an apprentice. With a certain
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degree of humility in this matter, much is being learned, though much remains to be learned.
The hon. Member for Macclesfield drew attention to the boom in the United States, which he said was due to free enterprise. The odd thing about the boom was that it came when the United States turned their backs finally on a balanced budget economy and went over to the ideas of Keynes.
Sir A. V. Harvey: While accepting that, will the hon. Gentleman agree that there has been a steady reduction in taxation in the United States, giving incentive to the boom?
Mr. Sheldon: So far from taxation being reduced, there are going to be further increases in taxation, almost certainly in the rate of Corporation Tax. I do not think that that argument holds much water.
Those are the reasons for the general increase in Government involvement in industry the world over, and we ourselves are playing our part in the general movement in that direction.
I believe that the I.R.C. is one of the best examples of this kind of Government involvement with industry. The whole Bill recognises implicitly the limitations on the amount of physic that the doctor can give in order to cure his patient, so that, instead of applying compulsion, the Government are inclining to work closer with industry. Industry realises that, and accepts it. Certain measures which we have introduced have mistakenly given the impression that we were trying to chastise industry when it was doing wrong, and complicating life for industry when it may have been doing well. This was a misleading impression, but it was suffered by many industrialists and business men. Nobody can say this about the I.R.C. The whole reason for it is to help industry generally as well as the economic situation of the country.
The ability and quality of the men who have been attracted into this Corporation are the surest signs that industry understands and accepts the reasons for the introduction of this Measure. There is one important point to remember. Many of the finest business men in this country are much more interested in the sheer professionalism of their work than in playing

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party politics. The fact that we have been able to attract such men is an indication that this is the way in which British industry is likely to move in the employment of its people at the very highest level. Our ability to attract these people and to make use of them in the national interest is one of the happy augurs of future co-operation.
The whole Bill is vague in its possibilities and its hopes and in what it can achieve. It is deliberately so. Nobody has talked about the precise way in which this will work, because we all know that it will depend very much on those who are operating it, but in itself it can hold the seeds of enormous success for the future type of co-operation between industry and Government, the type of cooperation which can make a reality of the new kind of organisation which I look forward to seeing in this country, an organisation based on professional industrialists working closer with the Government for the furtherance of both their purposes.
5.32 p.m.
Mr. A. G. F. Hall-Davis: I should like to begin my remarks at the point at which the hon. Member for Ashton-under-Lyne (Mr. Sheldon) closed his. I thought that it was an extremely true and appropriate comment when he said that the whole Bill was very vague.
Mr. Sheldon: Purposely vague.
Mr. Hall-Davis: Perhaps I can take the argument a little further from that comment, because the Bill illustrates one of the gravest weaknesses of this Government. Over and over again Ministers appear to believe that the stating of an objective is sufficient to ensure its attainment. Time and again, since October, 1964, we have heard right hon. Gentlemen on the Front Bench opposite saying that they would do this, or they would do that, and then sitting down feeling satisfied, as though intention were the same as achievement. Rarely are we told how a thing is to be done. That comment applies to the Bill, and I therefore came into the Chamber this afternoon to listen most carefully to what the First Secretary had to say about the operation of the Bill and the work of the Corporation. I regret that when he sat down I was none the wiser.
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The objective of the Bill was well stated in the final sentence of the White Paper published in January, 1966. Its purpose was
"to secure a lasting improvement in the structure and competitive strength of British industry."
I accept that as a praiseworthy and clearly stated objective, and it is much better phrased than the first sentence of the Explanatory and Financial Memorandum published with the Bill itself.
Having accepted the objective as being clear, one looks at the Bill to see how the objective is to be fulfilled. We find a Bill which, on any assessment, should be declared void for vagueness. I never have liked blank cheques, and I like them even less when they can be filled in for amounts up to £150 million and drawn on the taxpayers' account.
I am endeavouring to make some constructive suggestions to the Front Bench opposite, and I would be grateful if I could have the attention of one Minister, at any rate, even though what I am saying may be only a modest contribution to the debate. I think that this is in the spirit of the House.
On 4th May of this year the then First Secretary, speaking during the Budget debate about the decision to set up the Corporation, said:
"Despite the efforts of more progressive managements, in far too many cases the impetus to change is lacking. The Industrial Reorganisation Corporation will be operating on quite different criteria from those which often guide individual managements."—[OFFICIAL REPORT, 4th May, 1966: Vol. 728, c. 1677.]
When one looks at the Bill to find what these quite different criteria are, one finds that only Clause 2 is of any assistance at all. The rest of the Bill is concerned almost entirely with either the bare bones of the Corporation, or with the financial mechanics of its operation.
Clause 2 gives the Corporation vast powers. Under it the Corporation will have power to
"promote or assist the reorganisation or development of any industry or section of an industry; or if requested to do so by the Secretary of State, establish or develop, or promote or assist the establishment or development of, any industrial enterprise."
I would remind the House that within the meaning of the Bill industry is specifically interpreted as meaning any

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commercial or financial activity. Surely we can all agree that it would not be possible to give an authority wider powers than those to play an interventionist rôle in moulding the structure of British industry, trade and banking?
If such great powers are necessary, and if such great financial resources are to be deployed, surely this House should lay down guide lines for the Corporation? Where do we find the guide lines in the Bill, and what are they? We find them, such as they are, in three lines in Clause 2(1):
"…for the purpose of promoting industrial efficiency and assisting the economy of the United Kingdom or any part of the United Kingdom."
These are the only terms of reference for the Corporation laid down anywhere in the Bill. These, presumably, are the quite different criteria on which the Corporation will be operating, to which the then First Secretary referred on 4th May.
The members designate of the Board, to whom reference has been made in this debate, who have volunteered their services, have all served with distinction in their various fields, and have demonstrated that capacity which Clause 1 lays down as a necessary qualification for their appointment. I have no doubt that they offered their services because they unreservedly supported the White Paper objective of securing a lasting improvement in the structure and competitive strength of British industry. I suspect, however, that none of them would serve as a member of a board of a company and allow that company to embark upon a project involving the possible investment of £150 million without insisting that the terms of reference for the project were properly framed, and without specific industrial objectives clearly identified, and I do not think that we in this House should do so, either
If the Government consider that such large funds need to be available, if they consider it worth while to direct to the work of the Corporation the time of busy men who are already making a substantial contribution to the vigour of the economy in other fields, surely the Minister can identify for the House the major sectors of industry and commerce in which he considers there is a need for such a Corporation to operate. If he cannot, surely the Bill is a waste of busy
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men's time and taxpayers' money, and the Minister and the Government lay themselves open to being held to be blind worshippers of the golden calf of mere size.
It is all right for the right hon. Gentleman to put the argument for size and vigour, but if he cannot identify the sectors of the economy where he feels action is needed his only defence of the Bill rests on attachment to size alone. There are many sectors of industry where things are on the move and where a strengthening of the industrial structure and rationalisation is proceeding. It is certainly proceeding in textiles and in the motor industry. Things are moving now in shipbuilding, machine tools and in various branches of electrical engineering and in many other industries. In a wide range of industries adaptation of structure may be taking place as quickly as the industries can digest it. All this kind of structural change brings management and organisational problems—problems which, if the change is pressed too fast and before the time is ripe, can lead to a fall in efficiency rather than an increase. Team loyalties of the best kind are involved in this type of structural change. Loyalties to local communities and employees are involved, also.
The hon. Member for Heywood and Royton (Mr. Barnett) implied that he would like to see shotgun weddings taking place under the influence of the Corporation. I would remind him that one reason why mergers are sometimes delayed, to the impatience of those outside the organisations concerned, is that there is a good team, or there is felt to be an obligation to a local community which it might not be possible to fulfil unless care is taken in these matters.
The only specific guidance given in the White Paper refers to schemes which offer good prospects of early returns, in terms of increased exports or reduced imports. It is not being unduly demanding of the Government Front Bench to say that the sectors which offer such early returns must surely be known by now to the Department of Economic Affairs, after its two years' existence and after the N.E.D.C. studies going back even further. As the Minister appears to be so coy about naming them, perhaps I may offer a suggestion. There is one field where the

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Corporation might intervene, and where its assistance would be universally welcomed as an alternative to the present situation. I refer to the steel industry.
Rather than proceeding with the funeral march of nationalisation why not let the Corporation bring its vast experience and expertise—which I recognise that its members have—to framing a structure for this industry which would meet the objects of the Industrial Reorganisation Corporation White Paper and—I am sure that this could be done—incorporate the measure of overall supervision to which the Government are committed?
As well as knowing where the Corporation will act it is important that we should be told more about the way in which it will operate. I hardly expect its members, acting as a press gang, to sit themselves down in armchairs in a club or in an aeroplane alongside some company chairman and issue an invitation to him to come to the headquarters of the Corporation and engage there in a friendly chat, over a friendly cup of tea, with one of his erstwhile competitors.
Nor—and this is a more serious and important point—should it engage in cutting out expeditions through the gradual purchase on the Stock Exchange of the dominant shareholding of a company, followed by pressure for a merger or reorganisation. Let us be clear; the Bill gives the Corporation these powers.
The hon. Member for Heywood and Royton talked about compulsory powers. We can have no more clearly compulsory powers than that of buying a company and then running it as is wished. Equally, I would not like to see pressure applied in a public report, a point that has been raised. The thing that has been overlooked in this discussion is the question of the financial implications for those companies quoted on the Stock Exchange. Anybody knows that when a merger is contemplated it is important that false hopes should not be raised and, equally, that people should not be allowed to sell their shares at a price which is not the true current price because of discussions that are in progress and announcements that are shortly to be made. Nothing has been said about the use of financial inducements by the Corporation
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to secure mergers. This could bring considerable difficulties unless it is to use the cutting out method, which means pressure by becoming the major shareholder, when there is no need for financial inducements to be offered to the other shareholders.
Mr. Harold Lever: Why does the hon. Member think that there is more danger when this Corporation operates in that way than when a private merchant bank operates in that way?
Mr. Hall-Davis: My reference to the danger was in the context of what was said by the hon. Member for Heywood and Royton about drawing attention in the report to bring pressure on an individual company to merge. I do not think that the full implications of the financial operations of this body have been worked out. I shall be surprised if we do not hear more about it if the Corporation comes into being in these terms. I hope that it will go about its business by means of a formal direct approach to boards of directors, followed by the suggestion that they and their advisers should get together with each other to try to work out a scheme of rationalisation which would be mutually acceptable. The initiative should come from the Corporation.
If this course were followed, could not the Finance Corporation for Industry be linked with the Industrial Reorganisation Corporation to provide the transitional finance required, rather than to arm the I.R.C.—which, having listened to what has been said and having studied the Bill I feel to be primarily intended as a managerial and not financial body—with vast financial resources of its own? What the First Secretary said confirmed my view that the intention is that this should be a managerial and not primarily financial body. The steel denouement when it comes and whatever it may be, will release substantial F.C.I, funds which could be supplemented, and we should not be again duplicating another financial body.
Finally, I turn to the most important weakness of the Bill. Specific initiatives of the Corporation will lack the sanction and authority of Parliament. This Bill almost completely by-passes Parliament. By so doing it not only takes a further step in devaluing the authority and democratic function of this House; it will also be proved to detract from the authority

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and influence of the Corporation itself. Because Parliament is by-passed the members of the Corporation will, before long, find themselves in an invidious position which they may feel unable to sustain without Parliament's authority because, to fulfil their objectives, they will inevitably find themselves—if they are doing what the First Secretary wants them to do—taking action hostile to the profits of existing enterprises and, in the short-term and in specific areas, hostile also to employment.
In such circumstances it is essential for the continued reputation and success prospects of the I.R.C. that its actions should not merely have the tacit approval of the Minister—and I am sure that even that is necessary as the Bill is drafted—but that its actions should have the clearly declared support of the House. When I was reflecting on this my mind went back to the Cotton Industry Act, 1959. I was therefore particularly interested to hear the right hon. Gentleman's references to this Act.
I should like to draw his attention to one significant feature of that Act which he did not mention. The objects were somewhat similar to the object stated in the White Paper—" …with a view to promoting the efficiency of the industry by the elimination of excess capacity "— but in order to bring that about, duties were laid on the Cotton Board similar in intention to those now laid on the Industrial Reorganisation Corporation. The Cotton Board——
Mr. Harold Lever Mr. Harold Lever indicated dissent.
Mr. Hall-Davis: I can see the hon. Member shaking his head. We look forward to his contribution, another from a Lancastrian, to the debate.
The Cotton Board was charged with consulting, through its representatives, those carrying on business and those employed in the industry. It then had to submit its proposals to the Board of Trade, which—this is an important and significant feature, I think—made an order subject to the affirmative resolution procedure of the House.
The cotton reorganisation schemes involved drastic changes for firms and individual employees and I am sure that they were more readily accepted because they derived their ultimate authority
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clearly and specifically, for the individual schemes, from this House. I realise that these were schemes of contraction. I go some way here to meet the dissent of the hon. Member for Manchester, Cheetham (Mr. Harold Lever). The Corporation will also be concerned with schemes for expansion, but not entirely. However, schemes for expansion also will often affect individual and collective interests closely and I am sure that the Corporation will be more respected and readily accepted by those in industry, trade and commerce if its proposals are linked with Parliament and not, as would be the case under the Bill, almost totally divorced from it.
The Corporation will inevitably be regarded with some suspicion. I refer not only to political suspicion arising from its potential rôle as a widener of the public sector of the economy. The suspicion will be aggravated because the Bill places such vast and perhaps unprecedented powers on the Corporation and the Minister. The way to allay suspicion is by open debate in this Chamber.
If we are to vary our hours of sitting, this is one of the duties which this House might well take upon itself in connection with the Corporation. The powers under the Bill are too great. The sphere of the operation of the Corporation is insufficiently defined and the divorce from Parliament is too wide.
5.53 p.m.
Mr. John Fraser: I wanted, first, to deal with one fundamental objection which seemed to be made to the Bill by the right hon. Member for Altrincham and Sale (Mr. Barber). This seemed to be, that the State should not have the right to undertake large commercial enterprises in the same way as a large commercial firm, that the reorganisation of industry and mergers and so forth should be left mainly to market forces. This seems to be a root objection to the community, through the State, participating in industry. I must reject this conception.
It is still true that a great deal of the wealth of the country is concentrated in the hands of very few people and the ordinary men and women in all our constituencies have absolutely no say in how industry in this country should organise. The decisions, to a large extent,

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are made in boardrooms and directed by large institutions and wealthy men. This should be recognised.
Nevertheless, the interests of ordinary men and women are affected by the industrial efficiency of the country. Their jobs are affected by the reorganisation of the industries in which they work. The chances of their getting better hospitals and schools—to put it in a wider context—are affected by their efficiency and yet they have no say about the way in which the market forces operate.
This is so, even if they are small shareholders. Anybody who recognises the reality of the way in which companies work knows that management is largely self-perpetuating, and even if there is a large spread of share ownership in a company, the shareholders, because of the proxy arrangements, have very little control over the decisions which are reached.
I reject the conception that the State and the community and ordinary men and women should not be able to participate in industry in exactly the same way as large companies do. It has been urged against the Bill that it gives the I.R.C. very wide powers, but if one compares the restrictions which are contained in the Bill with, let us say, the memorandum and articles of I.C.I. or any large public company, one sees that there are many more restrictions in the Bill than there are in such memoranda and articles of most large public companies. We must reject once and for all the idea that there is something alien about the State and the ordinary person being represented in the reorganisation and, indeed, in the ownership of industry.
The second allegation which has been made, without any truth, so far as I can see, is that this somehow involves compulsion, although I can find no compulsory powers in the Bill. But this smacks again of an illogical attitude. No one has yet suggested that the compulsory powers which are contained in the Companies Acts, whereby a take-over bidder who has obtained 90 per cent. of the share capital of a company is then able, compulsorily, to acquire the other 10 per cent., should be removed. They are, indeed, recognised as an essential part of the methods of reorganising and amalgamating companies.
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It is a little hypocritical—perhaps I had better not use that word—it seems to me quite wrong to suggest an illusory compulsion by the Government and yet implicitly to support, in the take-overs from private sources, the compulsory powers which exist under the Companies Acts. Opposition hon. Members, I think, are representing only their own views. So far as I can see, the Bill will give a good deal of aid to private industry.
I should like to give one or two examples. One, in my own experience, is that of the man who is purely a technical man, an inventor, who makes scientific instruments. I came across the case of someone who had invented a scientific instrument which was known to be wanted in many parts of the world. He was, however, purely an inventor, a man with no business acumen and indeed no wish to participate in business ventures. He was unable, for this reason, or disinclined, perhaps, to spend much of his time exporting his goods. He would rather spend his time inventing scientific instruments.
I should like to see the I.R.C. undertake the formation of a company or an agency which would buy things like scientific instruments from small individual inventors and market them abroad, providing the financial and selling services to a large number of small firms and then leaving those firms to get on with the real job of development and invention.
I should like to turn to the question of medium-sized firms which export and which, perhaps, in the course of their trade, produce 200 different lines. This is so in confectionery and in the tool industry. These are relatively easy to produce and sell at home but one might have an export order for New York, for example, of 100 different lines for one shipment. Because of shortage of storage space and so forth, there is a great disincentive to get that export order away, because it would involve packing in perhaps small supplies of 100 different lines of goods.
Yet there must be many medium-sized firms which do this job and which would find it easier if one firm could undertake 10 lines for export while another took over another 10 lines. If they could be helped

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to do this by some co-operative organisation, some consortium, the initiative for which would come from the I.R.C., this would help our exports. It would make it easier to export and help firms which do this job so conscientiously to do it more efficiently.
In London, one of the crying needs is for the modernisation of property and small repairs. One of the most inefficiently organised industries is the small building industry, in which there are firms comprising two or three people doing plumbing, slating, painting and also having to do their buying, accountancy and estimating. They are not running very efficiently. In the lists of bankruptcies, the names of small builders are at the top of the league.
It would be a great advantage if a body like the I.R.C. could encourage the amalgamation of these small, valuable, essential jobbing builder firms, so that they could do the job of restoration of old property and the other very difficult jobs which one finds it so hard to get done but which are essential to preserve our older houses. The I.R.C. could efficiently organise a consortium or a new firm which could group together people who at present work diversely, and largely inefficiently, because of the very nature of the industry with which they are concerned.
Those are a number of examples of the way in which I see the Corporation working, in the public interest and in the interest of private industry.
I pass on to other aspects of it which are not concerned with money. I do not think that the provision of money is alone the answer to our problems. I am glad that, after decades of exhortation and incentives, the powers in the Bill will enable the Corporation to participate in the management of firms by acquiring equity capital.
I hope that my right hon. Friend, in winding up the debate, will indicate the sort of policy which is to be followed. When the Corporation has acquired equity share capital, what part will it play in the appointment of directors and staff in the firms in which it has equity capital? I should like to know rather more about that and also about what initiative the Corporation will take. We have heard much argument in the
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last couple of years about cutting the dead wood from board rooms. I should like to know what part the Corporation will play in cases where it has equity share capital.
Finally, this is an organisation for reorganisation. I should like some attempt to be made, perhaps only by way of experiment at first, to develop an industry on entirely new lines, starting by reorganising the very nature and structure of a firm. It might be a profitable experiment to allow the workers in the industry to participate in the management and in the election of the board of directors, in the same way as shareholders have the right to appoint directors.
So far as I know, there are very few experiments or working examples of this in industry. The reason is fairly obvious. There is unlikely to be an enterprise in which the workers have some degree of control of the board of management and the right to elect directors to the board of management, simply because the relationship of capital to worker is so high that it would be impossible for the workers in the industry to subscribe to the capital of the company in sufficient proportions.
However, this has been undertaken in relation to professional services and has worked very successfully. It has increased efficiency—this is one of the objects of the Bill—because it has been able to resolve what is a basic conflict between the owners of capital in a company and those who work in it. Fundamentally, the representatives of those who work in a company are there to try to get the workers more money and to improve their conditions. No matter how hard one tries to resolve the difference, in the present structure of a firm there will always be a difference between the interests of the management, the owners of the firm, and those working in it.
I should like to hear that in the course of exercising its powers the Corporation will undertake some experiment in private participation—not just consultation, but participation and control in the management of a firm.
6.3 p.m.
Mr. John H. Osborn: I have listened to the debate with considerable interest. The hon. Member for Heywood and Royton (Mr. Barnett)

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spoke about mergers in what I call a favourable sense. Indeed, the debate so far has been about mergers in a favourable sense. The First Secretary of State and Secretary of State for Economic Affairs glossed over the fact that there has been a change in attitude towards rationalisations, amalgamations and mergers. This is a matter which I discussed in detail when we debated the Iron and Steel Bill.
In the last few years the Socialist Party has turned completely head over heels in its attitude towards the desirability of rationalisations and mergers. It is now saying that rationalisations and mergers are good. Further, having discovered that they are good, the Socialist Party is ramming them down the throat of British industry and is using what will turn out to be a blunt, inadequate and costly weapon for the purpose—I mean the Industrial Reorganisation Corporation.
What proof have I of this change? I have been doing some reading. I did some before the debate on the Iron and Steel Bill and I have pursued my reading in the Library since then. In the debate last July I drew attention to the problem of Baker-Bessemer, a steel works in the Sheffield area. This firm was taken over by United Steels for a very good reason. The demand for a tyre mill was such as to keep one mill going fiat out but not such as to justify two mills. One happened to be more up to date than the other. One probably had a better sales organisation than the other. Therefore, a take-over, in the view of those concerned, was inevitable and desirable. Socialist Members complained bitterly about this take-over by a large giant. We had a vigorous debate in the House. My hon. Friend the Member for Macclesfield (Sir A. V. Harvey) brought up the question of Sir Frank Kearton in relation to the I.C.I.-Courtauld merger and congratulated Sir Frank on his power to resist this.
We have had debates on mergers in the House. On 30th January, 1962, there was a very vigorous debate, as I mentioned in the debate on the Iron and Steel Bill in July. The hon. Member for Nelson and Colne (Mr. Sydney Silverman) described this I.C.I.-Courtauld merger as
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"a damaging and evil thing for the nation."—[OFFICIAL REPORT, 30th January, 1962; Vol. 652 c. 903.]
In retrospect, I believe that the hon. Member may have been right, but at the time the Opposition were opposing what might have been a useful merger, a merger which might have been forced through had the Corporation then been in existence. With hindsight we might think differently today.
Subsequently, on 14th February, 1962, the right hon. Member for Battersea, North (Mr. Jay) said this:
"The issue before us today is …the new and accelerated rush towards monopoly by mergers and take-over bids over a very wide area of British industry. Mr. Clore's original take-over bids, or some of them, anyway, were originally defended as likely to stimulate sleepy managements to make better use of idle assets."
Then there are some scathing words particularly dealing with the Saxone-Lilley and Skinner issue, which was before us at the time. Later, the right hon. Gentleman was equally scathing, saying that it had been alleged
"that ever greater private monopolies are necessary to compete abroad."—[OFFICIAL REPORT, 14th February, 1962; Vol. 653, c. 1323–25.]
On 16th February, 1962, Mr. Wilfred Proudfoot, then the Member for Cleveland, initiated a further debate on mergers, which I well remember. The present Attorney-General, the right hon. and learned Member for West Ham. South (Sir Elwyn Jones) said:
"Some of the amalgamations, mergers, and in particular, forced mergers … are doing great harm to our economic and industrial life.'"—[OFFICIAL REPORT, 16th February, 1962: Vol. 653. c. 1692.]
This was said four years ago by the present Attorney-General, before he came to high office. The right hon. and learned Gentleman then condemned the Fairey-Westland-Bristol Aeroplane merger. Is not this what Plowden subsequently recommended on a much larger scale? In retrospect surely what was put forward then was a good thing. There has been a complete change of mind by the Socialist Party: it has turned head over heels.
The White Paper—Cmnd. 2889—refers to
"The need for more concentration and rationalisation to promote the greater efficiency and international competitiveness of British in-

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dustry, which was emphasised in the National Plan …"
I shall not refer further to the National Plan. Thank goodness the Corporation was not set up at the time of the Plan and had to operate in accordance with it. The White Paper continues:
"Nevertheless, the pace and scale of change do not yet match the needs of the national economy."
I have made these quotations to prove that the Socialists have changed their tune.
What has brought about this change of climate? Is it anything we have done in the House? It might be. In 1957, there was the Restrictive Trade Practices Act, which was equivalent to the anti-trust laws of America and which took us from protectionism, which was necessary in wartime and in the 1930s, into a competitive environment. Measures since taken, particularly the reports of the Registrar of Restrictive Practices, have injected competitiveness into our society. We have debated this point thoroughly in the House. Surely this is now desirable.
At the same time, since 1962 we have been deploying—at any rate, until 1964 or 1965—the arguments for British entry into Europe. Those arguments were not well listened to by Socialist Members when they were in opposition. Everyone now agrees that, if British industry is thought of in the context of the continental economy, large-scale production units with larger markets are ever necessary. I, for one, have reiterated this time and time again in the House.
A third important factor—and this was done by a Conservative Government in about 1962—was the creation of the N.E.D.C. and, subsequently, of the little E.D.C.s. This has meant that the professional managers about whom we have been talking, as well as boards of directors, have been able to discuss the capital needs of their industry and the virtues of rationalisation and concentration. I believe that this, over the course of time, has brought some interesting results.
I lately went through some of the reports of the little E.D.C.s. The mechanical engineering E.D.C., in its progress report 1964–66, states, in paragraph 19:
"The E.D.C. is considering the scope for rationalisation."
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In paragraph 3 of a letter dated 6th June, 1966, the electrical engineering E.D.C. stated:
"The E.D.C. has set up a committee to assess the benefits of large-scale production."
On another issue altogether we have the benefit of the Geddes Report which states, in paragraph 572, page 153:
"To concentrate the main strength of the industry into at least four big compact shipping groups."
We therefore have to take this Measure in the context of several factors.
First, hon. Members on this side, and the Conservative Party, have always acknowledged that mergers are desirable and, consistently over the years, have done nothing to discourage them.
Secondly, modern British professional management in particular has been aware of the advantages of rationalisation and concentration. There has been every indication that increasing competition and the pinch that goes with it, has brought about a desire for rationalisation by industry.
Finally, we have this complete change of front by the Socialist Party. This means that the two sides of the House of Commons and professional management are agreed that what we are talking about is a good thing. That being so, I wish to concentrate on the Bill.
I regard the Bill as a sledgehammer to crack a walnut, but it is the wrong sledgehammer for cracking the wrong walnut. The walnut is the size and structure of British industry. In July, there was a Second Reading debate about the size of the steel industry and we were influenced by the Benson Report. There were new technological factors. There was the L.D. method of melting steel. There was the fact that over 10 years it has been possible to melt steel not in 60-ton units, but in units of 250 to 300 tons. This has been discovered by a process of trial and error. Other factors have been imported higher-grade ore and the use of large ore carriers. Therefore, when we had the Benson Report before us, there was obviously, as we pointed out, a need for larger units in the steel industry.
I was rather perplexed at the time by some of the Benson conclusions. We have to differentiate, in the steel industry or any other, between size of company and size of plant. The Iron and Steel

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Federation's quarterly Steel Review has produced some fairly interesting information. In the United Kingdom, out of a total of 41 steel works there is one with a capacity of more than 3 to 4 million tons. In the E.C.S.C, there are 106 firms, but only two of that capacity, so Britain's record here compares favourably with that of the E.C.S.C. as a whole. Under the heading "Shares of National Capacity in Works of Various Sizes" in the range of 4–3 million tons the United Kingdom has 9·6 per cent. and the E.C.S.C. has 8 per cent.
That means that more of United Kingdom steel is made in larger units than is the case with the E.C.S.C. In the United Kingdom, 21 per cent. of our steel is made in plants of below half a million tons capacity but the percentage is 23·1 in the E.C.S.C. Dealing with size of company, we find that in the United Kingdom 44·3 per cent. of the steel is made in units of 3 to 4 tons as against 36·2 per cent. in the E.C.S.C. In other words, taking the steel industry in Europe as a whole—I do not include America or Japan because the figures for America and Japan indicate Europe and Britain are far behind in this respect—rationalisation in our steel industry has gone ahead very favourably compared with the rest of Europe.
If we take the recent census of production in 1962, there is no doubt that we have fewer small firms and more larger firms. When we take the figures in "Economic Trends of 1965", we find that the average acquisition by companies in the four-year period 1958 was £116 million a year. Subsequently, it has been about £300 million a year, and of firms with capital of over £25 million one in every three has taken on a new company every year.
Rationalisation and concentration has been going ahead, even in the machine tool industry. The Chesham Occasional Paper No. 4, which I have, dealing with international machine tool comparisons, points out:
"In West Germany, too, the number of firms (500) in 1964 was the same as in the U.S.A., but two thirds higher than Great Britain (300). The average labour force in the machine tool firms was lower in Germany (220) than in Great Britain (316)".
There is more general information which I intended to give to the House.
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It was published by the Stationery Office for the Board of Trade in 1965 and points out trends in Britain. I have figures for Sweden, Italy and France, and I am quite convinced that Britain has pressed well ahead with rationalising its industry, it has more larger units and fewer smaller units than any of the individual countries in Europe. I suggest that other hon. Members should look at this information before decrying our own performance. There has been considerable progress in the right direction. But further rationalisation is vital, and I accept this.
On the other hand, I was looking at the leader in The Guardian this morning, which stated:
"However, the potential merits of the IRC in dealing with inefficient pockets of industry have since come to be recognised by progressive business men, and the Government has been able to recruit a strong board of leading industrialists …"
I could take up that charge. The leader also refers to
"Ritual objections by the Opposition to this use of public funds …"
I shall touch on that, too.
But the leader also implies that the size of British companies in many key industries does not compare with that of their American and Continental rivals. I suggest that this respectable paper reviews the subject and either proves me wrong or its own inferences right—and let others do the same, because false representation of trends has been taking place. This denigration is unfortunate.
I turn now to the sledgehammer. I read in The Times of 30th March, 1966, an interview with Professor Petrilli, Chairman of I.R.I. of Italy. He believes that the British Government cannot
"… copy our example because of the different structure of the economy and the different kinds of problems to be faced."
The article goes on:
"Some difficulty might be encountered in expecting to exercise control and at the same time to raise new money on the market. In Britain, for instance, it would be difficult to find an investor prepared to buy shares in a company controlled by the State unless he knew there to be no interferences from the latter."
These are real problems that have been raised by Italians on the way we are now trying to tackle these problems.

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I support my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) in saying that businessmen have to look up and look out, and be aware of what is happening. I shall not go through "Signposts for the Sixties" and the views expressed there, though they have been dealt with in this debate and speeches made over the years have clearly indicated those views. We have had reference to the publication issued in June, clearly setting out the views of hon. Members opposite. It is impossible to get away from the fact that the Industrial Reorganisation Corporation could well be a wolf in sheep's clothing, and businessmen should be very careful not to be taken in too early, because this Measure is potentially dangerous in wrong hands.
I have read with interest the annual report of the Industrial and Commercial Finance Corporation, which has been referred to by my right hon. Friend. The Corporation has so far made advances of £78 million, with a further promise of £10 million outstanding. It has provided £135 million for British industry. It has made a profit in the last year and it has 1,235 customers. I went a stage further and enjoyed reading the debate which took place on 23 January, 1945, on the formation of this Corporation, which was set up by the Bank of England, the English clearing banks and the Scottish banks.
It occurs to me that this might be a formula that could well be repeated, if some organisation of this type is necessary to act as a catalyst, rather than a direct agency operated by the Minister. There were extensive arguments in the House about the purpose of this agency. However, over a period of time it has settled down extremely well and I know that it could be said that the I.R.C. will settle down as well. If that were the case, objections would be weak, but the wording in the Bill does not indicate that this will necessarily be the case.
The First Secretary made several insinuations against small firms. It is nonsense to say that big organisations are essential to bring about breakthroughs in technology. In a firm with which I was particularly associated I had a chance of making a technological development
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against a bigger organisation. In the larger organisation the technicians and scientists were very reluctant at the time to go ahead, probably for good reasons. The smaller organisation with which I was associated took the chance, and the chance came off. Business decisions involve risk taking, and the pure scientist in this instance was not prepared to take a technological risk.
I believe that the big organisation is not able to take some of the risks that the smaller person can take, particularly when that person has conviction. I wish that I could mention one particular firm by name. I was recently given an account about three technicians, one employed by a company with which I am associated who, shortly after the war, when working in the laboratories of a big company, found that they could not get their ideas through to their technical superiors, let alone communicate them to the board. These gentlemen happened to meet at a technical conference. They borrowed a few hundred pounds from a bank, set up in business and sold that business for well over £1 million a few years ago. Is this not the sort of thing that a small business can do, which proves that big business is not the only way of tackling a breakthrough?
I do not say that big businesses are not essential for a lot of break-throughs. I remember that in July, 1960, in a debate on capital investment in industry, I brought up the whole problem of scale with particular reference to the work in Russia on continuous casting. I also referred to precision casting, impact forging and extrusion which have completely altered the concept of industry. This sort of thing is going on, and I believe that planners at the centre are too insensitive to changes because communications are too difficult. Too large an organisation such as the I.R.C. could well make mistakes.
Only 10 days ago, in the Press, there was announced a break-through in steel melting which could well alter all the criteria in existence when we discussed the Second Reading of the Iron and Steel Bill last July. I refer to spray melting. This process was published in the Press and described on radio broadcasts. It consists of a small unit to make at very much reduced capital cost large tonnages

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of steel per hour by the simultaneous injection of molten iron, oxygen and powdered limestone. The economic consequences of this break-through are incalculable. The first prototype was not in a big steel firm, but in a small iron company in the north-west coast at Millom.
It is necessary to accept that there is no real value in a lot of separate units under a large organisation unless rationalisation is brought about by the management when a merger has taken place. In a large organisation when mistakes are made they can be large mistakes. In a large organisation there are problems of communication leading to difficulties in industrial relations. Some of the productivity teams that went to America in 1949 and 1950 stressed the need for small units so that men could identify the management and the people who were leading them.
I ask hon. Members to think about this. There is a pace at which change can be too rapid, when instability destroys security and inevitably causes fear and upheaval in industry. This is something which those connected with industry can see all the time. I suggest that this factor be carefully borne in mind. The right merger at the right time is, of course, of value, but many factors must be taken into consideration.
I think that this work could best be done by the firms used to this, and the merchant banks.
With the I.R.C., who exactly is to decide what the national interest is? Who is competent so to decide? The people in the I.R.C. may be the most genuine of individuals and the most expert in finance, but how do we know that their decision will be right? What criterion will they use? The members of the I.R.C. board are distinguished and busy people. Will they have time to give careful consideration to all the propositions which are put to them? Would it not be better for these decisions and responsibilities to be diffused?
I have spoken for longer than I intended, but I hope that I have proved that amalgamations and mergers are nothing new. They are going on apace; they are approved by hon. Members opposite instead of disapproved as they were a short time ago.
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How can they be brought about? If competitors feel the pinch of competition they must realise the virtues of coming together, and I believe that this is a good way of doing it. When people have to decide whether to come together, they have to bear in mind new management methods. There is a very good article in The Times on the value of operational research. When people come together they must know the facts and figures relating to the value of their own companies. This is the sort of expertise that can be provided by merchant banks, but essential when negotiations take place.
An appeal has been made to business men on a professional basis. My hon. Friend the Member for Macclesfield asked what would happen when Sir Frank Kearton and Mr. Grierson retired. What would happen if they should fall out with the First Secretary? How would this blunt instrument be used in the wrong hands? I would be happier if a time limit for loans and equity investment in any one concern were written into the Bill. What guarantee have we that the I.R.C. will not make so many blunders that it will have to come to the House for an increase on the £150 million?
This Bill is irrelevant, because change due to technological factors and new means of communication is going ahead as quickly as can be digested. If there is need for a catalyst to bring about mergers, I think that the I.R.C. is the wrong one. I regret that we have a Bill proposing the I.R.C. as such at the present time because it is a Bill wide open to abuse, and I shall oppose it in the Lobby tonight.
6.30 p.m.
Mr. A. H. Macdonald: The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) spent some time at the beginning of his speech in an attempt to suggest that we on this side have changed our minds. I thought that that was rather audacious, coming from a representative of a party whose sudden decision to abolish resale price maintenance stunned half the nation. Then the hon. Gentleman submitted a large number of statistics culled from the steel industry in order to suggest that we are not doing too badly as we are now. But, as

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he himself conceded, those statistics were selective, for they excluded Japan and the United States.
If one is sufficiently selective, one can make a record out of anything. I know a man in Leeds who opened a plastic sachet of shampoo with a pin instead of scissors, as instructed. Now he is the only man in Britain with a left eyeball guaranteed free from dandruff. That is the kind of selectivity which produces a meaningless record.
The hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) spent some time describing the Bill as a blank cheque. That, too, was a little audacious coming from a representative of a party which, when in Government, spent large sums of public money without close scrutiny of what was going on. As I hope to show, the Bill provides some benefit and protection for the taxpayer in the use of public money in this way.
The hon. Member for Morecambe and Lonsdale was on rather stronger ground when he regretted that my right hon. Friend the Secretary of State did not go into any detail about the various directions in which this Bill might operate. Perhaps I will have an opportunity in a moment to mention one or two activities where I believe the I.R.C. would be beneficial.
The hon. Member for Macclesfield (Sir A. B. Harvey) started off with faint praise of the Bill, but ended with a crescendo of condemnation. He referred to the rights of the shareholders. This was a just remark and I was sorry that the right hon. Member for Altrincham and Sale (Mr. Barber) was not in the House at the time, because his own comments took the line that the rights of shareholders should diminish and, indeed, disappear when the Government or a Government-sponsored body are the shareholders.
There is an extraordinary dichotomy of thinking among hon. Members opposite when they consider the investment of public money in the way proposed in the Bill. I suppose that when hon. Members opposite, in their private capacities as individuals, have funds available which they wish to dispose in industry or commerce, they invest them accordingly. I am sure that they do not give it away. How then, comes this strange doctrine
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that, when public funds are involved, it is abhorrent and wrong to invest them and that, instead, the Government should give the money away in the form of grants? That seems to be a strange view. What is so improper about the investment of public money so that the public, whose money it is, receive some sort of dividend? I welcome the introduction of this principle. The arguments in favour of it are quite contrary to the principle of giving grants.
Again, the right hon. Member for Altrincham and Sale seemed to see something horrible about the suggestion that money invested in this way might give the I.R.C. control over the company in which it had invested. This is also a bizarre doctrine. Are we to suppose that equity capital shall suddenly lose its equity and become non-voting if it is acquired by the I.R.C? Why should we?
The right hon. Gentleman also referred to the suggestion that this would be some form of subsidy to selected firms. It must surely be well known that, in private industry, subvention payments are going on all the time. Furthermore, if a large group of companies buys a new subsidiary and invests additional funds in it in order to develop it, is that bad? Is it unjust to competitors of that subsidiary which have not been taken over? I do not follow the logic in the right hon. Gentleman's argument.
Indeed, the right hon. Gentleman advanced no real argument against the Bill. He read out the powers to be granted by Clause 2 and seemed to think that a mere recital of these powers was sufficient condemnation. It may seem so to him but the country outside will require some rather more cogent arguments.
It was a great pleasure to me to hear my right hon. Friend the Secretary of State refer to the fact that market forces are not always sufficient to bring about the rationalisation and improvements that we require. I will give some illustrations. Clause 2(6) says:
"… references to an industry include references to any description of commerce or financial activity…"
I want to develop that theme a little on lines that have not so far been followed in the debate. It is not only industry with which the I.R.C. should be concerned. There are grounds for thinking

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that there is scope for rationalisation in financial activity as well.
I have often thought, for example, about the "Big Five" banks. What is so sacrosanct about the number five? I know that the tremendous amount of clearing that takes place every day is done with great efficiency, but I feel that there may be some scope for rationalisation because the banks are not competing with one another in any real sense. They are simply following one another about.
When one bank opens in a new locality, it is not unusual to find the others opening up in the same place as well. I wonder whether there might not be some scope for economies in manpower. I am supported in this view in that, nowadays, the banks find it necessary to advertise for staff. That never used to be so, but now it appears that there are difficulties in obtaining staff.
There are other examples showing that the banks are not really competing with one another. When one bank considered going into the credit card business, all the others began to nose around there as well. When one bank invested in a finance company, all the others followed suit. It seems to me that they are not competing with one another and there must be grounds for rationalisation.
Rationalisation among finance companies is also possible. Here I should declare my experience. Before my election, I worked for a finance company. As I well know, the finance companies, in competing with one another, are obliged in many cases to pay a commission which can amount to as much as 20 per cent. This contributes nothing to the success or failure of a particular transaction. I am not thinking only of small transactions like those involving television sets, but of quite large transactions on hire purchase or credit sale, or in the form of deferred term agreements.
If there were rationalisation among finance companies, it would no longer be necessary for the companies to pay out commissions of 20 per cent. and in that event charges could be cut to the benefit of the consumer all round. There was at one time an agreement between the finance companies to restrict the amount of commission paid in this way but about
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a year ago this was cut down, mistakenly in my view, by the Restrictive Practices Court and at that time the Financial Times, no less, commented that, in the hire-purchase business, competition has the effect of keeping prices up. Here again, therefore, there may be some room for rationalisation.
I want to refer, also, to the concept of rental business. I would like to see the I.R.C. looking into this and considering whether any measures could be taken to assist those companies engaged in renting out plant and machinery. We should encourage companies which are engaged in this business. The use of rental encourages the more efficient use of plant and machinery and it encourages the use of more specialised plant and machinery, but by its very nature the rental business is capital hungry.
If a company which wishes to embark on the business of acquiring capital assets which it is to rent out finds itself needing more and more capital, it is not always easy for it to obtain that capital, because, by a quirk in our methods of accounting, which I confess I do not fully understand, although no doubt other hon. Members could explain it to me—although not now, I hope—it appears that in the early months of a rental transaction there may be a paper loss and that as a company expands, the more the loss appears to be. Therefore, it must be a discouragement to outside investors and I would like the I.R.C. to take the longer-term view, as has been suggested, and to invest funds in companies engaged in this sort of business.
I would also like the company to be prepared to consider some element of risk. Paragraph 7 of the White Paper says:
"The Corporation …will not support ventures which have no prospect of achieving eventual viability."
I understand that the Corporation is to operate on a commercial basis, that is to say, it is to be expected to show a profit. Nevertheless, I hope that it will not be too strict in its selection of enterprises. The best failure rate is not nil. If the failure rate is nil, that might be a sign that the Corporation has been too cautious. I would like to see some moderate element of risk and I hope that the I.R.C. will not be subjected to too much criticism and too much obloquy if one or two of its enterprises are not entirely successful.

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I wonder whether the Corporation might care to investigate what could be called the comparability of companies in respect of their utilisation of capital. This is a subject on which a good deal of work is done by stockbrokers and accountants, but by its very nature this comparability of efficiency is not made widely available to the general public or representatives of the community, but, naturally, only to the clients of the stockbroker or accountant concerned. There must be much to be learned by comparing enterprises in the same field to see how their utilisation of capital and their efficiency compare one with another. I would like that to be done by some public enterprise so that the results could be more widely applied and not given merely to the clients of the stockbrokers or accountants concerned, as is now the case.
On all these grounds, the Bill is a welcome step forward as embodying the principle that when public money is invested, it should be possible for the public to receive some return by way of dividends, comparable to the way in which private investors may expect returns on their money. This seems to be a reasonable and sound principle and I support the Bill.
6.44 p.m.
Mr. Martin Maddan: The speech of the hon. Member for Chislehurst (Mr. Macdonald) has underlined the fundamental difference of approach to economic matters generally and to the Bill between the two sides of the House. What he was pleading for was not competition. He did not believe that in the long run it was the best guarantee of and spur to efficiency. He thought that rationalisation by some clever gentlemen, no doubt decided centrally, provided a better guarantee of efficiency than did the market forces of competition.
He displayed a slight ignorance about all this when he alluded to what he described as the then Government's "sudden decision to abolish r.p.m." It was not at all sudden. In the Restrictive Trade Practices Act, 1957, the decision was taken by a Tory Government and a Tory House to end collective resale price maintenance and a few years later it was decided to end individual resale price maintenance. What was sudden about that I do not know.
Mr. Harold Lever: The hon. Gentleman misses the point. It was not the suddenness which was relevant to the debate but the fact that the Tories had interfered with market forces.
Mr. Maddan: The hon. Member for Chislehurst was referring to an assertion by one of my hon. Friends, the Member for Sheffield, Hallam (Mr. J. H. Osborn), that the Labour Party had changed its position, and the hon. Gentleman was trying to show that we, too, had changed our position. We did not do so. There was a perfectly logical and sensible development.
The hon. Member said that he could not see any difference between one company taking over another and making subvention payments to it and public money being poured into a company which was competing with other companies. The one is a very different kettle of fish from the other. When the State pours money into a company the hon. Gentleman has no opportunity and I have no opportunity and no company has any opportunity to contract out of the financial obligation to sustain that subvention; but when a company takes over another, the shareholders can always get out if they do not like it. When the State does it, we are all involved. What is even more objectionable is that we are often involved in paying out money from our own pockets directly to subsidise our competitors. There is no parallel at all with private take-overs, and that part of the hon. Gentleman's speech was rather muddled.
I return to the subject of market forces and the right hon Gentleman's illustration about resale price maintenance. It seemed to imply that the abolition of resale price maintenance was interference with market forces. That is rather like saying that the referee in football who blows his whistle because someone is offside is interfering with the game of Association football. [Laughter.] That is an exact parallel and I will develop it. We recognise that there must be rules in football and we appoint a referee to enforce them. In the competitive economy, in which we on this side of the House believe, we recognise that there must be rules and we appoint people like the Registrar of Restrictive Practices and the Restrictive Practices Tribunal to enforce those rules.

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What the abolition of r.p.m. did was to establish or strengthen the position of the referee, but what this Bill would do would be to put another player on the field. That is different altogether and I see no justification at all for the contention that the abolition of r.p.m. was an interference with market forces and somehow parallel with this Bill.
The Bill also contains an undoubted drift towards compulsion, as my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) said. The hon. Member for Chislehurst drew attention to the wide range over which the Bill could operate, not only in industry in narrow terms. Will the Minister of Technology, who I understand will reply to the debate, tell us whether the definition in Clause 2 includes agriculture? Is that "commercial or financial activity"?
In Russia and other Communist States [Interruption.]—I call them Communist States—it was felt that it would improve the efficiency and structure of agriculture—almost the sort of words used in the White Paper about industry—if the farms were collectivised. It has not really been a very successful experiment, because there was not a willing co-operation and conviction amongst those who had to operate it. I am worried that, equally, the Corporation to be set up in the way proposed in the Bill will not have a story of great success, because it will not necessarily obtain the conviction and co-operation of those who are concerned.
When one is looking for the best possible reason for the Bill, its purpose might be described as being to make the economy grow fastest in the reasonably short term, and it can be argued that market forces are sometimes a long time in making themselves felt. As Lord Keynes said, "In the long run we are all dead". That is a perfectly legitimate argument and it is perfectly legitimate to go on to say that the Government can take the opportunity, and perhaps have a duty, to stimulate the activity of market forces. But they should not contradict them; they should not run counter to them, and there is nothing in the Bill to prevent the I.R.C. being used for social and prestige purposes to shore up a declining industry rather than for financial, economic purposes which are the really important things.
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The Bill would be much better and the I.R.C.'s work would have been much better if the £150 million had been eliminated. It may be asked, "If you do that what could the Corporation do?" But my hon. Friend the Member for Hallam referred to the Italian Industrial Reconstruction Institute which raises practically all its money on the market. The Corporation can raise money on the market but this would have the backing of a Government guarantee, and if the market is not prepared to advance the money for the project concerned and the market's assessment of that project's chances of success is unfavourable, there will be the danger of money being committed for various social or prestige reasons to projects which are too risky or uneconomic.
I do not like the part of Clause 2 about the Secretary of State requesting the Corporation to do various things. It seems to me that that will lead to an interference with market forces. The Front Bench opposite cannot have it two ways. They cannot at the same time ask us to praise them, which we can, for the calibre of the people they have got to serve on the Corporation, and then write into the Bill that they would not entirely trust the judgment of those people as to the correct thing to do. The Secretary of State may request them to establish or develop an enterprise and to do other things, and later in the Clause it is stated that he may issue general directions that they must do such things. If we are to be consoled with the calibre of the membership of the Corporation let us not have these powers of direction and interference by the Secretary of State.
A point that has not been mentioned today concerns a way in which something like the I.R.C, but without the powers of interference and without the backing of public money, could be useful. One of the things that is thinnest on the ground in our economy and industry today is skilled and energetic managerial talent. It is the same in any country and in any sphere of activity—the professions, arts, engineering and so on. Really top people are thin on the ground. It could be that mergers, skilfully conceived, would succeed in creating conditions in which that talent could operate in a larger sphere. That would be useful, but if the proposition is attractive the near-compulsive powers and the £150 million should not be necessary to effect it.

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If I were humbly considering what I should be thinking were I one of the very distinguished members of the board of the Corporation, I should be saying to myself Timeo Danaos et dona ferentes. I should say to myself, "Let us get by with as little of that £150 million as possible, or indeed none." I should say that because the more the £150 million is used the less effective and the less trusted will I.R.C. be.
It is regrettable that the £150 million has been written into the Bill. I have no doubt that we shall see what we can do about that in Committee. I ask the Government to consider between now and the Committee stage whether the measure of agreement which there has been on both sides of the House on certain objectives could not better be capitalised upon, and whether confidence in industry and financial circles could not be better stimulated, by redrawing the powers, constitution, and financial arrangements for the Corporation as proposed in the first draft of the Bill. I do not think that anybody denies that there are cases where a body which is specifically charged with the duty could see opportunities which might be very attractive if they were pointed out and helped along. Most of us would agree about that. What we are worried about, and what industry and finance will increasingly be worried about, and likewise the people of this country, are the very large financial backing and the near-compulsory powers that go with it that are written into the Bill.
6.58 p.m.
Mr. Harold Lever: I dare say that what the directors will, in fact, say is that they fear the Conservative Party even when they bring irrelevant classical quotations.
We have had an odd debate, with contributions from the other side of the House that have been moderate, well informed and extremely effective in the sense that they would have commanded the ready assent of the House had they been addressed to it 60 or 70 years ago. They brought a strange flavour of out-of-date economic Victorianism to our deliberations. It is not necessary in 1966 to scratch around to find an argument for the state's intervention in the interplay of market forces.
The first thing that springs to mind is that it must have come to the notice of
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the party opposite that the biggest single market force in any modern industrial economy is the State, and when the State intervenes it does so because, in accordance with every modern concept, irrespective of whether the Conservative Party or the Labour Party is in power, the State has financial and economic responsibilities different from those which were the underlying assumptions of the out-of-date nostalgic speeches made by hon. Members opposite today.
I will not join the hon. Member for Hove (Mr. Maddan) in ferreting out arguments and analogies with resale price maintenance, because other arguments and analogies lie ready to hand. Did not the Conservative Party interfere with market forces when it financed the Colville steel deal? Did it leave it to private enterprise to find £30 million? Not at all. It came to the conclusion that that money could not and would not be found by private enterprise, but that from the point of view of the steel industry it should be found and the State had to find it.
The State constantly intervenes in the sense of modifying market forces in the most direct way, as for example when the Exchange Equalisation Fund operates to buy or sell forward sterling or to deal in foreign currencies. These sort of arguments ought not to occupy the more adult Members of this House in this part of the century. The case of the Opposition would be a good one but for the fact that it is nearly a century out of date.
Hon. Members opposite agree with the purposes set out in the Bill but object to our having a State merchant bank to assist in financing them. We know that they are men of good will and subscribe to these purposes. If they agree to others doing this, why should not the Government, too? They say, why bring in the Government when the merchant banks are doing this job quite well? The first thing to be advanced in support of this moderate and constructive Bill is that it in no way impedes this world of the merchant banks. It does not stand in their way at all. My right hon. Friend the First Secretary of State and Secretary of State for Economic Affairs went out of his way to pay tribute to the good work of these institutions in relation to mergers, rationalisation and the like.

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It is asked: why not leave it there and hon. Members opposite might say why bring in the Government? There are a number of good reasons why and I shall concentrate on one or two. First, in organising mergers a Government-sponsored institution may have moral backing which a merchant bank does not possess. A merchant bank may be acting on one side of the argument, but there is a real possibility that mergers which could be achieved by a Government sponsored organisation of this kind would escape the capacity of many merchant banks partly because they lack the moral authority and impartiality of the kind of institution we are bringing into being. Also, an institution of this kind can take a longer term view of matters than would be possible for a private bank to take.
Mr. Hall-Davis: The hon. Member is saying that merchant banks have not the power to persuade an unwilling party to go into a merger, but it would be prepared to bow the knee to a Government body.
Mr. Lever: Certainly not. I will deal with the bowing of the knee and all the hyperbolic rhetoric to which we have been treated in this debate. Whereas a reluctant or doubtful party to a proposed merger might quibble if one of the merchant banks retained by the other company were advising in favour, it might be more impressed by argument and persuasion without threats, blows, press ganging or knee bowing, by the moral authority of a Government-sponsored body which had no axe to grind except national efficiency.
The Conservative Government found, and every Government in every country has found, that there are always gaps in the flow of funds if the matter is left entirely to the operation of the market. I do not want to weary the House by going over the history of what has happened in this respect in this country. These gaps in finance were found, not by Socialists or Left-wingers, but by Conservatives. We had, for example, the experience of the Macmillan Committee, which showed how we could get short-term funds readily and long-term funds readily, but not medium-term funds too easily—the so-called Macmillan gap. I think that the difficulty is probably greater today.
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Here we have an institution which although it will operate commercially and wants to have a return on its capital need not compete with quite the same appetite for ultimate profit as a privately-owned commercial bank legitimately pursuing its objectives has to do. There has been much talk of buying ordinary shares but very often the difficulty which a firm finds today is that of lack of capital at fixed interest for a 10- to 15-year period, but this institution will have the possibility of providing capital where private enterprise and market forces have left these gaps.
Mr. David Price: We are interested in the argument of the hon. Member, but surely this is the rôle of I.C.F.C.?
Mr. Lever: The hon. Member says that that is the rôle of I.C.F.C.
Mr. Price: That is a public body.
Mr. Lever: It is a public body and it performs part of this rôle and no doubt performs it well but what is the objection to having another body specifically assigned to the rôle of fostering mergers and rationalisation to add to the funds available for this very desirable purpose.
The hon. Member for Eastleigh (Mr. David Price) said that the businessman should beware of State shareholding in business, but through the Bank of England and these various bodies the State very often does have shareholding in private business without anyone having sleepless nights about it. Perhaps the hon. Member is unaware that the Bank of England is now publicly owned. The Bank of England seems sometimes unaware of this, but there is no reason why the hon. Member should be in the same darkness.
Then there is the complaint that excessive powers have been given in this Bill. The right hon. Member for Altrincham and Sale (Mr. Barber) clearly thought that. He had his eye on the Cheltenham spinster's vote or the nervous maiden lady vote when he sought to excite excessive fear about the powers of this Corporation. I should be the more intimidated were they not less than the powers of almost every finance company and the powers provided to almost every off-the-peg limited company and less than those possessed by the meanest merchant bank in the country.

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There is no reason why anyone should deem them to be excessive or tremble at the thought that the Government are entrusting them to this entirely refutable body. The suggestion is that there is going to be compulsion somewhere so why not leave it to private enterprise? If there is to be compulsion and that is what the Government are after, I should be grateful if any hon. Members opposite would quote a single syllable in the Bill or the White Paper which confers the slightest powers of compulsion on the directors of the Corporation or on the Minister himself in the operation of these powers. There is not a word of that in the approach of the Minister, in the approach made in the White Paper or the powers conferred by the Bill.
The fact is that contrary to the rhetorical excesses to which we have been treated there is no compulsion involved in this, nor could there be. Anyone who does not want to be merged, rationalised, rendered efficient, or subvented, can tell the Corporation to go to the devil and no one is entitled to inflict the slightest loss or harm on him if he does so. So much for compulsion. I see that the hon. Member for Isle of Ely (Sir H. Legge-Bourke) seems to be pregnant with an intervention he is about to make.
Sir H. Legge-Bourke: As the hon. Member has challenged hon. Members on this side of the House to produce a Clause positively regarded as giving the Corporation compulsory powers, I ask him to look very carefully at Clause 2(2), which says:
"The Corporation shall have the power to do anything whether in the United Kingdom or elsewhere which is calculated to facilitate the discharge of its functions under the foregoing subsection."
Is it not conceivable that the Corporation might consider that powers of compulsion are essential to enable it to do this?
Mr. Lever: I am not attempting to adopt a patronising attitude towards a very valuable Member of the House, but if he had taken legal advice upon this he possibly would not have made that intervention. The general wording of this power is not misleading. It gives no kind of compulsory power to anyone in any circumstances. If the hon. Gentleman were to read in its broad, poetic sense, the Corporation's power to do, within the United Kingdom, or anywhere else, that
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which is calculated to facilitate the discharge of their functions, he might think that it included the power to hang anyone who stood in the way.
I can assure the hon. Gentleman, and he can take such legal advice as is available to him, that there is no question of compulsory powers being derived from those words. It merely widens the area of non-compulsory powers that the Corporation has. It gives it no power of compulsion over anyone at all; it merely confers a power in the use of their funds which would otherwise perhaps be circumscribed without those words.
It is asked, "What would have happened if there had been something like this in existence when I.C.I. tried to take over Courtauld?". It is said that some national disaster might have happened. The answer is that if we had had this Corporation when the I.C.I. bid was made for Courtauld and if, as was the case, Courtauld's shareholders decided that they did not want to be taken over by I.C.I., the identical situation would prevail if this Bill had been enacted as did prevail. No power additional to those already existing would exist and the shareholders of Courtauld would be perfectly free to refuse the bid from I.C.I., the Government, or anyone else.
Some of my hon. Friends seemed a little worried that there is no sign of the Government's intention to make a loss. I welcome the fact that the Government intends that the Corporation should be run on commercial lines. There is sometimes a case for subsidy in a particular industry and in particular circumstances, but a general grant of power to subsidise should not be conferred in a Bill of this kind. Members opposite have alleged that this Bill gives a power to subsidise businesses.
It gives no such power. If hon. Gentlemen say that whenever one sets up a company of this kind it is possible that directors would illegally and improperly subsidise, by misuse of funds, then that would apply equally to a private company. I might be the director of a vast private company and decide, most improperly, and contrary to the interests of my shareholders, to subsidise another company. That would be quite wrong and it would be quite wrong for the I.R.C. to subsidise any company.

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One of my hon. Friends was worried about the failure rates. He thought that it would be too low. I believe that I can put his mind at rest and say that on the basis of precedent there is reasonable ground for thinking that that at any rate will not be one of the Corporation's worries. On the other hand, I would welcome the Corporation taking a certain degree of risk, based upon commercial calculation. In proper circumstances and with proper arrangements made there might be a case for State subsidies in certain industries, but this is not the Bill that should provide them, and, quite rightly, the Government intend that the Corporation should work upon sound commercial lines.
An hon. Member expressed the fear that the Corporation would be turned into a State holding company. If the directors, wrongly and foolishly, turned themselves into a holding company, contrary to the intentions expressed in the White Paper and the Bill, they would very soon be out of business, because they have only £150 million and they will be far more important and effective, even if they have desires to be a hording company, if they make their funds rotate in the manner indicated by the Minister.
At all events, the Minister is to see that the funds of the Corporation rotate, because that is the whole purpose of the operation. Fears of a State holding company are misguided, because if the Corporation turned itself into a holding company it would quickly sterilise itself and put itself out of business. Another hon. Member said what a thing it was that the Government, having created a shortage of funds, should now come forward as the provider of funds. It seems a singularly illogical argument.
I do not want to go into a lengthy economic exposition, but when a Government create a shortage of funds in a deflationary period, one thing which they have to ensure when they start to provide funds is the selective application of these funds. It is a proper, natural and desirable process that when a Government have created a shortage of funds in this way, when they are allowing the freeflow of funds, they should not allow an indiscriminate flow which would get us back to square one and the same difficulties
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and unbalance which we have had in the past. Far from being open to rebuke on this ground, the Government might be chided that they have not done enough in preparing for the selective reflation of the economy and the more accurate detection of the funds that have been made available by restrictions placed, with some sadness, on other areas of the economy.
It has been suggested that there is something the matter with having "dollar a year men"—as the Americans call them—on the board of directors. Hon. Gentlemen opposite should not make heavy weather of this and my trade-union-minded colleagues should not feel apprehensive. The truth is that both the gentlemen concerned prefer to make this gesture of public enthusiasm rather than allow the automatic collection of something like 18s. 3d. in the £ on what would otherwise be their salaries. It is perfectly in order for them to be generous in this way, and no one need regret it or feel that there is any menace because of this.
It has been done in America more often than here. Hon. Gentlemen opposite cannot have it both ways. They cannot praise all the time, quite rightly, the assurance, energy and initiative of American industry, and then complain when two very distinguished men of business do what is very common in the United States when they are asked to serve the Government, and volunteer to do so for a nominal salary. It is perfectly right and need not cause apprehension. The House would be much better advised to welcome the fact that we are able to attract the services of men such as this, acting without any desire to enrich themselves personally.
The point has been made by the right hon. Gentleman the Member for Altrincham and Sale (Mr. Barber), in his concluding and most exaggerated statement, that the Bill is evidence that the Government dislike and do not believe in private enterprise. If this is the evidence it is very strange evidence of dislike, namely, that the Government are to provide private enterprise with £150 million worth of funds in order to render it more efficient and ex hypothesi in a mixed economy to be more profitable, then I must confess that I would welcome a few enemies similarly armed financially

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and with similar purposes in my own private affairs.
This kind of nonsense makes it clear that hon. Gentlemen opposite are engaged rather in exposing their reflexes than their arguments and are more concerned to amortise their oratorical investments than to make a serious contribution to the matter before the House today.
I welcome the Bill. It is a moderate and reasonable Bill and I believe that the Corporation will play a constructive part in the purposes that we all have in mind. I believe that hon. Members opposite will regret the folly of their speeches today and will adopt a more constructive attitude towards the Corporation when it is functioning.
7.20 p.m.
Sir Harry Legge-Bourke: If all hon. Members in this House were as unemphatic in their political "isms" as the hon. Member for Manchester, Cheetham (Mr. Harold Lever), we should all get along a great deal better. There is no hon. Gentleman opposite who makes his Socialism less distinct when he speaks. If one could feel that the Government, in introducing this Bill, were equally unemphatic in their Socialism, perhaps those of us on this side of the House who have doubts about the Bill might take a different view altogether.
Whatever else the Bill may be, one thing which it definitely is not, and which all too few people have failed to recognise it is not, is that it is not democratic. What we are doing—I am not suggesting that this Government began the process, because it did not—to our body politic is to produce a new form of aristocracy. I was never a very great Greek scholar, but the meaning attributed to "aristocracy" in recent years is not the true meaning at all. "Aristocracy" simply means the rule of the best, and the tragedy of the old aristocracy is that it assumed that one could not be the best unless one inherited the qualities. This has led to a great deal of muddled thinking.
I suppose that all of us would like to see the Government run by the most highly qualified people. The more sophisticated the running of the country becomes, the more difficult it is to find people with the necessary qualifications. I am particularly glad that the Minister of Technology is to reply to the debate,
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although one would not have thought from the First Secretary's speech that his Department came into the matter at all. Only by reading the White Paper does one discover that there has to be very close cohesion between the Department of Economic Affairs and the Ministry of Technology. To think of the Bill without considering the technological aspect would be preposterous.
What we are doing is establishing yet another body—I suppose that the N.E.D.C. was the first big one—which is not answerable in Parliament but is being given very considerable powers in allocating expenditure in industry, much of which will remain in private hands. Those of us who fought the 1945 General Election will remember the Labour Party's famous pamphlet "Let us Face the Future" in which nationalisation was sold to the nation on the ground of syndicalism which, it was said, would give the workers participation in running their industries. However, it did not take Sir Stafford Cripps long to tell the nation, after the Labour Party came to power, that the more he looked round the more convinced he became that the average man not employed in management was unfit to have any say in management.
This is the great disillusionment which took place over nationalisation and which eventually led in 1951 to the return of a party which believed in private enterprise. Since then, the Conservative Party has realised that to some extent this country was trying to run itself rather in the same way as the unfortunate rector who can no longer afford, if he can find, domestic servants and who is living in a rectory too large for him and decides that it is necessary to re-gear the whole thing so that he can let some rooms and have some means of communication to let him know what is going on in the house. We have been rewiring the national rectory and trying to ensure that all Departments of State know better what is going on in general. We hope that out of the wash will come a system which will enable this country to get on its feet, increase its productivity, and so on.
Whatever may be happening, let us recognise straight away that it is not democracy as democracy has been understood. It is an attempt to find ways of ensuring that the commanding heights of

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industry are in the hands of those most qualified to be responsible for them. This is not democracy, and it becomes less and less democratic if these people are given powers outside the direct responsibility of Ministers.
The only way in which we shall be able to question what goes on in the Industrial Reorganisation Corporation will be to ask the Minister of Technology what he is trying to do to ensure that the right technology is applied and, through the First Secretary, finding out how the £150 million is getting on and what is being done with it. This is rather remote control, to put it mildly, when it comes to the democratic Parliamentary process. I am not saying that it is necessarily wrong. But let us be frank about it and not pretend any longer that this is democracy, because it is not. We are establishing a new form of industrial aristocracy, or economic aristocracy. There may be a very strong case for it, but let us examine what other experiments have been made in this field.
My hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn), who made many important points, touched in passing on the Italian conception of the Industrial Reorganisation Institution which was set up in Mussolini's day. But it has been made clear by Professor Petrilli, who is chairman of that body, that there is no application of that principle in the United Kingdom. I.R.I. came about, as far as I can see, because certain banks went into certain industries which had got into deep water to such an extent that the banks which had been lending them money got into deep water too and the Bank of Rome had to try to resuscitate the whole lot. As a result, a situation developed, which was meant to be temporary but which became permanent, in which that Institution is able to flout what the Italian Government wants done, even when that Government is in communication and negotiation with another Government and wishes to do something completely different.
Hon. Members will know that I am referring to the Alitalia order for aircraft. The British Government, through their Ambassador, tried to negotiate a deal for the purchase of British aircraft. The Italian Government apparently wanted
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this, but the I.R.I. said, "No. We shall do this on a strictly commercial basis as we think fit." So it ordered American aircraft. If we have an I.R.C. which is completely independent of Parliament, it may be recommending the same thing. What will happen then? Will the Minister of Technology, or perhaps some other Minister, intervene at once and say, "We want to buy British. Therefore, the Corporation must fall in with Government policy"?
As the Bill stands, does Clause 2(1,6) give the Minister power to do that? I do not know whether it is the Government's intention to use such power. Clause 2(1,b) provides that the Corporation may
"if requested so to do by the Secretary of State, establish or develop, or promote or assist the establishment or development of, any industrial enterprise".
I take it that that means that except in the creation of new undertakings the Secretary of State has no power to order the Corporation to do anything. Otherwise, the Corporation is free lance.
The Minister of Technology (Mr. Anthony Wedgwood Benn): If the hon. Gentleman looks at Clause 2(4) he will see that the power of general direction resides in the Secretary of State.
Sir H. Legge-Bourke: That is very interesting. If that is so, I wonder to what extent these eminent gentlemen who have accepted appointment to this Corporation were fully apprised of this when they agreed to serve.
Mr. Harold Lever: One of them was sitting in the Public Gallery.
Sir H. Legge-Bourke: I am not attempting to claim Parliamentary privilege in what I am about to say. I am sure that during their lives these distinguished gentlemen have rendered very great service to the various undertakings with which they have been associated. But, in accepting their appointments, either their political naïvety passes comprehension or they are deliberately encouraging to remain in office a Government dedicated to destroying the private enterprise which has got these men to the positions which they have reached. They cannot have it both ways.
Reference has been made today to "Signposts for the Sixties". This is a document which I regard as the Prime

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Minister's "Mein Kampf". I gather that he wrote most of it. It is all very fine for the hon. Member for Cheetham to say that the arguments which we have been attempting to adduce on this side of the House might have been relevant 70 years ago, but I hope that he will accept that "Signposts for the Sixties" should be regarded as a relevant document in deciding what the Government wish to do concerning nationalisation and public ownership in industry.
If one reads pages 16, 17 and 18 of that document—I will not quote them; hon. Members can obtain copies of the document—one sees that the present Government believe in the idea of a gradual increase, by different methods, of State control of one sort or another. State control is a complete antithesis of private enterprise. Public ownership of one form or another is the antithesis of private enterprise. If the noble people who are accepting these posts on the Corporation have not realised this, I hope to goodness that their industrial judgment is better than their political judgment.
It is all very fine to have contact with Government and I am sure that in the interests of their various undertakings it is important, whatever party is in power, that they should have as good relations as possible with the Government of the day. However, British industry and top industrialists must, sooner or later, make up their minds which side they are on. Are they in favour of private enterprise or further State control, because in falling for these jobs they are openly encouraging the continuation in office of a Government who are dedicated to destroying private enterprise and to having complete State control in the end?
Mr. Robert Maxwell: Since he claims that Sir Stafford Cripps used words to the effect that workers knew nothing about management, would the hon. Gentleman give, chapter and verse, where Sir Stafford Cripps is supposed to have said that, since I have no recollection of it and, as he is so much afraid that the establishment of the I.R.C. will be harmful to private enterprise, will he say how he believes private enterprise such as the shipbuilding and aircraft industries are to be helped if not through a Government institution such as this?
Sir H. Legge-Bourke: To answer the hon. Gentleman's first question, I believe
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that Sir Stafford Cripps said it in Bristol in 1946, but I will look it up and let the hon. Gentleman know. To answer his second question, may I ask the hon. Gentleman if the proposition now before us means that, for example, Fairfields will come under the auspices of the Corporation?
Mr. Maxwell Mr. Maxwell indicated assent.
Sir H. Legge-Bourke: Is that the view of the Minister?
Mr. Benn: No.
Sir H. Legge-Bourke: Who is right?
Mr. Benn: Shipbuilding is dealt with by the Shipbuilding Industry Board, which will operate with similar objectives. It is somewhat curious that no reference should have been made to the Geddes Report, remembering that similar work will be going on.
Sir H. Legge-Bourke: I am doing my best to fill in a few gaps and at least we now have one point clarified. I understood the hon. Member for Buckingham (Mr. Maxwell) to be arguing that the Corporation would cover shipbuilding as well. There appears to be a dispute developing between the hon. Gentleman and his right hon. Friend.
I mentioned the creation of a new aristocracy. We are seeing developing in Moorgate a new éminence grise which is not doing too badly. After all, Mr. Kenneth Keith and Mr. Palmar from Hill's are in N.E.D.C. and there are others. I have no doubt that they have enormous roles to play in the future of the State, but I cannot help remembering that the Bill is really the child of the present Foreign Secretary, who graced us for a few happy moments with his presence but who disappeared again a little later. I wish that he were here now because I have with me that wonderful correspondence which passed between him and the Hon. Maxwell Stamp as published under the auspices of Philip Hill, Higgins and Erlangers in the autumn of 1963. It is correspondence about what was going to be done when there was the next Labour Government. Mr. Maxwell Stamp had assumed that there would be a Labour Government and, in that, his political judgment was accurate—but, as for the rest, I suggest that the present Foreign Secretary ran rings around him politically.

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I greatly enjoyed reading the correspondence, although it is clear from it that the present Foreign Secretary regards the duty of a Labour Government as one automatically involving a considerable element of socialisation of industry in one form or another. I ask the distinguished gentlemen who are prepared to serve on this new Corporation to realise that it is no good their behaving when they get there as though the Government of the day were trying to deal with this matter purely objectively on the basis of private enterprise, because that is not the case. If they had not realised this, I hope that they will think about it quickly and decide whether they should, in honour to themselves and their self-respect, remain with the new Corporation.
Mr. W. S. Hilton: The hon. and gallant Gentleman said earlier that he was filling in a few of the gaps. Does he not think that it would be more advantageous to the House if, in filling in those gaps, he did not indulge in attacks on people which are irrelevant to the Bill and which are unworthy of him and the House?
Sir H. Legge-Bourke: I was careful to say that I was not claiming Parliamentary privilege in these remarks. If these people care to have a go at me I will have no objection and will be available any day they like. Let us be frank about this and not pretend things which do not exist. I am certain that the Corporation might be perfectly admirable and harmless—that is, if the Government of the day were not themselves dedicated to nationalising more and more industry in one form or another. So long as the Government believe in this, the Corporation is yet another organ for them to use to pursue a policy of State take-over.
Many people say that the Prime Minister is a difficult man to trust. Some people doubt his sincerity. I have never for a moment doubted that he is dedicated to Socialism. I know that he is a dedicated Socialist—[HON. MEMBERS: "Hear, hear."]—because he would not otherwise have written "Signposts for the Sixties". However, where people are being deceived—whether or not deliberately by the Prime Minister is for them to judge—is in their failure to realise
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that the new method of bringing about Socialism, save for the Iron and Steel Bill, is not by nationalising legislation but by stealth. The I.R.C. is yet another organ enabling the State, should it so wish—and I do not believe that the choices have yet been made—to take over any of the industries that can be covered by the activities of the Corporation. That is why I say that this is a pernicious Bill.
The present Government came to power having persuaded the majority of the electorate to believe that the idea of old-fashioned nationalisation was out and that it was a party which believed in running a mixed economy.
Mr. Harold Lever: For the benefit of my muddled mind, would the hon. Gentleman clarify this problem? He said that "Signposts for the Sixties" was clear evidence, which the directors should have in mind, that the Government were dedicated to the total destruction of private enterprise. In the next breath he said that the Government got to power by falsely pretending that they wished to run a mixed economy and not to destroy private enterprise. How does he reconcile the two?
Sir H. Legge-Bourke: In exactly the same way that when Hitler published "Mein Kampf" all too few people read it and all too few people understood what it meant. [HON. MEMBERS: "Shame."] So with "Signposts for the Sixties": all too few people have read it, all too few yet realise what it means. It is only when we come to examine the legislative programme now before Parliament that we realise the full meaning of that document.
I say that unless this country wakes up pretty quickly, unless industry especially wakes up to what this Government are really at, we shall find the State having taken unto itself powers of which subsequent Governments will find it difficult to rid themselves, even if those Governments turn out to be in favour of private enterprise. Hon. Members opposite laugh. [An HON. MEMBER: "Yes, we are laughing."] I do not rule out the possibility of this country having a Kerensky Government. I do not ever forget that nearly every Communist State which exists in the world began as a Socialist one.

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As I say, although I would not suggest for a moment that the Minister of Technology, who has enough to do dealing with technology without bothering about these other things, is deliberately out to grab every industry under his wing that he can, I do say that there are some Socialists who would like to do this, and do it a great deal faster than some Members of the Government today would like to do it. It is a question of who wins in the end, the extreme Left or the moderates, the revolutionaries or those who would like to mark time, and those who find a mixed economy satisfactory.
I would like to be a little more certain that the Government as a whole collectively believe in private enterprise, but the documents which they write and the legislation which they produce point to the opposite. For these reasons I shall vote against this Bill, and I hope we defeat it.
7.42 p.m.
Mr. Bob Brown: I do not think that I have ever listened to a more unworthy contribution than the contribution I have just listened to from the hon. Member for the Isle of Ely (Sir H. Legge-Bourke), who said that industrialists will have to make up their minds which side they are on. Surely that is the most disgraceful type of statement that a Member could make. I should have thought that British industrialists are on the side of Great Britain. Or am I to infer from the hon. Member's speech that he is suggesting that British industrialists should support the British Government only if the Government have a Conservative majority? Because that, in my opinion, was the implication, and I think that to say that that is a scandalous implication is to put it extremely mildly.
Mr. Dan Jones: For 13 years the trade union movement co-operated handsomely with Tory Governments. I think that that point should be made.
Mr. Brown: I am grateful to my hon. Friend for making that point, because it is very important. It would be equally unworthy for any Member on this side of the House to suggest that with a Conservative Government in power the trade unions should not co-operate with the Government of the day. It would be equally unworthy.
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I find myself somewhat at a loss to follow the arguments which have been put forward by hon. Members opposite against the idea of State finance being utilised towards the rationalisation and the modernisation of British industry. The hon. Member for Hove (Mr. Maddan)—I think he has left the Chamber now—talked as though this suggestion almost bordered on the sacrilegious. Has he forgotten that a Conservative Government agreed to pour several millions of pounds of State finance into the building of a new liner, a new "Queen"? Equally, have hon. Members opposite forgotten that Tory Governments and previous Labour Governments poured millions of public money into the British aircraft industry without any consideration of a financial return to the taxpayer?
The hon. Member for the Isle of Ely——
Sir A. V. Harvey: The hon. Member refers to the aircraft industry. He will remember that its exports this year, in spite of the rundown, will be nearly £190 million.
Mr. Brown: Of course, and I would not disagree at all, and surely that is another argument in favour of the Bill we have tonight, that we want to improve the efficiency of our export drive.
Now if I may get back to the hon. Member for the Isle of Ely, he posed the suggestion that this Government are bent on the destruction of private enterprise. I refer to Command Paper No. 2889. This clearly sets out in paragraph 6 that the State will
"dispose of its investments when the profits of rationalisation have been assured".
If there is a case to complain about the Bill and about the White Paper I would have thought this to be precisely it. I do not agree that when State finance starts to produce results the State should lose interest. I should have thought that if State finance improves the efficiency of an industry, so that a non-profit-making industry becomes profitable, the State should continue its interest. We have for too long been interested in taking over the running of dead ducks.
The hon. Member for the Isle of Ely laid great strictures on the nationalised industries. I am not aware that he ran any campaign between 1951 and 1964 to

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get the then Tory Government to return to private hands the railways, the coal mines, the gas and electricity undertakings. There did not seem to be any keen desire on the part of the Tory Government to denationalise the type of industry which, because of the great service element, we could never hope to run at a profit. The steel industry, of course, and road haulage were a different issue, a different issue entirely. Where there was some "gravy" this had to go back to private hands, but where a liability existed let the State have control of it.
I am the Member for a constituency in a development district and I particularly support the Bill in so far as it gives the Government added opportunity to aid the economic development of the regions, and, naturally, I have in mind the Northern Region. Both sides of this House subscribe to the need for the work of the N.E.D.C. It is fair to say that a previous Tory Government initiated the N.E.D.C. Here again, I would have thought that the reference in the White Paper to supporting, through the Bill, the aims and objects of the little "Neddies" would have found support from the other side, and yet we have actually listened to speeches precisely in the opposite sense. Surely anyone who opposes the Bill on the basis that there is not a need for State intervention to assist private industry to modernise because private industry can manage very well on its own is living in Cloud-Cuckoo-Land.
I will not suggest at all that everything is wrong with private enterprise. There are many extremely efficient enterprises in private hands, and for many years ahead, certainly for the lifetime of most of us in this Chamber, they will remain in private hands. For the hon. Member to suggest that the Labour Party intends to nationalise everything, as though the Labour Party could nationalise everything if it wished to, is nonsense. We recognise that we shall have a mixed economy for as far ahead as any of us can see, but this does not necessarily mean that the State should not intervene if State intervention is necessary. We have many small private firms which are doing quite a good job in the export field, but, nevertheless,
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with the merger of two or three of these small private firms into a bigger enterprise we could improve our export drive.
This is the sort of thing that the Bill aims to do, and I fail to see why it should have the type of opposition that we have heard from hon. Members opposite this evening. Make no mistake about it, I am not one of those who believe in nationalisation for nationalisation's sake. However, I see nothing wrong in State intervention where it is needed, and it is obvious that it is needed very badly in many spheres of activity at the present time.
7.50 p.m.
Mr. Bernard Weatherill: The hon. Member for Newcastle-upon-Tyne, West (Mr. Bob Brown) made the interesting points that for far too long the State had been taking over the "dead" industries of the country and that it was quite right that the Government should now turn their attention to the more profitable ones. The point is whether the Government's intervention in the more profitable industries will make them still more profitable. What hon. Members opposite fail to remember is that the Government have an interest of something like 45 per cent. in every company in the country in terms of their tax returns. My submission is that the State intervention will not make private industry more profitable.
The real object of the Bill, which is the stimulating and assisting of industrial concentration, could hardly be more out of touch with the needs of the country today. In many ways, the Bill is symptomatic of one of the major delusions of Socialist thinking, which is that size equates to efficiency. More and more, one is driven to the conclusion that the party opposite is the party of big business and the enemy of the very personal enterprise without which we can never rise again to the height of an economic power. What a wonderful chance we are missing in persisting in following the path of centralisation and concentration which is the purpose of the Bill.
Every day we read or hear someone deploring the brain drain of the best of our people to America; yet the opportunity to reverse the flow by taking one of America's best ideas is being ignored.

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In the United States, industrial concentration has been tried and found wanting. It happened there not as a result of legislation such as we are attempting to introduce today but because of the cult of bigness for bigness' sake. The result was that the American Government had to introduce urgent measures to reverse the trend. They had to bring in antitrust laws and similar measures to break down the monopolies which had grown up inside the American economy. Best of all was their adoption of the Small Businesses Act and the Small Businesses Investment Act, which authorised the establishment of the Small Businesses Administration.
It would be a signal service to the nation if the First Secretary of State would take the Bill away and rewrite it so that the Industrial Reorganisation Corporation became, in effect, the British equivalent of the American Small Businesses Administration. If he were to do that, it would certainly have my support and that of the majority of hon. Members on this side of the House.
Mr. Eric Lubbock: Before the hon. Gentleman leaves that point about the difference between British and American industry, would he not agree that in some of the more technologically advanced industries in America, the size of American firms gives them a great advantage over us? I.B.M., for example, is larger than the whole British computer industry put together.
Mr. Weatherill: That may be a fact, but it is equally true that the American Government had to set up the Small Businesses Administration to force competition against the big monopolies which had grown up as a result of the cult of bigness. That is just what the Bill is attempting to do in this country. Instead of the monstrosity whose obvious real function is to take more and more industry into public ownership by stealth, as my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) put it, we should have today, in the words of the late President Kennedy, an organisation which would develop competitive effort by encouraging the proliferation of small businesses.
The object of the Bill is the very reverse of that. Hon. Members opposite would do well to reflect that the United States Government have been forced to use
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the taxpayers' money to bring back small businesses for the purpose of breaking up the monopolies and cartels which had grown up in the American economy as a result of the cult of bigness. Why on earth should we not learn from their experience? It is my intention, as soon as I can, to go to America and study the Small Businesses Administration in depth. I wish that the right hon. Gentleman who is piloting this Bill through the House had been there before me. But it is still not too late. Why does he not go now, or at least send one of his departmental colleagues? If he did, he could introduce amendments to the Bill which would have a beneficial effect on the economy of the country.
Apart from the nationalisation characteristics of the Bill, it is difficult to suppress a shudder when one reads Clause 2. It is a matter which has been mentioned by a number of hon. Members on both sides, and I feel it only right to repeat what has been said. The Corporation may
"(a) promote or assist the reorganisation or development of any industry or section of an industry; or
(b) if requested so to do by the Secretary of State, establish or develop, or promote or assist the establishment or development of, any industrial enterprise."
One is left with the impression that the First Secretary could wake up one morning and say to himself, in effect, "Today, I intend to ask the Industrial Reorganisation Corporation to develop and promote this or that industry". Even to state this case is to argue the alternative, and, quite clearly, the alternative is to encourage the individual citizen to risk his own money to develop his own ideas and, better still, to help him organise finance to develop those ideas.
I believe that it is not the Government's business to trade. When introducing the Bill, the First Secretary said that we could not leave the market forces to act on their own and that the Government's duty was to intervene and take action. The Government can intervene and take action as one of the major customers of the country. As a major consumer of almost everything, I believe that the Government should devote a substantial proportion of their purchases to the smaller firms of the country, thus providing trade and guaranteeing a firm basis from

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which they can sally forth to challenge for a share in world markets.
It is a myth that big firms are more efficient than smaller ones or that they work better. As my hon. Friend the Member for the Isle of Ely said, it is well known that the State is a bad tradesman and that, in practice, nationalisation has been a failure. I believe that the State should allow the trader to get on with the job which he understands. Our business men do not fear competition. What they fear is unfair competition, and the Bill involves an element of unfair competition.
It gives the State power to set up companies in competition with private firms, but the right of private firms to compete against the nationalised industries is still denied. I maintain that this is a bad Bill. I feel that it is a dangerous Bill. Above all, I think that it is an ill-conceived Bill, because it will use public money for the wrong purposes, namely, to create monopolies, rather than to promote competition, and for this reason my hon. Friends and I will vote against it.
8.0 p.m.
Dr. David Kerr: I have reflected before in this House about the value of turning the cold searchlight of pristine ignorance on to a topic, and I hope that the House will bear with me if I repeat the performance. I come quite naked into the debating Chamber, armed with no quotations from better-informed speakers than I, lacking any but the most superficial acquaintance with the City columns of The Times, or the Sunday Times, or even, and I say this with shame, of the Observer.
The House, then, will understand that I am not bogged down by the kind of uncritical commitment to a deeply held principle which seems to be the stimulus—dare I say the provocation?—of some of the chunterings which we have heard from the other side in the course of this debate.
Today's discussion has been an interesting restatement of the principles of faith, that small businesses are good, and big businesses are bad. It has been a disarming account of the evils of nationalisation, but when one looks at the page which hon. Gentlemen opposite
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have been trying to fill with their list of all the evils which follow this dangerous process of nationalisation, one finds that it is despairingly blank. Everything is written in invisible ink. Pursuing this metaphor about pristine ignorance, I cannot help feeling that it seems a view which is shared by, if I dare utter a word of critical comment, too many of my colleagues on this side of the House.
We on this side have long been aware of the need for a little Socialism in Britain. The hon. Member for the Isle of Ely (Sir H. Legge-Bourke) referred to it in a way which made me shed a tiny tear. He called it unemphatic Socialism when he referred to the speech of my hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever). I do not feel that today is a day calling for unemphatic Socialism, but one calling for clear-cut, emphatic, undeniable, un-regenerate and totally unashamed Socialism. I make no apology, certainly not to my colleagues, too many of them absent friends at the moment, for preaching again the kind of tenets which have led to this teeny weeny little Bill.
The prospect of the Opposition mounting screaming on their stools holding their skirts above the top of their stockings and screaming loudly about this tiny mouse is something for which there is a great deal to be said. I will be forgiven if I do not reflect for 15 seconds on this indecent operation, but, if I did, I would reflect on the shape of their legs, and not on the mouse, and of course this is a splendid political tactic. Nobody wants to notice what a tiny mouse of a Bill we have. Everybody wants to examine the Opposition's legs.
I cannot help feeling that we have a rather better answer than that. We are not hanging our heads in shame for a Measure which is beginning to look like Socialism. When we talk about a mixed economy, I do not go all the way with my colleagues. I do not think that it will be beyond the projected imagination of the lifetime of us all that we shall one day have a thorough-going Socialist economy in which the people of the country will have a large measure of say in the way the economy is run, and will derive the majority of benefit from the way in which the economy produces its wealth. I do not defend, and I do not stand here to defend, a system in which one per cent.

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of the population owns 50 per cent. of the wealth. I do not intend to promote a system in which that 50 per cent. expands to 75 or 80 or 90 per cent. of the wealth. But that is only by way of introduction.
The hon. Member for Croydon, North-East (Mr. Weatherill) made great play with the American Small Businesses Act. Of course he recognised that this is the equivalent of that Act. If the other side is now beginning to wake up to the fact that the Government mean business, I can only say that it is characteristic that hon. Gentlemen opposite should have to refer to a document which was published long before the present Prime Minister became the Leader of this party, and refer to it, moreover, in emotive terms as his "Mein Kampf". Some of us think that it might be kinder to talk about it as his Bible, but whatever emotive term is used, neither applies. He did not write it. I always understood that it was written by that great member of the Labour Party, Morgan Phillips, and it does no discredit to him that today we are implementing a tiny sector of what he hoped to see achieved by a Labour Government for which he worked for so long.
Let us go back to the Small Businesses Act. The hon. Member for Croydon, North-East would like us to forget that the growth of monopoly capitalism—and if these are hard and harsh Socialist terms which he does not like, let me put it another way and call it the growth of giant businesses—possessing enormous reserves of capital, and representing great investments, has been much more rapid in the United States than it has here. All the time that the hon. Gentleman was talking about the Small Businesses Act he was paying a tribute—I think perhaps unconsciously—to the fact that in America the growth of giant businesses has been so rapid, so dangerous, and so threatening to the American economy that that Act became necessary. What the hon. Gentleman did not tell the House was that the anti-trust laws in the United States are much more stringent and much more far-reaching than are as yet necessary in this country. If this small Measure does something to obstruct the development of that kind of monopoly, it will have an additional benefit.
Mr. Weatherill: That is not the point that I was making. I was saying that the Bill would create monopolies which
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the American Government had to introduce legislation to break up.
Dr. Kerr: To put it at its kindest, the hon. Gentleman's understanding of the Bill and mine differ. My reading of the Bill is precisely that Government intervention in industrial investment will never create a monpoly, least of all a Government monopoly. The whole essence of the modus operandi—I am sorry that classical allusions keep cropping up this afternoon; it is most improper for this debate—of this Corporation is that it will have a hit and run method of working. It will intervene, and the moment the business enterprise is on its feet it will withdraw.
It is a very rash thing to do in this Chamber, but I make a prophecy. I prophesy that the moment this Corporation begins work all the friends of hon. Gentlemen opposite will rush to get on the bandwagon once that Corporation has established a new and successful business. They will not drag their feet. There will be plenty of capital available for the new industries once the Government have assisted them to get on their feet.
Some of my hon. Friends deplore the fact that possibly the Government may be taking risks. Risks in the business world are always a relative matter, and it seems to me that the whole essence of this operation is that the Government are to enter a field where the risks are just sufficiently great for private investment not to feel that it ought to make money available.
Sometimes the need will be a social one. Sometimes the need will be a contributory one to the general aspect of industrial progress. Sometimes the need will be simply the need to develop a hitherto undeveloped process or discovery. The number of examples which we have had in recent years in which the National Research and Development Corporation, the Atomic Energy Authority and the Ministry of Technology have already led the way in promoting this kind of idea and pushing forward this kind of exploration into development is proof enough that this kind of industrial organisation is now a crying need. It is a natural consequence of what has happened under a Labour Government in the last two years.

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I ought to say that it is a natural development of what happened before the Labour Government came to power. The chaps opposite could not recognise it and act upon it, because they could be sure that, if they did, some gentlemen on their side would get up and accuse them of Socialism. That is something they have always had to look out for. From what we have heard from the hon. Member for the Isle of Ely, I am sure that he suspects the hon. Member for Orpington (Mr. Lubbock) of being a revolutionary Socialist. If he is, we shall welcome him on this side.
Be that as it may, it is clear that just as risks are relative in the business world, so are political instincts in this House. Let me get back to the question of American investment in small businesses. If a small business in the United States is competing on level-pegging terms with DuPonts, General Motors, or Ford's, I shall watch its progress with interest, supported, no doubt, by all the resources of the United States Federal Government and Treasury.
But this is not how the thing works. It is not even necessary for it to work quite in that way. What the hon. Member forgot or forbore to remind us of was the growth of American investment in this country. We hear hon. Members, hon. and gallant Members and right hon. Members opposite shouting about the evils of British Government investing in industry even if, with a regrettable pusillanimity, we propose to withdraw once the thing is on its feet. But when did we hear any protests from hon. Members opposite about the American take-over of Ford's of Dagenham, or about the closing of E.M.V. at Willesden?
This is the way in which the American system works: if one has enough investment overseas one does not have to keep all the problems at home; one can send them by a fine postal service overseas and witness their effects overseas. It is no accident that some of our exports are under the direct control of American decisions taken in New York. How can it be at a time when this country is striving for exports that in Iraq—from which country I have just returned—the policy has been established that
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Ford motor cars exported to Iraq should come from Germany and not Britain, and that General Motors' products should come from Opel and not Vauxhall? When was any protest to be heard, or screams about intervention and anti-Americanism ever raised loudly from hon. Members opposite?
Perhaps we shall have complaints that we are similarly a little inconsistent in promoting Government intervention in British industry. Since when did the Government of this country represent a party and not the whole of Britain? When, in our whole constitutional history, was it ever proper for a Government to speak and act only on behalf of a party? Of all the rubbish that I have heard on the doorstep—the kind of thing which speaks so loudly of the influence of hon. Members opposite—the worst was this nonsense about nationalisation. It has been spoken of as though nationalisation was a process whereby the iron and steel industry became the property of the Labour Party. What arrant nonsense! If—as is going to happen—we nationalise the iron and steel industry, I am sorry to think that it will belong as much to hon. Members opposite as to me. They may not like it. They can make insulting remarks about their colleagues who go with the Government and help to promote the enterprise and prosperity of this country. None the less, the power and authority will be vested as much in them as in us. But that is what they are grumbling about and what they are screaming about. It is a total reversal of the very purest interpretation of the word "aristocracy" that the hon. Member for the Isle of Ely was giving us earlier.
Mr. Joseph Kevin McNamara: Does my hon. Friend agree that what the Opposition are urging is freedom for the few instead of freedom for everybody? This is one of the most important aspects of the Bill.
Dr. Kerr: I am grateful to my hon. Friend for his intervention. He has put it so succinctly that he has reduced the length of my speech by no less than 20 minutes. This will be a little disheartening to those of my colleagues in the Tea Room and the Smoke Room, who are relying on my keeping it going

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a little longer. I welcome any interventions of a similar nature; they will spur me on to greater endeavour.
I want to return to what was said by the hon. Member for the Isle of Ely. In a sudden purple burst of exotic oratory he accused us of rewiring the national rectory. There has been a twin note of classicism and religiosity in the debate this afternoon that I do not understand. Even if we are rewiring the national rectory I cannot see why, pursuing the matter further, the hon. Member should, so to speak, refuse a national correctory. This is precisely what the Bill sets out to provide.
Let us look at some of its terms. Opening the Bill at random, I see that it is permissive in nature. Its terms, which have been repeatedly overlooked by hon. Members opposite, provide that the Corporation "may" do something; that the Secretary of State "may" direct its policies into certain channels, and then the Corporation "may" act upon those directions. It is this almost cowardly reluctance to invoke compulsion which is a matter of regret to so many of us on this side of the House. I cannot see that there is anything very much to be said against the idea of doing something in a forthright fashion.
When we are talking about one of these questions of the Secretary of State's taking powers, let us not overlook the fact that the appropriate Clause—Clause 2(4)—provides that the Secretary of State
"may, after consultation with the Corporation"
That does not sound like dictatorship naked and unashamed; it sounds rather like long-winded bureaucracy. But this is the way we choose to do it. It does not convince us when hon. Members opposite start screaming and exhorting us about the dangers of nationalisation. Their words will be heard. Their "Charge of the Light Brigade" will be taken note of by all the old ladies with six shares in Marks & Spencers and ten shares in I.C.I. This is the audience to whom they are directing their remarks. It has to be heard and it has to be said. Their remarks are also directed to a large number of people who would normally, presumably, be of the same political persuasion.
But it is a remarkable fact that I cannot forbear from remarking upon—the success
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of the Labour Government in dividing its political opposition, on both sides. It is a fact that the Left of the Labour Party is not—to my great regret—speaking with one harmonious voice at this moment. It is also a fact—and this I applaud—that on the other side of the House there is a similar diffusion and similar discordance, which gives great heart to those on this side, who are delighted that the Opposition is fragmented, though we are not so happy when it is so inefficient as it has shown itself to be in recent months.
It is remarkable that there are, as the hon. Member for the Isle of Ely was at such pains to point out, people whom he knew and trusted, but who are suddenly sabotaging, the whole of the Conservative Party. They are coming to work for a Labour Government. Why? Because the Labour Government are trying, sincerely and wholeheartedly, to boost the prosperity of Britain and that, first and foremost, is what industrialists are concerned about. There need be no apology about that either.
Another matter which we have heard hon. Members rambling on about is the question of mergers and what evil things they are. We have a machinery called the Monopolies Commission, which is supposed to report on mergers from time to time. One of the matters before it at the moment is the question of cinema circuits. Hon. Members will know that there are two major cinema circuits which dictate the fate of some very important British products. That is dictatorship, not of the mailed fist in the velvet glove kind, but of the economic kind; this is just as unacceptable to me as anything dealt out with rhino whips in other parts of the world.
The Monopolies Commission is investigating these two circuits. I wonder whether the House is aware how long it has taken. It is now nearly two years. During that time a number of very worthwhile British films have been produced and have not been shown. Are we going to put our trust in a Monopolies Commission which will take two years to investigate every proposed merger? What will happen to The Times and the Sunday Times? Are we to wait another two years before the Commission reports, leaving those two papers in a state of—I must not say suspended animation; that would be rude to their journalists—

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but at least a state of considerable suspense.
If one were to follow the logic of the Bill, would it not be possible for the Industrial Reorganisation Corporation to take a hand in The Times newspaper? We never regard it as a Government organ, but everywhere else in the world it is always assumed that The Times speaks for the British Government. Is it not about time that we set up a corporation to run The Times? [Laughter] My hon. Friends laugh at this, but it is an entirely serious suggestion and worthy of examination, although this, of course, is not the moment to do it.
What I wanted to draw to the particular attention of the House is the question of the rôle of mergers in industry. Not long ago, we have very important mergers in the motor industry. One was the merger between the Austin Motor Co. and the Morris Motor Co. I am bound to say that that led to about the sloppiest management in industry in Britain. How is it possible that a merger of this sort, leading to a giant motor corporation, can be virtually the only sector of the motor trade which is so badly run that it has to get rid of so many workers, when other motor companies are doing very well, thank you. It is a most extraordinary state of affairs.
Mr. McNamara: This is a tremendously interesting point. Is it not interesting to see the way in which many other motor companies are continuing to work their labour, continuing to produce new lines, continuing with Sunday working, while this one motor company seems to have such shockingly bad labour relations and industrial management that it is reduced to having to get rid of its workers and using the most unnecessary excuses for its own bad industrial practice?
Dr. Kerr: I endorse entirely what my hon. Friend says, that we are faced clearly with an example of incompetent management which is fortunate in having, ready-made, an excuse which does not seem to be used by any competent and effective management in the whole of the motor industry. I cannot help reflecting that the whole question of mergers is not something which the Bill is guilty of perpetuating in quite this sense.
The whole essence of the Bill is not to advance mergers. It is not, as the quaking
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hon. Gentlemen opposite seem to feel, involved in a great Government intervention in industry. Let us consider the figures—£150 million maximum. It is a piddling amount—I am not sure whether that is a Parliamentary word but it is a very useful one. It is an amount so tiny, by comparison with the needs of the country and with the amount of capital deployed by the giant finance and insurance corporations, that I wonder that any hon. Member opposite has the temerity—I would not say the "stupidity", because that would not be Parliamentary—to stand up and quote this tiny sum of money as though it were a great new measure of Socialism.
The amount of capital deployed by the Prudential Insurance Co., for example, is £1,500 to £2,000 million. Compare with that the £150 million which we are proposing to deploy. When one considers that that £1,500 to £2,000 million is the deployed capital of just one insurance company—admittedly the biggest—and when one considers the enormous tangled web of financial investment in insurance companies, banks and unit trusts and how capital, the very lifeblood of industrial development, is held in this stranglehold by private ownership, how can hon. Members opposite dare to accuse the Government of the kind of ridiculous activities which they envisage in their fantasy nightmares?
We are making a fine contribution. We do not have to be ashamed of it. I would say to my own Front Bench that we do not have to be cowardly about it either. There is a great deal of feeling on this side of the House which is wholeheartedly in support of Government endeavour to make it not £150 million but £1,500 million very quickly and to hang on to the businesses which Government develops and make sure that the benefit comes back to the community and is not handed over to some private enterprise. This is what we want and I am confident that we shall have the shell-like ears of the Front Bench paying great attention to us when we are demanding this. We do not have to be shy on this side. We know what we are here for and we do not need hon. Gentlemen opposite to tell us.
I have, perhaps, spoken a long time on a subject about which I know absolutely nothing. I like to feel that the

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only interruptions have been the friendly ones made by my colleague the hon. Member for Hull, North (Mr. McNamara). I should like to feel that what I have been saying has not been irrelevant. It cannot have been, Mr. Speaker, or you would have been on my tail.
When we come to the House with some new development for Britain this is "naked Socialism"; when the Tories fish it out of the bag 10 years later, this is modernisation. It is a very striking contrast. This is one of the things to which hon. Gentlemen opposite must wake up—that we are here to modernise and that the only effective way to do so is with a good, deep, strong draught of Socialism. This is exactly what we are putting before the House and the country in the Bill.
8.29 p.m.
Mr. John Nott: If I correctly understood the hon. Member for Wandsworth, Central (Dr. David Kerr), he was asked by his hon. Friends to come into the Chamber and keep the debate going. Although I respect the hon. Gentleman's views on economic matters, I find it interesting that he of all people should have been sent in here to keep the debate going following the denial by the First Secretary of State that the I.R.C. has any interventionist ambitions.
Dr. David Kerr: It would be quite inaccurate to describe my presence here as being the result of having been sent, except in the rather idiomatic sense. I am "sent" by the Bill: I am delighted with it. In fact, I came in here because I had something to say, and I am astonished that I had such an excellent opportunity of saying it.
Mr. Nott: I thank the hon. Gentleman for that intervention. I suggest that on future occasions, when we are debating an economic matter of such great importance, he should be reading the City columns of the Observer in the Smoking Room, where he will no doubt learn much more about the serious matters which concern us tonight.
There are two points at issue in the debate. First, there is the question whether we need a new body at all to help in the rationalisation of the structure of British industry. The second question is whether the Government have chosen the right mechanism to achieve that object and whether they have given
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this body the right powers to achieve its aims.
Before elaborating on these two points, I wish to refer to some remarks made by the First Secretary of State. The right hon. Gentleman indicated that, although this body had not yet been set up, there was great interest among industrialists in the facilities which it will provide. If the right hon. Gentleman were to set up another body with £150 million worth of money at Government rates of interest for young marrieds who wish to buy their homes, there would be a flock of people seeking money for its desirable objective as well. If the right hon. Gentleman is surprised, or if he supposes that it indicates great success for this organisation, that people are interested in coming to find £150 million, he must be extraordinarily naïve. Industrialists need money. I find nothing surprising about that.
Throughout the debate I have felt that there has been a fundamental misunderstanding of the function of British merchant banks because speaker after speaker has asserted that merchant banks, when helping with the rationalisation of British industry through mergers, often take equity interests in these companies. I have been in the City for eight years working in merchant banking and I have not yet come across one case where a merchant bank of repute has taken an equity interest in a company that has sought its advice as to how it might merge with another company. It is not the merchant bank that takes the equity interest. It is the company which is making the acquisition that takes the equity interest.
As I understand it, the I.R.C. is intended to perform similar functions to that of the merchant banks. If it wishes to do this, it should form a persuasive advisory function, which is what I would like to see it do, and not take equity interests in the companies it is attempting to advise, because that is a confusion of the aims that the I.R.C. is set up to achieve.
I was interested in the suggestion by the hon. Member for Wandsworth, Central that this is a mere mouse of a Bill. Whatever the hon. Gentleman may say about the Prudential, £150 million is a very considerable amount of money. The Prudential is a vast organisation, the

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vastest financial organisation in this country; but £150 million is a great deal of money in the private sector, particularly for the taxpayer, whose money this is. If the hon. Gentleman regards this as a little mouse of a Bill, I suppose he would speak of the Iron and Steel Bill as a big rat of a Bill, which is the view held of it on this side of the House.
I return to the first question I posed, which is whether a new organisation is needed at all. Although it can possibly do some good I would have preferred it to be a Department of the Board of Trade. This is what the Board of Trade should be doing; this is its job. I do not believe that a new organisation is necessarily needed, but if this body can achieve some rationalisation of the structure of British industry, I wish it well. I have no objections to the purpose behind the setting up of the Corporation.
I want to illustrate shortly the problems in regard to the structure of British industry. In a whole host of different industries there is a problem of structure. I am thinking of the mechanical handling industry, the wool textile industry, particularly the top making industry, and the chemical plant industry. These industries are examples of industries where rationalisation of structure is necessary. It is nothing to do with small companies or big companies. It is a question of the rationalisation of the structure of these companies.
I want to take the machine tool industry as an example of the need for some further work in this direction. In the last few years the machine tool industry has gone a long way towards rationalising itself through means of the market mechanism. Only in the last few weeks the market mechanism has itself resulted in proposals that Alfred Herbert, the largest machine tool company in the country, should merge with B.S.A. Machine Tool Division. This is part and parcel of a further agreement whereby Alfred Herbert and the Machine Tool Division of B.S.A. will set up a company with the American firm of Ingersoll, an important machine tool company in the United States. Staveley Industries, another important machine tool company in this country, has made an agreement to merge its machine tool interests
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with Asquith. There are further agreements whereby B. Elliot may come with Butler Machine Tools into the Staveley/Asquith complex.
All this has gone on in the last few years. It has come about without the I.R.C. Do not let us delude ourselves that such rationalisation will not come about without the I.R.C. Of course it will. I am of the view that some new body will not do any harm as such even if it only helps by the judicious use of the carrot, the natural processes of the market. This is a perfectly reasonable objective. I believe that most hon. Members on this side and in business generally would be quite happy that such a body should be set up. I personally think that it could have been set up by a Department of the Board of Trade, but I have no objection to a small organisation composed of experienced men trying to achieve some of these objectives.
The problem of British industry surely is that, although there are hundreds and thousands of efficient, small companies, there are also a great many small companies which are much too small to afford the research and development which are so vitally necessary for competition in world markets.
One question which has not been mentioned in the debate is that in the end it is men—it is management—that creates rationalisation of industry. It is not money. Anyone sitting here through the six and a half hours of this debate that I have sat through would think that management and men have nothing to do with mergers. In fact, they are the only things that matter. Management alone can create rationalisation of industry. The money is purely a secondary issue. Whitehall cannot do it. The I.R.C. cannot do it. Rationalisation can be brought about only by companies coming together willingly to achieve the necessary rationalisation.
In the machine tool industry there are about 300 firms, 200 of which employ fewer than 30 people. They may be very efficient firms but clearly a firm employing fewer than 30 people does not usually have the financial resources to compete in world markets.
Over the last few years this country's imports of machine tools have been rising. The one simple reason for this is that

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our machine tool industry was not sufficiently rationalised and did not have the structure to indulge in research. This is a generalisation. It does not apply to every firm. However, we are generalising in this debate. As a result of this lack of research, imports of machine tools have been rising. Foreign users of machine tools, when asked why they do not buy British machine tools, say it is because our products are not sufficiently sophisticated. West Germany exports £27 million worth of machine tools. This country, a great industrial nation, exported £9½ million worth in 1965.
What is so serious about the position in this country at the present time is that, because of our history as an Empire and a Commonwealth, our exports of machine tools go traditionally to India and the developing nations which, as time goes by, will require more sophisticated products and we, at the moment, are not producing them. This, as I see it, is one of the problem of British industry. Hon. Members opposite may not agree with me, but I must leave that point and go to another side of the main issue. Nevertheless, if we agree that mergers, amalgamations, whatever we may call them, can bring about some rationalisation of production and a better distribution of manpower—which is also fundamental to British industry—it is worth encouraging them by persuasion.
Where I completely part issue with the Government is on the methods they have employed to do this, because by giving this Corporation equity powers they have spoiled a very good case. We are not frightened, or I am not frightened, of the Government's taking an equity interest in something; all I believe is that the powers to do it will create opposition to this body which need not have occurred.
What happens when a company wishes to merge? First of all, it has to get the agreement of the people with whom it wants to merge that it is a good idea. I have never seen a merger work well where both sides have not agreed with each other first. A company then says, "We want to finance this merger". Very often the company cannot afford to do it because it cannot raise fixed interest capital in order to finance the merger, and it cannot raise that fixed interest capital because its capital cover or its interest
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cover, or something of that sort, is not adequate to support a loan.
But if the Government were to set up a new organisation which had the powers to go into the market and borrow money at market rates—perhaps with a Treasury guarantee, but not borrowing from the Treasury—there would then be no charges that the taxpayers' money would be used uneconomically. Let this body borrow money in the market, with a Government guarantee perhaps so that the money could be borrowed at a reasonably cheap rate of interest——
Mr. Harold Lever: Can the hon. Gentleman tell me this? Except as a matter of semantics, what is the real difference in substance between the Corporation getting its funds directly from the Government and getting them from the market on the Government's responsibility? Is it not precisely the same in substance?
Mr. Nott: I would partly agree with the hon. Gentleman, but I would like this institution to raise fixed interest capital and lend fixed interest capital. If it were to borrow on the market, charges could not be made that the money was being financed at less than economic rates—that is all I say—and, in that respect, criticism of the body would be dispelled.
Mr. McNamara: I am sorry to interrupt the hon. Member's rather interesting speech, but would he not agree that the whole purpose of the Bill is not so much that this is what will necessarily attract money on the market but what will in the long run be in the national interest and in the interests of the community as a whole? Therefore, there is a distinction to be made between what is in the national interest and what is, perhaps, in the interest of the person seeking to invest capital. Surely, the State is in a better position to do that.
Mr. Nott: We have this talk of a national interest. The Prime Minister earlier in the debate talked about the national interest as if his view of the national interest automatically coincided with the view of everyone on this side and everyone in the country. That seems to be supreme arrogance. I say that if the taxpayer is to produce £150 million,

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this House should be in a position to say "Yes" or "No", if it is equity capital that is involved. I do not like talk of a national interest in this particular debate, because I think that the House should be in a position to decide whether or not in each case when the I.R.C., or whatever body it may be, has acquired an equity interest, that control is or is not in the national interest in that individual case.
Mr. Harold Lever: Would the hon. Gentleman tell me whether he intends his argument to mean that the I.R.C., if it is financing a smaller merger involving £3 million, should require legislative approval in each instance? Does the hon. Gentleman think, apart from the inconvenience, that the House is in a position to sit and judge upon each individual case of merger financed in this way?
Mr. Nott: I believe that everything the Government desires could be brought about by some organisation having fixed interest powers. If the Government wish to acquire a controlling equity interest in the private sector they should come to this House and debate the matter, whether it be £3 million or £30 million. I believe that to be the case, and I think we should have a chance of discussing whether or not the ownership of companies falls into the hands of the public sector. This seems to me to be the crucial political issue, certainly on the economic side, whether or not the public sector has grown too large and should be diminished or whether it is too small and should be increased. This is the vital matter of economy debate in this country and I see no reason why it should not be debated in this House.
If this Bill were introduced without equity powers, with powers to advance fixed interest capital needed for gearing in a merger to increase the earnings of the companies involved and thereby make an economic merger out of what would otherwise be an unecomomic merger, I would accept it as being reasonable. But we have to look at the Bill in the context of what the Government have been doing in the last two or three years. They are now talking about the rationalisation of the structure of British industry. This is the Government who introduced Corporation
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Tax. That tax, of course, does one thing. It encourages companies not to distribute their earnings to the market. It encourages companies to grow fat. It keeps them away from the sanctions of the market and of shareholders.
This is the Government who, in the 1965 Finance Act, made it almost impossible to distribute capital, meaning that the companies had to plough it back. This is not helping the rationalisation of the structure of British industry. It is doing the opposite. This is the Government who have produced one of the most idiotic of all measures that we have seen since the war—a premium to manufacturers for employing men under the Selective Employment Tax.
How will that help the rationalisation of the structure of British industry? If the First Secretary accepts my argument that there is a maldistribution of labour in this country—and certainly the Prime Minister does, because that is what he has been talking about incessantly in the last three months—why does he pay a premium under the Selective Employment Tax to manufacturing industry? If he wants inefficient, out-of-date companies to go out of business, why did he run the economy up to 20th July at a clearly heavily inflated rate and then slap on the heaviest, toughest credit squeeze that the country has seen since the war which can only drive good and bad companies out of business because of the exaggerated nature of the measures which have been taken?
All these factors—Corporation Tax, the 1965 Finance Act, the inflationary policies pursued by the Government up to 20th July and Selective Employment Tax—have done more than anything else during the last two years to solidify the structure of British industry and prevent its rationalisation. These are the matters to which the Government should have been directing their attention—not setting up great bodies with £150 million powers.
I have no objection to a new organisation set up to improve the structure of British industry. It could be a new body or it could be done by the Board of Trade. What has the Board of Trade been doing all this time? Or who is responsible? Perhaps it has been the Treasury.
A job needs to be done. The task is there. But mergers, amalgamations and

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rationalisation only come about through good managements and men. For example, one can think of Viyella International, Courtauld and Albert E. Reed as companies which have rationalised their industry during the last few years—and they have done so because they have had men like Hyman, of Viyella, and Kearton, of Courtauld. [An HON. MEMBER: "He has gone to the I.R.C."] Yes, but I.R.C. will not provide industrial management. If Sir Frank Kearton has to manage every company in which the I.R.C. takes an interest, he will not be able to do his job very well. Again, Albert E. Reed has one or two brilliant men who have rationalised the company. It is men who will create rationalisation and not money.
I believe that the C.B.I. and British industry are suspicious of the equity powers which the Government intend to take. I believe that rationalisation could be carried out without equity powers. They are utterly irrelevant to the main objectives of the Bill. That is my principal objection. If they had not been included, I would have welcomed some body of this nature.
8.52 p.m.
Mr. Edward Milne: I am sure that the hon. Member for St. Ives (Mr. Nott) will forgive me if I do not follow him too closely in his observations, but I was interested in the points he made about his own experiences in merchant banking and when he spoke about the persuasive advisory interest that may be introduced into industry in this matter he was obviously talking from wide experience.
What has surprised me is the talk that we have heard in the debate about mergers, monopolies and all the other evils that are supposed to flow if this Bill becomes law. When the hon. Gentleman advised us to look at the City columns of the Observer I wondered whether he had seen those columns about two weeks ago concerning the late merger between B.O.A.C. and Cunard. When Cunard decided to withdraw, it was able to make about £3½ million in the process.
The strange thing about the attitude of the Opposition is that they are converted to the idea to the use of public money in private industry only so long
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as they are able to control the means by which it is used and so long as they themselves are able to derive benefit from it. The hon. Gentleman spent some time talking about the machine tool industry, but I was surprised that he was not able to convert his own Front Bench when they were the Government to pay more attention to the Steuart Mitchell Committee, which was set up to examine the machine tool industry and which reported some time ago.
The hon. Gentleman described the Steel Bill as a "rat," but I am sure that in considering investment of public money in industry he has not forgotten about the situation when the party opposite denationalised the steel industry and sold back public assets to private firms which are now in ownership. Colvilles, when offered its undertaking back for £30 million, received a loan from the Government of about £16 million so as to be able to carry out this transaction.
The use of public money has become an accepted part of the industrial scene. I represent the constituency in one of the development districts where, week after week and month after month, we have witnessed the investment of public money rightly setting up new industries. Many of us on this side of the House have rightly asked for the investment of that money to be a matter of not only private but public concern. That is why we welcome the setting up of the Corporation. We feel that the stability which can be given to the development districts by the investment of money in this way will give us the full employment for which we are looking.
Mr. Lubbock: I am most grateful to the hon. Member for Blyth (Mr. Milne) for allowing me one or two minutes to say that we in the Liberal Party welcome the Bill. My right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) said at the time of the White Paper that he thought that it had many valuable features and hoped, as the hon. Member for Blyth hopes, that it could be used as an instrument of regional development. We hope that as it gets under way we shall see investment going to areas, such as the hon. Gentleman's constituency, which in the past have suffered from under-investment.
I listened to the hon. Gentleman——
Mr. Deputy Speaker (Mr. Sydney Irving): Order. I was under the impression that the hon. Member for Blyth (Mr. Milne) gave way to permit an intervention and in calling the hon. Member for Orpington (Mr. Lubbock) I was calling him to intervene and not to make a speech.
Mr. Lubbock: I must apologise. I thought that the hon. Member had concluded his speech.
Mr. Milne: Whatever the hon. Member for Orpington may have thought, I sat down to allow him to say a few words, which is always a dangerous thing to do. I welcome his intervention and the support of his party for regional development.
The point I was making was that the idea of Government investment or Government money going into industry was not new. It is an idea which could be developed and extended, and the Bill is a welcome move in that direction.
8.58 p.m.
Mr. David Price: The speech of the hon. Member for Blyth (Mr. Milne) and the intervention of the hon. Member for Orpington (Mr. Lubbock) introduced a new element into our discussion about which I shall be interested to hear from the right hon. Gentleman, for I would like to know how far the I.R.C. is to be an instrument of regional development. The issue was mentioned earlier.
The House will agree that this has been an interesting debate, but inevitably it has gone over much the same ground covered in our debate on 15th February. We have had second speeches from a number of hon. Members—the hon. Member for Heywood and Royton (Mr. Barnett), the hon. Member for Ashton-under-Lyne (Mr. Sheldon) and, as always, the hon. Member for Manchester, Cheetham (Mr. Harold Lever), who amuses us. But there has been one important difference: then we had only the White Paper and today we have the Bill.
In February, the proposed Industrial Reorganisation Corporation was presented to us by the then First Secretary of State as a sort of industrial St. Bernard dog seeking out distressed companies lost in the snows of structural inefficiency and bringing them public succour. It was a touching image.
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But now, with the Bill before us some of us see a rather different beast. We are inclined to think that the Bill's pedigree is more akin to that of the timber wolf, and the fangs are there for all to see in Clause 2. It is true that the St. Bernard's brandy barrel, to the tune of £150 million of public money, is strung around the wolf's neck, and I have no doubt that some of the simpler souls in the private sector will find that brandy barrel has some immediate charm. As my hon. Friend the Member for St. Ives (Mr. Nott) rightly pointed out, many of us will be in the queue when free brandy is going, but we have to think of the consequences.
I wish to go briefly over a few of the major arguments advanced for the Bill and the arrangements as presented to us by the Government. The most substantial argument deployed has been the need for larger industrial units. This was put very well in the White Paper:
"Many of the production units in this country are small by comparison with the most successful companies in international trade, whose operations are often based on a much larger market."
There is obviously force in this argument, and I hope that the right hon. Gentleman will take it in the spirit in which I mean it when I say that it is by far the most respectable argument. But let us not exaggerate the case. A considerable number of mergers has taken place in recent years. The structure of British industry is not significantly different from the structure of European industry, and it is important to mark this point.
In a recent survey The Times listed the top 100 European companies on the basis of capital employed. For the purposes of this list we did not count as a European country. The spread was from the enormous giant of Royal Dutch-Shell, with a capitalisation of £2,000 million, to Machines/Bull, with capital of about £39 million
By comparison, Britain had 115 companies with a capital of over £39 million. Certainly, as far as the top of the scale is concerned, this does not suggest that British industry is very different from the European, even though European industry enjoys the much larger home market of the European Economic Community. When the final stage of the Common Market is reached there will be, I suspect, more mergers than have

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so far taken place. It is also true—and this is the most serious point for us all—that we and the Europeans in our different ways have to compete with the large American corporations.
The only answer for us must lie in creating a much larger home market for British industry, and that can be achieved only through British membership of the European Economic Community. I have been advocating this for at least the last 10 years, and every year the case becomes stronger. If the Government made a clear and unequivocal declaration of intent to join many British firms would go further than they have already in seeking partners across the Channel. Furthermore, if the Government removed all the obstacles to British firms making such arrangements—I think especially of the limitations placed on the export of capital—this Bill would be largely redundant.
Even when we become part of the European market, as I trust we shall, sheer size will not be everything. It is all too easy to fall into the simple view that there is a straight linear relationship between scale of activity and potentiality for success. I therefore wish to examine the concept of the optimum firm. The Secretary of State may agree with me that the classical definition of the optimum firm by Professor Robinson gets it about right when he says:
"By the optimum firm we must mean that firm which in existing conditions of technique and organising ability has the lowest average cost of production per unit, when all those costs which must be covered in the long run are included."
I think that we get agreement on that. This takes us back, dare I say it, to the concept of profitability. I never know whether that is a dirty word or a respectable word, but I think that we are going through a respectable phase with the Government now.
To analyse this concept of the optimum firm we must recognise that one can identify a number of different parameters all of which bear on the question of what is the optimum firm in a particular industry at a particular moment of time and there is not a fixed optimum. May I suggest some of these parameters? First, there is the question of market conditions, in other words, what is the optimum sales unit? One of my complaints against the present Government is that they are not
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sufficiently market-oriented. Any Government which was market-oriented would not have introduced the Selective Employment Tax.
Secondly, there are the rather technical considerations. There is the optimum technical unit. We have heard a little today, but not enough, about research and development. I do not know how many hon. Members have been studying the analyses which Mr. Freeman has been making and trying to find some statistical relationship between the amount spent on research and development over a period of years and trying to find some formula. He has come up in certain electronic fields with the suggestion that we have to spend 8 per cent. to 10 per cent. of turnover in order to be up to the minimum threshold level for research and development.
This is a most interesting tool of analysis, but those interested in it will agree that it is in its early stages. It varies from one industry to the next, and also even within a particular industry it varies at a particular moment of time. When we get into the most advanced technological industries the need for research and development does not increase at geometric rates but at a stepped curve. At certain times one may be moving over into a new generation of technology and have to build up more in those years than in subsequent years. It is not an even curve. This brings in interesting concepts, but it is extremely difficult to be dogmatic. I very much question the competence of any organisation or merchant banker to know the answer. My hon. Friend the Member for St. Ives got this matter about right. It is a question of men and management rather than one of finance.
Then there are the whole of the production considerations and the question of what is optimum production. We know the arguments about trying to get a completely integrated process, but I suggest that numerically controlled machine tools add a new dimension to the production scale. I do not believe that any of the classical arguments for mass production will hold up over the years when we really take advantage of the opportunities which numerically controlled machine tools provide.
Then there is the optimum financial unit. Here I suggest that one of the reasons why many companies are not

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maximising their assets—I was interested in what the hon. Member for Heywood and Royton said on this—is due to the fact that we have different methods of treating investment in the balance sheet. There are companies which have plant and machinery completely written off and which are reluctant to invest in new machinery because on the basis of a written down balance sheet it does not pay them to do it. I hope that when we come to examine the Government's proposals on company law reform some thought will be given to the economic effects of certain methods of writing down capital assets in balance sheets.
A vital question is what is the optimum managerial rôle. It is true that some large corporations have been very successful in getting methods of decentralisation down the line, but I maintain that the biggest single limiting factor upon how big a company ought to grow is managerial and human and neither technical nor financial.
There are, finally, the group of factors which I call the forces of risk and fluctuation. The aim here is a company possessing the greatest powers of survival in the face of industrial, commercial, human, fiscal and, dare I add, Government vicissitudes. For example, those companies who were simple enough to take the National Plan at its face value will be in dead trouble.
I would like to illustrate some of the points I have made by saying a little about the machine tool industry. I am sure that hon. and right hon. Gentlemen opposite agree that the machine tool industry has been one of the case examples which we have been given, justifying the Bill. The First Secretary quoted it in aid. This misses the fact that the last two or three years have seen very important mergers and rationalisation taking place. There are now eight groups responsible for about 45 per cent. of the industry's output. Over the past 10 years, 72 firms out of a total manufacturing membership of the M.T.T.A. of 175 have become constituents of larger groups.
I would commend to the House the section in the report of the "Little Neddy" on machine tools at paragraph 19 where it gives further details to those given a few minutes ago by my hon. Friend the Member for St. Ives. What is
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more significant is to compare the structure of the British machine tool industry with the structure of the German machine tool industry. This is a fair and relevant comparison, because the German machine tool industry has been perhaps the most successful for its size in the world.
It will be found that if one analyses companies by number of employees in the United Kingdom, 4 per cent. of our companies in the machine tool industry employ less than 50 employees. In Germany the figure is 3 per cent. In the next band 50 to 100 employees there are 10 per cent. in Britain and 7 per cent. in Germany; in the 100 to 250 band there are 20 per cent. in Britain and 16 per cent. in Germany; in the 250 to 500 band there are 21 per cent. in Britain and 20 per cent. in Germany; in the 500 to 1,000 band there are 25 per cent. in Britain and 28 per cent. in Germany and over 1,000 there are 20 per cent. in Britain and 26 per cent. in Germany. This does not bear out the argument that whatever may be the failings or imperfections of the British machine tool industry as of now, it is structural.
I would like to say a word in defence of the small company because the conventional wisdom of Whitehall is rather underestimating the rôle of the small firm. I was delighted to hear the comments of my hon. Friend the Member for Croydon, North-East (Mr. Weatherill) in his defence of the small firm. Having said that, I must make it clear that I do not believe that a small firm is a good thing and should be preserved merely because it is small, or that a small firm has the right to remain in business if it cannot pay its way. The test of a small firm should be the same as the test of a large firm, that is, the test of commercial success. But let it be noted that the more the Government intervene in the day-to-day running of industry the harder it makes life for the small firm. I hope that I have said enough to show that the question of optimum size of a firm in any particular industry at any moment in time is a highly complex matter and that even within broad tolerance bands there is room for considerable differences of opinion among professionals.
Equally, we must recognise that size is only one of the many factors which go to make up success in world

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markets. The only value of the Bill is the recognition by the Government of the importance of mergers. Mergers are now "in." They are respected and have the Government's blessing. But £150 million of public money is a rather expensive benediction.
But it is also important to recognise that just as firms can be too small, so they can be too big and their activities too diverse. In certain fields mergers and amalgamations should arise, not only from building up a firm to a given size, but also from rationalising it down to a certain size. The more energetic and sincere a company is in its corporate planning, the more likely it is to get the answer to the question of scale right for itself.
On past experience, we are entitled to question the ability of a Government or of a satellite public body to prescribe in any particular industry the commercial contours of how to achieve balanced concentration or balanced divorce. We believe that the Government would be better concentrating their efforts on providing the necessary market stimulants to this process, and, above all, ensuring that the opportunity cost is not too high, rather than creating new machinery of dubious commercial validity.
Reducing the opportunity cost is a matter not for the Department of Economic Affairs, but for the Chancellor of the Exchequer. However, in either case, the I.R.C. will be irrelevant unless it takes over the Treasury. This may be the new secret element. If the Minister replies that the I.R.C. will merge with the Treasury, this will add a new dimension, and no doubt we on this side would have to reconsider our attitude about opposing the Bill.
I turn to the Government's second argument, which is the gap in market forces. Let us take our text from the White Paper, when it says:
"There is no evidence that we can rely on market forces alone to produce the necessary structural changes at the pace required."
I challenge this statement as a statement of fact. I quoted from the recent experience of the machine tool industry. Market forces are working better than right hon. and hon. Members opposite have given them credit for. In the motor industry, which has been only briefly mentioned, market forces brought
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Rootes and Chryslers together. This year, we have had Jaguar joining with the B.M.C. The mechanical engineering industry is full of current examples. Mergers and rationalisation have been taking place ever since the Industrial Revolution.
The Government argue that, to compete successfully in world markets, larger groupings are needed. There is no doubt some truth in this argument, although the case can be overstated. I am sure that the success of Volvo, in the American motor market, shows that a firm does not need to be a Ford or General Motors to be successful. But it is imperative that we should approach this problem from the standpoint of world markets and not with an insular little England approach.
The reason we do not have larger groupings in world terms is that the present structure of British industry makes sense in terms of the British home market. Furthermore, overhanging British industry has been the fear of the Monopolies Commission. We judge monopolies of scale in terms of the British market and not the European or world market.
The logical way to deal with the problem of the market is to make the British market bigger, and that is done by joining the European Economic Community. I do not know how many hon. Members read the very good survey in the Financial Times earlier this week on the British motor car industry. There was a very important comment in it by Geoffrey Owen, the industrial editor, when he said:
"Until Britain becomes a member of the E.E.C. the motor car industry will be suffering from a severe handicap which cannot be offset even by a tariff-free E.F.T.A. So long as this problem remains unsolved British car manufacturers will be conducting what is essentially a holding operation within the E.E.C. in readiness for the day when they can compete on equal terms."
We must also take into account the fact that until recently mergers were socially unacceptable. Industry is sensitive to social forces in the community, and especially to public opinion. My hon. Friend the Member for Sheffield, Hallam (Mr. J. Osborn) was right in castigating hon. Gentlemen opposite for the attitude which they used to adopt but which, we are delighted to note, they have abandoned in Government. We welcome that change

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and, while I will not press the point further, hope that they do not again take their old attitude.
We should rewrite the Monopolies Act in terms at least of the European market and our concept of monopoly of scale should be related to that. We are entitled to have some doubt about whether the Government really believe in a market economy at all. The right hon. Gentleman the First Secretary astonished us when he said that the introduction of the Resale Prices Act—recalling that it was introduced at a time when my right hon. Friend the Leader of the Opposition was at the Board of Trade—was not designed to strengthen the market forces.
The whole concept of the market is surely a question of arriving at the just price through an equivalence of bargaining power between buyer and seller. To ensure that there is as near as possible an equivalence of bargaining power, it is necessary for the intervention of the law and of the State to keep those conditions maintained. I should have thought that that was absolutely clear. The error of some of the Manchester school of laissez faire economists of the last century was that they thought that they could maintain these market conditions without the intervention of the law.
There is, of course, a penumbra between the private and public sectors where the Government are, say, the monopoly or major buyer, as in the case of the aircraft industry, or where they may be, as in the sphere of atomic energy, the source of nearly all knowledge—in which case, for my part, I am open as to what sort of arrangement we have between the public and private sectors.
However, changes in that sphere do not require the creation of the I.R.C. because they can be done direct and because the power of the Government is sufficiently strong to enable them to do what they wish in this matter.
The third argument in the White Paper—which has not been deployed today—is that no machinery is available for doing this. I do not know how the Government have come to this conclusion, particularly since they say that there is no organisation whose special function is to search for opportunities to promote rationalisation schemes which
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could yield substantial benefits to the national economy. They had better have a word with my hon. Friend the Member for Bournemouth, West (Sir J. Eden), who is involved in one of the major companies which is in this business of bringing together industrial partners with an eye to marriage.
I have dwelt rather more on the economic aspects of the Bill because many of my hon. Friends have mainly dealt with the powers in the Measure. There is no question but that these powers go very much further than is necessary to achieve the more limted exercise which might have been possible. We would not have objected to the creation of a modest research organisation, linked with N.E.D.O. and the "Little Neddies" or with I.C.F.C. to provide up-to-date studies on industrial structures and to make international comparisons. We might even have accepted a catalytic organisation to assist the promotion of industrial rationalisation. However, these are not the powers of a catalyst, but of a major public body, most of which can be exercised without any Parliamentary control.
There are also the powers of the Secretary of State in Clause 2(4) which are of a general and entirely undefined nature and which enable the right hon. Gentleman to give any directions he likes to the Corporation, which must obey. Personally, I do not give people blank cheques and I do not believe that the House should, either.
I believe that the moneys involved are grossly in excess of what are necessary. The White Paper made it clear that it should not be the purpose of the Corporation to be a general holding company. Why, then, do the Government think that a sum of £150 million is right? Because £150 million goes far beyond the needs of temporary bridging finance. So far we have had no justification for this. It may be that some hon. Gentlemen opposite think it too little, but we have had no justification.
Furthermore, we know from Cmnd. No. 2974, presented by the Chief Secretary to the Treasury last April, that the Government envisaged the first £30 million being needed by the I.R.C. in the current financial year. This must mean that the Government have a pretty clear idea of

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the identity and of the scale of the first flush of mergers, and how much money this will require. I very much hope that the right hon. Gentleman, when he winds up, will give us some indication of this.
I should just like, very briefly, to make mention of the nature of the board. First, I would register a protest on behalf of the House that the right hon. Gentleman the Member for Belper (Mr. George Brown) announced the full complement of the board of I.R.C. on 4th May, and it is only today, 19th October, that we are debating the Second Reading of the Bill. This is yet another example of the growing contempt in which this House is being held by the present Government. It gives the House no opportunity to discuss the type of board which is necessary for this sort of organisation.
Personally, I believe that for the type of activities which the Government have in mind it is the wrong sort of board. In my view, the board of I.R.C. should be small and predominantly whole-time, and the reason is this. These mergers require fairly delicate negotiations, and I believe that people about to be merged will prefer, will insist on, dealing with principals and directors.
I believe that a board—12, I believe, have been appointed, going up to 14—of part-time men—true, taken off the Treasury list of the good and the great, of distinguished men in their own fields—is not the appropriate sort of board for doing this sort of operation. I do not mean that in any hostile spirit, but a thoroughly constructive one. But having had these gentlemen appointed for the last five and a half months the Government cannot go back on that and this makes the position of the House extremely difficult in this matter.
Finally, we have been told nothing of the working criteria of the I.R.C. How far is it designed to help the regions? How far, as the hon. Member for Wandsworth, Central (Dr. David Kerr) hoped, is it designed towards a full-going Socialist economy? How does I.R.C. effect mergers where the parties are unwilling? How does it get information upon which to know whom to seek out?
So, plainly, the Government are well set on their course towards a fully interventionist State. The Bill is but another milestone in that direction. I believe that it is the wrong approach to
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the structural problems of industry which most of us agree exist. These powers are excessive, and, when taken within the total matrix of Government policy, dangerously excessive. It is, therefore, right tonight that we should vote against the Second Reading.
Of course, the Government will argue, as the right hon. Gentleman the Member for Belper did on 4th May, that those of us who oppose the Bill have no proper sense of public values. The Government will have to learn that those who oppose their Measures are every bit as patriotic as those who support them, because the means by which we pursue our common national ends are in themselves important because the means we choose to adopt to achieve our ends can change and corrupt our ends out of all recognition. The Bill pursues wrong means, means which are corruptive of the sort of market economy we wish to see in Britain.
In judging those means I would ask the House and, let me say, the City of London, to recall the lines of Rudyard Kipling:
"And that is called paying the Dane-geld;
But we've proved it again and again,
That if once you have paid him the Dane-geld
You never get rid of the Dane."
9.30 p.m.
The Minister of Technology (Mr. Anthony Wedgwood Benn): If I thought that I had any reason to get the indulgence of the House I would ask for it on the first occasion on which I have spoken as Minister of Technology. However, when I look forward to some of the controversial elements of what I may have to say, I think that I had better not ask for it.
It has been a surprising debate. When I thought about it and compared it with what happened in February, I expected a slightly different tone. It was very controversial in February. The election was coming up, and we expected a storm about it. But, since then, from all sorts of sources, we have some idea of how the I.R.C. is going to be received. It is going to be fairly well received by those forces already operating in this field. Sir Frank Kearton and Mr. Grierson are highly respected men, and they would be very shocked tomorrow to read some

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of the things which have been said about them in the House today, not with a view to taking legal action, but surprised to find that they were named in terms approaching economic treachery by associating themselves with the Corporation.
It is all very well to criticise the Government for putting forward the names early. But if we had come forward with the Bill without indicating who was to be on the Corporation, there would have been a great many speeches about giving a blank cheque to a number of faceless men.
Generally speaking, the I.R.C. has had some influence already on the attitude towards mergers, and I was quite wrong in supposing that the tone of the debate today would have been slightly different. Instead, we have had an onslaught from hon. Gentlemen on the Front Bench and some on the back benches opposite which reminded one of today's Daily Telegraph, which described the Corporation as being of "avowedly Facist derivation."
What surprises me more than anything is what has emerged from the speeches of hon. Members opposite, with the notable exceptions of the hon. Member for St. Ives (Mr. Nott) and the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn), about what they really think industry is like. From that point of view, it was an extraordinary debate. We had the "Great Divide", which I expected after the Blackpool Conference. We had the "arbitrary and all-embracing power "of the new I.R.C. We had a view presented by the right hon. Member for Altrincham and Sale (Mr. Barber), who opened the debate from the Opposition benches, based on almost entirely ideological arguments. Then, in winding up, we had a more academic speech in which the hon. Member for Eastleigh (Mr. David Price), with his industrial experience, probed his way towards a series of criteria which might guide the I.R.C. in approaching the problems. However, neither the ideological nor the academic will help us very much when we approach the practical problems before the I.R.C. of dealing with industry.
From the hon. Member for the Isle of Ely (Sir H. Legge-Bourke), we had a doctrine which occasionally rears its head in the House, but thank goodness, very occasionally. It is that people of
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public spirit ought not to engage in public service unless it is in support and in the interests of his own party. To suggest that the business men who have agreed to take part in this enterprise are in some way betraying their class, their party or the City, and that that is something which in their minds ought to be above public service, seemed to me to be a very dangerous doctrine. It reminded me of Lord Hinchingbrooke, who once made some comments about National Savings at the time of the Labour Government after the war. It reminded me, too, of a letter which I received from an R.A.F. pilot in Cyprus at the time of Suez. He said:
"I am going to be sent to bomb Egypt. I think that this is a war of aggression. What would you recommend me to do?"
I thought about it carefully for a time and eventually replied:
"It is not for me to tell you. All that I can say is that arguments about it are going on in the House of Commons, and it is for you to decide where your duty lies."
For hon. Members of this House to urge other people to refuse to co-operate with the Government of the day is a very dangerous doctrine.
The other point which interested me was that the hon. Member has discovered "Signposts for the Sixties". He produced it like a man who had personally unearthed the Dead Sea Scrolls, when everything in it is to be found in the Bible. The references to the rôle of public enterprise were not hidden away in "Signposts for the Sixties". They are to be found in our manifesto. However, what interested me particularly was that apparently it took five years for a political idea from this side of the House to reach the ears of the hon. Gentleman. I congratulate him. If that is the only technological gap which we have to overcome in our society, then I suppose we ought to be grateful.
Sir H. Legge-Bourke: I did not make the accusation which the right hon. Gentleman alleges I made against the gentleman who accepted a job from him. I accused them of political naivety and asked them to choose which side they were on—further nationalisation, or private enterprise. On the other question, I read "Signposts for the Sixties" the year after it was published, and I have gone on reading it since, because the

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more one reads it, the more one realises how dishonest right hon. Gentlemen opposite were at the last election.
Mr. Benn: If the hon. Gentleman has read "Signposts for the Sixties" for the last five years, there may be some hope that it will ultimately influence him. I said that I did not know what he was accusing these gentlemen of doing. I did not specify. He has made it a bit clearer by saying that they have an obligation to choose, but to choose between whom? If the Government ask a man to engage in public service, does he have to choose? Does every civil servant have to choose between public service in a democratic society, and the call of the Opposition? The hon. Gentleman had better either amplify this doctrine, or withdraw it.
What has surprised me about the debate is the atmosphere, or the view, of industry which has emerged from hon. Gentlemen opposite, a sort of mixture of Adam Smith with a bit of Bagehot and some Latin tags, the view that somehow small business is the central element of our society. The hon. Member for the Isle of Ely described the job as being "the rewiring of our national rectory", an extraordinary doctrine which I could not understand.
In a way the party opposite, with certain very notable exceptions to which I have referred—the hon. Members for Hallam and St. Ives who talked about real-life industry—gave us a view of industry which I suppose one would get at a Conservative weekend conference, people who thought about private enterprise in their youth and had been recalled to the fold by the speeches of the right hon. Member for Wolverhampton, Southwest (Mr. Powell), whose purity in his attitude towards Government intervention is comparable to the preaching of some popular evangelist in relation to religion. It did not seem to relate to the real working of industry in which the Government are, and have been for a long time, deeply involved. I think that hon. Gentlemen opposite would be better advised to watch the "Power Game" or the "Plane Makers" or read "Corridors of Power" in order to get a real view of industry instead of the one that we got from their speeches tonight.
The fact is that only in today's Daily Mirror the right hon. Member for
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Wallasey (Mr. Marples) advocated a policy of intervention in industry which makes the I.R.C. look like a univeral aunt. He said that we want 15 Beechings. This is his solution, a miracle not attempted since the Garden of Eden. He went on to say:
"I want to see a trouble shooter-in-chief who will blast commonsense into the boardrooms and on to the shop floors … if industry did not toe the line, there would be no two ways about it.
I would punish men by getting management to close down plants, move them elsewhere and start all over again.
I would penalise reactionary bosses by closing down works and getting take-over bids from more efficient firms—but the labour force would not suffer.
Or, quite simply, the bosses would go on a Government black list and there would be no more Whitehall contracts".
Sir Harmar Nicholls rose—
Mr. Benn: I gave the right Gentleman notice that I would raise this, and he asked me to make the point which he makes in the article, that it would have to be a fair deal, and be seen to be fair on both sides.
Sir Harmar Nicholls: Why did the right hon. Gentleman not read that?
Mr. Benn: I promised the right hon. Gentleman that I would refer to it. The point is, who is to decide that it is fair? If we have 15 Dr. Beechings, then presumably they will have some say in what is fair and what is not. When I read an article like this in the papers—I am not arguing the merits of it—it makes me wonder what the right hon. Member for Enfield, West (Mr. Iain Macleod) meant when he told the Blackpool Conference that compulsion was alien to the whole Conservative philosophy. It really is a very curious view.
All I can say about the right hon. Member for Enfield, West is that it was one of his typical speeches; instant philosophy, toughness and calculated imprecision, designed to guide his party on its way through the next few months. Let us take the argument advocated by the party opposite, which is that the market will do the job, and is doing the job. How does this fit in with the right hon. Gentleman's article in which he says:
"Believe me: Without adding a single penn'orth of machinery or plant to British

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industry, we could turn out 30–50 per cent. more."
Hon. Members: In motor cars.
Mr. Benn: No, not motor cars—in British industry generally. He may be right. I am not arguing about that. But it is not fair for hon. Members opposite to suggest that market forces are doing what is necessary. The truth is—and hon. Members opposite know this as well as we do—that the raising of the level of efficiency in British industry—which is an interest we all have in common—involves the scale and organisation of industry. I do not for a moment say that it is the only factor, but I want to try to put the I.R.C. in its proper context with other measures.
Nobody could deny that British industry, which grew up in the trading tradition—in which we had our markets protected by the British Empire, and in which the trading tradition was the dominant one among British manufacturers—could not really survive, even in a modified form, in a world where our competitors built up a different type of organisation, based upon concentration, specialisation of the economy, and long runs. That is why I yield to the hon. Member for Eastleigh when he says that size is not the only answer. We do not believe that size alone is the answer. Collecting groups together just to make them bigger than other groups provides no benefit of scale, and a very detailed and knowledgeable approach must be made by those who look at the problem of the scale of industry.
Although British industry has altered very much, and its organisation has altered very much, and mergers have taken place in certain areas—I do not want to go into this in detail—it is true that in some export areas the scale of British industry is smaller than some of its overseas competitors. I will take the case of shipbuilding, because this is already the subject of an I.R.C. type of operation, arising from the Geddes Committee, which was relatively well accepted by the party opposite. In that industry one problem was that there were too many units and too little research, and not a big enough scale of operation. We are dealing with this problem now, through the Shipbuilding Industry Board. There may be a rôle for the I.R.C. in and
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around this field as well. But I never heard any warning from the party opposite about the Geddes Report. What was interesting was the measure of good will that we got from both sides of industry and both sides of the House for an operation not so very different from that which we are now recommending to the House in more general terms.
Mr. Dalyell: If my right hon. Friend has time before he ends, will he tell us something of the way in which the I.R.C. will help in the regions, particularly where there is unemployment?
Mr. Benn: I shall deal with that point later, if I may.
British industry is in some cases too keen to compete with itself rather than to recognise the fact that it lives in an international jungle where giants roam quite freely. The idea of the I.R.C. is that it should interest itself in this sort of problem. It will be an independent public agent, using public funds, and will try to find methods to help raise the level of industrial efficiency by rationalisation and modernisation.
The arguments we had about the I.R.C. from the party opposite were contradictory. Some objected strongly. The hon. Member for the Isle of Ely said that it would be fundamentally undemocratic to transfer so much money to a group of people who, he implied, were not answerable to the House. That is an interesting view of the traditional duties of the House of Commons in relation to the disbursement of public funds. The answer is that we must maintain my right hon. Friend's control. That is built into the Bill. But when my right hon. Friend's control was referred to by the hon. Gentleman's colleagues, it was that which found evil—the idea that a Minister should have any control in this area.
The two hon. Gentlemen, both of whom speak on science and technology, ought to sort this out. Do they want the I.R.C. to operate entirely independent of Ministerial control and supervision, in which case one conclusion follows and one might argue that that was more undemocratic. Or, do they want to preserve Parliamentary and Ministerial control, in which case we need the ultimate "say-so" of my right hon. Friend the First Secretary. This is something

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which ought to be worked out and discussed very fully in Committee.
The next question which arises is, why cannot the market be relied upon to do the job? There is some argument about what the market is. One theory is that the market is pure competition of the kind which is to be found only in the early economic textbooks. I do not think anyone really accepts this, because the use of compulsion by the party opposite on resale price maintenance and restrictive practices was justified on the grounds that compulsion was needed to maintain purity in a market which tends to coalesce into monopolistic groups. So we recognise that a little compulsion is accepted, even under the Enfield, West doctrine.
My right hon. Friend's definition of the market is not a bad one, that market forces are what happens if one just leaves things be. The market has had over 100 years to operate in this country but has not produced a structure of British industry which enables British industry to compete effectively in a very tough world market. If the market were capable of doing the job, the right hon. Member for Wallasey would not say in his article today that there could be up to 50 per cent. increased production simply on the basis of our existing capital investment—
Mr. J. H. Osborn: The right hon. Gentleman knows the United States of America very well. Would he attribute the concentration there to market forces or not?
Mr. Benn: I do not think that I will help the House by trying to draw a close comparison between experience in the United States and experience here. However, in many areas, positive Government intervention in industry in the United States is on an even greater scale than that which we have in this country.
Whether we like it or not, the Capital Gains Tax, which was described as a wicked Socialist Measure, came straight from the armoury of the United States Treasury. I do not think that the gift tax or any other fiscal parallels help us very much. American industry built up on the idea of concentration and specialisation, bigger scale and longer runs of production than British industry.
Of course, it is true that there have been a number of mergers in recent years. Some of these have improved
350
competitive efficiency, but, as the hon. Member for Eastleigh said, metgers are not magic. They are no universal panacea. If a merger is made up by bringing together a ramshackle group of companies, even if they are in the same field, and they are not rationalised, nothing may be obtained from it, and it may even damage the inspiration of local management. If it were made up of groups representing different industries, it might operate against the idea of efficient management.
The purpose of the I.R.C.—I am sure that this is right—is to bring to bear on this problem some minds which are skilled in this respect. This is why the choice of Sir Frank Kearton and Mr. Grierson and their colleagues was a wise one and we were glad to get such people, despite the proscriptions laid down by the hon. Member for Isle of Ely. The I.R.C. is not simply to be a public version of a well-established private function. It is charged with the responsibility of promoting industrial efficiency and it will look at its job from a point of view rather different from that of the regular merchant banks, but using the usual well-tried means of the merchant banks to achieve what it is hoping to achieve for our competitive strength.
It will have the right, and, indeed, the duty, to look at certain exporting firms to see that they get the support they need by reorganisation to put them in a dominant position for dealing with large international corporations in third markets.
An Hon. Member: How?
Mr. Benn: The answer is—by the well-tried methods. The fact is that I.R.C. will be charged positively with the task of looking at this from this point of view, and this is important. I am very keen—I am sure that Sir Frank Kearton and Mr. Grierson will both be very keen—that I should not over-sell I.R.C. today. I am not presenting the Corporation tonight in the same way as the right hon. Member for Wallasey presented 15 Dr. Beechings, as an instant solution to our problem. It is essentially a long-term job. As anyone with industrial experience knows, one cannot necessarily be sure that the mergers one would like to achieve can be achieved quickly or that the results of mergers, even with good management, can be felt immediately.

351
I do not believe very much in the idea of working out in this debate or in Committee the academic criteria for the optimum size of different types of industry. I would much rather trust the people in the Corporation who have knowledge of this to recruit expertise where they want it, to establish relations of confidence with those involved, and, above all—here I agree with what was said by some hon. Members opposite—to concentrate on the management element.
It is not just bringing together different elements. What we are looking for are candidates who are clearly in a field where their present size is a disadvantage, where they need good management, and where this management has an opportunity through the merger and through the influence of I.R.C. really to work its way through. These very wide criteria which I.R.C. will have in mind are the answer to those who charge us with accepting the theory that mergers are a panacea for all our problems.
The other thing which interested me very much about today's debate was how very few Members opposite made any reference to technology. There were a few exceptions. Industry is not being challenged only by American, German and Japanese firms. It is being challenged also by the new technologies. It is these forces which are at work, whatever Government are in power, whichever Minister is in office, whichever managing director is in the firm concerned. It is the new materials, the new processes, the new plant and equipment, the necessity for more research and development; it is the complexities of modern marketing techniques—all these things operate in industry today and are creating from within industry the need for change. I do not believe that in certain areas anyone would really deny that small firms cannot afford the facilities which are needed to let them take advantage of technological changes which are coming.
The next question is whether it is right to use public money for this purpose and, if it is right to allow the I.R.C. to do so, should it take an equity holding? The use of public money for industrial purposes is not new. I will not use the phrase of my right hon. Friend the First Secretary of State about it coming out in bucketloads from the Tory Party, but there were some pretty considerable disbursements,
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and I do not grumble about the idea. There was the Cotton Scheme. There was the proposed Cunarder scheme. There was the shipbuilding credit scheme. There was the Wiggins Teape scheme. Wiggins Teape might well have been done by I.R.C.—which answers the question about its possible use for regional development.
The question which divides us here is this. If Government money goes in, is it right that the Government should have some share in the profit that emerges from the merger? As we have been accused of really concealing our intentions from the public, it is important to refer hon. Members opposite to the manifesto, which makes this absolutely clear:
"A Labour Government will apply tests of the national interest before agreeing to sub sidies for private manufacturing industries and will insist, as would any prudent private in vestor, on a voice in the control, and a share in the profits, where public funds are involved."
This was two years ago. Hon. Members may not like it. I know that they do not like it. They prefer public enter prise to be kept in the failing sectors, because this confirms their view that public enterprise fails. When we put money in——
Sir H. Legge-Bourke Sir H. Legge-Bourke rose——
Mr. Benn: I will not give way now; I am sorry. I have a little more to say and I want to have the chance to say it. If we put in public money we think it right that the community should get a share if the investment succeeds. Quite frankly, it seems to be quite wrong that public money and public enterprise—for this is public enterprise in the entrepreneurial sense—should be used only as an ambulance in the economy, simply to pick up the manifest failures of public enterprise like the railways and the coal mines. Why not, to use a medical analogy, use public funds to invest in the maternity wards as well as in the geriatric and accident wards of industry? What I like about the I.R.C. is its subtle combination of a midwifery service with a touch of artificial insemination as well. It is a sort of marriage bureau with its own dowry system. It tries to see that public enterprise, in the broadest sense, is used to stimulate the growth of new industries in our economy.
The funny thing is that although references have been made to "Signposts

353
for the Sixties" no one made any reference that I heard—and I have been here nearly all day—to that part of the Bill which refers to the provision of money for new enterprise. Reference was all concentrated on the merger aspect. In practice, the creation of new enterprises may well be, I will not say the most important, but a very important element in what we hope to do.
It is argued, of course, that this could become a sort of holding company, but the truth is that this bit of public enterprise will be the more effective the more the funds are rotated. If we stick in one industry only as a holding company we are really sterilising the I.R.C. and preventing it from having the means to achieve what is wanted. If only hon. Members opposite could get the idea that the new techniques of public enterprise we are evolving are not a secret way of bringing about nationalisation but a new way of bringing public funds to bear on the problems of industry, they would be a little less suspicious. To be told that the I.R.C. is "a sheep in wolf's clothing", stealing in at the back door, and hitting "the wrong walnut" with "the wrong sledgehammer", is to miss the point of what we are trying to achieve. All those colourful phrases were used.
With us, the I.R.C. is only part of a development of new instruments de-
signed to establish a sensible working relationship between Government and industry. When one listens to Conservatives talking about industry one would think that the only thing that had happened was that private industry had come under the spell of the Government. But more has happened than that. The nationalised industries now respond more to the sort of modern managerial criteria laid down, quite rightly, by the party opposite in Cmnd. 1337.
The public sector is responding more to criteria appropriate to efficient management everywhere. In my own Department, in Government research and development we are trying to build into our decisions ways of using existing Government facilities and applying them with commercial criteria in mind. What is happening to the three elements in industry today—private industry, public industry and Government—is that all three are getting closer together and the I.R.C. is intended to build bridges in this area. I wish that in this debate we had had something from hon. Members opposite indicating, at any rate, that they understood the problems that the I.R.C. is intended to tackle.
Question put, That the Bill be now read a Second time:—
The House divided: Ayes 223, Noes 151.

Division No. 174.]

AYES

[10.0 p.m.

Albu, Austen

Coe, Denis

Faulds, Andrew

Allaun, Frank (Salford, E.)

Coleman, Donald

Finch, Harold

Alldritt, Walter

Concannon, J. D.

Fletcher, Raymond (Ilkeston)

Anderson, Donald

Conlan, Bernard

Fletcher, Ted (Darlington)

Ashley, Jack

Craddock, George (Bradford, S.)

Floud, Bernard

Atkins, Ronald (Preston, N.)

Crawshaw, Richard

Foley, Maurice

Atkinson, Norman (Tottenham)

Cronin, John

Foot, Michael (Ebbw Vale)

Bacon, Rt. Hn. Alice

Crossman, Rt. Hn. Richard

Ford, Ben

Barnett, Joel

Cullen, Mrs. Alice

Forrester, John

Baxter, William

Dalyell, Tam

Fraser, John (Norwood)

Bence, Cyril

Darling, Rt. Hn. George

Gardner, Tony

Benn, Rt. Hn. Anthony Wedgwood

Davidson, Arthur (Accrington)

Garrow, Alex

Bennett, James (G'gow, Bridgeton)

Davidson, James (Aberdeenshire, W.)

Ginsburg, David

Bldwell, Sydney

Davies, Dr. Ernest (Stretford)

Gordon Walker, Rt. Hn. P. C.

Blackburn, F.

Davies, C. Elfed (Rhondda, E.)

Gregory, Arnold

Blenkinsop, Arthur

Davies, Ednyfed Hudson (Conway)

Griffiths, David (Rother Valley)

Booth, Albert

Davies, Harold (Leek)

Griffiths, Will (Exchange)

Boyden, James

Davies, Robert (Cambridge)

Hale, Leslie (Oldham, W.)

Braddock, Mrs. E. M.

Dell, Edmund

Hamilton, James (Bothwell)

Brooks, Edwin

Dewar, Donald

Hamilton, William (File, W.)

Broughton, Dr. A. D. D.

Dickens, James

Hamling, William

Brown, Rt. Hn. George (Belper)

Doig, Peter

Hannan, William

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

Dunn, James A.

Hart, Mrs. Judith

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

Eadie, Alex

Haseldine, Norman

Buchan, Norman

Edwards, Rt. Hn. Ness (Caerphilly)

Hattersley, Roy

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

Edwards, William (Merioneth)

Hazell, Bert

Callaghan, Rt. Hn. James

Ellis, John

Heffer, Eric S.

Cant, R. B.

Ennals, David

Henig, Stanley

Carmichael, Neil

Evans, Albert (Islington, S. W.)

Herbison, Rt. Hn. Margaret

Chapman, Donald

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

Hooley, Frank

Horner, John

Mahon, Peter (Preston, S.)

Sheldon, Robert

Houghton, Rt. Hn. Douglas

Mahon, Simon (Bootle)

Shore, Peter (Stepney)

Howarth, Harry (Wellingborough)

Manuel, Archie

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

Howell, Denis (Small Heath)

Mapp, Charles

Silkin, Rt. Hn. John (Deptford)

Howie, W.

Mason, Roy

Silkin, S. C. (Dulwich)

Hoy, James

Maxwell, Robert

Silverman, Julius (Aston)

Hughes, Emrys (Ayrshire, S.)

Mendelson, J. J.

Silverman, Sydney (Nelson)

Hughes, Roy (Newport)

Millan, Bruce

Slater, Joseph

Hunter, Adam

Miller, Dr. M. S.

Small, William

Hynd, John

Milne, Edward (Blyth)

Snow, Julian

Irvine, A. J. (Edge Hill)

Moonman, Eric

Spriggs, Leslie

Janner, Sir Barnett

Morris, Alfred (Wythenshawe)

Steel, David (Roxburgh)

Jenkins, Hugh (Putney)

Morris, Charles R. (Openshaw)

Steele, Thomas (Dumbartonshire, W.)

Jenkins, Rt. Hn, Roy (Stechford)

Mulley, Rt. Hn. Frederick

Stewart, Rt. Hn. Michael

Jones, Dan (Burnley)

Newens, Stan

Summerskill, Hn. Dr. Shirley

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

Norwood, Christopher

Swain, Thomas

Jones, J. Idwal (Wrexham)

Ogden, Eric

Swingler, Stephen

Kelley, Richard

O'Malley, Brian

Symonds, J. B.

Kenyon, Clifford

Orme, Stanley

Thomas, Iorwerth (Rhondda, W.)

Kerr, Russell (Feltham)

Oswald, Thomas

Thorpe, Jeremy

Ledger, Ron

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

Tinn, James

Lee, Rt. Hn. Frederick (Newton)

Owen, Will (Morpeth)

Tomney, Frank

Lestor, Miss Joan

Page, Derek (King's Lynn)

Tuck, Raphael

Lever, Harold (Cheetham)

Pannell, Rt. Hn. Charles

Varley, Eric G.

Lever, L. M. (Ardwick)

Pardoe, John

Wainwright, Edwin (Dearne Valley)

Lewis, Ron (Carlisle)

Park, Trevor

Wainwright, Richard (Colne Valley)

Lipton, Marcus

Parkyn, Brian (Bedford)

Walker, Harold (Doncaster)

Lomas, Kenneth

Pearson, Arthur (Pontypridd)

Wallace, George

Loughlin, Charles

Pentland, Norman

Watkins, Tudor (Brecon & Radnor)

Luard, Evan

Perry, George H. (Nottingham, S.)

Weitzman, David

Lubbock, Eric

Price, Christopher (Perry Barr)

Wellbeloved, James

Lyon, Alexander W. (York)

Price, William (Rugby)

Whitaker, Ben

Lyons, Edward (Bradford, E.)

Probert, Arthur

Williams, Alan Lee (Hornchurch)

Mabon, Dr. J. Dickson

Randall, Harry

Williams, Clifford (Abertillery)

McBride, Neil

Rankin, John

Willis, George (Edinburgh, E.)

MacColl, James

Reynolds, G. W.

Wilson, Rt. Hn. Harold (Huyton)

MacDermot, Niall

Rhodes, Geoffrey

Wilson, William (Coventry, S.)

Macdonald, A. H.

Roberts, Albert (Normanton)

Winstanley, Dr. M. P.

McGuire, Michael

Roberts, Goronwy (Caernarvon)

Winterbottom, R. E.

McKay, Mrs. Margaret

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

Woodburn, Rt. Hn. A.

Mackenzie, Alasdair (Rose&Crom'ty)

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

Woof, Robert

Mackintosh, John P.

Rodgers, William (Stockton)

Maclennan, Robert

Ross, Rt. Hn. William

TELLERS FOR THE AYES:

McMillan, Tom (Glasgow, C.)

Rowlands, E. (Cardiff, N.)

Mr. William Whitlock and

McNamara, J. Kevin

Ryan, John

Mr. Walter Harrison.

MacPherson, Malcolm

Shaw, Arnold (Ilford, S.)

NOES

Allason, James (Hemel Hempstead)

Errington, Sir Eric

Jennings, J. C. (Burton)

Astor, John

Eyre, Reginald

Jopling, Michael

Awdry, Daniel

Fisher, Nigel

Joseph, Rt. Hn. Sir Keith

Barber, Rt. Hn. Anthony

Fletcher-Cooke, Charles

Kaberry, Sir Donald

Batsford, Brian

Fortescue, Tim

Kimball, Marcus

Beamish, Col. Sir Tufton

Foster, Sir John

King, Evelyn (Dorset, S.)

Bell, Ronald

Galbraith, Hn. T. G.

Kirk, Peter

Bennett, Sir Frederic (Torquay)

Gibson-Watt, David

Kitson, Timothy

Berry, Hn. Anthony

Gilmour, Ian (Norfolk, C.)

Legge-Bourke, Sir Harry

Biggs-Davison, John

Gilmour, Sir John (Fife, E.)

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

Birch, Rt. Hn. Nigel

Glover, Sir Douglas

Longden, Gilbert

Blaker, Peter

Glyn, Sir Richard

Loveys, W. H.

Bossom, Sir Clive

Goodhew, Victor

McAdden, Sir Stephen

Brewis, John

Gower, Raymond

MacArthur, tan

Brinton, Sir Tatton

Grant, Anthony

Maclean, Sir Fitzroy

Bromley-Davenport, Lt.-Col. Sir Walter

Gresham Cooke, R.

McMaster, Stanley

Brown, Sir Edward (Bath)

Gurden, Harold

Maddan, Martin

Buck, Antony (Colchester)

Hall, John (Wycombe)

Maginnis, John

Bullus, Sir Eric

Hall-Davis, A. G. F.

Mathew, Robert

Burden, F. A.

Harris, Frederic (Croydon, N. W.)

Mawby, Ray

Cooke, Robert

Harrison, Brian (Maldon)

Maxwell-Hyslop, R. J.

Cordle, John

Harvey, Sir Arthur Vere

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

Corfield, F. V.

Hawkins, Paul

Mills, Peter (Torrington)

Craddock, Sir Beresford (Spelthorne)

Heald, Rt. Hn. Sir Lionel

Mills, Stratton (Belfast, N.)

Crosthwaite-Eyre, Sir Oliver

Heath, Rt. Hn. Edward

Miscampbell, Norman

Crouch, David

Heseltine, Michael

Monro, Hector

Cunningham, Sir Knox

Higgins, Terence L.

More, Jasper

Dalkeith, Earl of

Hiley, Joseph

Morrison, Charles (Devizes)

Dance, James

Hill, J. E. B.

Munro-Lucas-Tooth, Sir Hugh

d'Avigdor-Goldsmid, Sir Henry

Hobson, Rt. Hn. Sir John

Murton, Oscar

Digby, Simon Wingfield

Hogg, Rt. Hn. Quintin

Nabarro, Sir Gerald

Doughty, Charles

Holland, Philip

Nicholls, Sir Harmar

Douglas-Home, Rt. Hn. Sir Alec

Hutchison, Michael Clark

Nott, John

Drayson, G. B.

Irvine, Bryant Godman (Rye)

Onslow, Cranley

Eden, Sir John

Jenkin, Patrick (Woodford)

Orr-Ewing, Sir Ian

356

357

Osborn, John (Hallam)

Royle, Anthony

Walker-Smith, Rt. Hn. Sir Derek

Osborne, Sir Cyril (Louth)

Russell, Sir Ronald

Walters, Dennis

Page, Graham (Crosby)

Scott, Nicholas

Weatherill, Bernard

Peel, John

Sharples, Richard

Webster, David

Peyton, John

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

Whitelaw, William

Pike, Miss Mervyn

Smith, John

Wills, Sir Gerald (Bridgwater)

Pink, R. Bonner

Stainton, Keith

Wilson, Geoffrey (Truro)

Powell, Rt. Hn. J. Enoch

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

Wood, Rt. Hn. Richard

Price, David (Eastleigh)

Summers, Sir Spencer

Woodnutt, Mark

Prior, J. M. L.

Taylor, Sir Charles (Eastbourne)

Worsley, Marcus

Ramsden, Rt. Hn. James

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

Wylie, N. R.

Rees-Davies, w. R.

Taylor, Frank (Moss Side)

Younger, Hn. George

Renton, Rt. Hn. Sir David

Thatcher, Mrs. Margaret

Ridley, Hn. Nicholas

Turton, Rt. Hn. R. H.

TELLERS FOR THE NOES:

Roots, William

Vaughan-Morgan, Rt. Hn. Sir John

Mr. Francis Pym and

Rossi, Hugh (Hornsey)

Walker, Peter (Worcester)

Mr. R. W. Elliott.

Bill accordingly read a Second time.
Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

INDUSTRIAL REORGANISATION CORPORATION [MONEY]
[Queen's Recommendation signified]
Considered in Committee under Standing Order No. 88 (Money Committees).
[Mr. SYDNEY IRVING in the Chair]
Motion made, and Question proposed,
That, for the purposes of any Act of the present Session to provide for the establishment of a public corporation (hereinafter referred to as "the Corporation") with the functions of promoting or assisting the reorganisation or development of any industry or section of an industry and establishing or developing, or promoting the establishment or development of, any industrial enterprise, it is expedient to authorise—
(1) the issue out of the Consolidated Fund—

(a) of any sums required for enabling the Secretary of State to make loans to the Corporation;

(b) of any sums required to fulfil any guarantees by the Treasury in respect of sums borrowed by the Corporation otherwise than from the Secretary of State;

(2) the payment out of moneys provided by Parliament of sums required by the Secretary of State for making payments to the Corporation on terms which provide for the making of payments by the Corporation to the Secretary of State of amounts proposed by the former or determined by the latter;
(3) the borrowing in any manner authorised by the National Loans Act 1939 of any money needed for providing sums required for enabling the Secretary of State to make loans to the Corporation;
(4) the payment into the Exchequer of any sums received by the Secretary of State or the Treasury in consequence of any of the provisions of the said Act of the present Session and the re-issue out of the Consolidated Fund of sums so received by the Secretary
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of State in respect of loans made by him to the Corporation;
so however that the aggregate of the amounts outstanding in respect of the sums paid to the Corporation as mentioned in paragraph (2.1 of this Resolution and of any sums issued by the Treasury in fulfilment of any guarantees mentioned in paragraph (1)(b) thereof and not repaid to them, together with the principal of any loans in respect of which guarantees have been given by the Corporation under the provisions of the said Act of the present Session and the principal of any money borrowed by the Corporation under those provisions, shall not exceed £150 million.—[Mr. MacDermot.]
10.10 p.m.
Sir Harry Legge-Bourke: Theres is only one question which I want to ask on this Money Resolution, and I shall be very brief.
In reply to the debate, the Minister of Technology said that he saw the Corporation taking a major part in applying modern techniques to industry. There is already a body which does that to a certain extent, namely, the National Research and Development Corporation. We in Parliament have voted that Corporation permission to take out loans up to £25 million. Can we be told whether in future years there is to be a separation of the money used for this purpose of applying technology
As the Resolution stands, it appears that the new Corporation would be able to have £150 million. Will that continue to be in addition to the £25 million which the N.R.D.C. is allowed to employ? Most of us would feel that the work done by the N.R.D.C. has been so excellent that it would be a great pity if any inroad were made into its work, and I hope that we can have an assurance that the £150 million will be in addition to the money for N.R.D.C. and that the financing of N.R.D.C. will be kept entirely separate.
The Minister of State, Department of Economic Affairs (Mr. Austen Albu): My right hon. Friend the Prime Minister

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was very glad to hear the remarks of the hon. Member for the Isle of Ely (Sir H. Legge-Bourke) about N.R.D.C. The hon. Gentleman will understand that this Resolution refers only to the Bill and does not affect the funds available to N.R.D.C. in any way.
Question put and agreed to.
Resolution to be reported.
Resolution to be received Tomorrow.

PARLIAMENTARY COMMISSIONER [MONEY]
Resolution reported,
That, for the purposes of any Act of the present Session to make provision for the appointment and functions of a Parliamentary Commissioner for the investigation of administrative action taken on behalf of the Crown, it is expedient to authorise—

(a) the charging on and issuing out of the Consolidated Fund of the salary of the Commissioner and of any pension or other benefit granted to or in respect of persons who have held office as Commissioner; and

(b) the payment out of moneys provided by Parliament of the expenses of the Commissioner under that Act.

Resolution agreed to.

EMPLOYMENT AGENCIES (REGULATION) BILL
Instruction to the Committee on the Bill that they have power to make provision in the Bill in respect of employment agencies which are not fee-charging and undertakings which supply persons in their own employ to act as office staff or as nurses or midwives.—[Mr. Hugh Jenkins.]

MEMBERS OF PARLIAMENT (WORKING FACILITIES)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Whitlock.]
10.14 p.m.
Mr. Paul Hawkins: I was rather taken aback yesterday morning when I was informed that I had the Adjournment debate tonight. I put down this subject some three months ago and I must admit that I had rather forgotten doing so. However, I shall do my best in the time available to say why I consider this matter to be important.
The subject is concerned with the inadequate working conditions for Members of Parliament. I refer especially to backbench Members who wish to give efficient service to their constituents, because this is what we are elected to give. This is in no way a party matter. I do not attach any blame to the Ministry of Public Building and Works, or any other Government Department. I do not want luxurious conditions for myself or other hon. Members, although friends have put forward ideas, from stables to sauna baths and other things.
I want to be able to do my job, as all back benchers do, as efficiently as possible and to deal with correspondence, which takes a considerable amount of time, fairly quickly, and have time for research into major constituency and national problems. Every hon. Member, especially the back bencher, knows that conditions for work-here are so incredibly inefficient that they would not be believed outside the House. When an hon. Member tries to tell his constituents the sort of things one has to do here they do not believe him; they think that he is just telling them a story to try to impress. The conditions would not be tolerated by the smallest business, for it would be broke in a few months.
I recognise that one of the main troubles is the archaic interior of the Palace of Westminster, but I am convinced that a good architect could make far better use of the existing building. I readily acknowledge that quite a lot is being done at present. This is not before time, but it is being done. I tried to get to my filing cabinet during the Recess, but I had to go away because the whole place

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was dangerous to walk through, with all the floors up. Any other hon. Member who came back will realise that quite a lot is being done. What is happening, nobody knows, except the workmen and possibly the Ministry of Public Building and Works.
I reject absolutely one suggestion I heard which may have been put forward by the Liberal Party—the bombing or blowing up of the building. I do not know whether that is its solution.
Mr. John Pardoe: That was Rhodesia.
Mr. Hawkins: I am sorry.
The other major trouble is the division of authority within the House. It is very difficult for an ordinary Member of Parliament to know where to go for different aspects of his work, for there are Mr. Speaker's Department, the Serjeant at Arms' Department, the Clerk's Department and many others. As with so many other Government and official departments, one naturally always goes to the wrong place first and is told that it is nothing to do with that department and that one had better go somewhere else. When one reaches that place one is told that it is nothing to do with them, or rather that part is not, but another part is. It is very difficult to find out who is responsible for what.
A few experiences of my own may illustrate what I mean. I entered the House, like several others, in 1964 and received a folder from the Serjeant at Arms, a booklet from the Refreshment Department, a booklet from the Library and a few other papers. One of the older hon. Members on my side of the House took me and other new hon. Members round the House and pointed out all sorts of interesting historic features, but did not remember to tell us where the bars were or the more important parts of the House. We did not receive any plan of the building but I believe—and I am glad to hear it if it is the case—that the hon. Members elected this year did receive a plan. Why not have one booklet with all this information in it? Perhaps it would be too simple, but it could also tell one the principles of procedure, how to put down Questions and where to go. Why should one have to waste the first few months
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of one's time here—some who represent marginal constituencies may wonder whether they will be here longer than for a few months—trying to find the way around?
I was given a key to a locker and after some difficulty I found that locker. It was on the floor outside the dining room in direct line with where the waitresses come out with loaded trays to go into the dining room. I am not built in a way that makes it easy to kneel down, I found that when I bent down to the locker I would trip up a waitress with a loaded tray. After six months I returned the key. I later found that some hon. Members had filing cabinets. On asking for one I was told that there was not one available, but after four or five months I got a key to a filing cabinet and I thought that I was making great progress but my filing cabinet, with some others, was in the cloisters. Now I find that where my cabinet is there is to be another Government Whips' office.
I do not know whether a lot more Government Whips are to be appointed. Probably they will be needed during the coming part of this Session. I understand that that area is to be taken from backbenchers. It was a very convenient place close to where we hang hats and coats and adjoining a desk. Of course, I had to arrive there very early because the desk was not mine and if one got there between 9 o'clock and 9.30 one was swept up by the sweepers and they did not leave until getting on for 10 o'clock.
Despite this, I felt that I was fortunate after six months to have achieved a filing cabinet. Rejoicing, I went to tell my secretary. Then the blow fell for I found that no women are allowed in the cloisters, although the cleaners use it. So I had to learn a new job, filing, and I am extremely bad at it. This was not the end, because when I went down to dictate letters in the only place one could find, on the interview floor, I would get a letter from the file in the cabinet and then have to go up two flights in the lift, down the steps, along the corridor, down more flights of stairs, cross the cloakroom to the part of the cloisters to the filing cabinet. I then had to reverse the process to get the file back to my secretary.
This seemed to be rather wasting time. I found that it took me 10 minutes every time that I wanted a letter from the file.

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This may sound amusing, but it is an appalling waste of time and it is a waste of the electors' money. I reckon that it took me two hours a day to carry the files and to do the filing and at the end of the day, because my secretary could not be there, it meant that the secretary was never able to get to one's filing cabinet. I thought that this was doing something one was not paid to do and yet not allowing someone else who could do the job much better to do it. My suggestions to the Serjeant at Arms that the secretary should be allowed there perhaps for one hour twice a week received a rather dusty answer.
There are many other matters I could mention. The telephone system seems completely inadequate. One gets into a telephone box and somehow or other always finds a Welshman on one side and a Scotsman on the other and it is difficult to carry on a conversation in English in that situation. It must be difficult for them to have Englishmen on either side. The way in which messages are taken round to Ministers interrupting committee meetings, and the lack of accommodation in the Library, are matters which we all know about.
In passing, I wish to say how grateful I am to the staff in the House. They are doing first-class work under difficult conditions, particularly the police, who have put me on the right corridor on many occasions. It was not for a long time that I realised that I should be looking at the colour of the seats to direct me to the House of Commons, when I kept going to the House of Lords by mistake. The Library and Post Office staff work all hours and are extremely efficient and courteous. Our waiters and waitresses have to put up with a lot of inefficient conditions in the kitchens and elsewhere and they do a very good job, for which I am extremely grateful.
What am I asking for? First, full information for all new Members, contained in one booklet, with a plan of the building. I feel that this would be welcomed by all Members. I want better facilities for secretaries, particularly in the Westminster Hall area which I know best, because conditions there are not fit for secretaries to work in. I would like a system of indicators in many places throughout the House, which would
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indicate that someone has a message waiting for him. I do not want a public address system. I want the cleaning to be finished by 9 o'clock in the morning; it is a small thing but one cannot get down to an hour's work before Committee, attempting to answer letters, if one's desk is being cleaned.
I want more Library and research staff and, finally—it seems a lot to ask—I want each M.P. to have a desk, a filing cabinet, a telephone and two chairs, one for his secretary. These must be within the building because, although I have seen some very good offices on the other side of the street, the difficulty of the lift, getting across to this building when there is a Division and being apart from the workings of the House, make such accommodation very difficult to use.
The thinking behind these antiquated conditions appears to be that it is good for a new M.P. to learn the hard way and to go back to school. Perhaps the reason why nothing is done is because members of the Government—I am not blaming any hon. Member in any Government—are the people who bring about changes and they are all right and have forgotten what conditions were like when they were back bench Members.
The chief reason for the lack of reform is ourselves accepting this state of affairs and never daring to spend money because the electorate would never "wear it". If they were told clearly how we are wasting their money by wasting our time then they would accept it. We need to have a real look at the proper use of the space in the building, coupled with an urgent O & M study of what are the minimum facilities necessary for us to do our job properly. If we put up with these conditions we shall rightly be the laughing stock of the nation.
More seriously, we shall never go on attracting the best type of person to be a Member of Parliament. I do not believe that I have asked for a lot of things. Many Members would like a sauna bath, a swimming pool and certain other things which would be very attractive, but I have only asked for what I think are the bare essentials necessary to carry on one's work efficiently and to enable one to give enough time to the major problems of the day. If one spends all of one's time with correspondence and trying to find out

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how to do things, one cannot concentrate upon the matters which we have been sent here to do.
I would like to say how very grateful I am to have been given the opportunity of ventilating this matter. I am often infuriated and frustrated by the obstacles which appear to be put in the way of our doing our job properly. But, like most hon. Members, I am fascinated by the work and am only asking for improvements so that we can do our job in the right way.
10.30 p.m.
The Parliamentary Secretary to the Ministry of Public Buildings and Works (Mr. James Boyden): I am grateful to the hon. Member for Norfolk, Southwest (Mr. Hawkins) for giving me an opportunity to explain some of the things that are going on, although I must start with the central difficulty that many people want to be more central than everyone else, that many people are in this place and want to use it, and that this is an absolutely fundamental problem in a Victorian building which was designed for much more leisurely days and procedures.
Much has been, is being and will be done. If one considers the situation before 1960, there were 78 rooms available for Parliamentary use, 60 for Ministers, five for back benchers—60 hon. Members shared those five rooms—five for secretaries and eight for chairmen such as the Chairman of the Public Accounts Committee and of the Estimates Committee.
Since 1960, there has been a steady incorporation and building of more rooms. In 1960 7, Old Palace Yard was brought in, with 10 rooms and 1, Bridge Street was brought in in 1961, giving 53 rooms. There were other minor additions as well. My right hon. Friend the Member for Leeds, West (Mr. C. Pannell), who was a great protagonist for hon. Members' rights and accommodation, brought into use 54, Parliament Street in 1965, which provided 11 rooms, and the roof space scheme, which is now practically completed, brought in 70 rooms.
We are nearing the point when Star Chamber Court will be available. The building work should be finished just after Christmas, while furnishing, and so on, will take about another month, which
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means that by February of next year we will have another 67 rooms available. This means that since 1960 we have added 228 rooms, primarily for Parliamentary use—the sort of use to which the hon. Member for Norfolk, South-West referred—compared with an initial figure of 78 prior to 1960.
A considerable part of this accommodation has been given to private hon. Members. The total available to private hon. Members, if one takes the whole picture and looks forward to February, 1967, is that 79 single rooms have been or will be available while, with other, shared rooms, about 215 back-bench hon. Members will have facilities with desks, many of them in single rooms. In addition, there will be 16 rooms available for secretaries, making accommodation for about 124 secretaries. Before 1960, there were five rooms available for secretaries.
In addition, the number of rooms available for chairmen will have gone up from eight to 25 and the number of rooms for Ministers—there are rather more Ministers now—will have gone up to 104. There are other rooms to which I have not referred, but which make the conditions of the House much better for hon. Members and help to alleviate some of the poor conditions which existed before.
It is recognised that what has and is being done is not enough and, as the hon. Gentleman probably knows, there is a big scheme under way for a new Parliament building. I assure him that what he asks for by way of improved organisation and method—a clear definition of what is required by Parliament and hon. Members—is fully in the mind of the Ministry of Public Building and Works and of the Services and Accommodation Committee, which look after these matters, and of the special committee which will look after the new building. Negotiations are now starting to try to work out the best facilities for hon. Members, but this is looking a long way ahead. New buildings take a long time to complete, and planning, which is a difficult matter, also takes a considerable time.
So I think I can say that in the five or six years since things began to move—I am glad that the hon. Gentleman did not make party politics out of this, for both parties have done their bit in this

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—the organisation of the building, the organisation of the architecture has got very considerably under way and is making very great strides forward.
Perhaps I should say one thing about a matter which irritates hon. Members from time to time and is partly a personal thing, and that is complaints about the heat of rooms or the cold of rooms, things like that. The hon. Gentleman intended to raise the question of lavatories with me, but I noticed that he did not. But there are complaints about the central heating not working properly, and that sort of thing. If any hon. Member—this went out on record about a year ago—has any such complaint, and will ring up extension 800, I can promise him that the Ministry's engineers will give instant attention to the matter. Normally, it is a matter of a very small adjustment and it can be put right.
I think that perhaps the hon. Gentleman would like me to explain what is to happen with the new building which is coming. He asked a number of questions which obliquely referred to this. I would like very much to say again how much the House owes to my right hon. Friend the Member for Leeds, West for initiating the new building project in Star Chamber Court. Work started on this in the Summer Recess of 1965, and the estimated cost is about £250,000. As I have suggested, the work is practically completed and we should be able to make the arrangements for it quite soon.
There has, of course, been a change in the method of allocating rooms, and this is now done at the behest of the House of Commons Services Committee, which has done the allocations to which I will refer in a moment, and any further proposals for altering the accommodation and making facilities better will now come from this Committee and the Ministry of Public Building and Works will, of course, carry out as the House directs.
I think that I should say here that the staff the Ministry employs on this building are very experienced people who are very good at the particular jobs they have to do. I do not think that there was any implication of criticism of them, but I certainly would like to say, from my experience of them, how well they do
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attend to the physical needs of this building, which is very difficult indeed.
To go on with the new Star Chamber Court, the building has got four storeys which are to be allocated in this way. The Members' cloakroom will be created there to release the existing cloakroom in the cloisters—which the hon. Gentleman suspected will probably lead to his being turned out.
I should explain about his difficulty with the filing cabinet that that is in the gentlemen's cloakroom. I think that he made a point about cleaners. Women are not allowed in there when the House is sitting. That is the reason why his secretary cannot have access to his own filing cabinet. The normal custom is for secretaries to have filing cabinets in the rooms in which they work. His filing cabinet is his personal one—many Members have them—not necessarily to be used by secretaries. If he had had a desk in another place—I gather he was offered a desk outside the actual central part of the House, and he did not find this convenient—he would be able to have his secretary have access to his filing cabinet. I understand his difficulty at present in Parliament Street or Bridge Street—across the way at the other building when Divisions are on, when the weather is wet; and when Divisions are on there is a constant trailing to and fro, which interrupts one's work, and which probably decides one not to go on with the work, but to go to the other place, to which he referred.
As well as the cloakroom there will be a car park. The principal floor level will accommodate the Chairman of Ways and Means and the Deputy Chairman, and there will be nine single rooms for Ministers, releasing nine rooms elsewhere for private Members. The principal mezzanine floor will have rooms for members of the "Shadow" Cabinet and their secretaries, which will release 16 rooms elsewhere. The first floor will have 16 single rooms for Ministers, which will release another 16 rooms elsewhere. There will be three units for the Press Gallery, and the first floor mezzanine level, which can only be half-used because of service installations and pillars, etc., will provide accommodation for journalists and have five double rooms for the use of private Members.

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The hon. Gentleman referred to the accommodation for the Whips. Again, this is not an encroachment on private Members' rooms, because there will be an increased number of rooms available. Government Whips will have accommodation there, and the staircase is being constructed to make it quick and easy for them to attend to their onerous duties of keeping us in order.
To mention some of the other facilities which have been added to make it possible for people to perform their duties quickly, there has been an increase in parking space, with the provision of 50 parking spaces in the lower garage of Church House. That is an additional facility which is very convenient. There has been a very considerable extension to the Library facilities, brought about by the activities of the Library Committee.
In 1960, there were 18 Library clerks and other officials of that grade, and seven secretaries and attendants. In this year, there will be 32 Library clerks and 14 secretaries and attendants; in other words, the staff has almost doubled from 25 to 46. That is to cope with the new services—the small scientific section—the experimental news cutting service, and to improve existing services. This has given rise to considerable pressure on accommodation, because the additional Library staff have to be accommodated somewhere.
I should like to express appreciation of the way in which the late Speaker, Sir Harry Hylton Foster, assisted in giving up part of his domestic quarters for Library staff, and of the way in which the present Speaker has given up his Library to make an extension to the Members' Library, which will be started on reasonably soon, at Christmas, and provide an additional part to the Library.
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In the same way, other services have been improved. The copying machines are greatly used. There are two now, and I think that there were none when I first came to the House. A third is being installed.
The hon. Gentleman grumbled about the telephone system. One of the difficulties about it is its structure. But an intercom telephone network was introduced last year, which is taking more calls and making the existing services go a good deal further.
Perhaps I should refer to the position about desks, which is rather better than the hon. Gentleman gave us to understand. After the General Election, a ballot was held for desks, and those hon. Members who were unsuccessful were placed on a waiting list. All those have since been offered desks, although some have declined to take them because they were too far away from the centre. I see the hon. Gentleman shaking his head. I will have his particular case investigated. That is what I am informed. I understand that there is only one hon. Member who is now awaiting the offer of a desk, and he applied in July.
Matters of improving facilities which require additional work are now very much under the control of the House of Commons itself. As I said earlier, they arise from the recommendations of the House's own Committee, and the execution of them is with the Ministry of Public Building and Works.
The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at sixteen minutes to Eleven o'clock.

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

FUTURE WATER SUPPLIES
2.36 p.m.
LORD HAWKE LORD HAWKE rose to ask Her Majesty's Government what plans they 'have to ensure that the future water supplies of this country meet the anticipated increasing demands of the future, particularly in the South-East; and to move for Papers. The noble Lord said: My Lords, the fact that for the first time within my recollection there are no Questions on the Order Paper on a Wednesday must not be taken by Her Majesty's Government to mean that we are satisfied with their conduct of our affairs. My Lords, when people turn on a tap they expect to find water, but they do not realise that it takes years of thought and millions of pounds before that water comes out of the tap. I have had a Motion of this sort on the Order Paper for a considerable time, with two objects: first of all, to discover what Her Majesty's Government were doing in respect of the future and to make sure that they were doing something; and, secondly, to bring home to people the very large sums of money and other considerations involved.
The Water Resources Act 1963 provides that river authorities should make a survey of the needs and the resources of their respective areas; and, in spite of a flurry of licensing work, and so on, that work is presumably being carried on. But the Water Resources Board, seeing that in their opinion the needs of the South-East of England were much more urgent than those of other regions, thought it advisable to make an overall study of this region themselves in advance of the piecemeal survey by the river authorities. The committee of experts who made this survey were largely drawn from the component river authorities. If as a layman I may venture to say so, I
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think the study is an excellent one, although it is rather technical in places, and it makes very interesting reading even to the layman.
Their first task, of course, was to estimate future consumption in the light of the likely trends of population and water use per head in the future. They found difficulty—I can understand why—in assessing these factors, so throughout their Report they adopted the strategy of planning plentifully for the near future in the knowledge that they could either modify or hasten plans for the far future. That seems to me a sound approach. Of course, the fact that there is urgent need in the South-East does not mean that, in the future, there will not be urgent needs elsewhere in the country, but the Water Resources Board consider that the needs in the South-East will arise before those in the other regions, and they therefore await the respective reports of the river authorities for these other parts of the country. So I shall be dealing chiefly with the South-East on the basis of this excellent Report.
The South-East is taken to be all that part of the country east of a wavy line joining the western corner of the Wash with the western boundary of Dorset. In this area there are about 19 million people at the present time, and it is expected that there will be 22 million by 1981 and 28 million by the end of the century. In 1964 the statutory water undertakings supplied these people with 32 gallons per head per day domestically, and 21 gallons industrially—a total of 53. In addition, there were drawings of water representing about 11 gallons per head per day by industrial users, such as power stations, which drew direct and not though the water undertakings. The breakdown of the domestic consumption is rather interesting: drinking and cooking, one gallon; dish-washing and cleaning, two gallons; laundry, three gallons; flushing and refuse disposal, eleven gallons; washing and bathing, ten gallons; car-washing, half-a-gallon; garden and recreation. one-and-a-half gallons; and waste in distribution, four gallons. So the two major users are bound to increase as more houses are fitted with flush lavatories and bathrooms.
They have to estimate future demand, although it is really difficult to do so,

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and to take into consideration three factors: first of all, the size of the population, then the consumption per head and then the industrial growth. I will not mention much about industrial growth because other noble Lords will be speaking on that subject. One knows that gallonage per head is going up and that the population is expected to increase. After a lot of thought, the Committee decided to recommend a figure increase of 3·1 per cent. per annum simple, which is very roughly in line with the rate of increase over the previous ten years. That would mean that for supplies through the water undertakings the gallons per head per day would go up to 80 at the end of the century. This would roughly represent a doubling of the present overall consumption; in other words, an increase from about 1,000 million gallons per day to about 2,000 million gallons per day at the end of the century for a population of 28 million. Moreover, the Board think that their figure for the end of the century is the lowest possible, unless the population figures prove wrong—and, of course, they could prove wrong.
My Lords, how are we to meet the deficit? First, is there enough water overall? The rainfall over the whole country averages about 36 inches, ranging from 100 inches to 20 inches. In the South-East, it averages 27 inches, varying from Dorset to Essex. About half of the rainfall is lost through evaporation and transpiration, and most of that occurs during the summer; so the summer rain is no good for our water supply. The run-off available for impounding varies from 4 inches in Essex to 20 inches in Dorset. This represents, over the whole area, something like four times the current consumption. Of course, one cannot impound it all, because the rivers must be kept flowing; but the water is there and it is chiefly a question of catching it.
There is a tendency to think fancifully in terms of water, of vast, dramatic schemes to bring water from Wales, from the Lakes, and so on, through gigantic pipelines into the drier areas. The Board consider schemes of this sort expensive and unnecessary, as the South-East area can get its water supply within its own catchment area. The deficit, of
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course, is not spread evenly over the south-east. Some parts, such as Sussex, parts of Kent, Hampshire, Dorset and Suffolk, are expected to be self-sufficient and, indeed, to have a surplus. The deficit area is represented roughly by half a circle from Northampton to Buckinghamshire to the Thames Valley and out through Essex.
The main strategy of the Report is based on taking the minimum land for storage, using the rivers to move the water and keeping the water cost as low as possible. The two important consequences flowing from these considerations are that the Board want to use nature's reservoirs as much as possible—in other words, underground water—and they want the rivers to be kept reasonably clean. If we can manage to do these things, then the taking of land for storage and the need for pipelines will be kept to the minimum; if we cannot manage to do these things it will mean making much more man-made storage, with its consequent effect on land use and so on.
There are two alternative systems: we can hold up water in storage reservoirs and pipeline it to the treatment reservoirs for use, or we can use rivers to transport the water to treatment reservoirs by regulating their flow by impounding water in the winter and letting it out into the rivers in the summer. That is the better and the cheaper system favoured by the Water Resources Board, modified by the maximum use of underground storage to save land and cost, for underground water is much cheaper than stored water. If we do not get the results we expect from this we shall have to fall back on other expedients, so the Board want geographical studies to be put in hand for a number of the storage works which they hope they may not require. Also, in case of a long-term short-fall, such as miscalculation of population, miscalculation of consumption or overestimating the amount of water which may be got from underground, the Board want a feasibility study made as quickly as possible of the Wash Barrage. I understand that the paper work has been started, but that work on the site has been called off for the sake of economy.
In this Report there are in detail a number of schemes and alternates and

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reserves which I will not go into here, but there are one or two interesting features which arise. First of all, there is underground storage. The plan relies a lot on being able to obtain underground water for the Thames. The Board want to go forward with experiments which have been started by the Thames Conservancy (I have no doubt that my noble friend Lord Nugent of Guildford will mention them) designed to pump out the chalk in the summer and leave a greater storage space in the chalk for the winter rain. There are pilot schemes intended for Lambourn and also in the Ouse Catchment. The result would be more water in the rivers in summer and less in winter than now. I presume that the Lambourn scheme would top up the Kennet. I do not know whether the noble Lord, Lord Kennet, views with equanimity the idea of being "topped up". It is thought that the chalk underlying London, in which the water level has sunk over the years through heavy withdrawals, might be topped up also; but nobody knows what would be the effect of doing this with untreated water, and the supply of treated water, naturally, is not very freely available. In any case, it is all rather experimental.
Then, my Lords, there is the question of the re-use of water, particularly in the Thames. The upstream effluent becomes the downstream water resources, and they reckon that if they can put enough water in the top of the Thames, the shortage of London and the Lea Valley, and so on, will be looked after. That is where it becomes so important to improve the cleanliness of the rivers. It is not so much sewage effluent which is the danger, because that tends to correct itself through aeration over the weirs and in flow, but it is the industrial effluent which we have to try to keep out, or which must be purified before we let it back into the rivers. I made careful inquiries about what would happen if a drum of deadly poison got into the Thames. I was assured that it is all under control, and that is a comforting thought, but I am not quite sure how it is under control. I read in the Press that in East Sussex at the moment the re-use of water is being actively practiced—of course, the water of the Rhine is used a great many times before it reaches the sea.
There are other quite practical schemes which the Board would prefer not to use.
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Welsh water could be brought into the Thames. It would be expensive, but it could be done by regulating reservoirs in the Welsh Hills or by impounding reservoirs near the mouth of the Wye or the Severn in England. This scheme would be liable to heighten the blood pressure of bird-watchers, botanists and Welshmen, and it could be said that it was being done at the expense of the future needs of the West Midlands. So it would create an awful lot of trouble. Then, of course, there is talk of water barrages across Morecambe Bay, the Solway Firth and so on, but it would be very expensive to bring water from there, and the water would arrive much too late. The need will arise before barrages can come in.
Water from the sea has some advocates and the Board would like to see experimental plant on a full scale set up in this country. Not only would it probably be a very good "shop window" for exports, but it would be possible to arrive at a proper and realistic costing of the water. At present the price of water is very elastic. It depends entirely on how you allocate the costs between electricity and water. In the March number of Optima, the Anglo-American Corporation house journal, there is an interesting table which gives a graph of electricity and water prices based on the theoretical performance of the best advance gas-cooled reactor. With electricity at 0.4d. per unit, water comes out at 4s. 3d. per thousand gallons. That is a good deal more than the cost of most of the water consumed in this country, but is within striking distance of marginal supplies, and an experiment in the use of low pressure steam from an atomic power station on a big scale would be very useful from the point of view of knowledge for this country and for exports to desert countries, because this is a business in which we are supposed to be very good.
There is the question of the capital involved in all this. The Board put the cost of the South-East region at £410 million for supply, and £300 million to £350 million for distribution over the 35 years. The Wash barrage at £250 million could substitute some, but not a great deal, of its expenditure. In addition. there is the huge expenditure involved in enlarging sewage treatment plants which

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would have to deal with the correspondingly extra amount of water, and also for providing plant where it does not properly exist to purify some of the effluent which goes into the rivers. But all the schemes are costed in the Report, and mostly come out at under 2s. per thousand gallons.
My Lords, I will mention one or two further points of interest. Spray irrigation is rather an unknown quantity. No one knows what crops it will pay to irrigate, and what will be the price of strawberries and the price of water at the end of the century. The Board have allowed for an increase in spray irrigation, but their advice to anyone who wishes to rely on irrigating his crops in a dry year is, "Build your own storage to store the winter run-off and be sure". Reading the Report, fishermen may have doubts and qualms, but I think they may be assured that the Board are pretty "fishy minded". In fact, one of their officials told me he would like to see salmon running up the Thames again in his lifetime.
The Board does not eliminate reservoirs; it only minimises them, and a Wash barrage could not arrive in time to relieve the position in the next fifteen years. So, if we are going to have reservoirs, let us have them so that they are of use for something else besides storing water. We do not want reservoirs which the public cannot approach because there is not enough plant to de-contaminate the water after its contact with the public, as I believe is the case at Thirlmere. Let our reservoirs be available for fishing and sailing and other amenities, as is the reservoir at Diddington. We want to make quite sure that powers to acquire sites for water authorities are sufficient to enable them to build something that is a sailing place as well as a water reservoir.
But I think there is something much more fundamental in the Report, and that is the doctrine of sharing of water. With river boards each looking to the needs of their catchment area, there is a danger of localised thought. They might say to themselves, "Let us provide for our local water undertakers and earmark any reserves in our area for our future needs. We will, of course, estimate liberally and let the rest go hang." This will
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not do. At the same time, local people must feel assured that if they export water in the short term and should happen to want water for themselves in the long term, their needs will be met in due course. This is the function of the Water Resources Board. Unless they can ensure against "dog in the manger" and keep private confidence alive, their long-term plan cannot work, and we should have to fall back on the alternatives, which will use more land and be more expensive. It is not too late and it is not too early to start planning in these matters, but it is no good cheeseparing on research and field work now, because if we want water flowing when our grandchildren turn on the tap, we have to start making plans now. I beg to move for Papers.
3.3 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, it is customary on a Motion of this sort to start by congratulating the mover on his choice of Motion and upon his opening speech. I must admit doing this occasionally a little bit tongue in cheek, if it falls to my lot to prepare the speech in reply, but to-day my tongue is not in my cheek because on this matter of water conservation, my wife assures me, I am a bit of a crank. I never pass a reservoir in the part of Wales with which I am most familiar, especially after a time of drought, without looking at the level of the water a little apprehensively and wondering whether it is going to last out.
The problem which the noble Lord, Lord Hawke, has placed before us to-day is how in the years ahead, up to the end of this century, the water that we simply must have can be conserved and will be available for the use of the population that will certainly follow us. This is a particularly opportune moment to debate this matter, because we have before us this interesting and useful Report prepared by the Water Resources Board. They have tackled at the very outset the most problematical area in the whole country—namely, the South-East.
Your Lordships will know that the Water Resources Board were established under the Water Resources Act 1963. They have begun to discharge their functions of advising the Minister and the river authorities about the conservation of water. Although passed by a Tory Administration, I praise the 1963 Act as

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a timely and wise piece of legislation—I never mind praising Administrations of the Party opposite in a matter like this because opportunities for praise happen to be so rare, but this is one of those occasions when they passed a really first-class piece of legislation which is now beginning to show its effect. The 1963 Act has equipped this nation organisationally with excellent tools, in the shape of the Water Resources Board and the river authorities, to plan our water strategy on a national scale and to produce a conservation policy that makes sense in the broadest terms. Admittedly the total strategy will take time to produce, but preparations are going forward, I am assured, on a broad front.
The Board's first Report has been, as the noble Lord, Lord Hawke, has said, wisely concentrated on the area of greatest difficulty—namely, the South-East. I understand that the next Report is likely to concern itself with the North-West, and judging by past experience in this House, I imagine that that Report is likely to be a little controversial. It is too soon to say when that Report will be published, and I mention it now only to show the lines upon which the Board are planning their work, tackling the difficult areas and ensuring that the problems are looked at not only in relation to these areas but also in relation to the nation as a whole and its resources. Here I support very much what the noble Lord said, that we cannot and dare not think only in terms of water that happens to be available to us in our immediate locality. We must think in terms of planning the nation's water as a whole, and I say this equally to my Welsh compatriots and to others who think in terms of, "This water is ours and we must reserve it solely for our use". This is nonsense. We must share what happens to fall on this Island in such a way that the advantage will accrue to the nation as a whole. Otherwise we shall have wasteful schemes and shall be doing a lot of stupid things with our comparatively scarce water resources.
Apart from these generalities, I am going to concentrate my speech on the South-East, leaving it to my noble friend Lord Kennet to deal with the broader aspects of this matter which will undoubtedly be raised in the debate after I have sat down. It is, of course, to the South-East that the noble Lord, Lord
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Hawke, devoted the major part of his well-informed speech. Clearly he has done his homework on this and given us the benefit of it. The South-East is an extraordinary part of England. It is the area with the greatest concentration of population and consequently with the greatest demand for water. It is also in part the area in which there is the least water to be had. It is worth mentioning, I think, that the Government started work on the water problem in the South-East before there was even a Water Resources Board. The Ministry of Housing commissioned an expert report on the underground water resources of the Great Ouse region before the Board began to function. That report has now been made and it is part of the data available to the Board.
The situation which the Board and the river authorities inherited in the South-East was one in which considerable quantities of water were already being transferred from one area to another, and the growing demands for water necessitated a regional plan for resources that are available and ought to be made available. The Board began their work by bringing together the ten river authorities concerned and setting up a technical committee of the authorities' engineers concerned and their opposite numbers from the water undertakers. Their terms of reference were to assess demands for water for all purposes in the South-East of England to the end of the century; to determine the resources available, and to consider the system by which water would be distributed in bulk to major users.
That technical committee reported in the spring of this year, and their report was published in July, accompanied by a document which the Water Resources Board had produced. That document set out the Board's conclusions upon the report of the technical committee. I am not going to attempt a summary of either the report or the Board's conclusions upon it, except to say that what has emerged is that the problem facing everyone concerned with the provision of water in the South-East is that of providing an extra 100 million gallons per day within the next five years, a further 300 million gallons per day in the following decade, and an additional 700 million gallons per day by the end of the century. These are tremendous quantities.

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On present supplies, the Board think that there are five river authorities in the South-East with potential resources sufficient to meet their estimated demands for the rest of the century. These areas are Avon, and Dorset, Hampshire, Sussex, Kent (outside the area of supply of the Metropolitan Water Board) and the East Suffolk and Norfolk area, excluding Ipswich and South-East Suffolk. The other areas of the region, those of the Thames and Lee Conservancy Authorities, the London Excluded Area, and Welland and Nene, Great Ouse and Essex River Authorities need a planned development of new resources estimated at 85 million gallons a day, in 1971, 270 million gallons a day in 1981, and 650 million gallons a day in 2001.
In reviewing ways of meeting these deficiencies, the Board have included every known method of producing water, not just the conventional ways. They are considering the use of storage—both surface and underground—to regulate flow in rivers; to the artificial recharge of underground storage; to estuarial barrages, particularly the Wash; to the desalting of sea water; and to the transfer of water into the area from the Westand the South-West. However, only the abstraction of water from underground strata and the construction of more surface storage can be relied upon to make more water available during the next ten years. Bearing that in mind, the Board propose a progressive programme that will make full use of all additional supplies which can be obtained fairly quickly from works already authorised, and to authorise new works which will take full advantage of existing river flows without requiring large new storage reservoirs.
The Board also propose to get the maximum yield from underground resources, which means saving agricultural land and capital investment on reservoirs. This will involve new techniques to enable increased use to be made of storage in underground strata and to augment river flows with underground water when necessary. The Board hope that large additional supplies can be produced in this way from the chalk in both the Thames and Great Ouse areas. This is the method described by the noble Lord, Lord Hawke. If the Board are right, only one large storage reservoir will be needed before 1981, although smaller storage reservoirs
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will be needed in the outlying parts of the region. This will provide invaluable time for studying the results of work on desalination and on barrage schemes, so that a realistic comparison can be made between them and the more conventional methods of water supply. What they are recommending is, first of all, a programme of works to meet the foreseen deficiencies during the next decade, coupled with an urgent programme of investigations which must be completed by the early 1970's so that the whole situation can then be reviewed. The investigations cover a wide field, ranging from pilot schemes for the development of ground-water storage and the survey and exploration of possible reservoir sites to a feasibility study of a barrage across the Wash; further work on desalination; and the transfer of water from the West and/or South-West into the Thames area.
I think that the House would like to know what action has been taken since the Report was published in July of this year. In paragraph 44 of their Report the Board summarise the programme of works and investigations which appeared to them to be necessary and about which they would be consulting the river authorities and other bodies and interests cocerned. On Wednesday next the Board will be meeting representatives of the ten river authorities in the South-East to learn their views on the Report and to plan the action to be taken by the Board, the river authorities and others to implement its recommendations. All action has not, however, been deferred, pending the outcome of that meeting, and I am now going to give a summary of what is already being done.
The Metropolitan Water Board have resolved to go ahead with the construction of the Datchet reservoir. The Essex and Great Ouse authorities are investigating a scheme to transfer water to Essex from the River Ely Ouse; and the Thames Conservancy are investigating the Sunny-meads intake scheme. The Water Resources Board and the Welland and Nene and Lincolnshire authorities have agreed to undertake an investigation of the ground water resources of the Peterborough area. The Board have received within the last ten days the Thames Conservancy's detailed proposals under Section 18 of the 1963 Act for their pilot ground-water scheme in the Lambourn Valley. If this scheme is approved by the

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Board, it is hoped that a start will be made on it before the end of the year, subject to all necessary consents and authorisations being obtained. These will necessitate planning permissions, as I am sure the noble Lord, Lord Nugent of Guildford, will know; and I am sure he will be hoping that these consents, authorisations and planning permissions will be forthcoming. We certainly want to get on with these schemes as soon as possible. The Lambourn Valley scheme, I understand, will extend over, three years and is a major investigation. The preliminary work necessary to the formulation of an investigation scheme under Section 18 of the Act is in hand in the Great Ouse Area. The River Authority have appointed consulting engineers and are working closely with the Water Resources Board's Geology Division. In addition to all that, there is a phased programme of surveys and explorations of reservoir sites in hand for completion by the end of 1967.
I have been asked, and rightly asked, what is the Government's attitude to this Report. It can be said, I think, straight away, that this Report appears to us to be a realistic appraisal of the water problem of the South-East and the Government envisage no difficulty about the provision of the necessary loan sanctions and finance. But this is, at this stage, with one exception. That exception is that the Government cannot at present commit themselves either way to a feasibility study of the Wash Barrage scheme. This imaginative proposal has, understandably, attracted a great deal of attention, but it must be remembered that the Water Resources Board's Report canvassed a number of important proposals, and it is worth pointing out that the Board came to the conclusion that, given an extensive re-use of water, the most economical and beneficial way of meeting the expected deficiencies is by a programme of controlled ground-water development and pumped storage reservoirs, perhaps supplemented in the last decade of the century by the transfer of water into the Thames from the West or the South. The Board do not, therefore, give first preference to a Wash barrage, but that is not to say that it would not merit further investigation, especially if some of the other proposals do not come up to expectation. The cost of a feasibility study is estimated at £1½ million, so it is under-
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standable that the Government are not prepared to commit themselves immediately to that sort of expenditure. In passing, I must say that I do not agree with the noble Lord, Lord Hawke, that a feasibility study was started and has now been stopped on the grounds of economy. As I understand it, a feasibility study, as mentioned in the Board's Report, has never been started.
LORD HAWKE: My Lords, I think I must have made a miss-statement. I never intended to say that a feasibility study had been started, but I think a lot of desk work has been done which would be wasted unless a feasibility study followed.
LORD CHAMPION: My Lords, that is quite right. A certain amount of desk work has been done in preparation for a feasibility study later on. I thank the noble Lord for his correction, and I accept, of course, that that is what he meant.
The noble Lord, Lord Hawke, rightly stressed the need for care about re-using water. When the Report talks about the "re-use", it means that water taken out of a river for public supply contains a proportion—possibly a large proportion—of water which has already been used for public supply at least once and has been discharged again to the river as effluent after purification. Besides getting our terms right—and we have to get them right in this connection, because so many people talk about "drinking sewage" and that sort of thing—we must get our perspectives and our facts right. I also agree with the noble Lord, Lord Hawke, that we must get our effluent right if we are to re-use the water, as in fact is being done and will have to be done increasingly in the future. A large proportion of our used water is already being re-used, but its safety as a source of drinking water (assuming it receives the normal treatment after abstraction) is beyond question at present. That has been demonstrated by decades of experience, and nothing proposed in the Board's Report suggests that in the short term there will be any change.
The Board's proposals in the longer term may well entail taking water for public consumption from some rivers which will contain a great deal more used water than in the past: so much so that

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at times the whole amount of water taken may have been used already once or even oftener. Clearly it is of the highest importance to ensure that such rivers do not under this pressure become unsafe or unacceptable sources of supply. This will need—and will receive—close attention both in the South-East and elsewhere.
There is little doubt in the South-East about the immediate future—that is to say, the next ten years or so. We do not believe that the amount and extent of reuse conceivable in the next decade or so could possibly go beyond what the rivers could safely carry. In saying that, the Department's technical advisers have had in mind the whole physical characteristics of the rivers in question—the length, volume, the present volume of discharges and the probable increased amount of effluent discharged and the number of points of discharge.
In the long term there will be many rivers in the country for which a confident assurance could also be given. But for some the answer would not be so clear. There will have to be a special series of studies in each case to determine whether the water could satisfy the quality required of public supply and what would need to be done, in the way of controlling more tightly existing and future discharges, to ensure that public supplies remain safe, palatable and of the highest quality. Perhaps I ought to add here that during this month the Ministry of Housing and Local Government have sent out a memorandum on the technical problem of sewage effluent which urges the responsible bodies carefully to consider whether standards previously considered adequate are now suitable and, if not, to make the necessary adjustments and alterations.
In conclusion, I think I can say in answer to the question of the noble Lord, Lord Hawke, about plans that there are detailed and well-considered plans for meeting the increasing demands for water in the South-East. These plans cover both short and long term; that is to say, the next ten years and the next thirty-odd years. Inevitably there are gaps to be filled in, and changes may have to be made—for example, if there happens to be a major break-through in desalination. In the meantime, we have certain definite
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potentialities on the surface and underground, and these are being diligently explored. We believe that everything possible is being done to meet the demands of the South-East, and that they can be met as and when they mature. The Government look forward to this debate, to see whether anything emerges to-day, as I hope it will, that deserves the study of the Ministers concerned.
3.28 p.m.
LORD NUGENT OF GUILDFORD: My Lords, I thank the noble Lord, Lord Champion, for his interesting and helpful reply to my noble friend Lord Hawke, and I shall have a comment to make on one or two of his observations as I proceed with my speech. May I first congratulate my noble friend Lord Hawke on raising this question to-day and for giving your Lordships the opportunity to discuss this most important matter. May I also thank him for the admirable exposition which he gave us, both of the problem as a whole and of the particular problem of the South-East revealed in the Report of the Water Resources Board. This has put the whole matter into a clear perspective, just right for us to discuss now.
First, perhaps I should declare that I have an interest in this watery world. I am Chairman of the Thames Conservancy, and I am also President of the River Authorities Association; so I have quite a bit to do with water. With regard to rivers, of course much more is involved than what we do with the water itself. What the river looks like is in the interests of the community, and everyone who has anything to do with rivers is conscious of the trust he holds to keep constantly in mind the amenity and recreational interests of the whole community.
I am sure it comes as a surprise, not to you, my Lords, who are the cognoscenti, but to the man in the street, that we in this country should be short of water. The heavens are so generous to us most of the time, and certainly have been in the last few days, that our mackintosh and umbrella are our constant companions, and it seems extraordinary to think we could be short of water; but it is perfectly true we are going to be short of water in the next few years, as this admirable Report forecasts. Indeed, if we get a dry

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summer in the 1970–71 period we shall undoubtedly be short of water in some areas in the South-East unless we can get some of these conservation schemes under way.
The shortage that is predicted by the Water Resources Board is some 85 million gallons over the whole South-East and 33 million gallons in the area for which the Thames catchment authority is responsible. Of course, this becomes a matter of urgency when you look, as I have to look, at the works that are required to meet the shortages which will then arise, because in fact next year the Sunny meads scheme, referred to by the noble Lord, Lord Champion, will have to start. That is a scheme which will take water from the River Thames up into the Hertfordshire area to a tributary of the River Colne in order to supplement supplies there, and the water undertakings concerned will have to get this work started next year if the supply is to be available for drinking and domestic purposes in the 1970–71 period. So there really is no time to lose.
The overall position, as my noble friend Lord Hawke rightly said, is that there is enough water. The shortages are local and seasonal shortages. The problem to meet the shortages is dealt with in three ways; first, by transfer of water from the high-rainfall low-density areas, principally in the West, to the low-rainfall high-density areas in the East and South-East; secondly, by conservation, somehow conserving winter surpluses so that they are available to supplement the summer shortages; and, thirdly, by a better purification of effluents to higher standards to allow further re-use of water. Here may I congratulate my noble friend Lord Hawke on the wise comments he had to make on this particular point.
It is perhaps of interest to mention to your Lordships the very high degree of re-use which is quite safely and successfully made to-day regarding the River Thames. Consider for an instant that there is a large town, Swindon, at the headwaters of the River Thames; not far away is the great city of Oxford, and not far from there are the city of Reading and a large number of other towns, villages and conglomerations of residents up and down the River Thames. The effluents of all those urban areas have
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to go into the Thames, and at the end of it all the Metropolitan Water Board takes some two-thirds of its total supply for us Londoners as our drinking water. So this water has been not only used and re-used but used several times over. Fortunately the Metropolitan Water Board is a highly efficient body and the water supply to Londoners is some of the best water supplied to any population in the world, and is perfectly safe. But this situation does perhaps demonstrate how much is being done—and, indeed, much more can be done and much more will have to be done if we are to have a sufficient supply of water—in the purification of water from the effects of effluents to make the use and re-use of water completely safe.
My noble friend Lord Hawke asked what would happen in the River Thames if some factory unfortunately discharged a tub of poison into the river. Of course, anything may happen with literally thousands of factories and works that exist in the catchment area, and occasionally such accidents do occur. Fortunately, whenever they do happen they are immediately reported, and immediately the Conservancy acts to alert all water undertakings who have intakes on the river so that they immediately close them during the period in which poison is passing down the river. We know how long it takes to pass each point in the river, and so we know when it is quite safe to say that it has passed and gone over the weir at Teddington and out to sea. After it reaches there people do not think of drinking it; in fact they get as far from it as they can. So the river is kept safe by a very strong organisation of river purification and inspection.
The point I want to make to Her Majesty's Ministers opposite is this. As the volume of consumption continues to increase by all these methods we have been speaking about today, so the volume of the effluents is going to increase too. The standards that are commonly worked to for maintaining purity as regards effluents are called the Royal Commission Standards, and they provide for an 8:1 dilution of river water to effluent. But, of course, it is quite inevitable that as the volume of effluent grows throughout the country this proportion of 8:1 becomes quite impossible to maintain.

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As the River Thames is passing by Oxford in the periods of low flow there is only a flow of about 40 million gallons a day. By the time they have the extension of their modern sewerage works completed there and are up to their full capacity they will have an effluent volume of over 20 million gallons a day; therefore they will not have as much as 2:1 dilution. So we must ask, and ask again, for higher standards of effluent if we are to maintain the general quality of the river water. We are fortunate in a river like the Thames because at every lock—and there are 44 of them—it has a beautiful weir and that automatically oxygenates the water and goes some way to restore its purity, but basically we must depend on the purity of the effluent itself.
Here I would ask the noble Lord, Lord Kennet, when he replies if he will say a few strong, and I hope comforting, words to your Lordships that it is the intention of Government to require and advise the river authorities to increase the standards of effluent, even though the cost is considerable and not unnaturally local authorities have projects other than sewerage works they would like to spend their money on. Here I say to the noble Lord, Lord Champion, how much I welcome his statement that a circular has gone out to local authorities to call their attention to this particular problem. I am sure this is a matter of first importance. It takes some years to get these schemes completed, and it is not always easy unless we get the full support of Government.
Let me now turn to the question of conservation and transfer. Here I should like, if I may, to pay a tribute to my noble friend Lord Brooke of Cumnor, who I am so glad to see sitting with us on the Front Bench, because my noble friend was the Minister of vision some six years ago who foresaw the necessity for a national water policy, which the Water Resources Act 1963 brought about and which we have been talking about this afternoon. In particular, the first step that my noble friend took was to set up the Water Conservation Sub-Committee of the Central Advisory Water Committee, which was of course the basis of the 1962 White Paper which was then the basis of the 1963 Act. It is to this that we owe the fact that we have on the
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Statute Book to-day the Water Resources Act, and have the Water Resources Board and the river authorities with the necessary new powers of water conservation. Perhaps it is the moment to make the point that it will probably be another three, four or five years before we get any more water out of any of this, and therefore the time from the moment of vision by my noble friend to the moment when we get the extra water is some ten years. These things take an extremely long time to do, and it therefore behoves us all, including Her Majesty's Ministers opposite, to move with all speed, even now, to see that we get the extra water we need.
The river authorities are hard at work now—they have been in existence for only eighteen months—preparing to provide the extra water that is wanted. But the first thing they have to do is to survey their areas to find out what is the existing demand, who has a licence of right to take water, what water is available and therefore what extra water they have to spare for those who want it and then, on top of that, what schemes they have to provide to meet the growing demand of the future. All this is going up.
But there are two implications of great importance which have been touched on to-day one is amenity and the other is finance. I know that your Lordships have expressed great concern about the amenity aspects of water conservation, rivers, lakes and so on in this country, and in many cases amenity arouses strong feelings, particularly when reservoirs are proposed. I do not doubt that your Lordships will have noticed in The Times of Monday of this week a reference to the possibility of a new reservoir in the beautiful Yealm Valley outside Plymouth. The alternative to that is Dartmoor. Both have a strong case for not having the reservoir in their locality. This is one of those cases where everybody is in favour of having more water, but "not here"—always somewhere else.
This brings me to the alternative method which has been much commended to-day, of getting the extra water we want conserved by the use of underground aquifers. The underground aquifer scheme which has been referred to to-day by my noble friend Lord Hawke and by the noble Lord, Lord Champion, and

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which the Thames Conservancy is developing, is an interesting one and is, I suppose, in the nature of a pioneering scheme for this country. I am most hopeful that we shall succeed with it. As the noble Lord opposite told your Lordships, the Thames Conservancy has now officially submitted its application for the first part of it, the pilot scheme, which would sink nine boreholes in the Lambourn Valley area and pump them over the next three years.
This is a pilot scheme in preparation for developing the scheme as a whole over the Western part of the Thames catchment area. If this scheme succeeds it will, we believe, produce some 270 million gallons per day extra, which would be put into the Thames during the dry summer period, into tributaries, and it would be available for all the riparian authorities, including those for London, to meet the greater demands. Naturally, these schemes are most attractive, because they avoid flooding any land, they avoid taking any land, and the cost is low. We think the cost will be no more than one-fifth to one-tenth of that for a conventional reservoir. But I should like to make the point, which may be of interest to your Lordships, that these schemes are most difficult. Inevitably, whenever water has to be taken from underground there are existing wells, there are existing user interests, there are the interests of the riparian owners of the tributaries and the rivers who are concerned about what will happen to their river when water is pumped out from underground. All these interests have to be reconciled and satisfied before a scheme like this can go forward.
I would say that the administrative problems involved in putting forward a scheme of this sort are quite as much pioneering and quite as difficult as the engineering problems that are involved in the first place. Nevertheless, we are proceeding in the Thames Conservancy with this scheme, and I am hopeful that it will succeed both for itself and as an example which the Great Ouse river authority will shortly be following. If it does, it is going far to meet the needs of the Thames catchment area and of London. It is also going far to meet the needs of South Essex over the next twenty years. South Essex is one of the
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driest areas in the country, and one of the most densely populated.
At the same time, I would agree with the noble Lord, Lord Champion, that even then some small reservoirs will be wanted, at any rate in this area; but it is significant that in this Report of the Water Resources Board on the southeast the alternative put forward to the ground water scheme of the River Thames Conservancy would be at least three, if not four, large over ground reservoirs, varying between five and ten square miles each, in the Thames catchment area. I am sure that the volume of objection which there would be to those would reach even the august ears of your Lordships in this House. I am sure such an alternative would be massively objectionable. This is one of the reasons why the Thames Conservancy have over the last ten years been studying this ground water idea, knowing how objectionable it would be to flood large areas of the Thames Valley in order to conserve the water which would be wanted. It is against that background that the scheme is going forward, and we hope it will be successful.
Finally, let me say a word about finance. The noble Lord, Lord Champion, made a point about finance. I think his words were that the Government will provide loan sanctions for the finance necessary for the development of these schemes. I should like to make this point to him: that the river authorities had a rather discouraging experience last year with their hydrometric schemes, where a sum of only £220,000 was provided for them. They need some £5 million altogether for these hydrometric schemes, and this should be provided immediately. They are the guiding schemes which provide those concerned with the basic information. I hope, therefore, that there will be a little loosening of the purse strings if river authorities are to get on with the job, which they must do if we are to get the extra water. We need not only loan sanctions in the south-east and throughout the country for the development of water conservation schemes, but real priority, so that river authorities get the money when they need it in order to develop the conservation schemes.
May I conclude with two major points I which I put to the noble Lord, Lord

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Kennet, in the hope that he will say a word about them in reply? We have in this Report, to which my noble friend has called attention, a blue print which will supply us with the extra water we need for the South-East, we hope over the remainder of this century. We have the river authorities in existence ready to do the work. We have the Water Resources Board ready to do, and in fact doing, admirable co-ordinating work. All we need now is the Government intention to provide the extra money needed for these schemes on the one hand, and for the important and extended sewerage works on the other. I hope the noble Lord will be able to reassure us on these two points.
3.49 p.m.
BARONESS STOCKS: My Lords, this discussion recalls to my mind a remark by Mr. George Brown. Unfortunately I cannot recall when he made it, where he made it or in what connection he made it; but I know that he did make it, and in such a way as to suggest that he was speaking as a responsible member of his Party. He quoted water as amongthe services in this country which were ripe and ready for nationalisation. He quoted it in the same sentence as he mentioned steel. It seems to me that something of this same idea was embodied in a speech which some noble Lords here may have heard, the last speech which the late Lord Birkett made in this House when he opposed the Manchester Corporation Bill which aimed at piping water from Lake Ullswater in order to meet the needs of Manchester in 1970. He concluded his speech with these words. He said that the defeat of the Bill
"will urge upon the Government the immediate necessity of producing that national scheme which…will give natural justice to every interest."—[OFFICIAL REPORT, Vol. 237, col. 237; 8/2/62.]
He used the words "national scheme", not "national consideration".
Partly no doubt as a result of that speech, and much else, we had in the subsequent year the Water Resources Act 1963. That has been referred to by three noble Lords in some detail, and its powers have been described. It has given us the Water Resources Board as a co-ordinating authority with very considerable powers, which has produced
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this Report for the South-East of England to which reference has been made to-day and which I hold in my hand, with some difficulty owing to its enormous size and great weight. It refers—and it was quoted by the noble Lord, Lord Hawke, as referring—to the danger of localised thought. The noble Lord, Lord Nugent of Guildford, has called our attention to the concern of particular interests. When one realises that the relatively restricted area covered by this Report embraces 131 statutory water undertakings as well as the eight river authorities which have been referred to, it is not difficult to see that the reconciliation of those localised industries must have been very difficult indeed. For instance, the Report says in paragraph 30:
"We accept that the proper interests of the existing water undertakings in the area must be safeguarded; it will be our concern to secure this. At the same time, however, we cannot accept that because an undertaking's area embraces undeveloped sources of supply that undertaking should always have exclusive claim to those sources even to the extent of inhibiting their wider and more productive use."
But, in spite of the passage of the Water Resources Act and of the work of the Water Resources Board, we do not really seem to have got where I think Lord Birkett wanted us to get and meant us to get.
Mention has already been made of the fact that shortly in this House history will be repeated when the Tees Valley water scheme, which aim sat producing sufficient water supply for I.C.I. during the next ten years, is debated. Well, I hope history will repeat itself—certainly I think the discussion will repeat itself. The noble Lord, Lord Nugent of Guildford, referred to what is now going on in the South-West in the area which lies just outside that dealt with by the Water Resources Board Report in connection with the Plymouth Corporation Water Bill, which has provoked a sort of internecine strife between those who favour ancient monuments and those who favour National Parks—those who wish to preserve Sir Walter Raleigh's ancient manor and those who wish to preserve the open freedom of Dartmoor. That, it seems to me, is a matter which should not be decided on a local or even a regional basis; it is a question of national policy. I understand also that Manchester is

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again "on the war-path", so we may soon have that matter to consider.
There is another element in this lack of a co-ordinated national scheme which has been referred to at some length by the three noble Lords who haw spoken, and it is of course referred to over and over again in this Report. I refer to the question of sewage disposal and the reclamation of fresh water from effluent. I hope we may have an opportunity of discussing the question of sewage disposal at a later stage in connection with the problem of coastal pollution, but it crops up on this Report and has been referred to this afternoon. There is no sewage resources Act; there is no sewage resources board. Our sewage disposal is administered by a chaos of local authorities, some of them very small and financially weak local authorities, some large and efficient joint boards which are able to command scientific advice and to carry out large schemes—but it is a chaos of local authorities. The importance of the scientific treatment of such effluent is stressed time and again in this Report. I have marked the passages in which it has been stressed, but as it has been referred to by earlier speakers it will not be necessary for me to refer to them now.
If the case for a nationalised water scheme is urgent, surely the case for a national sewage disposal scheme is even more urgent. Really, one has only to read this Report to realise that the two aspects are in fact not two problems but one problem, arid should be treated as one problem. Therefore, when I dream of the future, of a golden age in England, I see in my dream one Ministry of fresh water dealing with both water resources and sewage disposal as one problem, which indeed it is.
I have used the word "nationalization", though I was once called to order by a Third Programme producer for using the word "nationalization" in connection with the administration of sewage, because he said that it was a word which was political dynamite and would immediately raise hostile emotional reactions in many breasts. But as it is used in this context I do not think it need raise any hostile emotional reactions in the breasts of noble Lords opposite, because it does not really interfere on a large scale with any private interest. In the case of water I think the private
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interests concerned are negligible; in the case of sewage disposal they are nonexistent. Indeed, I think the only people who need fear this form of nationalisation are the noble Lords who sit on this side of the House because the nationalisation of water resources would, and should, challenge the sovereignty of certain very large, powerful Labour-controlled municipal corporations in the North and Midlands, whose motto in respect of water supplies appears to be, I'm all right, Jack!"
4.0 p.m.
LORD MOLSON: My Lords, I am very glad to follow the noble Baroness, Lady Stocks, because I want to draw special attention to the importance of preserving amenities at the same time as we are taking steps to increase the water supplies of the country. I am an active member of several amenity societies, and in particular I am Chairman of the Standing Committee of the C.P.R.E. on the National Parks. I was very glad that the noble Baroness referred to the defeat by this House of the first water proposals that were put forward by Manchester in 1962, proposals that undoubtedly would have been most damaging to the amenities of the Lake District. Your Lordships very wisely refused even to allow it to go to a Committee but threw it out on Second Reading.
Just lately, further proposals have been made by Manchester. These are far more modest, with far greater consideration of amenities, but even so the amenity societies with which I am concerned have found it necessary to oppose the Order at a public inquiry. I think I may say that. as a result of our opposition, and that of local residents in the Lake District—and it cost us some £12,000 to oppose this scheme—ithas been very substantially amended by the Minister, but even now we do not regard it as entirely satisfactory. I think my noble friend Lord Inglewood will be raising the matter further when the Order comes before this House.
The noble Lord, Lord Champion, was indeed right when he said that when water matters in the North-West arise they may again prove, as they have in the past, to be somewhat controversial. But it must also be realised that we do not confine our interest in any way to the Lake District. We are much concerned about

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the proposals that are being made for new reservoirs near Plymouth and on Dartmoor. What is so profoundly unsatisfactory about these proposals is that it is not claimed for them that they are going to be anything in the nature of a permanent solution of the water problem. I quite realise that, as my noble friend Lord Nugent of Guildford has said, it will take a long time after the conception and passing of the Act before the full benefits of it come into operation in providing long-term policy. But it is, I think, important to realise that we are likely in the near future to be confronted with further problems of this kind.
I have been studying the last Annual Report of the Water Resources Board. Whatever may be the long-term proposals, I am a little concerned to read that they say in paragraph 45:
"Provision of new supplies during the next ten years is likely to be along lines already familiar. In many areas new storage reservoirs above ground will undoubtedly be required."
Even for the later period between 1975 and 2000 they say in paragraph 51:
"…it is probable that most of the country's requirements over and above those met by ground-water developments will be met by the further development of upland storage sites in the north and west.…"
I am glad to see that they have recognised their responsibilities under the Act to take amenity considerations into account. In paragraph 96 they say:
"In view of the purposes for which the National Parks were designated, there must be a strong initial presumption against any development which might damage their appearance or interfere with public access. We fully accept this. Indeed there may well be certain areas which should be held against any development. On the other hand, the total area of the Parks covers too much of the country—some 10 per cent.—to be regarded as sacrosanct from any change."
I think it is a little sinister that, despite what the Board have said, they should hedge it around with such reservations, because the Lake District and other places of outstanding natural beauty are particularly easy areas in which to locate reservoirs.
I am surprised and sorry that in the Second Annual Report of the Board no reference whatsoever is made to the need for water economy. On the Second Reading of the Water Resources Bill I moved
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an Amendment with regard to economy, and I withdrew it on the undertaking that the Government would introduce a new Amendment on Report stage. That was duly done, and my noble friend Lord Jellicoe, in moving the Amendment which now finds its place as Section 12(3)(a) of the Act, said:
"I trust that this Amendment, which makes it clear that it will be the duty of the Board to consider measures leading to economy of the use of water, meets their point".—[OFFICIAL REPORT, Vol. 246, col. 907; 12/2/63.]
That was the point raised by myself and my noble friends on the Committee stage. I think that it is desirable not only to ensure an adequate supply of water, but also to make sure, with the great increase in the supplies of water and the vast expenditure which in any case is going to be involved in providing it, that the water is not wasted.
I have been in touch with the Institution of Water Engineers with regard to the kind of economies which they regard as most important. Of the first and greatest importance is, of course, what has been referred to by several speakers to-day, and notably by my noble friend Lord Nugent of Guildford; that is, the repeated use of water taken from the rivers. The Board refer to that in the Special Survey relating to the South-East. But I can find no reference to it in the Annual Report of the Board which deals with the whole of the country. The long and important rivers of the North, with many industrial towns upon them, have special opportunities and a special need to use the same water time and again.
I was very glad that the noble Baroness, Lady Stocks, referred to the great importance of improvement in the treating of sewage, because obviously the worse the sewage which is put into the river the less possibility there is of re-using the water. But in the Annual Report of the Board there is no specific reference to this matter in other areas than the South-East.
The second most important economy in the use of water is the re-use of the water by industrial undertakings. As 60 per cent. of the total consumption of water in this country is for industrial purposes, this is a matter of importance. I mentioned before, when the Act was under discussion in this House, that a

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food-packing firm came to my constituency many years ago and wanted to establish a factory in Glossop. The amount of water which they asked should be supplied by the town was greatly in excess of what could be provided. The municipal water engineer therefore suggested to them that they should install a purifying plant and constantly re-use the same water. That has been entirely satisfactory and, in fact, is more economical from the point of view of the firm itself. There is, I am sure, immense scope for further development in this way, but it is not referred to in the Report.
There is also the matter of the scientific detection of underground leaks in mains. Great progress has been made by scientists in devising instruments by which these leaks can be detected, but nothing is said in the Report about the extent to which this work has been put into operation. I do know, however, that the standard of care in this matter varies very much from one undertaking to another.
Finally, there is the matter of water consumption in private homes and institutions. Cisterns in W.C.s are frequently twice the size really required, and spray taps instead of normal taps have been found to be an important form of economy. I should have supposed and wished that the Government would ensure that economies of this kind were applied all through their large building programmes in the way of schools, universities and hospitals.
My Lords, I join with all those who have spoken to-day in welcoming, as I do in general, the Annual Report of the Water Resources Board and their more detailed and careful study of the problem in the South-East. I am glad they draw attention to the need to preserve the amenities in those areas of sparse population and plentiful rainful which are among the most beautiful and attractive in the country; but I also hope that, at the same time as they are considering an increase in the supply of water, they will ensure that reasonable economy is practised in its consumption.
4.12 p.m.
LORD POPPLEWELL: My Lords, like other noble Lords I welcome this
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discussion on the nation's water resources, and commend the noble Lord, Lord Hawke, very much indeed on the wording of his Motion, which, in addition to allowing the noble Lord to pinpoint the particular difficulties of the South-East, allows for a much wider discussion than that. The problem that he has pinpointed so far as the South-East is concerned is a perennial problem, not confined merely to the South-East but affecting, nearly all the country. Even in those areas in which we have reservoirs and very good rainfall, and apparently an abundance of water, on many occasions we find the water authorities making an appeal for economies in the use of water because they visualise a shortage taking place.
That is so, even though we have very short summers and the very heavy rainfall to which the noble Lord, Lord Hawke, referred—something like 36 inches. I am told that if we interpret that in terms of gallonage it comes to something in the region of 12million million gallons of water by way of rainfall in this country. This is a very large amount, and, bearing in mind the short droughts that we have in summer, surely a weakness in our structure is indicated if we cannot at all times provide a supply of water which is adequate for everyone. I am told that out of this tremendous rainfall something like fifteen times more water is not used than runs through our water mains. Even if we allow for the evaporation that take place, these shortages indicate that there is a tremendous wastage somewhere.
The nation has demanded, and continues to demand—and very rightly so—better housing standards, better health standards, better standards of hygiene and many other improvements. As has been pointed out on more than one occasion, to meet all these additional requirements, more and more water is going to be required. Therefore, to the nation, this is a very exacting demand indeed. It is a challenge of considerable magnitude. There is no shortage in the total quantity of water available. Detailed surveys of water supplies have taken place and are continually taking place; advisory committees have been set up; we have the very good Water Resources Act of 1963; and we have the establishment of the Water Resources Board. All this

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is to give consideration to these problems, and indicates that Parliament, in addition to the nation, has woken up to the fact that this water is available and that somehow in the nation's interest it has to be used in a much better way than previously.
The chairmen of various water authorities continue to draw attention to the urgent need for increased water storage capacity, for increased conservation or for something of that description, because of the needs that arise all over the country. The noble Lord, Lord Molson, referred in his speech to what happens when a particular area desires to increase its water reserves. It meets with all kinds of difficulties—very rightly so in many instances—from the National Parks and from various organisations that desire to retain the beauty of the open countryside. We see these difficulties manifested each time a major project is visualised. It was deplorable to experience the difficulty there was when Liverpool wanted its supply from the Welsh mountains; and we even saw an attempt to blow up the dam created for that purpose. We saw the war that developed when Manchester wanted to take more water from Ullswater in addition to its Thirlmere supply; we know of the battle that has taken place with regard to the new water development that is proposed for Teesdale; and, as Parliamentarians, we have all seen the large amount of Parliamentary time that is taken up by Private Bills which have to be presented and have to go through the respective Houses.
This, in addition to all the public inquiries that take place, indicates a tremendous waste of money, energy and effort; but it is not surprising that it does take place. I am told there are nearly 800 local authorities', over 40 Joint Boardsand 173 (or some figure in this region) private companies exercising statutory powers with regard to water supplies. In addition, a large number of other companies and private proprietors operate water supplies under no special Acts. Many of these are small, and are not necessarily most efficient in their distribution.
In recent years, many amalgamations of water authorities have taken place—and we all know the difficulty that
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develops once one tries to secure the amalgamation of water authorities. All the local interests immediately become paramount—and the noble Baroness, Lady Stocks, referred to what happens in the case of many local authorities in this particular direction. However, this indicates that all these local authorities are faced with a common problem, and that is to increase their catchment area or storage capacity in some way or another because of the growing demands. The existing procedure might have been all right in the early part of the century.
My Lords, may I strike a personal note? I feel very strongly about the purity of water supplies, for unfortunately my father died in 1910 because of an outbreak of typhoid fever due to consuming impure water coming from a river not adequately treated. Naturally, this brings home very clearly indeed that in the re-use of water—and I think we have got to re-use water a lot more in the future than we are at the moment—we must ensure even higher standards of purity. When we hear of such instances as those mentioned by the noble Lord, Lord Nugent of Guildford, we may wonder about the position of Oxford so far as its future is concerned. It is equally essential that these administrative areas should be subjected to still further drastic review. Let us face it: the noble Baroness, Lady Stocks, was right.
The speeches so far have indicated that there is great need for the Water Resources Board not only to prepare a national plan but to ensure a national plan that in effect would entail something like a grid system that would be able to supply areas of water shortage on tap. We may call it "nationalization". Do not let us be afraid of the word. If we may use this as a comparison, we have nationalised electricity; we have provided a grid supply for electricity. We had a countryside devoid of electricity until we established a grid system under nationalisation. We now have the Gas Boards instead of the various smaller gas suppliers with local autonomy. The Gas Boards, too, are thinking of grid supplies. The North Sea gas will be afurther factor to consider. We ought to be following the same principle so far as water is concerned. There should be a link-up, and where shortages develop the grid could be turned on.

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I think the noble Lord, Lord Nugent of Guildford, made a good point when he said that we cannot visualise flooding vast areas of the Thames Valley. There are certain parts of the country where water is in abundant supply; it should be taken and dealt with as a national service. Naturally, cost comes into this. We realise the Government's difficulty here, but it is a question of establishing priorities. This is not something which can be done overnight. It must be carefully planned. The Water Resources Board must have a look at water resources on a national basis. We must preserve what we have, and we must ensure that if we are taking some beautiful land and utilising it for water storage we must put in its place a recreation area and use the stored water for boating and swimming. We could plant trees in the area and thus preserve the beauty and amenities. I think this is possible. There is the question of cost, but I urge the Government to think seriously about this.
I would add a few words in connection with the problem of sewage. Coming from the North, I have referred on more than one occasion to the open sewers of the Tyne. Hundreds of sewers run into the river entirely untreated. I welcome the steps forward that are taking place as part of the £x-million scheme of the University of Newcastle in conjunction with all the local authorities on Tyneside. I trust that ultimately the day will come when we shall see the salmon going up the river Tyne in the way they used to many years ago. To come back to Yorkshire, I think of the River Aire and the foul sewer it has become. I think of all the effluent and trade waste coming down from the mill country into what in its unspoiled reaches is a beautiful river. Now, in parts, it is one of the most vile and stinking rivers it is possible to come across.
Therefore, when we are dealing with this question, we must insist that industry be compelled to deal with its own effluent more adequately than by turning it out untreated into the rivers. We know towns where there are tidal rivers where it is thought right to allow open sewers to go into the tidal waters. From this practice results the fouling of many beautiful beaches. Only the other week when I was on holiday at Bridlington I saw an example of this. Of course, it is a question
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of priority; but I think that this debate will have been extremely useful if it indicates to the Government the feeling in the House in this connection. I trust they will take note of it in framing any future legislation on this subject.
4.27 p.m.
LORD MERRIVALE: My Lords, speaking for industry, I hope I shall be echoing the thoughts of many of your Lordships who have not yet taken part in this debate. I welcome the Water Resources Board Report on South-East England, a Report which was produced with considerable speed when one considers that the Board had been in existence for approximately only two years. In its chapter on industry, the Report illustrates the real demand and interest by industry for water in this area during the period under review, that is, until the end of the century. It is equally certain that this increased demand exists elsewhere in the country, as is mentioned in the Report. An accurate forecast is indeed difficult, but I understand that industry has recently been working on the general proposition that the increase in demand would be of the order of 3 per cent. to 4 per cent. per annum. For example, the Draft Manchester Water Order is of great importance to industry's requirements in the North-West.
I hope I am interpreting the thoughts of the noble Lord, Lord Molson, rightly, when I say that I am glad to think that we have his limited support with regard to this Order now. The Tees Valley and Cleveland Water Bill is designed to meet the industrial requirements in the North-East. In this case I am sorry to say that one cannot count on the support of the noble Baroness, Lady Stocks. I think one should never forget that water is a vital requirement for industry for many different purposes: that is, for cooling, processing, and incorporating in their products. Therefore, I hope very much that the various plans to get more water over the years, which are enumerated in the Water Resources Board Report will command universal support. In his opening remarks the noble Lord, Lord Champion, appeared to support strongly the proposals contained in the Water Resources Board Report. One can only hope, as he did, that planning permission in the various areas will not he difficult to obtain, so that the schemes may go ahead satisfactorily.

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In the short term—I stress that it is in the short term—I think it right to say that industry agrees with the view of the experts that neither desalination nor barrage schemes will produce an answer to the present problem. I understand that it would probably be ten to fifteen years before either method would produce any water in great volume. Therefore, industry is in complete agreement with the Water Resources Board in its proposed types of storage—the more conventional types to which the noble Lord, Lord Champion, referred—that is, regulating reservoirs and impounding works. Industry feels that it it is absolutely right that in the coming years a close look should be taken at the possible advantages of the other two methods, a barrage scheme or a desalination process, but that we should not count too much on these, so far, unproved and, at the moment, uneconomic methods. Whether it be at Government or at local level, I think that the Water Resources Board deserves every support in the implementation of its present and future projects. Anyway, it would seem that the Board has the full support of the Government, which is most encouraging.
My Lords, during the Third Reading of the Water Resources Bill on March 7, 1963, I said that industry was in a weaker position than agriculture or the statutory water undertakers in not having a parent Minister. It was felt at that time that the President of the Board of Trade would be a most appropriate parent Minister. I think that to some extent industry is still at a disadvantage in not having a parent Minister, but I am pleased to be able to say that industry has benefited from the deliberations of a most useful and valuable Joint Standing Committee. I understand that this Committee has met about six times and its work has proved extremely useful to industry from the point of view of general discussion and information.
In spite of views which were expressed at the end of 1962 and early in 1963, industry has enjoyed full consultation with the Ministry of Housing and Local Government in the implementation of the 1963 Act. At that time, too, certain noble Lords, including the noble Lord, Lord Lindgren, expressed the fear that industry might not be economical in its use of water. I said at the time that
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industry was very conscious of the need for economy, and mentioned as an example that with regard to certain applications water was re-used or re-circulated approximately forty times. That is why I am glad that the noble Lord, Lord Molson, quoted the particular example of one firm which re-used water. However, as there are some persons in the country (I hope there are none in your Lordships' House) who feel that this process of re-use or re-circulation of water by industry is not as extensive as it could be, I would stress that there are still many technical difficulties which prevent greater extension. Again in respect of economy in the use of water there is a second relevant factor: that is, the imposition of the licensing system which carries a liability to pay charges, though that will not be effective until 1969 for licences of right. I think the licensing system ensures that industrialists take a serious interest in the economic use and conservation of water.
My Lords, I hope that, without going into detail, I have shown there is close co-operation between industry in general and the Water Resources Board, and that there exists in industry a great interest in the supply of water in the South-East and in other parts of the country.
4.37 p.m.
LORD MAELOR: My Lords, before I entered the Chamber I had not the slightest intention of taking part in this debate. But having listened to my noble friend, Lord Champion, I feel prompted to say a word or two, because I am sure that my noble friend has given your Lordships' House, or is likely to give, a wrong impression concerning the reaction of the people of Wales if ever again a drop of water is taken from Wales to serve the purposes of England. I am not anti-English, but I am pro-Welsh. We in Wales have had a bitter experience during recent years.
The people of Wales have been very generous in the matter of water supplies to the people of England, because the English local authorities own twice the water surface of reservoirs compared with that owned by the people in the Principality. Only a few years ago the Liverpool Corporation decided to construct a reservoir, and in order to do so it was necessary to submerge a village, including its church. It was a Methodist

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church. Had it been a church of the Church of Wales I doubt whether the reservoir would have been constructed. But the Methodist church, the post office and the school were all submerged in order to construct this reservoir in Merionethshire.
When I opposed this scheme in another place I found, to my dismay, that the Liverpool representatives were very much assisted by representatives from Manchester and other cities. It was then that I learned that the water which was supposed to be to help Liverpool was to be re-sold to these other cities: they were to receive the surplus of the water extracted from our land. As I have said, we in Wales are not anti-English. We have lived together now for centuries, but the present Prime Minister—and he is the first ever to do so—has recognised the nationhood of Wales; with the result that your Lordships would be under a very wrong impression, in spite of what my noble friend has said (and I am sure that he would not intentionally wish to give your Lordships a wrong impression), if it were thought that water would ever again be extracted from Wales to help any local authority in England without its first of all being decided by the Welsh Office, which was established by the present Prime Minister.
I have before me the Report on the Water Resources of Wales, which has been published by the Government, and I am hoping that one day we shall discuss that Report here, and discuss the water resources of Wales exclusively, not taking into account water resources in any other part of the Kingdom. I have been thinking that I ought to warn your Lordships now, if what my noble friend said appears in the Press tomorrow, of the feeling, which the noble Lord on the other side of the House will remember, created when the last reservoir was made in Tryweryn Valley, in Merionethshire. Up to now people have been coming over and looking at our valleys, deciding that reservoirs should be constructed here and there, like those which supply Liverpool with water. That sort of thing must cease from now on. The water in Wales must not be for the use of people other than the people of Wales. If we have a surplus, then we shall sell it to the people of England. I am sorry that my maiden
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speech in your Lordships' House should be of this nature, but I felt that I must utter a word of warning.
4.41 p.m.
LORD RAGLAN: My Lords, it falls to me, rather unexpectedly, to congratulate the noble Lord, Lord Maelor, on his maiden speech. The sentiments he has expressed I hear much of, living as I do in South Wales. I would not say that they were not controversial, but I have very much sympathy with the views he has expressed. I hope that the noble Lord will often address the House again.
This is not a subject I know a lot about; indeed, our water resources, the amount we use and the ever-increasing amount we are going to use, if we are not careful, are matters about which not enough information is yet available. I think that we ought to be worried about the situation we are floating into, and the noble Lord, Lord Hawke, is to be greatly congratulated on this Motion. In the days before piped mains water, when water was carried from a well and the supply eked out with what could be caught off the roof, every drop was precious and cared for accordingly. Now we have gone to the opposite extreme, and water is not thought of as precious enough. A big reason for this, I would say, is the water rate. The water rate, at a flat rate, is an encouragement to waste, because it gives too many people the idea, not only that it does not matter how much they use but also that they ought to use as much as they can to get as much value as they can from their rate. I know of no other commodity which is regularly supplied on the same basis—pay a small flat rate and take away as much as you like. How nice it would be if the Electricity Board, or the coal merchant, or the garage man, operated in the same way !
But I believe that it is a fundamental law of economics—because it is in the nature of most humans—that people waste what is cheap or what is, or seems to be, abundant. And water is cheap, very cheap, and seems to be abundant. The only difficulty at the moment is in storing it. But surely the attitude of so many water boards is thriftless and shortsighted: "Gosh!, we are sorry that there wasn't enough for you to leave your tap on all night, but don't worry;

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we have a valley in Buckinghamshire, a valley in Hertfordshire, a valley or two on Dartmoor, a valley in Upper Teesdale and 20 or 30 valleys in Wales, which will see us right for the foreseeable future." It may be that more reservoirs are urgently needed, but one must wonder whether the forecasts are anywhere near right, or whether the rate of consumption is necessary or whether damming up valley after valley is the right way to go about the matter, and where it will all end.
I know that the Conservative Party are, officially, against more nationalisation, but I know many good Conservatives—and I mean good Conservatives—who say privately that our water supply industry ought to be nationalised, and I myself see that as the only way in which a national resource, which is increasingly difficult to obtain, can be properly cared for. In order to reduce waste, I think that every user should he metered, so that the more people use, the more they pay. This has been done in a number of areas, with very good effect.
If the first so many gallons per household per day—enough to provide for the absolute necessities of life—were charged quite cheaply, and all extra used was charged rather dearly, there could soon be enough accumulating in a national kitty to pay for schemes like the Morecambe Bay Barrage, the Wash Barrage and other similar national schemes, which it would be so useful, perhaps essential, to have and which, in their making, would not so negligently drown our valuable lowland areas. And perhaps a National Water Board would finance the river authorities, which could then direct more money to purifying the Thames and other polluted rivers, and finance the sewage disposal of which the noble Baroness, Lady Stocks, spoke.
The South-East, I recognise, poses a special difficulty, because it is farthest away from the areas which have a big surplus. I hope that the plans for underground storage will be helped on by the Government and soon by a National Water Board. It certainly seems a pity to resort to desalination when at the moment there is so much water running away to waste in the North and West. But people in valley areas will not take kindly, and rightly so, to having their
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land—and the nation's land—swamped, more especially if they think that the water is being piped off merely to run to waste somewhere else.
4.48 p.m.
BARONESS WOOTTON OF ABINGER: My Lords, unlike my noble friend to whose eloquence we have just listened, I do not have the advantage of living in Wales. I live within 35 miles of your Lordships' House, and until about two years ago, on the rare occasions when no rain fell for about two weeks, I found myself in the position that the piped water supply to my house failed so badly that I was unable to take a bath before attending your Lordships' House. And during the whole of the eleven years I have lived within 35 miles of your Lordships' House I have never been allowed to use a hose on the garden. I find this very odd in an age in which it is contemplated that men will land on the moon.
4.49 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, once again the House has spent an afternoon in a way which is so good. in aerating a topic, rather in the way described by the noble Lord. Lord Nugent of Guildford, of the aeration of the Thames as it pours over the weirs. I think that we have justified the flow of water. At least the sediment has settled and some useful bubbles have come to the top. I should like to take up some of the points which noble Lords have raised at various points in the debate. I hope and believe that my noble friend Lord Champion sufficiently answered the detailed points made by the noble Lord, Lord Hawke, in his important opening speech, and I would add my thanks to those of my noble friend to the noble Lord for raising this topic.
The noble Lord, Lord Nugent of Guildford, asked in effect whether the Government would keep up pressure on the local authorities about the purity of the effluent they are permitted to discharge into our rivers. The Government are well aware of this problem and we are trying, in the highest hopes, to keep this question under observation. The approach which has been adopted in the recent circular and memorandum, to which the noble Lord, Lord Nugent of Guildford, referred,

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is that we have to insist on higher standards with local authorities where they can be demonstrated to be necessary by the conditions in the river and the uses likely to be made of the water subsequently. In other words, one should not lay down the same standards; it depends so much on who will discharge effluent into the river lower down and what has happened to the effluent already there.
The noble Lord, Lord Nugent of Guildford, also said something about the scheme for putting water into the chalk in summer. With regard to the two schemes coming up in the Lambourn Valley and the Great Ouse Valley—and when I say "coming up" I mean the two schemes under consideration—the Government are well aware of the anxiety of the relevant authorities to get them into operation and are equally well aware, as the noble Lord, Lord Nugent of Guildford, said, that there are many stages of consultation and "permission-getting" to be gone through before they can come to fruition.
LORD HAWKE: My Lords, did the noble Lord, by a slip of the tongue, say "putting water into the chalk"?
LORD KENNET: I am sorry; I did. I mean, of course, taking water out of the chalk and putting it into the rivers. The confusion was with reverse schemes elsewhere. I know the noble Lord, Lord Nugent of Guildford, will do what he can through the Conservancy to take account of the probable worries of those who live around the places where the holes are proposed to be bored, especially with regard to the type of machinery that has to be put on top of the holes in order to get the water up.
Lastly, the noble Lord permitted himself a gentle complaint, I think, about the cut in capital expenditure of hydrometric schemes. It is the general fate when the economic weather is bad that almost every one has to put up his umbrella, and I think that, by and large, the capital investment in water resources has come off pretty well and has not had to put up its umbrella too much during the present bad weather which the nation is undergoing. I think I am right in saying that the level of capital expenditure on these schemes is likely to rise, not to the £5 million, as he said, but to £500,000. Therefore, the situation is not as grave as might appear.
LORD NUGENT OF GUILDFORD: My Lords, the £5 million is the estimated total cost of these schemes by river authorities throughout the country. I should think that they will wish to spend that sum within the next five years.
LORD KENNET: That is estimated total cost. The figure of £500,000 is the estimated annual cost in the immediate future.
The noble Baroness, Lady Stocks, in an interesting speech, made the point that sewage disposal should be considered for nationalisation in the same way as water has been, and is, considered as a candidate for nationalisation. I noticed that she used the words "a sewage resources board". It is rather the other way round. I am not sure that your Lordships would feel that there ought to be a sewage resources board, in the sense that it would devote its energies to ensure that there would be enough sewage to go round.
LORD INGLEWOOD: My Lords, is the noble Lord suggesting that the Government will give priority to the nationalisation of sewage disposal over the nationalisation of steel?
LORD KENNET: Far from it. I was seeking to give reasons for putting sewage rather low down on the scale of national endeavours and enterprises to be considered for nationalisation. The point is that sewage is, and I think must remain, essentially a local business. There is no need for considering it on a nation-wide basis. There are no local shortages of sewage, as there are shortages of water, that have to be overcome by a great national scheme.
BARONESS STOCKS: I merely referred to pollution.
LORD KENNET: I turn now to the speech of the noble Lord, Lord Molson, whose burden really was economy. I think the view of the Government is that re-use is the best economy. The more that one can get industry re-using its water, the bigger the saving of water there will be. As to the number of leak detection systems, I am informed that many water undertakers have rather good leak detection units, particularly the larger ones. As in so many fields of local government and cognate fields, we find that they are the ones who are the most modern and efficient in regard to such

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schemes. I was interested to hear the observations of the noble Lord, Lord Merrivale, speaking from an industrial point of view, and particularly to hear the good impression that he had of the work of the Standing Joint Committee on industrial re-use—that is, as between the Water Resources Board and the Confederation of British Industry.
I took the greatest pleasure in the excellent maiden speech of my noble friend Lord Maelor, and quailed when I heard him say that if ever again a drop of water is taken from Wales to serve the purposes of England he knew not what would happen; and I continued quailing for several rotund periods until he came back to the point and said that not a drop of water should be taken from Wales to serve the purposes of England without that course being approved by the Welsh Office which has been set up by this Government. My heart beat a little slower at that point, and I felt that peace might, after all, be preserved.
The point made by the noble Lord, Lord Raglan, about making people pay, or pay more, for water, is an interesting one which we will keep in mind and certainly will consider. I would only remind the noble Lord that industry does pay by consumption. It is metered. And industry takes a pretty good portion of the water that is available.
LORD RAGLAN: Perhaps they should pay more.
LORD KENNET: Perhaps they should. I think it is clear that everybody will have to pay more. But this is looking far ahead.
LORD HAWKE: My Lords, if the noble Lord has finished dealing with the points raised in the debate, could I ask him whether he has anything to say about the question of the experimental distillation plant attached to an atomic power station? I think a lot of people are interested in this. Could he also say whether a fact that was told to me is true—namely, that the distilled water rots iron pipes very quickly and so produces distribution problems?
LORD KENNET: I thank the noble Lord for bringing that up, and I will answer him straight away. To take the second point first, I understand it is a
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fact that, distilled water being very pure, it shakes loose all the coating which has been left in the pipes by the less pure water used previously, and therefore it is necessary when you are putting unsalted water, desalinated water, into a public supply system to repollute it with the right salts in solution in order to prevent the coating from coming off the pipes. I am informed that the process is not difficult; it is not excessively expensive, and not a major bar to desalination. I will deal with the overall question of desalination in a moment.
We are operating within the framework of the all too well-known fact that the demand for water has risen, is rising, and will continue to rise. As the Second Annual Report of the Water Resources Board estimates, the total amount of exploitable water in England and Wales is equivalent to an average flow of about 16,000 million gallons a day, and the total demand in the year 2000 is likely to be about 10,000 million gallons a day. So one can see that the situation is not hopeless. It is not a question of necessarily inventing entirely new techniques out of the blue. We can cope if we do things in the right order, and do them wisely. There is enough water to meet the demand.
In this context I would emphasise that the South-East Report mentions a good many schemes. They will not all be necessary. I think so much is clear from the Report. The decisions will have to be taken, and taken in an orderly manner, over the next few years about what combination of schemes will, with the least disruption to everything else, provide the right amount of water at the right places and at the right time.
I should like only to echo what my noble friend Lord Champion said: that we are fortunate now in having the Water Resources Board. We have the machinery and the framework for gathering the facts, for drawing conclusions from them and making suggestions and recommendations to the Government and to other authorities about what ought to be done. The first fruits of this new system are the Water Resources Board's South-East Report which we have largely been discussing to-day. The North of England as a whole is likely to form another large region for which co-ordinated planning for the whole area, on the analogy of

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the South-East Report, is being undertaken.
At this stage I would convey an invitation to noble Lords. I am told that if any of them would like to visit the Water Resources Board in its office at Reading they would be more than welcome. Perhaps they would get into touch, either direct with me or with the Chairman of the Board, about such a visit, because it is always more convenient to go in small parties rather than singly. I myself had the good fortune to visit the Board a week or two ago, and I should like to tell the House about one thing as an example of the work they are doing.
I saw a delightful example of a little analogue machine (it was not big enough to be called a computer) which had been set up to simulate the layer of chalk under London. The Water Resources Board already know that the water level has fallen in that layer by several hundred feet since 1800, and they know where it has fallen and to what extent in different places. They are just about to be able to ask this analogue machine what has happened under London since 1800. They already know the answer, and if the machine gets it right they will then be in a position to ask it what is likely to happen in the future if they take water out from one place and put water into another place. Such machines are now able to do in microseconds what has previously taken twenty clerks years to do. That is one reason why one is glad that this Board have been set up.
A further solution to a large part of our water supply problems over the next decade or so will be in what are known as conventional projects, otherwise reservoirs. Every time a reservoir is built there is conflict with other interests. Sometimes the most convenient place, from the point of view of water, is most inconvenient from the point of view of amenity; maybe it is in a National Park or is on some of the best agricultural land. Sometimes the best place for avoiding amenity damage is the worst place for water, but there are two points that I would stress. The first is that what we are doing at the moment is not as awful as it is sometimes made out. The total average of land over England and Wales going out of agricultural use every
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year is about 50,000 acres. The average amount of that land which is going out of agricultural use because it is being flooded by reservoirs is 1,000 acres, so it should be seen that, of all the land we are using and taking from agriculture, for one purpose or another, reservoirs are taking only 2 per cent.
LORD MOLSON: My Lords, may I ask the noble Lord whether, when he refers to that percentage of agricultural land, he is including the reservoirs in places like Exmore and Dartmoor, which are places of great beauty but are not to any great extent of agricultural value?
LORD KENNET: The figure is for land going out of agricultural use. I assume the figure required by the noble Lord would not appear in that percentage, but I can send the noble Lord the precise percentage for the other land as well.
The second point which it is important to make is that the age of the reservoir is not going to be extended indefinitely into the future. Everybody knows, I think, that at a certain point we shall be using unsalted seawater. I think it is clear that in 100 years' time we shall be using it and that in five years' time we shall not be using it. The only question is, when does it break even economically? The background to this problem is that at the moment we have no plants which have been specifically designed from the bottom up to produce both electricity and unsalted water at the cheapest joint price for both commodities.
The difficulty in the way of making calculations is that electricity generating authorities, not only in this country but all over the world (there was an international conference about it in Vienna a week or two ago)—all industrial generating concerns—are used to calculating the price of electricity as low as they can get it, and they are inclined to say, "If anybody wants any steam left over from our plant they must pay the economic price". Conversely, those charged with providing water at the cheapest available rate are inclined to say, if anybody wants to get any electricity out of the desalination process before the steam is cool enough for them, whatever happens they will not increase the price of water for it. This is an historical factor, but we are now coming into an age where it is beginning to be possible

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for the first time for calculations to be made which ignore these factors. Several figures have been published, but I think the figure mentioned by the noble Lord, Lord Hawke, of 0·4d. per unit of electricity, as against 4s. 6d. per 1,000 gallons a day water, is about the best figure available at the moment.
One wishes one could say that we shall not need any more reservoirs after such-and-such a date because desalination will be economically possible. We cannot say that. One wishes one could say that on such-and-such a date in three or four years' time we shall be able to make that statement. Unfortunately, even this is not yet a technical possibility. But I can assure the House that as soon as it is possible to give the first date, from which it will be possible to calculate the next date, this will be done. In the meantime, our research programme in this country continues, and I can supply background information by correspondence to any noble Lords who are interested.
I said a moment ago that a reservoir was bound to clash with other interests, but it is possible to do a great deal more, and we are doing a great deal more now than we used to do, to see that it clashes as little as possible with other interests and that it brings new, positive interests. I refer to positive landscaping, minimum interference with the existing landscape and, possibly, its use for sailing, boating, bird watching, walking around, picnicking, enjoying oneself in general and even, in some cases, swimming.
The House will be aware that the amount of use that can be permitted on a reservoir is dependent upon the amount of purification plant provided. If there is maximum purification of the water going out of the reservoir, then maximum use for recreation can be permitted. If you have half-purification you can permit half-use. If you have minimum purification you can permit very little use, or none at all. I think we all know that the days when a reservoir meant something like Thirlmere, with barbed wire all round and you could not go within a hundred yards, are numbered; and the influence of our Ministry is being brought to bear to the maximum possible extent in ensuring that
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all the new reservoir proposals throughout the country first provide for the amount of purification which will permit use for recreation and secondly will have an amount of use which is compatible with the amount of purification which is undertaken.
LORD HAWKE: My Lords, may I ask the noble Lord a question before he leaves that subject? So much for the good intentions of the future. What about the past? Why should Manchester be able to segregate Thirlmere, when I understand it is merely a question of having suitable treatment works and spending the money thereon in order to be able to allow the public access there? Why cannot Her Majesty's Government put pressure on Manchester?
LORD KENNET: I am informed that the Manchester Corporation are looking at what can be done to liberate Thirlmere and the Government are at the moment awaiting proposals from them. One is tempted always to think that the Government should put pressure to bear on this or that authority, but the Government are not responsible for providing actual water at all; this is the responsibility of the water authority, and it is easy to be tempted to go too far in putting pressure on such authorities.
We have the machinery to plan over the wider area, and we are using it. We have the machinery to plan our resources comprehensively in the interests of all water users, whether those who are taking water out of rivers or those who require it to be left in the river for use lower down, or those who do not want to take water out at all—those interested in fisheries, navigation, land drainage, amenities, sailing and swimming. We have the machinery to provide the data on which we can build our future plans and we are beginning to use that data for our future plans. Previously this field was dominated by narrow assessments of each separate water undertaking, which was quite simply how to get drinkable water at the lowest possible cost. The field now is subject to the wider considerations I have been mentioning.
It is the duty of the Water Resources Board and the Government, as advised

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by that Board, to weigh up how best in the future to use all these natural resources—land, rivers, lakes and underground storage—and desalination and barrages, for the benefit of all. This includes giving full weight to all interests, not only water consumers but also farmers, those who enjoy the water, the National Park authorities, and the authorities for the development of new towns and the expansion of existing ones, and for the creation of new lakes and reservoirs with a strong eye on their recreational possibilities.
LORD HAWKE: My Lords, I think we have had a very interesting debate on a topic which has not been debated in your Lordships' House for some time. I will not attempt to answer any points that have been made, because the noble Lord, Lord Kennet, has devoted considerable time to learning up this subject and has answered very adequately. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.
House adjourned at fourteen minutes past five o'clock.