Sitting of 1 February 1967

Preamble
The House met at Ten o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS

  TRAVEL TRADE REGISTRATION
  10.5 a.m.
  Mr. Edward Milne: I beg to move,
  That leave be given to bring in a bill to register certain sections of the travel trade and to introduce a code of conduct for the travel trade.
  Happenings in the travel trade have occupied the attention of hon. Members on both sides of the House during the past few years. Indeed, as far back as 30th May, 1962, I was in a similar position as I am today. Great changes have taken place during that period in this rapidly growing industry since the then chairman of the Association of British Travel Agents talked of complaints in the trade as being capable of being counted on the fingers of one hand. That ostrich-like attitude was followed by a number of failures in the travel trade. and bodies like Fourways, Fiesta, Spain Only, Rentavilla and others became national names throughout the country.
  Although useful ambulance work to save those ruined holidays by the Association of British Travel Agents, Hotel-plan and others was carried out, many people lost not only their holidays but vast sums of money as well. Throughout this period, the Board of Trade has had to stand almost helplessly by and do little or nothing for those unfortunate people.
  The attitude and the procedure appear to be to leave the travel trade to work out its own destiny. The two main organizations—the Association which I have already mentioned and the Travel Trade Association, with members involved in the trade failures to which I have referred—have been unable to clear up the situation that exists.
  In presenting a Motion of this nature, there is not time to go more fully into
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  the past and, in pressing for this Measure, I want to look at the position as it exists today and to convince hon. Members on both sides that legislation is even more necessary than ever. So much is the present uneasiness reflected in the travel trade and throughout the community that an organisation similar to the A.A. and R.A.C. has bean set up to give safeguards to holidaymakers which the travel trade has up to this stage failed to give.
  In dealing with this rapidly growing industry, the House cannot fail but to be influenced by happenings in other sections of trade and commerce. The insurance liquidations have shown the effect on the public mind of failures in that field, which spring very much from the same causes as the failures in the travel industry. The collapse of Davis Investments, with its effect on Davis Travel, is probably the most recent example that one can give of this situation. At this important time of the year, it has set many people wondering about the security of their holiday arrangements.
  It is true, and in fairness it is necessary to say, that Davis Travel responsibilities have been taken over by another firm, but those of us who have followed the happenings in this trade know that a great deal of unhappiness still remains.
  We are not alone in seeking this form of registration or licensing. Many European countries have already introduced such a system and found it to be of benefit. At the moment, the Dutch Government are spending over £30,000 to probe into the Dutch travel trade. Our own Board of Trade has decided to await the outcome of the travel trade's own efforts, and the Association of British Travel Agents has introduced what it has termed "Operation Stabiliser". Operating for the last 18 months, it has certainly blocked the entry into the trade of many intending agents, but, in the process, it has raised protests about the closed shop attitude in the trade.
  From complaints which have reached me, those seem to be justifiable in themselves. Great delays have taken place which appear to indicate that Operation Stabiliser at best is a clumsy device and at the worst is giving to the trade a system of licensing which it pretends to oppose but which it is actually carrying out. In fact, though claiming to be

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  against the licensing of the trade, the appeal court of A.B.T.A. for entry into the trade is operating in this way. Appeals are heard in secret, with no Press allowed in. Under its regulations, A.B.T.A. travel agents and tour operators are allowed to trade only with each other. I have noticed the argument put forward in travel trade publications that the time is not opportune and that the travel trade can ill afford at this time to come under parliamentary scrutiny. I feel that we are entitled to ask why not. Public money is at stake, and we ought to be demanding that protection be afforded, because some of the journals which are complaining about the trade being put under public and Parliamentary scrutiny go on to say in some of their other columns: "Unwelcome as the facts may be, 1966 has seen an increase in complaints from holiday-makers."
  I notice that Press reports, even this early in the season, following the glossy brochures and mass Press advertising, are starting to talk of worried tour operators moving to cut losses. Already firms are beginning to talk about load switching, which is the transfer of holiday arrangements from one firm to another. In itself, that is not necessarily a bad thing, but on being informed of those changes, many people who have paid deposits to the travel trade do not wish to go on the altered holidays, and many of them have been losing deposits in the past on that account. Too many travel agents and tour operators regard the complaints which they receive as frivolous. However, it is not frivolous for great numbers of families throughout the country who have lost their whole savings spent on holidays. I know from my own experience in this matter how long it takes for complaints to be dealt with. I raised a number of complaints with the Board of Trade recently which started back in the middle of October and which now are still being dealt with and investigated.
  Even in the short time at my disposal, I feel that the need for this type of legislation has been demonstrated. I trust that the House will agree to the Motion and allow the Bill to go forward to a Second Reading.
  10.14 a.m.
  Mr. Kenneth Lewis rose—
  Mr. Speaker: Does the hon. Gentleman wish to oppose?
  Mr. Lewis: Mr. Speaker, it has become somewhat usual these days to allow a Ten-Minute Rule Bill to go through without opposition. However, there are two reasons why I oppose this Bill. The first is that last night, on television, the hon. Member for Liverpool, Walton (Mr. Heffer) indicated to the country that, because a Ten-Minute Rule Bill of his on coursing was allowed to go through unopposed yesterday, that was to be taken as acceptance by the House. That in itself would seem to justify my line this morning. If it is of any consolation to the hon. Member for Blyth (Mr. Milne), I once had a Ten-Minute Rule Bill which happened to come forward on a big occasion when my right hon. Friend the Member for Bexley (Mr. Heath) was due to make an important speech on the Common Market. I had my Bill and, unhappily, my right hon. Friend had to wait, because it was opposed by the hon. Member for Ebbw Vale (Mr. Michael Foot).
  I oppose this Bill rather reluctantly because, as the hon. Gentleman knows, I have a private interest in the matter. Nevertheless, I hope that the House will recognise that, having a financial and private interest, I know something about the business to which the hon. Gentleman has been referring for a long time and has again referred to today. He himself indicated that he has been interested since 1962. The fact that he has seen a great improvement in the period since 1962 ought really to encourage him to get away from the subject now. He has flogged the travel industry to death, with a good deal of exaggeration, to which he has added this morning.
  It is not true as he said that, nowadays, many people lose a lot of their savings because of disastrous holiday arrangements. These things have been put right by the travel industry, and I am very glad that they have been put right.
  What the hon. Gentleman wants is Government registration and Government control, and that is in line with what hon. Members opposite want in respect of a great many free enterprise activities. The truth is that the Association of British Travel Agents and the Travel Trade Association have got together in recent years and done the very

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  things which the hon. Gentleman wants. Those two associations represent the majority of agencies, and they have registered their members. In addition, they have created a rescue fund to which every member travel agent contributes. That fund now stands at something like £100,000. The claim on it last year was £200 or £300, which indicates to the hon. Gentleman the limited difficulties that arise. They are so minute as almost now to be non-existent. The hon. Gentleman is shaking his head, but his right hon. Friend the Minister of State to the Board of Trade answered a recent Adjournment debate and accepted that such complaints had become less and less and that the travel trade had provided this safety net for members of the public.
  A.B.T.A. also lays down standards. Every agency which is a member of the Association of British Travel Agents has to provide accounts and has to produce them each year in order to prove to the association that it has stability. Tour operators are governed on safety by Government regulations. The nationalised airlines, quite apart from the private airlines, can check on the financial stability of operators who charter their aircraft. The whole tour operation field is governed by international air transport regulations. All these are safeguards. Some of the trouble in the past and some of that which the hon. Gentleman quoted has been caused by foreign operators and by foreign companies in this country. He knows that perfectly well. However, even they are having great difficulty today, if sub-standard, because of the power of the Association and because of its increased membership. This is all to the good.
  The hon. Gentleman really cannot have it both ways. He cannot ask for registration, and then complain, as he did this morning, that there is a closed shop. The closed shop would be even greater if we had Government regulations. What the hon. Gentleman is really doing is having a crack at free enterprise. He is engaged in pinpricking protestations.
  Let me tell the hon. Gentleman about this business. It started after the war as
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  a new industry, with no basis. It had to compete with the State through the nationalised airlines, British Railways, and so on. It has helped to make tourism what it is in this country. It has helped to make it a top currency earner. For although we send many people abroad, many people come to this country and spend foreign currency here.
  Free enterprise pioneered cheap charter travel; it pioneered air car travel, and it is now busy pioneering hovercraft travel. It saves the carrying companies of this country, including the nationalised carrying companies, millions of pounds a year in promotion costs and in ticket offices, and if the hon. Gentleman disagrees with that it proves that he does not know what he is talking about in presenting this Bill. The hon. Member says these are strong words. They are, because this is a business which I happen to know.
  This business has taken a great many risks, and in so far as it has put its house in order, I hope, at the beginning of the holiday season, that the people of this country will have confidence that they can enjoy their holidays. Only one thing is stopping them from doing that and it is not the trade itself. It is the hon. Gentleman's Government, because in so far as the Government have cut the travel allowance to £50, they have made it difficult for the travel industry to keep up the standards that it is seeking to provide. Indeed, the Government are creating a situation in which the very risks to which the hon. Gentleman has referred will be increased, and I therefore oppose the Bill.
  Mr. Speaker: Since a Division has been claimed, I have to declare that the proceedings stand deferred. The Order of the House of 14th December provides that the Question may be put before the Adjournment of the House is moved at the end of business tonight, whenever that may be.
  The Proceedings stood deferred pursuant to Order [14th December] (Sittings of the House (Morning Sittings)).

  COUNT OF THE HOUSE (QUESTION OF PRIVILEGE)
  Sir Harmar Nicholls: On a point of order. Mr. Speaker. Just before midnight last night I was on my feet speaking to an Order placed by the Government arising out of the prices and incomes legislation. It was a debate during which there had been formidable criticism of the Government's judgment on this important matter. At that time an hon. Member called for a Count. The Count was, of course, quite in order, but after the Count was called one of the Government Whips ran down the Chamber telling hon. Members to keep out.
  Mr. Speaker: Order. The hon. Member cannot raise his point of order at this stage. Perhaps he may have an opportunity to do so later.
  Sir Harmar Nicholls: Further to that point of order. I want to raise a point of order on the legislation that we pass at the beginning of every Session, that Members shall not be impeded on their way to Parliament. I submit to you that on this matter Members were on their way to the Chamber—
  Mr. Speaker: Order. The hon. Member will have an opportunity of raising this later.
  Sir Harmar Nicholls rose—
  Mr. Speaker: Order.
  Mr. Marcus Lipton: On another point of order—
  Mr. Speaker: Order. I have ruled that I shall deal with the point of order at a later stage in this morning's business.
  Mr. Edward Heath: Further to that point of order. As we are now working to a new procedure, would you tell the House at which point it would be appropriate to raise this point of order?
  Mr. Speaker: I am grateful to the right hon. Gentleman. This is a new procedure, and I have been taking advice while the point was being raised. I understand that it ought to be raised at half-past Three this afternoon.

  MINISTRY OF AVIATION (DISSOLUTION ORDER)
  10.24 a.m.
  The Minister of Aviation (Mr. John Stonehouse): I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Ministry of Aviation (Dissolution) Order 1967 be made in the form of the draft laid before this House on 17th January.
  This is an important morning for the House of Commons. We are breaking new ground by being here at this time. When we have been here before at 10 o'clock, the House has had a distinctly jaded look, having sat up throughout the preceding night. What a contrast there is this morning! Hon. Members are here, lively and alert, and no doubt we are going to have a very good debate.
  I have some reservations about being here this morning, or at least about being here for this debate at this time, as my Department is affected by two debates on the Consolidated Fund Bill this afternoon and this evening, and perhaps tomorrow morning, and I might find myself seeking to catch the eye of the Chair 14 or 15 hours from now.
  It appears that right up to the very end my Ministry is still attracting its fair amount of comment and criticism. It is not going out with a whimper. In view of the subject which has been chosen for the Adjournment debate on Friday next, it could be said that we are going out with a sonic bang.
  I am moving this draft Order with enthusiasm. I have seen the Ministry from the inside for 18 months. I have been to the larger research establishments. I have had a very close contact with the aircraft industry, and I am satisfied beyond any doubt that the new organisation within the Ministry of Technology offers the best opportunity for our work to succeed.
  I think it is a pity that the advice given by a former Minister, Mr. Amery, some years ago that the Ministry of Aviation should be expanded into a Ministry of Science was not accepted at that time. It was left to this Administration to give the Ministry of Aviation a new sense of purpose and direction.
  Of course, this occasion is tinged with some regret. We are talking about a

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  Ministry with a considerable history. It grew out of the Ministry of Supply set up in 1939, and the Ministry of Aircraft Production set up a year following that. It has had its great achievements. Of course, it has made its mistakes, but if I might make this last defence for the ugly duckling among the swans of Whitehall, it is much easier to make mistakes in a fast-moving technological environment than in some other placid pools.
  This Ministry has been in the centre of political controversy. Some of these political storms have tended to obscure the peaks of achievement scaled by the men in the Ministry. The scientists and technologists in our establishments have been breaking new frontiers, and the combined efforts of the Ministry have helped Britain to be in the forefront of aviation progress. The Ministry has helped to develop great aircraft in the VC.10, the BAC.111 and the Trident, and it has procured some very fine aircraft for the Royal Air Force. In recent years it has helped industry to achieve a very fine performance in the export field, and I am particularly glad that last year exports totalled more than £200 million. This is a very fine achievement, and all those in the industry deserve credit for it, but my Ministry has played some part in it and we have been glad to have given assistance.
  Before we finally disappear, I want to pay a tribute to all those in the Ministry who have contributed to these and past successes. I could spend a long time describing the good work of the Ministry, but I want now to put a finger on its fundamental weakness, and it is this, that in pursuing its sponsorship of the aviation industry it has failed to give top priority to commercial objectives and to its wider responsibilities to the economy as a whole. The Ministry of Aviation has been spending £650 million a year; of this, £550 million in expenditure in industry. Much of this total expenditure has been in original research and development, and the brutal truth is that not enough of the value of this has been flowing into industry generally.
  Within the Ministry of Technology this vast purchasing power will now be wed for the wider application of the new technologies. In short, there will be more fall-out. In particular, the
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  research establishments will be more closely associated with research which can be valuable to British Engineering generally, and will help our firms, not only in the aircraft and electronics industries, to utilise new techniques and functions. Original research in defence will become more available, as far as security allows, to firms not normally directly involved in meeting defence needs.
  All this opens up a most exciting prospect, but the inspiration of this new opportunity will not detract from the most important task we shall still have for acting as the procurement agency for the Ministry of Defence. When I wear my new hat as Minister of State I shall continue to take special responsibility, under my right hon. Friend, for defence procurement functions. There will continue to be the closest possible contact with the Ministry of Defence.
  For the time being my senior staff and I will be remaining in the Ministry of Defence building so as to enable these close ties to be maintained. It will be our objective to obtain what the Ministry of Defence requires at the most efficient price and within the time scale that the customer expects. Wherever possible, we hope that specifications will be drawn to enable a civil application also to be achieved. The Ministry of Technology will continue to have the Ministry of Aviation's responsibilities for assisting military exports. Wherever possible, Ministry of Defence specifications again, will be drawn with a view to achieving exports for the products developed by British industry.
  The Ministry of Defence itself is very much alive to this need, and my right hon. Friend the Secretary of State for Defence has emphasised, in connection with the Anglo-French VG aircraft, that we hope that if minor amendments can be made which will help to widen the market for this aeroplane these amendments will be incorporated in the plan.
  If the House approves the draft Order, the Ministry of Technology will take over sponsorship of the aircraft industry. We believe that this industry has an important part to play. The industry now knows that it will not be spoonfed. In civil aircraft development we must be mindful of the need to secure an adequate return on the taxpayers' investment. New

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  projects will be judged by strict criteria. We will take into account all the factors of import saving and export potential, as well as the fall-out of new developments.
  There is every hope that we can establish realistic collaborative projects with Europe and thus secure a basic market among our European allies which will provide commercial opportunities for our industry in this field. It will be the task of the Ministry of Technology to help to secure this opportunity for the aircraft industry.
  At present the Ministry of Technology has 6,000 staff, of whom 5,000 are non-industrial and 1,000 industrial. The Ministry of Aviation has about 31,000 staff, of whom 19,000 are non-industrial and 12,000 industrial. Included in the 31,000 there are 18,000 at the eight research and development establishments. All these staff will now join the Ministry of Technology. The combined Ministry will have about 37,000—
  Sir Gerald Nabarro: My particular interest is that I have the Royal Radar Establishment in my constituency, at Malvern. Where are the employees of that establishment included? Are they in the 19,000? Where will they go?
  Mr. Stonehouse: The employees of the R.R.E. are included in the 18.000 at the eight research and development establishments, in which the R.R.E. is included. All this staff will become part of the responsibility of the Ministry of Technology.
  Mr. Neil Marten: The figure that the Minister gave presumably includes those who have already gone to the Board of Trade, so the total figure would probably be nearer 40,000 than the figure he gave.
  Mr. Stonehouse: Yes. The Ministry has already lost responsibility for supervising the regulations governing civil airlines. That has already gone to the Board of Trade. I cannot quote off the cuff the exact number of staff involved in this transfer.
  The combined Ministry will have about 37,000, staff and will, therefore, be among the five largest Ministries in and around Whitehall. From the outset
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  all these staff will be treated together with unified seniority lists and promotion opportunities. I am confident that the men and women who make up the Ministry of Aviation will welcome the change that this merger gives them and the opportunity for services that it provides.
  The phoenix of the Ministry of Aviation may die on 15th February but it will fly again with renewed strength and vigour within the new Ministry of Technology. I commend the draft Order to the House.
  10.37 a.m.
  Mr. Rober Carr: In opening, the Minister referred to our innovation this morning, and welcomed the fact that instead of being jaded at this hour of the morning we were fresh and vigorous. I agree with him. I only hope that he and I and all other hon. Members—and you, Mr. Speaker—will be equally fresh and vigorous this time tomorrow morning. We have a lot of business ahead of us. I am also somewhat surprised that so many hon. Members opposite who urged upon us these morning sittings, and expressed the view that it was wrong for hon. Members to have other work to do in the morning, should evidently themselves be indulging in a hard day's work elsewhere. It is a somewhat disappointing start from that point of view.
  We are dealing with a most important question. It is not a minor affair but a major one. The organisation which the House is being asked to set up today will be responsible each year for the spending of huge sums of public money, measured in hundreds of millions of pounds. The effectiveness with which that money is spent, both scientifically and industrially, will have a great bearing on the future technological capability of this country and our political potency and material prosperity.
  Apart from the importance of this section of the Government machine, it has always seemed to me that Parliament has too few occasions on which to examine the organisation and methods of the Executive. We feel that Parliament should take advantage of the opportunity provided by this change to probe deeply into the nature of the change and its purposes. From this side, at least, we shall have many comments to make and

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  many questions to ask. It is only fair to warn the House that we feel that this may take a considerable time—probably longer than we have available to us this morning.
  I congratulate the Minister on his appointment. At the same time, I sympathise with him on the somewhat ironical position in which he finds himself, for his maiden Ministerial speech is also his own funeral oration. Politically—and I stress "politically"—he seems to be suffering the fate of the drone. He told us that he goes willingly and gladly to the consummation of his fate. I had better not pursue this analogy too far; one would hate to think of the Prime Minister in the rôle of the queen bee.
  I hope that in his new appointment the Minister will maintain his enthusiasm for aviation. He talked about different hats. I notice with interest that he and I are wearing Concord ties. I hope that this is a good augury; although I wonder why his tie is the blue version while mine is the red one?
  I must make it clear to the House that because of the antecedents of this Order—what we regard as the unnecessary delays and incompetences which have led up to it—we do not welcome it. But before I come to the substance of the reasons for our objections, I wish to add my tribute to that of the Minister to the Ministry of Aviation and all those who have worked in it since the then Conservative Government established it about 11 years ago. I do not bid the Ministry of Aviation farewell because in spite of our doubts about the Order—because of how it has been arrived at and so on—we may in the end find that there is no need to say farewell to it because although it will be under a different name, its life will continue.
  The bringing forward of this Order at this time represents yet another breach of faith on the part of the Prime Minister, who said in reply to a direct question from me about the timing of this change:
  "As to implementation of the Plowden Report and decisions consequent upon that, my right hon. Friend the Minister of Aviation will have time while he is still within hi; Department to deal with that question."—[OFFICIAL REPORT. 16th June, 1966; Vol. 729, c. 1662.]
  I urge hon. Members to note the words "will have time", in reference to my question about the timing of this
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  change. By no stretch of the imagination can anybody claim that there has yet been implementation of the major Plowden proposals. We had vague and woolly-phrased declarations of intent before Christmas about the future structure of the industry, but we know that the discussions and negotiations are far from finality, let alone implementation.
  It may be argued, if we accept that the Government are determined to put through this change, that it is better that it should be put through quickly, even before Plowden is implemented. However, this does not alter the fact that, on this matter, the Prime Minister promised one thing and is doing the opposite. Maybe this is becoming such an obsessional disease with him that his name will be left behind in the English language like the names, for example, of Boycott and Spooner, so that we will be able to give moral guidance to our grandchildren by telling them not to do "a Wilson".
  My hon. Friends and I see nothing sacred in having for all time a separate Ministry for aviation. However, we believe that the timing of this change has been extremely badly arranged, that the way in which it has been timed during the last year has inevitably caused distraction to Ministers and officials who needed to take extremely urgent decisions and that it has, therefore, caused delay over very important matters. We therefore feel that the operation up to this stage has been put through with incredible ineptitude, for which we primarily blame the Prime Minister.
  It seems to us that the distraction and delay which have inevitably been caused by an administrative upheaval of this kind would have been worth while only had the change been part of a really radical reform. But instead of a radical reform, all that we have had so far is the Prime Minister imitating the grand old Duke of York and marching his men up Whitehall and down again. We have had extraordinarily ponderous elephantine administrative manoeuvres merely to reach the present position.
  Mr. Norman Atkinson: Get on with it.
  Mr. Carr: The hon. Gentleman tells me to get on with it. I tell the Government to get out into the industry, talk

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  to the people who have been affected by these decisions and then to see whether they agree with what I am saying.
  Mr. Atkinson: I told the right hon. Gentleman to get on with it because I have heard him on at least five occasions leading us up the hill and then down again in respect of what he would describe as "Wilsonian heights".
  Mr. Carr: I repeat that the views I am expressing are strongly held by those affected at all levels throughout the country. It does no harm to make these views clear in the House. It is one of our tasks to air such views.
  Mr. Eric Lubbock: The right hon. Gentleman is correct in saying that some people in the industry agree with the views he is expressing. However, that is by no means universally the case. I certainly know of leaders in the industry—those with whom I have been in contact—who have not gone on record as being violently opposed to these changes in the terms being used by the right hon. Gentleman.
  Mr. Carr: The hon. Gentleman has misunderstood me. I am at present expressing the strong feelings that are felt throughout the industry about the delay that has taken place, and I have been describing the elephantine administrative manoeuvres that have been required to reach this position, regardless of the basic merits or otherwise of the change. When the Prime Minister announced in the House last June his basic decision to abolish the Ministry of Aviation, he broke one of the simplest rules of good management. He announced his decision to abolish the Ministry without first having formed a clear opinion of what he wanted to put in its place. That has caused the delay and criticism to which I referred.
  Regardless of the basic merits of whether or not the change is a good one, the way in which it has been done has caused a great deal of criticism and considerable suspicion about its outcome. The way in which the Prime Minister tackled this whole business has resulted in five months of indecision, accompanied by one of the classic battles in Whitehall's corridors of power—and the real
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  problems of the industry got pushed into second place.
  What have we got if this Order goes through? We have got, as the Minister made clear in his opening remarks, a Department called the Ministry of Technology in which the old Ministry of Aviation element will be far the biggest and most powerful part. But, if this is what was wanted, we could have got there quite simply and quickly. That is the substance of the first part of my criticism. All that the Prime Minister had to do in November, 1964 was to change the name of the Ministry of Aviation and add some new functions to it. The end product would have been the same. It could have been just what we are getting now.
  Instead of that quick, simple and tidy process, which would not have caused delay, we have had the most extraordinary convolutions and arguments spread over two-and-a-quarter years. Parliamentary time and public money have been wasted in setting up a new Ministry of Technology with new Ministers, new officials and new offices. Now more Parliamentary time and public money are being wasted in abolishing the old Ministry and arranging for it to merge with—or, as I think more likely, to take over—the new one.
  Sir Stephen McAdden: I wonder if my right hon. Friend would consider delivering these forceful arguments rather more slowly so that they can be assimilated by hon. Members on this side of the House and in the optimistic hope that one or two Socialists will come into the Chamber to listen to them?
  Mr. Carr: I shall bear that in mind because I want to be audible and understandable to hon. Members who are present.
  One thing that this proves clearly is that, whatever else the Prime Minister is, he is not good top management material. He seems to have the instincts and qualities of one of those company promoters who shift assets from one shell company to another.
  One question that the House should ask before allowing the Government to have this Order is, how does the change marry with the recommendations of the

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  Plowden Committee? The Plowden Committee, after all, was set up by this Government to advise on the future of the industry and its relation to the Government.
  I was surprised that in moving the approval of this Order the Minister had nothing to say about this. The proposal before us does not match the Plowden Committee recommendations at all. The Plowden Committee recommended certainly that the Government should undertake an early review of the future of the Ministry of Aviation but it said in paragraph 501 of its Report:
  "The main purpose of any change in the arrangements would be to foster a more direct relationship on military aircraft procurement between the Service Departments and the industry."
  That, the Committee said, would be the main purpose of any change, but the setup with which we are being presented this morning completely rejects that view. It might he right to reject that view, but when we have had an inquiry such as the Plowden Committee inquiry and we have turned away from one of its most important expressions of opinion, the reasons for that rejection should be explained and closely argued in this House.
  Mr. Robert Howarth: The right hon. Gentleman would be more fair if, when drawing attention to paragraph 501, he also read out the drawbacks against the suggested course of action listed in paragraph 502.
  Mr. Carr: Certainly I admit that the Report drew attention to drawbacks, but I did not want to quote too lengthily. As the hon. Member has mentioned paragraph 502, one should also refer to paragraph 503 where the Committee indicated the sort of possible compromise which certainly does not marry with what is being put before us this morning. I think that I am justified in saying that in the proposals that the Government are putting to us, they are departing from the views of the Plowden Committee, and we ought to know, if this is right—it may be right—the reasons for rejecting the advice of the Committee which the Government set up specially to advise them on this matter.
  Sir G. Nabarro: Will my right hon. Friend bear in mind that we are limited
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  for time this morning and that a large number of his hon. Friends wish to participate in this debate for constituency and other reasons? We have to finish at 12.30 p.m. and if my right hon. Friend goes on at this pace he will still be occupying the Floor at 11.30 p.m.
  Mr. Carr: I am receiving some conflicting advice from my hon. Friends. I can assure my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) that I have no wish to do anything but to put the points which we on this side of the House believe are important and which need to be considered.
  The second theme running through the Plowden Committee Report and relevant to this question, was the need for closer and deeper consultation in decision-taking between the Government and the industry. Yet the Prime Minister admitted openly when announcing this decision last June that the industry had not been consulted at all. What is the purpose of behaving and governing like that? All the time the industry, which had not been consulted, had worked out alternative proposals after careful thought and based on great experience. Surely it would have been not only courteous and a matter of good will to the industry but also wise in the national interest that those proposals should have been considered by Ministers before the apparently irrevocable basic decision was taken and announced.
  The third dominant theme in the Plowden Committee Report was the need to relieve the aircraft industry of much of the detailed control imposed on it by the Ministry of Aviation. "Getting bureaucracy off the backs of industry" is the way in which some members of the Plowden Committee have described it in conversation. Before passing this Order the House should ask how the proposed change will bring this about, how it will help to get bureaucracy off the backs of the industry.
  This seems to require two main things: first, a change of method in evaluating projects, estimating costs, defining operational requirements, developing modern techniques of cost and technical management and modern types of contracts. Does what is proposed mean that all would go on as before? We do not

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  believe that this Order should go through without the Government dealing with some of these questions which are absolutely basic to the effective expenditure of the money—hundreds of millions of pounds a year—to which the Minister referred.
  Secondly, and with all respect and admiration for the merits of civil servants individually, getting bureaucracy off the backs of the industry—if it means anything at all—must surely mean having fewer civil servants interfering with it. The Minister told us how many civil servants there are at present in the Ministry of Aviation who are to be transferred to the Ministry of Technology. He told us that all of them are to be transferred, but what are the projected numbers for one, two and three years ahead? What reductions are planned? In what categories are those reductions to be made? Are reductions in some categories to be offset, as they might well properly be, by increases in other categories? If this main theme of the Plowden Committee is to be achieved, reductions in total there must be.
  At the moment of introduction of this new system of Government organisation we should have been told what the Government have learned from the further study recommended by the Plowden Committee of American and French methods in this field. What were the results of that study? Are those lessons to be applied, and how does this change affect that issue? What is to be the rôle of the great research stations about which my hon. Friends are so naturally concerned? Are they to continue at more or less the same size? If so, does that mean that their work will be diversified? If that is so, there are many people of great scientific experience who have doubts about the wisdom of that. Or are they to be reduced to smaller size; and, if so, how much?
  These are by no means the only question which should be answered. We should be told, for example, how the new organisation affects the management of our space programme. It must be notorious by now that the division of responsibility which exists within the Government for the management of space is proving, as each month passes, to be more and more unsatisfactory and more
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  and more in need of unification. Surely this is the moment to put it right, when Government organisation of these matters is being changed. But is it to be put right? This is one of the important functions which go with the Ministry of Aviation, and we have heard nothing about it.
  Then there is a matter of great concern to all of us as individual Members of Parliament. That is the effect of the change on the subject of Parliamentary Questions. Hitherto we have had a Ministry of Aviation. We knew that Questions for that Ministry came on on one day, and we knew that on that day, when the Minister of Aviation was top of the list, we could get our Questions dealt with. But now it seems to be already extremely unsatisfactory. It is now extremely difficult to get Questions down about those functions of the Ministry which have gone off to the Board of Trade. They are swamped in a large number of other subjects and are clearly being dealt with by Ministers—I do not blame them for this—who have so many other interests that they are much less versed in and much less on top of the aviation job than they should be or were under the previous set-up.
  There is another aspect concerning Parliamentary Questions which we should get clear as we make this change. We should ask for a clear definition of the division of responsibility between the Secretary of State for Defence and the Minister of Technology with the functions that he will be assuming if the Order goes through. Many hon. Members have found it difficult to understand, and most unsatisfactory, the way Questions relating to the production of military aircraft have been shifted backwards and forwards—transferred between—the old Ministry of Aviation and the Ministry of Defence. There is a difficult borderline here, but it has struck a number of hon. Members—not merely hon. Members on this side of the House either—that this shuffling backwards and forwards was done more often for political convenience than for any other reason. This situation should be redefined at this moment.
  Then there is something we want to know about the position of the Minister himself. We understand that he is to become a Minister of State in the new Department. We would like to know

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  more about his real relationship to the Secretary of State for Defence and his real status in the Government. Here, perhaps, his salary is a sign to the House of what that status is to be. We know what it is at present. We realise that this could be explained by the operation, however misguided, of the incomes policy. As a Minister of State in the Ministry of Technology, he could either be a Grade I Minister, as we understand it, with a salary of £7,625 per annum, or he could be a Grade II Minister of State at what we believe is his present salary of £5,625. When all questions of the incomes policy are put on one side and are at an end, in which category is the Minister of State, as he is to become, to be? In view of his heavy responsibilities, and in view of the importance of the function, we believe that he should be—
  Mr. Lubbock: On a point of order, Mr. Deputy Speaker. I wonder if you could help hon. Members on this subject. There are 11 of us intending to participate in this debate—[HON. MEMBERS: "Hoping to."]—and the right hon. Member for Mitcham (Mr. R. Carr) has already been on his feet for half an hour. Could you appeal to him to curtail the length of his speech?
  Mr. Atkinson: Further to that point of order, Mr. Deputy Speaker. This speech has now been going on for nearly half an hour. This is obviously an exercise for Front Bench participants. Many of us are of the opinion that morning sittings are not designed and have net been created to give Front Bench speakers opportunities of this sort. Is it possible for you to say whether you w ill consult Mr. Speaker and discuss this matter with him, with a view to his perhaps issuing an interpretation of the recommendations which have been made, so that there can be some guidance for Front Bench marathon athletes of this sort?
  Sir G. Nabarro: Further to the original point of order raised by the hon. Member for Orpington (Mr. Lubbock), Mr. Deputy Speaker. Is it not a fact that the Order has to terminate in debate at 12.30 in order to leave half an hour for the Adjournment?
  Hon. Members: No.
  Sir G. Nabarro: Would you rule, then, on the interpretation, Mr. Deputy Speaker? Is it one o'clock?
  Mr. R. J. Maxwell-Hyslop: Of course, it does not.
  Sir G. Nabarro: In reply to that interruption—of course it does not, only if the Government give further time. Will it be extended?
  Mr. Deputy Speaker (Sir Eric Fletcher): If the hon. Member for Worcestershire, South (Sir G. Nabarro) is addressing me on a point of order, it would be more convenient if he continued to put the point of order to me.
  Sir G. Nabarro: Mr. Deputy Speaker, could you appeal to the respective Front Benches, having regard to the fact that there are 11 Members on this side of the House seeking to catch your eye, to curtail their speeches to a reasonable length? My right hon. Friend the Member for Mitcham (Mr. R. Carr) has now been on his feet for 33 minutes.
  Hon. Members: A good speech, too.
  Sir G. Nabarro: It may be a very good speech, but there are a great number of other hon. Members who can make very good speeches, particularly on constituency matters. Is it not a recommendation for morning sittings that Front Bench speeches should be reasonably short?
  Mr. Deputy Speaker: In reply to those three points of order, the House will be aware that no limitation has been placed by the House on speeches during morning sittings any more than during any other sittings of the House. I am sure that the right hon. Member for Mitcham (Mr. R. Carr) will have heard the observations which have been made to me on these points of order.
  In reply to the point of order raised by the hon. Member for Tottenham (Mr. Atkinson), I will certainly bring what has been said to the notice of Mr. Speaker. With regard to the point of order raised by the hon. Member for Worcestershire, South (Sir G. Nabarro) the debate will continue until half-past twelve, when we shall proceed to the Adjournment.
  Mr. Stephen Hastings (Mid-Bedfordshire)rose—
  Mr. Anthony Royle: Further to that point of order, Mr. Deputy Speaker. I ask your advice. Is it not correct that the pressure for morning sittings came from members of the Labour Party? Pressure mounted to such an extent that we are having this debate this morning. Is it not, therefore, extraordinary that the benches on this side of the House should be filled while there are only seven members of the Labour Party present?
  Mr. Deputy Speaker: It is not in order during the debate on this Statutory Instrument to discuss the arrangements which were made by the House for morning sittings.
  Mr. A. Royle: Further to that point of order. Is not the point I have made connected with the point made by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) about the length of the speech being made by my right hon. Friend the Member for Mitcham (Mr. R. Carr)? It is a very good speech and a very important speech, because my right hon. Friend is raising some points which are very important to the aviation industry—
  Mr. John Rankin: It is the Opposition who are complaining.
  Mr. David Webster: Behave yourself.
  Mr. Royle:—and he is doing so very ably. It is surely not beholden upon hon. Members opposite—the five or six, or perhaps the seven, who are here—to complain.
  Mr. Deputy Speaker: It is not in order during this debate to consider whether it is a good thing to have morning sittings or not. That is something that has been decided by the House. All I can indicate to the House are the circumstances in which the debate should take place.
  Mr. Carr: If I have been on my feet for about 33 minutes, I can only say that one of the main reasons has been the number of interruptions to which I have given way. Perhaps it was wrong of me to give way, but I was attempting to be courteous to the hon. Members who sought to intervene. Both sides of the House should realise that we are this morning discussing the
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  Government organisation which is to be responsible year by year for the expenditure of—I think this was the figure given by the Minister—£500 million or £600 million of public money. We do not regard this as a matter which can be briefly debated. We do not think that a two-hour debate is adequate for it. If the Government choose to put it on in the morning and that is all we have available, it is not our fault; but we should not be doing our duty if we did not treat it, as I deliberately described it in my opening sentences, as a major subject. That is what we are doing.
  I was about to sum up, and this I shall now do. What really matters, and what is urgent for the technological virility and capability of Britain is that Government management of the great lead technology of aerospace should be made more professional and more effective. This goes far deeper than the organisation of Departments. It goes to the very roots of traditional Whitehall methods and to the roots of Treasury control in particular. Let us be honest and above party politics in this and admit that we have not in the past managed these affairs particularly well, and let us admit also that our failures in this field are not to be found or, for that matter, to be cured in terms of party political dogma. They are not due to the incapacity of particular Ministers or officials. They are rooted in the inappropriateness of the Whitehall system itself, a system which was developed in far-off days for entirely different purposes and conditions when problems of Government participation in the selection and control of the advanced technological projects of the modern age were not so much as dreamed of.
  In the debate on the Plowden Report exactly a year ago today, I put forward on behalf of the Opposition nine proposals for the modernisation of our management methods in relation to procurement. I did my best to put them on a non-partisan basis, and they were not unkindly received by both sides of the House. We welcome the fact that some progress has been made towards their adoption, but there is still a long way to go.
  May we be assured by the right hon. Gentleman, when he winds up either today or on a later occasion when the debate finishes, that the change proposed in this Order will be made the occasion

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  for carrying such reforms forward in a more urgent and radical way? Further, may we be assured that Ministers will look more deeply and with a new mind into the very nature of Departmental responsibility itself? Many people both inside and outside the House who have had some experience of both Government and industry are coming increasingly to think that we shall get the necessary professionalism and continuity of management and the close knitting together in mutual responsibility of Government and industry only if we set up a managerial authority one stage removed from Government itself.
  The public expenditure which can be afforded for aero-space development can and must properly be decided only by the Government of the day; but within that limit there is an increasingly strong case for technical policy-making and the programming of major objectives to be put in the hands of new aviation space councils comprising members from the Government, industry and other outside sources and served by independent secretariats providing technical, commercial and financial expertise of the best obtainable quality.
  If the Government will make a serious attempt to answer some of the questions I have asked and give us confidence that the Departmental change proposed will be made to mark the beginning of a driving process of Governmental reform and modernisation going to the very roots of Departmental responsibility itself, we shall be glad to see the change go forward with our blessing. But if not, if these questions and points are not to be replied to seriously by the Government, then our worst and original suspicions will be confirmed, suspicions that out of what we believe the Prime Minister started as a piece of political jobbery will be borne nothing but administrative impotence.
  11.15 a.m.
  Mr. Robert Howarth: I was not happy about the purpose of this Order, and I was a strong opponent in more private gatherings of the proposal to wind up the separate Ministry of Aviation. I do not like the proposal. It may be that this is because my limited experience of Parliament has always been, as it were, under the umbrella of a separate. Ministry and I cannot, therefore,
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  make an objective comparison with the situation as it was before. After listening carefully to what has been said by the Minister and by the right hon. Member for Mitcham (Mr. R. Carr) who, when he got away from the rather heavy political points which, I suppose, he felt he had to make, made some very fair and constructive comments, and after hearing the answers which, I hope, we shall have later this morning, I may feel happier about the proposal than I have up to now.
  Those with whom I have contact who have had experience of divided responsibility for this subject, that is, prior to 1959 and the setting up of the separate Ministry, assure me that the division of responsibility had the effect of introducing delay and frustrations which do not augur well for the suggestions being made in this instance. I recognise that this is arguable, and we shall, obviously, have to watch future developments very carefully. We hope that the Minister's optimistic forecast of how it will work will come true.
  I particularly welcome the Minister's emphasis on his determination that the future will be used particularly to stress the commercial approach. We have in Britain in the past—responsibility here rests upon both the industry and the Government—missed opportunities which have been open to us in the commercial field, and we shall have to make up for this in the future. My attitude to the specific subject of debate and to all other aerospace questions is determined by my appreciation that the growth of air transport nationally and internationally is proceeding at such a rate that on the passenger side there is a doubling every five years and the freight market is growing even faster. These changes are of such a character that they are not appreciated by many people. I think that this applies particularly to many of the leading people both in the Government and in industry outside aviation, and from this failure spring many of the mistakes we have made in the last two decades.
  Trying to be objective, I think it fair to say that there have been mistakes both in the short period when this side has had responsibility for events and, certainly, in the 13 previous years. I think that the main reason is that so many

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  people failed to grasp the rate of growth of air transport. Until one gets that in perspective, so many of the mistakes are made that have led us into the situation where America now undoubtedly holds a commanding position. While those of us who are eager to see our entry into the European Economic Community hope that we shall be able to redress the situation in the years ahead, the gap is now so great that we face an immense task.
  I appreciate the eagerness of so many hon. Members to enter the debate and I shall try to be brief, but I shall try at least to answer the right hon. Member for Mitcham in what I thought was his major criticism of the Government, that we were introducing the change before we had implemented most of the recommendations of the Plowden Report. I was brushing up on the Report as the right hon. Member was speaking, and my reading of it leads me to the opposite view, that under the heads of the summary of recommendations at the end of the Report one can pick out item after item where the Government have either taken or are taking steps in line with the Report. Our debate today arises from the recommendation of the Report that the future of the Ministry of Aviation should be looked at.
  Another major heading is "International Co-operation". Surely the announcement only a few weeks ago of the successful agreement to go ahead with the Anglo-French variable geometry aircraft fits into that category? The agreement is welcomed by the industry and adds to a much happier feeling in it in the past month or two than possibly there has been in the past few years. My impression is that there is a renewed confidence in the industry. As we now know, the Minister is taking his responsibility to the Ministry of Technology, and I am sure that if he has his way that confidence will rapidly grow throughout the whole industry.
  Another heading in the Report's summary of recommendations is "Exports", and we have heard the record of the industry there. Steps have been taken and are being taken in regard to civil aircraft. They have not yet matured, but many of us hope that progress will be made this year with the air bus. Aid
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  has been given to specific civil projects, amounting to many millions of £s, which we hope will enable those products to be sold in wider markets.
  There is a heading "Light aircraft". We all know of the proposals, which have been widely welcomed on both sides of the industry, for the take-over of the Beagle Aircraft Company, a company which has performed exceptionally well. The aid that we hape will be channelled to it, and possibly the agreement with Sud Aviation, should enable it to meet the very strong competition from America.
  Under "Organisation of the Industry", it is true that discussions are still proceeding on the proposals to merge the airframe side of B.A.C. and Hawker-Siddeley and to introduce an element of public ownership. Naturally, such things take time, and I am not surprised that we have not had a final decision. The matter is being discussed with industry and I hope that we can get agreement on it. To complain on the one hand that the proposal to dissolve the Ministry of Aviation was not discussed with industry and then grumble because the Government have not reached finality on the question of organisation seems to me to be wanting it both ways. In proceeding on this matter in the way that they have, the Government are moving in the right direction.
  Under nearly all the headings in the recommendations in the Plowden Report, one can point to action that has been or is being taken by the Government, and I therefore think that that part of the right hon. Gentleman's speech was particularly weak.
  But when we come to the list of detailed and technical questions he put to the Minister I felt that he was on very strong ground, and that his questions were important and pertinent. I hope that we shall have satisfactory answers. I do not suppose that we shall have them all today, but I hope that we shall have them as time goes on and that we get the sort of answers that will support the optimism which I now have in the aerospace industry.
  The right hon. Member asked whether we have looked at the American and French experiences. It is rather interesting to look at the French experience

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  at least. Rather in parallel with our own proposals for the merging of aero-frame companies, such proposals are going ahead apace in France also. It could well be that both countries, recognising the difficulties we have relative to America, are arriving at rather similar conclusions.
  I am at one with the right hon. Gentleman in his statement that we obviously need to free the industry from bureaucracy as much as we can. That is a laudable aim with which no one would disagree. But the aviation industry is unique in the amount of money it receives from the taxpayer. Clearly, one cannot hand out something like £500 million per annum to aviation without very strong assurances that it is being used correctly and wisely by those to whom it is passed. I hope that we can develop, on the aeroframe side at least, a mixture of public and private ownership which will get the best from both, and which will enable the initiatives and responsibility which both these sections show to work for the benefit of the aviation industry.
  There is one other point which is an encouraging feature of the scene at present, and is undoubtedly linked with the subject under discussion this morning; it is the setting up of the Select Committee on Science and Technology—our first meeting takes place today. Many of us hope that it is possibly a precursor of more specialist committees, and obviously I am thinking of one solely for aerospace questions. That might be optimistic, but there are on the Committee a sufficient number of members with aviation interests to ensure that the aerospace industry is covered in our discussions. I look forward to the development, through the work of that Committee and possibly future committees, of an independent, technical and, certainly on this subject, bipartisan approach which will be of benefit to the nation and the industry.
  Finally, I take this opportunity of congratulating my hon. Friend the Minister for his record both in his period as a junior Minister at the Ministry of Aviation and his actions in the short period of his tenure of office as Minister of Aviation. His record is outstanding, and he gained the confidence of the industry. It has come to know that he has the
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  confident that in his new post, as I believe it is to be, as Minister of State at the Ministry of Technology, with responsibility for aviation, we shall have the sort of attitude and encouragement which has been lacking over many years in the past. I am exceptionally confident for the future, despite the unease I had over the proposal to wind up the Ministry. Many of the events over the past few months have completely changed the picture, and I look forward to being a very critical observer of the scene ahead, which I hope will measure up to the forecast of the right hon. Gentleman.
  11.29 a.m.
  Mr. Hugh Fraser: I assure the House that I shall not speak very long. We all, on all sides, would like to wish the Minister well in his new job. It strikes some of us, however, that this has been, so to speak, a reverse takeover bid and that there is little change except that, in the view of many of us on this side, the Ministry of Aviation will be attached to the wrong sponsoring Department. This is an alarming thought after so much time has been given by both the present and the previous Government to the fate of the Ministry of Aviation. As my right hon. Friend the Member for Mitcham (Mr. R. Carr) said, it would have been much easier to have taken over the Ministry of Technology and to put the hon. Gentleman in charge of it.
  From the Minister's speech in opening the debate, two themes are clearly dominant in his mind and that of the Minister of Technology. One is that the idea of the possibility of greater aviation sales should be instilled in the Ministry and the other is that in some mysterious way there should be a greater fall-out. I believe that in both these directions—the commercial interest and fall-out—the Government would have been better advised to attach the Ministry to either the Board of Trade or the Ministry of Defence. If we are to pursue the commercial interest, I believe that the Board of Trade would have been a better sponsoring Department. For pursuing the question of fall-out, I am quite convinced that the Ministry of Defence would be the area in which it would be greater.

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  From my connection with the Ministry of Aviation in the old days, I am convinced that the greatest fall-out comes from the major project and not from tinkering about with minor projects. This is true both in this country and in the United States of America.
  The Ministry of Technology is not itself a major Department of State. It is not a Department of great influence of power or a Department with any specific objective except the generally rather vague one of pursuing technological advance. To judge from the Minister's entry into practical economics in various matters, his performance has not been of the highest order. The Ministry of Technology is, therefore, probably the wrong Department, and I am sorry about this.
  As my right hon. Friend the Member for Mitcham has said, the main problem today is to bring the Ministry of Aviation down to size. I am quite certain that we can learn, and should have learned, something from the American and French systems. The Minister would, I think, agree that the great decisions in aviation matters are made not by individual Departments, but by the Cabinet. The Cabinet has to make these decisions because huge sums of money are involved. Looking back, one sees that, whether the decisions which are taken are right or wrong, they are eventually made at Cabinet level.
  There is, therefore, a great deal to be said at this stage for the type of organisation, which one certainly sees in the United States and which, I think, we are moving towards in this country, which makes certain that great projects are properly administered. In every department of the Ministry of Aviation, one always saw the problem of the endless escalation of costs. This was not the fault of any one person in particular but was the general fault both of the industry and of the Ministry. I believe that if we could apply the type of management techniques to which my right hon. Friend has referred—the type of techniques which we were in process of applying to major military air projects and which the Americans now apply to things like the S.S.T.—this would be the great area of progress.
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  The fate of our aircraft industry is today crucial. On the one hand, its exports have been the highest ever, but, on the other hand, no fewer than 1,300 highly-skilled people left the industry last year. The industry is very much at the turning point.
  Equally, the problems of the proposed amalgamation are by no means easy. My belief is that this is being done the wrong way round. I am not sure that instead of B.A.C. taking over Hawker-Siddeley, it should not be the other way round. These are matters of decision, and these decisions should be taken by a strong Department rather than a weak and rather airy-fairy Department like the Ministry of Technology.
  I should like to ask the Minister this question. We have seen a reorganisation inside the Ministry of Defence. We have seen specialisation, of which I am absolutely in favour, in procurement and one Minister being made responsible for all the goods, services and arms flowing into the Ministry. These are enormous in size. How and where precisely does the Minister stand in relation to the Ministry of Defence today? As I see it, this present proposal makes a further area of discussion between whoever orders military aircraft and the organisation procuring them. This seems to me to be thoroughly bad organisation.
  As the Plowden Committee so clearly stated, one thing which should be made absolutely clear is the need for the most direct possible relationship between the biggest sponsor of aircraft, which must remain the Ministry of Defence, and the manufacturer. Under this new arrangement, however, we are to have a system which interposes two Ministers in front of the Minister of Defence when previously there was only one. This must be bad and it must have a bad effect. It is something which needs to be cleared up.
  I am sure that the Minister is wished well by the whole House. We have got to wish him well, because the aircraft industry is in such a sad condition. We hope that he will do something to put it right. I believe, however, that the instrument which he is being given is a most difficult one to manage and that, on the whole, this arrangement has been badly done.
  1.37 a.m.
  Mr. Tam Dalyell: We could, I think, agree that the problems covered by the Order are probably as complex and difficult as those faced by any Minister of the Crown in the twentieth century. On this account my hon. Friend the Minister deserves well. As he himself has said, it is easy to make mistakes in a fast-moving technological society. I welcome very much what he said about the future of the Royal Aircraft Establishment at Farnborough. It will bring Farnborough's work far nearer to British engineering in general.
  I must, however, tell my hon. Friend, both as a supporter of the Government and as a Member who, since entering the House in 1962, has concerned himself with science and technology matters, that I am profoundly disturbed by what appears to be going on in the world of British aviation. My hon. Friend said that he would have the closest possible contact with the Ministry of Defence, but I hope that in his new rôle in the Ministry of Technology he will consider it his job to probe deeply what is going on in the Ministry of Defence, because frankly it seems to me that what President Eisenhower called the military-industrial nexus has taken over the defence and major technological policies of this Government.
  The procurement policies on which decisions are being made between now and March seem to me to be likely to determine our defence, foreign affairs and technological policies for a decade to come. Just as the American order of Minuteman determined the whole American strategy of Counterforce, so I think that Aviation decisions have a great effect on our foreign, defence and technological policies. I must tell him also that, perhaps in a very naive way, the apparent enthusiasm with which he referred to military exports made me feel very sad, and sick.
  Mr. Lubbock: I wonder if I might ask the hon. Gentleman something?
  Mr. Dalyell: No. I say that simply because there are many other hon. Members who wish to speak.
  Two weeks ago, the Defence Secretary announced an initial agreement on the Anglo-French Variable Geometry aircraft which is to come into service in
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  1974. This is not the occasion on which to discuss the defence aspects of that. However, the A.F.V.G. is a hugely expensive project, compared with which Sky-bolt, Blue Water and Blue Streak were relatively cheap articles.
  The cost of the research and development on the A.F.V.G. is estimated at £200 million, and the unit costs, assuming that 1,000 are required, are reckoned to be;£1·5 to f1¶ million. On another occasion I would argue that these figures are grotesque under-estimates. For what purpose is it intended? East of Suez? I can hardly believe that the Government are making the assumption that Britain will be pursuing roles in the Far East in 1974. It is quite clear that the the decision in favour of the A.F.V.G. stems directly from the supposed future needs of the British aircraft industry. Therefore, the subject is directly relevant to this Order.
  Here is the situation which faces the incoming Minister. Many skilled engineers and designers who were engaged in the initial stages of the Concord find that their work is largely completed. In addition, design work on the Jaguar is largely finished, and my guess is that the Government are now face to face with the prospect of design teams breaking up and a consequential brain drain to America unless a vast military order is forthcoming. It may be that this very month the Government will be faced with the proposition that, unless we have a military aircraft industry, we opt out of civil aircraft and a whole range of technologies.
  Based on the current state of my knowledge, my view is that the decision to go ahead with the A.F.V.G. is a deeply mistaken judgment. It is up to the Ministry of Technology to do the probing. If I am right, and these decisions come basically not from our long-term defence needs in the 1970s but from the immediate needs of the defence industry, its engineers and designers, it is definitely relevant to this Order and to the duties of the incoming Minister. He should go about his work in an inquisitorial fashion.
  It seems to some of us that employees and employers in the defence industry are in precisely the same position as those members of the Trades Union Congress who, in the 1930s, asked for battleships

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  to be built to provide employment to feed wife and kids. The major task of this Ministry may he to bring about a constructive shift in policy. I am very conscious of the needs of those engineers and designers, and so I say to the Minister that his talks on Friday in Paris about the air bus are of crucial importance, and I hope that he will come to some arrangement with Scandinavian Airlines, Lufthansa and Air France on the development of the air bus, because many of our designers and engineers would find that all their talents were fully extended in trying to make a simple, cheap, subsonic air bus. As I shall argue later, markets for it could not be less favourable than the markets for the Anglo-French Variable Geometry aircraft.
  If the argument is that the air bus does not provide an exciting challenge to those at the frontiers of aero-space knowledge, then Britain, or better still a European technological community, should become engaged on multi-disciplinary projects such as particle physics engineering or exploration of the seabed and many other matters which we can think of. I would agree with the right hon. Member for Stafford and Stone (Mr. Hugh Fraser) when he talks of the need for a major project which can and does raise possibilities of value to industry and in fallout. A major effort for the exploration of the seabed is the sort of thing which ought to be discussed with the Hornig Committee set up by the President of the United States for co-operation between European and United States technology.
  In the meantime, it is the first major and disagreeable duty of the Minister of Technology and of my hon. Friend in particular to have rough, tough, unpleasant scenes with the Ministry of Defence to get it to drop the Anglo-French Variable Geometry aircraft and break the vicious circle whereby we have to build ever more sophisticated aircraft in order to be able to build even more advanced systems in the next generation.
  After all, where does this come to a halt, unless one has some kind of a weapons freeze? It is not a question of unilateral disarmament or anything of that kind. We have already reached a situation where no country will risk attacking these islands, in view of our
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  existing defence mechanisms, and no country will ever take liberties with another nation which has Polaris. So I say that this Ministry is intimately bound up with policies of defence and foreign affairs.
  Having made that general statement, there are some tasks for next week. The first thing which the Minister has to look at on the question of the A.F.V.G. is third party sales. Some of us cannot believe that the claims made for third party sales are justified. It is argued that for the Anglo-French Variable Geometry aircraft, British needs are between 120 and 150. France's requirement may be between 120 and 150. However, the assumption of a unit cost of £1½ million depends on the production of 1,000 units. It seems to some of us that we are faced with the obligation to sell 700 A.F.V.G. aircraft. But where are our markets for them? Is it argued that Belgium is a potential customer, to whom we have the greatest difficulty in selling the Jaguar? Are we arguing that it is to Germany that we should sell A.F.V.G. aircraft?
  Mr. Deputy Speaker: Order. I must ask the hon. Gentleman to relate his observations to the content of the Order.
  Mr. Dalyell: Mr. Deputy Speaker, in his opening speech my hon. Friend himself raised the question of exports. Since Germany has joint funding relations with at least two American aircraft companies, how is it supposed that the Germans will be interested in a substantial order of an overweight Anglo-French Variable Geometry aircraft which—
  Mr. Deputy Speaker: Order. That may be so, but this Order deals with the transfer of functions and the hon. Gentleman's observations must be related to the proposal to transfer the functions to another Ministry.
  Mr. Dalyell: In the transfer of functions, the incoming Minister will have to deal with the question of break clauses. Again, the most obvious example is the break clause arrangements for the Anglo-French Variable Geometry aircraft. I relate my argument to this Order by saying that, once we have taken the decision which may be taken in March to go ahead with this kind of order for the A.F.V.G., it affects the industry for which the Minister is responsible.

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  It is all very well arguing that one can have break clauses. One cannot have break clauses without massive industrial dislocation. Once a decision has been taken, a great deal of momentum gathers. In my view, this is a very serious matter for the Ministry.
  Again, there is the Government's claim that we are streets ahead of the United States in variable geometry techniques. That is the kind of ludicrous claim which underlines confidence. If we say that we are ahead of the technology of the United States, how is it that three years before we could do anything the United States had at least 14 F111's swinging their wings over Oklahoma and northern Texas day and night practising variable geometry?
  Those are questions of great urgency for this Minister, and perhaps the most urgent question of all concerns Anglo-French relationships. Why is it that they are going ahead with the Mirage 3G and start an agreement with us on A.F.V.G.?
  Is it seriously argued that D'Assault would continue the project without a green light from the French Government? For what rôle, in the absence of an east of Suez policy of their own, do the French want on A.F.V.G.? Does De Gaulle, or his successors, want the Germans to purchase the A.F.V.G.? If it is argued, as it has been, that they cannot go ahead with one-engined aircraft such as the Mirage 3G, it is fairly easy to do wing bed testing on one engine and then change to two engines from one.
  Discussing this subject is like opening Pandora's box, and a very deep probe will have to take place into it. Yes, Pandora's box. I am sure that it will reveal many of the difficulties which the Governments of modern States have been up against since the Second World War. This situation reflects what is perhaps a quiet change in the aviation policy of the Government, because I understood my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) to say that this Government would not mollycoddle the aircraft industry, and, when he cancelled the TSR2, rightly or wrongly, I was completely behind him. In my view the decision on the A.F.V.G. aircraft is a quiet reversal of Government policy.
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  The Minister has a duty to the Labour Party, to the Government, and to Britain to make these points clear, because vast expenditure on aircraft will have an effect on all the other policies of the Government, especially in exports, and one can name others, such as science teachers, schools, skill in industry, and so on. It is pathetic that we should have discussions with the Secretary of State for Education and Science about modest help for overseas students. This is miniscule expenditure compared with what we are debating today and the expenditure of the Ministry involved in this Order.
  I hope that the Government will give the gravest reconsideration to their important decisions before March, and will instil into their policy a greater ingredient of what I rather modestly call basic Socialist policy, by rethinking the A.F.V.G. concept.
  11.52 a.m.
  Sir Ian Orr-Ewing: First, I have to declare an interest, as is customary in the House. Those who are connected with either electronics or engineering in any sphere probably have some interest in this subject, because every worth-while firm has contracts with the Ministry of Aviation.
  Secondly, it is a rather strange bit of organisation by the Government who have selected such an extremely important debate for this morning sitting, when so many people want to speak. We remember that morning sittings were designed to get us home early. It is rather a strange coincidence that this debate should be held on the same day as a debate on the Consolidated Fund Bill which, by tradition, is not a short debate. I wonder how this strange marriage came about. Many of my hon. Friends wish to speak and make valuable contributions to the debate, but as we are so curtailed this morning I hope that they shall have other opportunities to speak on this vitally important subject.
  I thought it a sad reflection on the state of affairs that during the opening speeches there were only five back benchers on the Labour side, after the tremendous demand for these morning sittings, but there were many times that number on our side.
  I am sorry not to follow the hon. Member for West Lothian (Mr. Dalyell). I want

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  to speak about whether we have got this organisation right. As I said during the debate on the Plowden Report, as did my right hon. Friend, I believe that in this technological age we probably have not got the right organisation. Whitehall is not the right organisation for controlling highly scientific and sophisticated projects of this kind. I believe that in the long run we ought to set up separate corporations or separate organisations for conducting business of this kind. This is bound to take time, and I shall therefore concentrate my remarks on some of the disturbing aspects of the present proposals.
  I have worked in the electronic and engineering industry for about 20 years, and for seven years I was a junior defence Minister. One thing that came out quite clearly during my experience was that progress was very much quicker when the customer was brought near to the provider. There were two examples of this up to a few years ago. After the war, the Air Ministry had to go through the Ministry of Supply to get its requirements, and there was this very large buffer state interposed between the operator and the provider. In the Admiralty we had a different system. We did not have to go through a buffer Ministry. We went directly to the supplier, with the result that we got our goods to meet our needs more economically and more quickly. This is one of the basic faults of the present proposals. This is brought out very forcefully in paragraph 499 of the Plowden Report, which seems to have been disregarded, and I hope that when the Minister eventually winds up on some future occasion he will tell the House how he hopes to speed up the system of queries going backwards and forwards when there is this vast buffer state in the middle.
  Dealing first with civil aviation, I regret that nobody from the Board of Trade is present to hear this debate. After all, the Board of Trade is to take one-third of the staff, 8,653 people, from the Ministry of Aviation. The other 16,000 are going across to the Ministry of Technology. Presumably the Corporations and the Independent airline operators will frame their requirements to the Board of Trade which will then get in touch with the aircraft companies. The Board
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  of Trade is to be responsible for looking after the export potentialities, so presumably the Royal Air Force attachés in overseas countries, and also the civil air attachés, must now report to the Board of Trade. This is rather muddled and confused, because they will have two bosses, one on whom their promotion will depend and another to whom they will report.
  In, the military field we have the Ministry of Defence, and presumably the Minister of State for Equipment will be responsible for these matters. He will report to the Ministry of Technology, and the requirements will then be passed to the firm concerned.
  Since this Government came into power, and contrary to what the great majority of the electorate thought, there has been a tremendous cut in the number of aircraft projects. One can think of the P1154, the HS681, and that most promising aircraft that the free world has ever produced, the TSR2, yet there has not been any reduction in staff, in fact rather the reverse as one sees from looking at the figures for the Ministry of Aviation. We have only one advanced military project, the 1127, and outside this field we are dependent on Anglo-French co-operation, on the Jaguar, on helicopters—as we heard recently—and on the Anglo-French Variable Geometry aircraft.
  If we have not got a very good organisation for managing and controlling British industry, and a British industry which is far more concentrated than it was a few years ago, is it not even more important that we should have a flexible and fast-reacting organisation when we are concerned not just with our own industry, over which we have considerable power, but with French industry as well?
  It is my experience that the French have very strong teams of civil servants, many of whom are trained in technological subjects and who can speak the scientific language of the day. I wonder whether the Ministry has been a little loth to make up its deficiencies. We all acknowledge that, unhappily, our system for recruiting civil servants has not given the priorities which it should have given to people with scientific training, technical backgrounds, and industrial experience. These matters must be put right,

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  and I hope that in due course they will be.
  In the interim, however, would it not be wiser to make use of some of the expertise which exists in industry? The Americans take along to their design conferences people from industry. They have never for a moment hesitated to do so. A sort of slightly ivory tower attitude taken in Whitehall suggests that one should not take a person from industry to these conferences because, in some way, he is tarred with the commercial brush. If we want to get this settlement, and to have British units and systems incorporated in these joint projects, it is important that the Minister should take along people who thoroughly understand the systems that are being developed, to a much greater detailed extent than is possible for any civil servant.
  We are just starting the Estimates season. How will the Government apportion the defence portion of this large sum of money as between the different Service Ministries? Are we going to see the military portion of research and development, as it concerns defence establishments, reproduced in the Defence Estimates? If it is not, the claim of the Minister of Defence that he will keep the global sums spent on defence down to £2,000 million will be a phoney claim, and there will be a rigging of figures. This problem must be discussed. It should be cleared up before we start the Estimates debates.
  Who will supervise the ground environment? The ground control of our civil aircraft generally has risen from and is now co-ordinated with that of our military aircraft. Who will look after this? Again, the development of navigational aids has generally emerged from military navigational aids adapted to civil needs.
  Thirdly, who will co-ordinate the activities in space? For week after week, month after month and year after year, we have had no indication from the Government who said that they were devoted to "the white-hot scientific revolution." This is the most important field for the future, and yet we do not know and have never been told who is responsible, and who will co-ordinate activities.
  Mr. Lubbock: Oh, no.
  Sir I. Orr-Ewing: I am sorry for the only Liberal Member present. I have been on my feet for eleven minutes and I propose to continue.
  In introducing the debate, the Minister of State said that he was dedicated to import saving. I only wish that some of his predecessors had been more dedicated to import saving, because we have spent, or have committed ourselves in the last 2¼years to spending 2,000 million dollars on American aircraft. He said that if mistakes had been made they lay in the fact that the Ministry had failed to give sufficient priority to commercial applications. I ask him to revise the general thinking about profits in the aircraft industry. Contracts are being negotiated, but even today they are being negotiated in the aftermath of the Ferranti discussions and debates that took place in the House. If he is to obtain the confidence of the industry, he must realise that if it is to take risks—and risks which cannot be accurately calculated—it must be reasonably rewarded by profits of between 10 per cent. and 20 per cent. This point came out in the Lang Report.
  I now pay tribute to the fact that the Minister has not only recruited many new costing officers, but that they seem to be of an excellent calibre and are very competent. But the question of profits is still a dirty word, and the Minister will not get efficiency in the industry unless he can persuade people to take risks and to reward them for doing so. If their profits are unduly high, he might devise some system under which some of the extra profits go back to the Government and the Department. At the moment I am told that they are thinking of 12½ per cent. as the maximum profit. This is not realistic when a firm is developing a sophisticated product in which a tremendous risk is involved.
  In this connection, in paragraph 90, the Lang Report said:
  "We nonetheless deprecate the idea of a Ministry having a general right to post-cost fixed price contracts."
  This practice of post-costing appears to be growing in the Ministry. A fixed price contract is made and it is then reviewed and adjusted, probably downwards. If industry has done its work correctly and has taken a risk, it should get some of the rewards. Unless the

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  Minister works along these lines, he will not get the system into operation and we shall not get the technical strides in the industry—in the thousands of firms involved—that he and the House desires.
  If the Minister acts as I suggest he will build up good will. It is a co-operative operation. It can only work with good and close understanding and confidence between the civil servants and the industrial people with whom they are negotiating. I hope that he will give the matter careful thought and will deal with it together with the points that my hon. Friends have raised.
  12.5 p.m.
  Mr. Norman Atkinson: I am concerned about the future of the aircraft industry and the development within our own Ministerial set-up. I am also a willing supporter and admirer of my right hon. Friend, who has undertaken this work for the Government. I would have liked to say something about that this morning, but I am also passionately concerned about the democracy of this House and the rights of back benchers. It is a very sad occasion for me to have to sacrifice my right to talk about the things that I wanted to talk about in aviation, but I want to make one brief comment on the present situation.
  The right hon. Member for Mitcham (Mr. R. Carr) spoke for 40 minutes. I consider this to be a complete abuse of the time of the House.
  Sir Ian Orr-Ewing: On a point of order. This is monstrous, Mr. Deputy Speaker. The hon. Member for Tottenham (Mr. Atkinson) started the whole series of points of order, which took 10 minutes of my right hon. Friend's time.
  Mr. Deputy Speaker: The hon. Member is not entitled to accuse another hon. Member of abusing the time of the House.
  Hon. Members: Withdraw.
  Mr. Atkinson: I shall not withdraw, because I want to make a further comment on the matter. The right hon. Member for Flint, West (Mr. Birch) recently walked into the Chamber. There is a great danger, under our procedure,
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  that he could be called as a Privy Councillor. It could happen. That was his purpose in walking into the Chamber.
  Mr. Deputy Speaker: We shall make more progress if the hon. Member confines his speech to the Order dealing with the transfer of functions.
  Mr. Atkinson: I understand that the Minister would like to reply to the debate at about 20 minutes past 12.
  Sir G. Nabarro: Oh, no. Not on your life.
  Mr. Atkinson: I understand that this was the—
  Sir G. Nabarro: On a point of order. Can you guide the House, Mr. Deputy Speaker? As the time is now 12.9 p.m., is it your intention to allow this debate to be wound up when—I believe I am correct in saying—12 of my hon. Friends have been sitting here since 10.24 a.m. trying to catch your eye and listening to interminable interruptions, bogus points of order and the like? Can we have your assurance that the Minister will not be called a second time—or that any other Privy Councillor will be called—until back benchers have participated in the debate?
  Mr. Deputy Speaker: What time this debate ends has nothing whatever to do with me. I shall follow the normal practice of the Chair of continuing to call whichever hon. or right hon. Member happens to catch my eye during the debate.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. Mr. Rankin.
  Mr. Rankin: Further to that point of order. In view of my one particular interest in this debate and the fact that there is a duty on me this morning, I am drawn between these two interests. I would like to know clearly what will be the position if the Minister intervenes at any time before 12.30 p.m. Would that mean that at that point, and the Minister having completed his remarks, the debate would be finally terminated?
  Mr. Deputy Speaker: I will answer the hon. Member's point of order.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. It would be more helpful if I answered one point of order at a time. The answer to the point of order raised by the hon. Member for Glasgow, Govan (Mr. Rankin) is that this debate will continue until it is terminated. [Interruption.] Order. When the hon. Member for Tottenham (Mr. Atkinson), who is now addressing the House, concludes his remarks, it will be my duty to call whichever hon. or right hon. Member happens to catch my eye.
  Mr. H. P. G. Channon: Further to that point of order—
  Sir G. Nabarro: Mr. Deputy Speaker—
  Mr. Deputy Speaker: One at a time, please.
  Mr. Channon: May I inform you, Mr. Deputy Speaker, that I am in the same position as the hon. Member for Govan? I, too, wish to have an opportunity of addressing the House on this matter, but unfortunately I have been called by the House to take part in a Standing Committee this morning. May I have your assurance, Mr. Deputy Speaker, that there will be no question of this debate being closured and that no closure Motion will be accepted by you this morning?
  Mr. Deputy Speaker: It might simplify matters if I explained, in answer to that point of order, that no question of a Closure arises while I am in the Chair because I have no power to accept a closure Motion.
  Mr. Channon: Further to my point of order. Even if you were not in the Chair, would the Chair have any power to accept a closure Motion this morning?
  Mr. Deputy Speaker: As I said, I have no power to accept a Motion for the Closure. The hon. Member's point of order is, therefore, purely academic, for I have no reason to suppose that a Motion to closure the debate will be moved.
  Mr. Atkinson: As the Chairman of the Parliamentary Labour Party Technological Group, I would have liked to have made a contribution to the debate this morning. [HON. MEMBERS: "Go
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  on."] I propose instead, as a protest against the 40 minutes taken by the Opposition Front Bench speaker, to sacrifice my right to speak in this debate. I do so as a protest to the length of time taken by the right hon. Member for Mitcham (Mr. R. Carr), which I regarded as an abuse of the democracy of the House. I therefore appeal to the next speaker who catches your eye to allow some time—
  Mr. Cranley Onslow: On a point of order. Is it not a fact that the limits of time which may be split up among hon. and right hon. Members according to the way they catch your eye, Mr. Deputy Speaker, are set by the Government's allocation of the time available and that, therefore, the Government must bear the responsibility if we have insufficient time to discuss these matters?
  Mr. Deputy Speaker: I do not understand this complaint about insufficient time. The hon. Member for Tottenham (Mr. Atkinson) is entitled to take as long as he likes to make his speech, in precisely the same way as the right hon. Member for Mitcham (Mr. R. Carr) was entitled to make his speech.
  Mr. R. Carr: I am obliged to the hon. Member for Tottenham (Mr. Atkinson) for allowing me to make my position clear. Since he has on several occasions referred to my speech and has said that he regarded it as an abuse of Parliamentary opportunity and procedure, I think that he should, in fairness, consider the fact that the length of my speech was due largely to the number of interruptions made during it. I also urge him, in fairness to the whole House and not just to one hon. or right hon. Member, to consider, when referring to Front Bench speeches, whether there should be one Front Bench speech from each side or two shorter ones. The Opposition had the intention of having only one Front Bench speech in this debate.
  Mr. Atkinson: Nevertheless—
  Hon. Members: Withdraw.
  Mr. Atkinson: I will not withdraw what I said. Front Bench speeches of such length represent a denial of opportunity to back benchers. Therefore, as a protest against this sort of practice, I shall sacrifice my right to speak in this

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  debate. I close my brief remarks in the hope that you, Mr. Deputy Speaker, and Mr. Speaker will have some discussion about the practice whereby three or four hours of our time is taken up each Parliamentary day by Front Bench spokesmen, making speeches which are often devoid of comments which are germane to the debate in hand. I apply the same views to this business of Privy Councillors being called. With that protest, I sit down.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. Sir Gerald Nabarro.
  Mr. Stonehouse rose—
  Hon. Members: Sit down.
  Sir G. Nabarro: I thank you very much indeed, Mr. Deputy Speaker, for allowing me to catch your eye. I happily give way to the Minister to intervene in my speech.
  Mr. Stonehouse: I am grateful to the hon. Member for Worcestershire, South (Sir G. Nabarro) for his usual courtesy. I wish to make it clear that if I had the opportunity to catch your eye again, and the leave of the House to speak again, Mr. Deputy Speaker, in view of the great interest in this debate and the large number of hon. Members who wish to contribute to it, I would recommend to my right hon. Friend that more time should be allowed for this debate to be continued. [HON. MEMBERS: "Hear, hear."] That was the only point I wished to make, and if I should have time to speak this morning or on another occasion, I would do my utmost to reply to the detailed, and, if I may say so, some of the very sensible points that have been raised by hon. Members on both sides of the House.
  Sir G. Nabarro: I am sure that I speak for all my hon. Friends in expressing our gratitude and appreciation to the right hon. Gentleman for his realistic assessment of the Parliamentary position this morning. I did not greet with unalloyed enthusiasm the prospect of morning sittings on topics which were supposed to be of non-controversial, mundane and minor matters. [Interruption.] It is true that I had a Question down
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  on this subject, but I urge a closer examination of the Order Paper.
  Mr. Hugh Jenkins: The hon. Member for Worcestershire, South (Sir G. Nabarro) was just addressing one of his hon. Friends. Although the back of the hon. Member for Worcestershire, South may be a better view than the front, does he consider it in order to present his back to me?
  Sir G. Nabarro: Really.
  The topic we have been discussing this morning fulfils none of the requirements of a morning sitting. This is not a minor topic. Indeed, it is a topic of massive national importance. It is not a mundane topic. Flying at 1,500 to 2,000 m.p.h., whether by Concord or military aircraft, cannot be considered of mundane significance. It is most certainly not a non-contentious issue. What is done with the Ministry of Aviation and the massive scientific technological resources which that Ministry commands is anything but non-contentious.
  I castigated my right hon. Friend for the length of his intervention. I do not propose to emulate him.I, too, could comfortably talk for 38 minutes on this topic—
  Mr. Marten: Keep going.
  Sir G. Nabarro—but I will take only another two or three minutes in which to complete my remarks, bearing in mind the number of my hon. Friends who wish to speak.
  My constituency of Worcestershire, South contains the Royal Radar Establishment at Malvern which I do not exaggerate in saying has the greatest concentration of scientific and technological manpower in Britain today. The future of about 2,500 scientists there is, of course, a matter of great interest to us all. My desire is that the right hon. Gentleman, when he eventually replies to this debate, will give me a number of important assurances on behalf of those employees of his Ministry at the Royal Radar Establishment.
  The first is that the coherence and concentration of manpower at that establishment will not be derogated in any way by the transfer of Ministerial parentage from the Ministry of Aviation, about to

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  die, to the Ministry of Technology. The second question is that there will not be any fragmentation of this important scientific and technological development which has settled and grown up at Malvern since the war years. The third is that the stature of the Royal Radar Establishment, when it assumes the Ministerial parentage of the Minister of Technology, will be at least as great as it has been in earlier years under the aegis of the Ministry of Aviation.
  Those are the three questions which I put to the right hon. Gentleman. I assure him that there have been misgivings among civil servants at the Royal Radar Establishment, the more so as the Prime Minister, when I questioned him on this topic after he had made his statement on 16th June last, was somewhat indeterminate in his reply to me. Therefore, when the Minister answers the debate, I should like him to be a great deal more specific in what he says.
  I asked the Prime Minister in a supplementary question:
  "Is the Prime Minister aware that the greatest concentration of scientific manpower affected by his announcement today is at the Royal Radar Establishment, at Malvern, in Worcestershire? As that Establishment works for the Ministry of Defence, for the Ministry of Aviation and for the Board of Trade in maritime and nautical matters, will the Prime Minister say whether it is the intention to fragment it, to disperse, or to pass it in total to a new Ministerial parent and, if so, which parent?"
  We know the answer this morning, that it is being passed to the Minister of Technology, but what has caused a great deal of uncertainty among my constituents are the words which the Prime Minister used in the course of his reply. I shall not read all of it because the first part was a tribute, a very deserved and rightful tribute, to these workers, but the operative words were:
  "There is no question at all of fragmenting the establishment. It will continue as it is. I think that I am pretty safe in saying that this establishment will pass, with the rest of responsibility for the electronics industry, to the Ministry of Technology."—[OFFICIAL REPORT, 16th June, 1966; Vol. 729, c. 1664.]
  "Pretty safe"—it is for that reason that I ask the rather more penetrating questions this morning in my speech, which has lasted four minutes only—[Interruption.] I wish my right hon. Friend the Member for Mitcham (Mr. R. Carr) would not
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  wink at those behind him—four minutes only in contradistinction to his 38 minutes.
  I hope that when the right hon. Gentleman replies he will answer those three particular points that I have put to him. I have no objection to this translation to the Ministry of Technology so long as the stature of the Royal Radar Establishment, with all its ramifications and the great reputation that it has earned in earlier years, is not in any way derogated by the translation from one Ministerial parent to another.
  12.24 p.m.
  Mr. Eric Lubbock: The various important questions raised this morning could not possibly be dealt with in such a short debate as we have had. I am sure we are all extremely grateful to the Minister of State for saying that further time will be given to consideration of this subject. I wish that could have been made clear earlier in the debate, because then many of the points of order with which you, Mr. Deputy Speaker, have had to deal could have been avoided and we could have got on with the debate.
  In the short time which remains, I want to take up one or two of the criticisms made by the right hon. Member for Mitcham (Mr. R. Carr), with whom I most heartily disagree. I certainly accept the Minister of State's invitation to give an enthusiastic welcome to this Order, because I am certain that it is in the best interests of the industry and various establishments under the control of the Ministry of Aviation, such as that mentioned by the hon. Member for Worcestershire, South (Sir G. Nabarro), the Royal Radar Establishment in his constituency. I feel convinced that this establishment and the many others which are passing to the Minister of Technology under this Order will have a secure and profitable future under the able guidance of their new Minister. Many of the criticisms we have heard this morning and on other occasions from the right hon. Member for Mitcham are invalid and of no effect.
  The right hon. Gentleman had some fun with the Prime Minister's various statements and the way in which, he alleged, they had been altered by the course of events. He likened the Prime Minister to a company manipulator who transfers subsidiaries from one parent

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  company to another. I liken the right hon. Gentleman to a shareholder in a company which has been taken over but who thinks he still has the right to attend company meetings and pontificate on its affairs. If he studies the Prime Minister's statement in greater detail, he will find that there is no inconsistency in the decision which was finally made, even though a considerable length of time elapsed—and this is the criticism I make of the Government, the seven-and-a-half months delay—since the Prime Minister's statement last June and the transfer of Functions Order we are considering this morning.
  The right hon. Member seemed unable to make up his mind whether this transfer was too soon or too late. He said on a number of occasions that he did not object to it in principle, and this morning he reiterated that there was nothing sacred about the Ministry of Aviation but he thought the timing caused distraction and delay within the aircraft industry and the establishments of the Ministry of Aviation. When we first debated the matter on 16th June, 1966, he said that it would be folly:
  "to make such an administrative upheaval of this kind when so many fundamental problems of the aircraft industry are in the melting pot …".—[OFFICIAL REPORT, 16th June, 1966; Vol. 729, c. 1662.]
  We did not hear quite so much about that this morning, but the fact is that a number of the important problems which faced the industry and the Government at that time have been solved or are well on the way to solution after these seven-and-a-half months.
  The aircraft industry has always had fundamental problems because it is an industry of rapid technological change. If one accepts that the time was not ripe to make the change in 1966 an equally good case could have been made in practice every year when there are new pro-
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  jects, development and arrangements for collaboration with Europe and say that it is not the right time. The right hon. Gentleman would then have said that it is not the right time, we are not against the change in principle but would like it to be delayed. Or, as he said this morning—this was a suggestion I have not heard before—if it had been done when the Government first came into office he would have had no objection.
  I could have understood this argument if, for example, the Royal Radar Establishment had been put under some other Ministry and the Royal Aircraft Establishment had been taken into the Ministry of Technology. The only criticism one can make of the Government is that in June 1966, when it was first decided to transfer the industry, they did not at once say that it was impossible to transfer one part to the Ministry of Technology and the rest to the Ministry of Defence. That seems to have been the main cause for the delay, and it was quite unnecessary.
  This is no more of an upheaval and confusion for staff of the Ministry of Aviation than if there had been a change of Minister without a transfer of functions. If, for example, the Minister of Technology had suddenly become the Minister of Aviation, the staff would have been in exactly the same position as they are now when they come under the control of the new Ministry. I am convinced that this will have no effect on the establishments and staff of the Ministry.
  The right hon. Member for Mitcham said that many of the problems awaiting settlement after the Plowden Committee Report still remain to be dealt with.
  It being half-past Twelve o'clock, the debate stood adjourned.
  Debate to be resumed To-morrow.

  BRITISH MANUFACTURERS' DESIGNS (PLAGIARISATION)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gourlay.]
  12.30 p.m.
  Mr. Bernard Weatherill: I am pleased to be able to have an opportunity of bringing to the attention of the House a very serious matter, namely, the amount of exports which are being lost to British manufacturers as a result of plagiarisation of design by foreign competitors. There is a leading article in today's issue of Design which highlights the whole question.
  This is a matter of great concern to a number of our industries. It is particularly important at this moment of our history when we need to encourage, stimulate and increase our export trade. There is no need for me to remind the House that we must import 50 per cent. of all our food and almost 100 per cent. of all our raw materials. We will starve if we do not sell our goods abroad.
  It therefore goes without saying that we should be encouraging exports of high idea value and low material cost. It is particularly galling to see articles which incorporate this principle being copied by our overseas competitors. It is very difficult to assess the total loss to our economy resulting from the plagiarisation of British designs, but it must be considerable and probably runs into several millions of £s annually.
  The Minister of State will know—I entirely accept this—that this is not a new phenomena. A Question was asked in the House on 14th July last by my hon. Friend the Member for Merton and Morden (Mr. Atkins). The Question has been the subject of running correspondence between the Minister and myself. I have been pressing him to implement the Johnston Committee's Report which, I think it is generally acknowledged, would go a long way towards putting a brake on what can only be described as piracy, in the sense of piracy of ideas.
  Doubtless the Minister will have seen an article in the January issue of The Director by Mr. Walter Gundrey which highlights the whole problem. The Minister may also have seen a report in
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  The Times of 26th January which gives a number of examples of this very serious problem. I have been in touch with Mr. Leslie Julius who is mentioned in this article and who is the managing director of Hille and Co. The report in The Times quotes Mr. Julius as saying that since 1948, when his company
  "first went in for advanced designs, the number of ideas that had been stolen ran 'easily into three figures. Everything they did, he said, was watched closely. The Registered Designs Act was a waste of time."
  Mr. Julius tells me that he has recently lost exports to Israel on this same principle and at this very moment he is locked in conflict in Spain as a result of the copying of a chair which he has designed and which is being copied in that country. The chair which is being copied is being produced in inferior materials, with a resulting loss of reputation to his company and, in order to try to get it stopped, very heavy legal expenses are involved.
  I have had similar complaints from toy manufacturers. Because of the nature of the toy trade, toys have to be brought out in time for the Christmas trade. They are shown to the trade as a whole many months before Christmas. This gives ample time for copying to be carried out. I have had a number of examples from the toy trade. I want to show the Minister two of them. They are two rattles. I hope that I may be permitted to produce them, Mr. Deputy Speaker. One is made in Holland. The other is made in England. I hold them in my hands. The Minister will see that they are pretty well exact copies, although the colours are reversed. They even make the same noise. Perhaps it would be out of order for me to demonstrate that.
  There is another example in my office of two Canadian mounted police models, one made in this country of very high quality selling at about 5s., the other copied abroad and having on its box a description of the toy which is exactly similar. This sells at about half price. This is another very serious matter to the toy trade, which makes a significant contribution to our export trade.
  The jewellery manufacturers complain—rightly so. They say that they have to keep first-class designers at work at an extremely high cost. They tell me that over 10 per cent. of their turnover may

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  go in developing a new design. They complain that good designs are being ruined by a flood of copies on inferior materials. They complain also of loss of exports. It often costs £16,000 to design an article which they say may be copied for as little as £500. The price is cut accordingly.
  Only this morning the Society of Industrial Artists and Designers has been in touch with me and told me that these men who have vision and initiative to follow an active and positive design policy are losing heart. The consequence is that there will be a decline in the quality of British design, which is at present a most important factor in meeting competition in world markets.
  I fully appreciate that Britain cannot directly affect the design laws of foreign countries, but at least we can set an example to the rest of the world. The leading article in today's issue of Design sets the matter out very clearly. It says:
  "Most informed people agree that the existing law on the protection of industrial designs (the Registered Designs Act, 1949, amended by the Copyright Act, 1956) is out of date, time consuming and ineffective. It was because of this that in 1959 the President of the Board of Trade set up a departmental committee, under the Chairmanship of Kenneth Johnston, Q.C. to review the law as it now stands and to recommend what changes were needed. The Report of the Johnston Committee was published in 1962, since when it seems it has been quietly forgotten. At the time of going to Press"—
  this is very recently—
  "a spokesman at the Board of Trade said that there were certainly no plans to bring the Report before the House."
  This merely confirms what the Minister of State, Board of Trade, said to me on 22nd September after I had written asking me if he would do something about this very serious problem. He said
  "I … accept that the introduction of a copyright type system of protection, as recommended by the Committee, would give the toy and similar industries a better opportunity to protect their designs against copying than is provided under legislation now in force. But, as I said in the House on 14th July, it is not that we are reluctant to introduce legislation but a matter of finding time in a crowded legislative programme. I am sorry that I can give no promise about the possibility of bringing in new legislation, and I doubt very much, therefore, whether anything would be gained from a discussion".
  The purpose of my seeking this Adjournment debate is to ask the Minister
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  to reconsider that decision. I accept that the legislative programme is crowded. Nevertheless, this matter is of great importance for the export trade which we must encourage in every possible way, and much more important, therefore, than the London Government Bill, irrelevant in terms of exports, which has occupied the House for so long and more important than the Iron and Steel Bill which has occupied all of us for far too long.
  I urge the Minister to take action. Will he now dig out the Johnston Report and implement it as a matter of urgency? I do not suggest that implementation of the Report will completely stop the abuse, but it would greatly simplify the procedures for international protection and, furthermore, it would enable Great Britain to join The Hague Agreement under which a single deposit in Geneva would replace the present need for separate registration in each country. The leading article in Design which I have already quoted rightly points out that other countries outside the Agreement are waiting for Great Britain to give a lead. Above all, it would be an act of support and encouragement for British designers and manufacturers who are fighting for our country in the markets of the world at a crucial point in our history.
  12.42 p.
  The Minister of State, Board of Trade (Mr. George Darling): I am grateful to the hon. Member for Croydon, North-East (Mr. Weatherill) for raising the important matter of how best to safeguard our manufacturers' designs. He gives me an opportunity to say that for the past two years Board of Trade officials have been trying to help me to find satisfactory solutions to the problems which he has raised. We agree with his approach to the matter and have no quarrel with any of the arguments he has advanced. We, too, want to put the law and the administration right so that the industrial designs of our manufacturers can be properly protected against what the hon. Gentleman has called piracy by manufacturers overseas.
  The task of finding satisfactory solutions which will appeal to and satisfy all our manufacturers—as the hon. Gentleman probably knows, there are some who would disagree with his approach—has turned out to be far more difficult

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  than I expected. I began with, perhaps, an innocent approach. It seemed to me that it should be easy to lay down rules stating that when a manufacturer comes along to register a design, that design cannot be copied. That is how I started off, but the difficulties have subsequently appeared. Even before I began to read it, the size of the Johnston Report sounded a warning note to me. The Johnston Committee, which went into the whole matter most thoroughly, produced 59 recommendations, very sensible, constructive and practical recommendations in an excellent Report.
  Incidentally, I do not understand the final sentence quoted by the hon. Gentleman from the leading article in Design:
  "At the time of going to Press, a spokesman at the Board of Trade said that there were certainly no plans to bring the report before the House."
  The Report was presented to Parliament by the then President of the Board of Trade—it says so on the cover—in August, 1962, so that we have all had an opportunity to study the recommendations.
  If the 59 recommendations of the Johnston Committee are to be implemented in one piece of legislation, it will be a major Bill. I ask for your indulgence for a couple of sentences, Mr. Deputy Speaker, because I must mention the problem of legislation in order to come to the difficulties of administration and consider whether these difficulties can be overcome. Whether or not such a big Bill could be prepared and introduced in a reasonable period of time is not a matter for me alone—it is part of the general legislative programme—but it would certainly take time, as the hon. Gentleman appreciates, merely to have the legislation properly prepared. We have, therefore, been looking at the possibility of introducing what might be called an interim Measure. It would be a shorter Measure which, for the time being, would leave the existing and admittedly imperfect legislation as it is, but would add to it a simpler system of copyright protection.
  Although the hon. Gentleman has dealt with some of the ways in which the international arrangements work, I think that I should for the record explain how the system operates now. I take, first, the patenting of inventions. A manufac-
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  turer's rights, which are called industrial property rights, normally depend on his taking action to protect his rights in each country in which he hopes to enforce them. Regrettable as it may be, if a British manufacturer wishes to protect an invention in, say, six countries, he must make application for a patent in each of the six countries. Equally—though I do not think that we get much advantage here—a manufacturer in this country is free to make use of the inventions of manufacturers overseas, even though they have obtained their patents abroad, if no patent for such inventions has been sought and granted in this country.
  The present system is not satisfactory, and, for a number of years now, in the Council of Europe and elsewhere, we have been exploring with other countries schemes whereby a single patent application in a central office would provide at least prima facie monopoly rights in a number of countries. The Common Market countries have produced a draft of such a scheme, and we have said to them that if, as seems likely, the final provisions of the scheme are acceptable to us, we would wish to join provided, of course, that we join as full members having an equal voice with the others in patent-granting procedure. Unfortunately, that scheme is in abeyance at present because of disagreement among the Common Market countries as to certain of its terms. We must wait to see what happens on that front. There must be international co-operation; otherwise, we cannot make much progress.
  The same principle of territoriality, if I may use that word, applies to the protection of designs and trade marks. Perhaps the hon. Gentleman will agree that we can leave trade marks on one side and concentrate on designs. Here, too, protection must be sought and the design registered in each of the countries in which the manufacturer wishes to protect his rights. There are, however, in this field arrangements whereby a design can be deposited, as the hon. Gentleman said, with the secretariat, in Geneva, of the Industrial Property Convention. The secretariat will then transmit the design to the authorities in the member countries, where it is dealt with as though it were a direct application in each of the countries concerned.

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  Generally speaking, these arrangements are designed for the needs of those countries which do not, as we do—this is the first complication—make a search for anticipations and for conflicting designs before registration. Our Patent Office does that searching job, and it is impossible under our existing law to join the Arrangement on international designs known as the Arrangement of The Hague, because of the way we set about the job ourselves.
  It is a difficult problem for us to deal with, because our design protection is based on what is called a "novelty approach". A design is not registrable, and therefore does not become protected, unless it is new, that is, unlike anything which has gone before. A search is made in the Patent Office to seek to ensure, as far as is reasonably practicable, that the application for registration is for something that is new. Under the international arrangement which the hon. Member asks us to join, the Patent Office would never receive the representation of the design which it needs for a search in this country, because that is not the way the other countries work, and therefore, membership is impossible for us at the moment.
  That is where we must return to the question of legislation. Under our novelty approach to design protection, once a design is validly registered the proprietor has a monopoly, that is, he can stop the marketing here of articles bearing his design without the necessity of providing that the infringer copied from him. The evidence given to the Committee on Industrial Designs, the Johnston Committee, revealed that many of the present users of the existing system were satisfied with its essential features and did not want them changed. But the Committee felt—and we accept this—that the present system is not suitable for certain industries, including those which the hon. Member mentioned, particularly those producing toys and models. The requirement that a design must be new makes it difficult for manufacturers of models of existing things to obtain a registration at all, because in making a model of a train, an aircraft or whatever it is, their model is not new, and it is necessary to prove that the model they are making is a new thing. Without registration, a
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  manufacturer has no protection unless he is a party to such a scheme as the furniture manufacturers in this country operate among themselves.
  The Johnston Committee, examining the problems thrown up by this approach by certain industries, recommended, in addition to certain changes in the existing system, a new sytem of protection to be known as "design copyright" which would be additional to, and not in substitution for, the existing system. That is what we are trying to take up. It would mean that the test for protection would be that the design in question was original in the sense that it was the designer's own work, and no search for novelty would be made by the Patent Office when a representation of his design was lodged there; it was his own work and, therefore, there could not be anything like it. The proprietor's rights would be only against copying, and it would be a defence for an alleged infringer to prove that he arrived at his design independently—that is, without copying either directly or indirectly the design of the person who claims that he is the originator.
  We think that such a system would be more suitable than the existing system for certain industries, but if other industries want to work under the existing system, that is all right. Whether it would be equally suitable for, say, the protection of furniture designs in this country is open to doubt. That is something we would have to discuss with the furniture manufacturers; and whether we produced the right legislation if we adopted that course would perhaps depend on the first few decisions the courts would have to make in cases of alleged infringement.
  At any rate, it would have the advantage—the hon. Member hinted at it, but I would like to stress it—that it would enable us to join The Hague Arrangement for the protection of designs, and hence enable our manufacturers more easily to gain the protection they want in other member countries, but only the member countries, of that Arrangement. They include four Common Market countries and some others, but not the United States of America, none of the Scandinavian countries and not Russia or Japan.
  Whether those countries will follow the example Japan is showing, without coming into The Hague Arrangement, remains

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  to be seen. In recent years, the Japanese authorities have been very understanding about the desirability of controlling design copying, and have done a great deal in their own country to stamp it out even in cases where the foreign manufacturer has not registered his design in Japan but has merely made a complaint.
  The full recommendations of the Johnston Committee would involve a great deal of amendment of the existing law, but we think that if we could proceed with a short Measure, which would take up less Parliamentary time, we would leave the existing system unamended and add to it the simpler copyright system that I have mentioned. No doubt these Wednesday morning sittings will help generally in providing extra Parliamentary time for the consideration of legislation.
  The hon. Member mentioned the reply I gave to a Question from his hon. Friend
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  the Member for Merton and Morden (Mr. Atkins) about when it can be done. We answered about 35 Board of Trade Questions on that day, and as I went through them, helping to prepare the Answers, I was struck by the fact that in those 35 Questions hon. Members on both sides of the House asked the Board of Trade to introduce 10 new pieces of legislation. If we asked them to sort out their order of priority, I do not know where this would appear. I agree with the hon. Member that this question of copying is tremendously important. Perhaps if he can keep up his pressure he will persuade all the other hon. Members who want Board of Trade legislation quickly on a vast range of subjects to put this matter at the top.
  The debate having been concluded, Mr. DEPUTY SPEAKER suspended the sitting till half-past Two o'clock pursuant to Order.
  Sitting resumed at 2.30 p.m.

  PRIVATE BUSINESS
    BRIGHTON MARINA BILL (By Order)
      BRITISH RAILWAYS (No. 2) BILL (By Order)
        BRITISH TRANSPORT DOCKS (No. 2) BILL (By Order)
          ESSEX COUNTY COUNCIL (CANVEY ISLAND APPROACHES, &C.) BILL (By Order)
            GREATER LONDON COUNCIL (GENERAL POWERS) (No. 2) BILL (By Order)
              PORT OF LONDON BILL (By Order)
              Second Reading deferred till Wednesday next.
    UNIVERSITY OF ASTON IN BIRMINGHAM BILL (By Order)
    Read a Second time and committed.

  MORNING SITTINGS
  Mr. Speaker: Mr. McMaster.
  Mr. McMaster: Question No. 1.
  Mr. Temple: On a point of order, Mr. Speaker. At about 1.20 p.m. today I entered the Chamber, only to find a considerable amount of torn-up paper on the floor. I inquired of the messengers who was permitted to enter the Chamber and I was informed that as the Mace was still on the Table, nobody other than a Member of Parliament was able to enter. Therefore, I entered the Chamber myself and, with my own hands, I picked up the paper that was on the floor.
  I regarded the slovenly condition of the Chamber as most undesirable and I wondered to myself what kind of impression this would create on hon. Members entering the Chamber at 2.30, quite apart from other people who may be observing our proceedings.
  I wish to ask, Mr. Speaker—
  Mr. Speaker: Order. I hope that we shall not have a long speech on a point of order.
  Mr. Temple: I wish to ask for your guidance, Mr. Speaker, about whether
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  you could use your influence with those responsible for the conduct of the House so that either the Mace may be removed so that the Chamber may be cleaned, or that a squad of hon. Members may be recruited so that they may come in each day shortly before 2.30 to clean up the Chamber.
  Mr. Hector Hughes: Further to that point of order—
  Mr. Speaker: Order. I hope that we will not lose the valuable time which we are gaining for Questions. Mr. Hughes, a point of order?
  Mr. Hector Hughes: May I say a word, Mr. Speaker, further to the point of order? I do not want to delay the House, but is not what has just been said by the hon. Member for the City of Chester (Mr. Temple) an argument in favour of our reverting to the former time of sitting of the House?
  Mr. Speaker: We cannot discuss that now. I will look into the point raised by the hon. Member for the City of Chester (Mr. Temple). In the meantime, we are grateful to him for helping to clean the Chamber.

ORAL ANSWERS TO QUESTIONS
  MINISTRY OF AVIATION

    Short Brothers and Harland
    Mr. McMasterasked the Minister of Aviation what Government-sponsored research and development work in the fields of aircraft design and construction and missile design and construction, respectively, have been awarded to Short Brothers and Harland since March, 1966; and how many men he estimates will be employed by this company throughout 1967.
    The Minister of Aviation (Mr. John Stonehouse): During the past ten months five research and development contracts have been awarded to Short's and I will, with permission, circulate details of these in the OFFICIAL REPORT.
    I cannot give an exact figure for the workforce expected to be employed throughout this year.
    Mr. McMaster: Is the hon. Gentleman aware of the anxieties felt by those working in this factory? In view of the Government's responsibility as majority shareholder and also of the many pledges by the Government to do all that they can to alleviate the hardship which is being caused by their economic measures in Northern Ireland, will the Minister undertake to place sufficient production orders with Short Brothers and Harland to maintain employment there during the coming year?
    Mr. Stonehouse: I am aware of the great anxiety that is felt and I have discussed this during the last week or so with the chairman and directors of Short's. I cannot, however, give the blanket assurance that is now requested.
    Captain Orr: Is the Minister aware that the background to this matter is the fact that unemployment in Northern Ireland has risen from 5·7 per cent. in August to 8 per cent. in the latest figures? Will the Minister realise that what is giving anxiety concerning Short's is that there is no long-term knowledge about the future structure of the company. If he can tell us something soon, we will be glad to know.
    Mr. Stonehouse: I am as anxious as the House to give as much information as can be provided, but it is too soon for me to give any long-term assurances about the work that Short's will have during the next few years. An essential aspect must be that the work that Short's take on is economic.
    Following are the details:
    Details of the contracts mentioned above are:
    Aircraft
    (1) Continuation of the flight development and research programme for the S.C.1 V.T.O.L. research aircraft.
    (2) Continuation of the development of an automatic flight control system for V.T.O.L./ S.T.O.L. aircraft.
    (3)Adaptation of an American-designed target.
    (4) Conversion of Canberra P.R.3 aircraft for use with target.
    Guided Weapons
    A feasibility study for a unit self-defence weapon.

    TSR2 Aircraft
    Mr. Boyd-Carpenterasked the Minister of Aviation whether it was a condition of the payment of compen-
    478
    sation for the cancellation of the TSR2 aircraft that the prototype aircraft and jigs should be destroyed.
    Mr. Stonehouse: No, Sir.
    Mr. Boyd-Carpenter: Can the hon. Gentleman explain, therefore, why the prototypes of this unique aircraft and very valuable machinery have been demolished?
    Mr. Stonehouse: The right hon. Gentleman is under a misapprehension. There are five aircraft. One is being used for instructional use at the College of Aeronautics, Cranfield, and four are being retained for ground research work. The information obtained by the right hon. Gentleman is, therefore, incorrect.
    Mr. Hastings: Does the ground research work referred to by the Minister involve target practice?
    Mr. Stonehouse: I do not want to give details of the ground research work. The parts of the TSR2 which remain are the property of the Government and it is our decision how they should be used.
    Mr. Hastingsasked the Minister of Aviation whether negotiations on cancellation charges for the TSR2 are now complete; and what sums are involved.
    Mr. Stonehouse: No, Sir. The final amounts to be paid are still the subject of negotiation between my Department and the companies concerned.
    Mr. Hastings: Is it not the case that the compensation takes account of factors of production for two months only after the date of cancellation? Is that not quite inadequate to cover the immense disruption of business which a great many firms have suffered, having people who have been geared principally to the production of TSR2? Will the Minister take account of that?
    Mr. Stonehouse: It is a very complicated negotiation. I am satisfied that the stand which we have taken in the negotiations with the firms concerned is a very fair one.

    Beagle Aircraft Company
    Mr. Kenneth Lewisasked the Minister of Aviation what plans he has for ensuring the profitability of the Beagle Aircraft Company and for promoting its overseas sales.
    Mr. Stonehouse: The new board of the Beagle Company will operate the firm as a commercial concern, and my Department will provide every possible assistance in its development.
    Mr. Lewis: Does not the Minister agree that the virtual nationalising of this company will mean that his Department carries losses? What does he propose to do about the aircraft already in stock which have not been sold? Would it not be better to leave this to private enterprise so that if it makes a loss at least the taxpayer does not carry it and, if it makes a profit, well and good?
    Mr. Stonehouse: The House will have an opportunity during this year to debate this question. The short answer, however, is that private enterprise has failed to remain in the light aircraft field as we should remain. Therefore, the Government felt that we should take this stake in what can be an important developing field.
    Mr. R. Carr: Will the Minister assure the House that the Government will apply the same test of economic profitability to the Beagle operations that he has just said must be applied also to Short's?
    Mr. Stonehouse: Yes, we are anxious that in the long term Beagle should produce an economic return.
    Mr. Robert Howarth: Will my hon. Friend confirm that this company could have been taken over by private companies but that they simply were not interested and that the Government have stepped in to save for Britain a stake in the light aviation industry?
    Mr. Stonehouse: That is correct.
    Mr. Kitsonasked the Minister of Aviation how soon he intends to introduce legislation to implement his decision to purchase the Beagle Aircraft Company.
    Mr. Stonehouse: Before the end of this year.
    Mr. Kitson: Is it intended to introduce a separate Bill, or does the Minister intend to introduce it as part of the larger merger of B.A.C. and H.S.A.?
    Mr. Stonehouse: That depends on the progress that we make on the main negotiations.

    Satellite Technology
    Mr. Martenasked the Minister of Aviation if he will now give details of the Government's national space programme of satellite technology based on the Black Arrow launcher.
    Mr. Stonehouse: The programme is designed to improve our technological capability by developing and ground-testing satellite components and subassemblies and then testing them in space. It provides for development of the Black Arrow launcher to be completed by the end of 1969 and experimental satellites launched at approximately yearly intervals thereafter.
    Mr. Marten: Can the Minister state the total expenditure on this space programme and over how many years it will be spread? Secondly, what proportion of the prime contracts are being offered to American industry with British contractors as sub-contractors? If this is being done, what is the reason for it?
    Mr. Stonehouse: In answer to the first part of the question, the expenditure authorised is a total value of nearly £3 million. In regard to the second part, I will make inquiries and write to the hon. Member.

    Aircraft Firms (Personnel)
    Mr. Onslowasked the Minister of Aviation what recent statistics he has concerning the brain drain from certain important aircraft firms.
    Mr. Stonehouse: I am obtaining statistics for the year 1966 from the main firms in the aircraft industry. I have also today received from the Society of British Aerospace Companies the results of their inquiry of what happened in 1966. My Department is studying these figures and until this has been done I would prefer not to comment further.
    Mr. Onslow: Is the Minister's intention to challenge the figures which have been submitted by the S.B.A.C.? On what basis did he challenge the figures sent to him by the Action Committee for European Aerospace?
    Mr. Stonehouse: I would prefer to have a close look at the figures which

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    have been provided before I give a report to the House.
    Mr. Rankin: From what he has seen so far, is my hon. Friend impressed by the serious nature of the figures which ought to be in his possession from the Society of British Aerospace Companies? Does he realise that the brain drain is taking place not only from Britain, but within Britain?
    Mr. Stonehouse: I am concerned about the figures which have been provided so far, and I can give an assurance that in the Ministry of Aviation and the Ministry of Technology we will take a very serious view of this in the future and see what can be done about it. As in the last few weeks we have been able to announce new projects proceeding, which will ensure that the design team lead remains in the United Kingdom, there is not so great a need to be fearful as there has been.
    Mr. R. Carr: In view of the vital national importance of this matter, would the Minister consider the possibility of taking the initiative and making a statement to the House, rather than force us to wait what may be a very long time before he is in the firing line of Questions again?
    Mr. Stonehouse: I will consider the best way of making this information available to the House.

    F111K Aircraft
    Mr. Hastingsasked the Minister of Aviation what ceiling price has now been agreed for the F111K; whether all Royal Air Force modifications will be incorporated in all the aircraft to be purchased; and whether the necessary avionic equipment has yet been developed.
    Sir Ian Orr-Ewingasked the Minister of Aviation whether the avionic equipment for the F111K will be the same on all 50 of the aircraft on order.
    Mr. Stonehouse: The modifications required by the R.A.F. will be incorporated in all the aircraft we are buying and the avionic equipment, the development of which is largely completed, will be the same in each of these aircraft. We hope to agree shortly a supplemental ceiling price for these features.
    Mr. Hastings: While it may be that the development of the individual items of this equipment is largely completed, is it not true to say that an enormous amount of work still has to be done on the integration of these systems? Secondly, can the Minister give the House an idea of the arrangements being made in terms of industrial support for the F111K, and what test equipment will be purchased—American or British?
    Mr. Stonehouse: On the last question, about test equipment, I should like to look into that. I am satisfied that there will be no loss of time on the provision of the equipment.
    Sir Ian Orr-Ewing: Can the Minister assure us that the relatively crude Navattack and avionic systems which were first designed for the F111 will not appear on any aircraft which are delivered to us, and that the new and sophisticated equipment similar to that designed for the TSR2 will not involve extra price or delays in delivery?
    Mr. Stonehouse: I should like to look into the cost implications of that point.

    Variable Geometry Aircraft (Anglo-French Agreement)
    Mr. Onslowasked the Minister of Aviation whether the agreement with the French Government regarding the joint development of a variable geometry military aircraft ensures that the project will at least be carried as far as the production of one or more prototypes.
    Mr. R. Carrasked the Minister of Aviation if he will publish the terms of the agreement covering the Anglo-French variable geometry aircraft and the arrangements for joint research and manufacture, including particularly the conditions under which either party can withdraw from the agreement.
    Mr. Stonehouse: The terms of our agreement with the French are confidential but we are now engaged in detailed studies with a view to starting the prototype stage at the beginning of 1968. Development work will be shared equally between the British Aircraft Corporation and Avions Marcel Dassault on the airframe and between Bristol Siddeley Engines and SNECMA on the engine. Allocation of production will depend on

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    the two requirements. As regard the break clause I have nothing to add to what was said by my right hon. Friend the Secretary of State for Defence on 17th May, 1965.—[Vol. 712, c. 1006–11.]
    Mr. Onslow: While the Minister may regard this agreement as confidential, is he aware that apparently the French Government do not? Will he say whether he accepts the statement by the French Minister of Information, M. Bourges, that the whole thing comes up for radical review at the end of this year and is not in any sense final?
    Mr. Stonehouse: We have reached agreement with the French to go ahead with a serious research study. As far as we are concerned, the main agreement has been reached, and we are very satisfied with that agreement.
    Mr. R. Carr: On the question of the confidentiality of the agreement, does not the Minister realise that this is a vital project for this country involving very large expenditure over a large number of years? Ought not this House to be given the basic terms of the agreement? While we all accept the security involved on the specification of the aeroplane, the basic commercial terms should surely be published.
    Mr. Stonehouse: I will consider that request and will see that as much information as can be provided to the House will be made available.
    Mr. Dalyell: Is the Minister aware that many of us view this project with the deepest misgivings? Can he tell us if the Government are privy to the negotiations which have gone on on the Mirage 3G between Dassault and the French Government?
    Mr. Stonehouse: I am well aware of them, but I do not think that the Mirage 3G is a serious competitor.
    Mr. Dalyell: Of course it is.
    Mr. Boyd-Carpenter: In view of the large sums of public money involved, does the Minister mean, in saying that the terms of the agreement are confidential, that he never intends to disclose them to the House?
    Mr. Stonehouse: I have given an assurance that I want to provide as much information as possible to the House, and I will provide it as soon as I can.

    B.A.C. and Hawker Siddeley (Airframe Interests)
    Mr. R. Carrasked the Minister of Aviation when he expects to complete his negotiations with the British Aircraft Corporation and the Hawker Siddeley Group for the merger of their airframe interests.
    Mr. Stonehouse: Negotiations with the companies are in progress and these will take some time to complete. We are pressing on as fast as we can, but as there are several parties to this negotiation I cannot give any assurance as to when they will be completed.
    Mr. Carr: Does the Minister realise that it is now 15 months or thereabouts since the Plowden Committee raised this issue and that the uncertainty in the industry must make both the raising of capital for new projects and future management planning extremely difficult? Will he not agree that this uncertainty must be brought to an end?
    Mr. Stonehouse: All the fault is not on our side. The negotiations are very complex and include a valuation of very complex firms. I hope that we can make quick progress, but we are dealing with a large number of firms here. I hope that we shall get co-operation from their side. We are prepared to co-operate in order to bring this to a conclusion soon.

    Concord Project
    Mr. Monroasked the Minister of Aviation what recent changes there have been in the composition of the British element of the Anglo-French Committee of Officials supervising the award of contracts for the Concord project.
    Mr. Stonehouse: Sir James MacKay, formerly a Deputy Secretary in the Ministry of Aviation, has left the committee on his transfer to the Home Office. Air Marshal Sir Christopher Hartley, Controller of Aircraft, and Mr. F. J. Doggett, a Deputy Secretary, both in the Ministry of Aviation, have joined the Committee.
    Mr. MonroSurely continuity in this project was most important? Was it not a mistake to transfer this most important official from the Concord to prisons?
    Mr. Stonehouse: I am satisfied that the work of this Committee is being efficiently and effectively conducted.
    Mr. A. Royle: Is the Minister aware that the two gentlemen who have replaced Sir James MacKay are highly regarded and will carry out their task expeditiously and extremely well for this country?
    Mr. StonehouseI am glad to have confirmation of my view from that side of the House.
    Mr. Rankinasked the Minister of Aviation if he will make a progress report on the Anglo-French Concord.
    Mr. Stonehouse: The development programme is proceeding well. The first prototype at Toulouse is now in an advanced state of construction, and the aircraft is expected to fly in the spring of 1968. The construction of the second prototype at Bristol is also well advanced and this aircraft is expected to fly in the autumn of 1968.
    Mr. Rankin: Those who saw the aircraft recently can confirm all that my hon. Friend has said, and the greater the publicity that we can give to this achievement the better it will be for aviation in both countries. Can my hon. Friend say how many options are held just now for the purchase of this aircraft?
    Mr. Stonehouse: The number of options is growing day by day, and I will find out the exact figure and write to my hon. Friend. With regard to his first point, I am glad that he and other hon. Members have had an opportunity of seeing the work for themselves.
    Sir Ian Orr-Ewing: Will the Minister be a little more forthcoming than he was in reply to the Question on the Concord and say—if he rejects nationalisation, which we would endorse—how he will help to finance the production and provision of spares and components for an aircraft of this cost?
    Mr. Stonehouse: These questions are under current and continuous examination.
    Mr. Dobson: Is my hon. Friend aware that under that contract major decisions will have to be made by this Government and by the French Government about the
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    production needs for the aircraft? May I ask him to make sure that he has this well in mind?
    Mr. Stonehouse: We have this very much in mind.
    Mr. A. Royle: Will the Minister be a little more forthcoming and tell the House when he intends to set down a production order, and will he give the lie to the stories circulating that the Government are having second thoughts about backing the Concord programme, and give firm confirmation that the Government will support the building of the Concord right through to the production orders?
    Mr. Stonehouse: As I have said, these important and complex questions are under current examination.
    Mr. R. Carr: This is a very serious statement by the Minister. May I ask him once again whether he will make an early statement to the House, because I do not think that the House and the country ought to be kept in a state of doubt for another six or seven weeks?
    Mr. Stonehouse: There is no question of any state of doubt. The Concord programme is proceeding very well, and there is no question of any lack of decision on our side holding up this development work. There is no question of that at all. With regard to production financing, no decision on our side will in any way impede the progress of the development of this aircraft.
    Mr. A. Royle: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible opportunity.

    Airbus Project
    Mr. Kenneth Lewisasked the Minister of Aviation whether he will make a statement regarding the future development in association with France of the airbus project.
    Mr. Rankinasked the Minister of Aviation if he will make a statement on his talks last week at Bonn with French and German Ministers about the airbus and what progress was made in the matter.
    Mr. Stonehouse: When I met the French Minister of Equipment and the Federal German Minister of Economics in Bonn last week to discuss this project we agreed that a successful airbus would be an important step towards further technological and economic co-operation in Europe but that further information was required on a number of points before a decision on the future of the project could be reached. Officials were charged with presenting a report on the further information required which the three Ministers could consider in the middle of March.
    Mr. Lewis: Does not the Minister think that the doubts which exist on this project really lead to the conclusion that it is better to drop it and concentrate on other things so that we do not spread our activities too widely?
    Mr. Stonehouse: No. This project could be a very successful one and ensure that Britain remained in the subsonic aircraft field for the next 15 to 20 years. I give this project a high priority, but I believe that it is essential that we should be assured of its economic viability before going into it. The whole purpose of the officials' report is to get clarification on this point.
    Mr. Rankin: Is the Minister aware that the achievement of agreement on this project will be warmly welcomed by all those who are interested in the commercial advance of aviation, but does he also realise that, if this has to be a commercial success, it is essential now that we should start at London Airport creating the appropriate type of pier which will be necessary to handle people when this airbus is in use?
    Mr. Stonehouse: The last part of the question is for my right hon. Friend the President of the Board of Trade. On the first part, the economic viability will depend on the extent to which European airlines are going to commit themselves to buying the airbus when it is completed.
    Mr. Lubbock: Unless this project is proceeded with in the near future, the Americans are very likely to have an aircraft which will be sold to the airlines of Europe in competition with the European airbus. Is not the timing vital, therefore? Will the Minister say what further information is required by the Ministers?
    Mr. Stonehouse: The main points are information on airline requirements and intentions, the financial participation by the aircraft industry, and the question of the engine choice. We want information on those matters. I agree that we want to make decisions as soon as possible in order to get on with it if we are going to do it.
    Mr. Robert Howarth: Will the Minister confirm that a vital element in the construction of this aircraft is the engines? Could he indicate whether Rolls-Royce has requested any special assistance for the development of large engines for this project?
    Mr. Stonehouse: This is one of the points which we have under consideration. I agree that it would be very important, if we go ahead with the airbus development, to see that Rolls-Royce has an essential part in it.

    Plowden Report
    Mr. Maxwell-Hyslopasked the Minister of Aviation whether he will now publish a White Paper stating the Government's considered views on each of the guidelines to policy and detailed recommendations contained in the Plow-den Report.
    Mr. Stonehouse: No, Sir. The House already knows that 16 of the 24 recommendations of the Plowden Committee have been accepted by us in full, six accepted in part and two rejected.
    Mr. Maxwell-Hyslop: As the Minister has not yet informed the House in detail as to which proposals are accepted, rather than just giving the score, will he now undertake to make this information available to the House before the debate which was adjourned this morning is resumed so that we can debate the question of the transfer of power on the basis of the knowledge of Government policy, rather than in ignorance of it?
    Mr. Stonehouse: My predecessor gave full information on this point.
    Mr. R. Carr: This really is not satisfactory. An inquiry was set up by the Government into one of our major industries, and it has produced a long Report. The Minister in office at the time talked about a considered statement

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    being made on all those matters within a few weeks, and we have not yet had it. This is discourteous, both to the House and to Lord Plowden and his Committee.
    Mr. Stonehouse: I believe that the House is very well aware of the major decisions which we have made arising out of this Committee's Report, and there is no necessity for yet another White Paper to be produced on it.

    Aircraft Industry (Nationalisation)
    Mr. Palmerasked the Minister of Aviation what plans he has for the nationalisation of the aircraft industry in order to assist the future financing of the Concord and other aircraft projects.
    Mr. Stonehouse: None, Sir.
    Mr. Palmer: Is my hon. Friend aware that Sir George Edwards, the managing director of the British Aircraft Corporation, has said that he has no basic objection to nationalisation, especially in relation to the financing of the Concord? If Sir George is in favour, why should the Government be against it?
    Mr. Stonehouse: Because we are concerned to have an effective industry as a whole, and not only the B.A.C. is involved in it.

    Helicopters
    Mr. Martenasked the Minister of Aviation what engines will be installed in the SA330, SA340 and WG13 helicopters; and in which country the airframes will be built when orders are executed for French and British forces, respectively.
    Mr. Ridleyasked the Minister of Aviation where the SA340 and the WG13 helicopters will be made.
    Mr. Stonehouse: The SA330 will have the French Turmo engine. The final definition of the engine for the other two helicopters will be made about the middle of the year when the design studies are completed. Each country will make parts of each helicopter and will have a final assembly line.
    Mr. Marten: Can the Minister say whether the engine for the SA330 is suitable for the Services? Can he give an assurance that it was not downgraded
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    for the requirements of the Services simply to get a package deal?
    Mr. Stonehouse: My information from the Ministry of Defence is that it meets its requirements extremely well.
    Mr. Ridley: Is it not wrong to have an assembly line for each type of helicopter in each country? Would not the Minister agree that it would be much better to have one main contract for each helicopter, and allow the work to be shared out equally by means of sub-contracting?
    Mr. Stonehouse: The production work will be shared so that we shall have efficiency in production lines, but I do not think that it will add appreciably to the cost if the final assembly is done either in Britain or in France according to where the aircraft is required.
    Mr. HastingsIs not there a real danger that after the two French projects are completed the French Government may decide to pull out, or at least are empowered to pull out, before the Westland project comes forward?
    Mr. Stonehouse: I discussed this with my right hon. Friend and with M. Messmer a fortnight ago, and I think that the risks are very small indeed.

  BOARD OF TRADE

    Shop Premises (Leases)
    Sir J. Langford-Holtasked the President of the Board of Trade, in view of the fact that landlords of shop premises are making minimum prices of goods sold a condition before granting a lease to shopkeepers, whether he will introduce legislation to bring this practice within the provisions of the Resale Prices Act.
    The Minister of State, Board of Trade (Mr. George Darling): No, Sir.
    Sir J. Langford-Holt: Will the right hon. Gentleman take note of the fact that the landlord to whom I am directing my attention is the Airports Authority which, by contract conditions, requires British goods to be sold at 43 per cent. over the price at which they can be obtained at any other airport in Europe, and as this appears, at any rate, to be against the spirit, if not the letter, of the

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    Resale Prices Act, will he look at this question again?
    Mr. Darling: Yes, Sir. We are prepared to look at the question again. I understand that there is a case on the restraint of trade which may have a bearing on this question which was heard in the House of Lords just before Christmas. Judgment was reserved, and is expected some time in the near future. Perhaps we can look at this matter again when we get that judgment.

    Airports Authority (Passengers Baggage)
    Mr. James Davidsonasked the President of the Board of Trade if he will give a general direction to the Airports Authority to make new arrangements for handling the baggage of passengers arriving on domestic flights, in view of the delays caused by the present system.
    The Minister of State, Board of Trade (Mr. J. P.W. Mallalieu): No, Sir. This is not an appropriate matter for a general direction under Section 2(6) of the Airports Authority Act, 1965.
    Mr. Davidson: Is the hon. Gentleman aware that at least 10 minutes, and sometimes as much as 20 minutes or half an hour, per passenger could be saved by putting baggage direct from aircraft on to trailers or into the bus and bringing it into the terminal at the same time as the passengers?
    Mr. Mallalieu: I am not sure of the timing of that, but if the hon. Gentleman has a serious point I would be very grateful if he would put it to the British Airports Authority.
    Mr. Fortescue: Is the hon. Gentleman aware that this problem has been largely solved by the independent airlines on the domestic flights, but has not been solved by a nationalised Corporation?
    Mr. Mallalieu: I know that there is a temporary difficulty at Heathrow, but this is due to attempts to improve the situation.

    Private Pilots (Accidents)
    Mr. Monroasked the President of the Board of Trade what proportion of accidents to private pilots is known to
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    have been due to the effects of alcohol on the pilot in each of the last five years.
    Mr. J. P. W. Mallalieu: Alcohol is considered to have played a part in none out of 54 accidents in 1962 to aircraft flown by holders of a private pilot's licence, none out of 52 in 1963, one out of 74 in 1964, one out of 73 in 1965 and one out of 70 in 1966.
    Mr. Monro: Surely those are very small figures. Does the Minister recall his predecessor's saying at the Guildhall in November that many accidents were caused by pilots who had taken alcohol before flying? Was not this a gross exaggeration, and a slur on private pilots?
    Mr. Mallalieu: It is certainly true—thank goodness—that the numbers are small. My right hon. Friend was quite right to try to keep them so.

    International Airports (Siting)
    Mr. Bostonasked the President of the Board of Trade what recent consideration he has given to the need to site major international airports away from residential areas but accessible, by mean3 of fast road-rail links, to large centres of population.
    Mr. J. P. W. Mallalieu: Separation from substantial residential areas but with accessibility to large centres of population are certainly two of the factors, if not always reconcilable at reasonable cost, which are relevant to the siting of major new airports. These and other important factors have been in mind in considering the site of the third London airport.
    Mr. Boston: Although a coastal site with these links might be more costly, does not my hon. Friend think that it is worth paying pretty heavily in order to save people from noise? To what extent is he taking account of costs of this kind in achieving that purpose?
    Mr. Mallalieu: A good deal of cost is worth while to avoid the nuisance of noise. We have been considering all sorts of sites with that end in view.
    Sir J. Langford-Holt: Is the Minister aware that it takes longer to get from West London Air Terminal to the nearest tube station than from Heathrow to Paris? When he is siting these new

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    aerodromes will he try to make sure that they are at least accessible to public transport?
    Mr. Mallalieu: That is certainly the first part of the hon. Gentleman's question.
    Mr. Hugh Jenkins: Is my hon. Friend aware that it is very unlikely that the Concord aircraft will ever be able to fly over land? If this aircraft is to come into productive use—which in my view is improbable—is it not necessary to have an international airport on the coast? Does he agree with that?
    Mr. Mallalieu: I do not agree at all with the first part of my hon. Friends question about the Concord. It would be a great convenience to have an airport sited near the sea, or even on the sea, but the cost might be prohibitive.
    Mr. Marten: Following the curious remark of the hon. Member for Putney (Mr. Hugh Jenkins), may I ask the Minister if he recalls that his predecessor held a conference at Lancaster House on the very subject of noise, and that the results of that conference, so far as I know, have never been published? Why not? When will they be published?
    Mr. Mallalieu: They are being carefully studied. [Laughter.] Oddly enough, this is a very important subject, and it was a very important conference. The conclusions are being studied and will be published as soon as possible.

    Aircraft Noise
    Mr. Bostonasked the President of the Board of Trade if he will make a statement about the discussions he had with local authorities on 12th December, 1966, about aircraft noise.
    Mr. J. P. W. Mallalieu: As the Press statement issued after the meeting made clear, assurances were given that supersonic and other new jet aircraft would have to comply with the present noise limits; that noise and height monitoring would continue; and that no increase in night jet ojerations would be permitted at Heathrow this summer.
    Mr. Boston: I thank my hon. Friend for that assurance, but does not he agree
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    that his predecessor's warning at that meeting, that people living near London Airport could expect more noise in the next few years, makes the sort of project that we were talking about just now —a coastal airport—all the more necessary?
    Mr. Mallalieu: It certainly means that steps should be taken as urgently as we can take them to limit the noise of all new aircraft we produce.
    Sir C. Mott-Radclyffe: Does the Minister agree that we all recognise the difficult nature of this problem but that, none the less, there are times when the noise of aircraft is well-nigh intolerable, and that this will get worse and not better? Does not the Minister agree that he cannot just leave the matter as it is now?
    Mr. Mallalieu: I assure the hon. Member that I have no intention of leaving the matter where it is now. The noise in certain areas is becoming almost intolerable. We shall take what steps we can to ensure that in the future it is less rather than more.
    Mr. Channonasked the President of the Board of Trade if he will now make a statement about the Government's proposals to deal with aircraft noise.
    Mr. J. P. W. Mallalieu: During the aviation debate on 21st November, my right hon. Friend informed the House of the main measures which are already in force, and under consideration, particularly in respect of the heavy traffic at Heathrow. I hope to make a further statement in the near future about the proposal that noise should be included as a factor in the certification of aircraft.
    Mr. Channon: Since the Minister has already told us, in answer to an earlier Question, that the International Conference on Aircraft Noise was an extremely important one, will he give a clear undertaking that the discussions that took place at that conference, together with its conclusions, will be available to hon. Members in the near future?
    Mr. Mallalieu: Yes, I think that I can give that assurance.
    Mr. Hugh Jenkins: Does my hon. Friend agree that at the moment noise is measured only on take-off? Would it

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    not be a good idea to start measuring the noise under the glide path, on landing?
    Mr. Mallalieu: We are doing monitoring tests under glide paths.
    Mr. R. Carr: In relation to the proposed policy to make noise levels part of the certification process, can the hon. Member assure the House that this will be taken up vigorously at an international level? Does he realise that although it would be welcome in this country, if we were to do it unilaterally it could have a disastrous effect on the aircraft industry?
    Mr. Mallalieu: Yes, I entirely agree.

    City Airports (Municipal Ownership)
    Mr. Fortescueasked the President of the Board of Trade whether he is satisfied that the municipal ownership of city airports is in all cases in the best interest of the development of British aviation; and if he will make a statement.
    Mr. J. P. W. Mallalieu: Experience throughout the country indicates that the ownership of aerodromes by local authorities or consortia of local authorities has many advantages, and I can see no grounds, at present, for a change of policy in this respect.
    Mr. Fortescue: In view of the fact that the facilities at many of our airports will have to be greatly improved to cater for the next generation of aircraft, may I ask whether the Minister would agree that the experience now being gathered all over the world by the British Airports Authority, which has sent delegates to every modern airport, should be made available on a formal basis to municipally-owned airports?
    Mr. Mallalieu: I should think that that made sense.
    Mr. Lubbock: Is the Minister aware that by putting pressure on the London Borough of Bromley to take over Biggin Hill Airport his Department has created serious difficulties for the users? They will have no security of tenure, and there will be further expense falling on the ratepayers, who will have to pay the bill for the report of the consultants now being commissioned by the borough.
    Mr. Mallalieu: I know of no pressurising of the local authority. I know the
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    immense difficulties of deciding between various users—the sort of difficulties that exist at Biggin Hill. I shall go down fairly shortly and shall have a shot at sorting some of them out.

    Private Industry (Investment)
    Mr. Bruce-Gardyneasked the President of the Board of Trade if he will publish the calculations on which he based his latest forecast that there will be no drop in private industrial investment in 1967.
    Mr. Jay: Although the latest official inquiry shows that manufacturers expect lower investment in 1967, their forecasts took little or no account of the recent increases in investment grants. I hope that, with the realisation that our measures justify long-term expansion and with the easier position of finance for investment. the outcome for 1967 will be better than forecast.
    Mr. Bruce-Gardyne: Has the right hon. Gentleman overlooked his Department's latest forecast of a 10 per cent. drop in manufacturing investment this year? Will he confirm that this would mean that the level of manufacturing investment would, at constant prices, be substantially lower than it was in 1961 and not much higher than it was in 1960?
    Mr. Jay: The hon. Gentleman is overlooking the fact that that forecast was made before the increase in investment grants and before the recent reduction in Bank Rate. He will see, therefore— if he thinks about the matter— that what he described may not be the position. He may also be interested to know that private investment in the last few months has actually turned out to be a good deal higher than in the previous forecast.
    Mr. Barnett: As conditions change, would it not be better to ignore the unhelpful and over-clever forecasts made by hon. Gentlemen opposite and instead publicise the large amounts of money available to banks to lend for investment purposes?
    Mr. Jay: Investment up to date has been running at a high level, but I am sure that the hon. Gentleman opposite is doing his best.
    Sir C. Osborne: Since the Minister's latest figure, issued by his Department,

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    showed a reduction in production of 4½ per cent—the lowest for three years— how does he expect private employers to increase their investment in view of the squeeze and freeze which the Government are still imposing?
    Mr. Jay: The industrial production index raises another question. As I said, the investment grants have been increased and there has been a reduction in Bank Rate. We can look forward with more confidence to 1967.
    Mr. Harold Walker: Will my right hon. Friend seek to make greater use of the powers of the Industrial Reorganisation Corporation to make substantially increased Government investment in the private sector, with particularly increased shareholdings in the motor car industry?
    Mr. Jay: We are already making very considerable, and increasing, use of the I.R.C.
    Mr. Corfield: Does the right hon. Gentleman recall that when he introduced the Industrial Development Bill he assured us that the investment grants therein contained would be very much more attractive than those which they replaced? Can he give any hard and fast evidence to show that increased industrial investment has occurred?
    Mr. Jay: One hard and fast piece of evidence is the increased demand for factory space in the development areas over that period.
    Mr. Bruce-Gardyne: In view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

    B.O.A.C. (Boeing Aircraft)
    Mr. Fortescueasked the President of the Board of Trade whether an application has yet been made by the British Overseas Airways Corporation for duty remission on their third imported Boeing 707–320C aircraft; and, if so, what reply has been given.
    Mr. Jay: An application has been made and is under consideration.
    Mr. Fortescue: In view of the fact that in the last aviation debate I was informed, aggressively and abusively, by the then Minister of Aviation that the
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    reason why the first two Boeing 707–320C aircraft were being imported duty-free was because they were being used for freight purposes only, and in view of the fact that B.O.A.C. has already announced that this third aircraft will be used for passenger services for one year, why should there be any doubt, delay or discussion about whether or not it should pay duty?
    Mr. Jay: As the present Minister of Aviation, may I say, modestly and diffidently, that the law compels me to take this decision according to whether there are or are not similar British aircraft available; and that I shall do.
    Mr. R. Carr: Is the right hon. Gentleman aware that the previous Minister of Aviation gave me an assurance that if B.O.A.C. was to use these planes for carrying passengers, duty would have to be paid?
    Mr. Jay: I am sure that the previous Minister of Aviation's assurance was not to take any decision which was other than in accord with the law. I shall certainly do what the Statute passed by this House compels me to do.
    Mr. Fortescue: In view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible moment.

    Aberdeen (Trade with Northern Europe)
    Mr. Hector Hughesasked the President of the Board of Trade what steps he has taken and with what result to increase trade, commerce and exports from Aberdeen to Northern Europe; and to which countries this applies.
    Mr. Jay: I would refer my hon. and learned Friend to the Answer I gave him on 8th December, 1966. [Vol. 737, 1563.]
    Mr. Hughes: I thank my right hon. Friend for what he has already done. [HON. MEMBERS: "What?"] Does he realise that international transport is one of our difficulties? Will he therefore get in touch with the relevant Ministers of Transport with a view to improving the transport facilities between Aberdeen and Northern Europe?
    Mr. Jay: All the evidence shows that Scotland, and North-East Scotland, is

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    taking part in the present expansion of British exports to Scandinavia. I will certainly see what can be done to improve these transport facilities where that is necessary.

    Exports to Far East
    Mr. Hector Hughesasked the President of the Board of Trade in view of the fact that imports to Great Britain from Japan rose in November, 1966, to nearly £7 million, what steps he has taken and plans to take to increase Great Britain's exports to the Far East, including Japan.
    Mr. Jay: It was exports to Japan—not imports from Japan—that nearly reached the record level of £7 million in November. We hope that there will be continued stimulus to our exports to this important market through the efforts of the B.N.E.C. and the Government's services to exporters.
    Mr. Hughes: I thank my right hon. Friend for what he has said on this issue, but may I ask him to realise that there is a disastrous imbalance between imports and exports between Aberdeen and the Far East; and will he take steps to rectify this?
    Mr. Jay: The imbalance between the whole of the United Kingdom and Japan in this matter is far from disastrous. The remarkable fact is that our exports to Japan increased last year by 28 per cent. while our imports actually fell.
    Mr. Gresham Cooke: While it is obvious that we want to do as much trade as possible with Japan, may I ask the right hon. Gentleman to take into consideration the fact that motor imports into this country from Japan may increase very substantially in the coming year? Would it not be desirable to find more exports which we can send to Japan?
    Mr. Jay: We are extremely careful in our periodic trade negotiations with Japan to see that a fair balance applies to both sides.
    Mr. Ridsdale: While there may be an imbalance with Japan, would not the right hon. Gentleman agree that the imbalance with the Soviet Union is much more serious—£118 million imports and only £45 million exports?
    Mr. Jay: I agree, and only recently I again drew this to the attention of the Soviet authorities. We expect to see a much higher level of purchases from now on by the Soviet Government from this country.

    Patent Office
    Mr. Patrick Jenkinasked the President of the Board of Trade what consultations he has held with representatives of overseas users of the Patent Office about the proposed removal of the office to Croydon; what representations he has had from such users; and what replies he has sent.
    Mr. Darling: None, Sir. One overseas patent agent has made representations. The reasons for making a move have been explained to him.
    Mr. Jenkin: If the Board of Trade had taken the trouble to consult American users, would it not have learnt that the American Government made precisely the same mistake some years ago when they moved their patent office to the outskirts of Washington, only to find that they had to move it back again a few years later because, sited where it was, it was hopelessly inefficient?
    Mr. Darling: We are well aware of American experience in this matter. I assure the hon. Gentleman that their reasons for moving it back are not the same that would apply to our reasons for moving it out.
    Mr. Winnick: Would not my right hon. Friend agree that his Answer shows that there has been hardly any protest whatever about moving the Patent Office to Croydon? Is he aware that the people of Croydon are quite happy about the present arrangement?
    Mr. Darling: Yes, Sir.
    Mr. Frederic Harris: Is the Minister aware that the progressive town of Croydon welcomes the Patent Office coming there, that there will be no question of it having to go back to the centre of London and that the only point I wish to make is that it must be sure to pay its rates when it gets there?
    Mr. Darling: I was waiting for unanimous support, from both sides of the House, for the sensible suggestions we are making in this regard.

    Restrictive Trade Practices Act, 1956
    Mr. Patrick Jenkinasked the President of the Board of Trade when he intends to introduce legislation to amend the Restrictive Trade Practices Act, 1956.
    Mr. Jay: I would refer the hon. Member to the reply I gave to the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) on 8th December.—[Vol. 737, c. 1553–4.]
    Mr. Jenkin: Has not the position changed since then in that we now have not only the report of the N.E.D.C. calling for a substantial change to be made in the Act but also the report from Mr. Sich, the Registrar? Since amendment to the Restrictive Trades Practices Act has been sought for about three years, should not the Government get on with this and do something about it?
    Mr. Jay: We have the Companies Bill to pass before that. We are examining the proposals, but it will not be possible to legislate on those issues this Session.

    Private Firms (Operation)
    Mr. Hamlingasked the President of the Board of Trade whether he will seek powers to suspend the management of private firms which are operating in a manner which conflicts with the national interest.
    Mr. Jay: No, Sir.
    Mr. Hamling: Is my right hon. Friend aware are that complaints have recently been sent to his Department by some of my constituents about various private firms which have not only defrauded these constituents but have also caused them extreme injury from the point of view of motor insurance and travel? Will he do something about this?
    Mr. Jay: Yes, Sir. I know that these things have happened, but I think that my hon. Friend's proposals are somewhat sweeping. I suggest that it is better to proceed through the companies legislation, the restrictive trade practices legislation and so on.
    Sir H. Harrison: Is the right hon. Gentleman aware that his Answer is completely contradictory to the remarks of the Prime Minister suggesting that he
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    Wants to cut out dead wood in the boars room, as that can be done only by cutting out 51 per cent of the equity holding?
    Mr. Jay:I doubt whether that arises from this Question.

    Development Areas (Employment)
    Sir J. Edenasked the President of the Board of Trade by what means in his Department he ensures that any decisions he takes to bring new employment opportunities to development areas do not run counter to the general economic policies being pursued by Her Majesty's Government and the declared objectives of the "Little Neddies".
    Mr. Jay: One of the objects of attracting industry to development areas is to assist national growth by utilising resources now under-employed. My decisions on industrial location take full account of the Government's general economic policies and the objectives of the "Little Neddies".
    Sir J. Eden: I actually asked the right hon. Gentleman if he could tell me by what means he ensures co-ordination between his Department and the Department of Economic Affairs. Is he aware that in an instance known to me the "Little Neddy" concerned with an industry has found that there is over-capacity, whereas his own Department encourages the increase of production facilities in a development area which is already well supplied with them?
    Mr. Jay: It is for the "Little Neddies" to give advice but for the Government in these cases to take the decision.

    Plymouth (Airport Site)
    Dame Joan Vickersasked the President of the Board of Trade what progress has been made in finding an adequate site for an airport near Plymouth.
    Mr. J. P. W. Mallalieu: As I informed the hon. Member in a Written Answer on 25th January, a survey of possible sites is under consideration. Plans for such a survey will shortly be considered by the South West Planning Council.—[Vol. 739, c. 281.]
    Dame Joan Vickers: Does the hon. Gentleman realise that these plans have been under consideration for about two years? Does he know that it is quicker to go to Belfast from here than it is to go to Plymouth? Having had the City of Plymouth Bill defeated, is it not up to the regional commissioner to get on and to find a site in the near future?
    Mr. Mallalieu: The planning council is getting on as fast as possible but, as the hon. Lady knows, this is an extremely difficult geographical area.
    Mrs. Gwyneth Dunwoody: Is my hon. Friend aware that in Exeter there is an excellent airport which is capable of great development, and that it is a great grief that this discussion is going on about looking for an alternative site so close to an airport which already exists?
    Mr. Mallalieu: I doubt whether the citizens of Plymouth would say that Exeter was the ideal site for the airport, but that consideration should not be excluded.
    Dr. David Owen: Is my hon. Friend aware that this decision has been agreed by the regional development planning council, that many people in the far South-West are judging the success of that council by its success in this venture, and it is very important that this success should be seen to occur very soon?
    Mr. Mallalieu: Yes, it will be seen to occur if the planning council has all the facts.

    Building Grants and Loans
    Mr. Christopher Priceasked the President of the Board of Trade what criteria are used by the Board of Trade Advisory Committee in deciding to accept or reject applications for building grants or loans under the Local Employment Acts.
    Mr. Jay: The Committee does not recommend acceptance unless it is satisfied that there are good prospects of the undertaking being carried on successfully and providing continuing employment for the development areas.
    Mr. Price: Would my right hon. Friend agree that the committee now operates far too much in an atmosphere of secrecy? Would it not be a good thing if it were compelled openly to declare its
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    reasons for the very small number of rejections it makes? Is he aware that there are firms attracted by his Department into development areas on the understanding that they will get grants but which are being turned down apparently for no reason at all?
    Mr. Jay: I think there is a misunderstanding here. B.O.T.A.C. advises the Government only on one point, the viability and probable success of the individual firm. The information is necessarily confidential and could not possibly be made public.

    Resale Price Maintenance
    Mr. St. John-Stevasasked the President of the Board of Trade, whether he will make a statement on Government policy on resale price maintenance, in view of the recent controversy concerning sales of tobacco and sweets.
    Mr. Milneasked the President of the Board of Trade if he will initiate discussions with manufacturing and retail bodies in the tobacco trade, with a view to amending legislation to ratify forthwith the existing resale price arrangements on cigarette sales.
    Mr. Jay: It is too early to measure the full effects of the Resale Prices Act, 1964, although I am satisfied that it is introducing a measure of competition into retail distribution which is in the general public interest.
    In the circumstances, I am not convinced that discussions about possible amendment of the Act would serve any useful purpose.
    Mr. St. John-Stevas: Will the Government make plain that they favour the abolition of resale price maintenance in the interests of lower prices and of the consumer, and use all their powers to persuade manufacturers and distributors voluntarily to abandon the practice now?
    Mr. Jay: We would be very glad to see abandonment of the practice voluntarily, but while the present legislation is in force proceedings under the Act must be followed.
    Dr. John Dunwoody: Would my right hon. Friend agree that when he uses the phrase "the general public interest" in this context he should consider the possible consequences of a cigarette price

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    war on the health of the community as a whole?
    Mr. Jay: Yes, I would certainly agree with that.

    Loan Companies and Mortgage Brokers
    Mr. St. John-Stevasasked the President of the Board of Trade whether he will introduce legislation to regulate the business of loan companies and mortgage brokers.
    Mr. Jay: I have no present intention or, proposing such legislation.
    Mr. St. John-Stevas: Has not the President of the Board of Trade read the recent revelations in the News of the World about the disreputable activities of loan sharks charging effective interest rates of 27 per cent, and making off with people's deposits? Since the Government created the conditions of freeze in which these sharks flourish, are they not under a moral obligation to regulate their activities?
    Mr. Jay: I have not read the News of the World recently, but we shall, no doubt, he discussing this point in some detail in discussions on the Companies Bill, and I cannot go into it now.
    Mr. Winnick: Is my right hon. Friend aware of the great deal of genuine concern among the public about some of the dubious mortgage and loan firms which have mushroomed in recent years? Does he agree that the Davies Investment Company is not one on its own, but that a number of others are operating on more or less the same lines?
    Mr. Jay: I would not like to make a statement about unnamed companies, but I agree that the whole of this matter requires examination.

    Airports (Passenger Arrangements)
    Dame Irene Wardasked the President of the Board of Trade if he will give an assurance that the development of better airport arrangements facilitating the quicker progress of passengers will be contemporary with the new aircraft designed to carry an increased number of passengers; and if he will make a statement.
    Mr. J. P. W. Mallalieu: I can certainly give this assurance in regard to civil aerodromes owned by the Government. Other airport authorities are, I know, also working to this end.
    Dame Irene Ward: I thank the hon. Gentleman for that assurance. Why then have we so much chaos in quite a number of international airports, such as Honolulu and all over the world, including Heathrow? What is the good of an assurance for the future if the present is not dealt with satisfactorily by the hon. Member? I ask him not to say that this is not a responsibility of his, because I think it ought to be if it is not.
    Mr. Mallalieu: Unfortunately or otherwise, it is a fact that I am not responsible for Honolulu. At Heathrow large building operations are now going on, designed to improve this matter.
    Mr. Rankin: Does my hon. Friend realise how important increased pier facilities are at an airport in order to promote efficiency in handling people, because as one result there will be reduced bus services? Does he realise that the greatest contribution would be a third London Airport? When is that coming?
    Mr. Mallalieu: On the last part of that supplementary question, a decision will be announced very shortly. On the first part I noted the point when it was put to my right hon. Friend earlier this morning.

    Walkie-Talkie Sets
    Mr. John Hallasked the President of the Board of Trade what is the value of walkie-talkie sets operating on a frequency of 27.12 Mc/s., or thereabouts, imported during the last complete 12 months.
    Mr. Darling: I regret the information is not available.
    Mr. Hall: Would not the Minister agree that the importation of these walkie-talkie sets represents a confidence trick on the public because the Post Office is very unlikely to give a licence for their operation?
    Mr. Darling: I would not quarrel with the approach of the hon. Member to this problem. However, the question whether

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    or not these sets should be imported is a matter not for the Board of Trade but for the Post Office.

    Society of Motor Manufacturers and Traders (Circular)
    Mr. John Hallasked the President of the Board of Trade why the Society of Motor Manufacturers and Traders has been required to register as a Restrictive Trading Agreement details of a circular, issued in accordance with Government policy, urging members to observe the Prices and Incomes Act.
    Mr. Darling: The circular contained a recommendation that was registrable under the Restrictive Trade Practices Act, 1956.
    Registration as such does not, of course, affect the continuance of the recommendation, and I understand that there is no likelihood of its early reference to the Court.
    Mr. Hall: Is it not nonsense that a trade association which sends out a circular to its members urging them to abide by Government policy should then be called upon to register this with the Restrictive Practices Court?
    Mr. Darling: The Registrar is carrying out very clearly indeed the obligation placed upon him by the Restrictive Trade Practices Act which was brought into existence by the Tory Government.
    Mr. Patrick Jenkin: Does not this incident reinforce the need for the amendment of this Act? Has not this a higher priority than jerrymandering the London elections?
    Mr. Darling: What the hon. Member is saying is that this piece of legislation, which was passed only 10 years ago, was imperfect. I am not going to quarrel with him, but it was passed only 10 years ago.
    Mr. McNamara: Would my right hon. Friend point out to the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) that if we want any lessons in jerrymandering, we will go to Northern Ireland and Londonderry?
    Mr. Speaker: Order. We are wide of the Question.

  SHIPPING

    Inquiry
    Mr. Wingfield Digbyasked the President of the Board of Trade whom he has appointed to undertake the inquiry into shipping; what are their terms of reference; and when they are to report.
    The President of the Board of Trade (Mr. Douglas Jay): No appointment has yet been made and an announcement of the terms of reference should not precede this. I cannot say, at this stage, how long the inquiry is likely to last.
    Mr. Digby: If the right hon. Gentleman does not know whom he is going to appoint, or what they are to consider, was not the announcement a little premature?
    Mr. Jay: I think that the hon. Member has forgotten that Lord Pearson's court of inquiry is now engaged on a rather narrower inquiry. On reflection, the hon. Member may agree that it is more sensible to finish with the narrow inquiry before we start the wide one.
    Mr. Shinwell: Will my right hon. Friend tell the House what the Government are trying to find out about shipping? Is he aware that several hon. Members who are intensely interested in the subject could tell the Government all about it without duplicating any other inquiries? What is the use of appointing committees when hon. Members are at the disposal of the Government?
    Mr. Jay: I am always glad to listen to my right hon. Friend, especially on this subject, but there was a considerable demand for an inquiry—not least from those employed in the industry.
    Mr. Blenkinsop: Are we to understand from my right hon. Friend's statement that there will be no delay with the narrower inquiry, especially in relation to the amendment of the Merchant Shipping Act, which is a most important matter?
    Mr. Jay: Certainly we shall proceed with this as quickly as possible.
    Dame Irene Ward: Is the right hon. Gentleman aware that he would be able to obtain quite a lot of information if he

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    would accede to the pledge given a long time age by Her Majesty's Government that we could have a debate on all these matters? The pledge has been broken. Ii would be very much better if we could have a debate, because he would then hear a great deal of useful information, which would help those whom we are expecting to help the industry.
    Mr. Jay: I agree. I shall be glad to have a debate as soon as it can be arranged through the usual channels.

    Barges (Tidal Waters and Estuaries)
    Mr. McNamaraasked the President of the Board of Trade what action he proposes to take on the recommendations of the coroner's jury at Scunthorpe on Thursday, 5th January that his Department should ask Parliament to make it compulsory for barges sailing in tidal waters and estuaries to be subject to periodic surveys and statutory loading lines.
    Mr. J. P. W. Mallalieu: I am having the recommendation of the coroner's jury considered and will inform the House when I am able to reach a decision.
    Mr. McNamara: I thank my hon. Friend for that reply. Is he aware that these regulations need making, but not only these, for we also need regulations governing health and general qualifications of barge skippers and crews? Does he not agree that it is more by luck than by good management that we have not had serious accidents in the shipping lanes of the Humber and other navigable rivers?
    Mr. Mallalieu: There is something in what my hon. Friend says.

    Sea-going Pleasure Boats (Safety Precautions)
    Mr.. Geoffrey Wilsonasked the President of the Board of Trade what administrative or legislative steps he is proposing to take to strengthen safety precautions in relation to sea-going pleasure boats consequent upon the evidence disclosed in the "Darlwyne" Inquiry.
    Mr. J. P. W. Mallalieu: The court of formal investigation into the loss of the
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    "Darlwyne" has yet to announce its findings. Any recommendations in the court's report will be carefully considered. In the meantime I have already drawn the attention of the public, the police, local authorities and others to the requirements of the Merchant Shipping Acts and have sought their co-operation in enforcing them.
    Mr. Wilson: Will not the hon. Member agree that the evidence disclosed at the "Darlwyne" Inquiry was most disturbing and that it is necessary to have much more rigorous measures to enforce safety provisions for pleasure craft going to sea?
    Mr. Mallalieu: I agree with the hon. Member about enforcement. This is the purpose of the circular that I have sent out to the authorities.
    Dr. John Dunwoody: Would my hon. Friend agree that reputable pleasure boat owners will welcome the tightening up of the regulations? Will he look into the question of introducing a safety symbol guaranteeing the safety of a particular boat, especially for holidaymakers?
    Mr. Mallalieu: Yes, I will consider that.

COUNT OF THE HOUSE (QUESTION OF PRIVILEGE)
3.30 p.m.
Sir Harmar Nicholls: Mr. Speaker, following your suggestion that I raise this afternoon a point which I think may infringe the privileges of the House, I now do so. It arises out of the counting out of the House just before midnight last night, when a Count was called in the middle of my speech—and that, in itself, was a great loss to the nation. However, it is the matters that flowed from that that I submit to you.
The best description of what happened is reported in The Times.today. The report of what happened after the count had been called reads as follows:
"Then, to the astonishment of the few M.P.s inside and members of the public, as Labour Members began to stream back to make up the quorum so the debate could continue, a Government Whip…ran down the middle of the Chamber, waving his arms and calling: 'Keep out, Keep out'."
The effect of that was that a very important debate on an Order arising out of the prices and incomes legislation had

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to be abandoned before we had the official Government reply to what were very stringent criticisms and on matters which could have repercussions outside the House if the Government reply is not on the record. What was within the view of Members who were here was that the Whip ran down the Chamber, as is described in the newspaper report, waving his arms and actually touching people's arms and persuading them outside the precincts not to come in and form the quorum.
We all know the procedures of the House. My hon. Friends who were making their way from the Libraries and other parts of the building were met by the crowd of Government supporters moving back, intimating that it was over. It is within the knowledge of every hon. Member that, when the bells ring, sometimes wrongly, people are put off from coming to the Chamber when they are told that the business is off. I suggest that the action of the Whip spoiled a quorum at a time when we ought to have had it.
I want to quote a precedent which I think is analogous to the point I am putting to you, Mr. Speaker. The precedent I want to put to you occurred in the Committee Corridor in 1949. It was suggested that an hon. Member was prevented from going to help form a quorum in a Standing Committee. I will read the complaint which was made by the then hon. Member for Ashford, Mr. E. P. Smith, on 30th November, 1949:
"I rise to ask for your guidance, Mr. Speaker, in regard to an incident which occurred yesterday morning and of which I have given you notice.
Standing Committee E was summoned to consider the Censorship of Plays (Repeal) Bill. We did not have a quorum. Subsequently the hon. Member for Queens University of Belfast…informed me that as he was making his way along the Corridor to the Committee someone had accosted him and endeavoured to dissuade him from attending."—[OFFICIAL REPORT, 30th November, 1949; Vol. 470, c. 1150.]
Sir, your then predecessor in the Chair gave his Ruling on the following Monday, 5th December, as follows:
"I have to inform the House that I have received a report from the Serjeant at Arms on the incident which was raised last Wednesday. After considering the report—this was the case of Mr. Christopher Powell, the
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House will remember—I have come to the conclusion that there is prima facie evidence that Mr. Powell did endeavour to persuade the hon. Member for Queens University of Belfast…not to enter Standing Committee Room E on the morning of Tuesday, 29th November.
Whether or not such an interference constitutes a breach of Privilege is a matter for the House and not for me to decide. I must point out, however, that the hon. Member for Ashford…did not bring the matter to the notice of the House until 24 hours too late to be able to avail himself of the precedents given to matters of Privilege raised at the earliest possible moment."—[OFFICIAL REPORT, 5th December, 1949: Vol. 470, c. 1535.]
I suggest that the incident which occured last night is on an equal standing. The then Mr. Speaker had to say that the November, 1949 incident had not been raised in the House in time. I do not think that in this instance that suggestion can be made. I gave you, Sir, notice this morning and attempted to raise it, but delayed it until this hour at your suggestion.
There is this one extra point. If in 1949 the then Mr. Speaker ruled that there had prima facie.been a breach of Privilege, when the matter affected a Standing Committee, I submit that it is even more so when it affects the Chamber. The first legislation we pass when we assemble in a new Parliament provides that no Member shall be obstructed from doing his duty as a Member of Parliament. I submit that, however inadvertently the Government Whip did it last night, he obstructed Members of Parliament—he deliberately obstructed members of his own party and, as a consequence of the move that flowed from that, he obstructed hon. Members on this side, too.
The net result of that was that an important debate was inconclusive and that we did not have a Government answer to very stringent criticisms, some of which came from the Government side of the House, in particular from the hon. Member for Doncaster (Mr. Harold Walker). I submit, based upon the precedent I have quoted, that last night's incident is a matter for you to give your Ruling upon, Sir.
Mr. Alexander W. Lyon: Further to that point of order, Mr. Speaker. Are you aware that no Member of the House was obstructed from entering the House by any Whip and that, in particular, every member of the Opposition who was in

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the building was able to enter the Chamber but that, nevertheles, there were no more than four of them present?
Mr. Harold Walker: Mr. Speaker, before you give your Ruling—
Hon. Members: Order.
Mr. Speaker: Is the hon. Member seeking to address me on this point of order?
Mr. Harold Walker: Yes, Mr. Speaker. Before you give your, Ruling, I wish to comment on the factual content, because, as the hon. Member for Peterborough (Sir Harmar Nicholls) said, there were hon. Members on this side who were extremely anxious that the Parliamentary Secretary should reply and who share the hon. Gentleman's deep concern at the fact that that could not happen because a Count was called and a quorum was not present.
However, Sir, I must draw your attention to the fact that, when the Count IA as called, there were other hon. Members present on the opposite side of the House who were not obstructed from leaving the Chamber, who in fact left the Chamber and who, had they remained, could well have provided the quorum.
Mr. Winnick: Further to that point of order—
Mr. Speaker: Order. Does the hon. Gentleman wish to address me on the same point of order?
Mr. Winnick: Yes, Sir. First, may we know whether any Member has actually complained to you that he was obstructed from coming into the Chamber? Second, pursuing the point of order raised by the hon. Member for Peterborough (Sir Harmar Nicholls), would you not agree, Sir, that this is purely a matter of sour grapes because Conservative Members could not find numbers enough to sustain the attack which they made on the Government last night?
Mr. Speaker: Order. I do not entertain false points of order at any time. The first question the hon. Gentleman asked has no relevance to the matter at all. The second was a political observation.
The hon. Member for Peterborough (Sir Harmar Nicholls) has raised with me
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a point of order which he wishes me to consider as a matter of Privilege. I shall do what I usually do in such cases, availing myself of the leave of the House to consider it and give a Ruling in 24 hours.

MORNING SITTINGS
Mr. Lipton: May I now raise with you, Mr. Speaker, another point of order which I tried to raise this morning? The whole object of morning sittings, I submit, was to relieve the pressure on the lime of the House in its afternoon and evening sittings. If I understood your Ruling aright, that no point of order raised during a morning sitting can be considered until the end of Questions in the afternoon, I would ask you very respectfully to consider that ex cathedra pronouncement—which surprised me and, perhaps, other hon. Members—for this reason.
You will realise, Sir, as well as anyone that 3.30 in the afternoon is the most congested moment in the Parliamentary day. You can have Ministerial statements, the introduction of new Members, Motions under Standing Order No. 9, Motions for leave of absence, personal statements, questions of Privilege—all these raised at half-past three. I suggest to you, Sir, that it frustrates the object of the morning sitting if there is unnecessary postponement of business such as points of order from the morning sitting until half-past three in the afternoon.
You are empowered, Mr. Speaker, to deal with points of order at any time of the day or night. If a point of order is raised at 4 o'clock in the afternoon or at 8 o'clock in the evening, you are none the less emplowered to deal with it. In the circumstances, Sir, I invite you very respectfully to reconsider your decision not to deal with points of order during morning sittings.
Mr. Speaker: I am grateful to the hon. Gentleman. He has done the House a service in asking Mr. Speaker to clarify the Ruling which he gave this morning.
I was being addressed at that time on a point of order arising out of something which occurred last night. This is the kind of point of order which, involving Privilege, ought to be raised at half-past three in the afternoon. Had I known

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that the point of order which the hon. Member for Brixton (Mr. Lipton) wished to raise this morning had something to do with this morning's business, I should certainly have heard him. I hope that that clears up what was, apparently, an ambiguous Ruling which I gave this morning.
Mr. Lubbock: On another point of order, Mr. Speaker. May I ask your guidance on a question arising from this morning's sitting when Mr. Deputy Speaker was in the Chair? He was asked whether he would accept a Motion for the Closure, and he said—
Mr. Speaker: Order. One cannot raise from Chair to Chair Rulings which Mr. Deputy Speaker has given.
Mr. Lubbock: I quite understand, Sir, but I was not seeking to do that. The question arose as to whether, if you had been in the Chair, you would have been empowered to accept a Motion for the Closure, and the point then arises, with reference to morning sittings, as it appears to many of us who were present, that a Motion for the Closure could not be put because, under our new Standing Orders, there is no provision for a Division to take place before 1 o'clock.
I should be most grateful, Sir, if you would give your Ruling on whether, under the new Standing Orders, it is possible to put a Motion for Closure of debate at all during morning sittings.
Mr. Speaker: The simple answer is that it is possible to put a Motion for the Closure at any time. It is a question of whether the Chair will accept it or not. The implications for a Closure under the new arrangements for our morning sittings are rather different from the implications of the ordinary Closure procedure in that the Division on a Motion for the Closure, if the Chair permits it, will take place, like all other Divisions on matters from the morning sittings, at the end of the day's business.
Mr. Lubbock: With respect, Mr. Speaker, I think that that leaves the House in some doubt. The Motion for the Closure would be put, but no one would know whether or not it was accepted until some unknown hour, possibly in the middle of the night.
Mr. Speaker: Order. The hon. Gentleman must read carefully what I said. It is quite clear. The Closure will or will not be accepted, just as in the ordinary day's business. The implications of it are a little different. That is all.
Dr. Bennett: On a further point of order, Mr. Speaker. May I ask whether Mr. Speaker has been empowered to adjourn the House before 1 o'clock at a morning sitting? If Mr. Speaker, having no right to count the House, finds that there are no Members present other than himself, is he entitled to suspend the sitting?
Mr. Speaker: The Chair has enough to do to rule on what happens, without having to rule into the future on what might happen. The Chair will deal with that when it arises.
Mr. Rankin: Further to the point of order raised by the hon. Member for Orpington (Mr. Lubbock), Mr. Speaker. In view of the happenings at this mornings sitting, may I ask you not to come to a final decision on the operation of the Closure, but will you in the interests of—
Mr. Speaker: Order. The Chair comes to no final decisions on the operation of the Closure. Every Motion for the Closure is dealt with—this has been so in the history of Parliament—when it is demanded, and it is judged on the whole variety of circumstances.
Mr. Rankin: But, Sir, if I may continue, if the Closure operates as you have indicated, there will be no vote on the Closure at the point in time when it is put. The vote will not take place until later in the day. Is that not an unusual circumstance?
Mr. Speaker: It is a new circumstance. It is part of a Sessional Order which the House carried and which I have to administer. We cannot comment on it now.
Several Hon.Members rose—
Mr. Speaker: Order. The House has a lot of business to do. I hope that I shall not be addressed on points of order unless they are very serious.
Mr. Shinwell: Could I move next business, Sir?
Mr. Speaker: I am grateful to the right hon. Gentleman. It is a suggestion which he might put to the Select Committee on Procedure.
Sir J. Langford-Holt: Further to that point of order, Mr. Speaker. I think it right that the House should clearly understand what the procedure is in morning sittings. In the event of the Chair going no further than to accept the Motion for the Closure—nothing else—no Division can then take place. What happens to the business under discussion? Does it stop or does it go on?
Mr. Speaker: We cannot traverse the whole debate we had on the Sessional Order which the House discussed on 14th December last and carried. It involves all kinds of new complications, but we cannot discuss them under the guise of points of order.
Mr. John Hall: To clarify the matter for simple minds such as mine, Mr. Speaker, do I gather that what you are really saying is that you are very unlikely to accept a Motion for the Closure in a morning sitting?
Mr. Speaker: The hon. Gentleman has no right to assume that.
Mr. English: In your reply to the hon. Member for Orpington, Mr. Speaker, whilst addressing your mind to the question of the Closure, you may have unwittingly perpetuated a misapprehension which is in the minds of many hon.
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Members. Would you care to make clear to the House that the Standing Order does not preclude the possibility of all Divisions taking place in the morning, but only of most of them?
Mr. Speaker: It is all Divisions; it is impossible to take a Division in the morning sitting. This discussion is tiresome because we have debated this matter. What the House is expecting me to do now is to explain again and again the Sessional Order which the House has carried. If any matter comes to the Question in the morning sitting and a Division is called for, that Division takes place at the end of the afternoon's session.
Sir J. Rodgers: For the purposes of clarification, Mr. Speaker, could you tell us whether, if the occupant of the Chair should accept a Motion for the Closure, the debate then stops on that particular subject? I think the House is entitled to your view. Does it stop at the moment of acceptance, even though a vote does not take place until the evening?
Mr. Speaker: The simple answer is, "Yes". But that is the kind of question one should not put to the Chair as a point of order. All these matters are dealt with in a Sessional Order which the House has carried by a majority.
The Clerk will now proceed to read the Orders of the Day.

ORDER OF THE DAY

  CONSOLIDATED FUND BILL
  Order for Second Reading read.
  Motion made, and Question proposed, That the Bill be now read a Second time.
  3.52 p.m.
  Sir Edward Boyle: On a point of order, Mr. Speaker—
  Mr. Speaker: Order. I should be grateful if hon. Members would leave the Chamber quietly.
  Sir E. Boyle: I wish to raise a point of order on the Bill, of which I gave you notice this morning, Mr. Speaker. My hon. Friend the Member for Wokingham (Mr. van Straubenzee) hoped to raise under Class VII, Vote 5, the issue of the increase of fees charged to overseas students in higher education, which is of considerable interest on both sides of the House.
  I respectfully submit that the issue falls within Class VII, Vote 5, which deals with universities and colleges, and in particular within subhead II C at the bottom of page 37 of the Civil Estimates, dealing with universities' and colleges' capital expenditure (grant in aid). I submit that grants and loans for capital expenditure, as we see in Appendix II, include extra money for major capital works, both those in progress on 31st March this year and those to be started after 1st April this year.
  It has been common ground in the House ever since the publication of the Robbins Report, whichever party has been in government, that the capital grants for university and higher education expenditure are linked to the numbers of students, as recommended in the Robbins Report. The numbers of students are clearly linked to the conditions of entry for students and the grants made available for them and the fees charged to them. I therefore submit that Appendix II at page 39 of the Civil Estimates dealing with capital grants, the numbers of students entering higher education, and the fees charged to students, are all matters that hang together. Therefore, under Class VII, Vote 5 it should be possible to raise the issue of the fees charged to overseas students in universities and colleges.
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  In this context, I wish to quote what is said at page 773 of Erskine May:
  "…any questions of administrative policy may be raised which are implied in such grants of supply."—
  that is, on the Consolidated Fund Bill. I genuinely believe that the subject I have mentioned should be considered to be within the scope of the Consolidated Fund Bill which we are now about to discuss.
  I hope that even now, Mr. Speaker, you might find it possible to add that subject to the list of subjects we have today. If so, my hon. Friend the Member for Wokingham and I would be in our places for it, even if it were discussed at a late hour.
  Mr. Speaker: The reference in Erskine May is to the March and July Consolidated Fund debates, which I carefully explained cover the whole of Government finance, and therefore any matter of policy may be raised on them.
  The right hon. Member for Birmingham, Handsworth (Sir E. Boyle) has most ingeniously raised a point of order, but I must rule his submission quite outwith what we shall be discussing. He asked whether he would be in order in raising the proposals for an increase in fees to be charged for overseas students at universities on the Supplementary Estimates for universities and colleges under Class VII, Vote 5. I am afraid that I can see nothing in that Estimate which would allow that subject to be raised.
  It would not, for example, be correct to allow debate on the provision to increase the rates of pay for teaching staff to be broadened to cover the treatment of those whom they teach; nor would it be possible to use expenditure on new buildings as a peg to discuss the problem of fees for undergraduates to be housed in them. Those are separate issues which must await another opportunity.
  I am grateful to the right hon. Member for raising the matter so courteously, but I must rule that it does not arise on these Supplementary Estimates. I endeavoured yesterday to give broad guidance to help those whose subjects I had ruled out of order in advance, to prevent their having the pain of preparing their speeches overnight, only to find that I would not allow them to be made today.
  Mr. John P. Mackintosh: Further to that point of

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  order, Mr. Speaker. I thank you for your guidance on the matter. I had hoped to speak on the same subject as the hon. Member for Wokingham (Mr. van Straubenzee). Possibly within the terms of your Ruling, might not the matter be properly raised under Class II, Vote 9 B.20 and B.23, grants in aid to Botswana and Lesotho, or grants in aid of expenses of administration to those two territories, because it is clear that the increase in students' fees will produce a drain on the funds of hose two countries? It will therefore definitely give them less money for their administrative expenses, and thus possibly lead to an increase being required in those grants, which we are supposed to debate this afternoon. Would you consider it appropriate to discuss the effect of the fee increases in discussing the two grants to Botswana and Lesotho?
  Mr. Speaker: That discussion could apply in a debate on Botswana only to the affairs of Botswana and to grants-in-aid of Botswana. The hon. Member could not raise the general question of overseas grants to students on the Estimate for Botswana. On his attempt to link the grant-in-aid to Botswana with Botswana students who happen to come here, I must wait to rule after seeing how ingeniously he manages to do it. In the Estimates, "Botswana" means Botswana, not overseas students in general.

  WEST COUNTRY (ECONOMIC PROBLEMS)
  3.39 p.m.
  Mr. Paul Dean: The proceedings of the last half hour have shown that hon. Members sometimes find it difficult to say what they want to within our rules of order, and to understand the rules under which we operate. I realise that I must tread rather carefully this afternoon to keep my remarks within order.
  I am very grateful to have this opportunity of raising the economic problems of the West Country under the Supplementary Estimate Class IV, Vote 3. I am glad to see, as I am sure the whole House is, the President of the Board of Trade here to listen to the debate, and I am sure also that the House will want to extend a welcome to the new
  522
  Joint Under-Secretary of State for Economic Affairs and wish him well in his job. But I must also commiserate with him in view of the tremendous problems of regional employment which he has inherited.
  The West Country is an area of great beauty but precarious economy. Within the region, which stretches 200 miles from Bristol and Severn-side in the north to Cornwall in the south, there are great variations and differences in the economic problems, and, as is well known, the further south one gets the greater are the local employment problems. Indeed, they are getting more acute month by month. They are going from bad to worse and the outlook is getting bleaker and bleaker. The problem is now so serious that we are bound to ask the reasons for this Supplementary Estimate, which is designed to promote local employment. We are bound also to ask what it is intended to achieve.
  This Vote asks for an additional £3,150,000 for
  "…the promotion of local employment."
  This is on top of the original estimate of about £37 million. I have no doubt that my hon. Friends, particularly those who sit for development districts, will want to ask the Minister detailed questions on this Supplementary Estimate. I shall confine myself to some general questions directly related to it and the money we are asked to vote.
  I ask the President of the Board of Trade whether he can tell us how much of this £3·1 million is to be allocated to the West Country. In particular, can he say, in relation to the Written Answer he gave on 3rd November—when he announced a further programme of advanced factories, with one project in the West Country—whether the Estimate relates specially to the 20,000 sq. ft. that he mentioned in November for the Camborne-Redruth area, or whether it provides for additional factory space in the West Country over and above that provision.
  Secondly, how much additional employment does the right hon. Gentleman expect the additional money allocated to the West Country to produce and at what time will it produce it? Further, do any of these provisions for land and buildings, etc. in the Estimate refer to grants for houses for key workers? There

  523
  appears to be no specific reference to this and I would be grateful if the matter could be cleared up. It is an important point in getting the pump primed in Devon and Cornwall.
  The right hon. Gentleman will appreciate that it is important to us to have answers to these general questions as well as to the specific ones in order that we can judge whether this additional money is really to have an impact on the local employment situation in the West Country. I am doubtful as to whether what I imagine will be a small fraction of this £3·1 million would be sufficient to make any noticable difference to the local employment picture.
  What is the dimension of this problem? The unemployment figures in the West Country are now worse for this time of year than in almost any year since the war. They have grown from 2·4 per cent, for the region as a whole in October last year to 3·1 per cent, last month. But, far worse than the figures for the region as a whole—which, of course, consists partly of the prosperous area in the north of the region—are the actual figures for the development areas in the West Country.
  Mr. Speaker: Order. The hon. Gentleman cannot discuss the economic problems of the West Country as a whole or the unemployment problems of the West Country. He was right in the beginning in what he said, in that he must link up what he has to say with the £750,000 increase for the provision of land and buildings because construction has proceeded more rapidly than expected, the £1½ million for loans to undertakings which have been larger than expected, and the £900,000 increase in the building grants to undertakings. What the hon. Gentleman says must arise within these Estimates.
  Mr. Robert Cooke: On a point of order, Mr. Speaker. I had hoped to raise this point at the beginning, but perhaps I may be permitted to do so now. You have given notice of this subject being raised within the terms of the Votes within these Estimates. Class VI, Vote 14, relates to the National Health Service and regional hospital boards, providing for a substantial increase of £23 million. Subjects
  524
  such as that apply very much to the South-West. Would we be in order should we wish to raise them? Although I would not trespass outside the subjects of any of these Votes, if a vote applies to the West Country are we not entitled to raise that subject in the course of this debate?
  Mr. Speaker: If the hon. Gentleman were to raise anything which was outside the Supplementary Estimates he would be out of order. If he were to raise anything inside these Estimates he would be within the rules of order, whether in the West Country or not.
  Mr. Geoffrey Wilson: Further to that point of order, Mr. Speaker. In the notice of the subjects to be taken under Class IV, you referred to Vote 3, but there is also Vote 17, which deals with the British Railways Board. Would it be in order to deal with that subject?
  Mr. Speaker: Anything is in order which arises on the Supplementary Estismates. The hon. Member for Somerset, North (Mr. Dean) sought to raise general questions of the West Country. I had to find in the Estimates, and he had to justify to me, references to certain items. That does not prevent another hon. Member raising a matter on another item, always providing that it is within the Supplementary Estimates.
  Mr. Dean: Thank you for your Ruling, Mr. Speaker. What I am seeking to do is to find out how much of this £3·1 million for local employment is to be devoted to development in the West Country. I was hoping that you would allow me to make a case for a substantial part of this money being allocated to the West Country in view of the rise in unemployment in its development areas compared with the figures in other parts of the country. I can do this extremely briefly if you will allow me.
  Mr. Speaker: The hon. Gentleman can proceed as long as Mr. Speaker does not intervene.
  Mr. Dean: Thank you. The unemployment position in the development areas of the West Country makes a very strong case for a substantial allocation from this £3·1 million to them. The unemployment figure in the West Country development areas is 6 per cent. whereas the

  525
  figure in the Merseyside development area is 3·1 per cent., in the Northern development area 3·8 per cent., in the Scottish development areas, 4·1 per cent., and in the Welsh development areas 4·6 per cent. In other words, the problem of unemployment in the West Country development areas is considerably greater than in the development areas of other parts of the country. If one looks at the rise in the level of unemployment since June and studies the latest available figures, one finds exactly the same picture—that the percentage increase in the development areas in the South West is 160 per cent. That is substantially greater than that in the development areas in other parts of the country. Therefore, I hope that the right hon. Gentleman will feel that these figures in themselves make an exceedingly strong case for a substantial allocation of this additional money to the development areas in the West Country, and that he will be able to give us assurances on that.
  These figures make a mockery of the promotion of local employment in the West Country, and in other regions, which the Government are always professing. This is not promoting local employment —it is promoting local unemployment. No wonder that people in the West Country have lost confidence in the ability of the Government to promote local employment in the area. No wonder that the Government's own nominee, the Chairman of Our Economic Development Council, very nearly resigned for this and other issues—because of lack of confidence in the economic policy.
  There is another reason why I ask for detailed explanations of this Estimate. It relates to factors which are pulling in the opposite direction. What good can a fraction of £3 million do to local unemployment in the West Country, when we are paying out £16 million net in Selective Employment Tax?
  Mr. Speaker: Order. Now the hon. Gentleman is tempting himself. He must come back to the Estimates.
  Mr. Dean: The point I was seeking to make was for a substantial allocation, in order to offset what is being taken out in Selective Employment Tax. But in view of your Ruling, Mr. Speaker, may I pass on to say that we are being given a tiny blood transfusion in this supplementary Estimate, but it has to be
  526
  set against the very much bigger blood-letting through the Selective Employment Tax which we are paying.
  I pass now to the final point which I wish to raise. Does this Supplementary Estimate provide for improved communications? I have looked carefully through this, but it is not clear whether it does.
  Mr. Speaker: Order. The hon. Gentleman must real his Supplementary Estimate. There is no word here about improved communications. He knows very well by now, because he has read this as closely as I have, that there is no mention of communications in this Supplementary Estimate.
  Mr. Edward du Cann: On a point of order, Mr. Speaker. We realise that we are all in difficulty in this matter. I am sure that I speak not only for myself but also for my hon. Friend, and, indeed, for hon. Members on both sides of the House. One must understand, and we do understand, that the area of discussion here is bound to be circumscribed, and we are very sympathetic to the difficulty with which you, Sir, are faced. However, having said that, we are discussing the provision of money designed to alleviate unemployment in particular districts. Is it not, therefore, in order to discuss, if shortly, the economic situation in general in so far as it relates to this particular action on the part of the Government? Is it not in order, for example, to ask the Government, if I may give you an illustration, "How can it be right to spend money in this way, or are we doing the right thing in voting this money if these factories are to be under-used or unused?
  My hon. Friend the Member for Somerset, North (Mr. Dean), as I understand it, is arguing that other Government policies—which presumably the right hon. Gentleman decides in liaison with his colleagues— are accentuating the position. For that reason there is very great difficulty, presumably, in getting these factories used. In other words, we are talking around the question as to whether this expenditure is justified.
  If these factories are to alleviate unemployment, is it not then right to discuss, even if shortly and incidentally, factors which are leading to unemployment in this area.
  Mr. Speaker: I am quite sympathetic to the right hon. Gentleman. But this is not a new point. This procedure has been happening for many years. When we discuss Supplementary Estimates and the Consolidated Fund Bill on the Supplementary Estimates, we cannot discuss the policy behind the whole Estimates. We are discussing the Supplementary Estimates. We are not debating at the present moment the Board of Trade promotion of local employment in general. We are discussing three specific increases, which, as I have quoted already, are given for three specific reasons. The first is—and I quote— "provision of land and buildings because construction is proceeding more rapidly than expected". The second is: "An increase of £1,500,000 in loans to undertakings, because new loans are on a larger scale than expected". The third is" Building grants to undertakings— grants toward the difference between the market value and cost of buildings". What the hon. Member and the right hon. Gentleman must do is to pin their arguments on these. It is a limited debate. It always has been.
  Mr. Dean: In view of that Ruling, Mr. Speaker, I will, of course, try to keep within the bounds which you have laid down. May I now ask the President why some of the advance factories which have been built are not yet occupied? Is he satisfied that the additional money which will be made available for the provision of land and buildings for these two undertakings, for building grants to undertakers—and I hope he will tell us how much will be available for the West Country—will produce results, that people will be prepared to take up this money, and that we shall not find ourselves in the position of spending public money to assist in dealing with this problem when some vital aspects of it are missing?
  My right hon. Friend the Member for Taunton (Mr. du Cann)—whom we are all delighted to see on the Opposition Front Bench—was instrumental in setting in hand in 1963 an inquiry into the economic problems of the West Country, which resulted, in due course, in the report which was produced in 1965. I hope the President of the Board of Trade has read the report, because it produced some extremely valuable information
  528
  about local employment problems. It also dealt with the question of underemployment and of activity rates, which is very relevant to the effective use of this money which we are voting. On this point the Report states:
  "The low Activity Rates of the Region are the most striking evidence of surplus manpower. They indicate that…17 per cent, of the working population…could be working if the region had the same Activity Rate as the country. This figure, qualified by 'concealed' employment in agriculture and the Holiday industry and by early retirement, constitutes a measure of unutilised resources which ought to be of major value to the country as a whole."
  That is what we are asking for in this debate. We are not asking for permanent crutches for the West Country. We are asking for a fair chance to make our full contribution to the prosperity of the country as a whole.
  4.19 p.m.
  Dr. David Owen: I am very glad that we have the opportunity to discuss these Estimates, because they show an increase, and this is something for which we on this side of the House are extremely grateful. It shows that the Government are conscious of the problems of the development areas and of those parts of the regions which have suffered considerably for many years.
  The Government have taken a courageous stand in tackling the very severe problems in those regions of the country where unemployment tends to be very high, particularly at periods of deflation. Therefore, I welcome the Supplementary Estimates and the expenditure which they will allow, and I welcome the direction in which they are being aimed, that of improving local employment prospects and facilities in those areas which have been hardest hit. I hope that hon. Members opposite who wish to discuss this subject will not do so in any spirit of quibbling. We should be grateful that the Government are approaching the problem with the courage and determination which they have already shown and which is to be continued despite a period when credit facilities and money are very tight.
  I want to ask my right hon. Friend the President of the Board of Trade to consider a little more closely where these Supplementary Estimates are to be spent.
  Mr. R. J. Maxwell-Hyslop: Before the hon. Member for Plymouth, Sutton (Dr. David Owen) leaves his invitation to gratitude, will he say whether he thinks that a patient who is poisoned by a doctor should be grateful if the doctor then thinks of applying an antidote?
  Dr. Owen: This patient, the regions, has been hard hit on numerous occasions before. For some time the Government have been asked to pursue policies which are aimed at the long-term, and I believe that that is what they are doing. We have had enough of the stop and go of the economy in general, particularly when that stop and go has hit the regions. What we are asking the Government to do and what these policies are largely directed towards is sheltering the regions as far as possible.
  Mr. Deputy Speaker (Sir Eric Fletcher): I am sorry to interrupt the hon. Gentleman, but we cannot on a Supplementary Estimate discuss the stop-go policy. All we can discuss is this proposal to vote a Supplementary Estimate for specific purposes.
  Dr. Owen: I must apologise, You will realise, Mr. Deputy Speaker, that I was rather taken off the course of what I was saying by the hon. Member's rather irrelevant interruption.
  I return to the subject of how these Estimates are to be spent. Are they to be spent as in the past, or is there to be a specfic and special emphasis on how they are spent? I gather that to discuss that will be in order. I understand that a large part of the Supplementary Estimate will be going to the West Country, and we are extremely grateful for that. However, will the President of the Board of Trade look at the overall policy which has lain behind the spending of this money in the past? Will he specifically consider the problems of growth areas? We accept that this money should be spent in the development areas and in regions which have suffered a previous imbalance, but we urge on my right hon. Friend that he should retain the concept of growth centres. In particular, we draw his attention to the fact that in the past this kind of pending by the Board of Trade has tended to be concentrated on growth
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  centres, and the predominant growth centre in the far south-west is Plymouth.
  I am extremely perturbed by the exclusion of Plymouth from the development areas, because, whereas in the past this sort of money tended to be spent in Plymouth and similar growth centres, it is now to be largely withdrawn from them and spent on a larger development area. I welcome the increase in the size of the area, which involves most of Cornwall and parts of North Devon, but I ask my right hon. Friend to consider whether in the long-term it is dangerous to exclude Plymouth, as that inevitably results in many factories—and we are to spend money on land and buildings and loans for undertakings and building grants—being scattered unevenly over the areas so that it is difficult to attract new population. Continuing depopulation, with a shift of skilled workers to the Midlands and elsewhere, is one of the problems of the West Country. In the scattered areas of the far south-west some of the development area policy is working against what the Government wish to achieve.
  In a growth centre, as well as attracting industry and new factories, one needs growth of population and encouraging skilled workers to move into the area. While I welcome all that my right hon. Friend has done for the development areas, I ask him to consider Plymouth. The population of Plymouth has remained remarkably stagnant for many years. The city council has warmly welcomed attracting overspill population to Plymouth which has previously been regarded as a natural growth centre.
  What we need in the West Country is to be able to attract population and, with it, industry. We need new industry with skilled workers, coming from the Midlands or London, able to keep the workers we already have in the West Country in full employment and to train our workers and, most important in Plymouth, to diversify Plymouth's economy. This city is very dependent on one major industry, the dockyard. The President of the Board of Trade has a special responsibility to ensure that Plymouth's economy—
  Mr. Deputy Speaker: I am sorry to interrupt the hon. Gentleman again, but on this Supplementary Estimate we cannot discuss the general policy on which

  531
  the main Estimate was approved. Therefore, if Plymouth is not covered in the Supplementary Estimate, the hon. Gentleman is not entitled now to argue that money should be diverted to Plymouth.
  Mr. W. A. Wilkins: On a point of order. Obviously it will be difficult to raise any matters on these Supplementary Estimates as they stand. I wonder whether you can give us some guidance, Mr. Deputy Speaker. If the President of the Board of Trade told us the location of the land and buildings the purchase of which has accelerated expenditure to such an extent that we require an increase of £750,000 and to which undertakings the proposed loans are to be made or are being made, we should be able to keep in order by debating matters which arise under the Supplementary Estimate.
  Mr. Deputy Speaker: I cannot require the President of the Board of Trade to speak, except when he wishes to rise. I repeat the Ruling which Mr. Speaker gave yesterday when he said in connection with the Supplementary Estimates that where they represented, as in this case, only a limited increase in the original grant, then the debate must be limited to the reasons for the increase and not extended to questions of policy for which the original grant was sought. Hon. Members are therefore entitled to ask the President of the Board of Trade to indicate the reasons for which the additional £3 million is required. If they are not satisfied with those reasons, they can put questions, but they cannot debate the general policy on which the original Estimate was voted.
  The President of the Board of Trade (Mr. Douglas Jay)rose—
  Mr. John Nott (St. Ives): Further to that point of order. If at this stage the President of the Board of Trade gives us a specific list of where the increases will fall, the debate on this Supplementary Estimate will degenerate into a discussion of how much factory space should be allowed in Nether Wallop, or wherever it is where the increase has occurred. That will limit the scope of discussion and confine it far more narrowly than was the case with Mr. Speaker's Ruling yesterday.
  Mr. Deputy-Speaker: I cannot accept that. Mr. Speaker made it quite clear yesterday that debate on Supplementary Estimates was necessarily narrow. The debates are confined to the specific purposes for which the Supplementary Estimates are required.
  Mr. Maxwell-Hyslop: Further to that point of order. Am I right in thinking that it is perfectly in order to argue that a given entry in a Supplementary Estimate ought to be larger than it is so as to make provision for whatever it is which one is advocating to be covered under that heading?
  Mr. Deputy Speaker: No. That would not be in order.
  Mr. Robert Cooke: I would like clarification on another matter, relating to that raised by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop). You said that Mr. Speaker's Ruling stated that the debate would naturally be limited if there was a limited increase in the estimate. I am looking at Class VI Vote 14, and I see an increase in the nature of £23 million to the moneys to be advanced to the regional hospital boards and boards of governors. I take it that in the case of such a very large sum of money a fairly wide debate would be allowable on the subject?
  Mr. Deputy Speaker: We had better leave Class VI until we come to it. We are now on Class IV.
  Dr. Owen: I understand your Ruling Sir, and will do my best to keep within its limits. As I understand it, we must not make special references to future policy, and although I have expressed the wish that the President of the Board of Trade will look at Plymouth as a growth centre and include it in some form of development area, it is not in order to continue along those lines.
  I conclude by saying that I consider that the Government, by presenting Supplementary Estimates at this stage, have kept their election pledges to the West Country, that they were prepared to look after development areas, and those areas of the country which, for many years now, have been allowed to develop with this degree of economic imbalance to which I referred. We welcome the fact that the President has come to the House to ask for increased Estimates, and we

  533
  hope that this will insure a long-term steady growth in the potential of the West Country and particularly the far South West.
  Mr. Maxwell-Hyslop: It will not.
  4.33 p.m.
  Mr. Wingfield Digby: There are few enough opportunities when we can talk about our special problems in the South-West. The Scots have their Grand Committee and so have the Welsh, and it is becoming increasingly evident that the South-West has special problems of its own, and is not just a geographical expression. It is, therefore, very disappointing to know that our debate this afternoon is to be so circumscribed. I shall make every effort to keep in order, but I do not think that it will be very easy. In the circumstances it is a pity that we could not have been confronted with rather fuller notes than we have received in the Supplementary Estimates.
  Perhaps, when the President of the Board of Trade replies, he can tell us why these Supplementary Estimates are couched in such very vague language? The first two are simply approximately 50 per cent. increases on what he proposed in his original Estimates. Why is this so vague? Why has the right hon. Gentleman not a better idea of exactly what he has in mind? All of us interested in the South-West want to know how much of this increase relates to our own problems. We take a special interest in them and would like to know how much of the increase has arisen in our region.
  Is it entirely related to unemployment? There was a time when the Board of Trade took the view that development districts were only made development districts on the grounds of unemployment. We are now told that this goes further. My case is that there is a serious imbalance in the economy of the South-West, and in considering the distribution of a Supplementary Estimate such as this, the President should take this into account. There are many areas in the South-West where there is not sufficient diversity in the economy. There is too much dependence upon agriculture. There are other areas, already special areas, where there is serious unemployment.
  In deciding to come to Parliament and ask for this extra money, how much
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  has the President taken into account the special problems of the South-West? Another point which I hope he has had in mind before he laid the Supplementary Estimate before Parliament is the amount of earnings a man can take home in the South-West. We know from figures that we have been given that these fall sadly below those in other parts of the country. How much of these Supplementary Estimates really relate to the plans for the future of the South-West? Does the right hon. Gentleman recognise that this is now a real problem? Does he recognise that the economy has to be better balanced? There is this rather round figure of an extra 50 per cent., simply unrelated to our problems and related only to some very vague mathematical calculation which has been made in his Department.
  The hub of the Supplementary Estimate is the promotion of local employment. When we consider the promotion of local employment in the South West we are not only thinking of unemployed, we are thinking of providing better opportunities, particularly for school-leavers in our part of the world who suffer a serious disadvantage as compared with other school-leavers.
  I hope that the promotion of local employment means the promotion of good jobs and not just the promotion of any jobs and I hope that we shall have an explanation along these lines from the President of the Board of Trade, relating this to our problems in the South West.
  4.35 p.m.
  Mrs. Gwyneth Dunwoody: I welcome this Supplementary Estimate because one of the essential problems in the South-West is the question of investment and the amount of money going into the region. This is one of our most vital problems. It is not a new problem. It is of great interest to me to discover that some hon. Members opposite have just realised that we are desperately in need of more money in the region, since it is a problem which has existed for a considerable time. While hon. Members opposite were in government they chose not to do anything about the problem.
  Mr. du Cann rose
  Mrs. Dunwoody: The then Government chose not to do anything about the problem.
  Mr. du Cann: The hon. Lady really must give way.
  Mr. Deputy Speaker: Order. Mrs. Dunwoody.
  Mrs. Dunwoody: May I also say that it gives me great pleasure to see my hon. Friend the Joint Under-Secretary of State for Economic Affairs on the Front Bench, answering this debate. I am particularly pleased that we now have in the debate on economic affairs someone who is so well versed in the problems of the West Country, who has fought a constituency there and who is deeply concerned about immediate problems.
  One of the reasons why hon. Members opposite are able this afternoon to criticise the choice of the Chairman of our Regional Council is that the Government have been prepared to set on foot a regional policy. We have a particular need of new factories and new job opportunities. We need more investment in all our cities, and this is what we welcome in the Supplementary Estimates. I realise that I may not go beyond the bounds of discussing where the sort of development will go, but I hope that when these new factories are built the cities in the region will be considered. I do not mean only the developing areas, although we have very great sympathy for the continuing problems of employment there. They are areas which have been consistently ignored by previous Governments and they have high levels of unemployment.
  One of our problems is that our overall figures do not represent the amount of leakage of employable people from the region. We are concerned about our young people who are consistently leaving the South-West and looking for jobs elsewhere. What we desperately need is not just new factories but a complete diversification of the industry brought into the region. If this can be linked with an increase in the number of employable people in the population, as opposed to those who come to retire, then we shall be very pleased.
  We feel that the Supplementary Estimate is a step in the right direction, but what we hope for is that the percentage spent in the West Country will increase, not just for this year, but in the years to come. We shall make it our business to see, as the right hon. Gentleman realises, that the cities and towns of the
  536
  South West are given an increasing amount of assistance. This is a step in the right direction.
  4.40 p.m.
  Dame Joan Vickers: I am pleased to have the opportunity of following the hon. Lady the Member for Exeter (Mrs. Gwyneth Dun-woody). I should like to say to her that a great deal of work has been done in the South-West both by the Joint Committee for the Economy of the South West and the various chambers of commerce. In 1959, unemployment in my area fell from 4·9 per cent. to below the national average. Now it has gone up again to 3·7 per cent. A great deal was done when the Conservative Party was in office, and I should like to make this point particularly in the presence of my right hon. Friend the Member for Taunton (Mr. du Cann) who was at the Board of Trade and kept an eye firmly on the West Country. Excellent reports were made to the Chancellor of the Exchequer who, I am glad to say, acted on them when he was Chancellor and when he was at the Board of Trade.
  It was said in one of the Reports of the National Economic Development Council that the solution to the area's problem would contribute to the solution of the national problem of economic growth and congestion in certain regions. I am sure that the President of the Board of Trade is interested in this point. My only reason for not voting against the Estimate is that none of it is coming to Plymouth. I ask the right hon. Gentleman to what percentage unemployment must rise before he can think of promotion on these lines. I gather that he has no particular percentage in mind. Therefore, when he has some money left over, perhaps he will consider including other areas. I am not sure whether his Department is responsible for building the rehabilitation centres—in other words, for industrial training.
  The President of the Board of Trade (Mr. Douglas Jay): No. That is the concern of the Ministry of Labour.
  Dame Joan Vickers: The Ministry of Labour builds its own buildings, does it? [An HON. MEMBER: "The Ministry of Public Building and Works."] But it does not come under this Estimate. The

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  Estimate is very vague when it refers to the "promotion of local employment".
  I should like to follow up a point made by the hon. Member for Plymouth, Sutton (Dr. David Owen) on the question of growth areas. I should like the right hon. Gentleman to consider not taking up too much agricultural land but using land available near cities. I could give him, although I should be out of order—
  Mr. Deputy Speaker: I entirely agree with the hon. Lady: she probably would be out of order.
  Dame Joan Vickers: I should like to help the right hon. Gentleman to save some money, because I notice that in the Estimate there is provision for office buildings.
  Mr. Robert Cooke: Surely some of these will be productive buildings and not jus: a lot of offices?
  Dame Joan Vickers: If the right hon. Gentleman is looking for offices, he could consider areas other than development areas. For example, I could easily find for him 50,000 sq. ft. in one office alone which could be occupied at once, and this would probably save him a considerable sum on his Estimate. I hope that this point will be helpful to the right hon. Gentleman.
  I should like to mention the question of the Plymouth railway station. This arises under the Vote concerning the extra money required for the Railways Board.
  Mr. Deputy Speaker: I do not think that would be very convenient. That does not arise on this Vote because it is a matter for the Minister of Transport.
  Dame Joan Vickers: Would it be out of order to mention it?
  Mr. Geoffrey Wilson: On a point of order. This matter arises under the same Estimate, Class IV, Vote 17 where it is proposed to increase the British Railways Board's expenditure by £15 million. Earlier I raised with Mr. Speaker the question of whether one could mention Class IV, Vote 17 in connection with Class IV, Vote 3, which both concern
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  West Country matters and which both relate to increases affecting that area.
  Mr. Deputy Speaker: I did not say that it would be out of order. I said that it was not very convenient. It is perfectly in order for an hon. Member to raise those points, particularly because no hon. Member can speak more than once during this Second Reading debate. This debate has been so arranged that the President of the Board of Trade is to answer this section of it. If the hon. Lady and the hon. Member choose to raise transport matters, they may find that a representative of the Ministry of Transport is not present to deal with them. Subject to that, I cannot exclude references to the Railways Board.
  Mr. Michael Heseltine: Further to that point of order. The Ministry of Transport has been informed that this matter might be raised at this time.
  Mr. Deputy Speaker: I thank the hon. Gentleman.
  Dame Joan Vickers: I note that the grant to the British Railways Board is to be increased. This seems to be very extraordinary since the Ministry is closing so much of the transport system in the West Country. I wish to raise particularly the question of what will happen to the enormous station which was built at Plymouth at a cost of millions of pounds and which has been hardly used. A manager was appointed only a year ago with great éclat. It was reported in the newspapers that Plymouth would be the centre for Devon and Cornwall. Now the manager has been taken away and we are to have only an assistant manager whose duties will be split between Plymouth and Bristol.
  We are extremely worried that the West Country is to have more railway cuts, which create more unemployment. This has already involved the moving of a great number of key workers from the Plymouth area to other parts of England—some to Bristol and some to Newton Abbot. Although the President of the Board of Trade may not be able to answer this point today, I hope that it will be noted and that we shall have an explanation of the recent cuts in the West

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  Country. In particular, we should like to know what will be the Railway Board's centre for Devon and Cornwall.
  We depend on the railways because we have no air transport system. Further-more, this is a tourist area. If we are to have not only cuts in the railway services but also the demotion of the headquarters, this will lead to endless difficulties and troubles in the area where we need an excellent manager on the spot to deal with day-to-day problems.
  I am grateful for the opportunity of saying a few words in the debate. I hope that the President of the Board of Trade will be kind enough to keep an eye on what is happening in the West Country, particularly in the City of Plymouth. If matters get any worse, I trust that he will consider letting us have industrial development certificates more easily, which would help to solve the unemployment problem.
  4.49 p.m.
  Mr. Geoffrey Wilson: I should like to endorse what my hon. Friends the Members for Somerset, North (Mr. Dean) and Dorset, West (Mr. Wingfield Digby) have said about unemployment in the South-West. We are certainly suffering from a great deal of unemployment. The position is worse than it has been for a number of years. A short time ago we had the highest rate of unemployment, not since the last Tory Government, but since the war. Anything which can be done to alleviate the problem will be much appreciated. I hope that the measures mentioned in the Supplementary Estimate will do something in that direction.
  We are not allowed to discuss policy in this debate, otherwise one might make some suggestions about alterations in policy which would at least not cause unemployment which has been the result of certain recent policies.
  As I have intimated Mr. Deputy Speaker, I wish to refer to an item which appears in the same Class but not under the came heading—that is, Class IV, Vote 17, Grant to British Railways Board of an extra £15 million. I would like to know what that £15 million is and whether any possible benefit will come to us in the West Country, because our railway services have not been improving
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  but have been decreasing. A number of branch lines have been cut off and although the main line services have to some extent been speeded up, a number of stations have been closed and our services are less. If we are to pay more money for less, we would like to know what it is all about and whether we will get the benefit of any of it.
  I would particularly like to know whether a provision in the Transport Act, 1962, has been operated. At that time, when the Beeching proposals had been made for the closure of a number of lines, we were given an undertaking by my right hon. Friend the then Minister of Transport that a branch line would not be closed until there was an alternative service by road and that there would be adequate roads to deal with the transport. A provision was included in the Act that the Railways Board could come to an arrangement with the bus company and provide funds for the bus company to run a service if the bus company found it economic to do so. What is more, the railway service was empowered to run its own bus service. Those rights, which have existed for many years, were specifically preserved in that Act but, as far as I know, nothing has been done about either of these provisions.
  I would like to know whether any part of the extra £15 million is to be used for services of that sort. As far as I know, it is not. Our communications in the West Country are not what people would like. We want an improvement in communications, not only in roads, but in the railway services also and in the connections therewith. I hope that part of this £15 million will be devoted to this end.
  A number of points have been raised on the general question of unemployment and there are others which could be raised but which might be out of order. The President of the Board of Trade will, I am sure, bear in mind the exceptional circumstances of the West Country. He will know that we are a peninsula sticking out into the sea. We have communications in only one direction, and everything that we buy and sell has to go in one direction. We therefore have rather special problems which, I hope the right hon. Gentleman will bear in mind.
  4.53 p m.
  Mr. Michael Heseltine: There are many hon. Members on this side who will sympathise with hon. Members opposite in explaining how much they welcome the Supplementary Estimates which we were discussing earlier this afternoon. We will, I think, be forgiven if we suggest that it is too little and too late. It certainly will not help the large and increasing numbers of unemployed in the South-West now to be told that there is to be increased help in the outlying and economically less viable areas when the central focal points are ignored and unemployment is rising.
  Following my hon. Friend the Member for Truro (Mr. Geoffrey Wilson), I wish to refer specifically to the increase of £15 million to the Transport Board to finance the increased deficit on British Railways. We are entitled to ask precisely where this money will go and precisely which lines will receive how much of the £15 million. I have taken the opportunity of informing the Ministry of Transport that I would raise this matter this afternoon because I have in my constituency a case which is of the greatest concern to my constituents and I believe that help could come from the Minister.
  We are faced with the closure of an uneconomic line running from Okehampton to Bere Alston. We have been exerting every pressure we could to find out precisely how much money is involved in the loss that British Railways have to face every year on this line. It may be that when we are satisfied about the money that is being lost, there will be nothing that the local people will feel able to do to help to keep the line going. The point has, however, been put to the local authority, without any commitment on its part, that it might wish to have the opportunity of subsidising the line instead of letting it close. The local authority and myself have been trying to extract from either the Ministry of Transport or British Railways the figures involved in keeping the line open.
  I do not need to draw the attention of the House to the problems that exist in the South-West when a line of this sort closes. The economic arguments for a town such as Tavistock of its only rail communication being cut off are obvious
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  to everybody. The social arguments and the hardship which is caused when a line closes without adequate replacement by bus services being provided are bound to be obvious to hon. Members on all sides.
  What seems to me to be unforgivable is that we are not given the opportunity to carry through the thinking which is implicit in the Government White Paper on Transport and to try to help to save from our local resources the money which must go to make up this extra £15 million.
  I would like briefly to explain to the House the efforts that we have made to do this. We have asked British Railways to provide us with the figure that they would require to keep open this line, not in total, but from Tavistock to Bere Alston. British Railways have explained that they are not prepared to provide this information unless the local authority gives an assurance in advance that it has the power to use the rates for this sort of subsidy. The local authority, quite rightly, says that it cannot get involved in airy discussions of principle until it knows the sums of money involved.
  We are, therefore, left with the local authority passing the ball back to British Railways and the Ministry of Transport sitting tight in the middle saying, "We hope to change the situation by providing legislation which will enable local authorities to pay subsidies of this kind, but we are not prepared to do it yet".
  The difficulty with which I am faced is that by the time the Ministry of Transport has introduced legislation into Parliament, there will not be a railway line left to subsidise, because this line is already under sentence of death and is likely to close, if not in October, in November or December. By the time that the Ministry of Transport gets round to providing us with figures, let alone legislation, it will be far too late for any local authority to make a decision about whether it feels able to contribute towards keeping the line open.
  It is a remarkable state of affairs that as in so many other cases, the Ministry of Transport should be putting out a dreary set of platitudes about its intentions but that when it comes to hard facts about what it intends to do to help

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  the people in the South-West, those platitudes are exposed for what they are—mere words with no substance—to the people whom I am elected to represent.
  In reverting to the important item in the Supplementary Estimate to provide £3,150,000 towards the Board of Trade's promotion of local employment, I appreciate that in this debate one is not entitled to raise the principle under which this money is spent. I am, however, appalled when I hear hon. Members opposite welcome this assistance with smug complacency as though it will do something to help the economic and unemployment situation in the South-West.
  The fact is that it will not do anything to help, because despite all the words that we hear from the Government about concentrating the nation's financial resources upon growth points—the National Plan went on about this at great length—we are witnessing rising unemployment in these growth points and the Government, with their policy of too little and too late, are trying to mop up the excess pockets of unemployment in the outlying regions. Instead of trying to mop up those outside areas of unemployment, the Government would be far better employed in giving stimulus to the points where we can expect growth to continue with its own momentum when encouragement is given.
  We on this side, for example, consider that the West Country would be far better served if we were given an opportunity to spend this sort of money, not in the way which is now suggested, but on a decent road to the West Country. That is the way—
  Mr. Deputy Speaker: The hon. Gentleman is now getting on to questions of policy which are outside this Supplementary Estimate.
  Mr. Heseltine: I apologise, Mr. Deputy Speaker. I was seeking merely to say that we in the West Country could have looked forward to a much better future if the delays in the road programme had not taken place. However, I appreciate now that that is out of order, and I apologise.
  May I conclude by saying that we in the West Country are greatly disturbed that this sum of money is to be spent in a last-minute effort to try and cure
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  unemployment, which has developed to a very serious level in the outlying areas—
  Mr. Deputy Speaker: Order. This sort of subject is out of order. Mr. Peter Mills.
  5.0 p.m.
  Mr. Peter Mills: There is no doubt that those of us who live in the South West and in the remoter areas know the real problems which exist as a result of rising unemployment. Frankly, I was amazed at the lack of knowledge of the area displayed by the hon. Member for Plymouth, Sutton (Dr. David Owen) and the hon. Member for Exeter (Mrs. Gwyneth Dunwoody). I am amazed to think that they could come to this House and say that nothing had been done in the past. When one thinks that it was a Tory Government which set up the development areas, particularly in North Devon, that it was a Tory Government which gave aid to resurrect the shipyard and other industries which had fallen by the wayside and that it was a Tory Government which brought the level of unemployment down—and now we are seeing it rising faster than ever—literally, it amazes one.
  It is not true and it is dishonest to say that nothing was done in the past. Frankly, I do not think that those two hon. Members would have made such statements—
  Mrs. Gwyneth Dunwoody: On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Member for Torrington (Mr. Peter Mills) to accuse me and the hon. Member for Plymouth, Sutton (Dr. David Owen) of being dishonest?
  Mr. Deputy Speaker: I must say that I did not understand it to be an accusation of dishonesty. I understood the hon. Member for Torrington (Mr. Peter Mills) to be disagreeing with something which the hon. Lady had said. In any event, I think that this discussion is out of order and that it would be much better to confine remarks to the Supplementary Estimates.
  Mr. Mills: Thank you, Mr. Deputy Speaker. I am sorry that I was out of order, but I felt that it was right to correct something which was wrong. Surely that is what any hon. Member is allowed to do.

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  There is no question about it. We need further help in these development areas, and that is what the allocation of this sum of money is all about. We welcome this limited increase, but I would point out to the President of the Board of Trade that it is a good job that we have the increase in this allocation of funds. After all, there has been a continuation of the rise in the cost of advance factories and all the other facilities which one can provide in a development area. Therefore, it is vitally important that we should have had this increase, otherwise there would have been a cut-back in the aid and facilities within the development areas.
  The provision of money for these areas must continue. If one asks oneself whether this allocation is enough, I do not think that it is. It is not enough to deal with the very pressing problems which we have. Many small towns in the development areas are feeling the squeeze as a result of the various problems and difficulties which we are experiencing. Unemployment is rising fast, in spite of what has been done. I suggest to the House that it is very difficult for the people in those areas to understand why, in spite of the money that has been spent and in spite of this further allocation, unemployment should still be rising.
  In my opinion, Supplementary Estimates are not enough. Other factors should be remedied as well. I find it strange when I think of all the money being spent while, on the other hand, there are problems and difficulties over which the Government could help and, in a sense, save the business of spending this money. The effects of the Selective Employment Tax, taxation generally and the lack of incentives all come into it.
  I should like to ask the President of the Board of Trade why this further supplementary amount should be confined to one area for ever. Some of my hon. Friends may disagree with what I say, but I believe that there should be far more flexibility in the development areas. After one area has been helped with money in this way, I believe that it is right to move on to another area which is in dire need. A good example is in my own constituency, in Okehampton and Whitleigh, both of which need help quickly. Why is it that one has to be SO static in these boundaries? Why can-
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  not there be more flexibility in the allocation and spending of this money? The time may come when certain areas have overcome their basic problems. Why not then move on to deal with another area?
  It is obvious that, in certain districts which are not within development areas, it is impossible to attract new industry and help overcome the unemployment problem. In my constituency, I.D.Cs have been granted to Okehampton, which is not in a development area and does not get any of the allocation of this money—
  Mr. Deputy Speaker: I am sorry. We cannot reverse the policy by which certain funds have been allocated to certain development areas. We can only discuss whether extra money should be voted to those areas.
  Mr. Mills: Thank you, Mr. Deputy Speaker. Then perhaps I may conclude this part of my speech by saying that the fact of being in or out of a development area is vitally important to the problem of unemployment. I hope that my next point will be in order. I have torn up my speech once and had to start again, and I may be out of order, but I know that you will quickly draw it to my attention, Mr. Deputy Speaker.
  It concerns the line of the development areas; in other words, where the boundary lies, where the money is spent and not spent. I find it extraordinary to see how the boundaries have been drawn. Why is it that the Ministry of Labour and its officers decide what the area should be, where the money should be spent and where the catchment area should be? That seems to be all wrong. There is no real thought given to where the need lies. It is just a line drawn on a map according to whether the area comes within the sphere of operations of the Ministry of Labour office for the district.
  In my constituency there is the village and parish of Winkleigh. Part of it is in the development area where this money will be spent. The rest is outside it. That is absolute nonsense, and we cannot go on in that way. I ask the President of the Board of Trade to look into this question of boundaries and who decides which is to be a development area and which is not. At present, there are some

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  curious anomalies. Some villages are out and some are in. I can assure hon. Members that, if one is working in the area, it is most confusing.
  Apparently I was not out of order in saying that, and now perhaps I can proceed to my next point, which is the problem of loans for advance factories. I have had a good deal of experience of trying to attract industry into my constituency and into a development area. I believe that there is an awful lot of red tape involved in arranging loans. One Ministry does not know what the other Ministry is doing. One finds the Board of Trade encouraging industrialists to come, and I give full credit to its officers, many of whom have been most helpful. On the other hand, one finds the Ministry of Housing and Local Government being most difficult and making interest rates so high that it is impossible for industrialists to take advantage of these loans. This is a very real problem, and I believe that there should be far more co-operation between the various Ministries concerned with the allocation and spending of this money in the development areas.
  It could be argued that the spending of this money is really not necessary. It could be argued that there are other ways of overcoming these problems, and my hon. Friend the Member for Tavistock (Mr. Michael Heseltine) hit it on the head when he said that if we had better communications we would not need to spend this money. I do not know whether I would be considered very rash if I said that if we had a first-class motorway or road system in the South West that would be true.
  Mr. Deputy Speaker: Order. That is strictly out of order.
  Mr. Mills: Mr. Deputy Speaker, did you say that I was completely out of order?
  Mr. Deputy Speaker: Yes, in talking about motorways.
  Mr. Mills: I can see now that I am out of order, and I shall wind up my speech. I ask the President of the Board of Trade to look into the matters which I have raised, particularly this question of co-operation between the various Ministries so that there need not be any
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  delay and confusion as there has been in the past over many of these projects.
  5.11 p.m.
  Mr. Robert Cooke: This debate is about money, about more money. It surely cannot, by any stretch of the imagination, be out of order to make a remark of that kind, even of a general nature. I shall relate everything that I have to say to money, and more money, and I hope more money for the West Country, but before I get on to each individual Class of Estimate which I want to discuss I would make the point that the spreading around of money without proper thought and understanding does us very little good.
  I would be out of order if I were to discuss policy other than that closely related to these increases which we are being asked to vote, so I shall go no further than to say that we in the South West still feel that we are a neglected area, that the Government have little interest in our future. Looking at these Estimates, we are very doubtful about how much of this money will come to us, and what we need as well as money is thought, understanding, and interest.
  It is strange that one of the noisiest of West Country Members from the Liberal Bench has not been here this afternoon. Indeed, some of our more noisy colleagues from the Liberal Party in the West Country seem to be boycotting this debate. I cannot understand why this is so, but there it is, and no doubt it will be noticed outside.
  I want to deal with a number of Supplementary Estimates which I have before me, beginning with Class IV, Vote 3, the Board of Trade subject, promotion of local employment. I see that we are to get £750,000 in addition to the £10,250,990 already voted, and that this is to go on capital projects, land and buildings. I should like an assurance from the President of the Board of Trade that this money will be spent on productive building, that is on factories of one kind and another to help with employment and production, and that this money is not concerned with the capital expense of setting up Government offices and things of that sort. I am glad to see the President of the Board of Trade shaking his head. I hope that he will give us a little more detail about it.

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  Further down the page I see that the increase in loans to undertakings is only £1,500,000. It is perhaps unfortunate that there should be this considerable disparity, and that the loans should be smaller than the capital sums involved. If the Government, in their economic policies, did not meddle with industry, they would not have to go on with this business of setting up factories and starting industries on their own. If they must interfere, it might be better for them to create the economic climate for industry to flourish, and perhaps do more to provide capital for private enterprise to flourish, rather than build all these factories, some of which turn out to be in the wrong place. There is a limit to the benefits which can be conferred by State interference in economic matters, as I am sure even the right hon. Gentleman would agree.
  Mr. Jay: I do not know what the hon. Gentleman means by saying that loans are small in relation to the capital expenditure.
  Mr. Cooke: I am taking my figure from page 8, Class IV, Vote 3. It occurred to me that the increase over the present provision was not a large one. I hope that the right hon. Gentleman has got my point.
  Mr. Jay: The hon. Gentleman quoted the other figure for the provision of land and buildings. If one compares the increase in the two cases, which is presumably the right comparison, one sees that it is £1½ million for loans to undertakings, and £750,000 for the other item. I do not know why the hon. Gentleman claims that the loans are too small.
  Mr. Cooke: In saying that they were too small, I was not seeking just to make comparison. I was pointing out that there was this substantial sum for both, but that it was better, in the long run, to provide the capital for private enterprise to flourish, to help private enterprise to get the capital which it some-times cannot get in the present economic climate created by the Government rather than to dot about the place buildings which sometimes prove to be less than satisfactory or successful.
  I now turn over the page to where we see that substantial sums are to be provided for export credits, and simply say
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  that I doubt very much whether this money will come to the West Country, in view of the difficulties that we have in exporting because of our poor communications, which are due to the Government's neglect. I shall not mention roads at this point, as I am sure that this would not be in order, but the matter of railways is in order under Class IV, Vote 17, where we see this substantial increase for the Railways Board, to which reference was made by my hon. Friend the Member for Truro (Mr. Geoffrey Wilson), who has special knowledge of this matter, and also by my hon. Friend the Member for Tavistock.
  According to the Estimate, this sum of money is to make good a deficit. To my hon. Friends and myself this is a depressing reason for this Supplementary Estimate of £15 million. It would not appear that this money which we are being asked to vote today will improve services, far from it. This is merely to make up a deficit, and the future for our region in particular seems to be pretty bleak.
  I come now to Class VI, Vote 7, which deals with the general grant to local authorities. Nearly £18 million is to be granted in increases to be voted today. This, too, is depressing, because of the reasons given for it. It appears that the greater part of this money will be swallowed up in paying for increases of one kind or another, in costs, salaries, and so on, and that there will be very little expansion of services. We in the West Country would like to feel that we were going to see expanded local services of one kind or another. Our people have great difficulty in moving about the area, and the local authorities have their part to play in this, because of the curtailment of transport facilities, and so on. Local authorities are doing their best to help, but one sees that the purpose of this increase of nearly £18 million is
  "to take account of additional local authority relevant expenditure arising from changes in the levels of prices, costs and remuneration since the General Grant (Increase) Order,1965…".
  It is also depressing to see that all this great increase will be swallowed up in bolstering the existing services and not in providing anything better for the future. Turning the page we see that nearly £7 million is being given for this purpose in Scotland. Scotland no doubt

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  has its special problems, but it is interesting to reflect that as a substantial sum is going to Scotland the sum for England may not be big enough. The figures for England and Scotland do not seem to produce a very fair apportionment of the money, and I should like to know how much the West Country will get out of it all.
  One of the last estimates that I want to discuss is Class VI, Vote 14, concerning regional hospital boards and boards of governors. We see that we are to get £23 million more. It would be most helpful if we were able to discover just how much more is going to the South West, and to see whether, like so many other Supplementary Estimates, it is merely a case of bolstering up the existing state of affairs and taking account of the savage increases in prices and costs—because all along the line we are being asked to vote more money either for the same services or for inferior services, as in the case of some transport undertakings.
  Class VI, Vote 20, concerns the Ministry of Social Security. There is a substantial item for salaries, amounting to £19,168,000. It would seem that a a good deal of this is unproductive expenditure, brought about by the Government's own actions. There is a glorious sentence at the bottom of page 28, which refers to
  "Selective Employment Tax for staff and staff for Selective Employment repayments."
  There is no punctuation. What that means I am not sure, except that it is bound to be a waste of public money. Perhaps we could have some elucidation. The House is entitled to be told, because the large sum of £19 million is involved. The West Country is as fed up with S.E.T. as any other part of the country.
  I must have been in order in covering all these aspects of our problems in respect of different classes of the Estimates. The Government must have been aware that in dealing with the needs of the West Country they should have had Ministers to answer questions on all these classes and should not have confined themselves to the narrow subject of the Board of Trade. All the other Ministers of the Crown must be concerned with the needs of the West Country. If nothing is going to the West Country under the
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  various classes they have mentioned I shall find it very difficult to support the Government.
  I should be out of order in mentioning certain forbidden words, but it is surely in order to say that for the South-West communications have long been agreed to be the key to the future of the area.
  Mr. Deputy Speaker: The hon. Member has done very well so far. I hope that he will not spoil his speech by going out of order at the end.
  Mr. Cooke: I have no intention of straying further than saying that by general agreement on both sides—it has been mentioned in connection with the British Railways deficit—communications are the key to all our problems. It might be said that in this debate the subject of roads is out of order. I leave the House with this thought: under this Government improved roads for the south-west would appear to be out of the question.
  5.26 p.m.
  Mr. John Nott: The hon. Member for Exeter (Mrs. Gwyneth Dunwoody) and the hon. Member for Plymouth, Sutton (Dr. David Owen) congratulated the Government on their excellent efforts in respect of regional employment, and commented on the increase in the Estimates in respect of the Local Employment Acts, implying that this increase was another example of the gritty, purposive way in which the Government goes about its business. I suggest that the hon. Member for Exeter—the hon. Member for Sutton is not now with us—looks at the Sixth Annual Report by the Board of Trade on the Local Employment Acts, for the year ending 31st March, 1966, in which she will see that the total amount of assistance given under the Local Employment Acts last year was £42,314,000. Even after the proposed increase of £3,150,000 we still only come up to the figure of £40,492,000 for 1966–67. If I read these documents correctly, even after the Supplementary Estimates, the development areas, including those in the South-West, will get less this year than in the year ended 31st March, 1966.
  In spite of this, as the hon. Member for Exeter is quite aware, the level of unemployment, at any rate in the West Country, is far higher than it was during

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  that previous period, and more assistance rather than less is required. The figure of £3,150,000 is utterly inadequate in present circumstances. In Cornwall there are several employment areas where the rate of unemployment is in excess of 11 per cent. of the working population, yet the Supplementary Estimates include an increase of only £3,150,000, bringing the total to less than was granted under the Local Employment Acts in 1966.
  Secondly, in 1962–63—during those 13 wasted years of Tory rule—the Estimates were £41 million. In other words, in 1962–63, under our Administration, they were over £1 million more than is proposed for the coming year. How can the hon. Lady say, four years later, that this is an example of the Labour Government fulfilling their election undertakings to boost employment in the development districts?
  Going more carefully into the increases for each specific category, I note that in 1962–63 the amount granted for the provision of land and buildings was £11 million, against the £10 million proposed for this year. So the £750,000 increase does not even bring that category up to its 1962–63 level.
  In respect of loans to undertakings there is an increase of £1,500,000, bringing the total up to £11·5 million, whereas in 1962–63—during the 13 wasted Tory years when, according to the hon. Lady, we neglected regional development—loans to undertakings amounted to £25 million. How can the hon. Lady claim that the Government are interested in regional development when she looks at these figures? I hope that I have interpreted them correctly. If I have not, the President of the Board of Trade will no doubt correct me.
  These increases, overall, do not even bring assistance under the Local Employment Acts to the level at which they stood when the Conservative Government was in office in 1962–63.
  The Minister of State, Board of Trade, wrote to me in some detail when I asked him about the amount of assistance which we in the West Country were receiving under the Local Employment Acts. He said that the South-West had been receiving about 1·4 per cent. of the total amount granted to development districts in 1966—although we in the South-West have 1·9
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  per cent. of the insured population of the country.
  When we in the West Country complain of the paucity of the increase of £3,150,000, we are conscious of the fact that in 1966 the South-West received 1.4 per cent., amounting to £600,000 in all, of the total amount granted in 1966 of £42 million—whereas we have 1.9 per cent. of the insured population. These figures were given to me by the Minister of State in two letters, dated 11th November and 12th December. There had to be two letters because the Board of Trade had done its first calculations incorrectly.
  What do these figures mean? If one takes 1·4 per cent. as the figure which applied in 1966 to the South-West and one applies that to the total number of extra jobs created under the Local Employment Acts in 1966, one finds that, according to the Board of Trade Report dated 31st March, 1966, there were 92,494 additional jobs created in the employment areas in that year. Applying 1·4 per cent. to that figure, I work it out that the South-West benefited by an additional 1,295 extra jobs in 1966—that is, 1·4 per cent. of the total number of extra jobs created in the development areas as a whole.
  Having said that, I should point out that I have with me an interesting survey from the Chambers of Commerce of the South-West which shows completely conclusively that as a result of S.E.T.—as a result specifically of S.E.T., excluding the credit squeeze and so on—2,655 people lost their jobs. This means, in effect, that not only has the South-West been doing worse but that S.E.T. has created double the number of redundancies than the Local Employment Acts have created new jobs in the South-West in 1966. This is the measure of the problem we are discussing.
  This £3,150,000 increase in the Estimates is a pure flea-bite compared with the harm being done by S.E.T. and other Government measures. I am prepared to have my figures disputed. I have worked them out myself and I am sure that the President of the Board of Trade, who is in his place, would correct me if they are not substantially correct.
  Another figure must be borne in mind. If one takes this £3,150,000 to bring the total estimate up to the figure of

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  £40,492,000, which is what is proposed for this year, and if one applies the 1·4 per cent. again, it would appear that the South-West will receive £570,000 in the current year as against £600,000 last year. These are general figures. Yet the Chancellor of the Exchequer at Question Time yesterday, answering a Question from my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby), said that the S.E.T. payments—the amount going in S.E.T. from the South-West and not being recovered in refunds—amounted to £16 million. This means that we are paying out in the South-West in S.E.T. nearly £16 million more than we are receiving under the Local Employment Acts, which are attempting to encourage employment in the area. These figures are conclusive evidence that the proposed increase is minimal. The whole thing is a complete and utter farce and makes nonsense of the Government's promises at the last General Election to expand regional development. Suffice it to say that we know that unemployment is higher now than it has been for years.
  I have shown that in 1962–63 the overall amounts paid under the Local Employment Acts were more than are now being given—this four years later. The whole question of investment grants, to which I shall come, must be considered in this light. I come now to the category described as "loans to undertakings" and I will give one example of the problems which are faced by industrialists who are foolish enough to get themselves within the clutches of the Board of Trade in an effort to get these loans. I am not referring to the rate of interest. Personally, I am rather against rates of interest being subsidised by the Board of Trade. Once one starts doing that one never knows where to stop. The I.R.C. will be granting cheap loans to this person and the Board of Trade granting cheap loans to that person. In the end one's monetary policy is in a turmoil. I am, therefore, referring to the pure bureaucracy which goes on in the Board of Trade—but not to individuals in the Department who I know do their best in an effort to perform a useful role.
  Having made it clear that I am referring to the machinery through which people must go to obtain these loans and qualify for the increase in the loans which we are discussing—the increase of
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  £1,500,000—I give the example of one company to show what these poor industrialists must go through when applying to the Board of Trade for loans under the provisions we are discussing. I have with me a letter dated 17th February, 1965. It was written to a firm called M.E. Products (Windsor) Ltd. I know that the owners of the firm are happy for the name of their company to be given. The firm was encouraged to go to Cornwall because of the availability of labour there. The letter from the Board of Trade relating to the Local Employment Acts asked the firm to provide a number of facts. It stated:
  "…it will be essential for you to make forecasts of your trading results for the current year and for the ensuing three years i.e. years ending 30th April 1965, 1966, 1967 and 1968. These forecasts should be in reasonable detail and are best expressed in columnar form showing Sales, etc., Direct Materials, Direct Wages, Gross Profit, Factory & General Overhead Expenses (detailed), Interest and Other Financial Charges, and finally Net Profit (subject to taxation)."
  How can any small industrialists seeking loans from the Board of Trade give accurate detailed overhead expenses and details of direct materials, wages, gross profit, factory and general expenses for the year 1968, particularly with the present Government in power? The whole thing is a complete and utter farce and is evidence of the fact that the gentlemen in the Board of Trade who are responsible for this sort of thing have not the slightest idea of how business works or the problems which it faces in this lurching economy.
  Mr. Deputy Speaker: Order. I am inclined to think, listening to the hon. Member's remarks, that he is generalising and that his argument would be appropriate to the whole of Government policy in this connection. I do not think that it would be appropriate to raise such matters on what is a narrow issue and which Mr. Speaker has ruled to be a narrow issue. The hon. Member must, therefore, relate his argument specifically to the increases in question.
  Mr. Nott: I will try to keep in order, Mr. Deputy Speaker, and will refer specifically to the £1,500,000—the increase in loans to undertakings contained in the Supplementary Estimates. In doing so, I point out that even if the President of the Board of Trade and the

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  Government were to treble this figure, the problems of administration—of submitting invoices under the new cash grants system and so on—make this figure pale into insignificance beside the bureaucracy and lack of understanding on the part of the Government about how business works. Having quoted that letter from the Board of Trade to an industrialist, I trust that the President of the Board of Trade will look into this type of situation.
  I seek your guidance, Mr. Deputy Speaker, on the question of whether or not investment grants come within the matter under discussion. I believe that they do. I will, therefore, comment on this issue until you correct me and say that my impression is wrong.
  The investment grants are most interesting because every time we raise a question about employment in the South-West and every time we raise points on these Supplementary Estimates and claim that the increases are inadequate, someone on the Government Front Bench says, "Ah, yes, but we have increased the investment grants to 45 per cent.", as if it were justification for producing the Supplementary Estimates which show that there will be a decline in the amount given daring the current year compared with the year before, and even less than in 1962–63.
  In July last year the President of the Board of Trade gave an Answer to a Question asked by my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) about investment grants. The right hon. Gentleman will remember the Question well. The Question showed that in spite of the 40 per cent. investment grant, on a cash flow basis a company was receiving less now than it would have received under the old development district procedure and the system of Income Tax, Profits Tax and free depreciation of our Administration.
  Mr. Jay: The hon. Member forgets that the investment grant in a development area is available for replacement of plant whereas the old grant was not.
  Mr. Nott: I am fully aware that there are certain matters concerning the investment grant which differ slightly from the old grant under our Administration and that there have been one or two minor improvements made on the lines that
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  they can be given not merely for increasing the number of people employed. These are improvements, but on a cash flow basis the 40 per cent. grant benefits industries less than the old system of free depreciation. The President of the Board of Trade shakes his head; I will go and find the actual reference from the Written Answer.
  Mr. Jay: That was on assumptions in the Question asked by the hon. Member's hon. Friend which were misleading.
  Mr. Nott: They may have appeared misleading to the President of the Board of Trade, but to everyone to whom I showed them, accountants and bankers, they were quite clear. The calculation was taken on a £100 investment and I cannot see that it was misleading. Investment grants have been increased to 45 per cent. and all that it has done is that it has probably brought the position back on a discounted cash flow basis to what it was before the present Government took over.
  I wrote to the Prime Minister on this subject and he replied, very courteously as he always does, saying that of course one cannot just take these things on a discounted cash flow basis; there are many other criteria. We are well aware of that, but I thought it interesting that he should say this in his Answer when this system is recommended for use in the nationalised industries and the public sector. In this respect it seems strange that the Prime Minister should sweep it aside as a method of assessing grants under the Local Employment Act. I hope that I am not going on for too long, but, since I had to tear up three of the speeches I had prepared because all would have been out of order, may I please complete what I want to say by referring very briefly to one or two matters which appear in the Supplementary Estimates and come within the province of the President of the Board of Trade and of the Parliamentary Secretary to the Department of Economic Affairs?
  The first is the concern of the President of the Board of Trade and is about export credits. This is not partisan and I hope it is entirely non-political. Is it not possible to give more help under E.C.G.D. to professional services? Is it not possible for there to be better cover for professional services overseas? I

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  constantly come across professional architects and town planners who are advising foreign governments about new towns and matters of that sort who find great difficulty in covering their professional fees with E.C.G.D. Since architects and town planners through their professional services are getting first place into potential export markets and often through their advice we obtain export orders for capital goods, the Board of Trade should look into this question. There was a debate on this matter the other day. It is a most important point. I do not know also whether the increase in the export credit estimates would involve any help for the leasing of capital goods abroad. I was once the director of a company set up specifically to lease British capital goods to overseas countries We believed that it had a great future and I have found that the overseas customer would often prefer to lease goods rather than buy them on extended credit. The company folded up because we were quite unable to get from the E.C.G.D. a banker's policy to cover this. If we can earn more foreign exchange for this country by means of leasing capital goods abroad rather than selling them, perhaps the right hon. Gentleman would look into the question of granting banker's policies for this purpose.
  There is another matter on which I wrote to the President of the Board of Trade the other day. There is an airport at St. Just in my constituency. It was an old R.A.F. airport and was in the hands of the Ministry of Aviation and now, I understand, it has become a responsibility of the Board of Trade. It is all very confusing. I am glad to see the right hon. Gentleman the Member for Leyton (Mr. Gordon Walker), who co-ordinates the Government's chaos, now sitting on the Government Front Bench. Perhaps he can sort out some of these problems.
  With great trouble we managed to arrange for the airport to be used to fly over to France an important export. It is important although it may sound strange. It was Cornish shell-fish which could be flown to Paris to be eaten fresh in addition with snails and frogs' legs and other delicacies. It was a marvellous development and the export figures are quite substantial, running into hundreds of thousands. The Ministry of Aviation,
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  now the Board of Trade, decided to sell the airfield but it could not sell it to anyone other than a local authority. The bureaucracy, the trouble and time taken on this matter was quite inconceivable. As a result, the gentleman who runs this business, and whom we encouraged, nearly found that he had to close the whole business down.
  Finally, I refer to the Industrial Reorganisation Corporation. According to the Ruling of Mr. Speaker yesterday, where a new estimate is made we are entitled to discuss the policy underlying it. I shall not do that but only say that the whole set-up of the I.R.C. has now been proved to be utterly bogus. On Second Reading and in Committee on the I.R.C. Bill we were led to believe that the organisation would be working on commercial criteria, yet the first transaction it has handled was clearly contrary to the wishes of its Board. The First Secretary of State and Secretary of State for Economic Affairs had to make a direction that it would invest money in Rootes, which was clearly contrary to the wishes of the Board of I.R.C. I mention that because I understand it is in order to refer to policy.
  This was one of the most interesting and farcical episodes in our commercial life of the last few years. It was said that this investment had to be made in order to retain a British holding. I have never heard anything like it. Clearly there was to be a continuing British investment in it all along. It was not made on a commercial basis. It was made because the I.R.C. has become the creature of the Government and the very first transaction has been used contrary to what the Government claimed would be the basis upon which it would operate.
  The question of the regional hospital board was mentioned earlier. I noted when it was mentioned that at the bottom of page 24, where it refers to the increase in the amount going to regional hospital boards, it says:
  "Selective Employment Tax and increased rates of pay."
  This presumably refers to one reason why there is an increase in the Estimate for the regional hospital boards.
  I referred earlier to the Selective Employment Tax and to all the people

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  who have been made redundant and discharged in the private sector because some of their employers no doubt followed what the Government asked them to do, namely, took this out of their profit margins and costs rather than merely passing it on in the form of increased prices. However part of the increase given to regional hospital boards, which come under the Government, is explained away by the operation of the Selective Employment Tax. What goes for the private sector is quite different from what goes for the public sector.
  Right the way through the Supplementary Estimates, despite what the Treasury Bench may say, particularly in relation to Selective Employment Tax, we are having the wool pulled over our eyes. The position is worse now—in terms of the amount of unemployment, in terms of the amount of money available, and in terms of the system operated as compared with when we were in power. Yet it is suggested by Government supporters that these increases are an example of purposeful, gritty government, and are evidence of the fact that the Government are working in conformity with all those merry election promises made at the 1964 and 1966 General Elections.
  5.52 p.m.
  Mr. Edward du Cann: The number and quality of the speeches made by my hon. Friends, in circumstances which we all know are somewhat difficult because of the narrowness of the debate, indicate clearly the strength of the genuine concern which all of us who are associated with the West Country feel at present.
  Problems in the West Country are real; they are important in human terms; and the awful tragedy is that they appear to be getting worse. Hence we are delighted to have this opportunity to discuss narrow matters relating to these Estimates. I want particularly to congratulate my hon. Friend the Member for Somerset, North (Mr. Dean) on his initiative in raising the matter.
  I am sorry that we have not had a contribution from the new Leader of the Liberal Party, who always says so much about the West Country and who always does so little. However, I am glad to see the hon. Member for Bodmin (Mr. Bessell) here late in the proceedings.
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  We are very glad that the hon. Lady the Member for Exeter (Mrs. Gwyneth Dunwoody) should be participating in these West Country debates for the first time. One of my hon. Friends dealt severely with her on the matter of history, for her historical knowledge is plainly non-existent. This is a pity. All of us on this side of the House will always make common cause with any hon. Member opposite who wishes genuinely to advance the interests of the West Country. That has been the custom for a very long time. However, to distort the situation unnecessarily is foolish and benefits no one.
  To suggest, for instance, as the hon. Lady did, that one of my hon. Friends objected to the appointment of Dr. Tress as Chairman of the Regional Economic Planning Council is utter nonsense. All of us on this side have every faith in Dr. Tress and in his colleagues. The disappointment is that the Council appears, for reasons of which I am unaware, both to have got itself into a difficulty in the matter of policy and to have produced very little in the way of action hitherto. However, we have hopes for the future. It is right that I should put the record straight on that matter especially.
  We last debated West Country problems on 4th November, 1964. I wish to refer to that debate, I raised the matter on the Adjournment, with the support of my colleagues, deliberately—first, to put certain facts on the record and, secondly, to endeavour to elicit the Government's intentions for the West Country. I, for one, am satisfied—I am happy to say this in the presence of the President of the Board of Trade—that the Government's intentions are honourable enough, but we complain about their execution, which is hopeless in the extreme.
  In replying to that debate, the then Joint Under-Secretry of State for Economic Affairs said this:
  "I invite the hon. Member for Taunton to come back in two, three or four years' time and to see what we have achieved during that period."
  The answer is—precisely nothing. Indeed, if anything, as my hon. Friend the Member for St. Ives (Mr. Nott) clearly indicated, the situation appears to have deteriorated. I thought that the Under-Secretary's reply to that debate

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  was remarkable for two other sentences he uttered. The first was this:
  "…in general a demand for continuity in the policies of that Government certainly cannot be met."
  He was referring to the previous Conservative Administration. We were certainly warned. The other utterance of which I wish to remind the House was this—a Freudian slip, it may be thought:
  "It is easy to forget the South-West." — [OFFICIAL REPORT, 4th November, 1964; Vol. 701, cc. 357–361.]
  I believe this to be true. These few remarks were largely by way of introduction. So I must move on, and at once do so.
  We are entitled to debate the reasons for the increase in these Estimates. I say at once that we support increases of this sort. There is no doubt about that. "No quibble" was the expression the hon. Member who temporarily represents Plymouth, Sutton (Dr. David Owen) used. So we support these increases.
  Our question is: how necessary are they? Should they be necessary? My hon. Friend the Member for St. Ives, in a most eloquent speech, referred to the words "gritty" and "purposive" which we have heard from time to time from the other side of the Chamber. The truth is that the reason we have Supplementary Estimates now, apart, perhaps, from the increase in costs, is that the President of the Board of Trade has been obliged to embark upon almost a panic programme of increases is the advance factory plans, largely because of the general difficulties of the economic situation. "Gritty" is the word. Sand in the works of the economy from his colleagues is the truth.
  I draw the attention of the House to the real position. At the time of the debate in November, 1964, the general level of unemployment in the South West was 1·3 per cent. Today it is 3·1 per cent. Such is progress under Socialism. More important than that, bad though that position is, unemployment in the development areas—a number of my hon. Friends have referred to this—where presumably the Estimate and its ramifications especially apply, has more than doubled since as recently as August, 1966—in other words, since the Prime Minister's 20th July statement. In August there
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  were 3,270 or 2·4 per cent. of registered employees unemployed. In January, 1967, there were 7,900, or 5·9 per cent. infiltration and advice.
  These statistics alone give the contradiction—I will not use an even stronger word—to the Government's claim that the squeeze would never hurt the development districts. The reason why the Government, and the right hon. Gentleman in particular, have had to try to do more for the development districts is that the Government's unsatisfactory—some would say disastrous—economic policies have hit the development districts worse than any other part of the United Kingdom. This is the tragedy of today's situation.
  We do not as yet know the extent to which this Supplementary Estimate bears upon the West Country. No doubt, the right hon. Gentleman will be kind enough to tell us in a few minutes. Incidentally, perhaps I may echo what one of my hon. Friends said. We appreciate the right hon. Gentleman's courtesy in coming personally to reply to the debate rather than instructing a junior Minister to do so. When he replies we hope to be told exactly how much this Estimate bears upon the West Country. But for his two hon. Friends, who have now left the Chamber completely—a remarkable circumstance—to try to pretend that this Supplementary Estimate presages more help to the West is the veriest nonsense. To take into account the Selective Employment Tax, referred to in another Supplementary Estimate, the truth is that the new fiscal burden which the West is bearing must outweigh by 10 or 20 times any increase in Government support covered by these Estimates or otherwise. Those are the simple facts of the matter.
  Will the right hon. Gentleman tell us the rate of inquiries for factory space in the West Country in particular? We should all be very interested to know, for the natural assumption, if he is building advance factories more quickly, is that there is an increased demand. I fancy that the reverse is the case. To quote from the newspaper, the West Briton, the issue of 12th January,
  "The seven inquiries during the last quarter of 1966 from firms seeking to bring new industry to Cornwall was the lowest number since the Cornwall Industrial Development Committee began to stimulate interest in the county's economy ten years ago".

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  A thoroughly unsatisfactory state of affairs. The chief planning officer for Cornwall, whom many in the House know and whom all respect, as we do the many devoted public servants of the West Country, said this:
  "At the moment my department is dealing with only ten active inquiries. There has been a marked reluctance on the part of industrialists to consider either moving or setting up new undertakings".
  The public relations officer was more forthright. He said that this was the most discouraging situation for the past heaven knows how long.
  One can quote from any local newspaper. In the Somerset County Gazette for 6th January there was the headline,
  "New houses stay empty and unsold".
  The Cornish Guardian spoke of, "Pad-stow a dying town". My hon. Friends know from their own experience that one can go into the Barnstaples and the smaller Cornish towns in their constituencies and find rates of 3, 5 or 11 per cent. unemployment.
  Mr. Deputy Speaker (Mr. Sydney Irving): Order. The right hon. Gentleman is moving on to too wide a range of general policy rather than the Supplementary Estimates before the House.
  Mr. Peter Mills: Before my hon. Friend continues, I must point out that he has made a mistake. In Ilfracombe unemployment is 13 per cent.
  Mr. Nott: In my continuency it is 8 and 11 per cent.
  Mr. du Cann: I was coming on to the thirteens. My hon. Friend intervened when I had only reached a reference to 11 per cent. If I trespass beyond the bounds of order, Mr. Deputy Speaker, I am sure that you will understand the strong feelings which we have.
  What is the present rate of inquiry generally for the several factories in the West Country? The right hon. Gentleman will know the list and I need not detail them. As my hon. Friend the Member for Bristol, West (Mr. Robert Cooke) said, we are talking about money. What is the point of building these factories if we cannot put anyone in them? The factory which my right hon. Friend the then Secretary of State, now Leader of the Opposition, and I authorised in
  566
  Falmouth and got built is still empty now.
  This brings me to my next question: are the Government sure that they have their priorities right? Railways are being closed at a faster rate than ever before, never mind what the "Mistress of Transport" says when she comes down to Honiton and tries to mislead people in the West Country. What is the point of building factories and providing grants and loans—a policy which I strongly support—if the communications do not exist to get the people to and fro and the goods and services to and fro?
  I should be out of order in discussing roads in general, but it is reasonable to ask the right hon. Gentleman, if he is to reply for all his absent colleagues, what is being done by the Government to make certain that roads are built to the factories? In my opinion, nothing is being done. When I was at the Board of Trade, as the hon. Gentleman knows, for he supported the policy, my right hon. Friend the Leader of the Opposition and I got an extra £2 million for the A38 going on down to Cornwall. Not only that, we had a survey done for the new motorway down from East Brent to Exeter. So far as I am aware, all the money available to bring firms to new factories in the development districts and to build the roads to enable them to do so has now been cut. Furthermore, it is clear that we cannot have the new motorway, the best link of all, until 1973 at the earliest.
  We shall support the President of the Board of Trade in his building of advance factories, and we shall support him in implementing what is done under the Local Employment Acts of 1960 and 1963, passed by a Tory Government, with his support and that of all right hon. and hon. Member of the then Opposition. But will he use his influence to see that we have before us Supplementary Estimates next year to restore the cuts in the road programme imposed by his Government? If he does, we shall have pleasure in giving those Estimates our warmest support. Will he ask his right hon. Friend the "Mistress of Transport" to reverse her policy of accelerating the cuts on the railways? Moreover, in regard to airports, an extremely important matter when we are thinking in terms of—
  Mr. Deputy Speaker: Order. The right hon. Gentleman is going very wide of the Supplementary Estimates. He can refer only to the reasons for the increases there provided. He is in an entirely different field now.
  Mr. du Cann: Then I shall leave the subject of airports, Mr. Deputy Speaker, only to return to it on another occasion, for of all forms of communication, air communications are among the most important.
  I come now to the second leg of the Supplementary Estimate, the question of grants and loans. What is the rate of inquiry here? The right hon. Gentleman will know that, over the period of the passage of these Acts, about £2½ million was made available which assisted 58 new projects and produced 4,400 new jobs, with, at the time of the General Election in 1964, a further 2,000 in the pipeline.
  Dr. David Owen: On a point of order, Mr. Deputy Speaker. I have only just returned to the debate, having been in a Select Committee, but I did experience earlier Rulings from the Chair on this question and felt myself very limited in what I could introduce during the debate. I am not seeking to question the Chair, but I would wish the same strictness to be applied to the right hon. Gentleman as was applied previously.
  Mr. Deputy Speaker: Order. If the hon. Gentleman had been present about two minutes ago, he would have heard me drawing the right hon. Gentleman's attention to that very point. It is a difficult matter to rule upon, and the Chair is endeavouring as much as is humanly possible to keep the debate to the precise terms of the Supplementary Estimates. I am sure that the right hon. Gentleman will proceed with that in mind.
  Mr. du Cann: I shall, Mr. Deputy Speaker. I have been delighted to be pulled up twice because, although some of my hon. Friends have said that they had to put together more than one speech, I have found during the course of the afternoon that I was putting together four. If my speech is a little disjointed, that is the reason.
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  I was referring to the second part of the Supplementary Estimates in which it is proposed that additional money be voted for loans to undertakings, for building grants and so on. I had asked what the rate of inquiry was for these grants and loans. I am sure I speak for all my right hon. and hon. Friends when I say that we should be very ready to vote more money at any time for this purpose, but what worries us is the likelihood that of the amount of money here covered, very little will be available for the South West because the rate of inquiry is, in fact, down. We should very much like to know the facts.
  Last under this heading, and pursuing the reasons for the Supplementary Estimate, will the right hon. Gentleman tell us whether there has been any change of policy in relation to growth zones? Is he taking the view that money will be lent under these heads to people who are moving away from the development districts or anything of that sort? A little geographical information would be useful.
  To sum up the general views which my right hon. and hon. Friends maintain, we regard the present situation with deep concern. This concern is in certain respects turning to anger, for we suspected that this Administration might prove themselves to be neglectful of the South West. I hope with all my heart that this is not so. I warn the right hon. Gentleman that if that should prove to be the fact—and there is still time for judgment on it—we shall never let him or any of his colleagues forget it, and shall do our damnedest to see that they are reminded of it.
  The present situation is thoroughly unhappy. We shall always support him and his colleagues in wise measures directed to help the West Country, but we shall never tolerate anything but the best for that part of England which we represent and love.
  6.10 p.m.
  The President of the Board of Trade (Mr. Douglas Jay): If the subject of Cornish shellfish is in order in the debate, I hope that I shall be fully in order in saying that the purpose of these Supplementary Estimates is to intensify the efforts to promote employment in the development areas, including the South

  569
  Western development area. I undertake to the right hon. Gentleman that I shall certainly never forget the West Country, which I have probably known for some years longer than he has, and I undertake to keep a very careful watch on the progress of those efforts.
  I wish to tell the hon. Member for St. Ives (Mr. Nott) straight away that his figures were based on a fallacy, because he forgot that whereas local employment grants are included in the Estimate the investment grants are not. The investment grants are additional to what is provided in the Estimates, and therefore his comparisons of the total over the years were, to put it mildly, somewhat misleading.
  However, I fully agree with the statements that some parts of the South West have a serious unemployment problem, and indeed I know it from my own knowledge. A major effort must be made to overcome it. I do not regard the unemployment figures quoted by the right hon. Member who temporarily represents Taunton (Mr. du Cann), as being very serious. For the South West as a whole, the figure was 1·2 per cent. as lately as last June, and it had risen, taking into account both the seasonal rise and the inevitable effects of the measures of restraint of last July, to 3·1 per cent. in January When giving those figures, the right hon. Gentleman omitted to mention that, as he knows, there has always been a substantial seasonal rise in unemployment, particularly in the South West, between June and January. However, between November and January there was only a very slight further increase, and the seasonal movement should now be downwards.
  None the less, I fully agree that it is in the most severely affected parts of Cornwall and North Devon that the problem is most serious, and the figures for the new development area, again during the seasonal period, rose from 2·3 per cent. in June, 1966, to 6·1 per cent. in January, which is much higher than any of us would wish to see.
  Mr. Nott: I am sorry to interrupt the right hon. Gentleman. He corrected my statement, and I will, of course, stand corrected if what he said is accurate. But is it not right to say that the advantages we gave when in power were predominantly free deprecia-
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  tion? This would not show up in the Estimates, because free depreciation simply meant that less taxation was paid than would otherwise have been the case. Therefore, when the right hon. Gentleman says that the investment grants are not included in the Estimates this year, is not his own comparison unfair, in the sense that neither would free depreciation, which was our equivalent, show up in the Estimates to which I referred?
  Mr. Jay: That is not so, because for plant in development areas the previous provision was the plant grant under the Local Employment Act. The present provision is the extra 20 per cent. for development areas, under the investment allowances the latter does not appear in these Estimates whereas the former did.
  Mr. Nott: The most substantial benefit of all under the old system was free depreciation, to which I referred. I am saying that free depreciation would not show up in the 1962–63 Estimates, and that therefore the right hon. Gentleman's correction of my comment is not correct.
  Mr. Jay: What is clear is that the hon. Gentleman's comparison was not strictly correct, but I must not pursue that point any further.
  I agree that the unemployment figures measure the problem that faces us. Nearly the whole of Cornwall and North Devon has been scheduled as the South West Development Area, a far larger area than was scheduled under right hon. and hon. Members opposite. Within that area the whole range of grants, loans and assistance offered by the Board of Trade under the Industrial Development Act and the Local Employment Act, including the new 45 per cent. investment grant, is available for industrial expansion.
  This Supplementary Estimate will increase the finance available for those purposes, though I cannot tell the right hon. Gentleman the precise proportion of the increase which will apply to the South West Development Area. It is reasonable to assume that it will be proportionate to their share of the insured population in development areas as a whole. When one measures the proportion, I think that the number of I.D.C. approvals which represent new industrial expansion, are relevant. We are at present using the whole Board of Trade machine for I.D.C.s and

  571
  the steering of expansion schemes to get them located in the South West Development Area just as energetically as in the other development areas in Wales, Scotland and the North.
  Mr. du Cann: Would the right hon. Gentleman be kind enough to reply to my question whether he could break the figures down for the South-West? I understand that he now says that he cannot. Does that therefore mean that Parliament is being asked to vote money for the Board of Trade and the Board of Trade does not even know what it wants to do with the money when it has it?
  Mr. Jay: As the right hon. Gentleman should know, the figures are an estimate for development areas as a whole. That has been found the most accurate way of doing it. Although Estimates can be made for individual areas, it would be misleading in advance of the development of schemes to try to give precise figures. What I can give the right hon. Gentleman is the I.D.C. figures which is a fair measure. They show that the policy is succeeding in fact and not just in theory.
  The total of I.D.C. approvals for industrial expansion in the South West region, as an annual average, rose from 2,498,000 sq. ft. in 1961–63 to 3,666,000 in 1964–66. That is an increase of 46·8 per cent. in the industrial expansion going to the South West Development Area since the present Government became responsible.
  In the new South West Development Area, which we agree is the most seriously affected part of the whole region, the rise in I.D.C. approvals has been from 287,000 sq. ft. in 1961–63 to 660,000 sq. ft. in 1964–66. That is a rise of 130 per cent. since the present Government took over responsibility. That clearly means far more employment and industrial diversification in the future as those schemes take effect. I have every intention of seeing that that good work goes on, and if it does the industrial strength of the South-West should be transformed in time.
  The right hon. Gentleman asked me in particular about advance factories, which are, of course, financed under this Vote. We have introduced four advance programmes in development areas as a whole
  572
  since 1964. We have sited five of them in the South West Development Area; four have been completed and two have already been allocated. I think that the latter figure of allocations is the best answer I can give to the right hon. Gentleman's question about the rate of inquiries. The rate of inquiries for new factory space is naturally not as great as it was at the peak last summer, but it has not fallen off as much as many people feared.
  The hon. Member for St. Ives made a great protest about the time taken, and procedure followed, in applying for B.O.T.A.C. loans. The time taken has been greatly reduced, and the procedure and questionnaires have been simplified since this Government took over from right hon. and hon. Members opposite. On examination, a good deal of the time taken turns out to be due to the slowness with which some firms—not all—answer the questions asked. But if he is suggesting that no question should be asked about future prospects of firms, we certainly cannot lend public money on that sort of basis. B.O.T.A.C. examined an application from Cadco a few years ago and turned it down. That is good evidence that we have to examine these things very carefully.
  I well realise that industry alone is not all that the South-West needs and that tourism, transport and many other activities—though these are not all strictly my responsibility—are vital to the South-West. Since the right hon. Member for Taunton mentioned the Selective Employment Tax, and therefore I assume that it is in order, I am bound to say that I do not think that it is fully realised how much the Government are offering by way of grants, loans and general assistance to the tourist industry as well as to manufacturing industry in the South-West.
  First, we have increased the grant, since we took office, to the British Travel Association from £1,785,000 in 1964–65 to £2,175,000 in the present year. This expenditure benefits the whole tourist industry and the South-West has a very large share in the publicity promoted by B.T.A. Secondly, all hotels in the South-West Development Area can be considered for the 25 per cent. building grant under the Local Employment Act, provided that a contribution is made to employment in the area.
  Mr. Nott: Again, these figures give a wrong impression. The Government took away the investment allowances of the tourist industry which, in terms of value, far exceeded any increase given in the fields that he has just mentioned.
  Mr. Jay: The hon. Gentleman interrupted too soon. I was going on to say the other things that we have done for the tourist industry in addition to the B.T.A. grant—
  Mr. Robert Cooke rose—
  Mr. Jay: I think that I am bound to go on now. I was saying that hotels in the South-West Development Area can be considered for the 25 per cent. building grant under the Industrial Development Act. This is a major form of assistance, and it is far more generous now for the South-West than it ever was previously because the area has been so greatly widened. It applies, of course, only to buildings but, for plant and equipment for hotels, a 30 per cent. initial allowance is available—the hon. Member for St. Ives did not mention this—and that applies over the whole of the south-west region and not just in the development area.
  In addition to all this, we have launched in recent months the Board of Trade scheme for development loans of up to £5 million for major expenditure on construction work by hotels, which should certainly assist hotels in the South-West, as elsewhere, to attract more visitors. This scheme is now in force to encourage hotel building projects that will yield significant new or increased earnings from overseas guests staying at the hotels. We are making up to £5 million development loan finance available at Exchequer lending rate for the present year. The 30 per cent. initial allowance and the 25 per cent. building grant under the Local Employment Act are, of course, also available for all the service industries and not just hotels.
  Mr. Robert Cooke: I am grateful to the right hon. Gentleman for giving way again. We are interested in what he is saying but are far from convinced that we are better off. Surely he has just given us our argument. The point of the increased grant to the B.T.A. is to encourage more people to come to the West Country. But how are they to get there
  574
  if the railway is cut down and the road programme is lagging?
  Mr. Jay: I preseume from that that the road programme is in order in the debate, so I shall say what I was intending to say when I was interrupted. As I expect the right hon. Member for Taunton knows, for he mentioned the Selective Employment Tax, the Government have decided that extractive industries should have S.E.T. refunded and this, of course, applies to china clay as well as to tin mining, amongst the important extractive industries in the South-West. The high investment grants under the Industrial Development Act are also available for all existing industry in the development area and not just for new projects. As I was trying to explain to the hon. Member for Truro (Mr. Geoffrey Wilson), they apply to replacement and not just to the original installation of new machinery, as was the case under the Local Employment Act of the last Government. This will also be of great help to the established industries of the South-West like china clay.
  Mr. Geoffrey Wilson: The right hon. Gentleman says that china clay and tin mining will get this money back. But, from what I understood during the passage of the Selective Employment Payments Act, they were going to get the premium.
  Mr. Jay: I assure the hon. Gentleman that they get the refund.
  In view of the question asked by the hon. Member for Bristol, West (Mr. Robert Cooke) about the road programme and transport, which I understand to be in order, at any rate to some extent—
  Mr. Speaker: Order. I am not aware that the road programme is in order in this debate.
  Mr. Jay: But a great deal has been said about roads in the last half hour. I was going on to say that road expenditure has greatly increased under the present Government and in addition to this—and it is all I shall say on the subject, Mr. Speaker—the Honiton by-pass has been completed. I am sure that that is most welcome to all the people travelling by road to the South-West. In view of your Ruling, however, I will leave the matter now. In spite of what has been

  575
  said in the last half hour, I will say no more about transport or rail closures or some of the other points raised.
  Dr. David Owen: In touching on the question of road services and special grants for hotels, will my right hon. Friend remember that the only place in the South-West that wants to build a large new hotel is Plymouth, which is now excluded from the development area?
  Mr. Jay: Plymouth would benefit from the loan schemes I have described. Although Plymouth is not in the development area, it is possible for us—and it is our policy—to grant industrial development certificates far more freely in Plymouth and other areas of that kind than in a region of high employment. That is well recognised.
  Perhaps I should be in order to say just one thing about transport. By far the best way of maintaining rail services would be to promote industrial expansion and thereby the general prosperity of the region, which will make it economic to continue these services. This, I believe, is perfectly possible. I do not think that the industrial future of the region and the development area in particular is gloomy, because it has many great attractions for light industry and the actual volume of employment needed in central Cornwall and in North Cornwall and North Devon is not very large.

  WEST COUNTRY (ECONOMIC PROBLEMS)

    ROYAL ASSENT
    6.30 p.m.
    Message to attend the Lords Commissioners:
    The House went:—and, having returned;
    Mr. SPEAKER reported the Royal Assent to:
    1. Land Commission Act, 1967.

  CONSOLIDATED FUND BILL
  Question again proposed, That the Bill be now read a Second time.

  WEST COUNTRY (ECONOMIC PROBLEMS)
  Mr. Dean: The right hon. Gentleman has been able to give only very little information about the way in which this money will be allocated among the various development districts, the particular point which I put to him. He said that it would be on the basis of the insured population. Surely he is not suggesting that the respective economic prospects of the development districts and unemployment in the development districts in the West Country are not to be taken into account in this allocation.
  Mr. Jay: I was not saying that it would be proportionate to the insured population as between development areas and the non-development areas. I was saying that one could work on the assumption that it would be roughly proportionate to the insured population as between one development area and another, but I do not think that it is possible in advance to give a strictly accurate estimate, or an exact delimitation of the figure.
  However, I was about to say in conclusion that I believe that the West Country has many attractions to light industry and that the volume of unemployment, although the percentage figures look formidable, is remarkably small. New and diversified industries such as we are now introducing should help to ease the problem of seasonal unemployment in particular which has dogged the South West for so long, and it is certainly our firm intention to push on vigorously with all the plans covered by these Estimates and others until the economy of the South-West, in industry and in tourism and the service trades, has been established on a far stronger basis than it is now.

  BRITTEN-NORMAN LTD. (LOAN)
  6.42 p.m.
  Mr. Tim Fortescue: I am sure that the House will be happy to turn from the troubling and somewhat formidable problems east of the Scilly Isles to the comparatively narrow issue which I wish to raise on

  577
  Supplementary Estimate Class IV(7), Number E5 on page 15 of the Supplementary Estimates—the loan to Britten-Norman Limited of £180,000.
  I say at once that I have no intention of being controversial about this matter or of criticising the fact that the loan has been made, the object of my intervention being solely to elicit some information from the Government about why the loan has been made, in what circumstances it was made, how the firm is getting on and what the future prospects of this very good light aeroplane appear to be.
  I want very briefly to trace the history of this matter. On 19th October, 1966, in a Written Answer to a Question, the then Minister of Aviation said that an interest-bearing loan to Britten-Norman Limited of £250,000 was being made. There was no mention of what the interest rate would be. The reason for the loan was given as an expansion of the original production plan and that additional assistance from public funds was desirable. We heard absolutely nothing about this loan or about what was going on in Britten-Norman until the other day when the Supplementary Estimates were published. They say:
  "As announced in the House of Commons on 19th October, 1966, by the Minister of Aviation, H.M. Government has agreed to make to Britten-Norman Limited an interest bearing loan of £250,000, on certain conditions …"
  with no mention whatever of what those conditions are.
  On 24th November last year, we read in the Press that a full certificate of airworthiness was to be granted imminently and that production of this light aeroplane would be four per month in the next few months. We know that the first aircraft flew on 3rd June, 1965, but that the first production aircraft did not fly until September, 1966. We know that £250,000 of public money is being lent to help this plane to get off the ground and that £180,000 is now being asked for in the Supplementary Estimate.
  I have three questions to put to the Minister and I hope that he will be able to give factual answers to all of them. First, what are these certain conditions which are mentioned rather coyly in the Supplementary Estimate? For instance, what is the rate of interest? What is the
  578
  time scale of repayment? We know that the loan is to be repaid in full by 1969, but is it to be repaid at that time all in one sum or gradually over the years until then? Does the Minister consider that any further loan will be necessary over and above the £250,000 after 1969?
  My second question is very broad. I would like to know, and I am sure the House would like to know, why it was thought necessary, at the time, or now, to give assistance from public funds to this small firm. I am sure that there is a good reason and I am not criticising the fact, but the reason which we have been given is inadequate. All we know is that it is to aid production.
  Finally, why are American engines now being installed in this light aeroplane? It started with Rolls-Royce engines, but has now switched to Lycoming engines, which are American. I have always understood that we made the finest aircraft engines in the world, and yet here we have an example of the Government's lending money from public funds for an aeroplane into which are being installed American rather than British engines. I would like to be told why that is necessary.
  6.47 p.m.
  Dr. Reginald Bennett: I support my hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) in his interest in and inquiries about this firm. It happens to be a very close neighbour of mine and I have known it since its early days, since it started, after a certain amount of crop spraying, to make the cushion craft variant of the hovercraft, and it has now branched out most gallantly into making this twin-engined Islander aircraft which I have buzzing around my ears for most of the year when I am down there.
  This is an excellent little company and one thing which commends it to me and which will commend it to the House is the fact that it starts without that vast superstructure of overheads which de-devils most of our aircraft industry. It is a very worthy company and I am sure that it is worthy of the Government's support. Although the sum with which we are concerned is only one thousandth of the sum with which we are dealing in the Bill, we want to know a little more about this Supplementary Estimate. For once we agree with something which the

  579
  Government are doing, but what are some of these conditions which have not been clearly and explicitly mentioned? What is the rate of interest? What sort of security has been claimed? Is the loan on the same basis as any other moneys which may be outstanding? What specific share in the proceeds of the sales is being demanded by the Government in return for this subvention? Is the money specifically for the Islander only, or is it to go into other ventures, such as the cushion craft? If so, what are the prospects which the Government have in mind for the order book of this aircraft?
  Having committed the taxpayers' money to this admirable company, are the Government to give assistance to the company in promoting sales of this aircraft abroad, sales for which there must be a very ready market? If taxpayers' money is involved, the Government have a duty to assist the company in that way. These are important questions which I put in expressing my general good will and support for this extremely venturesome company, one of the few growth points in the aircraft industry for some years.
  6.50 p.m.
  Mr. Mark Woodnutt: I am very pleased that my hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) has raised this matter because it has given me an opportunity of supporting the Government in what they have done and of paying a tribute to this wonderful little company in the Isle of Wight. I also appreciate the tribute that he has paid to the company, and can quite understand that more information is required about the Government loan.
  I can deal with the point about the United States engines. Most of the exports of this aeroplane will be to the United States, and it so happens that it will be much more convenient to put United States engines in them. This company is a small and courageous company operated by a dynamic staff.
  The Minister of Aviation (Mr. John Stonehouse)indicated assent.
  Mr. Woodnutt: I am pleased to see the Minister agreeing; he has been down and seen the company. It is owned and run by quite brilliant young men, and
  580
  the team of 300 employees all work with a will, not hesitating to work weekends if necessary to get the production line running. It is deserving of all the assistance that it can get. It has designed and developed this 10-seater feeder airliner, which I have no hesitation in saying will compete with any aircraft in the world of a similar type, as to price, quality and technical achievement.
  The House will be interested to know, when we are discussing a figure of £250,000 in all, that of the £640,000 that this project has so far cost, the Government have contributed only £240,000. The rest has been raised by the firm, by these dynamic people at Bembridge, Isle of Wight, who do crop spraying all over the world, and ploughed everything they have made into the development of this aircraft at a time when the British aircraft industry was in the doldrums.
  The aircraft first flew in 1965 and, to give the House an idea of the enterprise of these people, it flew for the first time four days before the Paris Air Show. It was taken straight off to Paris and landed there, just after the giant Russian airliner, and stole most of the publicity that the Russians would have got. As a result of this, and at the 1966 Show—and this is the point of this Government assistance—the company got an order book, with no direct advertising or publicity at all, of something in excess of 40 aircraft.
  Two-thirds of these orders were for export. This is just what we want. Here is a firm in a little island off the South Coast—I usually refer to Great Britain as an island off the north coast of the Isle of Wight but that is irrelevant at present—which is really deserving of support. The company had originally planned to produce 35 aircraft a year, to which it was building up over a period.
  When one suddenly gets an order book, with no direct advertising, in excess of 40 aircraft, one must aim at a bigger throughput of 35 aircraft, and, in order to aim at a throughput of one a week in a shorter period of time, the company needed this extra support and applied to the Government for £250,000. I am very pleased to see that the Government then, and at an earlier stage, when they helped with the launching costs, contributing a rather lower figure, were so willing to

  581
  help this very progressive young firm—this is in spite of the fact that the Government appear to be doing their best to destroy the British aircraft industry.
  This is a good commercial investment for the Government because they are getting 1 per cent. above Bank Rate for the money and it has to be repaid within a short period of time. In addition, they have a debenture on the company's assets. From the money originally advanced, half the launching costs, amounting to £190,000, they will get a levy on every aircraft sold. The Government are therefore in a good position, sharing in the profits of this private enterprise firm. If we have to put up with a mixed economy, this is the best example I can think of, with Government cooperating with private enterprise.
  I see that the agreed loan is £250,000 and the Minister has put in the Supplementary Estimate a figure of £180,000 as being the amount required or expected to be required before 31st March, 1967. I understand that the company has already had £100,000 of this and that it is to put in for a further £50,000 for January, another £50,000 for February and £40,000 for March. This makes £240,000 and the balance of £10,000 it wants in April.
  The requirement of £240,000 is £60,000 in excess of the Estimate of £180,000. Perhaps the first part was in the original Estimate, and if that is the explanation, then all is well. If it is not, then I hope that the Minister does not intend to cut down on the requirements for January, February and March, because in working out its cash flow the company really needs this amount of money to achieve this production throughput in order to obtain an output of one aircraft per month in the period that they have told the Government it would do so. I would finally like to say how much I appreciate the assistance that the Government have given this company.
  6.56 p.m.
  Mr. Robert Carr: Like my hon. Friends I want to make it quite clear that any comments I make are not intended as criticism of this Government action. I have had the pleasure of meeting Mr. Britten and Mr. Norman, as well as seeing their aircraft at the Farnborough Show last September, and, like anyone
  582
  else who has had contact with the company and its products, I was immensely impressed. They are not the sort of people who wish to be feather-bedded at the taxpayers' expense.
  Their enterprise and willingness to put their own work and money at risk and to throw everything into the project was obvious, and it is pleasant to be helping a British company showing such enterprise and initiative. All of us must have felt very great sympathy when one of their aircraft crashed so tragically returning from a sales trip to the Continent. It was right that my hon. Friends should have asked these questions, because we should be able to maintain a situation in this House when we ask questions not only about public expenditure of which we are critical, but also about public expenditure which we feel it right to be informed on and when there is approval on all sides of the House for it.
  I should like to add one question to those of my hon. Friends. Is it possible for the Minister to give us some idea as to how the help that he is giving to Britten-Norman ties in with his strategy for aiding what I may loosely call the lighter end of the aircraft industry as a whole? Unfortunately, the amount of aid is bound to be limited and there is always the danger of spreading the amount available too thinly over too many projects, even though each project may be thoroughly good and desirable. There is the aid to Handley-Page on their Jetstream, the commitment which the Government have taken over with the Beagle and there is this—all examples of aid to the light end of the industry. If the Minister can give any indication as to how this fits into his strategy of aiding the lighter end of the industry, such information will be useful to the House.
  6.59 p.m.
  The Minister of Aviation (Mr. John Stonehouse): The House is grateful to the hon. Member for Liverpool, Garston (Mr. Fortesque) for initiating this short debate on a very enterprising firm. I agree with what has been said, particularly by the hon. Member for the Isle of Wight (Mr. Woodnutt), about this enterprising, dynamic, go-ahead firm.
  I first saw its Islander aircraft at the Paris Air Show in 1965. I was very

  583
  impressed with it indeed. As the hon. Gentleman said, it created quite a stir when it appeared there. There was a lot of interest in it, and I think that orders started flowing in on the first day. Following that, I went on a visit to Bembridge and saw something of the work at first hand so that I could advise my Ministerial colleagues about their proposals. I am glad to say that after that the Government agreed to put up £190,000 in launching aid to get this aircraft developed.
  Without that aid, it is unlikely that the firm could have gone ahead, because in the City and elsewhere it was impossible for it to raise the sort of money it required on terms which it was prepared to accept. It would have been possible for it to have sold out to the United States or someone abroad. We, together with the firm, thought that inadvisable and therefore we gave it 50 per cent. of the launching aid for this aircraft.
  We made the decision at that time because we believed that there were real prospects for the development of this small plane and it was thoroughly consistent with the policy which the Government adopted in October, 1964, for assisting viable, economic projects in the aircraft industry.
  I thought that the hon. Member for the Isle of Wight spoilt an otherwise very good speech by saying that it was the Government's intention to destroy the aircraft industry. Nothing could be further from the truth. We want the aircraft industry in Britain to be successful. We want it to play a very important part in the export drive. But the aircraft industry now understands and I believe accepts that we cannot work out large sums of public money for projects which will not bring a return to the economy as a whole. But in this case we were satisfied that, in the long run, this would be a viable project and, therefore, deserved our assistance.
  Following that decision, the firm went ahead to obtain permission for the development of a new factory and to start its production programme. By the middle of 1966 it was fairly obvious that the aircraft was attracting more support than the firm had expected. It received as many as 200 inquiries from as many as 67 countries. The first 30 aircraft
  584
  due to come off the production line were sold and yet the first aircraft had not been built. This was a remarkable success story considering that aircraft in this category are usually sold off the shelf and not from brochure.
  We therefore considered with Britten-Norman what could be done to assist the company in improving and expanding, its production plans. It worked out a plan with our Department for expanding production to about ten aircraft per month. Under this plan, 150 aircraft would be produced by early 1969 rather than by about the end of that year. The programme was being pushed forward to improve deliveries by about eight or nine months or more, so that customers putting in orders for the aircraft would have deliveries quite a considerable time before they would have done if the company had not had this special assistance.
  This is where the extra £250,000 comes in. It is additional to the launching aid which appeared earlier in the Consolidated Fund account. As the hon. Member for the Isle of Wight said, this amount is being transferred to the company according to its requirements. The figure of £180,000 is what we estimate, in consultation with the firm, is required before the end of March this year. Of this sum, £100,000 has already been paid. If the firm has any observation to make to us about the phasing of this assistance, perhaps it will make it.
  Mr. Woodnutt: The firm has had £100,000 already. It has applied for £50,000 in January, £50,000 in February and £40,000 in March. That is £240,000, not £180,000. Could it be that some of it was in the original estimate?
  Mr. Stonehouse: No. This relates to the total figure of £250,000. The balance will be paid in the next financial year. The phasing has been agreed with the company. Already £100,000 has been paid. The payment of the further £80,000 between now and the end of March is a phasing of payments agreed with the firm. If it has any other observation to make to us, I hope that it will make it because we are only too anxious to give the sort of assistance which it needs to get the production line effectively established.
  Woodnutt: I am sorry to press the Minister, particularly since he is being so helpful, but this does not accord with the figures which I have. I was on the telephone to the company this afternoon. Would the Minister look at this again? If the Government give this help it is vital that it is phased in the way in which the company wants it, or the whole project will fall down.
  Mr. Stonehouse: I do not think that this is an absolutely vital point. We are talking only of tens of thousands of pounds. It is not such a vital question whether the company receives the money before the end of March or in the following two or three months. This phasing has been agreed with the company. If it has any other observations to make, we shall consider them. My information does not accord with that which the hon. Gentleman has received.
  I wish to deal with some of the questions raised in the debate. The hon. Member for Garston asked what were the conditions on which this money was being advanced. In particular, he asked about the rate of interest. It is a commercial rate of interest, which fluctuates according to the Bank Rate. The sums will be repaid as aircraft are sold. It will not be a lump sum repayment in June, 1969. The phasing will be from June, 1968, for the following twelve months. We shall have a protection of our investment, and if by any mischance the firm defaults on its repayments we shall have the right to appoint to the board.
  The hon. Gentleman asked why we had to give aid. We had to give aid because this firm could not have increased its production programme to meet export orders unless we stepped into the breach to provide financial assistance. This demonstrates beyond any shadow of doubt what an important rôle the Government can play, not only in the aircraft industry in general, but particularly in the light aircraft end of the industry.
  Hon. Members opposite who so often castigated us for our failure to help the aircraft industry should pay attention to the observations made during this debate, for which I was grateful, because they demonstrate what a useful job the Government can do, even though the sums of money involved may be small com-
  586
  pared with what we have spent on other aircraft. It demonstrates how valuable it is to a small firm like this that it can get this sort of assistance from us.
  Mr. Cranley Onslow: Is it not fair to say that the conditions in point of time and the general availability of capital in which this firm found itself in need of money were not the easiest and that the difficulties which faced it were the direct result of Government policy?
  Mr. Stonehouse: I do not accept that at all.
  The third question asked by the hon. Member for Garston was why American engines are being installed. The Lycoming is being used because it is an engine with higher performance, and so it increases the saleability of the aircraft but does not increase its price. Therefore, from the firm's point of view, it is a very good thing to have this engine installed. Notwithstanding that, the import content of the value of this aircraft will still be fairly small and we will be able to earn substantially from the export of the aircraft.
  Dr. Bennett: Is it a question of higher horsepower or is it an engine of less weight for the same horsepower?
  Mr. Stonehouse: It is of higher horsepower, which will give a better performance. Therefore, from the viewpiont of the feeder airlines which buy it, it will be a more attractive proposition.
  Mr. Woodnutt rose—
  Mr. Speaker: Order. We have a number of debates ahead of us.
  Mr. Stonehouse: The hon. Member for Gosport and Fareham (Dr. Bennett) made the important point that this firm can be successful in producing light aircraft because it does not have a superstructure of overheads. I remember very well that when I went to the firm and was invited into the office of the managing director to discuss the proposal with him, there simply were not enough chairs when three or four of us were brought in for the discussion. The firm is operating on a shoestring. This is a very good thing. It helps to keep down the cost of the aircraft and make it attractive, particularly to customers abroad.

  587
  We are providing a great deal of assistance for the export of this aircraft, as we do to all firms. Any firm, whether or not it receives financial assistance from us, can come to us for this sort of aid and we will give it every possible help. I am glad to say that at this stage it is not shortage of orders that is any embarrassment. If anything, the problem is to get on with production, to get certification and to get these aircraft provided to customers abroad. Overall, by 1969 they should produce an export value of something like £2 to £3 million. This, although a small contribution, is a very welcome one to the export earnings of the United Kingdom.
  The employment position in the Isle of Wight is marginally improved by the assistance that we have provided.
  Mr. R. Carr: Can the Minister say a word about my point concerning strategy?
  Mr. Stonehouse: This goes rather wider than the sum which we are discussing. However, the assistance which we are providing to Britten-Norman in no way conflicts with the wider strategy which we are adopting for the light aircraft industry. The Beagle range, the aircraft in which Short's have been involved and the Jetstream produced by Handley Page are in no way competitive with this aircraft. It fills a particular slot in the market and there is no suggestion that by giving assistance to Britten-Norman we will embarrass any of the other proposals for assistance which we have in mind.

  OVERSEAS AID
  7.13 p.m.
  Mr. Dennis Walters: I am pleased to have the opportunity to raise a number of subjects in connection with overseas aid. I only wish that the debate on overseas aid would range more widely than the rules of order permit, because it is a subject on which the Government are particularly vulnerable. There are aspects like the increase in fees payable by overseas students to which I should certainly like to refer, but I realise that that is not in order at this stage and that I must confine myself to the assistance given to countries listed in the Civil Estimates.
  588
  I refer first to India and aid to that country. The Civil Estimates for 1966–67, printed on 30th November, 1966, include the total of £25½ million shown as a loan to India. This includes £15 million which appeared in the previous Civil Estimates, printed in 1st July, 1966.
  The House will be aware of India's current difficulties and the prospect of famine which, regrettably, has loomed so often over the subcontinent and is now present again. An announcement was made early last year of an interest-free loan to India of £7½ million to help India in her food crisis. Of this sum, £6 million was already pledged and, therefore, the additional money made available was only £1½ million. I would like to ask the Minister about the present situation in India and whether this sum, together with the generous aid provided by the Governments of Canada, the United States and Australia has met the immediate problem.
  An announcement was also made in April of an additional £17 million, which, it was said, would be directed to India's pressing economic problems. Some £10 million of this £17 million was said to be in the form of general purpose aid to buy a wide range of goods from Britain. This appears in the July Civil Estimates. I should like to know the situation concerning this sum. Have the goods and services been ordered or provided?
  That leaves £7 million of the £17 million which was offered and which does not appear, as far as I can seen, in either of the two Supplementary Estimates which are now before the House. Four million pounds of this was to be for a new Kipping loan to assist engineering industries in India to buy from Britain badly-needed spare parts and components and £3 million was for the purchase from Britain of spares and components for the Bhopal heavy electrical factory. Why does not this appear in the Estimates? If the spares and components are badly needed, surely something should have happened between April, 1966, and February, 1967.
  In December, 1966, the Government announced that they had made a £13½ million loan in flexible, non-project form, as it was described in the official handout from the Minister of Overseas Development, in recognition of India's need for

  589
  quickly dispersable aid arising from the import liberalisation measures, the current food shortages, and the substantial service payments due to Britain under previous loans.
  That appears to be very generous at first sight but it would be interesting to know how much actually will be available to India, because a substantial proportion of this is to be paid back to Britain for service payments under previous loans.
  As we know, recently the Government have announced a cut in the target for Lid in 1967–68. I realise, regretfully, that that is outside the scope of the present debate, but it is against the background of broken pledges—particularly the pledge to devote 1 per cent. or more of our gross national income to aid for the developing countries—that the House must consider the Supplementary Estimates for overseas aid.
  Perhaps one might recall that that 1 per cent., as agreed to by this country when we accepted the U.N.C.T.A.D. recommendations, was described by members of the present Government when they were in opposition as grossly inadequate. The right hon. Lady who is now Minister of Transport but who was speaking for the then Opposition on the subject, clearly stated that this was a woefully small sum to aim at and that we should go for a target of 2 per cent.
  At the present time, India is passing through an ordeal which it is almost impossible for anyone in this country to comprehend. The enormous problems which the Indian Government have to face will not be solved by criticism or by pious platitudes. The help which we give must be directed to the real needs of India on a scale which can make a solid contribution to the enormously difficult situation which she is facing.
  I want to ask the Minister first about the current situation in India, and how far the £7½ million has contributed to an easing of the famine situation. Secondly, what has become of the £7 million pledged to India for the Kipping loan and the Bhopal heavy electrical factory? Lastly, will the recent cuts announced relating to bilateral aid affect our assistance to India?
  Then, briefly, I want to turn to the South Arabian Federation. There is very
  590
  necessary assistance and aid pledged in these Estimates to the South Arabian Federation. I hope that the figure mentioned does not cover the military assistance which will be required, and which I hope that the Government will increase, and give eventually through an defence agreement with the South Arabian Federation.
  I want to be reassured by the Minister that, even assuming that the Government will persist with their proposed cuts for 1967–68, these cuts will in no way affect the aid allocated for the South Arabian Federation. That would be extremely serious. Moreover, bearing in mind that the figure in the Estimate refers to a target for a year ahead when, according to the Government, the economic situation will have improved, it is to be hoped that the cuts will not be necessary.
  In conclusion, I should like to hear the Government's attitude to the general aid problem and, more specifically, how this will affect India and South Arabia.
  7.24 p.m.
  Mr. James Ramsden: I intervene briefly to ask the Minister one or two questions about Kenya and the South Arabian Federation, both of which countries fall properly within the scope of these Supplementary Estimates. I apologise to the right hon. Gentleman for having given him notice comparatively late in the day. However, the issues with which I hope to deal are relatively simple, and I anticipate that he will have no difficulty in furnishing the information for which I intend to ask him.
  Taking Kenya first, some of us were privileged to visit that country on the business of this House in July. I should like to say straight away that no visitor to Kenya can fail to be invigorated by the spirit of genuine co-operation between the races which animates every form of public activity being carried on in that country. It is really a heartwarming example of genuine multi-racial co-operation conducted exactly in the spirit which one would wish to see. I am sure that no one speaking in this House would wish to say a word which might prejudice the successful future of developments in that direction.
  Kenya still has many problems, and, naturally in an agricultural country, the bulk of them concern the use, ownership

  591
  and development of the land. No one is more aware of their significance than those who are active in the political life of Kenya.
  As I understand the Estimate, the two sets of loans mentioned in it—the loan already begun for development projects and the interest-free loan of £18 million towards the cost of general development and land transfer—are to be applied in general to the development or reorganisation of land and agricultural projects in that Colony.
  The first thing which I would ask the right hon. Gentleman is if he could discriminate broadly between the various projects involved and due to be financed by these two loans. Secondly, and with specific reference to the £18 million interest-free loan, am I right in assuming that the bulk of the money involved will go to the Kenya Government in order to enable them to possess themselves of land at present in the ownership and occupation of Europeans for the purpose of settling African farmers on that land?
  If that is so—and I gather that it is, though I do not think that it has been mentioned in the House since a Written Answer some time last November—I wonder if the right hon. Gentleman could give us some details of the progress of working out the scheme for land purchase between Her Majesty's Government and the Kenya Government. Who will administer the scheme? I presume that it will be the Ministry of Agriculture in Kenya, or it may be some independent body working under its auspices. Who will carry out the valuations of the farms concerned? Will the valuations be done by the Ministry of Agriculture in Kenya or by some independent body? If it is to be the former, will there be any appeal to an independent body of some sort in the event of a failure between the private party concerned and the Ministry to agree about the price? I had hoped that the right hon. Gentleman would be able to assure us that some machinery for arbitration had been built into the scheme.
  If the right hon. Gentleman is able to give us an account of any progress which may have been made towards the implementation of the scheme, I am sure that
  592
  the House will be very glad to hear it. When this matter last came before the House, I think that the Minister's hon. Friend told us that the Kenya Government were on the point of sending out letters to those whom they hoped might be interested parties. It would be interesting to know what has been the response, what has happened, and, in particular, what has been the reaction from the European farming community to any steps which may have been taken.
  I wonder whether the right hon. Gentleman could also tell us whether, in the course of settling the business of this loan, he received any assurances from the Kenya Government as to when, on the completion of a purchase, the money would be payable—I mean the sort of time scale which would be likely to prevail between the contract being reached and the purchase being completed. I ask that because one knows that when public money is involved, in this country as anywhere else, payment sometimes takes a little longer than in the case of a private transaction, and if it takes too long it is possible for an ordinary case to develop into a compassionate case, a hardship case. I do not know whether the Minister can give the House any information about that.
  As this loan scheme is not by any means the first of such transactions to have been entered into by the Kenya Government, but will, I suppose, be the major one of its sort, can the right hon. Gentleman give us any idea of what will be the overall picture, by the time this loan has been used, of European farmers who do not wish to stay and farm in the country? I know that many are staying. Some of them have extended their interests and have shown their confidence in the future of European farming in Kenya by extending their purchases of land. Others, for one reason or another, have made different plans for their future, and if the right hon. Gentleman is able to give us a picture of how the European Community as a whole will end up in relation to those who may wish to go, it will be interesting to the House.
  There is one problem of administration related to the question of aid to Kenya in general, about which I should like to ask the right hon. Gentleman. I have already said that it was most impressive to see how all races were working together

  593
  in the Ministry of Agriculture and in its out-stations all over the country in the administration of the schemes, made possible by aid of this sort. Africans, Europeans and Asians are working side by side and doing a wholeheartedly good job. On the other hand, there is perfectly understandable and natural pressure for the gradual increase of Africanisation in administrative posts.
  Mr. Deputy Speaker (Sir Eric Fletcher): Order. In accordance with Mr. Speaker's Ruling, we cannot go into the whole question of administration in Kenya. All that we can deal with on the Supplementary Estimate is the reason for increasing the original Estimate.
  Mr. Ramsden: I was only going to touch on it, with a view to asking the right hon. Gentleman whether he had any information about the rate at which this is going to proceed, and of the intention of the Kenya Government in this regard. The position that we found was very reasonable, and I see no reason to think that it has altered, or that the right hon. Gentleman will not be able to give a satisfactory answer.
  The agricultural problems of Kenya are not by any means specifically European ones. Is it intended to devote any of this money to tidying up, so to speak, the land holdings in Kenya as between one African community and another? Is it intended to apply some of this money to buy out one tribe and thereby consolidate the land holdings of another? Is it intended to be applied under schemes for the consolidation and enlargement of African land holdings?
  Mr. Deputy Speaker: Order. I am afraid that it will not be in order for the Minister to answer those questions, because to do so will traverse Mr. Speaker's Ruling.
  Mr. Ramsden: With respect, Mr. Deputy Speaker, surely it is in order for hon. Members to discuss money which is provided under this subhead? Are not hon. Members entitled to know the purposes for which it will be applied before they vote one way or the other?
  Mr. Deputy Speaker: Mr. Speaker has laid it down clearly that on these Supplementary Estimates debates must be limited to the reasons for the increases,
  594
  and must not extend to questions of policy for which the original grant was sought.
  Mr. Ramsden: With respect, Mr. Deputy Speaker, are not we here talking about a new loan, and the first element, which I understand to be £600,000, in a new loan? Is not the whole scope of that loan therefore within the ambit of the debate?
  Mr. Deputy Speaker: I do not think that it is, because we are dealing with the revised provision, which has been increased from £4,825,000 to £7,075,000. It is true that there is a new sub-head, but that can be debated only to a very limited extent, and cannot include the whole question of Africanisation in Kenya.
  Mr. Ramsden: I do not want to detain the House, and it is with confidence that I leave it to the ingenuity of the Minister to furnish me with a reply which I think he knows I hope to have.
  I propose now to follow what was said by my hon. Friend the Member for Westbury (Mr. Walters) on the question of Southern Arabia. He asked the Minister whether what was involved here was military aid, and I understand that it is not. I think that I am correct in saying that. It was announced in the House, I think last June, that military aid of about £12 million was going to become available to the Southern Arabian Federation for the build-up of the Federal Army. I take it that this is not the responsibility of the right hon. Gentleman's Ministry, and that what we are concerned with here is economic and social aid. If I am right, I add my plea to that made by my hon. Friend that the right hon. Gentleman should give us some account of the various projects which will fall to be covered by this aid.
  I think that the House is very concerned at the moment with the prospects, about which we all know, of our withdrawal from the Aden base, and the whole question of the future of Southern Arabia. I think it must have become plain to anyone who has visited that theatre, as I have, that one of the reasons for the unrest and disturbances with which we have had to try to cope in the military sense during the last two or three years has been the fact that the hinterland of the territory, the seat of these

  595
  disturbances, is an extremely poor community. The country is difficult to administer because of the absence of road communications. Its people are difficult to keep happy, and are, therefore, an easy prey to subversion, because the economy on which they endeavour to support themselves is a bad subsistence economy.
  I need not labour the point that conditions there obviously require a considerable effort, and that it will have to be a greater effort in the absence of the annual inflow from the base, in the form of cash arising from the British occupation. It requires an obvious effort in the direction of social and agricultural development, and I hope that the right hon. Gentleman can give us some account of his intentions in that regard.
  I hope that the Minister will be able to answer the points that I have raised without getting out of order.
  7.41 p.m.
  Sir George Sinclair: I want to follow up the very searching questions which have been put by my hon. Friend the Member for Westbury (Mr. Walters) about India by referring to some of the Supplementary Estimates now sought for Pakistan. I commiserate with the Minister on inheriting a Department which, in spite of the great hopes expressed when it was inaugurated, has had its money for this year cut and has lost its place in the Cabinet. I regard this as a most backward re-assessment in respect of the Government's atttiude to the whole question of aid, and I greatly regret it.
  I know that within the bounds which have been set the right hon. Gentleman will do his best to see that British money is expended to the best purposes of economic development in the countries to which it goes. He has got together a considerable team to help him see that aid is well spent. I notice that in respect of the first loan there is a revised provision for £1 million and in respect of the third loan a revised provision for £100,000. Both loans are for British goods and services.
  I welcome this expenditure. It is overseas investment and not true aid, in any sense. It is all going to come back to Britain in the form of extra trade. I am sure that the funds loaned will be of
  596
  great use and will lead to economic development in Pakistan.
  I should like the Minister to tell the House how much of the money under those loan heads is going into true economic development. Is it going into infrastructure? Is it to be devoted to the basic requirement of developing territories—the speeding up of agricultural development? To what purpose is this additional money to be put? I should like specially to know whether any sums are going through the agency of the Pakistan Industrial Development Corporation, which has now been split into two, one for East Pakistan and the other for West Pakistan.
  I am interested in this matter because this was a device which Pakistan pioneered in tackling economic development which the private sector was not ready to tackle. The State has gone in to stimulate agricultural development and, when it has succeeded in getting economic activities under way, has disinvested and handed over to the private sector, using the money so derived as a rolling credit to sponsor new industries. This is one of the successful and helpful economic activities in which Pakistan is probably a world pioneer. I should like to know how much of this additional money will find its way through the two agencies in East and West Pakistan.
  In respect of the second loan, for development projects, totalling £3·617 million, we are asked to approve an additional £200,000. What sort of development projects will be made possible by way of this additional money? Can the Minister say whether the money is to go into industrial development, into infrastructure, or into agricultural development? He and his predecessor have laid increasing stress on the need to increase investment and efficiency in agriculture, in which 90 per cent. of the people of Pakistan and India are primarily engaged. This sector has been consistently lagging behind throughout the developing world. I want to know how far the Ministry has been able to reorientate its efforts in respect of the agricultural sector in these countries.
  In spite of these extra provisions, I am sure that the Minister will realise how inadequate our aid offer now is. Taken in the context of a percentage of the gross

  597
  national product of the developed countries, allocated in respect of aid and technical assistance to the developing countries, the percentage has fallen over the last two years right across the board. In official aid we are now allocating 6·7 per cent. of our gross national product, according to O.E.C.D. The first and third loans are largely for British goods and services and, as I have said, do not represent true aid; they are an investment. That is why I have put down a Parliamentary Question to ask the Ministry of Overseas Development to help work out an international definition of true aid. O.E.C.D. adopts one criterion, U.N.C.T.A.D. another and various other U.N. agencies adopt yet other criteria. Some services are counted as aid while others are disallowed as being true aid. If we are to have a true assessment—
  Mr. Deputy Speaker: Order. The hon. Gentleman cannot go into these general questions on this Supplementary Estimate.
  Sir G. Sinclair: I abide by your Ruling, Mr. Deputy Speaker, and conclude by again referring to Pakistan and hoping that the Minister will say how the additional sums will be spent and how they will be divided among infrastructure, industry and agriculture. We want to know whether some of these funds will be canalised through the two excellent agencies, the Pakistan Industrial and Development Corporations of East and West Pakistan.
  7.51 p.m.
  The Minister of Overseas Development (Mr. Arthur Bottomley): The hon. Member for Westbury (Mr. Walters) is to be congratulated for initiating this debate on overseas aid and, like him, I regret that we are not able to range more widely over this subject. He will agree that both of us have a great task in convincing the British public of the wisdom of giving overseas aid, although it is not only morally right that we should give it but a matter of self-interest, too.
  I would also have liked to have talked about school fees and to say how my Department is responsible for bringing 2,500 students here, the cost of which goes on my Vote, which means that the British taxpayer pays for this. I would also have liked to have said how the
  598
  Government sponsors students from overseas countries and how they will also be covered in regard to these increased fees, at least in respect of the students at present here. However, I cannot go into these matters for the reason mentioned by the hon. Gentleman; and if I attempted to do so you would soon call me to order, Mr. Deputy Speaker.
  The Supplementary Estimates are designed to meet the items which have been mentioned and others. Extra expenditure was foreseen at the beginning of the year, but we could not at that time say precisely how the money would be spent. We could not give a firm estimate and there must, therefore, be a Supplementary Estimate. Of the amount of £24 million £19·7 million is new money in that sense, but £4·4 million is a carry-over from the Colonial Office Vote and, in that sense, it does not represent anything other than a transfer.
  The main new item is the provision of £10 million towards an interest-free loan of £13·5 million to India. There is also provision for new loans to Pakistan and Kenya. Both of these items have been mentioned in the debate, but there is also provision for further disbursements under the existing Aid Programme for Ceylon, Kenya and Iran.
  It is right that India should have been specifically mentioned. We are all concerned for India in its present difficulties and I can only say that the Government are conscious of the need to give all possible assistance. If, for example, one considers the financial year 1966–67, one sees that the sum pledged was £32 million but that, in fact, £44·5 million was spent in the calendar year 1966. If one considers the amount of aid that is given through the consortium of the Western countries, one sees that the British contribution is 10 per cent. Indeed, about one-third of all our bilateral financial aid is given to India.
  As the hon. Member for Westbury said, one thing that is paramount in our minds is the famine situation in India. The whole of the new aid committed this year, £32 million, has been made available in a flexible way, and the Indians appreciate this. This flexibility enables them to take account of their food situation and I assure the House that we have this situation very much in mind as well. It helps

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  India because it gives that country foreign exchange which it can use for such things as shipping and buying food. We are not a food producing nation in this sense, so we cannot provide the food India requires. However, we are able to supply money in a flexible fashion, and this enables the Indians to make the best use of it to meet their present problems.
  To answer the question about the amount of money given, the whole of the £10 million loan of April 1966 has already been spent and the goods have been delivered. Of the remaining £7 million, committed in April, most will be spent in 1967–68. Orders are being placed now and it is probable that the whole of the £13·5 million will be spent this year.
  In respect of the aid we give to India, like the aid we give to other countries, our deliberations on this issue are a continuing process. We are always looking at the matter of need. As the hon. Member for Dorking (Sir G. Sinclair) said, funds are limited, so that whenever I have to consider this matter I must have regard to the fact that the aid must come within the existing aid programme. We have helped India industrially, which is the way in which we are best suited to help, and we are helping in the flexible way I mentioned, and the Indians appreciate help given in this way.
  I would have liked to have referred in detail to Pakistan in answer to the questions asked by the hon. Member for Dorking. Pakistan is the other country in that great sub-continent, but I admit that I am at a disadvantage, for I did not come prepared to answer such questions. I confess that I was not aware that Pakistan would be raised in this way. However, I assure the hon. Gentleman that too, have considerable knowledge of that great country and that I do not have the least doubt that many of the projects which he has in mind for Pakistan will go through the machinery which he mentioned. It is not, however, the responsibility of Her Majesty's Government to say what is best suited for the development of a country. It is for the country itself to decide but if the hon. Gentleman will permit me, I will consult my officials and, to the extent that he wants detailed information, I will send it to him.
  Sir G. Sinclair: I thank the right hon. Gentleman.
  Mr. Bottomley: The hon. Member for Westbury and the right hon. Member for Harrogate (Mr. Ramsden) raised a number of points and asked several questions concerning Iran and Southern Arabia. The position regarding Iran, from the point of view of the 1966–67 Estimates, is that the loan was not committed for specific purposes and that, therefore, we had to make provision for a token loan of £10. About £4 million from the loan has now been committed. The best example I can give of developments is that of an electrification project. The disbursements have begun and contracts involving more than £2½ million worth of generators have been placed and fortunately Britain is easily able to provide this equipment.
  There is also the question of technical assistance which, I think the hon. Member will agree, is a very valuable form of help to a developing country. In Iran there is a water master plan bureau and a hydraulics research station and we have sent out teams of experts to help with the planning of these two projects and to advise on the equipment they will need. We are right to give this aid to Iran because it is a developing country which is making rapid economic progress under a stable, forward-looking government.
  In the summer of 1966 my Department took over responsibility in Southern Arabia. Earlier this area had been within the province of responsibility of the Colonial Office and we were responsible only for aid provided under the Colonial Development and Welfare Acts, so far as they applied to that country, and to technical assistance. When Ministerial responsibility was transferred from the Colonial Office to the Foreign Office, we took over responsibility for budgetary aid. In this connection we believe it right to give all the help we can, bearing in mind that there is a move towards independence in 1968. We shall help as much as possible. To give an illustration, the figure for civil aid in Southern Arabia for the current year is about £9 10s. per head and in 1965 it was about £8 8s. per head.
  Mr. Ramsden: Military aid is not within the province of the right hon. Gentleman?
  Mr. Bottomley: No, military aid is not my responsibility. The hon. Member wished to raise a question on that but it would be difficult for me to give an answer as even with ingenuity I could not find a way round it.
  Mr. Walters: Before the right hon. Gentleman leaves the subject of Southern Arabia, can he assure us that there will be no cuts in the proposed civil aid set out in these Estimates?
  Mr. Bottomley: We could give no assurances of that kind. We have to talk with the countries concerned. Generally after this discussion has taken place we present the matter to the House. We shall have to wait to see what the position is as a result of further discussions on projected aid and commitments for the future.
  For Kenya, as the right hon. Member for Harrogate said, we provide an interest-free loan of £18 million. This is partly for land transfer which involves European mixed farms. It is at the rate of about 100,000 acres a year. The loan is partly for development projects during the period 1966–67. The land transfers programme is expected to cost about £6 million. This is subject to review and the estimated expenditure for this year is £600,000.
  The hon. Member asked the basis on which a settlement with the farmers is made. It is made on the basis of current market values as assessed by the professional valuers of the Kenya Lands Department. The basis is that of a willing buyer and a willing seller. Generally the scheme has been well received. I think the right hon. Member would agree that it is best to give it an opportunity to establish itself and that we should avoid hasty criticism. By all means let us examine it as we go along, but it would be best to allow it to work out on this basis and see how it goes. Knowing the Minister of Agriculture in Kenya, as the right hon. Member must know him, knowing the Government there and the willingness of the Europeans there and their readiness to co-operate, in my judgment we shall ultimately have the best possible results.
  Mr. Ramsden: I was not criticising it. I hope the right hon. Gentleman will not think that I was doing that. I was merely
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  asking for the details because, as far as I know, the House has not been told anything about the details.
  Mr. Bottomley: The details have been given to the House before, perhaps not specifically in the way I have given them, but this is not new information being conveyed at this time. This is an opportunity for the hon. Member to refresh his memory as I have been able to refresh mine.
  The final point I am called upon to answer is the suggestion that as a country we are not meeting our obligations under decisions of the United Nations, particularly of the U.N.C.T.A.D. Conference at which it was said that we should provide 1 per cent. of our income to help developing countries. In the past we have met that commitment by providing 1·17 per cent. and last year I think it was 1·15 per cent., so it has been over 1 per cent. Remembering that we have to take into account the national income, export credits and private investment, which is the requirement of U.N.C.T.A.D., it is too early to estimate for the period following April, 1968, but, despite our reductions in official aid in the current year, I think I can tell the House reasonably confidently that we shall meet the requirement of 1 per cent.
  On the aid programme generally we on this side of the House, recognising the economic difficulties confronting the country and that if we do not get that right first we shall not only fail to help ourselves but not be in a position to help others. I look forward confidently to a situation in which we shall have overcome the economic difficulties and in which this Government, which established the Ministry of Overseas Development to co-ordinate aid to overseas countries, will resume the rôle we have played through successive Governments in helping those less fortunate than ourselves.

  LOCAL EMPLOYMENT
  Mr. Deputy Speaker (Mr. Sydney Irvine): It may be for the guidance of the House if, because some hon. and right hon. Members have had difficulty in determining what is in order, I say that the next debate is very limited. It is limited entirely to the reasons for the increase in this Vote.
  8.9 p.m.
  Mr. Nicholas Ridley: I shall endeavour to keep within the narrowness of your Ruling, Mr. Deputy Speaker, but there are one or two questions which must be asked about this Supplementary Estimate. I start by questioning how much success we have hitherto had in providing local employment. The undoubted aim of hon. Members in all parts of the House is to remove all regional differentials in employment levels. I am sure that no Estimate or Supplementary Estimate would be required in the ideal State, because the level of employment would be the same throughout the country.
  This is not by any means so. There are still some very big disparities between the levels of employment in the various regions. The percentages of unemployment which have been reached are almost identical with the percentages of unemployment reached in the different regions in the peaks of 1959 and 1963. At present there are 339,000 people unemployed in the development districts, whereas in the peak of 1963 there were 366,000 and in the peak of 1959 there were 319,000. So there is nothing to choose between the figures.
  Moreover, the position may be a little worse because of the migration which is taking place. The total number of jobs in the development districts is much less than it was three or four years ago. The total net amount of migration from Scotland, Northern Ireland, the North-West and the Northern region in the last three years has been running at the rate of 66,000 a year. There has been migration into the South-West and Wales amounting in total to 22,000 a year. Thus the net migration from development districts is now running at 44,000 a year. Thus the loss of population in the last four years from the development districts might amount to about 176,000. If those are taken to represent about 70,000 jobs, on the ratio that 2½ people represent one wage earner, it can be said that there has been a decrease in the total number of people in jobs in development districts of 43,000 since 1963.
  In considering this Supplementary Estimate, it is highly relevant to point out that, despite the very large amount of money being spent, there are at present
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  43,000 fewer jobs in the six development areas than there were four years ago. It is a very sobering thought which the House should take very much to heart that, after all this time and after all the money we have spent on promoting local employment policies, we end up with a net decrease in the number in employment at a similar period in the inflation/deflation cycle to what we were in four years ago.
  This finding is confirmed by the National Institute Economic Review, which said in August, 1966:
  "The chart indicates the strength of the forces which have served to neutralise the effect of the policies which, during the last decade, have had as their aim the reduction of these unemployment differentials. The downward trend in Northern Ireland, and the temporary dips in the relative figures for the Northern Region and for Wales, show that unemployment disparities can be reduced, but that the reductions tend not to he long-lasting."
  Mr. Deputy Speaker: Order. I have endeavoured to allow the hon. Gentleman some latitude in developing his case in order to come to the Supplementary Estimates. I am afraid that he has not come quickly enough to the point. He must relate what he is saying to the Supplementary Estimates.
  Mr. Ridley: I accept that, and I have finished making the case that the result of these policies has been a reduction in the total number of jobs in the places where they are expected to help.
  We very much want to know the reason for the increase. To the extent that the Supplementary Estimate gives any help, it says
  "Construction proceeding more rapidly than expected"
  under land and buildings, and
  "New loans have been offered on a larger scale than expected".
  Other such reasons are given.
  I do not think that the amounts in these Supplementary Estimates are nearly large enough to counteract the mistakes which the Government have made. Replacing free depreciation by the investment grants was a very serious mistake and one which has hit the development districts. The Selective Employment Tax has hit the service industries and, in particular, has accentuated the problem

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  in the North of Scotland and in the South West. We had a debate on the South West earlier today.
  There can be no difference between us that these measures have not made the Government's policy any easier and I should have thought that it was necessary to increase the supplementary grants in this Estimate to a much greater extent to counteract the effect of the measures I have mentioned. The 10 per cent. drop in investment will severely hit the capital industries—steel, coal and shipbuilding. Both steel and coal expect a drop of 100,000 in employment. This will hit the regions first. It will hit Tyneside, the North-West, Scotland and probably Wales, and will make the problem much more serious. I do not think that there can be any hope of this very small amount can money making up for the extreme pressure which will come on the regions in addition to the serious deterioration I have mentioned.
  The Selective Employment Tax is bad enough for all industry, but in a development district such as the South West or the north of Scotland, where the main industries are tourism and servicing industries, tries, harm that it is likely to continue to do is incalculable. This is unquestionably the main reason for the decline in employment prospects in the South-West.
  One can have a much more resolute mobility of labour policy, but I should be quite wrong to develop that subject. I wonder why, after all this time and after spending money amounting to about £40½ million as set out in this Estimate, there has been no progress. Indeed, there are 43,000 fewer jobs in the development districts. This makes a mockery of the Prime Minister's words on 20th July:
  "the difference today … is that we have exempted, as the Tories never exempted, from the necessary steps which have had to be taken, all the development areas … instead of driving these areas into an intolerable level of unemployment and causing a deep gap between the more prosperous parts of the country and the areas of unemployment. What we have done is to bring the unemployment figures of the two parts of the country much closer together and our policies will ensure that the policies which we have been following for the development areas will continue."—[OFFICIAL REPORT, 20th July, 1966; Vol. 732, c. 642.]
  That has just not been proved to be so.
  The figures I have given show the need for an overhaul of our whole develop-
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  ment of industry policy. The Supplementary Estimate of about £3 million is nothing like sufficient to move the great obstacle which remains in the way of getting the employment pattern evenly distributed over the whole country. We are working against natural forces of a considerable scale. The President of the Board of Trade will agree that the harder we work to promote local employment, the harder we have to work, because the drift goes on: there is still the attraction of the higher wages or better conditions or better jobs in the South and the East. Therefore, we have continually to intensify our efforts to make the development of industry policy work. The President of the Board of Trade will also agree from the figures I have given that so far it has not worked.
  I therefore ask the right hon. Gentleman to tell us what this £3 millions expected to achieve, what the prospects are for the future, and how he intends to accelerate the provision of jobs in the development district which are now 43,000 down on the level reached in 1963.
  8.20 p.m.
  Mr. Ted Leadbitter: Earlier today, there was an interesting discussion on this Vote as it applied to the West Country, and I was surprised to hear the opinions so strongly expressed by tile right hon. Member for Taunton (Mr. du Cann) about the situation in the West Country in recent years. The right hon. Gentleman said that he viewed the present situation with deep concern, adding that he was arriving at the point of anger. This was to exaggerate the situation greatly in the light of the facts, and the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has similarly exaggerated the situation in this debate.
  The hon. Gentleman tells us that, in his opinion, there is no hope of a small amount of money making up for the effects of other measures affecting the regions and he says that there is insufficient in the Estimates. Without hoping or attempting to get out of order, perhaps I may bluntly answer that with two facts. In 1962, expenditure under the Estimates for this kind of development, covering grants for factory building, general purpose loans and grants, and also building, plant and machinery grants was £16,074,000. The Estimates for 1965–66, which can be said to be the first full year

  607
  under a Labour Government, were raised to £42,314,000. There is a considerable difference there between the performance of the previous Tory Government and the present Government.
  I am concerned primarily with an analysis of the effect of this kind of expenditure, and I want to test so far as I can the extent to which the Supplementary Estimates can lead us to reasonable conclusions about what is being done. I take it that it is in order to try to analyse the effect of the exercise of assisting the designated areas and, at the same time, to ask the President of the Board of Trade to define more precisely what the effects are for the regions, particularly the region in which my constituency lies.
  Earlier, in connection with the Vote for the promotion of employment, we had from hon. Members opposite some rather unfortunate statements about unemployment. The figures for mid-January this year show an unemployment level of 1·9 per cent. nationally. The figure for the Northern Region is 3·3 per cent., considerably more than for the West Country to which the right hon. Member for Taunton referred, and in my constituency it is approximately 5 per cent.
  I have two observations to make on that last figure. First, I express a deep sense of appreciation that, during the last two years, under a Labour Government, the level of unemployment in my constituency has dropped from 12½ per cent. to 5 per cent. My second comment is that 5 per cent. is considerably higher than the national average and, therefore, the greater reason to analyse the provision in these Supplementary Estimates.
  Such analysis is exceptionally difficult because, although we talk in the language of Estimates, we sometimes forget that Estimates become expenditure in some form, and it is on the expenditure side that one finds great difficulty. For example, sums are to be expended in the relevant period, that is to say, up to the end of March, 1967, but if we take the period of a year, which one can understand much better, the sum expended in any one financial year is not necessarily the same as was estimated for it. Analysis, therefore, becomes difficult. We may talk about what we expect or hope to
  608
  see put into practice in terms of assessed expenditure, but discussion of Estimate and expenditure becomes confusing when we have to narrow the argument down to Supplementary Estimates.
  A second cause of confusion is that the expenditure itself cannot be considered from one point in a year to another point a year hence. It is a continuing flow, and one cannot talk of expenditure to help designated areas in terms of annual packages. Third, the allocation of any one amount estimated is not fixed rigidly in advance; it is governed more or less by the success or failure of applications received as the year progresses.
  The House is always in some difficulty, therefore, and the problem is especially great for a back bencher who has to rely, as it were, on his own researches in assessing precisely what either Estimates in the whole or, as in this case, Supplementary Estimates will do.
  I have noted the three subheads under which the Supplementary Estimates have been settled, and I find here, strangely enough, a fourth source of confusion. During the past two or three years, the arrangements for regional designation have been altered. For example, not long ago we could talk about the North-Eastern Region, whereas we have now to talk of the Northern Region. It is exceptionally difficult either to assimilate figures or to make an assessment of what Estimates mean for a geographical area which has been altered in terms of designation as a special area.
  I have attempted to keep within the rules of order by bringing the figures under the three subheads of the Supplementary Estimates so far as I can. I wish to confine myself to three subheads which concern the division of the Estimates for the purpose of helping industrial resuscitation in the regions.
  Under the north-eastern designated heading is a subhead of grants for factories and buildings. In 1962–63 the Estimate was £2,417,000; by 1965–66 it had been raised to £6,317,000. I understand that the £900,000 in the present Estimates is more or less related to that kind of subhead. Perhaps my right hon. Friend will be able to say whether the general trend of allocation under that subhead is progressive or has been

  609
  adversely affected by the national economic situation. I find that during the past two years about £11 million has been estimated for the north-eastern region, as against only £5½ million for the two years before the Labour Government came to office. Is that rate of allocation being kept up within the Supplementary Estimates?
  I must confess to a general vagueness about general purpose loans and grants, found under the second subhead. One cannot be precise about what general purpose loans and grants are, unless they are for purposes of clearing derelict sites, the provision of ancillary services, or the buying of land for a developer. But I am rather disturbed about what I find under that subhead, because whereas the estimate for the North Eastern region in 1962–63 was £3,153,000, that figure fell in 1965–66. I am looking for a kind of regulator of trend, as I did under the first subhead.
  The figure fell to £1,345,000. Can my right hon. Friend tell us if he has experience of, or has information to lead him to believe that there is, some difficulty under that subhead? I believe that to provide Estimates for industrial development the three subheads must be interlinked. They must be able to progress together, and, if there is any lagging on one, that creates a problem for the other two.
  To put the matter in blunter language, it seems to me that during the past two years just over £5 million has been estimated for general purpose loans and grants, compared with £10 million in the two years before the Labour Government came to office. Because he does not have the precise information, the backbencher must ask, "What is the significance of this? Is that significance in some way reflected in the Estimate under that subhead?"
  A similar question arises under the third heading of buildings, plant and machinery. I am pleased to say that whereas in 1963 there was an Estimate of £1,711,000 under that heading, the Estimate has increased to £6,046,000 during the past year. That could be described as a boost, but a backbencher might come to the conclusion that under one subhead there is a boost, under another there is a kind of retraction, and under the third there is a progressive
  610
  increase. If he is answerable to his area and his constituency, he must ask whether those three related steps to industrial development are in step or getting out of step.
  It will have been noticed that I have had, as I said earlier, to confine myself to the language of the north-eastern Region. This was only possible because of the difficulty of getting the figures and trying to relate them to the Supplementary Estimates. But during the last two years we have had to talk in terms of the language of the Northern Region and, of course, the general regional divisions have altered elsewhere.
  I am rather disturbed that, in spite of the considerable increase in moneys made available in the region and the tremendous improvement in factory provision, certain other factors have militated against the kind of improvement in terms of jobs which most of us could reasonably well have expected.
  In 1963, in the Northern Region, 2,384,000 sq. ft. of factory space was provided, making available 6,100 new jobs. In 1965–66, a total of 5,574,000 sq. ft. of factory space was made available, producing 18,200 new jobs. If one were a little careless and attempted to confine the examination to two figures like that, possibly to take the opportunity of, say, party advantage, one would come to the obvious conclusion that there had been a tremendous improvement. But in 1964–65 the provisions through the general Estimates and the Supplementary Estimates for factory space was 7,424,000 sq. ft.
  Mr. Deputy Speaker (Mr. Sydney Irving): Order. The hon. Gentleman is going too wide. He is generalising his contribution and not confining it to the reasons for the increase in the Supplementary Estimates.
  Mr. Leadbitter: I accept your Ruling, Mr. Deputy Speaker, but perhaps, with respect, I might try to explain the point I was attempting to make. When my right hon. Friend replies, he will have to try to explain why there has been reduction of employment as compared to what a cursory examination of the figures might have led us otherwise to believe. In considering Supplementary Estimates, a pertinent factor in the calculation is the increased provision of factory space and

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  the number of new jobs related to it. One must find and use the known data.
  Perhaps I might, with brevity, return to the 1964–65 figure. I was saying that 7,424,000 sq. ft. of factory space was provided, producing 26,200 new jobs. To go back to your Ruling, Mr. Deputy Speaker, the real question is why was it that, within one year, the provision was reduced by 2 million sq. ft. with a reduction in new jobs of 6,000.
  Mr. Deputy Speaker: Order. I must insist. The hon. Gentleman is going far too wide. He is not really concerned with the reason for this particular increase but with differences in the figures for various years. He must come back to the point or I must ask him to resume his seat.
  Mr. Leadbitter: The patience of back benchers, Mr. Speaker and Mr. Deputy Speaker during discussion of Supplementary Estimates is one of the most commendable things about this debate, because it is only when one slides beyond the boundaries of discretion that one gets a rest in order to recapitulate and attempt to get back to the Supplementary Estimates.
  The reasons for these estimates are in the Civil Estimates for 1966–67, and obviously it would be easier to question them. It is also better to be able to question them if one is in a position to analyse the effect of previous Estimates. That is what I have done. Are the reasons for these Estimates those given by the President of the Board of Trade in the Supplementary Estimates? Are they, in point of fact, correct? Under the subheading "Land and Buildings" the reason for the £750,000 increase is that construction is proceeding more rapidly than is expected.
  I cannot see how an hon. Member opposite or an hon. Member on this side of the House can argue about that. Indeed, a man would be a fool if he attempted to do so. What I am concerned about—and what I am sure the President of the Board of Trade is concerned about—is whether it is the right rate of increase. Is it the right type of increase? Is it the right distribution of the increase?
  These are the kinds, of questions which unfortunately are bedevilling the Northern
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  Region. To give an example, if I were to reflect upon the present position in the Northern Region compared with that in 1962–63 and did not have a critical mind I would have to say that there had been a transformation in the Northern Region. There has been a remarkable injection of new factories, but, unfortunately, the ball has not been kicked in such a way as to achieve the right kind of goal. It seems rather odd—and I am sure the President of the Board of Trade will agree that this is a matter which is taxing his mind—that between 1960 and 1964, the number of employed men dropped from 878,300 to 853,600. This was against the likely result of the injection of new factories which could be forecast by any reasonable yardstick. The change in employment—
  Mr. Deputy Speaker: Order. I am sorry, but the hon. Gentleman will have to resume his seat if he cannot relate his remarks more to the increase. He is talking about the whole of the general policy of the Government in relation to local employment, and that is out of order. I hope that, on reflection, he will come back to the point, or I must insist that he resumes his seat.
  Mr. Leadbitter: Thank you, Mr. Deputy Speaker. As a matter of fact, I had just arrived at a comma, and four words will get me to a full stop. Why, in spite of the injection, has employment in those areas dropped by 2·8 per cent when the national figure has been a plus?
  I thank you, Mr. Deputy Speaker, for the patience which you have shown. It would be ill-fitting and improper to pursue a larger analysis of the employment question. Taking the Supplementary and the original Estimates together, the Government can claim to have provided the maximum possible, within the terms of the economic crisis, to correct the tremendous imbalance which existed between the poverty-stricken regions of this country and the more fortunate. The steps have been bold and imaginative, but they have been taken, as it were, to turn the tide of depression in the Northern and other regions. They were immediate steps, but at best only short-term measures.
  Estimates themselves cannot tell us much. I refer to their vagueness and to

  613
  the difficulties of arranging a clear connection between Estimates and expenditure. Therefore, the only test must be our experience in our own regions. Acknowledgment of the obvious gaps between planning and achievement can only lead us to look ahead and urge my right hon. Friend to heed the warning signs that injections of new factories into an area by themselves do not produce the proper answers to our problems. He must encourage more balanced and more integrated and qualitative development if he is to meet the needs of populations of regions such as mine.
  8.46p.m.
  Mr. J. B. Symonds: I hope that I shall be able to keep within the terms of the Supplementary Estimate, although those terms are very narrow. We have heard complaints about the amount of money which is to be spent, through the Supplementary Estimate, on the South-West where the unemployment rate was said to be 1·4 per cent. My hon. Friend the Member for The Hartlepools (Mr. Leadbitter) asked whether the North-East was having a sufficient share. Various hon. Members have mentioned various places, but the County of Cumberland, which I represent, seems to have been forgotten, to have been put on one side, stuck in a little corner and regarded only as part of the Northern Region whenever someone has thought that perhaps it should be considered.
  The Supplementary Estimate refers to the promotion of local employment. How much is to be spent in Cumberland under this heading? The rate of unemployment in Cumberland is 4·5 per cent. and earlier today there was a furore about an unemployment of 1·4 per cent. Hon. Members will be alarmed to hear that in Cleator Moor alone the rate is 10 per cent. A factory has been built there, but I do not know whether provision for it comes under this Supplementary Estimate or under the original Estimate. I have a question about another factory provided for by the Supplementary Estimate. Why has the first factory, which is ready for occupation, not been occupied? I have been informed that manufacturers have been asked to go there but have refused.
  A man or woman who refused a job would find the full weight of the Minister of Labour coming down upon them.
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  They would have their benefit disallowed for a period of six weeks. If I tell my people in West Cumberland that almost £3 million has been spent in Supplementary Estimates and that Cumberland must have had part of it, they will ask me: where are the jobs? They will tell me that they still have to sign on at the labour exchange. The average earnings in Cumberland are £11 4s. to £11 10s. a week, not the £18 to £20 a week about which one hears in some parts of the country.
  Will my right hon. Friend tell me when he expects the new Government factories at Cleator Moor to be occupied? It is vitally important that this should take place because we are a development district. Has he made any provision for our people at Millom? He must know that unemployment in Millom has gone up within a month by the percentage of unemployment mentioned for the whole of the South-West. It has now risen to 3·7 per cent.
  I was present at a meeting last Friday night when there were ructions because the 3·7 per cent. will rise to 4·4 per cent. and men will be displaced from the Hematite Iron Ore Company because the steel industry will not receive the grant for the steel spray process. The President of the Board of Trade must have known that this would occur. Did he make any provision in the Estimate for Millom? He must have had something in mind to make provision for local employment. I hope that my people will have the opportunity to discuss the steel spray question at some later date. The President of the Board of Trade will have this matter before him in the next five or six weeks.
  I appeal to the President of the Board of Trade to keep the Northern Region in mind. I come from the North East, but many of my hon. Friends seem to forget that Cumberland exists—an area of which this nation can be proud. When its people were asked to serve this country, they did not say, "No". They said, "We are prepared to volunteer". We appeal to my right hon. Friend to give us work. I hope that in his Supplementary Estimate he has made provision to let these factories at Cleator Moor and to arrange for further employment in Millom. He has been there and he knows

  615
  the people of Cumberland, because I believe that he has walked a few miles over it. The people look to him for employment, and I hope that they will get it from this Supplementary Estimate.
  8.57 p.m.
  Mr. Robert Woof: I shall try to adhere to your Ruling, Mr. Deputy Speaker, but if I have any qualification for participating in this debate, which is on the Supplementary Estimate of the Board of Trade and which deals with the promotion of local employment, it is that I live with this problem in a real sense every day.
  What draws my special attention is the sum of £3,150,000 for this operation. How much of it will be invested in my constituency? I have a special reason for asking. In December, 1965, the Government proposed to provide special funds to accelerate the provision of alternative industrial development in areas mainly affected by the acceleration of the closure of uneconomic pits and to help in meeting the social and human costs rising therefrom.
  It is enlightening to see the extra provision proposed for promoting local employment. The Estimate for land and buildings has risen by £750,000 to £10,250,990. The Estimate for loans to undertakings has risen by ¢1½ million to £11,500,000. The Estimate for building grants to undertakings has risen by £900,000 to £13 million. I should like to know how much of the sum for building grants and loans to undertakings will go to concerns which are prepared to move to constituencies like mine which are designated as development areas.
  As the amount required is for the promotion of local employment, it would defy common sense to deny the problems of local employment. I recognise that the basic difficulties are vast. It is not easy to give a correct diagnosis or to prescribe a ready-made remedy when the wheels of industrial life are under the shadow of depression. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) introduced into this debate—
  Mr. Deputy Speaker: Order. I had to draw the attention of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) to the fact that he was going too
  616
  wide of the subject for debate. The hon. Member is now guilty of the same offence. The debate is related only to the increases in these particular Supplementary Estimates and the reasons thereof.
  Mr. Woof: I must bow to your Ruling, Mr. Deputy Speaker. I was about to explain why I support the extra provisions of the Supplementary Estimates and why I think there are valid reasons for the Government undertaking to introduce these supplements to tackle the question of unemployment.
  Even though we have a habit nowadays of developing some new catchphrase—the one used in all modern senses is "redeployment"—I think it much more appropriate to coin a phrase used by the man buried in Highgate Cemetery—"the industrial reserve army". But that actually represents those who are discharged from skilled, semi-skilled and unskilled work. This is what local employment is about, and the Supplementary Estimate helps to retrieve the position of unemployment.
  I would like also to explain why more money should be allocated for this purpose, because the problems that arise are of several kinds. While the laying off of workers can be effective and expected to produce some kind of redundancy, it cannot automatically be assumed that the unemployment will be only a short spell. As a consequence, social problems are generated by redundancy and no cosy comfort is provided by overall unemployment statistics.
  While I can gain some consolation from the financial implications embodied in the Estimates that we are discussing, we have seen plenty of the fruits produced by the industrial working civilisation and we have learned to think of economic relations as being as much the subject of change and evolution as any biological organism. But when we have to come to deal with a situation in which these Estimates are actually to promote local employment, it means facing up to those workers who are concerned with difficulties that are encountered in securing alternative employment which is also a valid reason for enlisting my support for these Estimates.
  It is in such circumstances that it is not curious that the times are pregnant of

  617
  great changes in which the least observant must be convinced. That is why I also understand that the Government have added these additional financial provisions. They are highly welcome, because even a superficial acquaintance with the means and method of changing things can hardly fail to leave the impression that no limit is set to the submerging of many of the old landmarks in the old industrial areas. It is encouraging to note that the Supplementary Estimates will go some way to develop new industries in development areas and areas that are affected.
  There is sufficient to be seen to give us a clear view of the variety of problems with which we have to deal and the startling contrasts that those problems involve. It behoves us to learn what we cm, so that we may be able at least to remedy so much of the consequences as are capable of human treatment.
  The posture of affairs in an atmosphere that is breathing for Government financial assistance is crucial to combat local redundancy.
  Mr. Deputy Speaker: I am sorry to interrupt the hon. Gentleman again, but he is adducing general considerations that are applicable to the whole Estimates, when we are considering only the Winter Supplementary Estimates, which are very limited.
  Mr. F. V. Corfield: Mr. Deputy Speaker, could we have your guidance? When one comes to look at the figures, it is clear that one cannot identify the money that is being expended on any particular project. As I understand the figures, they represent merely an increase in the cost of the previously decided programme. It would seem to me, though far be it from me to set myself up as an expert on procedure, that it is quite impossible to discuss purely the £3,150,000 increase without reviewing the whole programme under which it arises. The £3,150,000 is not allocated to any specified project. It is merely an increase of the cost of the whole programme. With respect, I should have thought that we were entitled to range over the whole field of this branch of the policy for which the right hon. Gentleman is responsible and for which he would require this extra money.
  Mr. Deputy Speaker: The hon. Gentleman's difficulties are shared by the Chair. The Chair has allowed some latitude in the preparation of the case to deal with the Supplementary Estimates. But it is quite clear that we can only discuss the reasons for the increase. Unless remarks on the main Estimates are related to the reasons for the increase, I am afraid that they are out of order.
  Mr. Woof: With respect, Mr. Deputy Speaker. You will appreciate that it is very difficult to try to strike a match on a bar of soap. I must submit to you that I would expect that the Supplementary Estimate under discussion will go some way towards helping to build factories where alternative employment is not at present available. After all, in the Civil Estimates one finds the phrase "promotion of local employment." If there is no unemployment, there is no need to appropriate moneys in order to create employment. That is how I see the Estimates.
  I say that because a great many of my constituents have been victims of this kind of redundancy. It has not been sprung upon them on account of the July measures. It has been going on for years. The constituency has most certainly seen an almost complete upsetting through the contraction of the mining industry, accompanied by the closing of pit after pit—
  Mr. Deputy Speaker: Order. I do not want to bring the bar of soap out again, but the hon. Gentleman is out of order. Unless he can relate his remarks to the increase, I am afraid that I must ask him to resume his seat.
  Mr. Woof: I must admit that it may be difficult to estimate expenditure with any precision to improve the efficiency of local employment. I am obliged to say that, because the driving impulse of my personal interest, however concentrated or prolonged, is not mere web-spinning to entangle or confuse such an issue which coincides with the welter of economic and social problems.
  Therefore, in the midst of all, we are told repeatedly that the standard of living, like the possible level of material comfort, can only be determined by raising production, raising exports and increasing efficiency. This, as I understand the

  619
  appropriation of these Estimates, is to enable factories to be built and developed in the development areas. I hope it will be understood why my constituents think that they are entitled to a fair share of the money which Parliament is being asked to vote in these Estimates.
  9.10 p.m.
  Mr. William Baxter: I seek to intervene in this debate for two reasons; first, to congratulate the Board of Trade, and in particular my right hon. Friend the President of the Board of Trade, on the excellent work which has been done over the last two years. There is no doubt that my right hon. Friend's policy has led to a great deal of satisfaction, hope, and indeed inspiration throughout the country, and it would be remiss of the House to begrudge him this Supplementary Estimate, especially if he seeks to develop a factory in West Stirlingshire. Being the Member for that part of the country, I would be the last person to object to these Estimates on the grounds that he was proposing to do so.
  My right hon. Friend is a man of great calibre and ability, and he has sought to be reasonable to all parts of the country, but he must have had a bad attack of near-sightedness when visiting Scotland, because he failed to recognise the needs of one particular part of my constituency. I am thinking of the villages of Cowie, Plean, Fallin and Bannockburn. All the pits in these areas have closed over the last two or three years, and there is no alternative employment there.
  I would not like to think that an Englishman was so opposed to giving a little credit where credit was due that he would say that because Bannockburn was involved he would not put a factory there. I would not like to think that my right hon. Friend was that way inclined. There must be some reason, though I have never been given a valid one why no consideration has been given to building an advance factory in that part of my constituency, and it is on this simple basis that I intervene in the debate.
  The County Council of Stirlingshire has spent a considerable amount of money on providing new schools, new houses,
  620
  clinics, and so on, in those villages, but all that expenditure will count for nought if my right hon. Friend does not recognise the need to establish one or two factories there.
  It is true that a certain amount of work is available in the adjacent areas, but this necessitates the provision of a great deal of transport, and transport is a very costly thing these days, not only for the nation, but for the individual, and greater consideration should be given to siting factories in such a way that we can save the country money.
  I only make that claim. I could mention other parts of my constituency—
  Mr. Deputy Speaker: Order. I hope that the hon. Member will not do that. He is still not addressing himself to the reasons for these Supplementary Estimates, and the increases.
  Mr. Baxter: I beg your pardon, Mr. Deputy Speaker, but I thought that I had given a very valid reason for doing so, and, having looked through these Estimates, I can see no place which is more deserving of factories than is my constituency. There is nothing here to show whether my eyes are deceiving me, and I think that I am right to raise this point.
  Mr. Deputy Speaker: I think that the hon. Member is in order if, interrogatively, he poses the question whether these Estimates include work in his constituency, but he would be out of order if he went round all the districts in his constituency and asked the same question.
  Mr. Baxter: I bow to your Ruling, Mr. Deputy Speaker, and as the hour is growing late, and many other hon. Members wish to take part in this debate, I shall conclude my speech.
  I ask my right hon. Friend not to take my plea lightly. I ask him to give serious consideration to the issues that I have raised. If he does not, he will go down not only in my estimation but in the estimation of many people in Scotland. I invite him to look round that part of Scotland. I shall be happy to treat him as hospitably as I can. That hospitality will not be included in the Estimates. Nevertheless, it will be very generous and helpful in assisting him to make up his mind to give reasonable consideration

  621
  to the claims of the areas that I have indicated.
  9.15 p.m.
  Mr. F. V. Corfield: I rise with limited optimism as to my ability to keep in order, but I take it that as the heading in the Supplementary Estimates is concerned with the promotion of local employment it is in order to ask the right hon. Gentleman to interpret the increases for which he is asking in terms of an increase in the number of jobs available.
  Looking at the detail—if such it can be called—of Subhead A, we have an increase of £750,000 because the construction of the buildings is proceeding more rapidly than expected. Presumably these buildings are being completed more rapidly and are therefore available at an earlier date for the provision of employment. The same argument is valid under Subhead D, where new loans have been offered on a larger scale than expected. Presumably this means that there has been a bigger influx of industrialists willing to take advantage of the special financial provisions available in development areas and that, again, this indicates a widening of employment opportunities.
  If that is so, I take it that the right hon. Gentleman will be able to give some indication what this speeding-up of construction and loan granting represents in terms of increased employment. It seemed to me that my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) put his finger on the crux of the problem, namely, the extent to which the policies in respect of which this money is being contributed are increasing the number of jobs available and preventing or slowing up the drift from development areas to other areas.
  We would all agree that since the war this has been one of the biggest problems in the management of the economy. We have what hat; come to be known as over-full employment in certain prosperous areas of the West Midlands and the South East, but we also have an unacceptable degree of unemployment in the development areas.
  It was to this fact that my hon. Friend referred when he recalled a statement made by the Prime Minister on 20th July, to the effect that the fairly severe
  622
  restrictions announced on that date would not affect development areas. My hon. Friend gave fairly strong evidence to show that this undertaking is not materialising, and that there continues to be a falling-off in the number of jobs in relation to the working population available in development areas, as compared with the past, with the result that there is either more unemployment or more emigration from development areas to other areas.
  This must be regarded as a criticism of the policy for which the right hon. Gentleman is responsible and on behalf of which he is asking for more money, on the ground that he is doing rather better than he expected. This speeding-up must be very much to his advantage. I hope that he can dispel the fears and the convincing arguments of my hon. Friend that far from curing the disease he is not even managing to hold the position steady, and that there is a continuing drift and a lowering of the rate of employment in relation to the working population in these areas.
  Despite the various congratulatory remarks made by some of his hon. Friends—made more in their attempts to keep in order than to be genuinely congratulatory, I think—the right hon. Gentleman should not be complacent by merely asking for more money and by imagining that that represents success. We want to know what it represents in terms of increased jobs being provided in these areas and in terms of the success of the Government's policy, in accordance with the Prime Minister's undertaking. We want to be assured that, to some degree at least, the development areas are being insulated from the severe restrictions which have been imposed on the economy generally and which, in the past as well as at the present, always affect the development areas more severely than the rest of the country.
  9.21 p.m.
  The President of the Board of Trade (Mr. Douglas Jay): I thank my hon. Friend the Member for West Stirling-shire (Mr. W. Baxter) for his remarks and I assure him and the House that I am far from becoming complacent, least of all about West Stirlingshire and not even about Bannockburn.

  623
  The main reason why we are asking for an extra Winter Supplementary of £3,150,000—and I should tell the House that in the Spring Supplementary I shall probably be seeking a further £5 million—is that new industrial projects in development areas are expanding faster, I am glad to say, and payments are growing faster, than we estimated some months ago. The original net vote for £37,342,000, which is now likely to be exceeded by some £8 million over the whole year, itself compares with £29,867,000 actually spent in the previous year.
  The hon. Member for St. Ives (Mr. Nott) earlier quoted the then Tory Government's Estimate of £41 million for 1962–63 as evidence that more was being spent then than now. He did not say, and I believe that he did not know, that the actual sum spent in 1962–63 was not £41 million but only £24 million. This year we expect to spend more than £41 million, and it is really more than that because the investment grant element in the development area grants are not included in these Estimates.
  Under the individual subheads, provision of land and buildings—subhead A—shows an increase of £750,000 over and above the £9,500,990 originally sought. It is now the policy of the Board of Trade, not merely to build advance factories in the under-employed areas on a generous scale, but also to buy land in advance of the decision to build more factories because this enables us to cut out the long and laborious legal delays which have faced us in acquiring land in recent years. Expenditure here depends not only on the size and number of the projects, but on other things, such as the effect of weather on building work, the speed of construction and deliveries of materials and so on. The increase in expenditure over estimates in the first half of 1966–67 has been due to quicker expansion in all these respects.
  Subhead D, loans to undertakings, originally estimated at £10 million now needs a further £1,500,000 for the year. The amount here depends partly on the number of new cases and partly on the rate of progress of large and fast-moving projects, which vary widely from year to year. New cases this year have been
  624
  greater than the Board assumed. I think, therefore, that we can all welcome the additional estimate needed here, since it means faster capital expenditure in development areas.
  So with building grants to undertakings. The estimate of £12,100,000 is to be increased by £900,000 for the half year. Payments here have been rising quarter by quarter, but in no quarter previously have they reached an annual rate of £10 million. This year payments in the very large cases have built up more rapidly than we assumed that they would, and in the first half of the year they approached £6 million, one-third of which was for very large projects.
  My hon. Friend the Member for The Hartlepools (Mr. Leadbitter) asked whether this measured the rate of progress. It may not for these reasons exactly measure the trend, but I assure him that the trend is upwards. The total of all assistance offered by the Board of Trade on industrial expansion in the development areas has risen from £40·5 million in 1964–65 to £43 million in April-December, 1966, which is an annual rate of £57 million. We have, of course, been continually cutting down delays in procedure. That is one reason for the speeding up of expenditure.
  It is encouraging for the future of employment in the development areas—this is one example of why these estimates are increasing—that the number of projects coming forward to take advantage of these loans and grants, despite the general restraints on the economy in recent months have not fallen as seriously as some feared in this period. In 1966 as a whole, to measure the demand for extra loans and grants in this way, total industrial development certificate approvals exceeded those of 1965 by 12 per cent. What is more encouraging and more directly relevant to these figures is that the share of industrial development going to development areas grew still further in 1966. That is one reason for the Supplementaries. The share going to the South-East fell further.
  The development area share has risen from 24 per cent. in 1962 to 39 per cent. in 1965 and 41 per cent. in 1966. The share going to London and the South-East—the converse of this as a result of the tough I.D.C. policy which I have always

  625
  promised to follow—fell from 32 per cent. in 1962 to 15 per cent. in 1966.
  Mr. Corfield: I take it that those percentages are based on floor area?
  Mr. Jay: Yes, they are in terms of square feet. That is a very substantial swing in the proportions. It is bound, I think, to improve very greatly the employment prospects in the development areas in future but it must, of course, mean higher expenditure and, therefore, Supplementaries meanwhile. In 1966 there was a very welcome increase in new projects in Wales which, in terms of square feet, were actually double those of 1965, which were in turn 50 per cent. up on the five years 1960 to 1964. In the Northern Region, including West Cumberland, there was a sharp increase in 1966, which was 62 per cent. above the 1960–64 average.
  In passing, perhaps I should be in order in saying that this, of course, includes West Cumberland where a number of projects are going forward, an area which I shall never forget or neglect, as I think my hon. Friend knows. In Scotland the 1966 figure was below the 1965 record, but the average of the two years, 1965–66 was 78 per cent. above the previous five years average.
  Mr. W. Baxter: Is there any valid reason for this reduction in expenditure in Scotland as against the previous years? Will this be made up in the following year?
  Mr. Jay: It was not a reduction in expenditure, but a reduction in I.D.C. approvals because there was an exceptional increase to a record figure in 1965, but the total last year was still very high. At the other end of the country, in the South-East, approvals in 1966 were below the earlier five years and this was the only region where that was true. I believe that these figures show that it is possible by I.D.C. policy to influence substantially the spread of industrial development between regions and that in the last two years we have certainly succeeded in doing so.
  The House would probably like to know the progress we have made in the four advance factory programmes which have been launched in development areas in the last two years, which are financed
  626
  by these Estimates, and the rate of increase in which is one reason for the Supplementaries. Altogether these programmes included 94 factories, the last 21 of which were announced as late as November, 1966. Of the 94, 36 will be in Scotland, 24 in Wales, and 36 in the North East, Cumberland, Merseyside and the South-West. So far, of the total of 94, 24 are already completed, 35 others are building, and 24 have been allocated to tenants.
  We have had reasonable success so far in finding tenants, and over the whole of the Board of Trade factory space financed in this way rather more than 98 per cent. is occupied at present. I assure my hon. Friend the Member for West Stirlingshire that we shall find tenants for the factories he is concerned with as quickly as we can. We are indeed pushing on with the whole of these programmes as fast as we can, despite the previous legal delays which are sometimes exasperatingly prolonged.
  Industrial estates in the development areas are also being expanded and new ones constructed. That is one reason why we need provision for land as well as buildings in this area. At the new 330-acre estate on Tees-side the first phase of site development at a cost of some £1 million has been completed. One advance factory has also been completed and a second will be finished in a few weeks. We have given approval for two other Government-financed projects for individual firms on this estate. At Knowsley—or Kirkby, as it is sometimes called—on the outskirts of Liverpool, where we have been held up by extremely protracted legal processes, I am glad to say that I shall sign the necessary contract with Liverpool Corporation within the next few days.
  In Scotland, where this expenditure is also mounting, Bellshill—not, I am afraid, in the area of my hon. Friend the Member for West Stirlingshire, but not so far away—is developing rapidly and two factories have been taken there by Honey-wells, who are already at Newhouse. At Falkirk, which is nearer to my hon. Friend, we are acquiring 95 acres for a new estate. I hope this is good news to my hon. Friend.
  In Wales the chief new venture for which this expenditure will partly be needed is at Llantrisant, which is within

  627
  easy daily travelling distance of the Rhondda, and where 72 acres of suitable land are being acquired. Suitable industrial land in that area, because of subsidence and other problems, is not easy to find. Legal formalities here should, we hope, be completed this month. Approval has already been given for two Government-built factories here, one of 200,000 sq. ft., and both of which we hope to start building in the early part of this year. Another 86 acres of land are being taken over from the Ministry of Defence for another estate at Kenfigg, and work has begun.
  New estates are also under way in Dundee and Glasgow.
  In so far as we successfully attempt to speed up processes, it accelerates expenditure and therefore gives rise to the need for these estimates.
  The unemployment figures, I believe, show very strikingly that all these efforts, both by way of Board of Trade loans and grants and development of factories and estates, have begun to lay a much stronger foundation in these areas and to shield them from the general increases in unemployment over the past year. That, indeed, is the justification for these Estimates.
  If it is in order to answer the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), I will answer him. It could not have been expected that the development areas and regions would not feel at all the temporary rise in unemployment which followed the measures of last July, but the significant fact is that unemployment has risen markedly less in these regions than in the country as a whole.
  Taking the period January, 1966 to January, 1967, the rise in Great Britain was 72 per cent., in Scotland only 26 per cent., in the Northern Region 43 per cent., and in Wales 40 per cent. Wales has previously lagged behind, mainly, I think, because such a large part of it was descheduled almost entirely by the previous Government.
  Mr. Speaker: Order. I hope that the right hon. Gentleman will not broaden his reply too much.
  Mr. Jay: I am trying to tread a careful path between answering the questions
  628
  put to me and keeping within order, Mr. Speaker. I shall content myself with saying that the figures show that the measures taken and the expenditure made under these headings have succeeded in shielding these areas against the rise in unemployment which would otherwise have occurred.
  My hon. Friend the Member for The Hartlepools rightly said that there must be some other force militating against us. There is. This force is the decline in the coal industry in all these areas. This has meant a large decline in employment, against which we have been fighting by these methods, which was not occurring in earlier years. This is precisely one of the reasons for the expenditure, and, if we had not carried out these policies, the decline in the coal industry of between 150,000 and 200,000 men over recent years would have led to much higher unemployment in these areas than prevails at present.
  Mr. Thomas Swain: I realise that the coal industry has been run down considerably in what we call the depressed areas, but what does the Board of Trade intend to do for areas such as North Derbyshire where the coal industry has been run down equally severely? Nothing has been done, and the local authorities are having great difficulty in getting the Board of Trade to grant us industrial development certificates. The population of North Derbyshire is having to migrate to other counties—
  Mr. Speaker: Order. With respect, we cannot discuss general policy on this Vote. Question and answer must be linked to the Supplementary Estimates.
  Mr. Jay: I think that all I can say in reply to my hon. Friend and remain in order is that I should not be able to expend any of these moneys in North Derbyshire because it is not a development area, but the main remedy for the problem that he raises is the freer grant of industrial development certificates in those areas. However, I pursue that no further now.
  For all the reasons I have given, I believe that the money covered by this Vote is being wisely invested—it is investment rather than expenditure—and I hope that the House will approve the Estimates.

  INDUSTRIAL REORGANISATION CORPORATION
  9.39 p.m.
  Sir Harry Legge-Bourke: It will help the House if I define at the outset the matter to which I wish to call attention. It appears on page 19 of the Supplementary Estimates, 1966–67, under Class IV, Vote 25. This is the first time that the House has ever been asked to vote under this heading because what we are asked to do here is to approve the voting of £5 million to the new Industrial Reorganisation Corporation. At the time when these Supplementary Estimates were printed and introduced, on 30th November last year, the Bill setting up the Industrial Reorganisation Corporation was still before Parliament, and we therefore have the asterisk and note on page 19 saying that,
  "The whole of this sum is subject to the passage of the Industrial Reorganisation Corporation Bill now before Parliament."
  The Bill received the Royal Assent on 21st December last year. This is the first time we have had an opportunity to ask what is being done by the Corporation, how the money will be spent, for what purpose, and how the Corporation is being administered. It is therefore appropriate that, this being a new charge, we should also have a new Minister of State to reply. I shall have the whole House with me if I begin by offering my sincere congratulations to the hon. Member for Manchester, Cheetham (Mr. Harold Lever), now Joint Under-Secretary of State for Economic Affairs. I assure him straight away that I do not intend to imitate him in his great art of filibuster.
  Nevertheless, I am sure that he will agree that there is a number of matters of considerable importance under this heading. Some very important statements have been made about the work of I.R.C., and I hope that this debate will give the Under-Secretary of State an opportunity of stating what the Departmene of Economic Affairs really intends by those decisions, and what will be the way ahead for the Corporation.
  In dealing with this matter, the method I propose to adopt is to examine it under four different headings: first, the Ministerial responsibilities, in so far as they
  630
  exist; secondly, the decision which has been announced to call for an inquiry into the telecommunications industry, particularly relating to its relationship with the General Post Office; thirdly, to deal with the statement made last month about the Rootes-Chrysler tie-up; and fourthly, to suggest one or two things we should bear in mind as to the way we encourage the I.R.C. in its work.
  On the Second Reading of the Bill, when we were discussing whether or not we should have an Industrial Reorganisation Corporation at all, I had many misgivings. But it would now be more profitable if I accept that it exists; it is now under way, and what we should all seek to do is to ensure that it carries out its duties competently and with confidence.
  I hope that as a matter of illustration I shall be allowed to draw one small analogy from Greek mythology. There was a time when there was a take-over bid for Europa. On that occasion Zeus disguised himself as a bull and took Europa for a ride from Phoenicia to Crete, where she became the mother of Minos, Rhadananthys and Sarpedon.
  The take-over bid for the I.R.C. which has happened since the ink was hardly dry on the Royal Assent was scarcely a take-over bid—there was not much bidding about it; there was a grab of I.R.C. rather more rapid than that which Europa had to experience. Before long, poor I.R.C. had horrible visions of being strapped to a pillion, driven very fast by a "whizz kid", in the shape of the Minister of Technology, and then beetling back to Millbank Tower in an attempt to beat even the speed of the "ton-up boys" on their way back from Brands Hatch on a Sunday evening.
  That has very considerably disturbed the confidence of all of us in some of the assurances given when the I.R.C. was first established. It was quite clear throughout all the stages of our debates on the Bill that the Department responsible to Parliament for the activities of the Corporation was to be the Department of Economic Affairs. Instead, we have seen one of the biggest decisions that the Corporation has become involved in—the Rootes-Chrysler takeover bid—being announced in this House by the Minister of Technology.

  631
  Why was that statement made by the Minister of Technology instead of by the Secretary of State for Economic Affairs? We have had the great pleasure of reading an interview with the Minister of Technology, reported by Mr. Ian Coulter in the Sunday Times of 22nd January. This was a most interesting report, because one of the most important things that the right hon. Gentleman had to say was:
  "… when you are talking of I.R.C. you are not talking of the Government you are talking of a public merchant bank in a sense which is free to operate and is much more flexible in its approach than any Minister can be in his approach to industry."
  That statement caught my fancy. I was not a member of the Standing Committee which considered the Act but I have studied carefully what the then Minister of State, Department of Economic Affairs, the hon. Member for Edmonton (Mr. Albu) had to say about the Corporation in Committee. He said:
  "… we have to face the fact that the purpose of the Corporation is not the same as that of a merchant bank. It is to be very active in seeking out and trying to persuade others of the desirability of rationalisation through the formation of mergers."—[OFFICIAL REPORT, Standing Committee E, 27th October, 1966; c. 164.]
  There has been confusion about this from the beginning, and, strangely enough, reference was made to the Corporation as though it were to be a merchant bank by the Joint Under-Secretary of State for Economic Affairs, the hon. Member for Cheetham, when, as a back bencher, he spoke on Second Reading of the Act. He said:
  "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."—[OFFICIAL REPORT, 19th October. 1966; Vol. 734, c. 290.]
  Who is right among these Ministers? Is it the Minister of Technology, supported, in advance of office, by the Joint Under-Secretary of State? Or is it the hon. Member for Edmonton, the former Minister of State, Department of Economic Affairs? They cannot all be right simultaneously. If I am any judge of this matter, I would say that any company today going to see the Corporation would probably be well advised to take its merchant bankers with it. They would not regard the Corporation as a merchant
  632
  bank. If the Corporation is to be turned into a merchant bank, it will be impossible for it to organise itself on a really economic basis and keep its staff to the minimum.
  I believe that it was the intention—and that it was said during Committee stage and perhaps on Report stage—to keep the Corporation within as small a limit as would enable it effectively to do the job. If we are to turn it into a merchant bank, it will need 10 times the staff that it has today, if not more. I hope we can have this matter clarified.
  I sympathise to some extent with the Joint Under-Secretary of State in that this is the first time that he is replying to a debate as a Minister and he is having to defend a Minister who is not in his own Department. That is bad luck and I do not blame him for it. But the "whizz kid" in the Ministry of Technology has to be restrained and I fully support the view expressed by Mr. Patrick Hutber, in the Sunday Telegraph last weekend:
  "One of the most distasteful practices of politicians is to react to events with a hasty expedient, and then erect it into a principle."
  That is what the Minister of Technology did. He erected the special need and the way it was fulfilled over the Rootes-Chrysler affair into a great principle and for a short time he reigned as the king of all principles. I gather that the reign was short-lived and that now the Secretary of State has reasserted his authority. I hope that the Minister of Technology is not going to go blundering in on this front again.
  Nevertheless, we have to recognise that in the original White Paper—Cmnd. No. 2889, published in January last year—which preceded the introduction of the Industrial Reorganisation Corporation Bill, which is now an Act, on pages 3 and 4 at paragraph 9 we read:
  "The Corporation will co-operate with the Ministry of Technology".
  We all expected that to happen, but we did not expect this runaway elopement, or attempted elopement, by the Minister of Technology with the Industrial Reorganisation Corporation. I hope that the good lady, in her new establishment, is now happily ensconced, and is quite confident as to who is really her master, in so far as she has a Departmental master at all. So much for the differences between Ministers on this matter.

  633
  The power of the Secretary of State over the Corporation is very clearly set out in Section 2(1,b) and subsection (5) of the Act. I think it is important that we should recollect what the Act says. Section 2 starts by saying:
  "The Corporation may, for the purpose of promoting industrial efficiency and profitability and assisting the economy of the United Kingdom or any part of the United Kingdom,—
  (a) promote or assist the reorganisation or development of any industry; or "—
  and this is the important sub-paragraph—
  "(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."
  What has happened over the Rootes-Chrysler business has happened as a result of the Secretary of State's exercising those powers under Section 2(1,b). What has happened over the telecommunications issue has happened under subsection (5). In other words the Secretary of State may, according to subsection (5):
  "… after consultation with the Corporation, give to the 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 ".
  I should like some clarification on this. In the exercise of the Secretary of State's powers, am I right in assuming that the Rootes-Chrysler exercise comes under Section 2(1,b), whereas the telecommunications exercise comes under subsection (5)? That is my understanding of the matter at the moment.
  Perhaps it might be appropriate if I were to say what we know so far about the direction regarding the telecommunications. On 5th January this year the Department of Economic Affairs put out a Press notice in which it said:
  "The First Secretary, the right honourable Michael Stewart, M.P., in consultation with the Postmaster-General, and the Minister of Technology, has invited the Industrial Reorganisation Corporation to examine the structure of the telecommunications industry and its relations with the Post Office as the major home customer, with the object of seeing whether these could be improved in the national interest".
  It goes on:
  "In making this request, the Government are particularly conscious of the greatly increased demand for telecommunications equipment which the future programme of the Post Office entails and of the need to help the
  634
  industry keep pace with a rapidly changing technology and to continue to service the needs of its other customers both at home and overseas. The study will be concerned with as wide a range as practicable of companies supplying communications equipment, directly or indirectly, to the Post Office."
  There then followed "Notes for Editors", including where to make the appropriate inquiries. This seems to be a much wider exercise than the Rootes-Chrysler matter.
  I now come to the second part of my remarks. I say at once that there is far too much duplication of research and development in an industry where resources are inevitably limited. Much more could be done if there were rather more sharing of the technologies which have been devised. I am very glad that the Postmaster-General is present, because my remarks are now directly relevant to the Post Office as well as to the I.R.C.
  Over the years, some of my hon. Friends and I have noticed that the relevant industries have the impression that the Dollis Hill Research Station of the Post Office tends rather to act on its own and to keep itself isolated from anything save the Post Office. In saying that, I am not in any way seeking to decry the excellent work which Dollis Hill has done, but there is no doubt that what Dollis Hill is doing could be greatly helped if there were a free flow of the technology coming out of the telecommunications industries and also a flow of information the other way, from Dollis Hill into the industries. There seems to be a certain jealousy, with Dollis Hill trying to keep all the research and development of equipment used in the G.P.O. in its own hands.
  If the object of the exercise which the D.E.A. announced on 5th January be to ensure that there is a freer flow of technology between the industry and Dollis Hill, then it is an excellent exercise, but I want to make sure that the I.R.C. is the body doing it. I would like to hear why it was thought that the I.R.C. was the best body to do this work. Everybody knows that great expertise about managerial consultancy is now being built up in the private sector of industry and this could possibly advise both the industries concerned and the Post Office about the best management methods. There are many professional and scientific bodies, research councils

  635
  and so on, which could advise on interflow of information and cross-fertilisation of technologies. Are we certain that the I.R.C. is the appropriate body to manage all this?
  In saying that, I do not in any way decry the reputations of the splendid people who have been appointed to carry out this work—Mr. J. P. Berkin, one of the members of the Industrial Reorganisation Corporation, and Mr. John Corbet, of Peat, Marwick and Mitchell. Everyone knows that those two gentlemen have immense talent and reputation, but I seriously ask whether the sort of exercise which is visualised falls within the remit which we understood the I.R.C. was to be given.
  It is unfortunate that the first two things which the I.R.C. was ever called upon to do in public were the result of the intervention of the Secretary of State himself, because throughout the Parliamentary stages of the legislation we were told that its principal purpose was to give the I.R.C. its head, to let it get on with the job, to let it use its own commercial judgment, and we were told that Ministerial direction would be kept to the absolute minimum.
  There is one great value in having the Minister's power available if it is used in the right way. It could conceivably be an immense fortification for the I.R.C. in promoting what the I.R.C. itself believed to be desirable when the I.R.C. felt that by itself it could get no further and wanted Ministerial backing. That is a perfectly proper and appropriate way for the Minister's power to be used. But if the I.R.C. is to get the public reputation of being the child of the First Secretary, the very confidence which it was hoped would be built up in the I.R.C. because of the Corporation's alleged independence will be undermined. I hope that we shall have some clarification on this. It may be that I have not fully comprehended the real purpose of bringing in I.R.C. on the telecommunications front.
  Can the hon. Gentleman tell us how much of the £5 million we are now being asked to vote will be devoted to this particular exercise? We know that something in the region of £3 million will be involved in the Rootes-Chrysler
  636
  exercise, and that the total vote is £5 million. Presumably there is £2 million left over. How much of that £2 million will be eaten into by the telecommunications venture?
  Mr. Speaker: Order. I hope that the hon. Gentleman will acquit me of being discourteous, but there are many other topics which hon. Members wish to raise.
  Sir H. Legge-Bourke: I am well aware of this, but I was hoping that I would be given some indulgence tonight, because this is the first time that this subject has ever been debated. I certainly do not wish to delay the House, and I will try to draw my remarks to a conclusion as quickly as possible. Why was it that the announcement about the Rootes-Chrysler deal was made by the Minister of Technology instead of the First Secretary? To what extent has the action over Rootes-Chrysler compromised the assurance that we were given by the hon. Gentleman's predecessor in Committee when he said that there would be no question of the I.R.C. buying up shares of weak and declining companies.
  If I am right the Rootes-Chrysler venture means that the I.R.C. will have a share of the equity in the new combine but will not be buying Rootes shares. I would like that confirmed. As I understand the deal, it is that if at the end of five years, about 1972, the shares are worthless, then Chrysler is under an obligation to buy them from the I.R.C. at a profit to it. On the other hand, if the I.R.C. finds that the shares have increased in value or at least kept their value, then the I.R.C. will be free to sell them on the market. We were told specifically during the course of proceedings on the Bill that the I.R.C. would not act as a holding company. It seems that for about five years it will be almost a holding company. I assume that if the value of the shares at least holds good, if not improves at the end of that time, the I.R.C. will be able to sell the shares on the market? We do not want to see it turning into the very thing that we were assured it would not become, namely, a holding company.
  Why was it that the Minister of Technology was authorised to say, when he made the announcement in the House in January, that the Board of Trade had considered referring the whole business

  637
  to the Monopolies Commission when, on Second Reading, the First Secretary went out of his way to say that anything that the I.R.C. came into would never be referred to the Monopolies Commission because it would not be necessary?
  We have been crying out for capital investment; we have been encouraging foreign investment. Are we now moving into a position where, having encouraged foreign investment, the moment it results in a majority holding of the equity, then the Government steps in, through I.R.C.? This will be no encouragement to further foreign investment. We have to establish, once and for all, that in order to ensure that British interests are properly represented on an international Board, it is not always necessary, and hardly ever necessary for the Government to become a shareholder through one of their agencies. We must get it firmly established that if we want foreign investment in this country it must be done on true commercial and financial merit. Only in the last resort should the Government come into it. Certainly they should be extremely reluctant to put pressure on the Corporation to do something which the Corporation, given a free hand, would never have thought of doing. If the future progresses on these lines, there is great hope for international co-operation with this country.
  Parliament is usually very zealous about keeping an eye on expenditure. Five million pounds is no small sum. But if the Corporation is to do its job effectively—in other words, if it is to win the confidence of companies which should merge but which have not found a way of doing so—it is absolutely essential that neither the Corporation nor the Government or Parliament should breathe down its neck. Having set up the Corporation, we have to give it a free hand. We must not expect it to be treated as though it were a Government Department subjected to the scrutiny of the Auditor Comptroller General and all the investigation which Parliament can initiate at Question Time, during Adjournment debates, and so on. If we do this, it will destroy any chance of the Corporation succeeding. If it is given its head, with the very talented Board which it has, I am convinced that it can do a useful job. Let us give it its chance.
  10.7 p.m.
  Mr. Peter Hordern rose—
  Mr. Speaker: Is the hon. Gentleman seeking to address me on the same topic?
  Mr. Hordern: Yes, Mr. Speaker.
  As my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) said, we rather expected that the Minister of Technology would reply to this debate. In the Vote with which we are concerned, £3 million of the £5 million is concerned with the Rootes-Chrysler merger. It was the Minister of Technology who announced the details of that merger. However, may I say how delighted I am to see the Joint Under-Secretary of State at the Department of Economic Affairs on the Government Front Bench. I cannot imagine what on earth he thinks he is doing there, because he could have been on the Front Bench at any time in opposition or, I am sure, since this party came to power. It is a reflection of the disastrous view which he takes of his party's prospects that he has decided to accept office, albeit late.
  There is no doubt that the main purpose behind this Supplementary Estimate is to allow the Industrial Reorganisation Corporation to invest £3 million in Rootes Motors. I find this an astonishing reversal of the Government's declared policy. The Minister of Technology, who made the announcement on 17th January, clearly could not have read the proceedings on the Industrial Reorganisation Corporation Bill in Committee where various undertakings and assurances were given. I have not the reference, but I distinctly remember it being said that no investment would be made in weak and declining companies. This was fortified, not only in the White Paper which preceded the Bill, but as lately as yesterday by the First Secretary of State for Economic Affairs, who said:
  "Where the I.R.C. makes money available for new groupings, it will expect to receive a satisfactory return for the taxpayer".
  He went on to say:
  "It will certainly not support ventures which have no prospect of becoming viable".
  If ever there was a venture which had no prospect whatever of becoming viable in the short time in which the Corporation was proposing to invest money, it

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  is the investment of this £3 million in Rootes Motors. But the Minister of Technology said about this proposal:
  "The takeover of Rootes by the British Government—which, of course, was considered "—
  that is in terms of takeover of the whole concern by the British Government—
  "but would have involved massive sums of public money going into an insolvent private enterprise company without any guarantee that in this way it could remain viable—was not a practicable proposition."—[OFFICIAL REPORT, 17th January, 1967; Vol. 739, c. 38.]
  What on earth can the argument therefore be to invest £3 million in such a concern? Furthermore, if the Government were so convinced that this sum of £3 million was to be a satisfactory investment, why allow themselves rights to withdraw the money in 1971? What is the purpose of that provision? It certainly does not sound to me like a viable proposition.
  The fact is that this £3 million will allow the I.R.C. to have 13 per cent. only of the voting share in this new concern compared with Chrysler's 68 per cent. It would be interesting to know on what basis the Government think that this 13 per cent. effectively blocks the actions of the Chrysler board in any action which it cares to take. I know about the various provisions that were announced on 17th January, but perhaps the Under-Secretary when he replies will deal with the following two specific questions.
  If any undertaking given by the Chrysler Corporation in its letter of 16th January to the Minister is not carried out, what proceedings can be instituted, in what court, of what country, and how can the order of such a court be enforced against that Corporation? The hon. Gentleman—and learned too, I
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  should add; he knows his profession well—will know that there can be no satisfactory answer to that question.
  My second question is this. In view of the undertaking given by the Chrysler Corporation that a majority of British directors will be maintained on the board of Rootes Motors Ltd., what is the purpose of appointing a director of the I.R.C. at all? Was this appointment a condition imposed by Chrysler or imposed by the Treasury for its consent to that participation?
  One other aspect to which I must refer is the action of what might be termed the professionals on the board of the I.R.C., and in particular Sir Frank Kearton and Mr. Grierson. It is plain—I believe that I have this right—that the board of I.R.C. is not required by the Department of Economic Affairs to make an investment in any particular concern but is requested to make it. Therefore, the professional board of the I.R.C. is exercising its professional judgment as to whether the I.R.C. will or will not invest in any undertaking.
  I do not know about Sir Frank Kearton, but I feel quite certain that Mr. Grierson in the conduct of his normal commercial experience would not have considered this investment one that he could have recommended to his board outside the I.R.C. It is common knowledge that the boards of both Leyland and B.M.C. refused to take any part in this undertaking.
  I cannot help but suggest that these gentlemen, in carrying out their professional duties, owe not only their duty to the Government which they consider to be proper, but a duty also to themselves in their professional capacity and, above all, a duty to their country in not wasting the taxpayer's money in this way.
  10.15 p.m.
  Sir John Foster: I have been speculating on the way in which the hon. Gentleman intends to reply to the debate, if he is going to deal with the points which have been made from this side of the House. Before going further, may I add my congratulations to him on his appearance on the Government Front Bench?
  First of all, he has to face the difficulty, which I am sure he will cover with his usual skill, of the Ministry of Technology having intervened in this matter. It is quite clear that the Minister of Technology considers himself to be a Minister of Industry, and he considers that he has a policy for industry. However, that is not his sphere of activity. What he did in the Chrysler-Rootes deal was to hold up the matter, hoping to solve it according to his own policy on industry. Why the matter was referred to him is not clear. Obviously, there was an exchange control aspect which was referred to the Treasury, and one wonders whether it was the Treasury which referred it on to the Ministry of Technology.
  The hon. Gentleman will have to say that the Minister of Technology had a special interest, not particularly from the point of view of technology but from the point of view of industry generally. The answers in the Sunday Times show that the Minister of Technology considers himself to have an overall responsibility for industry generally and not just confined to technology.
  When the hon. Gentleman comes to the details of the Chrysler-Rootes transaction, he will probably be unable to tell the House whether the £3 million will be a profitable investment, if Chrysler loses, it will get the £3 million profit back or, if all goes well, it will have a share in the equity.
  Why we on this side of the House have a certain fear is, whether it is a good investment or not, it is not the kind of thing which we were led to expect that the I.R.C. would do. If it is a profitable investment, some other branch of the Government should have taken it on. We were led to expect that the I.R.C. would not act as a merchant bank. Certainly the impression was given that the Cor-
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  poration would act as a sort of catalyst. It would try to bring, say, all the shipbuilders together, having had an idea about a merger. Two of them might be agreeable, except that, being strong personalities, neither might want to give up his own creation. However, once a measure of agreement had been reached, the ordinary merchant banks would take over. It was not anticipated, either, that much of the £150 million would be used.
  I believe that the I.R.C. will be valuable if it is properly used, acting as a conduit-pipe to the Government. Here are people who know about industry and finance. If there is any aspect of the financial or industrial policy of the Government which needs qualification, amendment or addition to, the I.R.C. can represent the City view, diluted through its own experience. The Corporation can be valuable in that way. However, there was a great deal of anxiety on this side of the House about whether it was not backdoor nationalisation, and that the Government would use it for purposes which they said they would not. The Chrysler-Rootes deal goes just over the line, and it will be the task of the hon. Gentleman to allay those anxieties. I think that he will have to say that it was an unusual transaction which will not be repeated.
  The I.R.C. can be useful, provided that it is not used for the wrong purpose. The Government are rather in the habit of doing that sort of thing. They appointed a Law Commission, but one of the jobs which they have made it do is to undertake the reform of the divorce law. That again is using an independent body, about which our fears were allayed, in a manner which goes contrary to the assurance which we were given.
  For those reasons, the debate has been a valuable one. These questions have been raised, and I am sure that, with his knowledge of the City and finance, the hon. Gentleman will have a great deal of personal sympathy with what we are saying. I look forward to his walking a tight-rope with his habitual skill between what he believes and what is Government policy.
  10.20 p.m.
  Mr. John H. Osborn: It is some time since I spoke

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  during the Second Reading of the Industrial Reorganisation Corporation Bill. Much has happened since then, and I take this opportunity of doing no more than asking a few questions about what is happening now, and what is the Government's policy on a number of issues.
  I welcome the fact that we have with us the Minister of State, Board of Trade, the hon. Member for Sheffield, Hills-borough (Mr. Darling), because from time to time I have asked Questions of the President of the Board of Trade about overseas investment, and the right hon. Gentleman has answered them. I also welcome the fact that the Postmaster-General is here. I welcome, too, the presence of the hon. Gentleman who is to reply to this debate, representing as he does the Department of Economic Affairs. What I find a little disappointing is that the Minister of Technology has not seen fit to come to this debate, because he has been very vociferous about these matters, and I think that we should have some of his views as well.
  We are dealing with Class IV Vote 25 which refers to the Industrial Reorganisation Corporation. After the statement by the Minister of Technology I was rather surprised to read that this Vote came from the Department of Economic Affairs, because I had tended to read into his recent statements that the I.R.C. had been taken over by the Ministry of Technology.
  This Vote is for £5 million, but in the Second Reading debate we were talking about a total sum of £150 million. We have assumed that £3 million will be taken for the Rootes-Chrysler operation. This assumption may or may not be correct, because it all depends on when the £3 million will be required this year. We are dealing with a Supplementary Estimate, so I hope we are right in assuming that £3 million out of the £5 million is for the Rootes-Chrysler exercise, and perhaps we may be told whether that assumption is correct.
  Paragraph 9(1) and (2) of the Schedule to I.R.C. Act contains a reference to the employment of staff. Therefore, it is reasonable to ask what progress is being made, and how many staff are employed. I mean, of course, in addition to the chairman and the members of the Corporation. What sort of work is it doing?
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  If it has not got a big staff, is the Corporation now delegating work to other bodies to carry out services, and is it asking merchant banks to act as consultants? If it is, is it paying them, and will the money provided in this Supplementary Estimate be used for this purpose? It will be helpful if we are given some indication of how this money is being spent, and whether we are right in reaching certain conclusions.
  During the Second Reading debate I raised a variety of issues. I pointed out that over the last three or four years the whole climate for amalgamations and mergers had changed, and therefore the I.R.C. would be operating in an entirely different climate. Is the I.R.C. really necessary at this time, in view of other factors with which we are concerned?
  During that debate, at column 275, I quoted some figures which were refuted by the Chief Secretary during the Third Reading of the Iron and Steel Bill. I pointed out that more steel was made in larger steel works as a percentage of total production in the United Kingdom than in Europe, and that more steel was made in smaller steel works in Europe than in the United Kingdom, which completely refutes the statement made by the Government Front Bench last week. I think that it would be out of place to ask the hon. Gentleman to answer that.
  I also raised the question of the rôle of the Industrial and Commercial Finance Corporation. I stated then:
  "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…."—[OFFICIAL REPORT, 19th October, 1966; Vol. 734, c. 277.]
  I went further to ask to what extent it would be involved in promoting amalgamations and mergers. I now find that the I.C.F.C. has moved in the same field as the I.R.C. and has set up a division for this purpose. I should be most interested to have the Minister's comments on the value of these organisations.
  I now come back to the more fundamenal issue of American and ouside investment in this country. I have been reading some Questions I asked in November of the President of the Board of Trade and the Chancellor of the Exchequer, most of which were unanswered. When I asked similar Questions as far

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  back as May about investment from overseas in the United Kingdom I received an answer from the Minister of State, Board of Trade, giving the total return on world investment from overseas in United Kingdom industry. The figures were, £160 million in 1963; £162 million in 1964, and £161 million in 1965—
  Mr. Speaker: Order. I hesitate to interrupt the hon. Member. This is a broad debate, but it is confined to the item that we are discussing, namely, the Industrial Reorganisation Corporation.
  Mr. Osborn: I am about to introduce the subject of the correspondence going on with the Minister of Technology and Chrysler and am about to refer to American investment in this country and the factors involved—
  Mr. Speaker: Order. The hon. Member must take note of what Mr. Speaker says. He must link what he has to say with the Estimate before us.
  Mr. Osborn: Certainly. I am linking what I am going to say with the figures of American investment in this country, namely, £104 million in 1963, and £116 million in 1964. The points that I wish to raise relate to Questions raised in the House on 17th January, when the Minister of Technology referred to the whole question of the Industrial Reorganisation Corporation taking part in the Rootes-Chrysler merger and having an interest which is either 13 per cent.—
  Mr. Speaker: The hon. Member can discuss what he seems to be about to discuss, but what he cannot discuss is the general question of American investment in British industry.
  Mr. Osborn: In which case I will slick to the £3 million that the I.R.C. is putting into this investment. I cannot go on and deal with issues of principle, except to say that the I.R.C.'s participation could well provide a very great influence on American investment in this country.
  I will move on to the exact rôle of the Ministry of Technology. Reference has been made to Ian Coulter's article in the Sunday Times on 22nd January, in which a series of questions were asked, from the long-term view, on how far we would want to duplicate the I.R.C.-Rootes
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  situation. The reply from the Minister of Technology was:
  "I.R.C. came into this, we came into it, and it was the first time that these two instruments, which didn't exist before 1964, had been brought into play."
  Then the question was asked:
  "Do you see I.R.C.'s involvement in Rootes/Chrysler as merely a beginning?"
  to which the answer was:
  "I think the use of I.R.C. for this new purpose, putting a member on the board of Chrysler/Rootes in its new form, is the beginning of a technique of enormous potential…
  Do the Government back the Ministry of Technology in this matter? Another question was:
  "Will you issue some sort of edict to major British industrialists that if they are approached by American or other foreign capital, or by their foreign associate with a view to takeover, then they will come to you first and let you know of these moves"?
  The Minister of Technology replied:
  "… British industrial leaders are coming to see the advantage of having a department like ours which is looking at the problem in much the same way as they are".
  Was this the rôle originally envisaged for the I.R.C.? Do the Government agree with the views expressed by the Minister of Technology on this issue? Finally, the Minister of Technology stated:
  "… I cannot visualise my job being done without it".
  He was referring to the I.R.C.
  These are amazing statements and it is reasonable for my hon. Friends and I to ask exactly whether the I.R.C. is intended to be a tool of the Ministry of Technology as against a useful organisation in economic affairs. Indeed, should it not be completely allied to the Department of Economic Affairs and not be transferred to the Ministry of Technology?
  A constructive article appeared in the Statist on 20th January last. It questioned the rôle of the I.R.C. from the point of view of the Post Office and purchasing and referred to the need for secrecy. If the I.R.C. is to work, industry must have confidence in it and be able to approach it with confidence. However, it is a Government agency and, as such, it has a certain amount of responsibility to Parliament. That must be stressed.
  As to the rôle of the I.R.C., certain important questions must be answered.

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  For example, do we want American investment in this country? If we do, will the I.R.C. be used to lubricate it, so to speak? If the answer is "Yes", then do we want American investment at the rate of £300 million in the current year, and am I correct in anticipating such a figure for 1967? If the answer to that is also "Yes", then do we want to encourage American capital, American technology and American management expertise into this country? Is this the policy of the Department of Economic Affairs, is it the Government's intention to use the I.R.C. for this purpose? These questions must be answered.
  We go on from there to consider, if we want to encourage American capital, how we can best go about the task. I should have thought that the best encouragement would be to make foreign capital welcome by a system of low taxation for it; so that private enterprise has a fair chance of earning a proper return on capital invested. This type of financial and taxation policy should be exercised, rather than the sort of Ministerial edicts which are now emanating from Whitehall. Do we object to American majority shareholdings? If so, why do not the Government say so? It is evading the cause to follow an alternative course of placing a director on the board of a company; although it is not inappropriate to ask what such a director would be capable of doing. There is a 15 per cent. holding in Rootes-Chrysler. Is this the best way of tackling the problem?
  These are a few of the questions the Government must answer if the public are to have any confidence that the Government know what they are doing.
  10.34 p.m.
  Mr. David Price: I, too, congratulate the hon. Member for Manchester, Cheetham (Mr. Harold Lever) on finding himself on the Government Front Bench. Seeing the hon. Gentleman in that position, I am sure that we all feel like a person who, late on a dark night having been on a poaching exercise, meets an old friend but, with pockets full after the poaching exercise, finds that it is the game keeper dressed in the uniform of a special constable.
  Having recently passed the I.R.C. legislation, it is somewhat surprising that my hon. Friends should be raising this matter
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  tonight. It has moneys up to £150 million, and this £5 million is the first instalment. The reason for our concern was made clear by the speeches of my hon. Friends the Members for the Isle of Ely (Sir H. Legge-Bourke), for Sheffield, Hallam (Mr. J. H. Osborn) and for Horsham (Mr. Hordern) and my hon. and learned Friend the Member for Northwich (Sir J. Foster).
  To summarise the case, it rests on three points. First, the question of Ministerial responsibility. The Under-Secretary of State, who is very sensitive in these matters, will appreciate that it is very unfortunate that the Industrial Reorganisation Corporation's first two public actions, the investigation into telecommunications and its part in the Rootes-Chrysler affair, were both actions in which it had to have directives from the Secretary of State. This is perfectly legal, but we were led to believe that they were reserve powers to be used in extremis. I shall not bore the hon. Gentleman by going over the points put in the Standing Committee, but we were told that, perhaps, the Government might want to do something like the Fort William project again and this would be the appropriate instrument. We were told that such were the conditions in which Section 2(1,b) of the Act would be used.
  The investigation into telecommunications is very different. How far are Mr. Grierson and his two colleagues who have been put on to it doing all the work themselves? How far will it be necessary for them to hire the services of a reputable industrial consultant to do what I call in the vernacular the leg work of their investigation? It lay within the competence of the General Post Office and the Postmaster-General, if so minded, to initiate such an investigation themselves. Why the I.R.C.? Is the I.R.C. to become the industrial consultant to Her Majesty's Government? If it is, this is a new purpose and quite different from what we were told so recently in the White Paper and our debates in the House and Standing Committee. We must have this clarified. The inquiry would have been a perfectly proper undertaking for the Postmaster-General himself to initiate, if necessary hiring the services of such outside help as he thought right.

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  We come, next, to the second great public activity, the Rootes-Chrysler merger. There are two aspects of this which affect our decision on the Vote tonight. In our debates on the Bill we were told that, broadly, the purposes of the I.R.C. were two: one, to assist in mergers and bringing people together; two, to assist in bridging finance. Clearly, the first rôle was not necessary. Rootes and Chrysler were already together. The question was whether the marriage should, as it were, be consummated financially and managerially, or whether, before ultimate consummation, there should be a divorce and the Rootes part should be "flogged" to B.M.C., hawked round to Leyland, or even, in the view of some hon. Members opposite, passed to the poor benighted British public by nationalisation. The I.R.C. was not needed to produce the merger.
  We come, therefore, to the second r ôle, to assist in bridging finance. Is it suggested that Chrysler was unable to put up all the money it thought necessary both to buy complete control and to inject the extra working capital which we all agree was necessary in this enterprise? Was the I.R.C. brought in because Chrysler was unable to raise the money, and did the £3 million from the I.R.C. determine it?
  I put a Question to the Minister of Technology to ask whether the I.R.C.'s intervention had been sought by either Rootes or Chrysler or had been initiated by the Board of the I.R.C., and the right hon. Gentleman, with complete sincerity, replied, No, it had been ordered by the First Secretary of State, the Under-Secretary of State's master.
  This is a very unfortunate beginning to the I.R.C. The only reason for the intervention of the I.R.C. was given when I pressed the Minister of Technology about it on 17th January:
  "It astonishes me that the hon. Gentleman"—
  that is myself—
  "should not object to American control or foreign control of a British motor company, but should object to the British public being represented through I.R.C."—[OFFICIAL REPORT, 17th January, 1967; Vol. 739, c. 37.]
  If it is suggested that the only way we can ensure that the Rootes-Chrysler activities in the future are within the broad public interest is by putting one of Mr.
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  Ronnie Grierson's gentlemen on the board of the I.R.C., all I can say is that if that is really the Government's view then I, too, believe in fairies. It is a most quaint metaphysical proposition that equates the British public interest with having a member of the board of I.R.C. as a minority shareholder on the board of Rootes-Chrysler, both in terms of exercise of power and of actual control. As an old poacher himself, the Under-Secretary does not believe that I would be taken in by that. I believe in fairies, along with the Minister of State, who argues like a rather elderly mediaeval theologian.
  With those two cases in mind, we on this side of the House are entitled to have very grave doubts as to whether the House should tonight pass this Vote of £5 million for the I.R.C. We accepted our defeated votes on the I.R.C. with good grace, as the hon. Gentleman would expect, and if the I.R.C. had sought to do its business quietly there would not have been the fuss tonight.
  I hope that the hon. Gentleman will remember that he was once a poacher, and make a more convincing special constable's reply than merely saying, "That is the law because I make it."
  10.42 p.m.
  The Joint Under-Secretary of State for Economic Affairs (Mr. Harold Lever): The House will appreciate that this moment when I transfer myself from the gay irreverences of the back benches to the more seemly sobriety of the Dispatch Box is one of some trepedition. My courage is bolstered by the thought that whatever heroism will be required of me in answering this and other debates is nothing compared with the courage already displayed by my right hon. Friend the Prime Minister in placing me in the position from which I now speak. That is certainly the case if the very kind expressions by all hon. Members opposite who spoke have any resemblance to reality. I greatly appreciated the sympathetic approach to the debate made on that account by all hon. Members.
  I say sincerely to the hon. Member for Isle of Ely (Sir H. Legge-Bourke) that in raising the matter he has done a public service, because he has given the House an early opportunity of removing many misconceptions which all too obviously are in the minds of hon. Members

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  opposite and, it might be reasonably inferred, in the minds of some members of the public.
  However, the hon. Member for Eastleigh (Mr. David Price) may twit me about my previous speeches—and I must say that I view with alarm the approach of the next Finance Bill if the same kind of Talmudic analysis is to be applied to what I said on previous occasions as on this occasion, happily—as will appear—there is little difference of opinion between the hon. Member for Cheetham and the Joint Under-Secretary of State for Economic Affairs.
  However little change there has been in my position, there has obviously been a very great change in the attitude of the Opposition from the nostalgic escapism to which we were treated on Second Reading and in Committee. I am glad to see that the Opposition have, as I foretold in my Second Reading speech, returned to the paths of constructive sobriety which we would have expected of them.
  The first genuine problem obviously troubling many hon. Members opposite, and conceivably people outside, is that of who is responsible for the policy and functioning of the I.R.C.
  Let me say with unambiguous explicitness that the responsibility for the policy and functioning of the Corporation lies with my right hon. Friend the Secretary of State for Economic Affairs and his Department and with nobody else. Of course, there will be co-operation with other Departments. This was foreshadowed in the White Paper and if the hon. Member for Isle of Ely had read on when he referred to the White Paper's reference to co-operation with the Minister of Technology—interpreting this in a sinister sense—he would have seen that there was also reference to expected co-operation with the National Development Corporation—which, I gather, causes him no anxiety.
  Both these co-operations are what one would expect in the circumstances. The I.R.C. does not work in a vacuum. Before hon. Members opposite seek to disturb the undoubted harmony and identity of views which prevails between members of the Government on this and other questions, they would be wise to
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  bear in mind that this co-operation was foreshadowed and that comments by other Departments upon the work of the I.R.C. are natural, proper and relevant. But they are made in the context that they and the world understand that the sole responsibility for the policy and functioning of the I.R.C. lies with my right hon. Friend the Secretary of State and his Department. That was the position always; it is the position now and it will continue to be the position. So I think that should remove some of the doubts troubling hon. Members.
  The second problem raised was to suggest that it was a pity that the Government have exercised their powers under Section 2(1,b) of the Act in both of the first cases the I.R.C. has gone into—the Rootes-Chrysler deal and the telecommunications inquiry.
  Sir H. Legge-Bourke: My point was that, as I understood it, the RootesChrysler deal came under Section 2(1,b) and the telecommunications inquiry under Section 2(5). I understood this to be the I.R.C.'s own view.
  Mr. Lever: It was the hon. Member for Eastleigh who supposed that both these actions were ordered by my master—as I think he was described—my right hon. Friend the Secretary of State. I think that this was due to a misunderstanding by the hon. Gentleman which should be cleared up. The RootesChrysler deal was under Section 2(1,b). The telecommunications inquiry arises from the general powers and initiatives of the Corporation under Section 2(1,a) and was not ordered by "my master". Nor was it ordered under any other Section. The action was taken under the powers and upon the initiative of the Corporation itself.
  Sir H. Legge-Bourke: Oh.
  Mr. Lever: The hon. Member's disturbance may be unnecessary if he will pause for a moment. The fact that the Government expressed certain views to the I.R.C. on this occasion does not amount to a directive under other parts of the Act. It was simply a request in the course of the workings of the Corporation, for which we have this responsibility to Parliament. It is natural that, from time to time, with varying degrees of formality and informality, we

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  will communicate suggestions to the Corporation. If we did not, we should be failing in our duty. But that does not mean in every case that we are operating the specific powers contained in the Act.
  The greatest importance should be attached to the fact that our powers have been exercised under Section 2(1,b) in the case of the Rootes-Chrysler deal. We did not order the I.R.C. to buy or subscribe these shares. We requested it so to do. After the Corporation had listened to us, it could—for it is a perfectly independent and highly reputable and experienced board of directors—have decided that there was no need to buy Rootes-Chrysler shares.
  I gather that the hon. Member for Horsham (Mr. Hordern) would not have bought the shares and that he thinks that Warburg's would not have bought them. He cannot have it both ways. This is precisely the Government's case for bringing the I.R.C. into being—that it will act in circumstances where it is satisfied that the public interest would be served but where ordinary commercial and financial channels would not act. Instead of criticising the Government for this, the hon. Member is really reinforcing the Government's case, put on Second Reading.
  Mr. Hordern: The hon. Gentleman is not defending the commercial judgment of the Government or the I.R.C. He has yet to come to the argument about defending the public interest in these ventures. But, of course, he will come to it.
  Mr. Lever: I hope that the hon. Gentleman does not expect me to treat the House to a detailed analysis of the purchase by the Corporation of the Rootes-Chrysler shares from the point of view of the directors of the Corporation and speak as though I were a director of the Corporation and not a Minister in the Department responsible for the Corporation. It is sufficient to say that the commercial judgment of the directors of the Corporation was exercised and independently administered and it was affirmatively decided to buy the shares.
  Hon. Members may rightly or wrongly have a different point of view, but they cannot dispute that this was the absolutely free choice of an experienced, as shrewd and as public spirited a board of
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  directors as could be got together in any company in this land. They came to this conclusion and it is not for me to attempt to say in detail why they did. It is enough for me to say that in their free and unfettered judgment and on the basis of their vast experience they decided that this was a good thing for the I.R.C. to do, and there is every reason to expect that it will so prove.
  Hon. Members have criticised this and that and the other aspect, and the hon. Member for Eastleigh said that the Government were inviting him to believe in fairy tales.
  Mr. David Price: So is the hon. Gentleman.
  Mr. Lever: If he does, and he has given some evidence of it already, I would be the last to want to destroy so pleasant a fantasy, but there is nothing in the nature of a fairy tale in what I have told the House. It is literally the truth that the Board of the I.R.C. was perfectly free to reject buying the Rootes-Chrysler shares had it so decided. It decided to buy and arranged the terms on which it could buy and negotiated the details. We accept its decision and we have every reason to believe that it is a satisfactory one.
  I want to deal with what has been said about the director appointed. Of course it is not our intention to establish it as a principle that whenever a foreign company buys shares in a British company, by having one director on the board we shall have control or thereby safeguard the public interest. What was done here, however, was to put a voice on the board of directors which a bona fide foreign company, as we believe Chryslers to be, will respect, especially when it is as important a voice as the kind emerging from a director whom we intend—to put it more exactly, whom Corporation intends—to nominate to the board in this case. I believe that when the Corporation has nominated its director to the board, the Chrysler company will be very happy to have him there and will not regard him as an obnoxious outsider seeking to curb their proprietary interests supposedly in a desire to protect British interests, but will regard him as a useful addition to the counsels of the new company. There is nothing whatever to be said against

  655
  the Corporation appointing such a director.
  In the end, hon. Members opposite will be put in a very queer position, because I am confident that the Chrysler Corporation will be happy with what we have done, the I.R.C. will be happy with what they have done and the Government will be happy with what we have done, and I wonder who will be unhappy.
  It is objected that in its prudence and skill the I.R.C. has obtained a "put" option on the shares. If at the end of five years it chooses to exercise it, this will have been a very advantageous negotiation, because the Corporation could not lose any money, and the Chrysler Corporation did not have a pistol put at its head to agree to this. It readily agreed to this and negotiated it freely.
  Sir H. Legge-Bourke: The hon. Gentleman used a term of rather special significance, the word "option". Am I not right in saying that the Corporation has these shares already? The option is not the usual option of taking up more shares but of being able to sell the shares to Chrysler at a profit if the shares have depreciated or have been devalued, or, if they are standing at a premium, being able to sell them in the market to anyone it likes.
  Mr. Lever: That is exactly correct, and that is what I said, only I said it in perhaps too shorthand a form for the hon. Gentleman. I said that the I.R.C. had obtained a "put" option on the shares that it subscribed, which enables it to take a profit if it wishes in five years, or, on the other hand, if it envisages a larger profit, it can retain the shares and merchant them thereafter. I do not pledge the Corporation to precipitate action, which would not be pledged from any private concern that had subscribed this money. I cannot pledge the Corporation, the moment that the five years is up, to make a decision to put the shares of Chrysler or keep them. It will not sell them helter-skelter, but it will not retain them in the manner of a holding company.
  If it does not "put" the shares on Chrysler it will be because it sees a more
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  advantageous prospect ahead and will dispose of them in a more profitable way.
  Mr. Hordern: Will the hon. Gentleman deal with the point about the legal protection that the public interest will be afforded by this investment of £3 million?
  Mr. Lever: I take it that the hon. Gentleman is referring to the point he was making about the undertakings. He asked me first what value can be given to the undertakings if they are broken, in what court will we sue. These undertakings were not obtained in order that we could sue or enforce them in a court. They were obtained so that the Chrysler Company should know what the British Government expected of it, and it would be unwise and undesirable to make guesses about what would happen in the most unlikely event of these undertakings being broken.
  We were anxious to ensure that the Chrysler company knew exactly how we stood and what we required of it. It freely agreed to these requirements taking the form of an undertaking, not an undertaking on which we would sue, but an undertaking which we will expect the Chrysler company to honour, and which we have not the slightest doubt it will honour. It would not be desirable for me even to envisage the prospect of it dishonouring its undertakings. It is a very reputable and large American company and we welcome it taking an interest in our motor industry.
  It would be undesirable in the highest degree for me to speculate on the basis that it dishonours its undertaking. It is enough to say that by obtaining it the Government have made plain what they expect from the company and the company has made it plain what it proposes to do. These questions as to whether we will sue are not very relevant, nor is the argument that we are a minority shareholder and cannot out-vote the company on the Board. It was not our intention in acquiring the shares to out-vote anyone on the Board. It was our intention to see the Government represented at this crucial period in the company's life and to see if we could obtain some share in the profitability of the company which we hope will be achieved.
  Hon. Members have dogmatically asserted that in obtaining these shares

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  from Chrysler we have been guilty of a breach of our undertaking that we would not invest in failing and bankrupt industries. We are doing nothing of the kind. When we obtained these shares we did not subscribe to a failing company. We took shares on the basis of a total reorganisation of the company, overwhelmingly financed by Chrysler money. In those circumstances the company was no longer a failing or bankrupt company, it was a company in which Chrysler had shown, in the most tangible way, that it was confident of its ultimate success. So are we and that is why we hope to participate in the success.
  There is no breach whatever of our undertaking that we would not finance bankrupt ventures. This is by no means a bankrupt venture and the Corporation is very happy about the investment made, and we are very happy that it decided to make it.
  I was asked to deal with the telecommunications inquiry, and by a little irrelevant arithmetic, the hon. Member for the Isle of Ely said that we are to vote £5 million of which £3 million is for the Rootes-Chrysler deal. Is the other £2 million for the telecommunications inquiry he asked? No such extravagance is contemplated. The cost of the inquiry is to be in terms of thousands of £s not millions and the £2 million is simply to put the Corporation in funds and give it an agreeable "kitty" to reinforce its enthusiasm for the rôle it has to play.
  I want to say something about the functions of the I.R.C. I will summarise in a sentence what has been said before. Its functions are to play a part in modernising the structure of British industry and to increase its competitiveness and efficiency. It is to be what my right hon. Friend the First Secretary of State yesterday called the professional entrepreneur of reorganisation. It will seek to aid and promote activities designed to increase our export competitiveness or to bring about import substitution. These are laudable objectives that every hon. Member, on both sides, will support.
  What troubles some people is whether the I.R.C. has other objectives which have not been disclosed. I was asked whether it was a merchant bank. The hon. Member for the Isle of Ely was rather unwise in inflicting upon the House
  658
  for a second time part of a speech I made some time ago. He quoted me as saying:
  "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."—[OFFICIAL REPORT, 19th October, 1966; Vol. 734, c. 290.]
  I was dealing then not with my argument, but with that of hon. Members opposite. I have never asserted, I hope, on Second Reading or at any other time, that this was to be a State merchant bank. [An HON. MEMBER: "What about the Minister of Technology?"]
  I must say in all candour that the expression "merchant bank" covers and dignifies a wide range of financial and commercial operations these days. Nobody is quite sure what a merchant bank is. I am bound to say, speaking, perhaps, with more technical experience of these matters than my right hon. Friend the Minister of Technology—[Laughter.] I am not in the least criticising my right hon. Friend because it is difficult these days to pin down with any exactitude what is or is not a merchant bank. I would not myself have particularly chosen that description. [Laughter.] That does not mean that it is an inaccurate one or that any complaint can be made against my right hon. Friend or that there was any misunderstanding in what he said in using that term.
  At all events, in so far as the Minister of Technology has excited any anxieties on this score in any minds on the benches opposite about whether it is or is not a merchant bank, one thing which it is not is a competitor of any existing merchant bank. This is one of the reasons why I would not particularly have chosen that description, because it seems to me that if it is not the competitor of any existing merchant bank, it is unlikely that that description will be accurately comprehensive of its functions.
  At no point is the Corporation in competition with merchant bankers, or, indeed, any other financial or commercial institution, more particularly because merchant bankers normally act as an agent for some individual or person whereas this Corporation normally acts as an agent only for the public interest and the promotion of the public purposes that I have indicated. It is not an investment trust, which is another thing that some people might think it to be.

  659
  It is not an industrial holding company and it is not a vehicle for the extension of public ownership.
  There was, I think, anxiety on this score when the Bill was passed. The right hon. Member for Altrincham and Sale (Mr. Barber) talked about "creeping" Socialism. Hon. Members will have gathered from what I have said that the purposes of the Corporation are rather not to encourage Socialism to creep but to encourage private enterprise to gallop. That, I would have thought, would be a purpose that would commend itself to both sides.
  The Corporation competes with nobody. It threatens nobody. It compels nobody. It offers its connections, knowledge, advice and access to information to serve the purposes which I have outlined. There is no compulsion in its working. All this talk of threats or anything of that kind is quite beside the point. The Corporation must have for its functioning the co-operation and the good will of industry. It must win the confidence of industry. Without this it cannot succeed, it cannot operate. It can hardly do a deal except on the basis of winning the confidence and the good will of industry.
  No transaction of any kind can be entered into by the Corporation except upon the independent judgment and will of the board. That also covers the point which has been raised about independence. This is an independent board of directors free to refuse any transaction that does not appeal to them. This also covers the point of confidentiality raised by the hon. Member for Eastleigh. The board can preserve confidentiality. It is not a tool of the Government or a tool of the Minister of Technology. In its workings, it goes to elaborate lengths to maintain confidentiality and to justify the belief of the people with whom it deals that it does not pass on automatically to the Government what is confided to it.
  Now, on the telecommunications issue, it has been asked, why bring in the I.R.C. at all; why not let the Post Office do it? The short answer is that the I.R.C. has a wider range of connections and contacts than the Post Office has.
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  The I.R.C. will not merely investigate the telecommunications aspects of Post Office buying; it will look at all the ancillary and similar activities of the electronics industry to see where mergers, increased efficiency and added export effectiveness can result. That, it seems to me, more than justifies the Corporation in preparing this inquiry into the telecommunications industry.
  There have also been one or two questions from the hon. and learned Member for Northwich (Sir John Foster) which I think require an answer. The complaint is made that the Minister of Technology has made statements in this House on these questions rather than the First Secretary, but I think it was entirely appropriate that he should have done so. He is the sponsoring Minister for the industries concerned. It was in that capacity that he made these statements to the House, and indeed made very useful and constructive comments which from time to time have been reported in the Press.
  Attempts to take a sentence here and there out of context, or place undue emphasis on a particular phrase or sentence, seem to me very much beside the point. The co-operation of the Minister with the I.R.C. is taken for granted. It is essential for the Corporation's working, and is ever more essential for the Minister as well.
  The hon. and learned Member for Northwich said he envisaged something in the nature of transactions in which the Corporation would act as a conduit pipe for the Government. I think that is a splendid judgment, and exactly what will happen. Increasingly the Corporation will play a rôle in which they interpret the purposes and feelings of Government to industry and the financial world. The reverse process would not be entirely unwelcome in which it also interpreted the purposes and feelings of the business and financial world sympathetically and persuasively to the Government. Only good can result from this flow to and fro, using the Corporation as a conduit pipe.
  I think the hon. Member is mistaken in supposing that anything that has occurred so far detracts from that particular aspect of the Corporation's work.
  I hope that I have covered the points that were troubling hon. Members. To summarise, the Corporation's task is to

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  lead in the modernisation of industry, to promote the export competitiveness of private firms and import substitution by?private enterprise.
  I do not think that the anxieties expressed on the Second Reading—happily not very evident today—can be effectively sustained in argument. The rôle of the Corporation as an organisation increasing good will and understanding between business and Government will grow as confidence in the Corporation grows. I am very happy at the very responsible note struck tonight by the Opposition in their general purposes, even if some of the details are open to criticism.
  I think that the purposes of the Corporation will increasingly commend themselves to both sides of the House; that the Corporation, when it comes to report its activities, will receive a warm welcome for its first year of activity, and that the distinguished gentlemen who have undertaken this very onerous task will earn the gratitude of the House for he work they will have done in the public interest.

  JUNIOR HOSPITAL DOCTORS
  11.10 p.m.
  Mr. Bernard Braine: It has been apparent for some time past that there is deep dissatisfaction among hospital doctors, and, although the feeling is particularly strong among junior doctors, and justifiably so, it is shared by young consultants and indeed by many senior consultants who care profoundly about the future of their profession.
  The dissatisfaction stems from a variety of causes. First, there is the feeling that insufficient resources are available to ensure that the good conditions which obtain in our best hospitals obtain throughout the whole Hospital Service, and that, unless the nation wills the means, it will get and deserve to get a second rate Health Service. Second, there is the fact that the present structure of medical staffing in our hospitals is woefully inadequate and utterly unrealistic. Indeed, it is held that there is no proper staffing structure at all. Third, there is a lack of any proper and fair relationship between remuneration, work load and training.
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  As for the allocation of resources—and massive sums are mentioned in the Estimate—the Minister will know that it is the general view of the medical profession that the Hospital Service, in common with the National Health Service as a whole, is not getting adequate funds to provide proper health care. With admirable candour and courage, the right hon. Gentleman admitted that when he wrote last August to hospital management committee chairmen urging them to reduce the work load of hospital doctors, especially that bearing down on junior staff, even though
  "… this might lead to some curtailment of service to the patient."
  I am fully aware of the difficulty of any Minister of Health in securing an adequate share of available resources. I suppose that it would be out of order for me to go into this in detail, but perhaps I might be permitted to make one brief observation. As long as we are limited to a completely State-financed National Health Service, there will always be too little room for manoeuvre. It should be the duty of any Government to investigate alternative sources of finance and publish their findings.
  Mr. Deputy Speaker (Sir Eric Fletcher): I do not think that that would be in order. All that is in order on this debate is to deal with the Supplementary Estimate.
  Mr. Braine: I bow to your guidance on these matters, Mr. Deputy Speaker, but, with respect, it is the inadequacy of the resources available—and, in particular, the Estimate which we are discussing—which lies at the root of the dissatisfaction to which I wish to draw the Minister's attention. As I hope to show, with your approval, it is impossible to draw any distinction between the staffing structure, responsibility, work load and actual remuneration.
  I was not intending to say any more on the general subject of finance, except that, unless this nettle is grasped firmly, it seems inevitable that the quality of the Service will fall, the present discontent of health workers will reach boiling point, and emigration will quicken.
  It is relevant in that connection to say that, as a reflection of the conditions about which I am talking, emigration of

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  junior hospital doctors is on the increase. In 1958, only three doctors took the examination enabling them to practise in America. A year ago, more than 400 entered. Last September, more than 600 entered. I know that a proportion of those were not British-born doctors, but I am sure that the Minister agrees that the trend is quite serious and ought not to be disregarded.
  I do not think that it is of much use the Minister pointing to the increased output of our medical schools in the next few years, welcome though that is, if in fact a large number of our graduates are going to leave these shores. I do not wish to labour this point, except to say that surely our aim must be to improve conditions in the Hospital Service so that we not only keep our young doctors here, but encourage those who have gone abroad to return. I mention this solely to underline the importance and urgency of everything else that I shall attempt to say about the discontents of our junior hospital doctors.
  I turn now to the inadequacy of the present hospital staffing structure, which stems, I submit, from the failure to match the Supplementary Estimate to the real needs of hospital service.
  It is clear that there are insufficient senior consultants to meet the needs of the service. Proof of this is to be found in the fact that many senior registrars, and even registrars, are doing the same work, and have the same responsibilities, as consultants, although they are only paid according to their grade. The crux of my argument is simply that this failure to equate status, conditions of service, and remuneration to actual work and to actual responsibility goes all the way down to senior house officer level.
  To be fair—and I dare say the Minister will point this out—conditions vary from region to region, and from hospital to hospital, but in many hospitals a registrar is exercising a consultant's responsibilities while working a senior house officer's hours, without this being reflected in his remuneration. Nominally a consultant is responsible in every case if anything goes wrong, and I want—
  Mr. Deputy Speaker: Order. I am sorry to keep interrupting the hon. Member, but Mr. Speaker has made it quite
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  clear on more than one occasion that the debate on these Supplementary Estimates is limited to the reasons why the increase is sought, and does not enable hon. Members to canvass the general questions of policy for which the original grant was made. The debate must be limited to the reasons for the increase.
  Mr. Braine: During the course of the afternoon the debate has gone fairly wide, provided that the remarks have been related to the Vote. With the greatest respect, Mr. Deputy Speaker, it is the unrealistic nature of the advances made to hospitals in respect of pay which is directly related to the conditions which. I am describing.
  Money itself is of no importance unless one sees to what use it is being put. Surely examination of this is the purpose of Parliament? This is the purpose of the back bencher. This is one of the very few opportunities that we get to question the Estimates brought before us. I submit that in this case there is the closest possible relationship between the Estimate and the conditions in hospitals, which are a scandal. The national interest is concerned. This is a
  "Supplementary Estimate of the amount including a sum on account required in the year ending 31st March 1967 for the provision of hospital services…"
  We are dealing with £651 million.
  Mr. Deputy Speaker: Order. On the contrary, we are not. We are merely dealing with an increase of £23 million on the original Vote.
  Mr. Braine: I accept that, Mr. Deputy Speaker, but in relation to the problem which faces us in the Hospital Service, and which I am endeavouring to describe, this latter sum is derisory, and I am taking the opportunity of asking the Minister to explain how the money is being spent, what it is proposed to do, and whether the Supplementary Estimate covers some of the things which I shall suggest in a moment are absolutely necessary.
  I am most anxious to abide by your Ruling, Mr. Deputy Speaker, but I submit that it is necessary, in order to establish my case, to show how bad these conditions are, what needs to be done, and whether the money that we are considering here bears any relationship to

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  the realities. Nominally speaking, a consultant is responsible in every situation where a less senior hospital officer is acting, and something goes wrong. The fact that things go wrong very rarely is a wonderful tribute to the skill and devotion of junior saff. This only emphasises the value of the work they are doing. The nation is getting skill and devotion of a high order on the cheap. That is the whole burden of my observations.
  There is another aspect of the situation which I feel sure—knowing him—must be causing the Minister considerable anxiety. Because of the pressure of work many consultants cannot fulfil their obligations to take a share in teaching, training and research, all of which should be part of their normal duties. On the other hand, when they do take an active part in teaching, training and research of necessity more of their clinical duties are left to junior staff. It is said that there are three types of medical man—the first, those rare beings who by their sheer genius make some unique contribution to the art and science of medicine, so that their names become part of history; the second, those who serve their patients to the utmost of their skill and, in addition, pass on that skill to the next generation, and the third, those who certainly look after their patients but simply have no time to make any contribution to the future of their profession. Unhappily, due to pressure in the Hospital Service, the majority of consultants are forced into the third category, and in their hearts deeply resent it.
  I want to say a word about the house officer, who has been having a particularly difficult time. I suppose that most housemen have always been badly paid. Formerly they were regarded as apprentices, still under training, who had personal obligations and were preparing for a worth-while career which would give them status and satisfaction and high earnings. Today all this has changed—
  Mr. Deputy Speaker: Order. I am sorry. We cannot embark on a debate on the general working of the National Health Service, or the medical service. This debate is confined to the reason for which the Supplementary Estimate is
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  required; otherwise we shall find ourselves debating the whole working of the National Health Service.
  Mr. Braine: One of the reasons why we are having the increase in the rates of pay referred to in the Estimates is the tardy implementation of the award in respect of hospital doctors' pay, which has just come into operation. I am talking here about the most junior of hospital staff who, under the Estimate, are receiving some increase in remuneration. I am talking directly about people affected by the Estimate. Everybody knows—the Minister knows; his heart is in the right place on this—that these junior staff were particularly badly hit by the pay freeze. It was most unjust that they did not get the award announced in the House by the Prime Minister last May before the freeze. I hope that the Minister recognises that these young doctors should have had a better deal.
  I now turn to the relationship of pay to work load and post-graduate training. In any rational system, remuneration is closely related to the quality and the quantity of the work done, and to the responsibilities which are carried. Hospital doctors complain that their profession is the one exception to this sensible practice. They allege that nobody really knows what is going on, and they regard hospital returns on which Ministerial statistics and judgments are based are such that Supplementary Estimates are often wrong and misleading.
  I hope that the House will begin to see the justification for my preliminary remarks that official returns simply do not reflect the intolerable burdens which are carried by many junior staff working a hundred, or even more, hours a week. I am told that the resident staff in some hospitals, or on call, cannot leave the hospital for weeks on end. I do not believe that even the Minister knows the extent to which this burden is affecting the doctors or the quality of the treatment of their patients. I know of a case where a doctor has been on continuous duty for up to 48 hours.
  Hon. Members may have seen a report in The Times for 28th December last. I will make brief reference to it, but the House should know about it. This report

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  quotes a senior registrar in the north of England who described the situation
  "as 'appalling', adding that it would worsen 'as the work load is increasing and the number of doctors decreasing' ".
  A surgeon at a midlands hospital stated
  "that after long hours on duty with little or no sleep, 'one's judgment is bound to be affected, to the detriment of the patient' ".
  The report quotes a surgeon in the Birmingham Accident Hospital as saying,
  " 'It is a disgrace. Patients do not get good treatment.' Since going to the hospital he was 'tireder than I've ever been before' ".
  The report adds,
  "He said he was lucky to get more than two or three hours' sleep a night when on a 48-hour duty. These duties came round two or three times every three weeks."
  At Edinburgh Royal Infirmary a surgeon said
  "they had a 48-hour duty once a week, and two every third week".
  At Newcastle General Hospital, a doctor said:
  "the junior doctors were sometimes on duty for 110 to 120 hours a week. He said that some nights they got 'quite a lot of sleep', but during others only two to three hours".
  The report stated,
  "One senior registrar feared that the supply of Indian doctors, on whom British hospitals depended to a large extent, would dry up in the next few years as it was the policy of their Government to keep them at home. Other overseas doctors, he said, were being attracted to America, like so many British doctors".
  Another surgeon was
  "leaving for Canada because of the working conditions here, rather than because of the money".
  If only half of those stories are true—and why should we doubt them—it shows an absolutely scandalous state of affairs. The law very rightly protects airline pilots and coach drivers who have the responsibility for the lives of passengers, from working excessive hours. The law protects lorry drivers, but not hospital doctors who apparently can work until they drop. It is in the interests of the patients, as well as of the doctors to stop this frightening state of affairs in our hospitals.
  The Review Body rightly recommended last April that there should be a substantial increase for general practitioners to the minimum necessary to maintain general practice. But, in doing this, it
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  simply highlighted the fact that inadequate recognition had been given to the hospital doctors. In the British Medical Journal for 29th October last year, there was reference to
  "… the rigorous processes of training and of competitive selection which have to be undergone by those who choose a career in hospital medicine; to the relatively late age at which a hospital doctor attains security and full earning power as a consultant; and to the responsibility borne by consultants for undergraduate and post-graduate training".
  I know that the Minister is negotiating this matter with representatives of the profession. Yet there remains a real doubt in the minds of many junior hospital doctors that the Minister himself is aware of the basic causes of their discontent. It is for this reason that the Junior Hospital Doctors Association urged that an independently conducted work study should be undertaken in a particular hospital region by a reputable firm of management consultants.
  My information is that one regional hospital board strongly favoured this suggestion on the grounds that it would provide much-needed information and would help towards a better understanding of the problems of hospital staff. I should like to know whether it is true that the Ministry vetoed this suggestion on the ground that they were intending to undertake the task themselves. Come what may, we are faced with a shortage of hospital doctors and, with the best will in the world, the situation cannot be eased for some time to come. This means that if justice is to be done to those who carry the present burden, the Minister should be prepared to make certain minimum concessions. I should like to know whether there is provision in this Estimate that we are discussing to cover the concessions that I am suggesting should now be made.
  First, the contracts of junior hospital doctors should state clearly the minimum amount of time on duty. It is clear from what I have said that in many cases this is impracticable. In that case, I am saying that some extra incentive should be provided. Does this Estimate, which must cover the whole of the year, take that sort of provision into account?
  Secondly, short of a radical revision of the staffing structure, when a hospital doctor is carrying the responsibilities of a senior grade and there is manifestly a

  669
  shortage of senior men in a particular hospital group, he should be remunerated accordingly. Is there some provision in the Estimate to cover this, should the Minister decide to take some action on this matter fairly soon?
  There are some other matters which could be put right without a great deal of difficulty if the will to do so exists—such as the payment of proper mileage and telephone allowances, and the provision of more generous study leave. I will not go into any detail on these points, because these and other matters are the subject of negotiation. But I want to know whether this Estimate covers any of these.
  Bearing in mind what the Minister has already done in respect of the new contract for general practitioners—speaking for myself, and I imagine for the whole House, I welcome what he did—I am sure that he will agree that considerable relief could be given to hospital doctors by utilising more ancillary aids. Registrars have told me that they spend half a day purely on clerical work which takes much longer than necessary because of the relative inexperience of the secretarial staff provided. The reason is that hospital management committee budgets will not stretch to provide the kind of salaries which will attract and hold—that is the important thing, which will hold—the right kind of staff.
  None of these smaller matters must be allowed to obscure the basic problem—that of providing as soon as possible a really satisfactory career structure. I do not know whether the Estimate makes any kind of provision for this. I refer to the sort of career structure which provides doctors who have had two years experience in the house officer grade with security of tenure and financial reward comparable to that obtaining in general practice, one which provides a realistic ratio between consultants and assistants, and one that provides effective and continuing post-graduate training for all doctors.
  I have referred to the negotiations which the Minister is engaged in, and, no doubt, some of these matters are being discussed now. He may wish to be guarded about them. I do not blame him if he is. On the other hand, I think he could do much to allay the current
  670
  anxiety of junior hospital doctors if he would give a clear answer to a number of questions.
  First, do the negotiations cover all the points that I have raised? When does the Minister hope to conclude his talks, or is it his intention to implement individual decisions as they are reached? Next, on what basis can remuneration and conditions of service be based when, as far as I am aware, the existing work load, which we all know exists, has not yet been measured scientifically by anyone? Is it not ironic that the Minister has agreed to work studies to be carried out in respect of nursing, secretarial and domestic staff but has so far failed to put in hand a similar study of medical staff, who are, after all, the key to the whole problem? Or is it the case that he has put a study in hand? Or is he planning to do so? We should be told. In any case, will the findings be available before the current negotiations are concluded? Or why not allow an independent study to be made, as suggested by the Junior Hospital Doctors Association?
  If it is unrealistic—I want to be fair to the Minister—to expect such a survey to be completed in time, will the Minister say whether it is his intention in the current negotiations to reach an interim settlement which deals with some of the more pressing problems but gives real promise of better things to come, with an undertaking that negotiations will be reopened when the true facts about staffing are known?
  I have raised these matters not in any spirit critical of the Minister's own approach to these problems. I have always held—I hope I always shall—that health is a field in which there is no room for violent polemics. It is one of the few areas of human activities that we discuss in the House where science and humanity essentially go hand in hand and where the strong are daily called upon to help the weak—
  Mr. Deputy Speaker: Order. We do not discuss these matters on Supplementary Estimates.
  Mr. Braine: Mr. Deputy Speaker, it is kind of you to point that out. I am clearly reaching my conclusion. As I am anxious to obtain from the Minister the fullest and most detailed answer and am

  671
  anxious to secure from him the maximum co-operation, surely I am permitted to put these matters to him?
  Mr. Deputy Speaker: No, because the Minister will not be entitled, any more than the hon. Gentleman is, to proceed beyond the limits to which this debate is permitted to go.
  Mr. Braine: However narrow the rules of order are, Mr. Deputy Speaker, surely it is in order on a matter of this kind for me to go on to say, as I intended, that I wish the Minister all success in the negotiations which he is carrying out. That is all I was seeking to say. Here we are concerned with an Estimate covering millions of pounds, touching upon the health and welfare of sick people and those who tend them. Is it out of order to wish the Minister success in the negotiations and, in the process, to ask him whether he can answer the various points that I have made on this subject?
  All I would add is that the right hon. Gentleman will be judged by us and by the medical profession by his deeds, not by his good intentions, and for that reason we look forward eagerly to hearing how he views the situation, which I should have thought was one of growing concern to anyone in the House and outside it who cares about the National Health Service and the morale of those who work in it.
  11.40 p.m.
  Mr. Philip Goodhart: This Supplementary Estimate deals with the whole of the increase in pay for the medical staff in hospitals which has been agreed so far. However, because of the lateness of the hour I do not propose to tread the paths so ably explored by my hon. Friend the Member for Essex, South-East (Mr. Braine) in initiating this short discussion. Nor do I wish to go over the sad story of the long, delayed negotiations which were involved, for the House is well aware of that story.
  A minor part of the Review Body's recommendations was that we should abolish the old system whereby a doctor who was compelled to live in a hospital had a substantial part of his salary withheld to meet his board and lodging expenses. This system has today been
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  abolished, but to take its place, perhaps not surprisingly, the charge for meals has been increased very substantially. This means that a doctor who takes all his meals in hospital will be paying fractionally more at the end of the year than he does under the system which died today. Indeed, a married doctor would be substantially worse off because married doctors who maintain accommodation for their families outside their hospitals have been able, until today, to claim full tax relief on the board and lodging scheme. This can no longer apply, since the charge relates only to meals and they cannot get any tax relief at all. Thus, the married doctor is considerably worse off under the new system.
  I have received a letter from a young registrar in my constituency—I am happy to say that he lives in Goodhart Way—who writes:
  "I personally am not required to live in hospital, but for the hospital's convenience have slept in on those nights … when I have been on call for emergencies".
  Under an agreement made between the Ministry and the medical profession, nonresident doctors on call for emergencies have been provided with free meals outside reasonable working hours. Now this free meals system has been abolished. My constituent continues:
  "… I shall have to pay for every meal at new and increased prices. The extra cost will amount to about £80 per annum, so you can see that I have already lost £80 of the £150 net rise that I have just received".
  This is a niggling new imposition which frays the nerves of those doctors who must work exceptionally long hours, about which my hon. Friend the Member for Essex, South-East spoke. They often do 110 or 120 hours a week. Now they have suddenly found that this new additional charge is being imposed on them. On the one hand they are given a rise of £150 and on the other this extra charge is imposed. It is that little straw that sends people not so much climbing up the wall but climbing on to the boats which leave this country and the hospital service. My constituent adds:
  "My family and I really do not want to emigrate, but are you surprised that I am at present investigating the prospects of a post in a Dutch hospital for a salary of £8,000 per annum, with a house provided nearby (at an appropriate rent)?"

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  He goes on:
  "The Government has done its best in recent months to persuade me to emigrate, and at last I intend to take the hint and do so. The only further step they could take is to offer to pay my passage".
  This doctor has not yet emigrated, but, as we all know, hundreds of doctors emigrate from this country each year. The estimated net emigration of doctors in 1966 was over 300. On 5th December last, I was told by the Minister of Health that the total medical staff in our hospitals of the grade of registrar or below was 10,234, and of these 4,661, or 45 per cent., were born outside this country. Is it desirable that our Hospital Service should be dependent, and become increasingly dependent, on immigrant doctors? This trend will certainly continue if the Ministry maintains its policy of niggling over comparatively small matters such as this. As my constituent says, the Government have done their best in recent months to persuade him to emigrate.
  11.46 p.m.
  Dr. M. P. Winstanley: I endorse the general argument put by the hon. Members for Essex, South-East (Mr. Braine) and for Beckenham (Mr. Goodhart), and I wish to focus attention on three specific points arising out of what they have said. In doing so, Mr. Deputy Speaker, I shall, I assure you, have in he forefront of my mind the Supplementary Estimates which we are here considering and the question as to whether they will prove adequate for the mammoth tasks which the Minister faces.
  On the general question of staff shortages in hospitals and the plight of house surgeons, house physicians and resident staff generally, one must agree that we have come quite a long way. At the time when I qualified in medicine, a fair time ago but not all that long, the pay of a house surgeon or house physician in the Manchester Royal Infirmary—I have no reason to think that other places were more generous—was 9s. 2d. a week. But, of course, as the hon. Member for Essex, South-East emphasised, we were then working in a different career structure, and, rightly or wrong—wrongly, as it has proved—we felt that we could survive the roundabouts in view of the swings we might benefit from later on. We must look at things in an entirely different way now.
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  There is no need to talk about the size of the shortage of doctors or the problems which certain hospitals face on that account, but the important point—I am sure the Minister knows this—is that the shortage is an extremely delicate matter in that it is liable at any time or at any place to snowball rapidly. If a hospital is adequately staffed, it tends to remain adequately staffed. Once it begins to be under-staffed, it rapidly becomes much more under-staffed.
  If a hospital advertises at present rates of pay for, say, seven resident hospital staff, house surgeons or house physicians, it may not have a single applicant because a man tempted to apply will realise that he may well be the only one, in which case he can find himself doing the work of seven. On the other hand, a hospital advertising for one house physician will probably have several applications. This has been my experience, and I have no doubt that the Minister will confirm it.
  There is, therefore, a situation of some danger in certain special areas of the country—the north-west of England, the North-East, the West Riding of Yorkshire, South Wales and other parts—where there is an overall shortage, and within those areas there will be specific districts, at a distance from those in which there are teaching hospitals, in which the problem is accentuated. A rather serious disparity is created by the teaching hospital being able to attract staff by reason of other inducements which it has to offer. The outlying hospital, on the other hand, has no such inducements to offer.
  That necessarily means that the Minister must now consider ways of inducing people to work in those hospitals as a matter of relative urgency and these inducements may very well have to take monetary form. So far as emigration is concerned, it is certainly not only a matter of money. There are other matters that make doctors emigrate, such as facilities and conditions of work generally.
  It is well established that certain doctors who have left this country to work overseas have done so at a net reduction in overall remuneration. I know some who work overseas for less money than they received here, but they are working in infinitely better circumstances. That

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  is a money matter in the sense that to provide better circumstances the Minister must provide money to increase staff or provide the additional facilities that may be needed.
  I cannot give an estimate of the numbers of doctors emigrating, nor, I suspect, could the Minister or one of his predecessors the right hon. Member for Wolverhampton, South-West (Mr. Powell). I was at a meeting with the right hon. Member for Wolverhampton, South-West, when he attempted to calculate how many doctors were emigrating every year. It appears to be a very difficult exercise. He did it by taking the total number on the register at a certain date, deducting the number who had died or retired—he knew the latter figure because he had to pay them pensions—and adding those who had qualified and gone on the register each year. As a result of that complicated arithmetical calculation he was able to give a precise figure of the maximum number that could have emigrated! That is rather like trying to find out how many people had gone to a football match by counting all those who have not gone.
  The hon. Member for Beckenham tried to give an estimate, and I would not quarrel with it. I think that the Minister will agree that the figure is worrying, whatever it is, and that it shows a tendency which must be reversed.
  Mr. Braine: Does the hon. Member attach much importance to the estimate which Dr. Seal has made that in 1965 the number of doctors that emigrated was equivalent to one-third of those produced by our medical schools in that year?
  Dr. Winstanley: I am grateful to the hon. Member. I am aware that Dr. Seal has made a number of estimates over a long period, and has done very valuable work in pointing to the problem. But I do not necessarily accept his estimate any more than I do any of the others. I think that the Minister and the rest of us accept that there is a worrying figure. Let us not waste time saying exactly what it is.
  There is also a worrying figure in the other direction, and again it is a monetary matter. Many of the doctors who come here from countries such as India and
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  Pakistan, or have come here in the past, to take up resident hospital posts have done so to do post-graduate work and study for higher qualifications.
  Two things have happened. First, those countries are developing their own resources and organisations, so that the doctors are perhaps tempted to remain in India and take their own higher qualifications. Secondly, they find that owing to the general shortages in hospitals their time for study, which, after all, they have come here for, has become progressively eroded in certain hospitals. Therefore, the object of their visit is defeated in a sense, and as information about the situation spreads they will tend to come here less and less.
  I feel that those observations are important, and the Minister will be seized of them. It is essential that he should have at his disposal the necessary resources with which to take the emergency steps necessary if the tendencies of which I have spoken are not to snowball. It is no good waiting for another opportunity to come to the House for more money. By then it will be too late. These things can escalate rapidly. I have seen the problem grow in my area; a hospital is slightly short of staff and then almost overnight it becomes desperately short. I would like to be assured that the right hon. Gentleman feels that he has at his disposal the resources to apply in the necessary places if it should prove necessary to make such applications.
  Two days ago, the right hon. Gentleman announced the measures being taken to combat drug addiction. I welcomed those measures, the extremely mature consideration given to a number of very difficult aspects and the serious thought obviously given to the problem. The Minister had clearly taken into consideration a whole number of complicated but very important factors. He announced certain measures which, it seemed to many of us, would cost money.
  In response to questions put to him by the right hon. Members for Ashford (Mr. Deedes) and Leeds, North-East (Sir K. Joseph), the right hon. Gentleman assured us that these projects would not suffer for lack of money. Yet we could not get a specific assurance that more money would be made available for them.
  I cannot imagine that these new special centres in hospitals for treating drug

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  addiction can be mounted effectively without more money being made available and I would like to hear from the right hon. Gentleman tonight that the extra money which will prove to be necessary for these projects, which we all welcome, is included in the Supplementary Estimates.
  11.56 p.m.
  Miss Mervyn Pike: I am grateful for the opportunity to add my observations to this short debate, which I am sure we all welcome and which will be welcomed outside as well. Everyone on both sides of the House shares the anxiety that is felt for the future of our hospital service. I want to start where the hon. Member for Cheadle (Dr. Winstanley) left off.
  On Monday—and this is the question uppermost in our minds—we had the opportunity to ask the right hon. Gentleman al out the money that is to be made available within the Hospital Service for the new centres for curing drug addiction and we do not think that we got a satisfactory answer from him. He said that the money would be forthcoming and this we believe. We believe that his intention is that a real effort should be made in this respect. We do not doubt that it is his intention to do everything possible to ensure that these clinics are set up and the treatment facilities made available.
  Nevertheless, we must express our anxiety, with these Suplementary Estimates before us, that there will be cuts in other parts of the Hospital Service to find the money for the drug addiction centres. This adds to our anxieties about the state of the hospital service generally. Hon. Members have referred to shortages in the service and about the general level of emigration taking place. This is relevant to the amount we are discussing on these Votes.
  The brain drain to some extent reflects a bad investment, if one can put it that way. So many of those going abroad are not going because they really want to or because they are dissatisfied with their life here, but because they are dissatisfied with the future prospects in their careers. At the same time, they are going when there has been, as it were, the maximum investment in their training and when they have given the minimum return on that investment. They themselves are
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  getting a very bad bargain because they have not finished their training.
  There is great anxiety that any further shortages which occur in the National Health Service will lead to further acceleration of the process of emigration and damage to the N.H.S. as a whole. To some extent, the Minister's own statements have probably accelerated this process, but perhaps he will take this opportunity to clear this up. He is in print as giving the impression—not exactly saying—that he thinks that perhaps steps should be taken to stop this.
  The Minister of Health (Mr. Kenneth Robinson)indicated dissent.
  Miss Pike: I hope that the right hon. Gentleman will clear this up. If he means that he is to make it more difficult for these doctors to emigrate, they will go now while the going is good. If he means, as I hope he does, that he will try to get more money for the Health Service and so improve conditions that this desire to emigrate lapses, then we will all welcome that; but I cannot see from these Estimates how he will manage that.
  The questions to which I want to address my remarks fall into three categories. First, how does the right hon. Gentleman intend to spend the money covered by the Supplementary Estimates? Secondly, does he consider that the Estimates are adequate in view of the present situation in the Hospital Service? Thirdly and most important, is this money being spent wisely and are we getting the fullest value for our money from the Health Service?
  The emigration figures are relevant in this connection, because we get the vicious circle that the greater the shortage of doctors the greater the difficulty and the less good the work done by doctors who are overworked and overburdened, and the less adequate the service, the less good the value we get. One of our main anxieties in this respect is the excessive work load put particularly upon young junior hospital doctors and the dependence on immigrants to which this is leading. We are very grateful for the services which these immigrant doctors give, but their supply is not within our own control and may well diminish in future, because they, too, are being attracted overseas, and in their own

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  countries there is a movement to build up services and keep these doctors at home.
  Good though these doctors are, their presence puts an added strain on our own services. There are language difficulties, which are often serious, and in many respects more training is needed. They certainly come to us for our training facilities and in many cases they require extra training facilities to help them to give their best in their own hospital services.
  But the maximum strain in the service is being exerted on young men at the most vulnerable times in their careers, these young hospital doctors who are just finishing their training with all that that means. Most of us can still remember—although it is probably putting our minds some time back—what strain it was to go on year after year taking examinations and going to university and working hard and reaching maturity. It is a tremendous nervous, emotional and mental strain. People are marrying at a younger age than used to be the case, and this brings the added difficulties which the family man has. All this comes at their most vulnerable time in their career and, because of it, they are more liable to break down with the excessive burden of overwork.
  Here, too, this can be said to be a bad use of resources when there is this ridiculously heavy strain on young men at this vulnerable time in their careers. It often means that they are not able to absorb the training which they ought to have and not able fully to use the available facilities, and because of that many of them are not able to give of their best.
  We want to hear how the Minister believes that he will be able to meet this difficulty in future and to hear that he does not mean to lock up doctors in this country, but to make conditions so good that they will want to say. Will the Minister nail the rumour that the pre-registration requirements will be stepped up from one to two years, to some extent compulsorily lengthening the time whereby he can keep his hands on these people? Fundamentally the shortage is due to three main factors.
  The first is mainly financial. We keep saying that it is not wholly financial, but the financial factor looms very large
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  in the crisis that we are now facing. What progress has been made with the B.M.A. charter for hospital doctors? What progress is the Minister making in the talks, which he says started early this year? There is great dissatisfaction at the remuneration levels, and most people, looking at the structure of the service, believe that there is still insufficient flexibility. Is the Minister sure that in these Estimates he has enough room to manoeuvre?
  The hon. Gentleman the Member for Cheadle (Dr. Winstanley) pin-pointed the fact that we need more flexibility in the service structure if we are to achieve the necessary overall picture. There should be added inducements for difficult conditions. The hon. Gentleman talked about cases in the West Riding. It should be possible to attract people to these areas which are facing conditions of near crisis. The hon. Member for Beckenham (Mr. Goodhart) spoke of the residential charges on the men in the hospital services. Let us not forget that these doctors are living in the hospitals to suit their employers rather than themselves. In looking at this matter, the Minister should bear that in mind.
  Is he sure that this extra money will be sufficient? Probably more important than money in the long run are training facilities, and this is where we want to know if the Minister believes that the Estimates provide adequate resources, not only to give hospital doctors the time they need, but to give them proper training facilities. Because I do not want to delay the House I will not read all of the cuttings that I have, emphasising the need for training. Every item, whether in the British Medical Journal, The Lancet, the Press, or letters from hospital chairmen, emphasises that there are inadequate training facilities for young hospital doctors.
  We want to know more about what the Minister will do to attract women back to the service. To some extent young women doctors who have gone out of the service early can be attracted back given the proper facilities. Training is more important than pay here. The work load is possibly one of the most important considerations.
  Are we sure that the organisation of work is properly looked after? It is a

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  platitude to say that the general practitioner is not organised on the most efficient basis, but it is less commonly realised that the same criticism can be made of the work done by the hospital doctor.
  An article in The Lancet of 26th August says that the shortage of hospital doctors was at its most acute because of the survival of the myth that nearly all medical work not undertaken by consultants must be carried out by "transients". In almost every hospital junior staff spend much of their day on work which could be undertaken by others. The article goes on:
  "It would surely be sensible to examine their day's work closely in order to discover by how much, and by whom, they could be relieved of their tasks as clerks and messengers."
  The work load of casualty services is perhaps a part of the hospital service that requires special attention. At present doctors in the casualty services have to deal with many cases which are not "accidents", and emergencies. In these services junior hospital doctors, very often confused by long queues of cases, of which some are trivial, often have to make rapid decisions and difficult diagnosis at great speed. In order to help the young inexperienced doctor, it has been suggested, by Sir Harry Platt, that there should be consultant supervision in casualty units at all times. Here again we come up against shortages, but surely the Minister must give us some reassurance on these points.
  It is the career structure that is possibly at the root of so much of the difficulty at the present time. Remuneration is very relevant to the Estimate. I must admit that I am getting slightly nervous, Mr. Deputy Speaker, because I see you frowning at me, but I assure you that I am anxious to keep within the rules of order. Like my hon. Friend, however, I find it difficult to divorce the career structure from remuneration and the Estimates, because they are all so closely bound up.
  The problem of hospital doctors is not simply lack of money and overwork. Part of the problem is also the lack of opportunities for promotion for junior hospital doctors. The hon. Member for Cheadle said that in his early days—I was going to say before the Second World War, but I am sure that he was not practicing then. I am
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  sure that he was not even born before then.
  Before the Second World War, far fewer resident doctors were needed and it was possible then to relate the number of senior resident doctors required to keep the hospital going with the number of consultant vacancies which they would be expected to fill. The residents were hard worked, badly paid and badly housed. But the juniors were not staying for long and the seniors were prepared to put up with it in the hope of becoming consultants within a reasonable time.
  Today, a modern hospital cannot be run with such a minimal number of staff. Hospitals have, therefore, been compelled to take on senior residents for whom they know there is no future at all. The situation is aggravated by the enormous inflation of research staff who receive preference in the allotment of consultant jobs. At present, there is no reason why an ambitious young medical student should contemplate a career in the hospital service where opportunities are so limited. Unless there is a revision of the career structure in the non-teaching hospitals, increased pay will not attract more doctors.
  More consultant posts are certainly needed. There is plenty of work that they could do. Much emergency work and surgery which is at present being done by registrars could well be done by consultants, as, indeed, it was before the war. This would relieve the pressure on registrars, give them more hope for the future and also improve the standard of treatment.
  Another much-needed reform is the integration of general practitioners—
  Mr. Deputy Speaker: Order. The hon. Lady is now travelling a long way beyond the scope of the Supplementary Estimates.
  Miss Pike: I apologise, Mr. Deputy Speaker. I do not want to stray out of order, but I want to deploy the case that the career structure is very important. I will stop if you think that I am going too far, but I was about to make the point that we cannot get away from the world outside in this respect.
  The integration of the general practitioner into the hospital service is—
  Mr. Deputy Speaker: It would be wrong to let the hon. Lady, because she is speaking from the Front Bench, proceed further than other hon. Members have gone.
  Miss Pike: I certainly bow to your Ruling, Mr. Deputy Speaker, and I will not seek to go further. I believe, however, that the Minister has taken the point, which he knows only too well.
  Career structure, conditions of work, remuneration and opportunities throughout the whole service are uppermost in our minds in asking the Minister how he will spend the money that is provided in part of these Estimates, how he will make sure that he gets the best value for it and how he will ensure that in extending one part of the service he is not making cuts in other parts.
  We want to hear clearly from the Minister the position that will be brought about by the added money that is to be spent on clinics for drug addicts. This is uppermost in our minds. We are facing a crisis in the hospital service. We believe that more money should be brought into the hospital service and that these Estimates should be bigger.
  We only wish that as part of these Estimates the Minister could start a survey to see how he could bring more money into the service as a whole. We only wish that as part of these estimates we could recommend certain courses of study to find ways in which we could get out of the financial straitjacket which is causing so much damage to the service at present.
  But uppermost in our minds is the problem of finding extra money without making any cuts in the service, for if the Minister makes any further cuts in the service affecting young hospital doctors the crisis in the service is going to be very real indeed.
  12.16 a.m.
  The Minister of Health (Mr. Kenneth Robinson): I am very glad to respond to this opportunity, afforded to us by the hon. Member for Essex, South-East (Mr. Bernard Braine) and others, to discuss the conditions of junior hospital doctors, or at any rate, to discuss this Supplementary Estimate as it relates to junior hospital doctors. The rather narrow limits of this Supplementary Estimate have, of course, led certain hon. Members into some difficulties.
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  The hon. Lady the Member for Melton (Miss Mervyn Pike) rather highlighted these difficulties by asking me three questions. She asked me "how are you going to spend the money?" The answer, which is in the Estimate, is on Selective Employment Tax and on increased rates of pay in respect of pay awards agreed to date.
  The hon. Lady asked me "is the money adequate?" My answer is that it is perfectly adequate to meet the purposes for which it is being voted. She asked me if I am going to get good value for the money? I am quite sure that I shall get very good value for the money paid to these hospital doctors.
  It follows that these Supplementary Estimates will not cover the cost of addiction centres at hospitals, which have not yet been set up. I have nothing to add to what I said the other night about that. All hospitals get more money every year; the rate of increase is greater than ever it was under hon. and right hon. Gentlemen opposite, and those hospitals called upon to provide these facilities will get the resources needed to provide them.
  Before I come to the main debate, on the conditions of junior hospital doctors, perhaps I can deal with the particular matter the hon. Gentleman the Member for Beckenham (Mr. Goodhart) raised in relation to board and lodging charges for junior doctors. It is difficult to deal with a particular case, that of the doctor whose letter he read out, but I would be glad to look into it if the hon. Member will send it along to me.
  The Review Body, in making this award which is a very substantial increase for junior grades, said that in future there should be no payment for board and lodging together as in the past, and that for those doctors who should be compulsorily resident in hospital there should be no lodging charge but that they should be required to pay for their meals as they are taken.
  An agreed scale of charges for meals has been agreed by the B.M.A. on behalf of the profession, and I am sure it is not true to say, as was alleged in the letter, that the new meals charge for the compulsorily resident will be more than the combined charge abolished by the Review Body. I am told that it cannot be more, but as I have said, I would be

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  very glad to look into the particular case.
  Doctors have always had to work hard in their early years in the hospital service, at a time when they are acquiring their professional skills. I think, therefore, that it is all the more important that they should feel content with their general conditions of service, ranging from living accommodation to facilities for post-graduate training.
  Now in discussing the recent discontent among junior doctors, very vividly described by the hon. Member for Essex, South-East, it is well to bear in mind that recent years have seen great advances in medicine, increasing public demand for medical care, and considerable social change. It would be fair to say that conditions which were accepted as a matter of course by the previous generation, for example, by the hon. Member for Cheadle (Dr. Winstanley) when he was a young hospital doctor, are no longer acceptable to the present generation. I make no complaint about that. But the grievances of hospital doctors have not blown up overnight. For the most part, they go back a long time; certainly throughout the 13 years during which right hon. and hon. Gentlemen opposite were in charge of the National Health Service.
  I should like, first, to say a word about the work load, which I agree is one of the most important factors. It may of itself determine whether a doctor is satisfied with his employment. I agree that no one can give of his best when he is fatigued by excessive hours of work, and every year the volume of work in our hospitals increases. It can be measured to some extent by the figures in respect of hospital patients, such as discharges and deaths. But the figures do not fully reflect the increasing burden falling on doctors and other professional staff due to the growing complexity of medical care.
  New techniques of great benefit to patients very often require much more intensive work on each patient by the medical staff. The growing burden of complex and responsible work falls upon doctors of all grades, not only on the juniors.
  The extent of the increase in medical staffing in the hospitals since the beginning of the National Health Service is perhaps not even now sufficiently widely
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  known. All grades of staff increased by about 65 per cent. between 1949 and 1965 in terms of whole-time equivalents. In the intermediate and junior grades—that is, registrars and below—the increase was about 88 per cent. There were over 7,000 more doctors working in our hospitals in 1965 than there were in 1949.
  Despite the very considerable expansion, we still need many more doctors than we have. In recent years, the medical schools have not produced as many doctors as were needed, and the hon. Member for Essex, South-East knows why as well as anyone in the House. I do not want to labour the point about the Willink Report tonight.
  The average output of British-based graduates from medical schools in Britain was 1,600 in the years from 1961 to 1965. It is now rising, and the intake of British-based pre-clinical students has increased from 1,788 in 1960–61 to 2,363 in the autumn of 1966. That increase will be reflected in an increased output of doctors over the next five years, and that should help our hospital staffs to cope with the ever-increasing volume of patient care.
  At the end of last summer, I wrote to the chairmen of hospital authorities, as the hon. Gentleman mentioned, asking them to review the hours and organisation of work undertaken by junior medical staff, the facilities for recreation and study, and the provision of residential accommodation in their hospitals, and to report to me on the action taken to make improvements on each count. The response to that request has been encouraging. It is clear from the reports that I have received that boards and committees have set about this task with determination and ingenuity.
  Almost all committees acted on my suggestion and appointed one or two members to take a special interest in the welfare of junior doctors. Many committees have arranged special meetings with the junior medical staff, and in some groups other steps have been taken to improve communications between the younger doctors and the administration. Junior doctors have been co-opted on to medical committees or have been encouraged to organise junior staff committees. I am sure that all these measures will help promote an understanding of the sort of problems that we have to tackle.

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  Most authorities have reviewed or are reviewing hours of duty and organisation of work with special reference to standby duties. Steps are being taken where possible to reduce excessive hours and to increase time off for recreation and study by reorganisation of duties, by improvement of arrangements for filling vacancies and covering absences, increased employment of general practitioners on standby duties, and by increases in medical establishments. To some committees the basic problem is a shortage of medical manpower which will not be solved by the creation of additional posts which cannot be filled, and this relates to the point made by the hon. Member for Cheadle. These authorities say that there seems to be no way of achieving a material reduction in hours of duty for their junior medical staff at the present.
  It is very clear that the major cause of excessive hours is the need to provide round-the-clock services for accident and emergency departments, but most hospitals find this an unavoidable obligation. A few have found it possible to close small accident departments by making alternative arrangements to receive casualties elsewhere, and a limited amount of rationalisation in casualty services has been achieved as between hospitals situated fairly close together. This last was, of course, what was meant by the phrase, quoted by the hon. Gentleman, "some curtailment of services" in my letter to chairmen. In fact the curtailment has been minimal.
  There has been a good deal of development recently of medical libraries and other facilities for post-graduate study. Further expansion, including the provision of several new centres of postgraduate medical education, is planned. I am glad to say that there is increasing provision for study leave, day-release courses, and other forms of help for those studying for higher examinations, and I entirely agree with the hon. Gentleman that these facilities must be open to all junior doctors, whether British born or from the Commonwealth.
  In recent months the profession has been discussing these problems, and it sent me the memorandum upon them which it published in the medical journals. In answer to a Question in the
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  House on 14th December I said that I intended to start negotiations on the hospital doctors' document on 19th December. The negotiations did indeed start on that day, while, incidentally, the memorandum was still under discussion within the profession, and I really do not know what the hon. Member for Beckenham meant when he talked about a long delay in negotiations. I was discussing the document before it was finalised.
  Arrangements have been made for a full series of meetings to discuss in detail the many aspects of the hospital service which are raised in the memorandum. The negotiations concern all grades of hospital, medical, and dental staff, and not only the problems associated with junior grades in particular. They will cover a wide range of problems, but not major matters of remuneration. As the House knows, these are for the Review Body, and the Review Body awarded substantial increases in pay, particularly for junior doctors, in the Seventh Report which was accepted by the Government.
  If we are now getting the services of junior hospital doctors "on the cheap," to quote the hon. Member for Essex, South-East, I do not know how he would have described their remuneration when he was Parliamentary Secretary at the Ministry a few years ago, because these increases have been very substantial indeed.
  Mr. Braine: I was referring to junior staff taking on the responsibilities of senior staff and not getting the remuneration for it. The sole purpose was to probe the right hon. Gentleman's intentions with regard to the staffing structure. Is the Minister going to deal with that?
  Mr. Robinson: I am, but the hon. Gentleman knows full well that those conditions did not suddenly appear on the horizon when the Government changed in October 1964.
  Mr. Brain: I agree.
  Mr. Robinson: The increases to which I have referred are now in payment following the six-month deferment which was necessitated by the prices and incomes standstill.
  It has been for the professions themselves to decide who should represent

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  them in the negotiations, but the importance which they attach to ensuring that the interests of the junior doctors are kept well to the fore is shown by the fact that four out of the negotiating team of nine were themselves junior doctors.
  I am fully aware of the feelings of frustration which have been expressed by so many of the juniors, and which have been quoted during this debate. I am hopeful that when the current feelings of uncertainty about career prospects in the hospital service have been removed, many of the relatively minor matters which seem to cause a great deal of vociferous complaint will then be seen in perspective.
  The major problem of career prospects is not one that can be solved overnight. But these discussions do provide a real opportunity to review with the profession the junior hospital doctors and staffing structure. This is of vital importance and I am not without hope that major modifications in the career structure may be agreed that will go a very long way towards alleviating the current difficulties.
  A somewhat different series of problems raised in these discussions are those aflecting the work load and the hours off-duty of junior hospital staff. Some improvements have already been made here. My Department had already obtained preliminary information about the work of junior doctors and is planning a further study. Some improvements will inevitably affect the relationships between different categories of hospital staff, because we must bear in mind that it is not only junior staff who may be overworked but some consultant staff as well; or no one will be very much helped if changes made result merely in moving the burden of work from some staff to other staff who are already equally overburdened.
  Equally, we must provide that any changes must be co-ordinated so as to make sense within the framework of the hospital service as a whole.
  Dr. Winstanley: Can the Minister mention any proposals that he has for removing the burden from one hospital to another; in other words, the arrangements he has described about what to do within a hospital do not cover the problem of transferring hospital staff as between one hospital which is fully staffed
  690
  and another which is very much understaffed. Has he any suggestions for dealing with that problem?
  Mr. Robinson: This was one of the situations which gave rise to my suggestion about a rationalisation of casualty services. A certain amount has been done, but I hope that more can be done. In the long run, however, the solution is to improve conditions within these hospitals where staffing is very difficult in order to improve recruitment prospects.
  The hon. Member for Essex, South-East, asked how long negotiations would last. If he is interested in the answer—and it appears that he is not; perhaps the House will be—they will last as long as is needed to achieve a satisfactory outcome. I have made it quite clear—and this was another question of his, the answer to which he is apparently not interested in—that any agreed improvements which can be implemented in the course of the negotiations will be implemented without necessarily waiting for the conclusion of the whole lot of negotiations.
  Another important factor in the life of a junior doctor is his requirement for study leave to prepare himself to sit for higher qualifications which are normally necessary for a career in this service. The current negotiations deal with the special problems that this poses both from the service point of view and from that of the junior doctor. Our aim is to provide in future more flexible schemes which can readily be adapted both to the developing needs of hospital medicine and the varying requirements of the individual doctor. I believe that the House will recognise, in the light of what I have said, that the problems of junior hospital doctors are now being critically and urgently reviewed by the Government, in full consultation with the medical profession.
  Mr. Braine: Will the Minister say something about the question of a survey of the work load in hospitals? Is his Ministry engaged on any kind of work of that nature?
  Mr. Robinson: This was one matter I was dealing with when the hon. Member was deep in conversation with his hon. Friend behind him.

  SCOTLAND
  12.34 a.m.
  Mr. Gordon Campbell: I want to change to a different subject and to refer to page 22 of the Supplementary Estimates, containing items concerning the Scottish Supplementary Estimate and the increase required in general grants to local authorities in Scotland. The total of these items is £6,968,000. It is stated that this provision is subject to the General Grants (Increase) (Scotland) Order, to be laid before Parliament, and to the Local Government (Scotland) Bill. These Supplementary Estimates are dated 30th November last and we considered the General Grant Order on 20th December last. The Local Government Bill which was referred to must have been the one which is now enacted.
  Then, later on in page 22, it is stated, in explaining the expenditure, that the Secretary of State for Scotland proposed to increase the aggregate amount of the general grant for the years 1965–6 and 1966–7 was £8·4 millions. This was on 30th November, but the Scottish General Grant (Increase) Order, which subsequently appeared about two weeks later, provided for an increase of less than that—to be precise, for £8,045,000 for the two years in question, or about £400,000 less in the event than had been stated on page 22 of the Supplementary Estimates.
  Of course, one recognises that the question of dates arises here, but we would appreciate an explanation from the Minister. The grant begins in the middle of May and ends in the middle of May, but the Estimates are for the period up to 31st March; so there is a difference of about six weeks. This may explain why the figure of nearly £7 million is now required and not £8 million, or nearly £9 million if one counts in the £700,000 in rating relief. What it does not explain, is why it was stated on 30th November that there would be an increase of £8·4 million, while when the General Grant (Increase) Order appeared only two weeks later, the figure had become £8·04 million. I quote the figures in that way, because the explanation may be that there has been a misprint; it could be that 8·4 has been printed for 8·04.
  The Minister of State, Scottish Office (Dr. J. Dickson Mabon)indicated dissent.
  Mr. Campbell: The Minister shakes his head, but if it is not a misprint, then he must explain how the Secretary of State decided in only two weeks to lop off no less than £400,000.
  A further point needing clarification is on the question of the increased costs and prices and remuneration which are the reasons for this extra money being required. In the report of the Secretary of State accompanying the General Grant (Increase) Order, it was stated that the increase in remuneration was for increases in wages and salaries for teachers, firemen, and miscellaneous minor awards. We knew of the increases for teachers and firemen, but what about the "miscellaneous minor awards"? There is one in particular which is affected, and on which we should like more information.
  That is the local government officers whom it was expected would receive an increase in their pay as from 16th March—that is, this coming month. There would be two weeks of this 7 per cent. increase of pay included in this Supplementary Estimate because two weeks of March are involved. But have these been included? On 30th November last was an increase included under the extra remuneration and under "miscellaneous minor awards" in this explanatory report by the Secretary of State? These increases had been negotiated and then postponed for six months, so the facts were not new to the Government. They were negotiated on 16th September last and then, under the arrangements for freezing wages, the award was accepted but would not come into effect until 16th March.
  It was following the English equivalent of the negotiation. For the local government officers in England and Wales the negotiation had led to a 7 per cent. increase being agreed, and this also was postponed for six months; but the difference between the two negotiations appears to be that whereas in the case of England and Wales the pay award is coming into effect—I was going to say today, but I now see that the date was yesterday, 1st February—we understand that in the case of Scotland at the end of the six months the award is not to be made and has not been accepted.

  693
  This seems extraordinary and inexplicable because the time lag between the two negotiations, which was a matter of only a few weeks, was made necessary by the Department of Economic Affairs which, I understand, insisted that the Scottish negotiation must follow precisely the pattern of the English negotiation. It was understood that because the local government officers were in similar grades, doing similar work with similar qualifications, the Scottish negotiation should have the same award as the English, and that therefore the English negotiation should take place first and the Scottish negotiation afterwards.
  By mischance, it seems, the English negotiation was completed just before an arbitrary day, 20th July, and the Scottish negotiation afterwards. If that is the only reason that the local government officers in England and Wales are to get their award after the postponement for six months, while the Scottish local government officers are not to do so but are to have theirs further postponed, this is inexplicable. It is a deplorable distinction which has happened entirely by chance, and I hope the Minister of State can tell us that he or his right hon. Friend the Secretary of State will make sure that this glaring anomaly is put right.
  We should like to know, first, whether the part of this award that was expected to fall within this financial year—that is, the part which was expected to fall before 31st March—was included in these Supplementary Estimates when they were made up in November; and, secondly; referring to page 20 of the Estimates where there is exactly the same wording concerning the increase in remuneration for employees of local authorities in England, which increase is apparently to start on 1st February—whether allowance has been made in the English Estimates for such an increase to take place.
  This is a matter which is causing great concern not only amongst the local government officers and their employers in Scotland but in Scotland as a whole. I hope the Minister can tell us what the position is and that he can give us an answer which is fair to Scotland.
  12.43 a.m.
  Mr. J. Bruce-Gardyne: I should like to endorse the points which
  694
  were made by my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell). We need a great deal of explanation of the apparent discrepancies between the figures in the general grant that we are discussing tonight and the figures in the General Grant (Increase) (Scotland) Order that we discussed before Christmas.
  I should like also to take up one or two other points which arise from the details of the General Grant (Increase) (Scotland) Order for which the money is being voted, as I understand it, under the general grant which we are discussing tonight. My hon. Friend has already referred to the affair of the N.A.L.G.O. award. I should have thought that we needed a pretty comprehensive explanation from the Minister of State about this. On the face of it, it appears to be a fairly disgraceful case of discrimination against Scotland, and a case which is not, so far as I can see, allowed for in the Grant Order. We shall need a clear explanation why the discrimination should have occurred.
  When the General Grant (Increase) Order was being discussed in the House before Christmas, the Parliamentary Secretary, as he then was, pointed out, correctly, that the bulk of the money arose because of the teachers' salary award. He made a statement which I have read with considerable interest. He said that the grant was in respect of all kinds of workers in local government who deserved to have their wage and salary increases endorsed. He went on:
  "I hope that no one, in criticising the size of this Order, suggests that they ought not to be honoured."—[OFFICIAL REPORT, 20th December, 1966; Vol. 738, c. 1352.]
  It is a great relief to find the present Government honouring any of their promises to anybody. It sticks out like a good deed in a naughty world. I would not criticise them for honouring their obligations in the matter of an increase in teachers' salaries notwithstanding the circumstances whereby the award was agreed after the Secretary of State had "taken the mickey" out of the Prices and Incomes Board, a matter one would hardly be in order in discussing again tonight.
  Another point arises from the Order. Among the figures that come within the scope of the grant, there is an increase

  695
  in respect of cost of registration of electors. The Minister of State must give us an explanation. Why should the cost of registering electors increase when the number of electors declines? We had a net emigration of 47,000 Scots last year; the number of electors declined proportionately. Of those, 25,000 went abroad and 22,000 came south. The Secretary of State seeks to console himself with the fact that the number coming south remained constant, although there was an all-time record in the number going abroad—in the immortal words of the Prime Minister, voting with their feet, and voting against Socialism.
  Why is it that, despite the decline in the number of electors—of which the Government should be mortally ashamed—the cost of registration of electors should increase? We are entitled to an explanation. If in passing the Minister of State can tell us what the prospects are of a genuine increase in the number of electors in Scotland in future we shall be delighted but thoroughly surprised, and thoroughly sceptical so long as the present Government are in power.
  Another increase is on account of increased transport costs. This was discussed in the debate before Christmas, and the then Parliamentary Secretary gave a very unsatisfactory explanation, and a very inadequate one, of the reasons for the increase. In particular, he attempted to gloss over the impact of increased taxation and the taxation element in fuel costs and vehicle licences. I hope that we will be given a more comprehensive explanation tonight.
  There is also an increase in the grant in respect of National Insurance employers' contributions. Is there, in this part, provision being made for an anticipated increase in unemployment contributions in view of the growing condition of unemployment in Scotland? In other words, does the Minister anticipate that this is liable to affect employees in local government? [Interruption.] The Minister of State may consider this a laughing matter, but many people in Scotland do not regard it as such. But what can one expect from the present Government?
  Mr. John Brewis: I thought that the number of employees in local government was increasing.
  Mr. Bruce-Gardyne: My hon. Friend may be right. Perhaps that is the way in which the Government are hoping that their redeployment policies will work; the way in which people are being driven from one employment to another.
  At a time when the burden of rates has been increasing so fast, I would be the last person to complain about any assistance being given by way of general grant to help the ratepayers of Scotland. However, I cannot see that either this grant or anything else we have been discussing in the Scottish Committee can he regarded as in any way fulfilling the Government's frequent promises to alleviate the burden on ratepayers and shift it to the taxpayers. The Government have been issuing a great many empty promises and what is proposed will in no way adequately alleviate the burden on ratepayers.
  12.53 a.m.
  Mr. John Brewis: I wish to comment on only one point mentioned by my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne)—the local government aspect of this matter. I do so because it is lamentable that we cannot keep the salaries of those employed in local government in Scotland in line with their counterparts in England in such a way as to prevent them from seeking alternative employment South of the Border, particularly since we in Scotland cannot afford to lose these people to the South.
  This Supplementary Estimate seems to reveal some bad housekeeping. When the last General Grant Order was made the Minister stated, on 20th December last, that the figure involved was £86…2 million. That seems to have become £86…37 million. It also appears that, while he was referring to the year ending in May, he is now referring to the year ending in March. What is the true position? Further, we now have the figure of £93…8 million mentioned, although then it was £93…13 million. All the figures seem to be wrong. One must add to this the fact that the Ministerial Circular, signed by the Financial Secretary to the Treasury, contained a date in November, 1966, which indicated that it was issued—and, therefore, these figures got out—before the debate in December took place. It is all the stranger when one asks oneself whether he knew or

  697
  did not know that the local government claim was not to be honoured. Did he or did he not know that the teachers' salary increase was to be cut by 2 per cent. and that teachers in further education would not get their salary increase at all? Why are there always increases in the Estimates? There should be decreases occasionally.
  Interest rates for local authority borrowing have been at the highest rate for the longest period ever, but just recently there has been a reduction. What will the ½ per cent. reduction mean for the rest of the year? There is no reference to that anywhere. Will the Minister of State tell us what alleviation the hard-pressed local authorities will have from the reduction in interest rates?
  12.55 a.m.
  Mr. Edward M. Taylor: There is so much one would like to say about local government spending in Scotland, but the Supplementary Estimates limit the scope of the discussion to only a few points. But they are important points, and one cannot but deplore that, on a matter of such significance for Scotland, there is only one Labour back bencher present to discuss it. This is a shocking state of affairs.
  Mr. William Hannan: What the hon. Gentleman says is not founded in fact. If he cares to challenge the Vote, he will find out how many Labour Members will be on the back benches. There is no point in saying that they are not in the Chamber at this precise moment.
  Mr. Taylor: I am sorry to have annoyed the hon. Member for Glasgow, Maryhill (Mr. Hannan) because I know that there is no more conscientious Member than he.
  Mr. Hannan rose—
  Mr. Speaker: Order. After that exchange of amenities, I hope that we can come to the Supplementary Estimates.
  Mr. Taylor: These Supplementary Estimates remind us of the extent to which costs and prices are rising and of the Government's failure to control the increase in local government spending. But if we do not approve these Estimates, the local authorities will have to make good the difference, and this could only bring further distress to the hard-pressed
  698
  ratepayers of Scotland. Having this week had the opportunity to speak with some Glasgow traders about their rate problems, I know that this is one reason why we could not turn down the Estimates. It would only make things much more difficult and confirm the impression that some people have that the local authorities, with the connivance of the Government, are almost intent on committing economic suicide.
  I am concerned about the sharing of the increased costs referred to in the Supplementary Estimates. It is difficult to follow grants from one year to another and compare like with like, but it seems that the amount which has been allowed for under the General Grant (Increase) Order is to rise to over £93 million in 1966–67, compared with a final figure of about £83 million in the previous year. Government grants, therefore, are rising at about 12 per cent. a year, or a little less. But the Minister of State told us a few days ago that rates in Scotland, that is, the share borne by the ratepayers, were rising by more than 16 per cent. It appears, therefore, that the Government are passing an increased burden on to the shoulders of the ratepayers and accepting less on their own.
  Our fears have been confirmed by a Government paper published today by the Scottish Office which shows that the Government are not even prepared to accept the normal local authority estimates for reckonable expenditure, and the authorities will themselves have a much higher share of the burden to carry in the forthcoming year. I believe that that is the first time it has been done, and it will cause real alarm in local authorities.
  My second question is that which was touched upon by my hon. Friend the Member for South Angus (Mr. BruceGardyne) in his very penetrating speech. I would make a further quote from the OFFICIAL REPORT in that connection. The Minister said of the wage increases:
  "They have been negotiated through the proper machinery…and must be honoured."—(OFFICIAL REPORT, 20th December, 1966; Vol. 738, c. 1352.]
  It appears that the local authority officers are to be cheated out of their meagre entitlement because someone, somewhere is not fighting for the interests of local government in Scotland.

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  The Government have the responsibility for giving an answer. Are these figures included in this Supplementary Estimate, and if not, does that mean that the Government have known, or the Scottish Office Ministers have known, for a considerable time that that wage agreement would not be honoured? If that is the case, and I hope that it is not, it would be a disgraceful condemnation of the Government's interest in the people of Scotland and Scottish local government.
  The question of teachers' salaries is referred to at the foot of page 22 of the Supplementary Estimates, where it says that most of the increase results from the increase in teachers' pay. What would be the increase in the Supplementary Estimate if our schools were fully staffed? We must bear that point in mind, because the Government plan to raise the school leaving age, which would mean a dramatic increase in that provision. Are the Government taking into account the present situation in the schools or making provision for an increase?
  Have the Government allowed themselves scope to allow for things other than increases in "prices, costs and remuneration"? The Minister knows that this is an old hobby-horse of mine. It is wrong that the Government should only make provision for prices, costs and remuneration in such an Order. How strictly have the Government interpreted this?
  One point of difficulty arose as a result of a penetrating question by the hon. Member for West Stirlingshire (Mr. W. Baxter) on 20th December, when he asked whether provision for S.E.T. was included in the Order. The Minister was not very clear then. He said:
  "As far as we are concerned now the answer is, 'No.'"—[OFFICIAL REPORT, 20th December, 1966; Vol. 738, c. 1353.]
  A few weeks have elapsed since then. Has the Minister had an opportunity to investigate the matter, and is provision being made in the Supplementary Estimate for S.E.T.?
  If it is not, could the Minister explain why it is not included under the general definition of unexpected increases in prices, costs and remuneration? Surely it is one of the basic costs of local gov-
  700
  ernment which it cannot avoid, and one for which proper provision should be made? It will not be adequate for the Government to suggest that provision can be made in future years, for it is then so difficult to trace these things back. Can the Minister also give a general indication of the extent to which he interprets prices, costs and remuneration?
  How much provision has been made for the success of the Government's exhortations to local authorities to restrain their spending? We see in a paper published today that a further exhortation has been made by the Government, and that beneficial and useful schemes will be cut because of the Government's financial policies. To what extent has this Supplementary Estimate been adjusted as a result of the Government's endeavours and exhortations to local authorities? I want a straight figure. Can the hon. Gentleman say what the figure would have been if the Government had not made this exhortation to local authorities? Would not the rates increase of 16 per cent. in the country have been far more? This Supplementary Estimate is yet one further indication of the inadequacy of the rating system and I hope that the Government some day soon will have a general indication to make on the point.
  1.5 a.m.
  Mr. Hector Monro: As my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) said, this Supplementary Estimate is largely to deal with teachers' salaries. I am not in the least critical of the increase, for which the teachers are certainly due. If we are to have sufficient teachers by 1970, the salaries will have to go up a great deal faster than they are at the moment. I hope that the Remuneration of Teachers (Scotland) Bill will be the first stage in that direction.
  It is stated in the Supplementary Estimate that other local authority employees are included—for example, firemen and school crossing patrolmen and so on. Does this include national and local government officers who work for local authorities? I do not want to read again the penetrating extract from the debate of 20th December which my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) read out. It indicated that the Minister of State

  701
  accepted that the negotiated wage increase would be paid. That is why we want to know whether that is included in this Supplementary Estimate.
  The statement made by the Minister of State on 20th December was hedged around with various escape clauses but the intention to honour the agreement is there and when a Minister makes a statement like that he should carry it out. He knows that the increase is being paid to officers in England and Wales as from today but that the Scottish increase due on 16th March has been postponed. That is a shameful method of carrying on government in this important area of local authority salaries.
  I am concerned about the many services which the Government are increasingly estimating for and for which the local authorities will have to provide a percentage grant increase from their own resources. They are already extremely hard pressed and are trying to keep down to the suggested norm, which all think is impossible. It is extremely worrying to local authority finance committees, which have to bear the wrath of the ratepayers when the notices go out.
  Over many of these increases, particularly those in education, the local authorities have little control. The Government have their policy and legislation and the local authorities must carry out their instructions. Yet they have to increase their rates very substantially without having any come-back to the Government. The sooner we can change this method of education expenditure the better.
  I want to deal particularly with the item of £58,000 for planning. On 20th December, the Minister of State gave the figure of £38,000. That may be a mistake in printing. But I want to quote the remarks he made then:
  "There are planning advances which have to be made in many parts of the country which, frankly, have not been touched. I will not go into all the areas—the Borders, the South-West and the North-East—but all these require major efforts in planning, which can he expensive in professional terms, which we have to countenance. Therefore, the £38,000 estimated here is well justified."—[OFFICIAL REPORT, 20th December, 1966; Vol. 738. c. 1351.]
  Whether it is £38,000 or £58,000, it is still a lot of money.
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  I am particularly interested in the Borders and the South-West and I want to question the Minister of State closely about just how this money is to be spent in those areas. The economic consultative planning groups have been set up in most regions of Scotland, certainly those for the Borders and the South-West, although the south-west group has only just been formed and is at a very early stage, but I wonder how this money is to be spent between now and May.
  Do the Government have in mind some big new initiative for the South-West which will need all this money? Yesterday, in reply to a Question of mine the Secretary of State indicated that the Government were not going forward with an investigation of the Solway Barrage, which was one of the things in planning which we thought might well have been dealt with at an early stage. I welcome the expenditure of money on economic surveys if constructive action follows, but so often we set up committees and get no decisive action to follow. I hone that the Minister will see that constructive action follows the spending of this money on planning.
  The general impression which the people of Scotland will get will be that this is money being voted by the Government for valuable services, but at the same time they will well appreciate that a large amount of it has to be paid by the ratepayers in equal percentage amounts. The Minister should give as much information as he can in reply to the questions which have been put to him.
  1.12 a.m.
  Mr. Ian MacArthur: As the months go by, we receive evidence, which is now mounting to an alarming extent, of the quite astonishing mismanagement of our financial affairs by the Government. The sum of money which we are discussing tonight represents yet another example of that managerial bungling. I recognise, of course and at once, that a major part of the increase of nearly £7 million is represented by an increase in teachers' salaries in particular, which we have discussed at length and in detail on other occasions. I will not develop that now.
  I hope that one other salary heading will be covered by the Minister of State,

  703
  however, and it is that to which several of my hon. Friends have referred, particularly my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell)—the quite extraordinary abuse of local government officers in Scotland by the present Government, who have exercised a discrimination, through oversight and incompetence, against these officers which almost passes belief.
  I ask the hon. Gentleman one other new and related question, and I ask him to treat this seriously and not laugh at it as he has been doing. The point to which I draw his attention is one on which I require further information. If I do not receive it tonight—and I appreciate that I have not given the hon. Gentleman notice and that he might not be able to answer it tonight—I will press him about it on another occasion. Can he state the position of manual workers employed by local government in Scotland? Are they in any way covered by the missing £400,000 to which my hon. Friend the Member for Moray and Nairn referred? I ask that question because it appears from some information in the recently published Ministry of Labour Gazette that there may have been a similar mishandling of manual workers in local government in Scotland as there has been over the non-manual worker.
  I will not press that point any further now, but I hope that the hon. Gentleman will be able to give us some indication of the position tonight. If the Government, through their incompetence have doubled the discrimination, then they will be doubly to blame. My hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) referred to the Selective Employment Tax, which I raised in the debate on the General Grant Order in December.
  What was said then illustrates the reason for my comment about incompetence in terms of the amount of this grant which is not represented by salary increases. When I asked the hon. Gentleman I received an incomplete answer and I appreciated the reasons for it. I asked how much of this substantial increase is represented by increases in taxation and duties and so on, arising from the Government's decisions. When the Government increase duties and taxes they
  704
  always urge everyone to absorb those increases, but they are very ready to pass them on.
  Can the hon. Gentleman now give me more information? He has had over a month to ponder this question. Less than a year ago hon. Gentlemen opposite were telling electors and ratepayers that interest rates would come down. Interest rates have risen a good deal. Can the hon. Gentleman say how much of this increase is represented by increases in interest rates? Similarly, we were told that there would be no increase in taxation, but petrol tax has risen considerably. In our previous debate, the hon. Gentleman, in reply to a question by me, indicated that the cost of the additional fuel duty—simply the extra duty—was £23,000. He dismissed that as of little consequence.
  Looking through the debate again I was not able to decipher whether he means that the increase was £23,000. Perhaps he will confirm this. I hope that he will not brush aside £23,000 as being of little consequence. It represents 100,000 gallons of petrol or 3 million miles in a local authority car, and that is not to be sneezed at, particularly when we consider the state of some of the roads, improvement of which is now cut by the Government's programme. The S.E.T. question is one which the Minister needs to explain further.
  There is a substantial increase in National Insurance contributions and it occurred to me that some part of this might be the cost of the S.E.T. As my hon. Friend the Member for Cathcart reminded the House a moment ago, the hon. Gentleman said in December that there was no S.E.T. burden on ratepayers, in what he described as "these financial years". This may have been a misprint for "this financial year". How can that be so, because S.E.T. is already being paid? Perhaps he would explain this a little more? There must surely be some S.E.T. element. In passing will he tell us how this tax helps Scotland's economy? Perhaps he will tell us what postage increases are costing local authorities, and to what extent these increases of at least one-third are represented in the figures before us. There are other heads of expenditure which are going up as a direct result of the Government's actions, and I hope that the hon. Gentleman will give us a fuller and

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  clearer answer than he gave us on the previous occasion.
  1.19 p.m.
  Mr. Michael Noble: One point has been raised tonight which to my mind affects the morale and efficiency of a most important service in Scotland. I am surprised, although not totally ignorant of the reason, that not one word has been spoken from the Socialist benches in defence of the position of N.A.L.G.O. I would like the Minister to concentrate on answers to two or three straightforward questions on this problem. The first is that we were told that it was a decision of the Department of Economic Affairs that the agreement with the Scots must precisely follow the English award. To what extent were those the instructions which the Secretary of State had; and if they were his instructions, did he agree with them? He has been on record in this House as saying that he would protect Scotland from the special effects of the freeze. If he agreed to it, he broke his promise to Scotland.
  Secondly, these negotiations were carried out on 13th September, two months after the 20th July measures. Were the officers with whom these arrangements were negotiated told then that their pay increase would or would not come into effect on any particular date, or were they told that it was purely in the air? We should be told this.
  Thirdly, I know that the Minister was not present in the debate immediately preceding this one, but does he realise that not only is the House exceedingly worried about the problems of immigration—in the preceding case it was of doctors going overseas—but that Scottish Members are particularly worried not only by the high unemployment figures but by the problems of immigration? The hon. Gentleman knows as well as anybody in the House that there has been a steady immigration of people like firemen, policemen and all sort of others who work for local authorities coming down across the Border because of the better conditions offered here. Has that been taken into consideration in the Government's decision on this point?
  1.23 a.m.
  The Minister of State, Scottish Office (Dr. J. Dickson Mahon): I will come
  706
  presently to the major point raised by the right hon. Member for Argyll (Mr. Noble) when I have disposed of some of the other matters which are strictly in accordance with the Supplementary Estimate. The hon. Member for Moray and Nairn (Mr. G. Campbell) was perfectly right in asking us to give the reason for the discrepancy between the Supplementary Estimate and what the figures were—he was quite right in his figures—when we discussed the General Grant (Increase) Order on 20th December. As he will, perhaps, by now have guessed, something happened between 30th November and 20th December which significantly altered the position. What happened was that we had the final meeting with the local authority associations.
  I—and I am sure that previous Ministers would agree that this is right—put great store by those meetings with the local authority associations. They are real meetings and they get business done effectively. As the occupants of the Opposition Front Bench know, the local authority associations at the meetings with Ministers are serviced by a working party which does a great deal of hard work behind the scenes. A lot of figures given to elected members, and also to the Minister, at these meetings at that level are agreed by the working party.
  What happened is that after this Estimate was presented and we then had the discussions, the assumed increase for 1965/66 of £1·2 million was refined to a figure of £1·115 million and for 1966/67 the £7·2 million which we mention in this Supplementary Estimate was refined to £6·93 million, which was allowed for in the General Grant (Increase) Order. The difference in grant is £ ·292 million, but with some minor adjustments that we make in the outturn calculation for the current fiscal year, 1966/67, we expect that there will prove to be a £400,000 difference from what the Supplementary Estimate allows for.
  We all recognise that that is not the final outturn figure, because those who have experience—the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) and I discussed this some time ago—of doing these figures and trying to make true comparisons one year with another recognise that it may take as

  707
  much as three years—two years is pretty good, but three years is not bad—to get the exact outturn figures correct.
  This is because there is a calculation under the present system we are discussing which was created by the 1958 Act and the 1963 Act, and the present system demands these calculations after a time.
  Under the new system we will certainly have to go on taking calculations year by year, but it is fair to say that one does not really know the final outturn until three years after the financial year concerned. This is inevitable when one looks at the very complicated calculations when dealing with the general grant.
  As for the other complaint about the nature of the increases here, far be it from me to defend a Statute passed by hon. Gentlemen opposite when they were in office. It was they who laid down that the Increase Order had to apply to the three elements, and irrespective of what the new system does bring, I can hardly be asked to justify the present situation as it stands, which is their Act of Parliament. This General Grant (Increase) Order is their statutory shape, and I cannot alter that.
  What is a fair point is the interpretation of this, and that is what the meeting with local authorities associations is for—so that there is agreement between the Government and the local authorities on the interpretation of what is meant by the rise in prices, remuneration and the general point which is mentioned in the actual Statute.
  This is very important, and this is something we have to achieve as best we can at these meetings. They are not always smooth meetings at all—they are quite bumpy at times—but with good will we can try to secure this. Of course I cannot debate the Order we are going to discuss later on under the Local Government (Scotland) Act, 1966, which received the Royal Assent on 21st December.
  I cannot comment on the points made by the hon. Member for Cathcart on the position as it will be in the next financial year, though I do not agree that the proportion is going to be higher as against the ratepayer. But we can leave that to a later debate.
  708
  On the question of the discrepancy between the 16 per cent. and the 12 per cent. I think the hon. Gentleman will realise, if he thinks about it, that he is not comparing like with like. He has to take into account not only the money accruing from the rise in rates, that is the actual rise in local revenue in the form of rates. That is what the 16·7 per cent. represents but he has also got to recognise that there are other incomes to local authorities from various activities, transport and others, that one must add in as well as Government grants. So one cannot compare the rise in rate poundage and valuation on the one hand as against the rise in Government grants, as represented by this Supplementary Estimate being added to the original one.
  I hope that it will become very clear to the hon. Gentleman, perhaps on the next Order when I shall have more scope to debate this than this Estimate provides, that there is not this direct connection in figures. One cannot compare 16·7 per cent. with 12 per cent., or 13 per cent. The hon. Gentleman says 12 per cent., actually it is 13 per cent. I do not want to justify this, although I have a long explanation as to why he is slightly out, but there is no comparison between the 13 per cent. and the 16·7 per cent.
  I take the hon. Gentleman's point, nevertheless, that 16·7 is a high increase. As I said to the local authorities on 20th January, there seems to be no reasonable explanation for the imponderable 4 to 5 per cent. which is added to the rate burden in a revaluation year. Our predecessors in office had this experience in their revaluation year in 1961, when the increase was 19 per cent. In our revaluation year, just past, it was 16·7 per cent. I suspect that, if we had not started our campaign in February, in which we were helped by one or two hon. Gentlemen opposite as well as by some of my hon. Friends, we should have had a far higher figure than we have at present. It would no doubt have been higher than 19 per cent.
  It is fair to say that perhaps 9 per cent. of that 16·7 per cent. is justified by existing services. None of us can run away from that, though, naturally, hon. Gentlemen opposite have tried to ride two horses: namely, when money goes down, services are bad, and when it goes up,

  709
  it is downright extravagance. However, 9 per cent. is a genuine expansion in services, and I do not quarrel with the local authorities about that. Another 3 per cent. is for teachers' salaries, and none of us quarrels with that.
  Those come to 12 per cent. If we allow for the 1 per cent. argument, that means a difference between 13 and 16 per cent. I do not understand, and Ministers in previous Administrations did not understand, why there should be this incredible rise in the revaluation year, and I have still to get a satisfactory explanation from the local authority side.
  I have, e said why I think local authorities take, unfair advantage of the revaluation year, and I hope that, as Parliamentarians looking at the national interest, we shall nit make this a party point but recognise that the local authorities have to face up to the problems of a revaluation year as long as the present rating system persists.
  The local authorities have not disputed this in a difficult or irritable way, as I sometimes do in this House. They have taken the point. We have agreed, as far as we can, to go through the last and, if necessary, the previous revaluation year, 1961–62, and we shall try to isolate specific instances of what we mean. I regard that as a more effective way of pursuing the matter than, in debate in this House, clobbering each other over the head on these two years when neither party seems to have had control over this margin of 5 per cent. in a revaluation year.
  Mr. Bruce-Gardyne: Could the Minister tell us whether, in his discussions with the local authorities on this matter, they have suggested to him that the high level of interest rates prevailing has been a substantial factor in the high increase in rates during the past year?
  Dr. Mahon: There is no doubt that, in servicing the loans in which they have been involved for many years, the local authorities are bound to have to face up to the prospect of paying a lot of money in loan charges. I will not go into how much responsibility hon. Gentlemen opposite must bear for the high interest rates in those years, or how they denied access to the Public Works Loan Board for so long to the local authorities.
  710
  These loans are still being paid off at these interest rates. There is not just the legacy of two years of high Bank Rate under this Government. There are also the past obligations incurred by very high rates in previous years.
  What we are asking them to do is to service even bigger loans, and that is why we have the Housing Subsidies Bill, which will effectively peg the borrowing rate to 4 per cent., while adding other subsidies. We want to look closely at the development of services and capital expenditure in this regard.
  The interest on loans is not in the Supplementary Estimate for the first year, and amounts to about £534,000 in the second financial year that we are discussing. I do not deny that even £34,000 is a large sum, but, taken over the stretch of what we are talking about, the extent of the whole Government subvention for the local government year is not a large item. That does not mean that we are not concerned about it. The hon. Gentleman is quite right, but it means that it must not be made the major concern of local authorities at this time. There are other things about which they are concerned, and I share their concern. Indeed, perhaps we will debate this at length on the Rate Support Grant Order when we come to it.
  I cannot comment on all the points which have been raised in this debate. Some were taken up in the last debate on spending. I do not withdraw anything that I said about spending. I think that the money is well spent.
  I shall not follow the Solway Firth argument, because that is being dealt with, as the hon. Gentleman may learn from an Answer which has been given to him, I hope. There are certain other matters to which I am precluded from replying because there are Questions on the Order Paper and I would rather that the proprieties were observed and that the answers were given in the proper way.
  I am sorry if I was misunderstood when I was making some sotto voce comments to my hon. Friend, but I was trying to get some of the figures for which the hon. Member for South Angus (Mr. Bruce-Gardyne) was asking. I did not mean to be rude and turn my back on the hon. Gentleman.

  711
  During an intervention in the speech of the hon. Member for South Angus, who was talking about the figures of local government employees and asking whether unemployment benefits would be higher in Scotland because of the increased unemployment, the hon. Member for Galloway (Mr. Brewis)—and I congratulate him—pointed out that stamps for insurance would have to go up because there were more local government employees. It was an excellent example of two men on the same horse going in different directions.
  If both hon. Gentlemen will be kind enough to look at the Written Answer to a Question by the hon. Member for Cathcart on Tuesday, they will see there a breakdown of the figures, and I draw their attention to the second column which separates local government employees from educational, transport construction and certain other employees who are classified under these headings in the Digest. It shows that there has been a fall in the number of other employees, but I do not believe that one can take these figures as satisfactory, because we are all concerned about the shortage of teachers, for example.
  Mr. Edward M. Taylor: The figures in the Answer to my Question were a bit out of date.
  Dr. Mabon: That is true, but that is not my fault. These statistics were drawn up under rules laid down by hon. Gentlemen opposite. [An HON. MEMBER: "Alibis."] They are not alibis. They are facts taken from the Ministry of Labour Gazette and the Scottish Digest of Statistics, and one can get no further than that. The figures which do not really tell the whole story are those in respect of the missing people in local government services, and here I come to a point mentioned by the right hon. Gentleman.
  It is not true that we are short of as many as 3,000 places. We are short of about 500 teachers, whom we would like to recruit at once. I admit that this would alter the position, even for this year, although only marginally, and we have £400,000 in the Estimate as a margin. We would like to see a replacement criteria for the non-certificated teachers so that we can take up the
  712
  estimated shortage. The estimated shortage of certificated teachers in Scotland in December, 1966, was 3,662, but, on the other hand, one has to take account of the fact that at the present time about 3,000 non-certificated teachers occupy these posts. I just want to put that in its true perspective. I could not estimate how much more it would cost in the current financial year, but I am sure that we could cover it if we were lucky enough to have recruitment to that extent in such a short time.
  This is true of others in local government service. When I spoke in the debate on 20th December—I do not know whether I misheard hon. Members opposite when they quoted me—I said:
  "They have been negotiated"—
  that is, the wage awards for workers in local government—
  "through the proper machinery before the standstill took effect, and they must be honoured."—[OFFICIAL REPORT, 20th December; Vol. 738, c. 1352.]
  That is the essential point. The right hon. Member for Argyll tried to suggest, as I thought, that somewhere my right hon. Friend the Secretary of State for Scotland had said that Scotland would not suffer from the squeeze in the way she had done before. I thought that the right hon. Gentleman was insisting that the prices and incomes policy should not apply north of the Border. Those of us who are interested in the development of electricity know that one of the casualties of the standstill was the tariff of the South of Scotland Board. There are other examples, not only in the local government service but in industry, where Scottish workers did not get the benefit of negotiations being pursued when we were caught by the guillotine of 20th July.
  I am not arguing the merits of the case, and it has never been that case that we have argued. I am surprised that there was a suggestion from hon. Members opposite that Scotland should be exempted from the prices and incomes policy. Perhaps it is that they suggest she should be exempt from the credit squeeze effect, but on the prices and incomes part of the policy, surely not. I thought that that part of the policy was agreed between hon. Members on both sides—but I could be mistaken. Suffice it to say that my hon. Friends have been quiet on this matter tonight, because

  713
  they have been making representations along these lines both to my right hon. Friend the Secretary of State for Scotland and my right hon. Friend the Chancellor of the Duchy of Lancaster, who is concerned in this matter by virtue of his connection with the Department of Economic Affairs.
  The hon. Member for Dumfries (Mr. Monro) obviously does not read the first page of HANSARD at the commencement of the Session. Both Ministers have met deputations to discuss this matter, and I understand that they are continuing these discussions and intend to write to those hon. Members who have been anxious to speak to them and see them. There is also a Parliamentary Question on this matter, for answer tomorrow, I believe, and I would prefer not to pursue the discussion any more for the present, except to refer to the time taken. This point concerns the Government's so-called incompetence in this matter. We have looked up the history of the matter, and find that the period of time between the English and Welsh negotiations being settled—agreement was reached on 13th July. 1966—and the Scottish negotiations is substantially less than comparable periods in earlier years, the figures for which I have here.
  There has always been a time lag, for historical reasons, for which we are not responsible. The time lag in 1960 was three months and in 1959 it was rather longer. All I am saying is that the English and Welsh negotiations were settled on 13th July and the fact that the Scottish negotiations were unfortunately not settled seven days thereafter is hardly something for which to blame the Government.
  Mr. Noble rose—
  Dr. Mabon: All right; it was not a point made by the Opposition Front Bench, but it was a point made by the hon. Member for Perth and East Perth-shire (Mr. MacArthur), and he deserves a reply. The date was arbitrarily chosen and was hound to create some anomalies, but it is hardly reasonable to say that after the settlement of 13th July, because the statement was not made in time to beat the standstill it is an example of Government incompetence, or of selective discrimination. That is a quite unjustified charge.
  Mr. Noble: I do not want the Minister to pursue this for hours on end, but I would like the Minister to answer two perfectly simple questions which I asked and neither of which he seems to want to answer. They are, first, was the Secretary of State told that he had to stick precisely to the English pattern and, secondly, what were these people told on 13th September? I am not arguing whether they ought to have been dealt with in July.
  Dr. Mabon: So far as this year is concerned, there is no involvement, but the matter is being discussed. The right hon. Member knows the terms of Command Paper 3073 and Command Paper 3150, and they are the two which cover the respective periods. This was all known at the time, and the right hon. Gentleman must either say that he does not agree with the prices and incomes policy being applied to Scotland, or that he does. If he does, then there must be some observance of it. The whole point that I have been trying to make is that there cannot be distinction between England and Scotland, and it is at that juncture that the argument has to cease.
  So long as this matter is under discussion by Ministers, and hon. Members have made representations before this debate and questions have been tabled for answer, then it is unreasonable for me to be asked what the outcome will be. Until something has been conceded by Ministers I cannot say more. We must observe the White Paper policy.
  Mr. G. Campbell: The Minister of State may have misunderstood what I said in opening the debate. He may recall that I did not criticise the fact that the Scottish negotiations had to follow the English pattern. The point is that, because one followed the other, the second negotiations meant that these people were not going to receive the award. I did mention the interval of a few weeks in my opening remarks, but the fact that there was an interval did not mean that the second lot should not get the award.
  Dr. Mabon: I accepted what the hon. Member said at the beginning, but I must point out that what he said was not precisely followed by what some of his colleagues have said tonight.

  715
  I think that this matter could best be ventilated by its being raised with the Minister primarily responsible once it has had a fair chance of being discussed between the Minister and the organisations concerned. I can tell the hon. Gentleman that the Secretary of State has discussed this with the Minister concerned. He has received a deputation on the matter and is just as alive to the situation as the hon. Member and his right hon. Friend. In fact, I understand that correspondence has gone out to the organisations concerned, and this correspondence has by no means ended; but there must be some kind of indication from the Government about how the awards shall become operative. As hon. Members know, the third stage of the Government's prices and incomes policy is still a matter for decision and public announcement, and what is decided then may well affect the position of these people.
  Hon. Members may say that one group of workers has a justifiable claim, but simply to deal with that is one thing; another is to accept that we must recognise that this is a matter which has to be ventilated properly—and that is what is being done at present. There is no reason at all why they should not take the first opportunity to raise this at some later time.
  Mr. Bruce-Gardyne: Before the hon. Gentleman sits down—
  Mr. Deputy Speaker (Mr. Sydney Irving): Order. The hon. Gentleman has sat down. Mr. Martin Maddan.

  EXPORT CREDITS GUARANTEE DEPARTMENT
  1.50 a.m.
  Mr. Martin Maddan: I wish to raise the matter of the Export Credits Guarantee Department which is dealt with in Class IV, Vote 5 of the Supplementary Estimates. Although Scottish Members will, no doubt, be leaving the Chamber—[HON. MEMBERS: "No."] I am very glad to see that they are not. I am also glad to see that some English Members opposite, such as the hon. Member for Houghton-le-Spring (Mr. Urwin), are also interested in this question of the Export Credits Guarantee Department.
  716
  I should, first, like to betray some of my ignorance of the way in which the accounts for the Export Credits Guarantee Department are presented. In the accounts for 1965–66 we are told that there is a cumulative balance as at 31st March, 1966, to meet outstanding liabilities of £60 million. That is the balance sheet figure. In these Supplementary Estimates we are asking for a further £6 million, and there is another £1 million called back, making a total of £7 million—I am speaking in round millions—required to meet payments against liabilities which have arisen.
  I should be grateful if the Minister of State, Board of Trade could tell us whether under the accounting system any balance which the Department has just made as a result of its trading operations is paid into the Treasury and whether the right hon. Gentleman has to come back to this House for authorisation to get that money out of the Treasury, despite the fact that the money has been accumulated as a result of the commercial operations of the Department. If that is so, does the right hon. Gentleman think that that is a sensible way of proceeding?
  In the Supplementary Estimate we see that there was an original provision of £13 million for payments to be made under guarantees, and that this is to be increased by £7 million, making a total of £20 million. That is a very substantial increase of more than 50 per cent. The Supplementary Estimate states that the reason for this is:
  "Payments arising from sterling transfer difficulties in several countries."
  It would be interesting to know which are these countries where the transfer difficulties have arisen and what are the reasons for these difficulties.
  Then I come to another point concerning the policy of the Department which reflects itself in the liabilities which it assumes and those which it does not assume. It is, as I understand, the policy of the Department to give guarantees to exporters for credit facilities to customers which are as good as those given by other countries. The Department will first make a certain offer, and if the exporters says that his competitors in Germany, or America or elsewhere have

  717
  given longer credit facilities, the Department will try to match those guarantees. But I do not think that is wholly good enough. Perhaps the hon. Gentleman could tell us whether the Export Credits Guarantee Department every makes the running on behalf of British exporters, or whether it is not always just playing a defensive game against moves made by similar departments of foreign Governments.
  If one believes at all that Government planning can help to increase exports, I should have thought that some deliberate, calculated, selected cases could have been chosen in suitable circumstances in which the Export Credits Guarantee Department could make the running. There would be cases where it would help the national economy, and cases which would definitely establish long-term export connections in certain foreign markets. To cite an example, I think of the steelworks plant industry, which, if it were able to break into the South American markets at this time, could open up for many years in future a very valuable trade. I hope that we may hear from the hon. Gentleman that the Export Credits Guarantee Department will be encouraged by him—he is responsible for it—to develop its policy purposefully and not merely defensively.
  I come to a further question which has a bearing upon the liabilities that the, Department enters into and the degree to which it can inform itself about the nature of the risks that it is assuming. I believe that the Department has only one representative abroad—in New York. It must, of course, have information about other countries, which it gathers from many sources. I should have thought that from time to time the Department should have representatives in certain key markets, particularly if it is deliberately to encourage exports of certain goods to certain markets in the way I described. So why do we have a representative only in New York? One might say that if no representatives are necessary in other markets, why in America? Are the Americans such bad risks that they have to suffer particularly special and close scrutiny from the Department? It seems to me that there are other markets where it would be far more valuable to have a representative. So, why only in New York?
  718
  The preamble to the Supplementary Estimate explains that this class of estimate includes a subscription to an international organisation. I hope that the hon. Gentleman will be able to tell us what that international organisation is. I suspect that it is the Berne Union. How much is our subscription, and is it worth it? I know that the Berne Union has been regarded as having done valuable work, but a subscription that one takes out for a club at one time of one's life is not necessarily something that one should continue without questioning in later years.
  I particularly question this at present because the Board of Trade Export Handbook, No. 2, 1967—it could hardly be more up-to-date—says on page 5:
  "E C.G.D. co-operates with overseas credit insurers in following certain principles on credit terms, but although a 'credit race' has thus been avoided there has been a general drift, and principles laid down a year ago may be out of date today."
  What does that mean? Does it mean—since it obviously refers to the Berne Union—that we are playing cricket according to the Berne Union rules which were decided in the past? Does it mean that we have been left behind while others are playing according to new and better rules for their exporters? Or does it mean that we are ignoring the rules anyway? If the latter is the case, why do we bother to remain a member of the union? The phrase I quoted is written in such a way that a back bencher is bound to seek a clear explanation from the Minister.
  I return to the point at which I started; the case of the two sterling countries in which transfer difficulties arose, which is the main cause of this Supplementary Estimate. On 24th January last the World Bank reported to the United Nations Conference on Trade and Development about suppliers' credits. It reported at the request of U.N.C.T.A.D. According to the Press release from the World Bank, it was stated:
  "As of the end of 1965, it was estimated that the developing countries owed about $7,000 million on suppliers' credits. This represented more than one-sixth of their total external debt and a much higher proportion of their annual debt charges; they were paying more than $1,400 million a year in service charges on suppliers' credits, out of total debt payments of some $4,300 million".

  719
  The World Bank there drew attention to the heavy indebtedness of some countries, and stated:
  "The Organisation for Economic Co-operation and Development…is suggested as the appropriate forum for reaching agreement among the creditor countries on common principles to guide their policies and actions in guaranteeing, insuring and otherwise supporting suppliers' credits".
  If O.E.C.D. is to be the body to co-ordinate the policies of creditor countries, need we worry unduly about the Berne Union? The World Bank stated:
  "The Bank staff's recommendations would build upon efforts towards co-operation in this field already made by governments and various international institutions both public and private".
  It went on to name them, and included the Berne Union. Perhaps the O.E.C.D. is the proper instrument to protect these interests and help to avoid the credit race.
  The House has been in session for 14½hours today. There are many equally important points I could raise, but I will curtail my remarks in the hope that many other hon. Members will wish to make their views clear. I equally hope that we shall be given a clear reply by the Minister.
  2.4 a.m.
  Mr. Gordon A. T. Bagier: I will, because of the lateness of the hour, not speak for more than a few minutes. I thank the hon. Member for Hove (Mr. Maddan) for calling attention to this important subject, and I join with him in welcoming the increase in the provision of guarantees for export credit and the help being offered by the Department. Instead of covering the whole subject broadly, as the hon. Gentleman did, I shall direct attention to one aspect of the Department's activities.
  I am concerned about the speed with which the E.C.G.D. deals with applications for credit on the shipping side. I am sure that the shipping side of the Department is understaffed for the inquiries now having to be made with the growing number of export orders requiring its attention. It is essential that it moves as quickly as possible in its inquiries to keep up with the speed with which business is being done in this important and lucrative export trade.
  720
  I put this point strongly to my right hon. Friend because there is a grave danger—there is evidence of it only this week—that we are losing important export shipping orders because of the long delay in giving a decision on E.C.G. approval. We compare badly with the Japanese in this respect. I have been told recently by a shipbuilder—these are his words, not mine—that the E.C.G.D. is in general slow, cumbersome and often niggling in its requirements, and no shipbuilder can tell in advance what the Department's reaction will be. Negotiations, he says, are all too often long drawn out and frustrating for owner and shipbuilder alike.
  Those are strong words, but he went on to say that the Japanese are swift and precise so that the shipbuilder quickly knows what credit he is required to provide in the form of a collateral.
  I want my right hon. Friend to look into this because it is largely a question of staff and, to some extent also, of standardisation so far as it can be achieved in the Department. I understand that the E.C.G.D. has at present no set formula as to the value of the first mortgage on a ship in relation to its total cost. This makes it impossible to inform potential customers how much collateral they will be required to put up. In each case, the shipbuilder puts forward a different formula. Again to compare ourselves with the Japanese, they are specific about this initial inquiry. Why cannot we do the same as the Japanese? The ship is taken as 55 per cent. of the total cost, so that with an 80 per cent. mortgage the owner is expected to show 25 per cent. of the cost as collateral security, whereas E.C.G.D. have no set formula as to the value of the first mortgage on the ship in relation to the total cost, thus making it impossible to inform potential customers how much collateral they will be required to put up.
  There is also the question of the E.C.G.D. insisting that the insurance of the vessel must be placed directly in the London market. With foreign orders coming into this country, large owners very often have their insurance companies in places abroad. This is a further cause of unnecessary delay and difficulty because most marine policies are ultimately reinsured at Lloyd's in any case.

  721
  We have the best export credit facilities available anywhere. We can beat the Japanese at it, but our difficulty is getting it through the machine. In some cases which have been brought to my notice, it has taken as long as 14 to 18 months from the initial order being placed before a contract could be signed. At any time between the placing of the initial order and signature of the contract, a ship owner can pull out of the deal and the shipbuilder will be left high and dry with a gap in his programme.
  It is essential to help shipbuilders to maintain continuity of programme so that they can plan for a work force which will be kept in employment. There must be no gaps. In other words, for the sake of security in the industry and long-term planning, any help which the E.C.G.D. can give is most valuable. But for this purpose the Department must have more staff and more facilities so that quick decisions can be given on whether a potential customer is credit-worthy or not. Any improvement in this direction will be most welcome.
  Although I was not able to give my right hon. Friend too much advance notice of the points I intended to raise tonight, I hope that he will take my remarks in the spirit in which they are made. I believe that the Department can he made more efficient, and that that would be beneficial to the shipbuilding industry as a whole.
  2.10 a.m.
  The Minister of State, Board of Trade (Mr. George Darling): We had a debate on the whole work of the Export Credits Guarantee Department a week last Friday, and some of the points raised tonight were answered then. As this Supplementary Estimate is very narrow, I. do not think that I need to go into a great deal of detail again about the matters covered in the previous debate.
  But I should clear up what appears to be a confusion about the notional surplus the Department appears to possess. It has two types of credit insurance operating. The first is called "Section 1", because that is where that business appears in the appropriate Act. "Section 1" credit insurance is ordinary commercial credit insurance based on ordinary commercial practices, and the credit cover provided by E.C.G.D. is
  722
  recommended by the Advisory Committee that deals with that commercial side.
  The Bill I introduced a week last Friday was to increase to £2,400 million the total amount of credits that could be covered by E.C.G.D. insurance. If I had not introduced the Bill the previous figure, which is about £900 million less, would have been reached by April this year. It is true that, taking one year with another since the Department was set up about 35 years ago, there has apparently been an accumulated surplus of £60 million. But as the Department is supposed not to make profits or losses, taking one year with another, that surplus never appears anywhere, except in the hands of the Treasury if the Department makes a profit in one year. Therefore, because the money is in the Treasury, it is proper that Parliament should agree to vote the money when, as in this case, it looks as if the Department will make a loss on these activities.
  The surplus exists only in the Treasury—and I am not sure that it exists there, the way things are operated. It is a notional surplus, and it is certainly not in the coffers of the Department. In fact, the Department has no coffers. It is insuring day by day an enormous range of export credit arrangements against loss.
  The second Section of the Act deals with credit insurance which, although on a commercial basis, is much more risky, where, in the Government's view, the arrangement should be made in the national interest. The credit cover there will go up to £1,500 million under the Bill I have introduced. We are asked about certain cases where it looks as though British firms with more help could get more trade. Operations in certain countries which I shall not mention involve a greater element of risk because of all kinds of circumstances, with the result that they are not absolutely commercially sound. This is where the Treasury comes in. Although the arrangements are made through the E.C.G.D., because that is the way it should be done, in effect the decision is taken by the Government. But, of course, the E.C.G.D. is involved and its advice is important.
  One cannot really say to the E.C.G.D., "You go ahead and cover the riskier projects". Where risk is involved, the

  723
  Government may play their part. If the hon. Member thinks that the steel works people are not being helped sufficiently in South America, it is not so much to the E.C.G.D. that he should make his representations but to the Treasury and the Government.
  The hon. Member asked me which were the sterling countries which were being "troublesome", as he called it. They are not exactly troublesome but the countries concerned are going to involve the E.C.G.D. in some loss. With two minor exceptions, the payments giving rise to these Supplementary Estimates are wholly in respect of commercial debts to British exporters who have not been paid because of political or economic factors—in Ghana, the United Arab Republic and Indonesia, and I do not think I need elaborate. Because of the circumstances in those countries, the transference of payments to Britain has been prevented and consequently the insurance covers on these commercial transactions now fall to the E.C.G.D. to be paid.
  Mr. Maddan: The Supplementary Estimates specifically refer to sterling transfer difficulties in two countries. The hon. Gentleman has referred to three countries.
  Mr. Darling: I did say "with two exceptions". I was trying to be as brief as I could. If the hon. Gentleman looks again at the two Supplementary Estimates he will see that one refers to
  "…transfer difficulties in two countries"
  while the other refers to
  "…transfer difficulties in several countries."
  There are four altogether, with one country appearing twice, so five items are concerned. I have mentioned three countries. The two exceptions are the result of failure by Rhodesia and Ghana to meet their obligations under inter-Governmental loans. The first three cases I mentioned involved commercial activities.
  Inter-governmental loans are administered by the E.C.G.D. under the old Section 3 arrangements. Loans-in-aid provided by the Government come about under the Export Guarantees Act and are accounted, for technical reasons, under Vote 5. This is because, although
  724
  all this activity has now gone over to the Ministry of Overseas Development, until the loans are paid back they stand in the books of the E.C.G.D.
  Here again, when there is failure to meet obligations under these inter-Governmental loans, the E.C.G.D. has to pay out the insurance covers, and for the time being at any rate these appear as claims on the E.C.G.D. The Department, of course, has no profit or loss account and, in effect, the Treasury has to come to Parliament to get the money to cover these claims. That is why these Supplementary Estimates have been brought forward.
  Although the Estimates are rather narrow, I will try briefly to answer the points which have been raised. I think that I have made it clear that the E.C.G.D. is providing insurance credit and it is therefore unnecessary as all the insurance activities for all exporting arrangements for this country operate in the City of London, for the Department to have agencies all over the world. I will try to find out why there is an agency in the United States, but London is the insurance centre of the world and this is where these insurance activities should be concentrated.
  The international organisation is the Berne Union. I was asked whether there was anything to be gained from our belonging to it. In fact there is, because all exporting countries provide credits and credit insurance for their exporters, and unless it was kept under control there would be a tendency for all countries to go into what might be called an export credit competition until we reached the point where Governments were subsidising export credits beyond what anybody would consider to be proper commercial risks and proper commercial activities. The Berne Union tries to get what might be called limits to a credit war and the countries concerned agree not to go beyond certain commercial limits which are accepted among them in commercial discussions. This is extremely useful, and, generally speaking, the arrangement works and the countries concerned try to avoid going in for this kind of international credit war which might be very damaging.
  There are one or two other activities of this kind which I would be willing to

  725
  explain to the hon. Gentleman by letter. I shall certainly not try tonight to explain how the Berne Union works, although I have it in the brief—the hon. Gentleman can look at the brief if he likes. He spoke about the principles laid down by the Berne Union a year ago now being out of date. This is a matter of the term of years which should properly be provided by the various export credits guarantee departments of the world—they all have different names, of course, but that is what they amount to. The hon. Gentleman mentioned the report of the World Bank which was published on 24th January. I shall certainly not try to give him the Government's reaction to what was there said about the extent of credit arrangements. I will try to answer his question about that at a more convenient time.
  My hon. Friend the Member for Sunderland, South (Mr. Bagier) raised issues about shipping and shipbuilding which rather surprised me, because the special arrangements now in force to provide credit and credit cover are comparable with those which are available from other countries, including Japan. I cannot understand why there should be the kind of delay in coming to arrangements about ships, even those with mortgage arrangements, such as my hon. Friend mentioned. I understand that during the 12 months which followed the introduction of what is called the 5½per cent. scheme for all credits, British shipbuilders secured export orders totalling an estimated £88 million. This is a very good step forward. However, I shall certainly consider what my hon. Friend has said and get in touch with him to explain our reactions.

  EUROPEAN LAUNCHER DEVELOPMENT ORGANISATION
  2.25 a.m.
  Mr. Eldon Griffiths: I am very glad, almost relieved, to see that the right hon. Member for Wednesbury (Mr. Stonehouse) is with us. I understood that this morning's business of the House was a winding up, and I am not sure whether he has been wound up or whether he is under suspended sentence, or, like myself, in a state of suspended animation.
  726
  The Supplementary Estimates in regard to E.L.D.O. add a sum of approximately £6 million for Government expenditure on this project. Of this £3,500,000 coming in Estimate D.1. will be Government expenditure bringing this up to a total of £11,500,000. I notice, under that heading that the Estimates say:
  "Expenditure under this Subhead will not be accounted for in detail to the Comptroller and Auditor General."
  If there is any kind of expenditure that ought to be accounted for in detail it is expenditure on projects of this magnitude.
  The second part of the Estimate, D.2. is a sum of £2,450,000 which is to be added to the work done for E.L.D.O. by British industry. This total of £6 million in new money is the result, as indicated in the Estimates, of decisions taken at Ministerial conferences with our partners in E.L.D.O., which took place in July last. Before the House can possibly agree to this additional expenditure, it needs to know what this money is for and in short, what was agreed on the British taxpayers' behalf. We shall also need to know why, after first telling the world that they were withdrawing from the E.L.D.O. project, the Government changed their mind and decided to go into E.L.D.O. and why they now come to Parliament to ask for additional money when seven months ago they decided that they would not need it.
  The purpose of this excess money is to finance the British part, specifically the completion of the first stage Blue Streak rocket E.L.D.O. project A. This would put a European communications satellite into geostatic orbit using the perogee/apogee motor system, known as the PAS. The British share of the remaining stages of the E.L.D.O. programme "A" is 27 per cent. of the total. It is to meet this 27 per cent. share that the House is asked to vote this extra money. The other shares are Germany 27 per cent., France 25 per cent., Italy 12 per cent. and Belgium and Netherlands with a 9 per cent. share between them. Australia will be making available the facilities of the Woomera range.
  I am a supporter of this programme and the policy on which it is based and I am in favour of the House granting the Government the necessary Supply to go forward with it. I have three main

  727
  reasons for saying this. The first is on industrial and technical grounds, because the communications of the world will be transformed by a communications satellite such as the E.L.D.O. "A" project will put into orbit. I also believe that industry will materially benefit from the technological "spin-off" of fall-out, of new products and processes resulting from the exploration of space.
  To put it in the vernacular, if we do not move into space, as this particular Estimate will help us to do, then the danger is that we shall be left, making the boots and barbed wire, and the Americans and Russians will be making the sophisticated equipment that will fill the future channels of world trade.
  The second set of reasons why I am sure that this Estimate is right are political and diplomatic. Europe is drawing together and I believe that co-operating in projects of this kind will help us to come closer to that technological community of which we hear so much these days and, beyond that, to the unifying of the European nations which I believe to be desirable.
  The third reason why I believe it is right that this Supply should be granted is a national British reason, because space is a new dimension, a new frontier, and whenever man sets out in any directions towards new frontiers. I believe that, so far as possible, the British should be there.
  If, however, those are some of the reasons why I believe that the House should grant this Supply, I nevertheless have grave doubts, first, about the amount of money that the Government are requesting here and, secondly, about the management of the programme for which the Government are requesting it. I should ask the Minister to provide assurances on both these points before I could support the Bill.
  First, the management of the project. I do not mean the industrial management, because however much hon. Members opposite have sneered at the British aerospace industry from time to time, this is a project at least in which the British contributions have been good. British industry has delivered the goods, and delivered them on time. I therefore have
  728
  no doubts about Subhead D.2, the increase of expenditure for industry.
  If there has been delay and escalation in the cost of this project, the fault has largely lain, not with British manufacturers, but with those of our partner countries. Neither has there been any great difficulty in bringing together the technologists of the participating countries. E.L.D.O. "A" has experienced no major technical snags as far as I know. This is in remarkable contrast to the snags that have been introduced into this project by the politicians, by which I mean all the politicians in all the major countries and on both sides of this House.
  As to the E.L.D.O. "A" programme for which the Government want this extra money, there was, first, the political failure to ensure that E.L.D.O. would be the preferred supplier of launching vehicles for E.S.R.O. or even for European communications satellites. That was not written into the original agreement. It was lamentable that this was not done. Then, it took something like three years to get the original Convention ratified and ever since then the technologists and the managers have been messed about by reviews every few months, by budgets which have been left unapproved until the fiscal year was half completed and by a complete lack of guarantee of the stability and continuity of the project.
  It is extremely difficult to keep teams of technicians and managers together when one lacks that stability and continuity. My right hon. and hon. Friends on this side, both past and present, must, in my view, accept some of the blame for this. If it was they who were asking for this extra money tonight, I should want the same guarantees of better political direction of the scheme for which I am asking the Minister.
  But if my right hon. and hon. Friends on this side had some responsibilities in this matter, the errors of commission which the present Government are making make the errors of omission by past Governments seem very small potatoes indeed. It was the present Administration, who are now asking for the money to go ahead with E.L.D.O., who came very close, a matter of months ago, to compromising the whole scheme. Their actions at that time, when they

  729
  first said that they were pulling out of E.L.D.O. and then said that they were going back in again, leave me in grave doubt as to whether the House should entrust them with this extra money to complete a job that so recently they have said they would give up. I therefore invite the Minister to answer this particular grievance about the political direction of E.L.D.O. before he asks the House to vote him the extra money, and I think my grievance can be stated chronologically.
  On 4th June last year, The Times reported on its front page that Britain was "Opting out of Space", and the story went on to say that the Government had decided to convey this decision to their E.L.D.O. partners at a meeting in Paris later that week. When he read the news, the chief rocket engineer of one of our biggest aerospace firms, intimately involved in the project for which we are asked to vote money tonight, telephoned a very senior official at the right hon. Gentleman's Ministry and asked him what in Heaven's name was going on. His concern was quite understandable because millions of pounds of hardware, plus tens of thousands of components and blueprints, and several hundred of his firm's top men were tied up in this E.L.D.O. project.
  What answer did he get? The man from from the Ministry told him "not to worry, old boy"; there was no confirmation of the newspaper leak. And 24 hours later the same senior rocket engineer got an urgent call from the Ministry at his home and they told him this time that The Times was right and they were wrong, and that Britain was pulling out of E.L.D.O.
  That is an example of the kind of muddle for which we are supposed now to vote more money. But if there was muddle at the Ministry of Aviation there was even greater confusion at the Foreign Office. The morning after The Times leak, an official statement from the Foreign Office said
  "The Government has concluded, after a careful and detailed consideration, that the latest proposals for modifying the E.L.D.O. programme do not constitute a sufficient basis for continuing United Kingdom participation…and it has so informed its partners."
  That was quite clear-cut; a diplomatic exit line if ever there was one, and the Foreign Secretary of the day confirmed
  730
  this with precision at the airport on his way to Paris when he said that
  "we feel it is not in the best interest that we remain a member of the organisation."
  Once again we have quite clear, specific language from a senior Minister of the British Government on the project for which we are asked tonight to vote more money. Yet precisely one week later the same right hon. Gentleman, the former Foreign Secretary, came to the House of Commons and told us that the Government's message to their E.L.D.O. partners
  "…did not notify them of our intention to withdraw…"
  and his colleague, the right hon. Gentleman's predecessor, the Member for Sheffield, Park (Mr. Mulley), also told the House:
  "I can only repeat what my right hon. Friend said…"—
  the Foreign Secretary—
  "…that there was never at any time an intention on our part to withdraw from the E.L.D.O. organisation."—[OFFICIAL REPORT, 13th June, 1966; Vol. 729, c. 1027–41.]
  E.L.D.O.'s comment on this, from its own Secretary-General, revealed the mystification that they felt after hearing these two contradictory statements. They said:
  "After studying"—
  the British Government aide-memoire—
  "we are in a state of doubt."
  And so am I, Mr. Deputy Speaker, when I am asked against that background to support a further £6 million being spent by the right hon. Gentleman's Ministry. Of course, the reaction of our allies, the partners we are now voting money to go ahead with, was one of extreme annoyance. The West German Government officially "deplored" what had happened in London. The Australian Supply Minister said that Britain's withdrawal would mean
  "a fair amount of wasted effort."
  The Italian Government, our ally in the project for which we are asked to vote money, put out a statement saying that they were
  "surprised and perplexed."
  Le Monde, in Paris, wrote:
  "It is to be regretted that the policies of General de Gaulle should have prevented the entry of Britain into the European concert of nations…but however regretable this may be, the British Government's national egotism

  731
  (in the case of E.L.D.O.) cannot possibly find any justification."
  I think that that illustrates that there was muddle, confusion and bad feeling caused by the Government's action in a programme which we are now asked again to support.
  A week or so later, the Government had to back-track on the whole issue. The right hon. Member for Sheffield, Park went back to Paris, sat down with his allies, as he should have done in the first place, and at that meeting they decided on the present Ministerial arrangements, which are the origin of the Supplementary Estimates put forward to us tonight. I am the first to acknowledge that there are many advantages in the new arrangements which the right hon. Gentleman was able to secure.
  If the Government had left it at that, admitted that they had been precipitate, but had finally seen sense and changed their minds, this debate might not have taken place, and only the Government's maladroitness and insensitivity to European opinion would have been open to criticism. But, unfortunately, the Government went much further. Instead of admitting honestly that they had made a mistake and changed their minds, Ministers began to suggest that the great E.L.D.O. muddle had actually been a triumph, and the House was virtually invited to accept, and no doubt will be again later this evening, that it was the Government's proposal to withdraw the threat to go on strike which had induced the Europeans to reduce our share of the cost. They were almost boasting that they had screwed funds out of their partners by threatening to go on strike.
  That suggestion was and is utterly wrong, and, when we are asked to vote more money, we are entitled to an assurance that the money which Parliament is now providing will be used in a better fashion than that.
  I have looked up the facts with some care, and there are three which are established. The first is that the decision to withdraw from the E.L.D.O. project was taken by the Cabinet well before Whitsun of last year. Thereafter, the right hon. Member for Sheffield, Park and the right hon. Member for Fulham (Mr. M. Stewart), the then Minister of Aviation and Foreign Secretary respectively,
  732
  took it back to the Cabinet for reconsideration several times on "European grounds". On every occasion, they were turned down. It was decided that, though E.L.D.O. was a close-run thing, it should be dropped on its merits.
  The second fact which I have been able to establish is that in the House on 13th June, the right hon. Member for Sheffield, Park said of the June conference, at which he reprieved E.L.D.O. and agreed to go ahead:
  "I repeated these doubts at the resumed Ministerial conference on 9th June. Our European partners then put forward proposals for a more equitable distribution of costs…(and) for the addition of a perigee/apogee motor system…which will give us the possibility of putting into space a satellite about four times as big as Early Bird…"—[OFFICIAL REPORT, 13th June, 1966; Vol. 729. c. 1037–1042.]
  The key word in that statement is "then". By saying:
  "Our European partners then put forward proposals",
  the right hon. Gentleman suggested to the House that the prospect of lessening Britain's contribution and going on to the perigee/apogee system—the fourth stage—arose after the British threat to withdraw. This is simply not true. The opposite was the case.
  These proposals, which we now have incorporated into this Supplementary Estimate, to change the distribution of costs and to go for the more advanced motor system were actually made by our allies at a meeting which took place in Paris in April, long before the British Government told the House what the right hon. Member for Sheffield, Park did, and indeed in the debate on 27th May in the other place, two weeks before the June meeting when the Government reprieved E.L.D.O., Lord Chalfont used almost the same phrase about Early Bird as the right hon. Member for Sheffield, Park used on the 13th June.
  It is late for technical details, but here, documented, is the proof of a very sad and very sorry story. The British Government misled British industry, or members working for British industry. They confused our partners in Europe. They intentionally or unintentionally gave the House of Commons a different impression from the facts as I have now been able to establish them, and I believe that, intentionally or unintentionally, they

  733
  went some distance in misleading the British public about the sequence of events.
  That they have decided after all to stay in E.L.D.O. is to be a considerable relief, and that our partners have agreed to bear a larger share of the cost and to extend the project's capability is again something for which we can all be grateful, but the thanks should go to our European partners and to our own aero space industries which remained faithful to E.L.D.O. at a time when the British Government were attempting to withdraw from it, and it is against that background that I want to ask the Minister four precise questions.
  My first question is about the new funds that we are being asked to vote tonight. Will they be sufficient to enable E.L.D.O. project "A" to be completed successfully? If so, on what timetable? When does the Minister expect the assembly of the various rocket components to be completed? When does he expect the test firing to take place? When does he expect the first geostatic satellite to be in orbit, and what will it do when it gets there? How many communication channels will it have? Will they be available for military use? These are the kinds of questions to which the House is entitled to have answers before it agrees to a sum of money of this magnitude.
  Secondly, will the Minister undertake when, or if, he gets this money not to leave it at that? Is he prepared to go on to E.L.D.O. project "B"? I ask that because if he knows the true story of the space industry, and I am sure he does, he must know that E.L.D.O. project "A" alone is at best an early experiment. It is essential to go on to the "B" project if we are to have any valid communications satellite put into orbit and have Britain and Europe participating in this new adventure in space.
  Thirdly, do the Government intend to get into the business of the liquid hydrogen fuels which are visualised for the upper stages of development? Will the Minister give the House an assurance— and I think that this is really the key to my objection—that never again will there be such confusion and mind changing in the case of an international project of this kind?
  734
  Mr. Corobio, the Secretary-General of E.L.D.O., put it very well when he said:
  "If we do not see to it that Europe maintains its position as a continent of scientific achievement, we shall continue to lose an increasing number of our most able scientists and engineers. This loss is being particularly felt in the United Kingdom where language is not an obstacle."
  I ask the Minister to give the House an assurance that he will not be deterred by those who say, "What is it all for? When there are so many important things that need to be done, what is all this business about going into space? "People asked the same sort of question, "What is it for?" of Columbus, Scott, and probably even Sir Francis Chichester, but that is surely not a question that the Minister should worry about. The important thing is that there lie ahead, or above—however one describes it—immense possibilities for the technological expansion of British industry, for the collaboration of European nations coming closer together, as we all wish, and, something more, a stimulus to young people in this country to look for a goal larger than getting and spending.
  For these reasons I hope that the Minister will not be deterred from pushing ahead with this project. I shall feel much happier in voting him or his successor the Supply if he will show to us that not again will there be confusion, and that the practicalities of E.L.D.O. project "A" will be completed on time.
  2.50 a.m.
  Mr. R. W. Brown: I, too, will endeavour to keep my remarks as short as possible at this late hour. Contrary to the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths), I congratulate my right hon. Friend the present Minister of State, Foreign Affairs on his excellent negotiations last July. The catalogue of events that the hon. Member for Bury St. Edmunds gave had an element of truth about it, but he did not reveal the whole sordid business of the lobbying put on in respect of the project at that time. It was based wholly upon the alleged leak in a national newspaper in this country, which got across the Channel very quickly. That began the chain of events. We must examine the situation as it then was.

  735
  On both sides of the Channel discussions were taking place. They were confidential. How does one member Government out of six react when suddenly there is an inspired leak of some description? How it came about I do not know. When I say "inspired", I do not mean that it was inspired by the Government, but by others with less worthy motives. Perhaps my hon. Friend can shed light on the situation, because at that time I was visiting Europe and I was certainly sensitive to the perambulations of other people in Europe.
  The leak made some form of statement necessary, because at that time no decision had been taken. I might have misheard the hon. Member, and I apologise if I did, but I thought he missed out one very important word from the extract of the statement which he read. The statement referred to "continuing United Kingdom participation". That statement did not give the impression it was a cut-and-dried issue that the United Kingdom would pull out.
  Mr. Eldon Griffiths: The Prime Minister told the House that he would get to the bottom of the leak and report to the House. He has not done so. Secondly, does not the hon. Member recall that not only did Ministers say that the decision had been taken but, in addition, engineers in the E.L.D.O. programme in this country were given a good deal of information about how the project would be run down and how to redeploy some of their people away from it? This was the thing that gave credence to the Government's statement.
  Mr. Brown: The only thing I can say is that I never heard about that. I was presenting a report to European countries and it was very important that I should get such information as was available, but that information certainly never came to me; it never came to my notice that such a directive had been issued.
  I welcome the opportunity to comment on that point, because it is very unfair for anybody to try to create a situation where our Government appeared to be at fault when, in fact, they were discussing the matter; and it is no use following that up by more or less suggesting that this was in any way attributable to the Government. I say that the situation
  736
  Was salvaged because the project was going on the rocks.
  I am most grateful to the hon. Member for recalling some of the earlier history, and I would supplement what he has said by drawing the attention of hon. Members to a most extraordinary document, Command Paper 1731. It would appear that the only aim of E.L.D.O. was that it should be for the development of space vehicles and launchers suitable for practical application, and supply to eventual users. The only target and objective, after the first real coming together of the European space grouping, was to design a launcher—for "eventual users".
  I have said before, and I repeat again tonight, that I cannot understand how anybody could have expected an international consortium of this order to create the dynamic approach which was required if it was to build a rocket for somebody without knowing who, for a purpose which was not clearly stated, and to a time scale which had never been considered.
  It is at this point that there is escalation of costs. The hon. Member has suggested that that resulted from the actions of some of our partners, but I think that is unfair. I have always been against the argument of trying to apportion blame for the escalation of cost and who has, or has not, contributed to it. I do not believe that it will help the consortium we are trying to form if every time it is blown off course we want to decide who is or is not responsible for delay; it will never get on with its programme. I am convinced that the escalation of cost which was inevitable when the programme was based on the protocol signed by the nations, would get to the point where one or other in the group would have to question the viability of the project.
  The French, in fact, queried very seriously the whole project in the early part of 1966 and our own Government really carried the scheme that stage further. I am worried this evening as to whether we have really got the set-up right. I am pleased that this £6 million has been granted for the work, but I believe that we have got to have a single space agency in Europe if we are going in any way to achieve the sort of target I believe we should be trying to seek to

  737
  do. I know that there are lots of arguments why this is not possible. There are a lot of vested interests protecting themselves and I know that all the agencies in Europe have now agreed to set up a consultative committee. But I do not believe this will in any way solve the problem. We have got to be absolutely firm in ensuring that a directive is issued by one agency with the full responsibility for the financial implementation and for achieving the goal at the end of the day.
  Three factors emerge from our space work. First, one questions whether Europe has got the political will to go into the space field. When I was preparing a report on telecommunications by satellite in Europe, I was very sad, after having discussions with many groups of people in European countries to have to record that there appeared to me to be no real incentive for Europe to carry or, in this work. Somehow—and I hope my hon. Friend can become the spearhead—we have got to try to give Europe a goal to aim at. Whether it be aiming at the moon—the sort of thing that I do not believe we can afford to do —or whether it be some kind of medium goal, we must know where we are going to.
  My hon. Friend will recall that President Kennedy was the man who galvanised the Americans into action when he laid down clearly their objective to place a man on the moon. The dynamic approach of the American space industry began at that point when America saw clearly for the first time what were the objectives of their Government. Europe has got to do precisely the same thing. It must lay down firm guide lines at which all the aerospace industries and all the scientists and technologists involved can aim.
  Next, having taken the political will to do the job, we have then got to be equally clear about providing the finance to go with it. It is no good talking about doing various things and then, when we come to paying for them, choosing to advance all the arguments why one ought not to do those things. If we have the political will to do this, we must face the responsibility of paying for it. There are valid reasons why one should not spend such money. If one has the argument that we ought to have more homes,
  738
  hospitals and schools as opposed to spending money on space, that is a problem to be faced, but I believe that this country, and others, will regret it if we decide not to proceed with this great venture.
  I now come to the question of the structure. If we have the political will to do the job and if we provide the money, it follows that it is important for the structure of the agency to be the right one. This means a lot of hard work to determine the best means of carrying out the work. On the horizon one sees vast possibilities in the field of space research and achievement. One must ask the question: can Europe stand aside and allow these massive new techniques to pass us by? Can Europe grasp these opportunities by appreciating that space research yields positive results? If it is unable to do so, we must resign ourselves to the rôle of a passive onlooker, or else permit one or two European countries to try to keep going on a minor sort of programme in an endeavour to keep in contact with the two major space Powers in the world. If we show ourselves to be willing to stand by as passive onlookers, I am certain that history will judge us very harshly, and it will rightly do so.
  3.5 a.m.
  The Minister of Aviation (Mr. John Stonehouse): I am very glad that my hon. Friend the Member for Shoreditch and Finsbury (Mr. R. W. Brown)—
  Mr. Deputy Speaker (Mr. Sydney Irvine): Order. The hon. Gentleman has already spoken in this debate. He must ask for the leave of the House to speak again.
  Mr. Stonehouse: I would ask for the leave of the House to speak again—
  Mr. Kenneth Lewis: In view of what happened last night, Mr. Deputy Speaker, I think that we ought to have an experiment now to see whether the same thing will occur. I wish to draw your attention to the fact that there are not 40 Members in the Chamber.
  Notice taken that 40 Members were not present;
  House counted, and, 40 Members not being present, adjourned at ten minutes past Three o'clock a.m. till this day.

MINISTRY OF AVIATION
  Aircraft (Exports)
  Aircraft (Exports)
  Low Level Dropping of Stores
  Low Level Dropping of Stores
  Hypersonic Transport Aircraft
  Hypersonic Transport Aircraft
  Concord Aircraft (Equipment)
  Concord Aircraft (Equipment)
BOARD OF TRADE
  Factory Buildings (Northern Region)
  Factory Buildings (Northern Region)
  Kidney Machines and Amusement Machines (Imports)
  Kidney Machines and Amusement Machines (Imports)
  Computers (Exports)
  Computers (Exports)
  Heathrow Airport (Approach Path)
  Heathrow Airport (Approach Path)
  Boeing 707 Aircraft (Import Duty)
  Boeing 707 Aircraft (Import Duty)
  Hairdressing Service (Prices)
  Hairdressing Service (Prices)
  Davis Investments Group (Companies)
  Davis Investments Group (Companies)
  Motor Insurance Companies
  Motor Insurance Companies
  British Motor Cars (Canadian National Exhibition)
  British Motor Cars (Canadian National Exhibition)
  British European Airways (Flight Times)
  British European Airways (Flight Times)
  E.F.T.A. Countries (Protective Tariffs)
  E.F.T.A. Countries (Protective Tariffs)
  Hurn Airport
  Hurn Airport
  Drowning Tragedy, Keadby, (Coroner's Jury Recommendation)
  Drowning Tragedy, Keadby, (Coroner's Jury Recommendation)
  Investment Grants
  Investment Grants
  Distribution of Industry (Expansions)
  Distribution of Industry (Expansions)
AGRICULTURE, FISHERIES AND FOOD
  Irish Cattle (Imports)
  Irish Cattle (Imports)
  Fruit Drinks (Labelling)
  Fruit Drinks (Labelling)
  Anglo-Irish Free Trade Area Agreement (Price Guarantees)
  Anglo-Irish Free Trade Area Agreement (Price Guarantees)
  Tenant Farmers, Milton Keynes
  Tenant Farmers, Milton Keynes
  Agricultural Price Review
  Agricultural Price Review
  Foot-and-Mouth Disease
  Foot-and-Mouth Disease
  Agricultural Holdings (Workers)
  Agricultural Holdings (Workers)
  Farm Wastes (Disposal Research)
  Farm Wastes (Disposal Research)
  Scottish Restaurants (Price Increases)
  Scottish Restaurants (Price Increases)
  Bacon and Pig Meat Imports (Weight and Cost)
  Bacon and Pig Meat Imports (Weight and Cost)
  Milk (Raw Sales)
  Milk (Raw Sales)
  Bacon Curers (Farmers Contracts)
  Bacon Curers (Farmers Contracts)
SCOTLAND
  Government's Regional Policies
  Government's Regional Policies
  Sprats (Research)
  Sprats (Research)
  Police Forces, Orkney and Shetland (Amalgamation)
  Police Forces, Orkney and Shetland (Amalgamation)
  Water Resources
  Water Resources
  Farm Wastes (Disposal Research)
  Farm Wastes (Disposal Research)
MINISTRY OF DEFENCE
  Industrial Projects (Plowden Report)
  Industrial Projects (Plowden Report)
  F111 Aircraft (Capital Expenditure)
  F111 Aircraft (Capital Expenditure)
  Machine Tools (Imports)
  Machine Tools (Imports)
  R.E.M.E. Establishments (Northern Ireland)
  R.E.M.E. Establishments (Northern Ireland)
  Malta
  Malta
  Dittons Prior, Shropshire (Land)
  Dittons Prior, Shropshire (Land)
  High Ercall Airfields, Shropshire
  High Ercall Airfields, Shropshire
  British Army (Strength)
  British Army (Strength)
ROADS
  New Signs
  New Signs
  Yorkshire-Lancashire Motorway
  Yorkshire-Lancashire Motorway
  School Crossings
  School Crossings
  Road Maintenance (Rate Support Grant)
  Road Maintenance (Rate Support Grant)
  Road Programme (Mileages Completed)
  Road Programme (Mileages Completed)
PORTS
  Immingham Docks (Berthing Facilities)
  Immingham Docks (Berthing Facilities)
TRANSPORT
  Motor Vehicles (Bumpers)
  Motor Vehicles (Bumpers)
  Newton Stewart Chamber of Trade (Invitation to Minister)
  Newton Stewart Chamber of Trade (Invitation to Minister)
  Carriers Licences (Renewal)
  Carriers Licences (Renewal)
  Public Transport (Cardigan)
  Public Transport (Cardigan)
  Unlicensed Vehicles (Towing Away Charge)
  Unlicensed Vehicles (Towing Away Charge)
  Vehicle Registration Marks (Year Letter)
  Vehicle Registration Marks (Year Letter)
TECHNOLOGY
  Motor Vehicle Accessories (Prices)
  Motor Vehicle Accessories (Prices)
  Motor Industry (Foreign Control)
  Motor Industry (Foreign Control)
  British Motor Corporation (Vehicle Prices)
  British Motor Corporation (Vehicle Prices)
LAND AND NATURAL RESOURCES
  Forest of Dean (Report)
  Forest of Dean (Report)
  Agricultural Land (Reservoirs)
  Agricultural Land (Reservoirs)
NATIONAL FINANCE
  Decimal Currency
  Decimal Currency
  Civil Service (Widows' Pensions)
  Civil Service (Widows' Pensions)
  Developing Countries (Private Investment)
  Developing Countries (Private Investment)
  Balance of Payments (Malta)
  Balance of Payments (Malta)
  Whisky (Excise Duty)
  Whisky (Excise Duty)
ECONOMIC AFFAIRS
  Severnside Study
  Severnside Study
COMMONWEALTH AFFAIRS
  Malta (Defence Facilities)
  Malta (Defence Facilities)
  Expo 67, Montreal (United Kingdom Residents)
  Expo 67, Montreal (United Kingdom Residents)
  Commonwealth Countries (Secretary of State's Visits)
  Commonwealth Countries (Secretary of State's Visits)
EDUCATION AND SCIENCE
  Secondary School Pupils (Milk Cost)
  Secondary School Pupils (Milk Cost)
  Fann Wastes (Disposal Research)
  Fann Wastes (Disposal Research)
MINISTRY OF HEALTH
  General Practitioners (Allocation of Patients)
  General Practitioners (Allocation of Patients)
  Temporary Accommodation (London Area)
  Temporary Accommodation (London Area)
  Drugs (Medical Practitioners)
  Drugs (Medical Practitioners)
  Welsh Language (Census Information)
  Welsh Language (Census Information)
  Health and Welfare Services (Local Authority Expenditure)
  Health and Welfare Services (Local Authority Expenditure)
HOSPITALS
  Mexborough Montagu Hospital
  Mexborough Montagu Hospital
  Cross Infection (Deaths)
  Cross Infection (Deaths)
  Burns (Deaths)
  Burns (Deaths)
  Kidney Machines
  Kidney Machines
LOCAL GOVERNMENT
  Farm Wastes (Disposal Research)
  Farm Wastes (Disposal Research)
  Petrol Filling Stations (Applications)
  Petrol Filling Stations (Applications)
WIRELESS AND TELEVISION
  Offshore Radio Stations (Ships)
  Offshore Radio Stations (Ships)
POST OFFICE
  Post Office Savings Bank (Investments)
  Post Office Savings Bank (Investments)
WALES
  Leasehold Reform
  Leasehold Reform
  Welsh Office (Staff Grades)
  Welsh Office (Staff Grades)
  Mid-Wales (European Economic Community)
  Mid-Wales (European Economic Community)
  UNITED NATIONS (OUTSTANDING CONTRIBUTIONS)
  UNITED NATIONS (OUTSTANDING CONTRIBUTIONS)
  PASSPORTS (WRONGFUL POSSESSION)
  PASSPORTS (WRONGFUL POSSESSION)

Preamble
The House met at two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Coventry):
The LORD CHANCELLOR on the Woolsack

LORD PLATT
Sir Robert Platt, Baronet, having been created Baron Platt, of Grindleford in the County of Derby, for life—Was, in his robes, introduced between the Lord Adrian and the Lord Todd.
LORD JACKSON OF BURNLEY
Sir Willis Jackson, having been created Baron Jackson of Burnley, of Burnley in the County Palatine of Lancaster, for life—Was, in his robes, introduced between the Lord Fleck and the Lord Todd.

GRADING OF FRUIT AND VEGETABLES
2.20 p.m.
BARONESS BURTON OF COVENTRY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether the benefit of the grading provisions made under the Agriculture and Horticulture Act 1964 will apply only to growers and wholesalers, or whether such grading will be available for shoppers to make selection in the shops.]
BARONESS PHILLIPS: My Lords, sales by retail are specifically excluded from the grading provisions of the Agriculture and Horticulture Act 1964, but the benefits of those provisions will be felt throughout the chain of distribution, from producer to consumer.
BARONESS BURTON OF COVENTRY: My Lords, while thanking the Minister for that reply, may I ask whether my
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noble friend is aware that not even my regard for her makes it a satisfactory one? Might I ask whether we are to understand from that Answer that the growers will label their produce, that Government inspectors will inspect it, taxpayers will pay for it; but that the shoppers will be unable to select by it.
BARONESS PHILLIPS: My Lords, in reply to my noble friend, who knows that I have a great interest in this subject as she herself does, I understand that the consumer will benefit because the chain will be speeded up so that produce will get to the consumers faster. But this is basically not consumer legislation. Its purpose is to enable our growers to compete with imported produce. I think that my noble friend may be heartened to know that the Government are watching the Common Market countries who are extending their regulations to the retail market to see how it works out; so at the end of the year if she cares to put down another Question I may be able to give a more favourable reply.
BARONESS BURTON OF COVENTRY: My Lords, I should not want to wait as long as that. Not wishing to embarrass my noble friend, I will not ask whether she does not think this is complete nonsense. But may I ask whether the Government would be prepared to consider extending the provisions of this Act?
BARONESS PHILLIPS: My Lords, as the noble Baroness will be aware I can give no firm undertaking on behalf of the Government. However, after discussion with the Ministry I think I can safely say that although this is not intended in any way to be consumer protection legislation, this type of provision is open to further discussion and, possibly, to legislation.
LORD NUGENT OF GUILDFORD: My Lords, is the noble Baroness aware that, although these regulations will throw additional benefit on the producers, we from these Benches warmly welcome their introduction which will, on the whole, be of great benefit to horticultural production in this country. It will, I think, give some reassurance to the noble Baroness who asked the Question that the benefit will come also to the consumers in due course.
BARONESS PHILLIPS: My Lords, I should like to thank the noble Lord for his contribution. As I understand it, any improvement, at growers' level or at grading and wholesalers' level, must inevitably help the consumer.

BRITISH TROOPS IN THAILAND
2.25 p.m.
LORD MOYNIHAN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government how many British troops are stationed in Thailand; what is the nature of their duties in that country; to what regiments these troops belong; and what is the cost of maintaining and financing them there.]
THE MINISTER WITHOUT PORTFOLIO (LORD SHACKLETON): My Lords, there are about 450 British Servicemen now in Thailand. Of these, nearly 400, most of whom are Royal Engineers, are based at Loeng Nok Tha where they have been building an airfield for the Thai Government. This has just been completed and, as my honourable friend the Minister of State for Foreign Affairs announced in another place on December 20, the Royal Engineer squadron is remaining throughout 1967 to help the Thai authorities with a programme of road building. There are also a Royal Signals team, which provides our link between SEATO headquarters and Singapore, and a few individuals on attached duty. The full cost of these Servicemen is about £830,000 a year.
LORD MOYNIHAN: My Lords, while thanking the noble Lord for that complete reply, may I ask why the British Government should finance the building of an airfield for the Thai Government as opposed to one of the Commonwealth countries badly in need of such facilities?—and I am thinking at the present moment mainly of Ceylon and Sierra Leone, but also of the Fiji Islands, which possibly could benefit. Why was preference given to Thailand?
Loan SHACKLETON: My Lords, the noble Lord is raising a very much wider question. I do not think that many noble Lords would suggest that aid from this country should be confined to Commonwealth countries, although, naturally, the lion's share goes to them. There was need for this; it is part of the help which we are giving to an ally in SEATO. I should imagine that it is a very acceptable form of help—and even more so, the road building which is going on. It is very difficult to equate one particular form of spending with another.
LORD MOYNIHAN: My Lords, I thank the noble Lord. May I ask a further question? Is it not true that airfields in Northern Thailand are being used by the American Forces there for direct bombing missions against North Vietnam? Does the noble Lord consider that this gift to the Thailand Government should be used in that way and, if so, is it possible to equate that with the Labour Party Manifesto?—and I quote:
"Meanwhile the cruel war in Vietnam continues. Labour has consistently urged negotiations to stop the fighting and a settlement which would enable the people of North and South Vietnam to determine their own future."
Loan SHACKLETON: My Lords, I had wondered whether the noble Lord would get to that. If he wishes to put down a Question on that subject I shall be happy to answer the point. This particular airfield is not capable of taking the strike aircraft of the kind that are, in fact, operating over Vietnam at the present time. It is intended as a transport airfield. I can assure the noble Lord that it is not being used for the purpose he suggests at the moment—but even so, I do not see that it is relevant to his original Question.
BARONESS SUMMERSKILL: My Lords, may I ask whether it is customary for our Armed Services to do what is strictly civilian work for a foreign Government?
LORD SHACKLETON: My Lords, it has in fact happened on countless occasions in the past.

CONNEL BRIDGE RECONSTRUCTION
2.28 p.m.
THE EARL OF DUNDONALD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government, following the decision to widen Connel Bridge so that it can eventually be used by two lanes of road traffic—

(a) whether any interruption to traffic or restriction in vehicle width is anticipated, while the reconstruction work is in progress;

(b) if the bridge has to be closed for any periods during daylight hours, what alternative arrangements will be made for essential traffic;

(c) whether the Argyll County Council have been consulted as yet on these matters.]

THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): My Lords, Connel Bridge is not wide enough for us to be able to reconstruct it satisfactorily for use by two lanes of road traffic. Within the limitations of the basic structure, we intend to provide an adequate single lane and a footpath. During reconstruction we hope to avoid any of the inconvenience to users to which the noble Lord refers, but I cannot at this stage give an assurance that this will be possible. This is a narrow bridge, complex in structure, which presents difficult problems to the engineers. As soon as they have devised a solution, this, and its implications, will be discussed with Argyll County Council.
THE EARL OF DUNDONALD: My Lords, I am extremely grateful to the Minister for his very full reply and for his allaying a great many local worries. As I understand it, the bridge will not be reconstructed for two-way traffic, but for one lane only, with a footpath. I also understood the noble Lord to say that there will be some restrictions on traffic passing during the reconstruction. Would the noble Lord bear in mind during the reconstruction process two things—quite apart from forestry traffic, tourist and other essential traffic, such
956
as getting children to school: first, that the distance between the North side and the South side by any other route is over 100 miles; and, second that (to name but one firm) the bridge is used something like thirty times a day for the delivery of chemicals to Alginate Industries Ltd., at Barcaldine, and for the delivery of alginates to the South? Would he give an assurance that the vehicle widths will not be reduced below the existing vehicle width of 7' 6"?
LORD HUGHES: My Lords, it would be wrong to assume that limitations will in fact be necessary, but if there should have to be interruptions to traffic, the times will be selected to cause the minimum interference, and care will be taken to ensure that essential vehicles are not held up by the works.
THE EARL OF DUNDONALD: My Lords, if I may, I would ask one further question. If more interruptions than are envisaged at the moment have to occur, would he consider—bearing in mind that the Bonawe ferry is non-operational—reinstituting the old Connel Ferry, using the old hards on either side, by engaging a landing craft to make that crossing for essential traffic?
LORD HUGHES: My Lords, we will bear that suggestion in mind.
THE EARL OF DUNDEE: My Lords, would the noble Lord be good enough to bear in mind that the alginates factories at Barcaldine, to which my noble friend referred, and which would have to close down if traffic in day-light hours were interrupted, besides employing 200 people locally produces—1 million worth of exports annually and also gives part-time employment to about 600 people in the Outer Isles who collect the raw material for the factories? Will he assure us that he will bear that in mind? I am sure there is some good explanation; but is the noble Lord aware that until yesterday, so far as we know, nobody on the Argyll County Council had been consulted about this scheme?
LORD HUGHES: My Lords, I think the first point referred to by the noble Earl was covered by the answer I gave to the noble Earl, Lord Dundonald. We shall certainly have the importance of this industry very much in mind, and I

957
should be surprised if its vehicles do not come under the category of essential vehicles to which I have already referred. There have not been consultations with the Argyll County Council up to the present because we have nothing to discuss with them until we see what proposals are coming forward. These proposals are being worked out at the present time with the consulting engineers, and as soon as there is something specific, consultations will take place with the county council.

NATIONAL GALLERY PURCHASE OF RUBENS PAINTING
2.33 p.m.
LORD NAPIER AND ETTRICK: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government how much money was made available by the Exchequer to the Trustees of the National Gallery so as to enable the Trustees to complete the purchase for the nation of the Rubens painting "The Judgment of Paris".]
BARONESS PHILLIPS: My Lords, the answer is, None. The picture was bought from the annual purchase grant to the National Gallery, supplemented by some trust funds and some private donations.
LORD NAPIER AND ETTRICK: My Lords, I am obliged to the noble Baroness for that reply, confirming that no special disbursement was made by the Exchequer in this instance. I should like to put one supplementary question to the noble Lady. Cart she confirm or deny a suggestion which I have recently heard that there is some doubt as to just how authentic this picture is?
BARONESS PHILLIPS: My Lords, I should like to thank the noble Lord for giving me prior notice of this supplementary question so that I have been able to endeavour to obtain the reply. It may, or may not, please him, but I have done my best. The responsibility for buying paintings rests with the Trustees of the National Gallery, and it was suggested that perhaps the noble
958
Lord might like to pursue this point with that distinguished body.

INDUSTRIAL GROWTH: EXPORTS AND INCENTIVES
2.35 p.m.
VISCOUNT WATKINSONhad given Notice of a Motion to call attention to the necessity for a long-term policy for industrial growth, with particular reference to exports and to personal incentives for workers and management. The noble Viscount said: My Lords, I should apologise for the fact that my Motion does not appear on the Order Paper in the customary form. None the less, I trust that your Lordships will extend to me your indulgence and allow me to proceed. If I may, I beg to move the Motion standing in my name on the Order Paper, and to move for Papers. Also, I think I should declare an interest, for certainly I am a good deal mixed up in business and exports which will be, I hope, largely the subject matter of this debate. I do not seek to approach this problem in any partisan spirit, because the matter is too important for the future of our country. Whether our economic problems are to a degree self-inflicted or not, they still remain problems and they still have to be solved.
Perhaps, my Lords, I may say that to an ex-Cabinet Minister the present position is drearily familiar. We are on our way, one hopes, to solving the balance of payments crisis, but by methods which have been made familiar by successive Governments since the end of the war. As a result, the nation faces falling production and productivity, rising unemployment and reduced capital investment, due to loss of confidence in the future. Such a situation surely cannot be a permanent solution to our problems; and if prolonged it is bound to cause long-term damage to the British economy. So, surely, the most important question facing the nation is, "Where do we go from here?".
I am not seeking to argue, my Lords, that it was wrong to say, "Stop" six months ago, but I think it right to say that the Government have been extremely fortunate in the way in which their measures have been loyally supported by the trade unions and the employers. Neither of these partners in the State, as

959
I know from my own personal experience, have found the task of saying, "No" to their members a very easy or agreeable one, and I think the country has been genuinely well served by the statesmanlike forbearance shown, especially by the trade union movement. Of course, this time there was legislative backing for what was done, but in a free society even legislative action will not for long restrain the normal desires of men and women to advance their activities and their incomes.
Severe restraint by legislation—I hope that we are agreed about this—cannot and should not be a permanent policy. In other words, unless the Government are now prepared to set their present restrictive measures against the background of a future policy for growth and give a firm commitment to do so, I believe they will face the collapse of many of their plans. I do not think that anybody who wishes our country well would advocate the immediate end of all restraint, but surely no one wants to see it staggering on under such a burden of controls and constraints that the enterprise and vigour of the British people withers and dies.
My Lords, speaking with some slight experience in the Ministry of Labour and in industry, I beg the Government not to go on with their future planning on the basis of compulsory powers. The choice for us all now is whether the British economy is to grow or further to contract, for it cannot stand still. I hope, again, that the Government and their advisers will not be so foolish as to believe that they have some particular form of magical planning which could hold the economy on a steady line between "Go" and "Stop". No business can do this; it has either to go forwards or backwards, and I believe the business of Government has to make a similar choice. In other words, the attempt to maintain a "nil norm"—to use these quite horrible words—across a wide spectrum of British industry would be a mistake in tactics and a mistake in practice, even if it were statistically justified.
It may be asked, "Why is it essential that the Government should proclaim their future policies now?" Well, my Lords, one does not have to look very far for signs of falling confidence in business circles and, therefore, the possible
960
intensification of recession in key areas in the economy. There is, for example, a very sharp fall in the demand for executives right across industry, and this is really a very good yardstick with which to measure what business thinks about the future. Manufacturing investment continues to fall—not a very good sign in an increasingly technological world. Take as a specific example the British car industry. Here one sees many of the elements of a situation which is causing many business men grave disquiet. In this industry sales in the United Kingdom are still some 25 per cent. down. As a result, already some prices in the home market have had to be increased. Unless a fairly rapid improvement takes place in home sales, this increase in prices is bound to be reflected in the selling price of British cars abroad with disastrous results on the export figures for this industry. In the long term, I think all practical experience shows that we cannot base successful exports on a stagnant or retrogressive trade situation here at home.
There is to-day a further point. We must realise that, as industries strive for greater productivity, they are bound to become more capital intensive. This is obvious, but if they become more capital intensive, so they raise the break-even point of their operations to a pitch where even a relatively small drop in sales will turn a manufacturing profit into a loss, a loss that can then be recouped only by cutting back development. by increasing prices, or by doing both. Technological advance brings this penalty with it, that the more efficient and more automated a plant becomes, the nearer it has to operate to its optimum level of production in order to return a reasonable level of profit to those who operate it. This is saying nothing new, of course, but I believe that it is true that year after year our industry acquires a higher break-even point—probably it should—and, therefore, is the more narrowly based if excessively repressive measures force down production to a level where industry can no longer make a profit. or has either to raise prices or cut back on its programme for development and its expansion.
In this situation, surely it would be tragic if the Government did not indicate

961
what their long-term plans are for resuming the steady growth of the British economy, and for providing the necessary financial incentives to back that growth: What should be done in these circumstances? Obviously, the main action must lie with the Government. They have access to all the economic facts and figures. But I can see no fact or forecast that should lead them at this moment to refuse to disclose as soon as possible a long-term plan for growth. The only factor that could justify such a refusal would be if a decision had been taken to try to remain in a permanent phase of severe restraint and this, as I hope I have already shown, means not "Stop", but in fact a rapid fall into a serious recession.
Although the pound is riding high at the moment—and I am sure all of us are delighted that this is so—it seems to me one of the few things in the economy that is riding high. I know that there are risks in going forward—there always have been—but there are much greater risks if we hold on to severe restraint too long.
To try to be as constructive as possible in what I hope will be a short contribution to this debate, I should like to put forward the possibility of one or two perimeters of a framework within which a programme for greater development may safely be achieved. First and foremost, the maximum priority must clearly be given to increasing Britain's exports. I am delighted that this is common ground among everybody. This is not going to be an easy task. As I have said before to your Lordships, we can achieve a satisfactory overall export performance only by selling to the world technologically advanced capital products, as well as easier things like consumer goods, and it is in the advanced field of capital goods that we are most vulnerable to our competitors. For example, in a market in which I have some interest, after two very good years for exports to the United States I fear that the current year, 1967, will certainly be a more difficult year to attain the sort of figures we have so far achieved, because we are not selling enough technologically advanced goods, like aeroplanes and generating sets. These bring in a great deal more money than consumer
962
goods, however skilfully marketed, even in large quantities.
I believe that the Conservative Government created the right instrument for handling our export promotion in the British National Export Council, and the present Government have been very wise to back the Council and give it all possible help, as they have done. The Government must realise, however, that they, too, ought to operate on the same overall priority for exports that they ask the B.N.E.C. to observe, and in this context surely exports include" overseas operations". Here, I hope that the Treasury are thinking very seriously of amendments to the corporation tax that will avoid an unfair burden on firms who have built up profitable overseas businesses, remitting large sums of money to the United Kingdom, often on quite a small investment in the overseas market. I know that this matter is much debated, and it is interesting to debate the merits or demerits of overseas operations, but the fact is that this choice is not often possible. In most cases, there is no choice but to commit ourselves to an overseas operation or lose the market for good and all. So I hope that some consideration will be given to that suggestion.
At the risk of repeating the obvious, may I say that we should remember that practically the whole of the export effort by our country still depends on private enterprise. While I should be the first to say how much British businessmen owe to the devoted service of our ambassadors and consuls and their staffs overseas in the trade promotion field—we are getting immense help now from Her Majesty's services overseas, and I would say also how grateful the B.N.E.C. are for the strong backing which the Board of Trade gives them—none the less, in the end export trade depends on private firms who are willing at some risk to venture their own capital in this field and often take a lower profit margin in order to hold export business against tough foreign competition. These are the people who should be looked after, if we are to see our country grow on the correct basis of selling more abroad.
In passing, it would be interesting to cost the work of the B.N.E.C. on a man-hour basis. It would show that very

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large sums of money are being committed by the immense amount of time that many of Britain's business leaders are freely giving to the Council and to the work of promoting Britain's export effort as a whole. This service to the nation is willingly and, in my view, rightly given, and, as I see it, as chairman of one of the area committees of the Council, relationships between Government and the Council are good. I think that we are all trying very hard in this field.
But the point I now want to come to is that this satisfactory relationship would be damaged if the Government were to make some gestures to popular prejudice by making further moves towards economic egalitarianism for its own sake. I understand that Ministers will be under pressure, both in the House of Commons and elsewhere, to go on levelling incomes, wages and profits for the sake of levelling—for example, cutting of children's allowances or a wealth tax or some other tax which will bear heavily on the highly paid executive. Action on the wages front that seriously diminishes the proper differential that craft, skill and technological training commands would be just as unwise.
If we are to accept the need for exports, surely it would be an extremely foolish policy to discourage the very people on whom the success of our export trade depends. Therefore, I want to add a word or two about their rewards. I hope that your Lordships will agree that there is practically no incentive today for an executive to push his income above, say, £8,000 a year. Yet this figure, by United States standards, is away down the batting list of executive reward. Many of my American friends, when I talk to them, entirely agree that the largest single disincentive to growth in Britain to-day is lack of direct monetary incentive in the higher levels of management. Moreover, any move to increase tax burdens on the higher level of salaries is self-defeating, in all but purely Party political terms. The entire Exchequer receipts from surtax on earned income probably yield little more than £100,000 per annum. What the Government might consider, if they want to give more incentive to those exporting, driving hard, travelling hard and risking their businesses and their reputations in this diffi-
964
cult field, is a reduction in surtax, which could be done at a relatively small total cost, bearing in mind the total tax burden. It would be a good incentive to those younger men on whom our industrial future so much depends.
Nor should the Government ignore the right of the skilled operative to high earnings. The more a man on the shop floor earns by his skill and effort, the better it is for him and the better for the nation. I hope that this will not be discouraged in any policy to try to raise the basic levels of the minimum wage earner. Levelling may have its attractions to some, but levelling down is no way to run a competitive economy; and I hope that the Chancellor of the Exchequer will have this in mind when he frames his Budget in due course.
Next, within the framework for future growth and development, I do not think any of us should be afraid of an unemployment percentage of 3 or 4 per cent. Having spent some years—some of the most rewarding years that I have ever spent—under the late Lord Monckton of Brenchley in the Ministry of Labour, I am not likely to accept that any unemployed man has not a human problem and is not a human problem. But provided unemployment is transitional and not structural, we may have to accept it from time to time, as indeed we are at the moment, as part of the price of adapting our industries to a rapidly changing world.
Those of us who seek to set a framework for expansion with reasonable safeguards should face the difficulty of trying by some form of control to get a balance between what we export and what we import. Under GATT or any other international rules, as I understand it, any country is entitled to take action to safeguard the future of its own currency. It might well be feasible to keep imports and exports reasonably in balance by tightening controls, not in a physical sense but on the provision of funds that go to the purchase of imports at times when the gap between what we export, plus invisibles, is widening against what we import.
There are several ways of doing this without reverting in any way to the use of general licences. One of the most interesting, and I think most hopeful, that

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is used by several other industrial countries is to require from the prospective importer a prior deposit with his bank. This deposit can be varied according to the need to restrict imports at the time. I hope that all these possibilities are being examined, because I personally believe that any idea that we can run this country, with its excessively small reserves. without some recourse to "Stop" as well as "Go" is quite unrealistic. Obviously, physical limitation of imports, or even campaigns to substitute home-produced goods for imports, do not really go very well at a time when we are trying to push our exports as hard as we can. But it is quite another thing to use the control of funds used to purchase imports to avoid the kind of gap in our trade figures that might lead to a dangerous run on sterling.
Lastly, and most important of all—and I ask this, again, with all the force at my command—are the Government going to base their future plans on voluntary discipline arising from free agreement between the three partners in the State, the Government, the trade unions and the employers? We shall all, in the end, sink or swim together, and in the present climate of opinion I think the Government have a real chance of carrying their two partners with them in a programme of sensible and voluntary restraint, provided only that the Government show that they are willing to phase this restraint into expansion in the long term. The continuation of restraint by legislation means the end—and I mean the end—of any fruitful collaboration. This is a chance that could now be taken and one which I hope will not be missed.
I hope, therefore, that the Government, for their own sake and that of the country, will indicate this evening that they reject further legal coercion on wages or prices; that they reject the concept of a long-term standstill on wages or profits; and that they will indicate, at least in outline, their plan to get Britain on the move again. Only on this basis can we now build on the foundations of reasonable co-operation that are so hopefully growing between the C.B.I. and the T.U.C. and, therefore, between employers and trade unions. Only in this way, and with a proper recognition of incentives for those on the shop floor, as well as in management, can we keep our export
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trade going and pay our way, and gradually get back to the kind of growth and expansion that is what this country needs to be a power in the world.
I raise this debate, not in the sense of being critical but in the sense of trying to face this question. I am sure that the Government are giving it their close consideration. I shall understand if they cannot be entirely explicit in their answers to-day. None the less, I hope that we shall learn that these matters are receiving their earnest consideration, and that this consideration is firmly based on the voluntary principle of working together that has brought our country through many difficulties in the past. I beg to move for Papers.
2.57 p.m.
LORD SHACKLETON: My Lords, the noble Viscount, Lord Watkinson, has given us an introduction to a subject in which many of your Lordships are rightly and naturally interested. I think he has made one of the most comprehensive speeches covering this wide field that has been delivered, and yet he has contrived to be so interesting and brief. Even so, the noble Viscount covered too wide a field for me to hope to deal with all the points that he raised. But I am proposing to reply to this Motion in precisely the same spirit in which the noble Viscount moved it.
No one is better qualified than the noble Viscount, Lord Watkinson, both by his direct industrial experience and his contribution under a pro bono publico hat, and no doubt his own contribution would add significantly to the cost if we costed properly the voluntary efforts of those who help the nation, especially in the field of exports. I shall not, as I say, be able to deal with every aspect of this wide subject.
When we have these economic debates, we find that there always tends to be a central core which is common to all of them, and which it is necessary to deal with, while at the same time focusing on particular areas which seem to be relevant to the particular wording. I shall try to follow as closely as I can the intentions of the noble Viscount, but the fact remains that I shall not cover all the ground. My noble friend Lord Beswick, at the end of what will be a lengthy and,

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I am sure, notable debate, will be prepared to deal with as many points as possible.
It goes without saying that the opening words of my speech will be that the major objective of the Government's economic policies is to strengthen our industrial position, and to improve its efficiency in one way and another. This expression of opinion has been stated by successive Governments, and there is, of course, no point of difference between us here. Your Lordships will not, I hope, object if I go over a little of the background of the present problems before I come on to the long-term issue.
For the past two years our main short-term problem has been how to deal with the worst balance-of-payments crisis with which this country has ever been confronted—and I state this as a matter of what I believe to be a statement of fact, without political implication of any kind. That crisis arose, like the others before it. because of the fundamental structural weaknesses in our economy; and we are determined to put them right. In saying that, I do not suggest that this Government have a magic wand, and we should not wish to deceive ourselves or anyone else into thinking that we have a magic wand. But it does mean, of course, that short-term measures of deflation and restraint have proved necessary. But, at the same time, we have never stopped pressing ahead with long-term policies to improve industrial efficiency and to create those conditions in which faster growth can be sustained without moving into balance-of-payments troubles.
There is one thing that I should like to state very firmly now. Because in recent months there has been a certain amount of loose talk about the abandonment of planning, I want to make clear that the Government have not abandoned planning, and we believe that it would be disastrous if we were to do so. And I think that on this industry is in full agreement with us. When the First Secretary recently discussed future planning operations with the National Economic Development Council, they took the occasion to reaffirm their strong belief in the continuing value of planning, and I am sure they spoke for all the best-informed and most forward-looking people in industry. And I believe that
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this would broadly represent the consensus of view in your Lordships' House.
Following his discussion in the N.E.D.C., the First Secretary indicated the Government's view in a reply that he gave in another place. He said that, while events in the middle of last year had necessitated revising many of the figures and assumptions in the 1965 National Plan, the concept of planning was in no way invalidated. Indeed, it was more than ever necessary to push ahead with the action programme which the Plan put forward, and to work to plans which would enable us to resume at the earliest possible moment progress towards growth of the kind which the 1965 Plan had envisaged. This means we want to look forward, rather than back, and it was for this reason that we decided against publishing any review of the 1965 Plan, in favour of concentrating on preparing the groundwork for the future. This is, in fact, what is being done now.
The Department of Economic Affairs and other Departments are now working to establish a framework of assumptions about the development of the economy over the next few years, and on the basis of which a further planning operation could be mounted. This work is not yet complete, and when we have carried it further forward internally we shall want to discuss our conclusions with the N.E.D.C. and with other organisations so as to establish the kind of planning operation which will be most valuable to industry and to the country as a whole. I think that in saying this I am to some extent meeting the very important point the noble Viscount has made about a consensus and voluntary co-operation. This is clearly fundamental to the success of this kind of democratic planning.
There are, however, many important questions which cannot yet be resolved. We have to consider very carefully both the timing and the pattern of our future growth. The Government have stated that we do not intend to take action to this end prematurely. We do not want to revive all the old problems: renewed balance-of-payments difficulties, labour shortages, inflationary pressures on prices and incomes, and so on; and we do not want to lose all the ground gained in the past year. Therefore, reluctantly, we must wait a little longer, until the balance of payments has clearly returned to surplus, before we take more expansive

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decisions of this kind. Again, we have to ensure that, in relaxing the present pressure on restraint, we do so on a controlled and, I would stress, selective basis, so that our renewed expansion is firmly based. Also, we need to be clearer about the possibility of Britain's entering the European Economic Community, since our forecast of plans for the future is bound to be different according to what assumptions we make on that score.
There are a great many uncertainties, and I have often thought, both since I have been in Government and during previous Governments, that when one begins to look at the list of the uncertainties one wonders whether there is any point in making the effort to plan one's future at all. But, my Lords, I am convinced it is unnecessary that we should do so, although it would be premature at the moment to commit ourselves in detail to a revised plan. We do not welcome this delay, and we realise its inconvenience for industry and others who want to formulate their policies in relation to the policy of Government. I am therefore particularly glad to have the opportunity to say this, and it is a further reason why the noble Viscount's Motion is so timely. It would be wrong, we believe, to commit ourselves to a premature effort which would not be soundly based and would not command the confidence of industry.
However, we shall be continuing with the planning work, and as some of the uncertainties are resolved we expect to be able to give at least an outline of the way we think the economy will go over the next few years and of the possibilities that are open to us. I do not want to speculate too far, and, clearly, I cannot give any firm commitment either as to when this document will be vailable or as to what form it will take. But the point I want to emphasise is that our belief in the value of planning is un-diminished, and certainly in our forward planning we shall be looking well into the 1970s.
It is worth remembering that, while many of the statistical assumptions and forecasts have had to be modified or abandoned, the action programme, as I have said, is continuing and, I believe, beginning to achieve valuable results. Planning does not consist simply of making forecasts or setting targets or deciding what we should like to happen.
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It also means contributing and, if possible, ensuring that things do happen. That, again, is why close co-operation among industry, trade unions and Government is so necessary.
Perhaps I may now say a few words about growth and this difficult question of international productivity comparisons. It is, of course, obvious that we have to plan for a faster rate of growth, because on the whole our economic and industrial performance has fallen well short of that in other countries, and well short of what we believe it could be. But I appreciate that comparisons of growth performance are at times somewhat oversimplified and, furthermore, apt to be used on a selective basis for Party political purposes. I still recall a memorable speech of Mr. Quintin Hogg, then Lord Hailsham, when he inveighed against the whole concept of growthmanship; and, clearly, there are many other factors that influence the need to be taken into consideration in judging, if not national performance, at least national virtue. I sometimes feel there is a certain moral aspect to this. But I should not wish to suggest—and I am sure there are none who would not agree—that there are not, in fact, comparisons which give us very serious grounds for thought; and there are aspects of growth of a more complicated kind, in particular in relation to the deployment of our research and development effort on which a great deal more work and thought is necessary.
Nevertheless, the fact remains that, for whatever cause, the level of productivity in industry, and the rate at which it has grown, have been well below the performance of our competitors. We know, at the same time, that the best in British industry is at least equal to anything overseas. But here again, of course, it is the best who are most aware of their own limitations, and it is here that perhaps the better improvements will come.
My Lords, the Government are anxious to do all they can, in co-operation with the trade unions and management, to help British industry to achieve greater productivity. One of the main components in this drive is the National Economic Development Council. I could speak at length—indeed, there is much that I should say—about the National Economic Development Council, but it

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is so well known to your Lordships, and certainly to the noble Viscount, that perhaps all I need say is that it is no mere advisory Council, and that it is involved, along with the "little Neddies," in developing the type of co-operation between Government and industry that we all seek; and it has wide terms to assist in this.
My noble friend Lord Beswick, will, I hope, if time permits, have something to say about the work of the "little Neddies" but I should like to turn to one aspect of industrial efficiency which I believe often receives less concentration than it deserves. It receives a great deal of attention but not always concentration. It is the whole question of industrial management. The Government must do everything possible to help United Kingdom manufacturers make themselves more competitive, on our home market and overseas. But while the role of Government is crucial over a wide area (and I take the noble Lord's point with reference to the taxation policy, and shall hope to deal with it later), the fact remains that the Government's authority and influence is still necessarily limited. This is true in the management field even in a Communist society which goes in for the sort of totalitarian planning that we reject in this country. Therefore we must recognise that in the last analysis it is for much of British industry itself to tackle these problems in the boardroom, in the negotiating chamber and on the shop floor and, not least, in the accounting offices and the stockrooms.
The simple fact is that in certain areas management is still not able to employ the more sophisticated techniques, the use of which is essential to more sensitive and relevant judgments, and these techniques are not always as well understood as they should be. I know of firms who are not yet aware of the best way to operate, or the possibilities of operating, systems of financial control, or of the potentialities that modern costings and budgetary systems can make available to them. One example is in the field of stock holding, where there is undoubtedly waste in both manpower and resources. Difficult commercial judgments are involved, but there are techniques available; and though none of them will replace the basic judgment of manage-
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ment, their use would lead to economies. This is one area in which one of the "little Neddies" is itself making a special contribution.
We have had a great deal of Government exhortation for many years, and every debate we have of this kind reminds me of the exhortations we had in the late 1940s and recent years. I would not want to suggest that real progress has not been made, but here again, when we look at some of the reports from the "little Neddies", we see the scope for further improvement.
Again, the Export Hindrances Survey, undertaken by the marketing services unit of a well known firm of management consultants, suggested, among other things, that marginal costing techniques and the importance of volume production in relation to reduced costs were clearly not, as yet, fully understood. I only mention this to show that there is a great body of evidence produced by industry in this field. Of course, overcoming these obstacles is not something that can be achieved in a short time, and it is not possible here to give anything like an exhaustive account of the many factors which affect' the efficiency of management. However, I think we are agreed that there is an ever-increasing need in British industry for effective, up-to-date medium and longer term management planning on all aspects of industrial life. Of course the better United Kingdom companies already provide as good models in this respect as any that are to be found.
My Lords, this brings me directly to the point raised by the noble Viscount, Lord Watkinson; namely, the question of incentives. His Motion refers specifically to incentives. I do not believe that this is a subject which could be adequately or equitably dealt with purely on the basis of providing marginal inducements for particular categories of people. Indeed, when we begin to examine these marginal inducements, of which we have examples, we find that comparisons are exceedingly difficult. This has to be seen against the background of the whole of our industrial and fiscal arrangements, including, not least, the successful working of the prices and incomes policy: and my noble friend Lord Beswick will also he dealing with this matter.

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If this policy can be made to work, we can sure that the rewards of greater enterprise and productivity are real and not merely part of the inflationary process. So a firmly based and widely accepted incomes policy is as important as many of the so-called incentives—and, I believe, more important—which in practice become little more than a pretence to reward the powerful at the expense of the weak; or, equally, to dress inflationary wage settlements in the guise of perhaps even phoney productivity agreements—though I am not suggesting that this applies to the majority of productivity agreements.
Of course there is a need for incentives, but they must be applied where they are needed, and this means incentives to business possibly more importantly than to individuals. The export rebate scheme, the investment grant scheme, the remodelling of our taxation scheme, which we have begun, are all part of this. The use of taxation as an instrument of economic management has developed gradually over the last few centuries. For many years, and particularly in the heyday of the 19th century, laissez faire taxation was a necessary evil. The purpose was to raise revenue to pay for wars or other essential Government expenditure. Of course this has remained, but the role is different—or perhaps I should say that there are many additional new roles.
We have started to use taxation in a much more purposive way than in the past; as an instrument of social policy and a means of macro-economic control. To this has been added a fourth function: to discriminate (and here I admit we are going into a difficult field) between different types of industry, asset, activity and location, so as to encourage the economy to operate in the social interest without needing direct Government intervention. The selective employment tax is an example of this—and, let me admit, a controversial example—which I do not propose to debate now. But I should like to set the concept against the background.
The desirability of an influence of this particular kind in our economy is surely not arguable by the majority of noble Lords interested in planning. In this
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country we are tending to follow the United States of America, where a growing proportion of the wealth produced by all the modern aids has led to a filtering off of resources from secondary to tertiary industries. Some of this is no doubt a right and proper product of greater affluence. There is some evidence that this is a factor in the slower growth rates of manufacturing output in the United States and this country, which may in part account for, to me, the very definite paradox that it is these two countries which have the largest investment in research development. This is a difficult field in which further research is necessary, but I believe this is fundamental to the more sophisticated and directed and effective planning that we shall hope to adopt in the future.
There is another aspect of incentives, which is this. To my mind, the most important incentives to efficient work and high quality are not solely financial, or related solely to questions of wages, salaries and taxation. Here there are some interesting figures, and I expect the noble Viscount saw the comparison in the Financial Times last October. Also, a number of figures were given in another place yesterday which suggest that personal taxation in this country is on the whole rather parallel, in the middle range, to that in other countries. The phrase from the Financial Times suggests that direct taxation in the United Kingdom only begins to be significantly more penal than that in any other major industrialised country on incomes above £20,000. I will not go into the details of these arguments because there are all sorts of computations which are necessary, but by and large it is fair to assume that there are other countries, and some of our competitors, which are at least as highly taxed as we are.
In any case, the money incentive is not the only one, important though it is. And let me say straight away that Her Majesty's Government accept the importance of this, as they accept the importance of profits—and I think it is necessary to repeat this—as essential for the working of this co-operative economy of ours. But there are other incentives. Wage-related sickness and unemployment benefits, efficient management, industrial morale, and status in society generally,

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are all elements which have to be taken into account.
An important element in the Government's strategy for economic and industrial growth has been the encouragement of technological advance throughout manufacturing industry, and this aim has been stated many times by the Prime Minister and other Ministers. There is a wide field of industries where action is being taken by the Ministry of Technology, and some of the examples are well known. Indeed, they are so well known that I hesitate to mention even computers and advanced machine tools again. But apart from the" hardware" side of technology, one of the most important aspects of this question is the fact that we do not regard it simply as a problem of engineering, and we are endeavouring to bring about a marriage between engineering and economics.
A technological policy must be selective so that scarce resources which are put to seeking out and applying new technologies are used to the most efficient purpose. We must first be more selective—in so far as the nation is able to exercise this without grossly interfering with industrial decision-making—in choosing those projects which are on the threshold of technological achievement, and of course the computer industry again is an example. We must be able to look ahead and identify those sectors which are most able to benefit from improved technologies, and also to see whether the structure of those industries enables them to keep abreast of modern developments. We must seek out ways of adapting these technologies to industries and situations where at first they may not seem applicable.
Above all, in all our activities we have to investigate the various economic and social costs and benefits of such activities. This is an area where purposive planning is still only in development. A greater effort will be necessary if we are to understand and put to the best use the resources that should go into research and development. This is a subject which I hope we shall be able to debate at greater length, perhaps on the Motion that stands in the name of the noble Earl, Lord Bessborough.
There are important lessons to he learned here, which will demand closer
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collaboration between planners, economists and scientists. Cost benefit studies, which are still really in their infancy, could provide a valuable key, particularly in the fields of research and development. Some efforts are being made, and these can be of great importance in relation to lead time, a concept of which is just as important in traditional industries as in the more normal science-based ones. As Professor Galbraith has pointed out, the awareness of the role of research and development in industrial planning is an outcome of the growth of the large corporation in the United States, and while there is not time to discuss the structure of industry, or indeed to qualify that statement, it is certainly true that in many areas larger industrial units are a necessity. It is here that the I.R.C. has a very important role to play.
We still have to establish, at least on a guideline basis, the appropriate threshold in relation to the size of firms and the scale of their output below which research and development may fail to be effective and thus be wasted. Some of your Lordships will have read the very detailed studies which have appeared recently, both in the United States and, more notably, in the Report of the National Institute on this subject. There was one particularly interesting study in relation to the electronics industry.
All this will impose on us the need to face up to one of the most difficult and, at the same time, one of the most important issues; namely, the need consciously to select or reject certain areas in which to press on with research and development so that they may yield the maximum economic return. It might be possible to produce a most splendid electronic left-handed fountain pen which, none the less, would not significantly add to the economic wealth of this country, however attractive and rewarding it might be to the engineer and scientist who designed it. It is in this area that decision-making, sensitive and delicate, is going to be necessary. I commend to your Lordships a very interesting address by Professor Cottrell which was delivered at the British Association last year.
A great deal is going on both inside and outside the Government in connection with these problems. The setting-up of the new Central Advisory Council for

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Science and Technology, under the Chairmanship of Sir Solly Zuckerman, Chief Scientific Adviser to the Cabinet, containing the most authoritative experts—indeed, it was a problem to choose: there were so many—on scientific and technological policy, is further evidence of the Government's aim to make the best use of our knowledge and ability in this field. There is much more that I could say on this subject and on the relation between Government research and the universities and research institutions. I have mentioned this only to show that I personally believe that this is a very important aspect of the future growth, and steady growth, of this country on which more work is necessary, both within industry and in Government.
Our economic policies, as I have said, are still at present dominated by the immediate need to rectify the balance of payments, and this has meant taking measures to slow down growth at home. These culminated in the severe restraints imposed in July of last year. As a result, although some elements of demand, notably public investment and, more recently, exports, have been rising strongly, output as a whole has probably not risen since the middle of last year. Wage rates have risen scarcely at all during the standstill, and at the same time prices have risen much more slowly than in the past.
So far as the balance of payments is concerned, I think we can see that the July measures have helped to check the rise in imports which took place in the early part of 1966. At the same time, the slowing down in exports after the fourth quarter of 1965, intensified by the seamen's strike, has given way to a strong rise. My noble friend Lord Beswick, when he comes to wind up, will deal in more detail with what has been done recently to encourage exports. I will only say here that the magnificent performance of our exporters over the past two years, encouraged not only by the noble Viscount, Lord Watkinson, but also by Her Majesty's Government, has resulted in the biggest increase we have had in any two years during the past decade. The export drive is in the forefront of the Government's economic policies, and there it will remain. The slower growth of imports and the rise in exports have
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led to a big improvement in the current balance of payments, compared with the first three-quarters of the year. Thus, the immediate objectives of policy are being fulfilled and are laying the foundations for sustainable growth in the longer term.
I should like now to say a few words about the prospects for 1967. I think it is clear to your Lordships that we still have to pursue a moderate and careful course during the next year or few months. We shall need at all times to have regard to the supreme importance of a healthy balance of payments, and, especially, of course, to the commitment to pay off our debt to foreign central banks and the International Monetary Fund. This means that we must not only be in surplus, but must stay in substantial surplus for the next few years. This does not mean, and could not mean, that the brakes must remain on for ever, but it does mean that measures to promote renewed growth must be selective so that we can increase our output without relapsing into external deficit.
My Lords, I think I have said enough to indicate what is in any case pretty generally known, the lines 'on which further advance can be achieved. There are now strong forces making for growth in the economy. In regard to exports, if world trade continues to expand, the prospects are good and will be enhanced by any cost advantage we gain from the incomes and prices standstill. Then, public expenditure, both current and capital, will rise. Much of this is directly related to our future growth potential: investment in the publicly-owned industries. Although personal consumption has been reduced, both by direct measures and by some fall in real incomes, the effects of the restrictions will wear off and thus tend to raise consumer spending. Wage claims caught in the freeze will be met, and current grants from the Government will increase; these will again add substantially to consumers' incomes.
Finally, the selective employment tax refunds and premia (again, I will not go into the ethics of this) will undoubtedly at this moment ease the liquidity position of firms in manufacturing industry, and payments of investment grants will begin to flow by the middle of the year, though the increased grants announced in

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December will not be paid until mid-1968 and later. These built-in expansionary forces must not be underestimated in considering the need for further specific Government action.
What I have said confirms, I hope, that the Government are fully aware of
"the necessity for a long-term policy of industrial growth with particular reference to exports and to personal incentives for workers and management."
Moreover, I hope that what I have said indicates that we are more than aware—we are taking action. Again, these broad but fundamental directions of policy which I have described have been followed up over the last two years against a balance-of-payments crisis of which we have been all too aware. Despite the measures taken to deal with that crisis—many of them restrictive, and certainly inhibiting to growth—we have pressed ahead with our positive policies to ensure a firm basis for future growth. The measures and the planning and thought, aided by the enthusiasm and co-operation of industry, will, I believe, achieve what the noble Viscount asks for in his Motion which he moved so ably.
3.36 p.m.
LORD HARLECH: My Lords, as the wording of this Motion makes clear, the problem for this country is not just how do we expand production, but how do we expand it without running into a balance-of-payments crisis. This was a point which was most forcefully made by the noble Lord, Lord Shackleton, in the early part of his speech, and to which he came back in a notable passage towards the end. As my noble friend Viscount Watkinson said, it is no good us blinking at the fact that the solution to this problem has baffled all British Governments of both Parties since the war, and it has baffled not least the present Government.
In spite of the Prime Minister's boasts in 1964 that under a Labour Government things would be quite different, and steady industrial expansion would be assured—I would agree with the noble Lord that he did not actually claim to have a magic wand, but he went far in that direction—here we are, two years later, with industrial production no higher than it was when the Government took office. Despite
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the efforts of this self-styled, modern and dynamic Government, we are now in the middle of a good old-fashioned recession. Unemployment is rising, production is down, and there is every indication of a fall in capital investment, particularly in the private sector of the economy, possibly by as much as 10 per cent. I therefore agree entirely with what my noble friend said, that it is by no means too soon for the Government to indicate the strategy they intend to pursue when the moment comes to encourage economic expansion again.
I have used the word "strategy" rather than "plan" deliberately. The last thing in the world that we want from the Government is another mammoth document purporting to set out how much we shall all be producing and spending in five years' time, and purporting to tell us where we shall all be working: a document which, shortly after publication, would go to the top of the current fiction list and then be withdrawn.
The noble Lord, Lord Shackleton, had something to say about the kind of planning in which the Government are now indulging. He used some vague terms. He said that targets and forecasts were not everything. He used a rather delightful phrase, "the framework of assumptions that were being worked on". I am bound to say that the tenor of his remarks seemed to coincide much more with the sort of planning with which we on this side of the House might find ourselves in agreement. What we need is an indication of those measures which will make it safe for us to expand without once again running into balance-of-payments difficulties. In this connection, I welcome the particular reference to exports in the Motion before us.
I want, therefore, to start by putting forward some ideas which I suggest might be examined, and possibly even implemented, which could give us a better chance of keeping exports expanding at least as fast as imports during the next period of reflation. First, I suggest that the Government should give serious consideration to switching to a value-added system of indirect taxation, the whole of which tax would be refunded on goods for export. It seems to me that such a system would have the following clear advantages. It is a system which is allowed under the rules of GATT; it has operated most effectively in a number of

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countries which have been conspicuously successful in their export efforts; and it provides a direct incentive to industries to export.
Secondly, I suggest that the Government have a good look at the possibility of moving to a more flexible exchange rate for the pound, once we have got our balance of payments position right and sterling is again strong and secure. Allowing the exchange rate for the pound to fluctuate through a wider spectrum is not devaluation, and it would at least provide some automatic corrective at an early stage if we again ran into balance of payments difficulties. Put in its simplest terms, it would mean that as the rate for the pound fell, our export goods would become cheaper thus making them more competitive, while the cost of imports would rise correspondingly making them less attractive. I myself should prefer this—though I know it is a far-reaching proposal—to the methods suggested by my noble friend Lord Watkinson, although they might have a part to play; and, of course, in certain circumstances it might even be necessary to look again at the question of import quotas if we ran into a really serious financial crisis.
Finally, I think that the Board of Trade and the Foreign Office should look to see what more can be done to ensure that our consulates and commercial staff in all overseas posts are provided with the money and the equipment to do their job in the most effective possible manner there I should like to echo the tribute paid to these people by my noble friend in his opening speech. This would involve more generous expense allowances, and in many cases it might require the provision of an official car and a driver in order that the man could effectively cover his territory. In some posts it would be worth paying for additional manpower. It is really a question of casting our bread upon the waters; hut our most successful competitors do it, and I believe that the additional cost would be repaid many times over by increased orders for British goods.
Here perhaps I may make a further comment which is somewhat outside the scope of this debate. One of the most severe handicaps we have been operating under ever since the last war is that our reserves have been too slender to enable us to ride out temporary weaknesses in
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sterling. It therefore stands to reason that the United Kingdom would benefit enormously from an improvement in the international monetary system, and I hope that the Government will increase the effort and the determination they have already displayed in order to bring this about.
I now wish to turn shortly to the domestic scene. Although my noble friend has said he did not wish to be partisan in his approach to the problems to-day, I am afraid that, in this field, it is inevitable that we on this side of the House must part company, at least to some degree, with those who sit on the opposite Benches. We, for our part, are convinced that the burden of personal taxation which has been so substantially increased since this Government came to power is now far, far too great for our economic wellbeing. This weight of taxation not only discourages effort and enterprise, but there is little doubt it is also adding to the serious brain-drain which is giving us all so much concern. In this respect many noble Lords will have read during the past two days, in the Evening Standard last night, in the Daily Mirror to-day and in a leading article in The Times, more gloomy news on this particular front. I have not the slightest doubt that increased incentives to both workers and management would change significantly, and for the better. the economic climate in this country. I am sure that if our levels of personal taxation could approximate more closely to those in the United States and in West Germany, where they have sustained growth rates of 5 per cent. per annum, a new buoyancy would make itself felt in our society.
I quite appreciate what the noble Lord said, that one would have to take up a great deal of time if one wanted to arrive at a precise and accurate comparison between the levels of taxation on personal incomes in different countries, but from articles which I have read and from a study of the figures I have reached no other conclusion than that, as compared with both West Germany and the United States, in the middle ranks upwards there is undoubtedly a greater disincentive of taxation in this country. When the noble Lord says that in some ways the performance in this country is roughly comparable with the performance in the United States, I wonder how up to date

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those figures are, because certainly since 1960 the rate of expansion of the economy of the United States has been pretty spectacular. They have averaged about 5 per cent., and in some years have gone over 6 per cent. We have not approached that figure, least of all during the last two years. Conversely, additional tax burdens which are now being freely discussed in the newspapers would be only a further handicap to British efficiency. Much else might be done in tidying up the whole tax structure, and at the top of the list I would put the abolition of the selective employment tax, which was damned on all sides on its introduction and has been steadily losing friends since.
My next suggestion is that we should press ahead with all possible speed on management training schemes. Almost every outside expert who has examined the plight of our economy has concluded that, with some honourable exceptions, management in British industry is neither very up to date nor very efficient. In the light of this I am sure that the expansion of facilities for the education and training of management should be regarded as a crash programme with the highest possible priority. It would very soon begin to pay us dividends as a country.
Finally, I would say that the British economy would benefit from the spur of increased competition. Both sides in industry have expended too much effort in trying to eliminate competition, and Governments—possibly Labour Governments more than Conservative Governments—have aided and abetted them. There has been too great a tendency to cosset and subsidise the declining industries, too great a concern to protect even thriving, industries. Of course, as the noble Lord has said, our entry into the Common Market would be one way of ensuring that the British industry faced increased competition; but if our own membership of the E.E.C. is delayed—I, for one, certainly hope that it will not be—we must promote action on our own to bring about this increased competition.
I am not suggesting that any one of the ideas which I have put forward this afternoon would solve the problem of bringing about expansion while maintaining our external equilibrium. But what I do suggest is that the combination of
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increased competition and increased personal incentives at home, coupled with a switch to a value-added tax system and a more flexible exchange rate for the pound, could provide the formula for getting Britain moving again—and moving again in safety.
3.50 p.m.
LORD KINGS NORTON: My Lords, I must first of all apologise to your Lordships, because I shall be prevented by a long-standing engagement from being present during the later stages of this debate. Secondly, like the noble Viscount, Lord Watkinson, I must declare an interest in industry and exports and, in particular, invisible exports. It has been widely assumed—and has been assumed, I think, in the opening stages of this debate—that our exports are capable of further expansion, and I agree with this assumption. But I believe that if we are to achieve the expansion we want in the most efficient way, we must get a clearer idea than most of us have of the character of our potential. Secondly, when we know something of that, we must determine how best to convert that potential into performance.
I have been privileged to see, as a member of the committee which advises the Prime Minister on the Queen's Award to Industry, the inner working of that most imaginative scheme. Your Lordships will remember that it is for technological advance and for export performance. Your Lordships, and thousands of others, will recall something of what the Award winners have done to get their guerdons. What cannot be so well-known is the large number of entries for the Award which did not quite gain an Award, but which were still of tremendous merit.
I have gained an impression of great technological talent and exporting skill spread over a great variety of industries. I have gained an impression, too, that success attends the efforts of those organisations which know how to recruit, how to research, how to develop and how to marshal] their efforts; and I have gained the impression—admittedly, not entirely from being associated with the Queen's Award—that we are capable of spreading that kind of efficient performance further across the present fields of endeavour and into new ones. The potential is real and its dimensions are significant. It is difficult to quantify this

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potential, but I think we all know that, in the acid test of the balance of payments, the percentage changes demanded in overall effort are not large and, in my opinion, they are easily within our grasp.
In the matter of exports, some of the success stories have been remarkable, and I believe that those published can by their example provide a great incentive. But I think it is most important to realise the great potential which there is in invisible exports, represented by wise overseas investment and by the maintenance of our position in expanding economies, not only those of underdeveloped countries.
In his constructive opening speech, the noble Viscount, Lord Watkinson, made a number of telling points, and I want particularly to refer to two of them. He rightly associated improved export with technological advance. Not all the marketing techniques, the business schools, the subtle salesmanship of which we are capable, will avail us one jot, unless our commodities are competitive or, best of all, technologically better than those of others. Technological advance is of the essence. I said earlier that I thought that, good as we undoubtedly are in many areas of technology, we could do better. I want to mention one particular way in which we could improve our performance—a way of which the noble Lord, Lord Shackleton, is clearly not unaware.
In our impressive array of universities and colleges of technology, we have well-equipped post graduate departments of technology, or applied science—call it what you like. They are staffed by intelligent and often brilliant men, and they are frequented by the students who are intellectually the best equipped. They already contribute, of course, to technological advance, but I suggest that they represent a great potential as well. They are, naturally, already in touch with industry, but I should like to see that contact developed into something much more intimate. I suggest that part of the industrial policy which the noble Viscount wishes to see defined should be a plan for bringing these great potential sources into the closest possible touch with manufacturing industry, not only so that their efforts can be geared as closely as possible to the desirable industrial objectives, but so that their talents can be applied to helping industry to determine what those objectives should be.
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Taking the other point in the opening speech of the noble Viscount, Lord Watkinson, on which I seized, when he urges the Government to base their future plans on voluntary discipline arising from free agreement between the three partners in the State—the Government, the trades unions and the employers—I want to add, at least in the fields of technological advance which are so vital to our performance, another partner: the applied scientists in the universities and colleges, and the other places such as research stations, whose work can be so much more closely co-ordinated than it is at present with the industrial effort.
But as the noble Lord, Lord Shackleton, said, technological advance is not enough. We want technological advance for the benefit, in the short, middle and the long-term, of the economy. I think that over the years industry has developed a good understanding of the workings of the home market. I feel it has still a lot to learn about the workings of overseas markets. Tremendous advances have, of course, been made by the splendid teams under the banner of the British National Export Council, but I dare to suggest that there is another and complementary effort still to be made.
Once again, in the world of academy, there are groups of economists and others interested in the working of markets, whose efforts are not sufficiently intimately geared to the practical objective of improving the balance of payments. They are another source of potential energy, of potential strength. The pure economist, like the pure scientist, must be left to pursue his path to the stars, but the applied economist wants to attack the problems of more immediate practical import—or export
It is necessary to examine, in relation to export markets, the effects of inducements and incentives; to corn pare the operation of our inducements and incentives with those of other countries, to analyse export successes and failure histories; to identify the restraints hindering export success, and to prescribe for their liquidation; to develop educational patterns for people destined lo work in the export field; to understand the reciprocal effects of home and overseas trading—to find out, for example, whether squeezing at home produces

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dividends from abroad—and to investigate how overseas investment in one industry can stimulate export in another.
Now these problems, some of which were touched upon by the noble Lord, Lord Shackleton, and many other problems have already been taken up in a modest way by a group combined of industrialists and academics, called the Export Research Group. This is a cooperative effort, the extension of which could, I believe, he of the greatest value to industry, and its encouragement is worthy, I suggest, of inclusion by the Government in their plans for industrial growth.
The object of my remarks has been to identify two areas of potential strength to our export performance. Neither can seriously affect short-term performance. But the Motion before us relates to a long-term policy, and in the long-term—indeed, I believe, in the middle-term, by which I mean three or four years'time—I believe that marshalling the efforts of our applied scientists in the way I have indicated is a matter of major importance.
4.0 p.m.
LORD RHODES: My Lords, may I apologise to the noble Viscount, Lord Watkinson, for not being in the Chamber when he made his speech? He probably knows where I was. I was speaking at the Savoy in connection with "The Best of British" Week which Macey's are putting on in 1968, so I hope he thinks that I was well engaged. I was sorry to miss the noble Viscount's speech. I have followed the course of his Motion on the Order Paper with great interest. Although I have twelve points that I am burning to express, I am proposing to talk to only three; and, as the Motion is concerned with long-term policy, it is that to which I am going to direct my comments. I do not think anybody needs to be bashful about speaking on this topic in a debate either in this House or in the other House, because if we were all so wildly out in our prognoses or in what we had to say that we were proved wrong in twelve months' time, we should be in good company so long as the Front Benches on both sides remain where they are.
We have talked about the Plan. There is nothing dishonourable in having failed
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at the first attempt, but the lessons to be learnt we must learn forthwith. I think this country has made a brave effort to come to terms with the new economy of the post-war world. Years of patient work and sincere effort by people in this country have gone into removing the deeply-entrenched restrictive attitudes of the 'thirties. All that effort is at risk because of the cold draughts of balance-of-payments crises. Embers of doubt in the minds of those who remember can be fanned by such draughts—the fear of unemployment, the fear of working yourself out of a job, and all the rest of it, which I do not propose to pursue now because everybody knows it.
I would urge the Government, when they are putting forward the next Plan, or whatever one likes to call it, to get the priorities right and to remember that, without any question whatever, the first is the balance-of-payments problem. Because the mistake that was made this last time was to talk about growth before really settling this question of the balance of payments. I would put the first priorities as follows: putting right our ability to compete abroad; the heavy load of our international obligations in defence and aid; and our attitude to change. If we are not competitve enough to achieve all the export targets we need to achieve, our imports are bound to rise faster in relation to output. This is absolutely indisputable. If we are internationally competitive, the movement of capital in or out presents no problems at all.
The N.E.D.C. set a target of over 5 per cent. I do not want to be gloomy, because there is no point in being gloomy; it is just a matter of facing up to the position. Since 1958 our share of world markets has steadily gone down. In 1958 it was 18 per cent.; it is now 13 per cent. Since 1958 our prices have gone up by 18 per cent. Compare this increase with 13 per cent. for Germany, 10 per cent. for the U.S.A., 6 per cent. for France, 8 per cent. for Japan, 6 per cent. for Italy and a world average of 8 per cent. Our increase has been 18 per cent. Yet we know that the latest studies reveal that there is a definite relationship between price and export performance—perhaps even greater than anybody who is not in touch with this

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study can realise. It can even amount to as much as a 5 per cent. increase in volume for every 1 per cent. reduction in price.
Let me take the problem of our share in world markets, for instance. Mention was made by the noble Lord, Lord Harlech, of the older industries. We have been too slow in switching to what the markets of the world need and want. We have all heard the platitudes: you have to find out what people want, you must have it at the right price, you have got to deliver at the right time. These all fit into what I have to say. Germany was, and still is, the leader in the switch from light to heavy or old to new. She did not follow us as deeply in those industries which developed after the first flush of the Industrial Revolution, such as cotton and the rest.
A year or two ago I went to Japan under my own steam because I had something on my mind that I wanted to investigate, and that was where power resided. I sat next to one of the old Zaibatsu at a lunch which I was addressing in Osaka, and I asked him about this subject as an opening gambit. He said, "Well, it is very difficult. Power resides in the hills, and the difficulty is to know which hill to climb". It so happened that after my speech to them in the Anglo-Japanese Club they wanted to know something from me. So I swopped them my opinion as to why they had not got a public opinion in Japan such as we had in Britain, for some information which was not vouchsafed to the ordinary visitor—and this is what they led me to. So I got to the point where I was admitted: but I had some shocks. They were quite brutal in drawing attention to the way in which Germany had made a quicker and earlier switch into heavier industries than Britain had done, and this is what they said in their official foreign trade white paper:
"The speed of adjustment of the export structure of these two countries greatly affected later developments. In particular, it will be known that this became an important factor in leading the British economy into long-term stagnation."
The Germans and the Japanese have for a lone time realised that the underdeveloped countries will sweep into the export markets of the world for light industrial production. There is nothing we can do to stop it, nor is there any
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reason why we should try. Consider how embroiled we are with the constriction of some of our old industries and compare this situation to that obtaining in those Far-sighted 'countries that switched in time. This switch is going on and will continue.
What do we need to do? What are the lessons to be learned? First, I suggest that we need to get our statistical machinery right. For a great industrial country the statistics are woefully inadequate. If anybody were to walk outside this Chamber and go to any place which has any statistics at all and ask for the trend of world trade by commodity, he would eventually be channelled to O.E.E.C. in Paris, who give their assessment on a six-month and twelve-month basis—not by commodity but by gross exports. We have a small and very efficient unit at the Board of Trade. It struggles with a mountain of day-to-day demands. The Treasury itself palms off the job of statistics to the National Institute of Economics and Social Research. But it is mainly from day to day—useful perhaps for the next year, but not in the context of what the noble Viscount, Lord Watkinson, had in mind when he was moving this Motion. There might be objections from top civil servants who are very apprehensive about adding to the list of things that need to be investigated and for which statistics have to be produced. They have had experience of the thousand-and-one sets of statistics that need to be got out to run a country; some of which never see the light of day. Some are never read; plenty are useful; but plenty are useless. A central statistical office is necessary, with a thorough-going spring-cleaning of the form and needs of the present statistic position from old to new.
But if the switch is to be done, it must be done on a scientific basis; and the studies must be done, too, on various items in the main markets of the world. The trend of demand must be checked against our own performance. The Japanese call this a specialisation index. And we must apply it for ourselves. For example, if 5 per cent. of world trade is in chemical goods and 5 per cent. of our exports are chemicals, too, then our specialisation index would be one. I give that as an illustration. When world demand for particular items is rising, we should become worried if our index, too,

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is not going up. Stemming from this, there is no question about the greater use it would be to our investment programmes and to our incentive programmes than the omnibus type of assistance, in terms of machinery grants, and the difference between one area of the country and another in terms of non-development areas and development areas. We should really know where we were.
My next point is a different one, not often discussed in this House. Perhaps it is that we do not think we should get much of a hearing if we aired it; but I am chancing it. During this last fifteen months I have been to Mexico, America, the Far East, Saudi Arabia, Israel, Bangkok, Indonesia and Malaya. I know the field. I said to one man in Bangkok: "What do you do, lad?" He said, "I sell toffee." As it happened, I knew his firm; it was not far from where I lived. He said," I sell cough drops. I sold half a million pounds' worth last year, and I shall sell a million pounds' worth this year. But," he said," we have been taken over. An American firm has bought us out. They wanted a subsidiary for marketing."
My Lords, there is no doubt about it. We must improve on our marketing. When I first began in business in the wool trade, my first export was a piece of saffron-coloured cloth for Buddhist monks' robes. In those days they used to wear wool: they do not do so now. Whom did I sell that to? I sold it to an indent house. That has all changed. Then came the period of the agency business where you would go out and see your agent and show him what was what, explain the quality of the stuff and even do some marketing on the spot. You had to educate him. I believe that the excellent experience I have had still has value. In my view, we ought to encourage the gaining of this kind of experience, through the visits of business men abroad, to quicken their imagination so that they can really set to work to export. And I believe that it can be furthered by schemes such as those which have been sponsored and chaired by the noble Viscount.
But, my Lords, in the long term—and that is what we are discussing this afternoon—this system cannot stand up against
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the international subsidiary companies. Those companies that hold a substantial share of a particular market in consumer goods overseas have done it through the medium of subsidiary companies. Take the position of the pharmaceutical industry in this country. Seventy per cent. of it is controlled from outside. And this can happen not only in the case of consumer goods hut, in the immediate future, in the case of motor cars and electrical goods of all sorts. One might say that in this island we have a severe handicap. That is so; but I hope it will soon be remedied, in terms of size, in the near future by our going into the Common Market.
Observe the giants in the United States and what has happened in the long story of change. Last week we were discussing the Companies Bill in this House. About every generation, or every 23 to 25 years, public opinion decides that a change is needed. It is not unremarkable that in 1965 we put through the Monopolies and Mergers Act. If we look at this matter historically, we find that the Americans put through the Sherman Anti-Trust Act in 1890. Their Clayton Anti-Trust Act was put through in 1914. We put through our Monopolies legislation some fifty years later. This was not because we are technically backward, or because we have not as much brain-power as the Americans—not a bit of it. It is just the historical accident of size. As I said, foreign-owned companies have a 70 per cent. share of the United Kingdom pharmaceutical market. In motor cars there are Fords, Vauxhalls and Rootes, and we are fighting for our lives over the computer industry. We must take them on in the same sort of way. I do not know whether it might be possible after we had entered the Common Market, when we should have the size and could dc it with the assistance of those on the Continent. But clearly we have to set about this. It may be that, for balance-of-payments reasons, short-term, we cannot get on with it at present.
Let me give an illustration of what is happening now. In Malaya we have plantations which are as good a source of earnings as any. Yet when we bring in our fiscal policies we do not give sufficient consideration to what will be the

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effect on our companies which are earning sterling overseas. This aspect is important, and I am speaking about it because I promised to put it before your Lordships' House. What happens? We bring in a corporation tax and we lessen the profits to be distributed. Prices on the London Stock Exchange go down. What is now happening is that the" sharp boys are watching, and they are buying up the companies. They will fragment them, and that will be no good to Malaya or to us.
Wherever I went I was at considerable pains to put over to Governments the value to them of what has been done by people running the companies to which I have referred. These people have developed the resources of the countries concerned and have done a good job, not only for those countries but for Britain and the world. They have done a magnificent job. I went to some pains to try to show the Governments of the countries concerned that it was not just new money that was valuable to them. What others have been doing for a considerable number of years is also of value. Our investments abroad amount to £6,000 million, and I say definitely that we are still in the running; but this is a time of a new business revolution and we cannot neglect it. This also provides part of the answer to the problem of the brain-drain. Certainly it is the answer to our exporting future.
I have one or two more comments to make, and then I will sit down. I must pursue this question of size, because it is something I promised to do for groups of business, fine men, who are upholding the flag for Britain and sweating it out a long way from home. They are people of whom we should be proud. I say without any question that co-ordination and size will provide the answer to Japanese domination in the Far East. The lack of size and co-ordination between big firms—though not big by American standards—lost us a generating plant contract at Port. Dixon. Many of the firms which might have been concerned were engaged with the Central Electricity Generating Board in preference to seeking work abroad. I do not blame them. if they find it more lucrative to go for work from the Central Electricity Generating Board, or the Post Office, one cannot
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blame them. What they need is a trimming of costs so as to be more competitive in the world markets; and that is my theme.
The same thing goes for the cable requirements and the demands of the Post Office. These firms are not geared; and they need to be. Lack of size and lack of co-ordination lost us an order for 7,200 lines of cross-box exchange equipment in Bangkok. The provision of 86,000 lines of cross-bar exchange equipment is coming up. The lack of co-ordination and size and get together—on the basis that if one firm cannot do it another will—will lose us that order, because the Americans are on to it. The American Government are making themselves the agent for all kinds of feasibility studies. They farm out the work to their own consultative engineers, and when that is done the engineers get the job. They do the agency work and the feasibility studies for nothing, but, my word! they charge when it comes to the main claim.
I had this experience in Saudi Arabia. In October, 1965, the Americans drew together from all over the world a group of countries interested in desalination on behalf of a symposium in Washington. The man who discovered the modern method of desalination was brought over to read a paper. The Americans were very kind to him. President Johnson went to the last session and said, "How d'ye do?", to all the principal people from all over the world and told them what a terrific blessing the Americans were going to confer on everybody. Then he got hold of Prince Mohammed, of Saudi Arabia, and promised to do a study. They also promised to do a study about electricity. This is how the situation is working. We are a little asleep over this sort of thing, but I was fortunate and was able, in respect of desalination in Saudi Arabia, to interpose a British consultant engineer. I was able to do the same about electricity. Before I went, it was all "sewn up" that they should go over in their supply from 50 cycles, 400 volts, to 60 cycles, 120 volts, which would have had the effect of putting right out of the question any chance of getting electrical equipment into that country any more—and it is a country which pays cash. The same happened in Mexico, and it is happening all over the world.

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I would endorse what the noble Lord, Lord Harlech, said about more power to the elbows of our Embassies throughout the world. I have no fault to pick with the Embassies. They are really on the mark. They are incisive and they have got this internationally-minded competitive spirit. But they are understaffed. They could do without another seven in Bangkok, for example. Do your Lordships realise that in two countries they knew nothing whatever about the provisions of the Board of Trade about E.C.G.D., not because the Board of Trade are at fault, or the individual manufacturer who goes out there, but simply because it is now in new dimension? When I was at the Board of Trade I had it all explained in a pamphlet. When one sees in the morning paper in Kuala Lumpur banner headlines saying that Japan has given a loan of 140 million dollars to Malaysia and analyses it, one finds that it is nothing more than setting out the credit terms. The stuff has to be bought before the loan is made. Why cannot we do the same? We should have a real drive to sell what this country has to offer on the credit terms offered by the Board of Trade's E.C.G.D., which are not appreciated because more often than not it is the businessman's job to get the trade. It should be done by bilateral agreement.
I have a lot to say, but I will finish on this point. My noble friend Lord Shackleton mentioned a selective approach to technical subjects. Let me give him this one as an example. I went into an engineering works in Belfast. There were three young fellows there, every one of whom I should have been proud to have as a son. There were 6,000 employees and they exported 85 per cent. of their machinery, worth £27 million. They were not bothered about Queen's Awards and I could not persuade any of them to serve on any committees. But what they have done during the last 18 years is to increase the productivity of their machines by 250 per cent.
We should start at grass roots in terms of the appraisal of world markets. Unless we do that, we are dodging and messing about all over the place. I have no time to develop this theme, as I should dearly like to, but it is in what this Belfast factory has done that we reach
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fundamentals. It is in the productivity of the machine that true productivity resides. If we cannot do more with less cost and with less labour, we shall not achieve it.
I travelled yesterday on the bus from where I live to Manchester. Two men got on. One of them said to the other, "Eh, Joe, what do than reckon about this productivity they've been talking about?". This was the reply:"I think it's when we get a rise in wages and a shorter working week and need more people to do our jobs. "I thought," My God!, I could just do with them coming to your Lordships' House and listening to what we are saying." It proves the need for education. I think that this time round we have really to go to town and make certain that we are clear of any balance-of-payments crises in future. We have to set to work to bring in the fundamentals, which we know are working in other parts of the world. I am certain that if we set about it we have the resilience and the courage to do it.
4.37 p.m.
LORD ARWYN: My Lords, the noble Viscount, Lord Watkinson, has opened the gate to a very wide field and I am grateful for the opportunity to plead once more for the need to develop our own mineral resources and thus reduce the cost of imports of raw materials. In my first speech in your Lordships' House on March 18, 1965, I drew attention to the fact that 75 per cent. of world tin supplies came from East of Suez and that the once rich alluvial deposits of Malaysia, Thailand and Indonesia are rapidly being depleted. I asked the Government to consider very seriously the need for incentives comparable with those existing in Eire and Canada to encourage the revival of tin-mining in Cornwall.
My noble friend Lord Rhodes, who was then a member of the Government, assured me in his reply that the Government were "thinking seriously about this problem and hoped that a satisfactory outcome could be achieved. Since then, there have been some additional tax allowances, from which the metalliferous mining industry is one of those entitled to benefit, but there is no guarantee that these allowances will continue from year to year. They are not specially defined incentives such as those in other countries. In this country, there is little

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incentive to exploit the natural resources of tin, lead, copper and other metals, because of the very unfavourable tax situation, though the mining of these metals would provide employment and tax revenue and help our balance of payments.
The tax situation is unfavourable because successive Governments have failed to recognise that the mining of deep deposits is fundamentally different from other industries, for two reasons. First, when a manufacturing or retailing business is set up, its profitability can be assessed in advance, whereas the profits to be earned by mining can be established only after a great deal of money has been spent over a period of several years on preliminary exploration, shaft-sinking and underground development. That expenditure may prove to be fruitless and the money lost. Secondly, whereas manufacturing or retailing business can go on indefinitely with a continuing supply of raw materials or goods, a mine has a limited life. When all the ore has been extracted, the mine must close.
If these two special features of mining are recognised, it is clear that if the industry is to be able to compete for new capital with industries and businesses which do not suffer from these inherent disadvantages, it should be given appropriate tax relief. The exact form that such relief should take must be a matter for careful consideration, but it would seem reasonable that all pre-production expenditure should be recouped out of any profits that may arise before there is any liability for corporation tax, and also that it should be recognised that distributions of profit are in fact partly a return of the capital which was invested in an enterprise which in time will be worthless. As such, they should not be taxed as if they were entirely income. As the Treasury should know, tax concessions granted ten years ago to companies in Eire have resulted in a great resurgence of mining activity.
My Lords, following my first speech on this subject, I again drew attention to the need for a thorough examination of all our natural mineral resources. In order to have confirmation of my views on the subject, I appealed to Professor David Evans, Head of the Department of Geology at Nottingham University. The reputation of Professor Evans in this field is among the very highest. His response
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was in the form of a very comprehensive report. In September of last year I passed this report to the Ministry of Technology, and I still hope that some day we shall hear that action will be taken. But I have not heard anything more about that report. All this is most frustrating.
I happen to be one of the few—maybe there are two or three of us—who have knowledge of the mining industry in the South; and we feel that we are fighting a losing battle. The interesting point about Professor Evans' report is that it confirms all the recommendations of the Mineral Development Committee of nearly twenty years ago, of which I was a member. We sat for some two and a half years and produced a very comprehensive report. Nothing has been done about it. We forecast the need in the coming years to develop our own resources to counteract inevitable world depletion of key minerals. Do these pleas from those who are intimately connected with international conditions fall on deaf ears; or is it that among the various Ministries involved there is no one with sufficient vision and courage to challenge rigid departmental philosophy?
In your Lordships' House we have a reputation for wide and expert knowledge. Many of us involved in large industrial concerns are willing and ready to make serious contribution to discussions backed by our long, specialised experience. I often wonder whether or not some of us are wasting our valuable time, and that perhaps we could spend it much better back in our own industries, where we can be of more use and use that experience to ensure action.
My Lords, I maintain that frustration has a far greater grip on our young men than we realise. I should like to see the pundits of science and technology coming out of their labyrinth of councils, to stop building their paper forts, and tell the youth of this country what they themselves are prepared to do and what they expect of our young men, who to-day see nothing before them but a life of frustration. This is where the brain drain starts. This cold war between industry, the people and bureaucracy is becoming the chief cause of frustration. The young men will not stay here to dream their dreams; they are not going to be misled by the glamour of computers or the evils of atomic explosions.

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No one can solve the problems of increasing exports unless we first make the location and supply of our raw materials our top priority. We start with the geologist, and he then collaborates with the scientist. Everything comes from the earth, and we are soon going to feel very naked indeed. The scientist then starts his investigations. My Lords, I should like to see us starting all over again, and with a far saner outlook than we have shown hitherto.
4.45 p.m.
LORD SHERFIELD: My Lords, I shall limit the few observations that I have to make to the subject of personal incentives in relation to economic growth, and I will confine myself mainly to a limited class—that of the young and middle-aged manager and executive in business and industry and the professional man. This was one of the subjects referred to by the noble Viscount, Lord Watkinson, in opening the debate. In so limiting my remarks, I do not overlook the need for better incentives at every level of industry, on the shop floor as well as in management.
In approaching this question it is difficult to disentangle the theoretical from the practical and the fiction from the facts. A prevalent theory is that of the egalitarians or levellers, and it is this which seems to affect most strongly the recent policies of the Government in a number of their decisions, particularly those relating to taxation—and not only to the taxation of the mining industry, referred to by the noble Lord, Lord Arwyn.
The trend appears to be to limit the rewards and benefits of various kinds which the energetic and resourceful young and middle-aged man can secure for himself and his family, and to remove the more distant spur to rise to the very top owing to the penal rates of taxation which prevail in that area. It seems to be quite widely assumed that in a well-ordered society it is somehow wrong or anti-social that anyone by his own efforts should do better than anyone else, and that every impediment must be thrown in the path of such achievement. This applies both to earning and to saving. It is also, apparently, quite widely assumed that a man or a woman should be content to work for a modest return,
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either for the world's own sake or for the good of the State or society. We all know, as the noble Lord, Lord Shackleton, said, that there are many excellent people who work for the love of their work or for some ideal, and others who, on the whole, are not very interested in monetary reward. But this is, I fear, not generally true, especially perhaps in the business and commercial world, where there are not normally the compensations which many people find in the political and administrative spheres. Financial incentive to secure independence and freedom of choice in ways of life, education and so on is still the strongest spur to effort for most people.
It is arguable, I think, that the growth element in a modern economy depends to a disproportionately large extent on the efforts of a relatively few able, energetic, forceful, go-getting types of people, for whom a driving force is the efficiency, the expansion and the success of a business measured in terms not only of the return to the business itself but to all those who are engaged in it; and it is this type of person who is most discouraged by the financial and economic straitjacket in which he is forced to work in this country. Many enterprising professional and executive persons are driven to seek employment in other countries, or alternatively are discouraged from putting forth their full powers at home. It is much more agreeable to go quietly home for the week-end than to fly off somewhere in search of difficult export business.
When the present Government came into power I believe it was their vision of an efficient, streamlined, modernised Britain, with many of the so-called outworn privileges removed, that was particularly attractive to the younger people in every walk of productive life. Many of them felt that they would have an opportunity by their own efforts, and on merit, of improving their position in proportion to their success in their chosen industry or profession. But it is precisely this type of young or middle-aged person who could see that he might quickly attain, if successful, a salary in the lower or middle parts of the surtax range vi4ho has been the principal victim of the successive tax and other measures which have been introduced in such profusion in the least three years; and it

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is among such persons that, in my limited experience, I find discouragement and dissatisfaction.
Perhaps this would not be so important if it were part of a general trend in the world and did not affect our competitive position. Almost any conclusion can be drawn from the welter of statistics about the comparative awards and emoluments of executives of various grades in different countries. In another place the Financial Secretary to the Treasury recently attempted to demonstrate that, in comparison with some other countries, we were really very moderately taxed here. And that was a little difficult to follow. I have seen the figures to which the noble Lord, Lord Shackleton, referred and the noble Lord, Lord Harlech, mentioned this point also. But there is no doubt, I think, that at the top and near the top the penal provisions of the British tax system are paralleled nowhere else in the world. In the lower and medium executive and managerial range there are considerable variations between countries.
It is probably true to say that in the most rapidly advancing industrial countries, including, I believe, even the Soviet Union, the trend is away from egalitarian concepts and towards admission of greater incentives of a financial and economic character related to the performance of the individual person, firm and industry; whereas in this country the trend seems to be in the opposite direction. This is a controversial matter, but I think it could he said without too much fear of contradiction that for the managers, executives and professional men, the prospects of increases in net pay are worse in this country than in any other advanced industrial country. The sharply progressive nature of our tax system is, of course, the result of political decision, since, as the noble Viscount, Lord Watkinson, pointed out, it would not cost a great deal to moderate the surtax rates.
There are various other factors which I suggest hold down the awards and emoluments in the higher range. It is perfectly natural that the higher paid employees should be the last to get a rise in pay. That used to be the case for many years in the Civil Service, and I am glad that in this sector at least there has recently been a marked improvement in salaries for higher grades. But there exists the
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compression of differentials which occurs at all levels in the industrial field.
Another factor may be the slower growth record in this country in recent years compared with our industrial competitors, to which reference has already been made, because there may well be a relationship between the growth of a company and the rewards of its executives. Finally, there may be some kind of feeling in this country that high salaries and emoluments are somehow wrong in themselves. Here, again, we are probably odd man out among our competitors.
My Lords, I will not labour my theme further, especially as it is one which is likely to fall on deaf ears. But I do not think that the country can have it both ways. If we are to achieve the objectives which are in principle endorsed by our leaders, of a modernised, efficient, growing industrial society, then opportunities and incentives must be provided for the individual person and firm which will enable him or the firm, if he and it are successful, to do better than the less energetic and the less enterprising. If, on the other hand, we continue, in the name of social justice or social policy, to try to ensure that nobody can be better off than anyone else, then initiative, both in individuals and in firms, will be discouraged and enthusiasm dimmed. We shall continue to lose brains and skills to countries where there is less prejudice against a merit system or rewards for enterprise, and I fear we shall slowly fall back in the race for excellence in the modern world.
4.55 p.m.
LORD BOWDEN: My Lords, I find it a most memorable occasion that your Lordships' House should be addressing itself to the problems of industrial growth. Because for so long this has been a word hardly used by Government, we are apt to forget how recently we first became concerned with it. I was recently looking at the prices of equities in America and in England 35 years ago and to-day. Their value at real prices has been computed as it has changed during this interval of 35 years. One finds that the prices of shares bought in 1930 in this country have since fluctuated down to about 50 or 60 per cent. at a minimum, and now after this immensely long time they have come back to the

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figure from which they started—100 per cent. During the same time the value of shares in the United States, bought in the same way, has increased three-fold. Here is an astonishingly different achievement by two economies which at one time were not so completely dissimilar.
I think that in a way one can understand why this situation should have come about. I recall that on the first occasion when I ever heard a Chancellor of the Exchequer speaking in public he said that the three priorities he had in his mind were to maintain the position of the pound sterling, to stop inflation and, finally, to improve industrial production and further growth. I remember how my heart sank as he said it, and how much more it sank as I heard the round of applause given to him by the audience, all of whom obviously agreed with him. I thought then, and I have thought since, that had the priorities been exactly reversed, had increased production been put first, the position of sterling would by this time have been assured and the total income of everyone in the country would have been significantly increased.
I am reminded that about a hundred years ago, in a similar period, the population of this country had doubled, and the production of coal increased fivefold, of iron ten-fold, and of textiles fifteen-fold. Here was growth of a dramatic and extraordinary type that has never been rivalled since then. It was achieved, let us remember, by people who were not being exhorted by Government, who did it entirely on their own, and whose achievements were in large measure ignored by the world until finally they astonished it by their success. I have sometimes thought that if any man could devise a system for achieving a similar change in the last few years of this century he would not merely be howled down as absurd but would be driven out of public life. It is only in the last few years that the idea that we should be seriously concerned with production has taken hold of us. Let us hope that we shall be able in future to remember it at all times as the essential condition for the growth of our society, and in fact for its maintenance as one of the more advanced countries of the Western world.
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If one looks at the achievements of America, one sees that they are startlingly different from those of our own country. But most unfortunately we find a similar discrepancy between our achievements and those of other Western Powers, and it is appalling to discover in how many respects our achievements have fallen short of those of our competitors. For example, if one contrasts the amount of money spent per head of population on new telephones (these figures are tabulated every year), I recall no year in the last twenty in which we have spent anything like as much money as the average. In most years we have spent less than every other country from which comparable figures can be obtained. In a similar way, we spend less on housing, per million of the population, than any of the great countries of Western Europe. The same is true of the roads we build, am speaking from memory, but I think I am right in saying that in the last ten years we have built only nine inches of road for every new car which has been sold and licensed.
Again we fall lamentably short of the achievements of almost every other country in Western Europe. Since all these things are directly under the control of the Government, the only consistent explanation one can find for this lamentable and universal shortcoming must be that there has never been an adequate or appropriate assessment of the cost effectiveness of the work which has to be done. The only item I know in which we spend more than any other country in Western Europe per head of the population is defence. We must ask ourselves if our true defence is anything other than our economic strength, and we must ask ourselves most anxiously how we can devise systems for reapportioning our enormous investment programme and making it more effective and more productive.
It seems hardly conceivable that anyone throughout the past twenty years could have failed to be impressed by the fact that we were failing as a country to spend our resources on those things which are necessary for any healthy economy and for the growth of any society of any kind. Communications, in both telephones and roads, are obviously essential for economic growth, and we have consistently neglected them. I can only

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think that the failure has been because we have not made effective cost analyses of the benefits to be expected from investments. We must ask ourselves whether this is true, and, if so, whether the situation can be remedied.
To-day, of course, we have many other problems confronting us. As your Lordships will remember, about a month ago, when we discussed the brain-drain, we established the fact that we are probably doing more to benefit the developed industries of America than we are to benefit the developing industries of all the underdeveloped countries in the world. Switzerland is spending 30 to 40 million Swiss francs a year on educating men to go to America, which is comparable to the amount that she spends on helping the underdeveloped countries. Here is a problem which we must solve.
However, this is a relatively recent development. The source of our troubles lies much deeper in the past, and presumably we can solve them by remedies which we could devise by following the example of those countries which, over a period of twenty to thirty years, have been so much more successful than we have been. It is not possible in a short time to enumerate all the things we could do, but a few stand out as obviously possible and necessary.
In the first place, I must draw your Lordships' attention to the fact that the Government are already in an extraordinarily powerful position. They have their hands on the levers of power, and they have been extraordinarily timid in the way in which they have used that power. The Government are responsible, either directly or indirectly, for the control of something like 40 per cent. of the gross national product, which is about as much as the corresponding figure in the United States of America. But in the United States of America the Government have taken an extremely positive and purposeful view. They have said that if they control such vast resources they should be in a position to introduce into industry modern ideas and techniques, by a process of appropriately chosen purchases, appropriately chosen research contracts, and by a process of infiltration and advice.
I should like to give at least two examples, which may be unfamiliar to your Lordships. The Americans are at
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the moment starting on a major expansion of hospitals. To everyone's surprise it was discovered that the largest single builder of hospitals is the Defence Department. It has to build them, of course, for every country where they send their troops as well as building hospitals in America. They decided to establish a major research programme into the best way of designing, building, equipping and staffing the hospitals. Here was an immense investment and this was the best way to ensure that the money was spent to good purpose. No really comparable studies have been made in this country although we, too, are on the brink of the largest development in hospital expansion that we have seen for many years.
I will give another example. The American Government itself makes very little use of machine tools in its own agencies. On the other hand, it is responsible for buying enormous quantities of industrial goods which are made by machine tools. They have therefore decided, as a matter of policy, that they will give contracts to firms if they use the most modern types of machine tool, which they could not normally afford to instal, and they have imposed conditions in ordinary contracts which demand that firms shall make use of modern techniques of manufacture and modern types of machine tools. Even where there was no difference between the product as made in the new way and in the old-fashioned way, they insist that new production techniques should be devised and used. And thereby, they improve the whole of American industry.
We could do the same. The Post Office, the Defence Departments and all the other Government-spending Departments between them could make an immense impact on industry by using this technique, if they had the courage, the initiative and the resources to decide what type of production should be stimulated and how to do it. The Government have immense potential power to change the economy, if only they would use it. Other countries have astonished us by their industrial achievements, most notably Japan. The United States of America and Japan have had one thing in common, which is something we have never had. It is a policy which in America is called the "Buy American Act", and in

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Japan it is given a similar name. Both countries have stimulated their industries by demanding that new projects of great technological significance should be built by native labour in native factories to native designs, even if they are available more cheaply on world markets from other sources.
I was recently in Australia, and I went into the laboratories of several industrial firms and universities. I was told that even ten years ago almost all the equipment they used was bought in England but, they said, "To-day we buy from Japan. The Japanese product is cheaper, delivered to time and, in our opinion, it is better". Why has this come about? The reason is that Japanese universities and Japanese Government establishments needing new apparatus—for example, electron microscopes—were required to get them made locally. Having established a design, the Government was able to provide credits with which more of the instruments could be built, and, having got them, they sold them the world over.
The whole of the defence procurement of America is dominated by American companies, primarily because of the insistence of the Government that all the equipment which is used inside America for defence must be American made. In practice they insist that virtually any equipment to be supplied to any of the armed forces anywhere in the world (which hypothetically might be taken home to America) must be bought from American firms. We have never imposed a similar regulation or restriction. In the old tradition of the laissez-faire Liberals in the Gladstonian era, we have often tried to buy both weapons and important new technological equipment of all kinds from the cheapest source of supply.
We have sometimes enforced a "buy British" policy, but we have never done it with the consistency, the force or the success which has been achieved in both America and Japan, and on the occasions when English firms have tried to sell in competition with America it has often proved extraordinarily difficult. There was an example only the other day when ejector seats, which had been bought from England for Phantom aircraft in America because they were the best in the world, provoked the wrath of Con-
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gress. Mr. McNamara had to defend his choice against very strong opposition. These seats are made by Martin Bakers in Uxbridge, not very far from here. But their success is very exceptional.
It is most important when we consider the long-term future of this country that we should take the advice and follow the example of countries which have been more successful than we have, countries which have insisted for many years on the importance of growth as a concept and countries which have dramatically exceeded our achievements by exploiting techniques, many of which are in our hands and many of which we ought to use and could have used years ago.
The noble Lord, Lord Kings Norton, stressed the importance of close collaboration between universities, industry and Government. I am quite sure this is true and I am glad he raised the matter. I feel that one of the greatest single sources of success in industrial innovation in America and in Germany, has been the interaction between universities and industry. It has been facilitated by a number of small administrative processes, all of which are at our disposal but none of which have been used. Such institutions as M.I.T. and Cal. Tech have done work which has enriched the whole economy of the country and has created entirely new industries, particularly around Boston and San Francisco. In the process it has enriched professors themselves, many of whom have become millionaires. American universities encourage their staff to devote a significant part of their time to consulting work. They allow them about one third of their working lives for this purpose and have devised a special academic year to make it easy for them. This is a simple administrative process we have never adopted here.
We always undertake major programmes of research for our Government in specialised research institutions, such as Farnborough, Malvern, Harwell and so on. In America most of this work has been done under the ægis of the universities. It is very significant, to take a particular case, that radar, which was developed in specialised Government establishments in England, was put into the M.I.T. because the Americans think

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that a university is the right place to do work of this kind. I believe much could be done if we were to adopt the same sort of policy. We always seem to make a distinction where there is none to be made between the process of research and teaching. A man who is to become an engineer can only do so by practising real engineering and serving his apprenticeship to a great industrial firm or to a great engineer in a university laboratory. The Americans and the Germans have exploited this system to enormous advantage. We could do the same.
Perhaps I can give one example which may help your Lordships. When I was last in America, three years ago, M.I.T. was asked to accept two major tasks for the Government. One was to help to devise a new railway system between Boston and Washington and to be responsible for the total design study involved. They are now working on a very large scale indeed. Another task was to help other universities to make a complete investigation of the total water resources of the North American continent. Neither of these tasks would ever be entrusted to an English university.
It is significant that the survey of the economics of the Morecambe Bay barrage has not been entrusted to a university or to a consortium of universities but to a firm of civil engineers. Their terms of reference seem to me to debar them from considering all the relevant factors, and they are almost certain to produce a report which is so incomplete as to be most misleading. It is not enough to establish that water can be retained in Morecambe Bay without the barrage capsizing; the fundamentally important thing is to decide what it would do for the economy of the North-West as a whole. Will it make it possible to transform the whole of Western Cumberland; to provide new roads; to provide cooling water for reactors and power stations; to provide more land, and perhaps even to provide an amenity, and facilities for boating and fishing, which might be almost as important as the rest? The terms of reference which have been given by my right honourable friend the Minister for Land and Natural Resources have been so restrictive as to make it almost impossible for the consultants to consider the project in the round and in the whole. This kind of exercise in other countries
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would be entrusted as a matter of course to a consortium of universities. They would themselves employ such professional advice as they felt to be necessary in the circumstances.
My Lords, I have said that the economy of this country has grown appallingly slowly. Many of the remedies are in our own hands. It seems to me that many things that have held us back in the past are due to administrative processes which we could easily change, and it seems to me that if we changed them our potential for growth would be as great as that in any other country in Europe.
5.18 p.m.
LORD COOPER OF STOCKTON HEATH: My Lords, I do not think you will be surprised that, as the General Secretary of one of the largest unions in this country, I should have a particular interest in the subject of economic growth. I take the view that despite the short-term problems that we are now dealing with, the Government have remained true to the great economic conception put forward in the Labour 1964 Election Manifesto, The New Britain. Indeed, as I hope to show, the most creative work of this Government has been in forging and improving the new instruments which are necessary if we are to get the sustained economic growth which we all want.
Reference has been made to the past low annual increase in the economic growth of this country, and it is, I think, worth while repeating—not for political reasons, as you will see as I go along. Under Conservative Governments, from 1951 to 1964, despite the fact that for much of that period the terms of trade were in our favour, we sustained only a 2i per cent. average growth in gross national products over 13 years. This seems most insignificant when one looks at the record of our competitors. West Germany, France and Italy, for instance, all averaged 4 per cent. or more.
I would also remind those who now berate the Government over the present recession to look back to two economic crises of the late 1950s. We had a balance-of-payments crisis in 1957, which was followed by the raising of the

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bank rate to 7 per cent. and in restrictions on capital investment. By January, 1959, domestic production had fallen back and over 620,000 people were unemployed. Then we had the balance-of-payments crisis of 1961, followed by the Selwyn Lloyd credit squeeze and wage squeeze; and by February, 1963, domestic production was stagnant and there were 878,000 unemployed. I quote these figures just to demonstrate that all this is so very familiar—the same dreary cycle of balance-of-payments crises; the cutting back of home demand, stagnant production and unemployment. Now we have the same experience once again.
I do not bring these skeletons out of the cupboard for Party reasons. I am merely trying to illustrate from past experience that, no matter how much we talk about the need for economic growth, we are facing deep-rooted economic problems which have been with us for a long time and which successive Governments have found difficult to solve. For my sins, I have to talk to trade union branches, and have the very difficult job of explaining the economic problems of this country. I appeal to the sporting nature of my members. I talk about three main handicaps from which we suffer, over and above our normal relationships with other countries.
All Governments in advanced industrial countries are trying to combine full employment and economic growth with a balance-of-payments equilibrium. It is always a most difficult exercise, but we in Britain, as I say, have three exceptional handicaps over and above that common objective. First, it is often forgotten that we export four times as much of our gross domestic product as the United States does, and twice as much again as the Common Market. The reason for this high level of exports is, of course, well known: that we need it because we import so much of our food and our raw materials. The second handicap, which has been referred to in this debate, is the cost of overseas commitments. We have heavier overseas commitments, in the form of defence costs and aid, than all our foreign competitors except the United States.
Then, thirdly, we are the banker of the sterling area. On the News this morning there were some suggestions, or
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indications, that the French are convinced that, at a time when we are anticipating going into Europe, our position in sterling is in rather bad shape. I do not think any of us expect this position to change unless there is world-wide monetary reform. Therefore, so long as we are the sterling bankers we have to struggle to keep a sufficient surplus in order to behave as bankers. In fact, our immediate problem is to keep sufficient reserves in order to right the frequent balance-of-payments problems that we face. Here I feel that I must quote the Economist, because other figures have been quoted to-day. In the Economist of September 8 last, Sir Roy Harrod said that before the war our investment income alone paid for 35 per cent. of our imports. The position at the present time is that only 2½ per cent. of our income from investments contributes towards our imports. So, as a nation, we have a formidable task to perform.
There are no easy solutions. It would be marvellous if we could somehow remove these burdens. But the truth is that we have to grapple with them and face up to the real problem. We shall have to continue to export a high proportion of our gross national product. I cannot take time dwelling on this point, but I must say that by a voluntary system a terrific and successful effort has been made in regard to exports. This is one of the things on which we can pride ourselves, though no one would say that we still do not wish to see a much higher export trade contributing towards the possibilities of economic growth. We can certainly cut down on our overseas commitments. But this is no simple job. It requires a great deal of time and thought. One has only to reflect on Malta to see how a precipitate decision can cause all sorts of difficulties. It is most interesting, in the political world, to see pacifists almost advocating that we ought to continue being a little more generous in regard to Malta.
Again I do not wish to enter into this controversy, but I think it is true that wherever the decision is made to cut overseas expenditure, one finds trouble and an endeavour to modify any Government policy in that direction. As I say, there is little immediate prospect of our terminating our position. As the sterling bankers we earn a great deal; and I am

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not unmindful of this. But it creates a special problem in addition to the normal problems from which all advanced nations are suffering. So it would seem that we must search for new methods and new tools to manage the economy.
It seems to me that this is an open question and one to which nobody is going to find an easy answer. I think your Lordships' House would perform a great service by remaining rather objective about this, and in considering the ways in which we might proceed in order to stimulate greater growth in the economy. It is generally recognised, I believe, that the old methods have not proved successful. The monetary and fiscal weapons on which we have relied since the war are too broad in scope to remove some of the restraints on faster growth, and too blunt in execution to avoid some unpleasant side-effects. We all know that cut-backs in credit and demand hold back investment in new plant in both export and import industries. Anybody who is concerned with the economy must be terribly worried at the present time at the falling off of investments. Its immediate impact does not matter; but it will affect the economy in two or three years' time.
Little wonder that our investment record is so bad! Between 1955 and 1964 Britain devoted only 15·8 per cent. of her gross national product to investment, while Japan invested 28·8 per cent., West Germany 23·7 per cent., Italy 21·8 per cent. and France 19·2 per cent. Much as we like to discuss personal incentives, I think that the greatest single contribution to growth is investment. I suggest it is one of the main determinants of economic growth. Yet the net effect of reliance on traditional monetary and fiscal weapons was to slow down our investment, and thus hold back our growth. As I say, this is happening once again. Therefore, I think there is a general acceptance that new instruments are needed. Most of us in industry now accept that we must have planning, not only of investment and production, but also of demand. The most important results of this concept so far have been, on the one hand, the setting up of the National Economic Department structure and the Department of Economic Affairs, and, on the other, the prices and incomes policy framework, following upon the Declaration of Intent which was signed
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by the trade unions, the Government and industry.
We all now recognise that this new approach, which I suggest is necessary, has not been confined to one Party. This is the interesting thing. It may be that there have been occasions recently when pronouncements by one or two leading Conservatives have seemed to herald the return to the "pure milk" of Adam Smith. But in fact, in power, Conservative Governments began their own tentative search for new instruments of economic management. On the prices and incomes side, as long ago as 1957 a Conservative Government appointed a Council on Prices, Productivity and Incomes, under Lord Cohen, which was under a general brief to keep under review changes in prices and productivity. In 1962 the Conservative Government set up the abortive National Incomes Commission. On the investment and production side, again it was a Conservative Government which set up the National Economic Development Council. Its terms of reference were to explore "the obstacles to economic growth".
It is my view that, with the aid of these new instruments, and by adopting new approaches, we shall be able to break out of the deadly "Stop-Go" cycle. Already the Economic Development Committees have done good work in industry. This morning I attended a meeting of the National Economic Development Council, and I listened to a report by one of the chairmen of the small "Neddies". It was interesting to hear him say (I will not mention the actual industry of which he was speaking) that one of the great virtues about the economic development committees for industries is the fact that they are manned by and representative of industry. They take an objective view of the whole of the industry concerned and come up with some pretty good ideas.
At a lunch to-day I said—and I hope your Lordships will forgive me for repeating it—that the number of instruments for diagnosing what is wrong with British industry is more than adequate. The great problem is how we can translate into practice what we know is wrong. I will be quite frank with your Lordships on this. It is not one side of British industry that is wrong. We are up against old, long-standing traditions. I do not

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entirely agree with my noble friend Lord Bowden that Government Departments with power to do so ought necessarily to take British industry by the neck. I think I have now come to the view that British industry is a delicate flower, and if we are going to re-shape it and alter it, the best way to do so, as we still know, is the good old democratic way of change by consent. In other words, those who diagnose the problems have to persuade industry that these are real problems so that industry in turn has to find its way out.
VISCOUNT AMORY: My Lords, so far I have found myself in complete agreement with everything the noble Lord has said, and with the statistics he put so clearly before us; I agree with him that a great many diagnoses are being made. I think he will agree with me that it does register great progress, in that we are now finding ourselves more in agreement about what is wrong than I think has ever been the case before.
LORD COOPER OF STOCKTON HEATH: I thank the noble Viscount, and I am delighted that it should be he who has asked me that question. As I go along, the noble Viscount will see that he has anticipated me slightly.
VISCOUNT AMORY: I am sure the noble Lord will agree with what I have said.
LORD COOPER OF STOCKTON HEATH: I entirely agree, and I intend to pinpoint where hope lies in the new situation. We have had many studies by the "little Neddies", and this matter was debated in this House a little while ago. The studies on imports savings and a number of really fresh approaches to industrial problems have been carried out with great success by the "little Neddies".
Another matter which one must have in mind is the increasing development of training in industry. For about six years training was done on a voluntary basis and was not generally successful; in detail, in particular instances, there was great success. But now one has compulsory levies on industry where training is obligatory, and in the long term this is going to pay dividends. The great pity is that the time factor has always to be considered. The need for growth is
1016
urgent, but the fashioning of these new instruments, the training of people to be more competent in their jobs, will take some time. At the moment, we are only in the position of training those people who are going to do the training, for the job is so colossal. All these things which I have suggested to your Lordships are new instruments.
The incomes policy has, of course, a great bearing on this problem, and the concept of an incomes policy has been accepted by the vast majority of the unions. In spite of criticisms which we hear from time to time in regard to certain sections of workers in industry, by and large the policy has been accepted. We have accepted that a prices and incomes policy is necessary if we are—and I quote from the Declaration of Intent—
"To achieve and maintain a rapid increase in output and real incomes combined with full employment."
We also accepted, though naturally with reluctance, that a period of standstill was necessary. In spite of all the criticisms, we made it work, which I would suggest is a remarkable thing. Since the standstill the average level of wages, as we saw from a report published the other day, has risen by a very small amount. Therefore if, as I hope, the standstill makes a significant contribution to improving the relative position of our exports, it will in part be due to the goodwill of the trade unions and their members.
Looking ahead, the trade unions are anxious to co-operate to sustain a faster rate of growth. This is the only way in which real incomes can be increased. The T.U.C. and the Confederation of British Industry, however, are both concerned about the crucial question: at what point do we act in a voluntary way; at what point does Government intervention cease? I have spoken many times about this great tripartite move forward between Government and the two sides of industry, but I think that the T.U.C. and the C.B.I., probably with very good reason, take the view that, when it comes to applying the remedies, the appropriate bodies should be industrial and not Government.
I should think that there is a clear answer to this—and it follows very much upon the Motion of the noble Viscount, Lord Watkinson. If we are to have growth, if we are to have new methods,

1017
and if we still want the voluntary system to operate, I think—and I do not hesitate to say this—that both sides of industry must grow up. They must be capable of taking responsibility; and if they cannot take responsibility, then I find it difficult to see how they can avoid Government intervention at some point.
Therefore, unless a voluntary prices and incomes policy can be seen to be having a stabilising effect, both on internal prices and the prices of our exports, the Government are bound to step in. In my view, the prospects for an economic breakthrough are better than they have been for a long time. I should think that the most promising factor of all (and I have been associated with industrial relations for some forty years, which is a long time, and this factor pleases me very much), is that the T.U.C. and the C.B.I. are now getting together to talk positively about what they both can do to put British industry on its feet. Here lies great promise, but we must tackle the matter. If we fail, we cannot grumble if somebody else tackles it for us.
5.40 p.m.
VISCOUNT HANWORTH: My Lords, I should like to speak this evening about the human side of this Motion. I believe that there is a danger of our concentrating attention too much on the time-honoured incentives of the carrot and the stick. The stick which we wield to-day is too often too small to be fully effective, even if we wanted it to be otherwise, and carrots have lost some of their appeal when other food is plentiful. In any case, we are considering sophisticated and emancipated human beings.
We may think of the big stick as a thing of the past, and that it is applied only as an extreme sanction for really unsatisfactory work. This, I am sure, is largely true so far as the blue-collared workers are concerned, but it still plays a part in the control of middle and senior management, and I think it often inhibits their creative and modernising potential. Management are particularly vulnerable, because they have become accustomed to a higher standard of living, where unemployment benefit is only a small compensation for loss of a job. It is not only the individual who will suffer from a reduction in income, but the wives and
1018
families. One can be brave oneself, but not always at the expense of one's dependants.
I am not advocating a sort of job security provided by the Civil Service—we all know where that can lead. I am, however, saying that there are many areas of management to-day where fear inhibits the blossoming of some of our best talent, and discourages the modernisation which is so necessary for this nation's success. I shall come back to this point in a little more detail later on.
Although this is a material age, I believe that we arc tending to put too much emphasis on financial incentives to the exclusion of the other factors which can motivate people. In nearly everyone there is a wish to try to do something worth while which may not directly benefit the person concerned. This, if it can be invoked, is probably the strongest of all motives. It finds extreme expression in the man who is willing to die for a cause, but there are many other lesser examples of persons selflessly working in poorly-paid jobs because they feel it to be worth while. The probation service and the trade union officials, I should think, are very pertinent examples of what I mean.
The old artisan frequently regarded the quality of his work as being more important than the financial reward. He might have expressed this by saying that he took a pride in his work. Human nature has not changed, although mass production and modern conditions have tended to decrease job satisfaction. In spite of this, much of the lost ground could be regained if top management would try to inspire those working under them with a sense of purpose, and try to encourage a loyalty to the firm for which they work. That, of course, implies that people must be kept informed about what the firm is trying to do, and how it is trying to do it, and this is simply not done enough to-day. In the Services this is called leadership—an unpopular concept in industry, perhaps because its potential and techniques are simply not appreciated or understood. Or could it, perhaps, be that in general we are not getting enough of the right type of leaders at the top?
The incentives for top management are many, but financial reward is still important. This has been said many times in

1019
the debate to-day, and I do not disagree with it. But I was amused recently, when discussing with a senior executive how British industry could be made more competitive, to be told that the fault lay in excessive taxation which made higher profits and salaries not worth working for. Then, almost in the same breath, he castigated the workers for not caring about the quality of their work, but only about their pay packets. Of course, high rates of surtax have acted as a disincentive, and they have put a premium on capital gains which now have to be taxed in order to level the balance. Some of us think that perhaps this extra interference might not have been necessary had we not pursued this policy of high taxation for the higher incomes. I do not mean this in any way as having political implication. I am merely putting it forward as a possibly interesting point for discussion. However, for many of us a sense of fulfilment, the exercise of wider responsibilities, and the interest value of a job and its challenge far outweigh increased financial rewards, and I think that sometimes to-day we are apt to forget this.
I have so far dealt with the problem of incentives on a somewhat philosophical approach, but I believe that many practical measures would stem from this philosophy. We must try to consider a company more as a partnership of shareholders, management and workers, and to develop a greater sense of involvement in all ranks of employee. This in fact is the real message behind the "Q and R Year" which we are just entering. We must seriously consider according staff status to all workers, and making sure that the responsibilities which go with it are fully understood. Collective bargaining, as it is known in England to-day, is, I believe, the law of the jungle. We must move towards proper agreements, not negotiated under duress, legally binding on both sides, for reasonably lengthy periods. We need to look again at piecework incentives so that they will tend to encourage men to produce good work with a minimum of scrap.
Managing directors must encourage ideas from younger managers. It is usually the policy to accept suggestions from blue collared workers, but how often are the far more important ideas
1020
from management welcomed when, as is usually the case, they have some effect on another department? In my own experience I have seen firms which have been in difficulties, where they had all the talent in the management to put these things right, but who were not given a lead from the top. The young guard is often there, together with the ability, but the top does not always use them. We must cultivate an attitude of divine discontent where what is right to-day must always be questioned tomorrow. By doing so we can keep the interest of managers in their work.
A manager of one of the leading and most efficient firms in this country expressed this concept succinctly by saying that ten years ago they thought they ran an efficient firm. Since then they have made improvements in almost everything they do, and they.now know that they were not efficient. Attendance at well run courses and seminars can do a great deal in stimulating new thought because, after some time in a similar job, it is fatally easy to accept the routine and cease to think. Somehow or other we failed to get across the message that restrictive practices, protective rackets, or whatever you like to call them, do not work to-day in anybody's interest. This must be done, and the financial incentives must be geared to work in this direction. This, I think, is what might almost be called a matter of public relations. It is not the workers' fault.
Finally, I should like to take up one point which the noble Lord, Lord Bowden, made in his speech. He pointed out how many things were done a great deal better in America; and the implication was that we should copy many of them. I think that this is a very dangerous philosophy. By the time we have got round to copying the Americans, almost certainly they will have moved one stage ahead. What we need to do is look at what they are doing now, and to make one jump further ahead. If we try to copy them with the different traditions we have in this country to-day God help us in the future!
5.50 p.m.
LORD CAMPBELL OF ESKAN: My Lords, I listened with great interest to the noble Viscount, Lord Watkinson, opening this important debate, because his considerable experience in the fields

1021
of successful business and exporting, as well as in politics, demands close attention to his views. But I want to approach the subject of the debate from a viewpoint rather different from his and from that of other speakers. Speaking late in the debate, I had hoped that previous speakers might have shortened my speech, to the benefit of your Lordships and myself, by saying a great deal of what I was going to say; but I am afraid this has not happened, probably due to the eccentricity and wrongheadedness of my views. And it occurs to me that. as a businessman, I should declare an interest in the subject of this debate.
Nobody can deny Britain's vital need for a long-term policy for industrial growth; nor, as part and parcel of that, our imperative need for exports. I do not believe that any Government has done more than the present Government to try to hammer out such a policy, or done more to try to stimulate exports. But I am certainly not going to claim that this Government has anywhere near solved the problems of industrial growth. In fact, it seems to me that the main problem is that the problems have not even been properly defined and posed, let alone solved. The noble Viscount spoke, and most ether speakers have spoken, as though industrial growth were an end in itself. My starting point is that industrial growth is not an end in itself, any more than exports and financial incentives are. Industrial growth is, or should be, a means to civilised human ends. If it were an end in itself, it would be a highly questionable one. It would be wholly materialistic, dealing essentially with the quantity of life and not its quality at all.
We seem to be circumscribed by a maze of intersecting vicious circles, and I want to concentrate on two of them. The first is that we all want health, wealth and happiness, but wealth, at least, is attainable by the 50 million inhabitants of Britain only through industrial growth; and while we want the fruits of industrial growth, the fact is that an awful lot of people, consciously or unconsciously, shy away from the demands on health and happiness that the production of wealth makes. The second vicious circle is the balance, or I should say the unbalance, of payments; because until we can pay our way abroad we cannot put first things first at home.
1022
I have not time, without boring your Lordships for even longer than I otherwise shall, to speak about personal incentives, which the noble Viscount, Lord Watkinson, and the noble Lord, Lord Sherfield, have rightly raised, except to take two things. First, in the field of business management, whether we like it or not, status and money go hand in hand; and the competitive drive affects personal considerations as well as business activity. This leads to the present ludicrous situation in which companies, in order to attract and keep key men, have to pay very high, sometimes astronomically high, salaries, only to see them taxed away to smithereens, leaving the recipients little better off than people apparently paid far less.
Secondly, I am sure that scarcity of talent, exceptional skill and endeavour, responsibility, hardness of work and high productivity should reap special and just rewards—on the shop floor as well as in the boardroom. There ought to be a valid and visible relationship—a relationship which makes sense to the men and women on the job, at whatever level—between take-home pay and the quality of performance and achievement. The Government can tackle these problems, as my noble friend Lord Shackleton said, only in the context of a socially acceptable incomes and prices policy.
This, my Lords, brings me to what I see as the most vicious of the circles which circumscribe our policies and actions: the conflict between quantity and quality. Industrial growth makes demands on the health, happiness, leisure and freedom of men and women, and imposes disciplines and pressures which they would hardly choose in an ideal world. It can deface the countryside, pollute air and water and make day and night hideous with noise. It can distort people's desires, impelling them to want what they do not really want at all, and persuading them to buy a great many things which are either worthless or positively harmful. Greed, aggressiveness and fear, including the fear of unemployment, can all be applauded in the interests of industrial growth.
The point is that industrial growth is not an end in itself. It is a means, an inescapable means, to generally acceptable human ends. These ends can and must be identified, and this is the business

1023
of politics and Government. It was well said by M. Mendes-France that "to govern is to choose". To choose: not to wag fingers, nag, exhort and brandish sticks and carrots. What the Government should do, and what I believe this Government are trying to do, is to tell us for what human and social ends we must have industrial growth, and what we shall suffer if it cannot be achieved. The Government must not, as it were, condemn us to industrial growth as though they were inviting us to commit suicide in the uncertain hope of resurrection. They must tell us how we can be saved by it, and what we shall be saved from.
The fact of the matter is that if the economy stagnates or recedes, we shall be deprived of all sorts of things that we want and need. We shall not be able to improve the quality of life in these Islands, or even to maintain such quality as it now has, without creating industrial growth. I am sure that some noble Lords on both sides of the House must be thinking, "He is waffling about Utopia". I do not believe in Utopia any more than they do: but I do believe in ideals. And, although individuals may go about their lives fraught with the practical problems of living, nothing is more real in the life of a community or a nation than the ideal. The United States, Germany and Japan have been mentioned in this debate. My Lords, those countries are highly motivated by ideals, whether we happen to approve of their ideals or not.
What are Britain's ideals to-day? What is the aim of our existence? Let the Government tell us what they think the shape and purposes of Britain's ideal society should be; what our role in the world and our priorities should be. Let them tell us, and go on telling us, in unmistakable terms, what is needed to bring them about, and what they mean to do about it. It is no good urging everybody to be more efficient, productive and growth manlike in disembodied economic jargon. I am the last person to decry efficiency: efficiency is vital in Britain to-day. But the question must always be kept before us: Efficiency for what human ends? Nor is it enough for the Government to assume—and this was the burden of the ill-fated National Plan—that if people are efficient and produc-
1024
tive a natural growth rate of, say, 4 per cent. will result, and then we can have all that and heaven too. Because it simply is not true. With any practicable and foreseeable rate of growth, any Government are going to have to make hard choices between various forms of socially desirable expenditure. It seems to me that the Labour Government must choose now, and declare their choice, of social priorities.
My Lords, how can we all be expected to bestir ourselves unless we are told in unmistakable terms what we shall suffer if we do not bestir ourselves, and what we shall benefit if we do? The Government should tell us how much their ideal plans would cost in terms of human, financial and physical resources—for instance, their plans for housing, education, transport, health (very much including mental health), old age, and their attack on poverty, national and international, with its tragic effects on individual human beings. They should tell us which plans, and to what extent, they put first, and why. They must tell us what we must do and what we must be prepared to give up, and how much we must be taxed to meet the demands of their priorities. They must tell us what resources have to be deployed, and how we should deploy them.
Our problem is not that we lack the knowledge, the skills and the resources required for industrial growth: our problem is that we do not have the national will at present to deploy them. The Government, it seems to me, should use every imaginative means of propaganda at their disposal to ensure that we take the point of their social priorities and the means of achieving them. Social priorities are not dull stuff. They are the very stuff of humanity and they can be intensely exciting and inspiring. The youthful Winston Churchill—I believe, of social security, illuminating the subject—said:
"It brings the magic of averages to the rescue of millions."
Industrial growth is the only means of raising the average for the millions.
My Lords, this brings me to the second of my circles. We cannot go full speed ahead at home until we have brought our overseas payments into balance; because not only must we have

1025
industrial growth to enable the Government to translate social priorities into a full-scale programme of action and expenditure but the Government are inescapably inhibited from putting social things first and driving for a high-wage society—which is what we ought to be doing: high wages and high skills—unless, or until, we can pay our way abroad and bring our overseas income and expenditure into balance.
Here, as everybody knows, is the vicious circle, or, I suppose, the vicious spiral: social expenditure and higher wages mean more demand at home and so fewer goods for export and more demand for imports, which worsens the balance of payments; which necessitates deflation to reduce demand; which means less industrial investment; which means Britain has a lower share of world industrial investment causing higher unit costs, which further aggravates the situation—which brings us back to where we came in.
My Lords, how do we get out of this spiral, from which we must extricate ourselves before long-term policies for industrial growth and social development can be put into practice? The answer must lie in one or more of only a few alternatives: reducing imports, increasing exports, cutting overseas Government expenditure and private investment overseas. First, let me take imports. It is tempting to suggest that imports should be, for a time, physically controlled, but it seems almost impossible to do this after the existence and removal of the surcharge. The trouble is that deflation is an extremely expensive and inefficient way of reducing imports because it requires £;5 of deflation to reduce imports by every £1. Secondly, exports: I accept that we must all cheerfully "export or die", and, as I have already said, the Government are evidently working very hard indeed, and encouraging everybody else to work very hard indeed, to stimulate exports. And with great success, as the figures show: total exports for 1964 were £4,412 million; for 1965 they were 7 per cent. up at £4,724 million; in 1966 they were another 7 per cent. up at £5,037 million—which is real success.
Thirdly, there is overseas expenditure and investment. We are at present spending £350 million in foreign exchange on Government expenditure overseas, ex-
1026
cluding aid. Surely the Government's commitment to reduce this total by £100 million must be soon and visibly implemented, and I should hope—even taking the shrewd point of my noble friend Lord Cooper of Stockton Heath about Malta—there might be a further reduction of another £50 million. Aid is costing us about £75 million in foreign exchange. I do not want to see this cut. Indeed, I regret the cut of £20 million that has been made in total aid; and I am most unhappy about the decision to treble overseas students' fees. I fear that it will prove lamentably shortsighted. Casting one's bread upon the waters, as the noble Lord, Lord Sherfield, said in another context, is always a fruitful undertaking; and, in my view, aid to developing countries should emphatically be, for a Labour Government, one of the social priorities I have been discussing. But the bread that is cast upon the waters must be well kneaded (in both spellings) and well directed in every sense of the term.
Finally, private investment overseas at present amounts to something like £400 million a year. Here again, my Lords, I must declare an interest, as chairman of a company with relatively large overseas investments. I know quite well that there is an unresolved conflict of views between the people who think that, on balance, overseas investment is harmful to Britain in our present plight and those who think that it is, on balance, most beneficial. I myself am convinced that overseas investment, provided it is discriminating and properly controlled, can bring great advantage to Britain's overseas earnings through remittance of profits and through its generation of visible and invisible exports. And in developing countries—as it were, depressed areas—I believe that private investment should be a concomitant of aid. But I certainly do not see why for the next couple of years, while the British economy is struggling back to an even keel, private overseas investment should not be cut by a least £150 million each year.
I would suggest that this be done by a specially-constituted version of the Capital Issues Committee. I would suggest that the Government form a body of professional men, businessmen and civil servants, well-versed and expert in overseas investment, and charge them with

1027
the powers and responsibility for restricting overseas investment to not more than £200 million for each of the next two years. If such an idea were acted upon it would be necessary for the Government to give this regulating body for overseas investment guidance as to the criteria for authorising or postponing investments, export stimulation, developing countries, and so on. This would seem to me to be a better way of controlling overseas investment than, as at present, by hoping for the accidental and harmful side-effects of the corporation tax.
My Lords, by reducing Government expenditure and private investment overseas in these ways, we could in the short term restore our balance of payments and so recover some freedom of action in our domestic economy. But really adequate freedom of action for the British Government to pursue its own social priorities without always looking over its shoulder must, whether we like it or not, depend upon international confidence and a strong pound. These depend on more than a short-term solution to our balance-of-payments difficulties. And this brings me back to what the creative circle, as against the vicious circle, should be. It should be the choice by Government of its social objectives and priorities for Britain; the exposition of and positive encouragement to the industrial investment and the industrial growth needed to support these. There must be a continuing and increasing stimulation of exports. Overseas Government expenditure, other than aid, should be cut by £100 million or even £150 million a year. Overseas private investment should be temporarily—and I emphasise temporarily—reduced by at least £150 million a year. A prices and incomes policy, concerting rises in incomes with rises in productivity, must be sustained by voluntary means, if possible, but by legislation, if necessary, until employers and trade unions learn that the law of the jungle is utterly self-defeating.
Industrial growth should thus be regenerated, by the Government's inspiring the British people with the recognition of the relationship between the production of wealth and its translation into better and fuller lives: into health, happiness, and hope. If I am rightly told that wealth cannot bring health and happiness, I
1028
would reply that it can at least bring a social climate and a quality of life conducive to creative well-being rather than conducive to conflict, strain, ugliness, false values and indifference, and so to national disaster.
6.9 p.m.
LORD SOMERS: My Lords, I had not intended to intervene in this debate, because I am neither a businessman nor an expert in economics; but I feel there is one point that should be emphasised, that is, the quality of our goods, apart from the quantity. We have had a good many debates on business in this House and, so far as I can remember, practically the entire emphasis has been on the quantity of our exports rather than on the quality. I feel—
LORD SHACKLETON: My Lords, would the noble Lord allow me to intervene? In fact we had a debate a few months ago on quality and reliability.
LORD SOMERS: My Lords, I must apologise. Either I was not here, or I did not hear—one of the two. But there is no doubt that this question of quality is extremely important. A short time ago I bought two articles from two countries whose exports have increased enormously during the last few years, Japan and Italy, and I was very interested to find that in each case the quality of the material was excellent, the design was as good as it could be and the finish was absolutely perfect. I wonder of how many of our products we could say that today. There was a time when the words "Made in England" stamped on anything was almost equivalent to a hall mark. It meant absolutely first-class quality; but alas! I am afraid that is no longer so. If we do not improve the quality of our goods we shall not sell them abroad, because we have now too many competitors who produce first-class articles and they will be the first to gain the market.
I will give your Lordships another instance of the sort of thing I mean. There is a certain well-known German car and one very often sees models on our roads. I compared the turn-over on the front wing of one of these cars with a car of our own make of more or less the same price. The German car wing was made of good, solid steel and obviously was

1029
intended to last for years. The English car wing, I regret to say, was as thin as paper and obviously would have corroded within about a year's time. I dare say that a great deal of the trouble is the cost of raw materials; but, my Lords, if we do not find some solution to this problem, I feel that in the end we shall he beaten by competitors who can produce better grade material.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION
6.30 p.m.
The following Bill received the Royal Assent:
Land Commission.
House adjourned during pleasure.
House resumed.

INDUSTRIAL GROWTH: EXPORTS AND INCENTIVES
6.40 p.m.
Debate resumed.
EARL JELLICOE: My Lords, I feel that first of all I should thank my noble friend Lord Watkinson for introducing this debate to-day. He covered a great deal of ground at a cracking pace, and I personally found myself in considerable agreement with everything he said, not least with the temperate tone in which he couched his remarks. Like my colleagues on these Benches, if I were so minded I should say some harsh things about the present Government's failure in this field hitherto. What a contrast there is between the rather disabused wisdom in the speech of the noble Lord, Lord Shackleton, and all that brash dynamism—not his, of course—which we heard 28 months or so ago! But, like my noble friend, I feel that this is an occasion for looking forward rather than back, and I hope to couch my remarks, and to put a few proposals to noble Lords opposite, not in a spirit of postmortem, but in amore hopeful antenatal vein.
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I should like to dwell, first of all, on where I feel there is a very considerable consensus. I found myself in very great agreement with what the noble Lord, Lord Campbell of Eskan, said about the purpose of growth. We all, or almost all of us, believe in growth these days. We need it, of course, for the material things; for the bricks and mortar objects of our society. But there is more to growth than materialism. I believe that growth and the need for it goes right to the roots of our society. Perhaps in a static economic age—in the 18th century, for example—when the average man had very little expectation of improvement in his material conditions, growth was not all that important. But now we all know that growth is within our capacity and that we can profit from its fruits, economic stagnation, therefore, is bound to lead to frustration, to sap our national spirit and to erode the quality and excellence of our national life, of which the noble Lord, Lord Sherfield, spoke.
If we stagnate we cannot contribute to our own security; we cannot remain a first-rate modern industrial nation of the medium rank, just below the two super States; we shall not count in Europe, if we get into Europe; and we cannot throw off that surplus of resources which will allow us to play our part in smoothing that often dangerous and almost invariably abrasive relationship between the developing and the developed world. For all those reasons, I believe that growth is central to our purposes as a nation and to our health as a society. By the same token, I think we would all agree that the clue to sustained growth has so far escaped us. We have not won expansion without inflation, and not secured growth without recurring balance-of-payments crises.
We have heard a lot to-day about our need to export more, and of course rightly so. Only if we export on a rising curve can we expand on a rising curve. I would go rather farther. Only if we are prepared to take risks over exports—"Export or die!", as I think the noble Lord, Lord Campbell of Eskan, has put it in a notable speech—can we expand with safety and live.
Let me, if I may, give credit where I believe credit is due. Certain of the Government's actions—their panic import

1031
surcharge and that absurd selective employment tax—have certainly made the lot of the British exporter no easier. Yet I believe that, for all their mistakes, the Government have managed to instil into the British people, into all of us—whether bankers, industrialists, managers or workers, or just plain Parliamentarians—and have managed to convey to all of us, to the man-in-the-street and to the man in the board-room, some faint glimmering of the extreme urgency of the national need to improve our export performance. I believe this has been in large measure achieved, That performance is by no means bad, but it is by no means good enough. The noble Lord, Lord Shackleton, gave us some rather reassuring figures showing that we had exported at a record level for the last two years. Very well. But I would remind noble Lords that that ill-fated National Plan called for an increase of 5½ per cent. per annum in our exports, and we have so far not hit more than 4 per cent.
I do not believe, any more than other speakers this afternoon have believed, that there is any simple solution to this problem. Improving our export performance naturally means improving our economic performance right across the board, and entails much more than economic considerations. It brings in all the political considerations which lie behind our approach to the European Economic Community, for example.
A number of suggestions have been made to-day, and I should like particularly to support one idea on what I might call the reverse side of the coin ventilated by my noble friend Lord Watkinson, and that is what could be done by import saving. I would remind your Lordships that in 1965 our importers received nearly £500 million worth of short-term credit, mainly from overseas suppliers. If they had to deposit, as the noble Lord suggested, the cost of imports in advance, this could very well slow down the volume of imports. Personally, I am all for the liberalisation of trade. But beggars cannot be choosers, and some time last summer I found it rather ridiculous that we were continuing to import luxuries such as caviar when we were needing international "tick" on a vast scale for some of the necessities of life, such as oil.
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The proposal which, incidentally, was put forward last July by Mr. Maudling, could be made selective. It could be made to bite on luxuries alone, and not on necessary imports. It is compatible with GATT, and was operated very successfully by the Italians when they ran into balance-of-payments difficulties in 1964 and 1965. Of course, if it were regarded as a permanent part of our defence mechanisms, I would agree with the noble Lord, Lord Campbell of Eskan, this is to be avoided, but if it is regarded as merely a short-term expedient—as a sort of stand-by regulator of our balance of payments—I should have thought it was a perfectly acceptable part of our armoury; and I hope that the Government, if they need this expedient, will not reject it.
Then there are the positive ways in which the Government could stimulate exports. I was glad to hear what was said by the noble Lord, Lord Harlech, and other noble Lords about the excellence these days of our commercial representation abroad, and about all the help given by the Board of Trade and the E.C.G.D. to exporters. I believe those tributes have been justly paid. Nevertheless, I feel there are still ways in which the partnership between Government and industry—and it must be a partnership in this matter of exports—could be improved. I believe that our commercial intelligence is first-rate these days, but the follow-up can be less than first-rate.
Take a case in point, of which I became aware when I was in the Far East recently—perhaps I should have been aware of it before. South Korea is at this moment on the verge of industrial take-off as a country. She is running a very considerable credit balance with this country of four-to-one in her favour. It is an ideal place for the British exporter. But I wonder whether this fact is appreciated in board rooms up and down the British Isles. I wonder how many managing directors in this country are busy learning Korean. They may be doing so, of course, because the British National Export Council and their Asia Committee (and I would echo the tribute that my noble friend Lord Watkinson paid to the work of the B.N.E.C.) are making it their business to get this kind of information around.

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Take our performance with the really big contracts abroad, the sort of things of which the noble Lord, Lord Rhodes, spoke. We are losing too many big contracts these days to industrial nations of just the same rank and size and power in competition as ourselves. We are losing them to the French, to the Germans, to the Italians; and, not least, to the Japanese. In some cases our competitors seem to be better organised than we are to seize the big chance.
I believe that our arrangements as between Government and bankers and industry, and within industry itself, could bear looking at in this field. Our information about projects, I repeat, is usually very good, but on occasions we are rather less good in securing a well co-ordinated and selective follow-up, overcoming this problem of scale, to which the noble Lord, Lord Rhodes, referred. I agreed with what he said in this respect. We need a bigger approach to these bigger projects, such as the great generating schemes, the desalination projects, and vast projects like the trans-Sahara highway; and we need to organise ourselves better in this respect. We also need to pay more attention to the point to which he drew attention; namely, the question of getting consultants early in the field. This is an aspect of the matter on which E.C.G.D. could, with a little more flexibility, give some very considerable and significant help.
There are other measures which are available to us, of which I will mention only one. We should at least consider giving priority to successful exporters, favouring them by granting them scaled-up investment grants. This measure, of course, as the opponents to it would say, would be discriminatory. Never mind: I believe that we must discriminate in this field, and that is why I fully agree with what my noble friend Lord Harlech said about the value-added tax—the tax which it is proposed should be levied on the value which a firm adds to its products. Such a tax has many advantages, as my noble friend has suggested, and not least that it would replace both corporation tax and S.E.T.—and in the latter case, at least, that would be in itself a justification for it. I understand that the Government have been giving some consideration to this form of tax. It has been hinted that it
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is not without its attractions to Mr. Wilson, and I hope that when the noble Lord, Lord Beswick, replies he will be able to give us his views on this fiscal measure.
Successful exporting cannot take place in a vacuum. As my noble friend Lord Watkinson made clear, it must be based on a vigorous and expanding economy. It is a fallacy to suppose that a healthy export position can be won by artificially cabining and confining the home market. That is why I am so worried, like many of my noble friends (in fact like all noble Lords who have spoken in this House this afternoon), by the figures for production and, above all, by the figures for investment—the inescapable indicators for the future.
At this hour I do not wish to delve too deeply into questions affecting the domestic front. I believe, though, that the Government must take urgent measures to stimulate corporate investment. It is extraordinarily difficult in the present climate to take such measures in isolation; to be selective, as the noble Lord, Lord Shackleton, indicated the Government would like to be. But there are measures open to them. Psychologically, of course, nothing would do more good than if they were to scrap S.E.T. But I believe that, in any case, conscious and positive measures to stimulate national production and investment must be taken soon, and taken more vigorously than they have been so far. Not least I believe that the Government must be absolutely determined to pursue to its logical conclusion a policy of incentives for workers and management. I would endorse what my noble friend Lord Watkinson said about maintaining the differentials for the really skilled, high-grade worker in industry. This means that we must move increasingly towards a capital-intensive and labour-extensive economy. That means that we must stop employing three men when one man can do the job.
One of the most hopeful signs two or three years ago, as I saw it, was the move towards real productivity agreements in industry. We all know that there are bogus ones. One of the most distasteful aspects of the squeeze has been the freeze put upon those agreements. I hope that during the period of severe restraint the Government are examining how best to

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go about the active pursuit of real productivity agreements in the very near future.
Finally, we come to incentives, which have been spoken of a good deal this evening: incentives for what one might term the managerial class. I would accept what some noble Lords have said: that money is not the only, and in some cases not the main, motivation for medium and top management. Of course there are others: there is personal pride in the job; there is prestige; there is at the top level the feeling of pride, and the almost sensual pleasure in taking decisions, which we have heard referred to recently. But these pleasures are felt, on the whole, more often in the Civil Service than in business, although they are present in business. But, my Lords, we should not kid ourselves: for most young, and middle-aged, men and women—the drivers and thrusters whom we need in our boardrooms—a very real spur to greater effort is the chance to earn more money. There is nothing wrong in that.
If you are a young executive and can only afford a "mini", it is natural to want a Jaguar. If you are a little older, and you are married, the desire is natural and legitimate to make things easier for your wife and to provide wider and better horizons for your children. This is the sort of "carrot" which should be available to lure the £2,500 a year man into the £5,000 a year job, and the £5,000 a year man into the £10,000 a year job, to the benefit not only of themselves but also of their companies and of their country. I firmly believe that the Government must pay careful attention to this particular problem.
In this connection there are certain spheres at which I would suggest they should look. I would urge them to confirm that the surcharge is only a temporary measure. I would ask them to take another look at the question of stock options, which give a chance for young, bright executives, without capital and without the good fortune to have rich, or fairly well-off, parents, to take an equity stake in their companies, which is a good thing in itself. Finally—and I know this goes against the grain—I would ask the Government to have a good hard look at surtax levels as a whole. A great deal has been said on
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this point this afternoon, and I am not going to say any more. But having tried to listen dispassionately to what has been said, I believe that a very good case has been made for a further examination of this particular problem of incentives for the real "flyers" in our society.
I wish to conclude by saying this. With my noble friend, I believe that we must get this country and our economy moving again. I would repeat his plea; it is really essential that we should know more about the intentions of the Government. Of course, we cannot expect to know the details at this stage, but we wish to know, and the country wishes to know, more about their broad strategic approach. I must confess that, in this respect, although, as is habitual with him, what the noble Lord, Lord Shackleton, said was said pleasantly, and with all his usual competence, he gave me only a faint glimmering of what the Government may have in mind in this respect. But I found myself in considerable agreement with a great deal of what was said from the Benches opposite, and I hope that when he comes to reply in a moment the noble Lord, Lord Beswick, will be able to further enlighten us about the Government's intentions in this vastly important field.
7.2 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR COMMONWEALTH AFFAIRS (LORD BESWICK): My Lords, we have had some good, sound, constructive speeches to-day, not least that with which the noble Viscount, Lord Watkinson, introduced this debate. For all the noble Viscount's criticisms, it seemed to me that he, fundamentally, like other noble Lords was hopeful about the economic future of this country of ours. There have been of course some pessimistic speeches, notably the speeches from the noble Lord, Lord Sherfield, and my noble friend Lord Arwyn. I would only say this to the noble Lord, Lord Sherfield: in something like twenty years in Parliament I do not recall one year in which I have not heard someone prophesy the doom of this country because of high taxation. Having said that, I do not quarrel with what has been said by the noble Earl, Lord Jellicoe, about the need for dispassionate study of this question.
LORD SHERFIELD: If I may interrupt the noble Lord, I hope I was not a prophet of doom. I merely suggested that there might be a slow decline.
LORD BESWICK: I should have thought doom, at the end of a slow decline, is even worse than sudden death. For myself, I must say I found the robust faith shown by my noble friend Lord Cooper of Stockton Heath, and the broad vision of the noble Lord, Lord Campbell of Eskan, very much more to my taste than the emphasis upon reduction of tax rates on those more highly paid than others. One point at least I hope is clearly established as a result of this debate; namely, that the Government believe, as much now as at any time in the past, in the principle and practice of economic planning. It is also accepted, I trust, that the management of our economy cannot simply be achieved by controlling the level of demand. True, for balance-of-payments reasons, which it is not my intention to elaborate on now, the action taken to restrain demand has featured much more in recent public discussion; but action needs to be taken, and has been taken, on the supply side as well, and the techniques of positive and selective encouragement of production has been a major preoccupation of the Government.
The noble Viscount, Lord Watkinson, emphasised the need for co-operation between the three partners, the trade unions, employers and the Government, and the pattern of economic management and guidance that is now emerging more clearly takes account of the wisdom of what the noble Viscount has said. The N.E.D.C., E.D.C.s, the B.N.E.C., the I.R.C. as well as the creation of the Department of Economic Affairs and the Ministry of Technology, together with the reorganisation of other production departments all involve, for their effective working, consultation or discussion of one kind or another between the Government and their important partners.
It is our case that this action taken on the supply side of our economic affairs makes the current situation so very different from the "Stop-Go" policies of the past. If one had dealt with the balance of payments crisis only by holding back demand and production, the prospects for steady growth in the future
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would have been severely jeopardised. It was because, in our view—and, as the noble Lord, Lord Cooper of Stockton Heath, said, I do not here seek to make a Party case but simply to claim that as a nation we can learn from past experience—not enough was done in the past to deal with the underlying structural weaknesses of our economy that it was inevitable that the freezes and squeezes of 1961 and 1963 were followed by another crisis in 1964.
General reference has been made by my noble friend Lord Shackleton to the work of the "little Neddies", and he was rather chided by the noble Lord, Lord Harlech for not going into more detail. I therefore offer some details of the contribution towards this task of improving the supply side of our economy. Subjects which they have tackled, or are tackling, include standardisation and variety reduction; better methods of stock control; inter-firm and international productivity comparisons; the assessment of future manpower needs and action to help meet current or likely future shortages; the adequacy of existing industrial capacity; the improvement of Government and other statistics (about which the noble Lord, Lord Drumalbyn, had something to say in a recent debate); closer consultation between makers and users of equipment, and between manufacturers and retailers. For example, the Mechanical Engineering E.D.C. has initiated maker/user contacts in a number of sectors in order to ensure that users get a better idea of what is on offer and to enable manufacturers to ascertain the opinions, and the present and future likely needs, of the users of plant and machinery.
Discussions towards similar objectives have started in the fields of textile machinery, food processing, confectionery machinery, paper-making machinery and dock cranes, this latter especially in relation to container handling. Several maker/user groups are operating in textile machinery, and a census has been undertaken to establish the numbers and types of looms which are being imported. An important extension of this line of approach is a Working Party set up under the ægis of the N.E.D.C. last July to assess the future demand for process plant in the chemical, gas, petroleum and petrochemical industries. Its first report will

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be circulated very shortly. This Working Party has for the first time brought together figures of demand from the several industries using process plant, and its report will show that demand in 1967–68 is likely to be of the order of 20 to 30 per cent. above that of 1965–66—itself a year of high demand.
Equally usefully and constructively, the Distributive Trades E.D.C. has undertaken research in selected fields into the reasons why customers may prefer to buy imported consumer goods. It has also issued a useful manual of stock control methods for retailers entitled Gold in your hands and I understand that 22,000 copies of this manual have so far been sold. The Electrical Engineering E.D.C. has initiated an agreement between the Central Electricity Generating Board and the cable manufacturers to reduce the number of types of low and medium voltage transmission cables from around 280 to 30. Clearly, there will be advantages here to manufacturers in the way of longer runs and increased productivity. The Movement of Exports E.D.C., in its report Through Transport to Europe, spotlights the need for management to study transport arrangements just as carefully as production and marketing. It asks for the fuller use of pallets, containers and container ships, and roll-on/ roll-off vehicle and trailer services.
The noble Lord, Lord Kings Norton, rightly drew the attention of the House to the need for defining restraint on export growth. I hope he will agree from what has been done, and what is being done, that the Government accept the wisdom of what he has said. A number of current difficulties in the way of the fullest use of these newer methods of transport which concern the United Kingdom and international Customs procedures are being pursued with Government and other bodies concerned.
If time permitted, my Lords, I could give other practical examples of constructive work that has been going on, although not always hitting the headlines. There are, for example, the questionnaires circulated by four different E.D.C.s on export performance within their respective industries—chemicals, food processing, mechanical engineering and paper and board—which are now being analysed. In the light of its manpower inquiries, the Mechanical Engineering
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E.D.C. has put forward proposals for a "crash" training programme for welders, which I understand is going ahead satisfactorily. I have mentioned all these reports and recommendations, but I quite accept what was said by the noble Lord, Lord Harlech, that they would be quite valueless unless we have the right kind of management material, and unless we put the right kind of emphasis upon management training.
In the field of management education, I understand that the courses at the London and Manchester business schools have been over-subscribed, and the evidence points to a strong top level business interest. In 1965, 26 universities and equivalent institutions produced some 19 undergraduate courses, 58 post-graduate courses and 66 short post-experience courses on management education. Additionally, there are now about 50,000 students in some 2,000 management courses at technical colleges, and I understand the number is growing. Furthermore, there have been efforts to expand the work on productivity at factory floor level, taken after the Prime Minister's National Conference on Productivity in September of last year, and this work is being followed up by a Working Party under the chairmanship "of Neddy's" Director General.
As against all this, I should have thought, helpful and hopeful work, I noted what was said by my noble friend Lord Arwyn in his field of tin mining. I am sorry to hear about the frustration he feels. I will certainly try to find out what has happened to the Report of which he spoke. The noble Lord, Lord Bowden, in a speech which I think held the House (although I should like to check some of the statements he made), referred, among other things, to the need for ensuring that a "Buy-British" policy was carried out in this country. In fact, the Government have recently undertaken a full review of their purchasing arrangements, and a report on the outcome is shortly to be considered by the National Economic Development Council.
The noble Viscount, Lord Watkinson, and my noble friend Lord Campbell of Eskan, dealt with the important and controversial question of overseas investment. Surely no one is against investment overseas if we have the money available to

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invest. But the Government accept the analysis of my noble friend Lord Campbell of Eskan, about the inescapable need in the next few years, at any rate, for curbing the rate of investment overseas. He put forward a most interesting proposal as to how this curbing could be exercised, but I would put to him that the Exchange Control and the voluntary programme at present in operation exercise a greater degree of control than we have had before. Of course, some would argue that it is already severe. As for the method, the idea of using an Advisory Committee, as was suggested by my noble friend, is attractive, but on the face of it, the Government feel that the present arrangements under which individual applications are considered on their merits against criteria which are laid down in advance, are to be preferred.
Much was said by the noble Viscount, Lord Watkinson, and others about the importance of personal and group incentives. Despite what has been said by the noble Earl, Lord Jellicoe, and by Lord Sherfield and others, about the advantage of reducing taxation, I do not propose to go into this point: and I know that the noble Viscount is far too experienced to expect me at this time of the year to speculate on what the Chancellor of the Exchequer may say in a few weeks' time.
I should, however, like to deal with one aspect of this matter of incentives upon which I hope I shall obtain some agreement. I am absolutely certain that, as has been said by others, including my noble friend Lord Campbell of Eskan, it is not enough simply to think in terms of individual financial incentives. If we are to get the maximum possible effort from our people, there must be a general sense of fairness, and a deep, if unexpressed, feeling that, broadly speaking, rewards are going to the right people. I believe—and I have some experience—that it was because the people of this country, particularly the young people, had over the past decade or so felt that this fairness was not being applied that they voted for Labour, rather than in the expectation of some immediate tax reduction.
The Government's prices and incomes policy has come to be regarded by some, and wilfully misrepresented by others, as
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only a negative attack on wage increases. Nothing could be further from the truth. It is intended as an expansionist policy, but expansion allied to social justice and economic common sense. Of course, at the outset, a standstill on both incomes and prices was essential to enable productivity to catch up with previous excessive increases in income.
I accept the virtue of what was said by the noble Viscount about the possibility of voluntary agreement. I think it was regrettable that statutory powers had to be used to restrain the selfish minority who would not accept the good Socialist principle of serving the greater good of the greatest number. The truth is that the general response to the Government's call for discipline in wage claims and price increases has been absolutely magnificent. I should like to take this opportunity again of paying tribute to what has been done in this matter by the noble Lord, Lord Cooper of Stockton Heath, and others. The vast majority of both unions and management recognise the need for a standstill, and the attitude of these two essential sides of industry augurs well for the economic future of Britain. To me, it is ironic that some of those in the trade union and Labour movements with Whom I have been glad to work in many good causes, as I see them, in the past, have justified their obstinate opposition to the incomes policy on grounds of political principle.
They say that they are not against an incomes policy as such; they say, indeed, that they would welcome such a policy, but only after we have achieved a full Socialist economy. It is rather like saying that they will accept the discipline of traffic lights, but only when we have a completely modernised road system. Meanwhile, they are prepared to try any device to enable them to over-shoot the red lights and gain some advantage; relying upon the restraint of decent motorists in order to avert tragedy. There are others who use sympathy for the lower paid workers to cast doubts about the incomes policy. But of course it is precisely the lower-paid worker, the weaker elements, or the less well-organised section of the community, who would be left even further behind if we were to return to the old free-for-all. This fact, I believe, is now being much more clearly recognised.

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We are now in a period of severe restraint, and the Government have undertaken to produce further guidance for the period after June 30 when severe restraint ends. It will be necessary to develop the machinery, the methods and, I would add, the attitude and philosophy as well, which will ensure not only that the material results of increased productivity will be shared out between the employers and the workers, who immediately make the increase available, but also that there is a fair and adequate margin left for others in the community who cannot, for one reason or another, measure their contribution to our general welfare in terms of figures of output. The Government accept that a policy of stable growth cannot be made to operate without the active support of the great majority of those concerned. On the other hand, they also accept that they cannot abdicate their own responsibility for the good of the country as a whole.
So far, we can be proud of the progress which we have made. Who would have expected a few years ago that the T.U.C. would have accepted responsibility for vetting wage claims of their constituent unions? And when the case is being made out for tax reliefs, we ought to pay regard to the unselfish attitude of the trade unions and their sense of social responsibility in these matters. Of course, the First Secretary is consulting both the C.B.I. and the T.U.C. about the next steps in this decisive policy. The T.U.C. have convened a special conference for March 2, at which executives of constituent unions will hammer out the issues involved. The C.B.I. have set up a special working party for the same purpose. No one expects that we shall ever get a formula which automatically translates social policy into detailed wage rates, but I believe—and this is the belief of theGovernment—that the majority of those concerned do not want to go back to the
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old free-for-all. They want to go forward. They want an incomes policy which is compatible with a free, democratic society.
If we can succeed in this, my Lords, I believe that we shall be shown by history to have pioneered an advance in economic democracy which is just as significant as all that Britain has done in the field of Parliamentary democracy. I believe, too, that together with the other major efforts now being made to reconstruct the economic basis of our country, this policy on prices and incomes, on material rewards, will yet achieve the objective which has been set before us.
7.23 p.m.
VISCOUNT WATKINSON: My Lords, it only remains for me to say a very sincere word of gratitude to all noble Lords who have taken part in what has been a wide-ranging and very practical debate. If I might be allowed one final comment, it is that democracy would be a dull and flabby thing if we did not knock one another about sometimes. We have all "had a go" to-day, and I hope we shall "have a go" again. But, by contrast, there ought to be occasions when we seek to find some common ground, and where we can go forward in the national interest. I hope, having listened to the noble Lord, Lord Cooper of Stockton Heath, that we have found some common ground to-night. Let us hope that we can consolidate it and move forward, because we all sink or swim together. I beg leave to withdraw my Motion for Papers.
Motion for Papers by leave, withdrawn.

AGRICULTURE BILL
Brought from Commons; read 1a, and to be printed.
House adjourned at twenty-five minutes past seven o'clock.