Sitting of 10 February 1967

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

  SMALL BUSINESSES
  11.4 a.m.
  Mr. Bernard Weatherill: I beg to move,
  That this House takes note of the increasing difficulties facing small businesses; recognises their important contribution to Great Britain's economy; and calls upon Her Majesty's Government, in the national interest, to take urgent and positive steps to stimulate and encourage the prosperity and growth of this energetic and enterprising section of the community.
  I hope that this Motion will be accepted by the Government. It is perhaps even more topical than I thought it would be when I was successful in the Ballot recently, in view of the speech made yesterday by a high personage in which he said that we are all "in the soup" together.
  This is not a party matter. It is a matter which affects the balance, the prosperity and the happiness of the whole nation. I therefore hope that the Government will not attempt to duck the issue by trying to talk it out, but will accept what I shall say today. There may not be many of us in the House this morning, but we always understand that Friday is a difficult day for hon. Members who have to get back to their constituencies. Nevertheless, a very large number of people will be watching the debate, not only small businessmen, but employees in small businesses who will be anxious to know what we say this morning.
  It is a truism that the growth of a business or of a country or of any community depends upon the vision, the enterprise and the progressiveness of its people. This is the truth upon which the greatness of Britain was built in the past and upon which our whole future depends. We are a small island. We occupy only one-five-hundredth of the world's surface. We have one-fiftieth of the world's population. We have no
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  raw materials of consequence, except coal, ironstone and chalk, all rather valueless in the world today. We now have natural gas. That will be very important. We no longer have the captive markets of our Empire. To digress for a moment, perhaps herein may lie the seat of our present difficulties, because for over a century our businessmen had no real need to be competitive.
  We have a bonus which our forefathers did not enjoy—that is, experience. These men of vision and enterprise in the past went out to trade. It is a fact that trade did not follow the flag so much as flag followed trade. If I may get in a short constituency plug, I am very proud of the fact that the old East India Company had its headquarters in my constituency of Croydon, North-East.
  We are back where we started. Our whole survival and influence in the world depend upon trade and upon the energy and enterprise of our traders. Given our present circumstances, it never was more important to encourage imaginative and progressive men with new ideas, new concepts, and new enterprises to expand production in new ventures and in existing ones.
  In this country successive Governments have paid lip-service to the spirit of private enterprise, but very few have done anything positively to encourage or develop it. The object of this debate is to call attention to the difficulties which have been placed in the way of this energetic and enterprising section of our community, whose contribution to Britain's prosperity in the past was both vital and massive and which, in the future, if stimulated and encouraged, rather than legislated against, have a tremendously important—I would say even a decisive—part to play.
  I should like to stipulate at once in the context of the debate what I mean by "small business". Size is a comparative term. The House will remember that in the context of a recent take-over bid Courtaulds was considered to be a small business in relation to I.C.I. For the purposes of this Motion, I have in mind that a small firm is one which employs fewer than 500 people and a very small firm one which employs fewer than 25.
  The hon. Member for Billericay (Mr. Moonman), in a debate in the House on

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  15th November, drew attention to the fact that 52,000 out of the 55,000 manufacturing establishments in this country employed less than 500 people. Whilst these figures may be somewhat dated and ignore about 100,000 very small firms, and I would support any effort aimed at achieving a reliable census of our manufacturing capacity and potential, nevertheless, they are good enough to establish that we are talking about an important section of the community.
  The economic director of the Confederation of British Industry, in an article on 20th January entitled "British Industry's Image in the United States," had this to say in relation to American criticism of British management:
  "The American critics of British industry themselves concede that the leading British companies are by and large just as well-managed as their American counterparts. Is the difference then to be found amongst the managers of small companies which, in both countries, account for a good deal more than half of the total national output?"
  I must add that he went on to say:
  "Here again anyone who knows the two breeds must laugh to scorn the notion that the American small businessman has significantly more skill or knowledge than his British counterpart."
  There are a number of special difficulties which small firms have to face in Britain as compared with their counterparts in the United States. First, public opinion has been consistently conditioned by some newspapers and television commentators, and by some Members of Parliament, to the idea that small companies are in some strange way a kind of handicap and disability to the nation and should be eliminated as quickly as possible. As well as this—I am not trying to make a party point—members of the Government have from time to time sung the praises of bigness. It is not surprising, therefore, that the man in the street should come to believe as true what is merely a fable that bigness has a special advantage in itself.
  A recent example of that was in the Sunday Times of 29th January, when, in an interview, the Minister of Technology appeared to imply that the industrial efficiency of this country can be brought about only by the creation of bigger and bigger units. To be fair, the right hon. Gentleman's predecessor, Mr. Cousins, took a rather different view. In a letter to the Society of Independent
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  Manufacturers, with which I am connected, Mr. Cousins said:
  "I cannot accept the idea that Government policy has created the climate of opinion that technological break-throughs are the 'exclusive perquisite of large companies'. One needs only to think of the hovercraft and dracones to illustrate how major technical developments have grown from the ideas of individuals."
  I do not think that hon. Members will disagree that in the last two years in particular there have been a number of decisions in this House which have hit the small man particularly hard. I am thinking of the close company provisions of the 1965 Finance Act, the Capital Gains Tax, the Selective Employment Tax and the decision on investment grants. Firms in the distributive trades can no longer claim for equipment. This is a crushing blow to the smaller firms. I think, too, of the Redundancy Payments Act. However necessary and good it may have been, it hits particularly at the small firms. I think even of the Land Commission Act, which will introduce a betterment levy and will mean much more complicated alterations to the Capital Gains Tax.
  The situation has reached the stage where the editor of the British Tax Review, Professor Wheatcroft, has written that he has now almost given up trying to keep up with the new legislation. How can the small man hope to keep his bearings among this maze of complications? Even the Inland Revenue was forced to concede a special bonus of £50 for the extra work involved in trying to understand the Finance Act, 1965. No one has given a thought to the poor taxpayer, who has had no bonus whatever for understanding it.
  I do not want to speak loo long, but at this stage I ought to declare a personal interest in that I am the managing director of a small business which is a close company. I profit-share to the extent that some of my senior staff have equity shares in my business, I should have thought that this was a good, just and honest way to run a business, yet the close company provisions for the distribution of profits are penal. Again, I cannot understand why, under the Corporation Tax, when close companies borrow from a director, from a participator or from a member of his family at a commercial rate of interest—

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  not at any high rate of interest—this is not allowed for tax purposes but is treated as a distribution.
  What is wrong with supporting one's own work with one's own money or the money of one's family? It is small wonder that when I went to my constituency last week to talk about greater efficiency among small firms, one of the audience to whom I was speaking said to me, "Come off it, Mr. Weatherill, You know as well as I do tht there is only one way to run a business these days, and that is to run it inefficiently." Under the present taxation system, that is just about right.
  All these measures which I have mentioned are a tax upon the kind of initiative and enterprise which it is so essential for us to encourage. They discriminate against the average small company in comparison with the average large company. The same remark in total applies to the new Companies Bill. I must not argue now for or against that Measure, nor will I be tempted to do so, but I hope that I may be permitted to say that it will be a specific disadvantage for a small company to have to disclose publicly intimate details of salaries, export figures and turnover, since all this information can, and will, be used by home and foreign competitors.
  In the case of a public company one can well understand the need to disclose fully to the shareholders and the investing public the fullest possible information. A small company, however, does not invite public investment, and to disclose these figures is simply to arm one's competitors.
  In the second part of my remarks I should like to turn from the negative to the positive. I should like the Minister of State to consider a number of positive suggestions which, if he were to implement them, would go a long way towards solving the problem of productivity in Britain, which concerns us all, of whatever party. I am confident that if he were to implement them, we could lift the economy out of its present stagnation and they would help to carry us forward to a world of greater prosperity and happiness for us all.
  My hon. Friend the Member for Harrow, Central (Mr. Grant) drew atten-
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  tion a fortnight ago to the complexity of the tax system. I am absolutely certain that this is the first thing we must put right. Income Tax at its present high level is a tax on work and a tax on effort. We shall never solve our problems if the harder a man works the more he is penalised. In a B.B.C. broadcast on 24th February the Prime Minister said:
  "If one-tenth of the energy and the ingenuity and expertise that goes into side stepping the tax inspector went into the export trade we should have no trade problems."
  The problem is much more deep-seated than that. We know that it is by no means confined to the board rooms. It is even more apparent on the factory floor. I am convinced that a reduction in direct taxation is the first essential. The speech made yesterday, to which I drew attention, was quite right; the time has gone when we can exhort people to work harder. We must make it worth while for them to do so.
  Secondly, the immense number and variety of small companies in Britain is one of the strengths of our economy. They offer an opportunity for the expression and growth of personal initiative and individual judgment. They are frequently the source of new products and new methods. When I was in America recently a book was published there called "The Sources of Invention in the 20th Century", which pointed out that over 50 per cent. of all the inventions of this century had arisen as a result of one man's efforts, or the efforts of small companies. Certain things are best done in and by small firms, because they have the adaptability, resilience and ability to respond to change, which the bigger companies lack.
  The last but by no means the least important reason for small companies is that they provide an opportunity for a man who is unable to find happiness in a large firm to do so in his own company, or in a small company. The greater number of people that we train for a race the greater number of potential champions we are likely to produce. Given our circumstances, we must do all we can to encourage the enterprising and energtic section of the community—both men and women—to train for the trade race. The person—be he man or woman—who is willing to back his idea with his money, or with the money of his

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  family, should be encouraged and not discriminated against.
  I hope that the Minister will bring pressure to bear upon his right hon. Friend the Chancellor of the Exchequer to reform the close company provisions which at present are so discouraging to small business men. At present it is unhappily true that it pays to run inefficient business. That situation must be corrected, and the whole process reversed.
  Although it is not the responsibility of the Minister, we must overcome the idea that, somehow or other, to be connected with trade or to be in business is to be engaged in a kind of second-class occupation. When I first came to this House and wrote out my biographical notes and put down my occupation as "master tailor", I was horrified when a very respected and distinguished Member of the House, who is no longer here, suggested that next time I should put down "company director". He added, "I think that you could go further, and put 'director of companies' ". I will not mention his name, but I said, "You must be joking." He said that he was not, and I said, "If that is true, I believe that that is just what is wrong with England."
  I want to see Napoleon's sneer that England was a nation of shopkeepers turned into a term of honour and approbation, as was the late Kaiser's remark about the "contemptible little army" Napoleon was right; he saw in the English a built-in desire for individual independence, and recognised at once that that characteristic would always be incompatible with the kind of deified political leadership which France enjoyed at that time.
  A large number of thrusting and thriving small businesses decreases the likelihood of concentrations of excessive power, whether economic or political. I visited the United States in the autumn and studied the Small Business Administration. For generations bigness had become a god in America. The small man had been absorbed and pushed to the wall. As a result, at the end of the war, the American economy was in trouble. They had monopolies, cartels and a general lack of choice. By the end of the war it was essential to take remedial action. Since 1953, when the Small Business Act was introduced, there
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  have been a series of measures designed to bring back the small man into the arena of business.
  In America this has become almost a welfare programme. It will be the height of folly for us to ignore the American experience. In this country the little man is being legislated out of existence. If we do not reverse the trend we may find that in 10 or 20 years' time we, too, will be called upon to use the taxpayers' money to bring competition back into our economy by a programme designed to force back the people that we are at present forcing out of business.
  In the Conservative Party Manifesto at the last election we promised to set up a small business development bureau, with the object of providing information, advice and assistance to the individual with a new idea and, secondly, to act as a focus for the large number of organisations and institutions which are able to provide management assistance and finance, and market opportunities. We could and should learn valuable lessons from the United States experience and the experience of other countries with similar organisations, especially Germany and Japan.
  We have the Rural Industries Bureau, which has been in existence since the early 'twenties. It has a wonderful record of success and service to rural-based industries. Its experience should be carefully analysed and studied. We have the I.C.F.C., the merchant banks, the N.R.D.C., the British Institute of Management, the British Productivity Council, with its small business clubs, the Society of Independent Manufacturturers, the Institute of Patentees and Inventors, and a whole host of other organisations. There is no lack of advice there is almost too much. What is needed is that all these organisations should be brought into focus in an organisation such as the small business development bureau.
  As a positive encouragement to small business the Government—as is the case with the American Government—should set aside a proportion of its contracts specifically for tender by small companies. I am not asking for a welfare programme. In the United States, as here, the Government are the biggest customer, and the Small Business Administration has persuaded the

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  American Government to set aside 20 per cent. of all Government contracts for tender by small companies. These companies have to hold certificates of competence. I understand that this works very well, and that the American Government, far from spending more money, save money.
  The House will bear in mind the pamphlet written by my right hon. Friend the Member for Wallasey (Mr. Marples) entitled, "No Choice but Change" in which he explains how this system works. I will not go into it in detail, but the Government Department says, in effect, "Use your genius to make economies and we will share the savings fifty-fifty"—and then comes the sting—"If you do not make any savings you will never get another Government contract." I am told that it works extremely well.
  Secondly, there is management training. Dunn & Bradstreet, the well-known creditworthiness organisation, has discovered that for every one business failure due to lack of finance, nine failures are due to bad management. The S.B.A., therefore, has a programme which ensures that any help, financial or otherwise, that is given is conditional upon the small firm's or individual's agreement to participate in a management training programme.
  For the benefit of small companies—those employing fewer than 25 people—the American Administration has set up what is called SCORE—which represents the Service Corps of Retired Executives. As this name implies, this is a company of experienced retired business men who give their time free to act as honorary consultants to this class of company. I believe that we have in this country, too, a large number of retired executives who have several years of worthwhile effort in them and who would take it as a matter of service to help our tiny companies on to an efficient and businesslike basis.
  In conclusion, I would suggest that the Government should approach this question in three stages. They should, first, ask themselves whether they wish to encourage small companies as a matter of policy. If the answer is "No", then I believe that Mr. Frank Cousins will be
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  as disappointed as I am, and thousands of small businesses and those who work for and in small businesses will have to await the return of a Conservative Administration before their receive any stimulus or encouragement.
  But if the answer is "Yes", as I hope it will be, then I believe that the Government should as a matter of urgency obtain the best possible advice about small businesses—how they can be stimulated and helped by a revision of their tax policies and by Government policies generally, and, of course, by Government purchases.
  One last thing is that I am not advocating or asking for a welfare programme. While I believe that small businesses are a good thing; while I believe that it is essential to encourage all our traders, large or small, because without them we should surely starve; while, indeed, it may be morally right that we should be compassionate to the little man, it is neither moral nor right to sustain a man in business artificially. I believe that the test of a successful business is profit, and that a business which cannot earn profits should not survive.
  I am, as I mentioned, a businessman as well as a Member of this House, and I say that the enterprising and energetic section of the population about whom I have been speaking today do not fear competition. On the contrary, I believe that they welcome it. But what they resent is unfair competition and difficulties, artificially created, placed in their way by legislation. The earliest nursery rhyme that any of us learn is about the folly of killing the goose that lays the golden egg, and the goose that lays the golden egg in our country is business and industry. Any Government with any sense ought to bend over backwards to ensure that we have a large flock of healthy geese. One can over-feed them, but one can also starve them. We have to get the balance right.
  I believe that we cannot afford to place difficulties in the way of business men whose activities are so vital to our future. These difficulties undoubtedly exist, and I implore the Government to take note of them. This is not a political matter, and I hope that the Minister will not only accept this Motion but act upon it.
  11.35 a.m.
  Mr. Paul Hawkins: I am very glad to be able to speak for a few minutes. I wholeheartedly support everything that has been said so well by my hon. Friend the Member for Croydon, North-East (Mr. Weatherill). I do not want to repeat what he has said; I shall confine most of my remarks to the problems of the small business in the countryside and smaller towns.
  However, I want to make two general remarks to begin with. First, the small businessman, whether he be an agricultural engineer, a corn merchant, a builder, or an auctioneer, as I myself am, by his very nature is local. The owners of these businesses live near them and contribute leadership to the community. When small firms are taken over by large businesses, which is happening in the towns and the countryside, particularly in the countryside, one finds that they are managed from London, Birmingham or Manchester, and those managements have no interest in the locality. They do not live there, do not pay rates there and do not enter into the community life. They cannot, of course, do so. It is a very real loss to the country districts.
  Secondly, the small businesses are a very strong bulwark against monopoly, and are, therefore, a very real safeguard for the consumer. Unfortunately, it is often the case that the consumer does not appreciate their worth until they have been extinguished.
  I turn now to some of the particular problems of the countryside and smaller country towns. As my hon. Friend said, there is, fortunately, a first-class organisation in existence—the Rural Industries Bureau. This organisation exists in practically every county, and there is a separate organisation doing the same sort of work in Scotland. I want to say a few words about the Bureau and how its work could be improved and aided.
  The Bureau gives advice on technical services, such as choice of machinery to be used in any manufacturing process. It interprets advanced technological information and gives advice on how to apply it. One of the most difficult problems we have to face is that, while there is a mass of information, perhaps in London, perhaps in the hands of a
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  few people, the average small businessman—and it also applies, I assume, to some of the bigger businesses—does not know how to apply it or where to seek it.
  The Bureau does this job very well. It also gives advice about the design of workshops for particular purposes—a recent design that it helped with was for a very small brewery for particular types of that good liquid—and the layout of the workshops once they are built. There is a business management advisory service which gives advice on work study, accountancy—which is extremely important—marketing and exporting. It has arranged quite recently in Germany an exhibition or stand for small businesses and has gained, I believe, quite a lot of export business in that way. Finally, there are courses for builders in estimating and for agricultural engineers in maintenance and repairs.
  Rural industries have, during the last few years, at any rate in my part of the country, developed very fast and in many cases I think that it is far better to expand the existing businesses and use the skills which are already there rather than to go out for a very large and expensive overspill programme. Of course, the introduction of new industries into depopulated areas in very important. But often in the rural districts many men are coming off the land who are skilled and they need these small enterprises just as the small enterprises need them.
  I believe that the existing small businesses ancillary to agriculture, as well as many others, are capable of great benefit not only to the countryside but to the nation as a whole. I will give three widely differing examples in Norfolk to show how small businesses have been aided in expansion by the Rural Industries Bureau.
  The first is a firm which consisted of three brothers employing themselves part-time on producing automatic feeders, agricultural machinery and bulk hoppers. Over the last few years, their business has grown until now it employs full-time over 50 people. The second is a firm building cabin cruisers and similar craft. It has grown from two men to 40 full-time employees. The third firm, which is close to where I live, produces joinery and makes garden seats and other woodworking products. It has grown from eight men to 50 during the last three years.

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  All these firms have been helped to start and expand, and are still being helped in some way or another with accountancy services and expert advice. Nevertheless, I believe that the Bureau could do a lot more. I want to put forward some suggestions as to how the Bureau itself could be helped in doing more. First, more money should be made available to the Central Loan Fund from which businesses gain their own loans. They do not get grants and I would not wish to advocate them except in one case. At present, the maximum figures are £5,000 for a new workshop, £8,500 for working capital and a maximum for any one firm of £12,500. Not only can these sums in present circumstances be very limiting, but I understand that the total amount available from the Central Fund is now inadequate and that applications received recently were many times the amount available.
  Secondly, the yardsticks by which industries are helped are that they must be in a rural area or in a town with under 10,000 population or employing 20 or under employees. These figures could well be looked at again and I think that they should be raised. Surely the size of the town should be raised to 15,000 and possibly 20,000 population. Certainly firms employing up to 40 people should be eligible for such loans and assistance.
  As I have said, I am not in favour of grants because I believe that these can keep quite inefficient firms just going. I think that the loans could be a little less than at the full market rate. Indeed, I believe that they used to be free. But they are now at something like the market rate. There is, however, one case where I think that grants could be given for a limited number of years following the precedent of grants being made available to farmers who undertake to keep farm accounts.
  Grants to these small firms on the same basis could be invaluable. Many rural and small businesses turn out first-class goods and give first-class service. But often the accountancy side and costing are very weak and they are liable to be running at a loss or making too small a profit to keep their equipment and buildings modernised. So I ask the Government to look at this and see whether
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  they could not extend to these businesses the same sort of grants that are being allowed to farmers for accountancy. It could be limited to a certain number of years until they have their accountancy on the right lines. I believe that during the initial stage of perhaps three or four years, this could be invaluable in making a firm turning out first-class goods into a viable and profitable enterprise and one which might do the country a lot of good.
  There is another aspect to which I want to draw attention. I am not certain that my facts are right but I understand that the salary scales of the Bureau's staff are not keeping pace with those of the industrial training boards and that staff are being lost from the Bureau to the boards. The work is quite similar. One type of organisation works in the larger towns and the other in the countryside. This aspect should be looked at and if there is a difference it could well be put right.
  My hon. Friend the Member for Croydon, North-East has already mentioned the American experience in the placing of orders with the smaller firms. I think that a lot of Government work is done by smaller firms here but nevertheless no proportion of Government work is directed to them. The Government are one of the largest organisations placing orders with industry and they should think about the American experience and try to place a certain proportion with firms employing under 500 people.
  These smaller industries are vital to the life of the country districts, especially where depopulation is a threat. My hon. Friend the Member for Westmorland (Mr. Jopling) had hoped to be here but was unfortunately called to his constituency, and he wished me to stress the depopulation that is taking place. It is not particularly so in my area of Norfolk, where the population has remained static for a long time and is now slightly increasing, but in some of the more remote areas depopulation is a great problem, and there more encouragement of smaller industries is absolutely vital.
  These smaller industries are able to absorb men leaving the land and to use their great skills. We have an organisation in being to help, and I ask as a

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  matter of urgency for the financing and organisation of the Rural Industries Bureau to be strengthened.
  11.50 a.m.
  Sir Eric Errington: I am very glad that we are having a debate upon such a fundamental matter. There is a feeling among many people that profits are a bad thing and are antisocial. That feeling has been propagated over a considerable period, and it is essential to realise that unless profits are made, there will be no opportunity to improve the general conditions of people. In this connection it is important to consider small companies. The idea that the small company is something out of which someone is making a good deal of money without doing any work is quite wrong. Generally speaking, the small company requires a degree of energy and knowledge of a general character that is quite exceptional.
  Reference has been made to the taxes falling upon the small firm. The handling of these requires a degree of administration which is quite extraordinary. The close company is one of the problems. I saw the other day that there had been difficulty because the wrong subsection had been repealed, indicating that even the full weight of Government knowledge can sometimes fail and prove inaccurate. The Selective Employment Tax has been harmful to a great degree, particularly to the small retail company. There is a feeling that, on the one hand, there are very big companies which manage to have all the necessary administrative help, and on the other hand, there are the consumers who very rightly require efficiency from the retail trader. If there is a complaint or difficulty, it rebounds first and foremost on the retailer. We have been described as a nation of shopkeepers and we ought not to be ashamed of that. We should do all that we can to support such people as a great part of our economic life.
  The hon. Member for Croydon, North-East (Mr. Weatherill) dealt with rather larger companies than I have in mind when he spoke of under 500 persons employed. Much of the important work is done by units very much smaller than that. When I was in America, not as recently as the hon. Member, I had the opportunity to speak to one of the senior executives of an organisation adminis-
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  trating small American companies. I am confirming what has been said when I say that it was felt that this was an important organisation, because the smaller man, through large developments, was not getting a chance to show the ability and common sense which he possessed. It is necessary for our Government to consider these facts in view of the effect of legislation, particularly taxation legislation.
  Death duties have not been mentioned, but they are killing to a family trying to build up a small business. In many ways they are a nonsense, yet we do not seem to be able to find the time to look at the nonsense with a view to improving it. Instead, we impose additional responsibilities on this type of person. In vestment grants have been mentioned, and here again the action taken has hit the small man. There is a case which has just come to my notice which indicates the sort of difficulty encountered by such people in connection with industrial training.
  There is a small engineering firm for which arrangements had been made in connection with industrial training. The number of people employed there is 80. No particularly good facilities had previously arranged, but it had an efficient set of workpeople. What has happened is that the industrial training levy has been fixed for six months but the grant has not been fixed for the same period. The result is that the small company finds itself faced with a liability which has yet to be ascertained, of something like £3,000, but with no idea of the grant which will be paid.
  This is a real problem, because the amount is large in relation to the company's ordinary business. This is a great worry and is not helping to produce anything. I always remember the businessman who put over the door of his office, "This room produces nothing". The general attitude of Government legislation today is to ensure that the office is used more than the works, though it produces nothing.
  Much could be done about management training, but it is not only training which needs attention. It is necessary to provide facilities which will enable a person to strike out in a certain direction with finance which he thinks may be rewarding. I want to give a short

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  example. A constituent of mine has been very interested in and working for some years on a hydrofoil, which is not the same as a hovercraft. The hydrofoil secures its stability by sonar rays. This matter was taken up with the Minister of Technology, who is keener perhaps on the bigger organisations than on the smaller organisations. The result of that examination was that it was found that the hovercraft was being supported to a very substantial extent. When the hydrofoil, with its different characteristics, was put before the Government, it was decided that unless, by contact with a big company, a substantial sum of money could be found by this private individual who had a small company of about 20 or 30 people mainly engaged in radar work, the Government could not support it.
  That is something which should be actively considered. Not only should much more help be given in the ordinary administration of small businesses and in reducing the effects of taxation, but consideration should be given to the question of the Selective Employment Tax in certain cases. There should be some Government method by which the many people in this country with ideas could be helped by knowing where they can go to get that help, and there should be a ready acceptance that there is a big future for people with the necessary brains and ability and who lack only Government encouragement to make a success of their jobs.
  12.2 p.m.
  Mr. David Howell: In supporting the Motion so eloquently moved by my hon. Friend the Member for Croydon, North-East (Mr. Weatherill), there are two questions which I should like briefly to raise.
  First, why are we concerned with small business problems and with the urgent need to encourage small businesses when in many parts of industry all the ideas are in favour of greater concentration and the need to avoid fragmentation? It is said that the problem is not so much the size of small units but the need to amalgamate units and to merge, rationalise and concentrate. At a time when there is an undoubted need, in my view, for many industries to reform in a competitive stance in relation to world markets and adjust themselves so that
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  they can absorb the big investment demanded by advanced technology, it is incumbent on those of us who support the Motion to demonstrate why we believe that positive encouragement to smaller units is equally essential.
  In my view, the two lines of activity are not exclusive. I would argue that the need to press for concentration and rationalisation in our great industries, on the one hand, and the need to foster and encourage small units and enterprises, on the other, far from being exclusive, are complementary.
  On the concentration side, I have always hoped—perhaps some hon. Members would say optimistically—that the I.R.C. will use its power and influence to reinject a competitive spirit into industry. Certainly I hope that it would work in this way under a Conservative Administration and that it would use the "mini-Neddies"—the economic development committees—which are quite unsatisfactory bodies, to implement a genuine competition policy. That is on the concentration side—the side of saying that there is too much fragmentation and that we must rationalise and amalgamate.
  But it is precisely this need for concentration in some areas which generates a correspondingly strong need for direct action to foster new, invading firms—small firms with new products and new ideas. I say this because perhaps the most important lesson which emerges from a study of the pattern of vast industrial development is that the whole idea of an industry as a concept is becoming increasingly blurred. The idea of a group of firms concentrating on the production of a single item or single group of items is becoming less real.
  The potential rate of innovation in industry is so great that today's industry, as it is called, can be turned completely upside down by tomorrow's new idea, new product or new process. We are seeing this process already in many industries. Firms which have traditionally regarded themselves as part of an industry find their purpose and direction and pattern of production being challenged by entirely new processes and products which question the need and existence of the industry in which they believe themselves to be.
  We are seeing this process particularly in the area of activity of the universities.

  1973
  Universities have a very important part to play in applying, through small units and new enterprises, the fruits of their technological investigation and research to innovation, new ideas and the stimulation of new enterprises. Therefore, in dealing with the question of small business, we are looking at the dynamic area of industry where the new ideas will be applied.
  If I may move on to more controversial ground, this is a lesson which those who have argued most strenuously for the nationalisation of the iron and steel industry have missed. The idea that the iron and steel industry is a single industry is passing into history. What will be needed in future is many small invading firms ready to move in with entirely new products and processes to replace the basic materials on which the iron and steel industry has based its success and activity in the past. That is an opportunity which, unfortunately, has been missed in the iron and steel industry, but I hope very much that it will not be missed elsewhere.
  If today's need in many industries is to concentrate and rationalise and prepare to meet the greater competition of American technology in world markets, then tomorrow's need is to encourage many new firms urgently if we are to meet the challenges which are coming.
  Mr. John Biffen: On that interesting point about the iron and steel industry, would my hon. Friend say whether as a result of these views he concludes that there should be statutory limitation on the commercial activities of the National Steel Corporation?
  Mr. Howell: I feel very strongly that there should not, for the reasons which I have put forward. In effect, that kind of statutory limitation is putting a stopper on what I call the invading element—the new ideas and techniques which must be injected into a great industry if it is to survive and compete. The question of my hon. Friend is central. The idea that iron and steel, or the basic product of steel, is the key commodity and central material in a modern economy is getting out of date. It will be overtaken by new processes and new materials.
  That is the first of the two questions which I wanted to raise. It is incumbent on those of us who argue that urgent
  1974
  action should be taken for small businesses to point out that we do not rule out the need for concentration and rationalisation, but, on the contrary, believe that the two go side by side.
  The second question is this. Why do I and many of my hon. Friends believe in the necessity for a small business development bureau when there are many agencies doing various things already? We have heard about them from hon. Members. I have no doubt that the point will be made from the Government Front Bench that a good deal is being done by one agency or another—private and parastatal agencies, and Government agencies. Despite this, we still need a single bureau to give the Government Departments, perhaps above all, a focus for their own policies and activities.
  As my hon. Friend the Member for Croydon, North-East rightly said, looking back over the past two and a half years at the pattern of Government legislation, the plain fact is that the bias has been against small business. This may have been itentional or not. Perhaps in some cases it could be argued on partisan grounds that clearly it has been a doctrinaire move. In others I would be perfectly prepared to give the benefit of the doubt and say that it has not been intentional.
  I do not think that there has been a deliberate and vicious attempt through legislation to persecute the small business. That may not have been the intention, but that has happened in practice. There has been a small-business cause within Whitehall constantly pressing the case, the needs, and the requirements of modern small businesses, but in practice the whole drift of legislation, whether by default or intent, has been against the small businessman, against the new enterprise promoter, against the man who would like to go into business, start with some new innovation, and try to build up the business on the basis of it. Whether intentional or not, the Government have become aligned, through their legislation, away from small businesses and towards the great corporations, towards the big businesses, the big corporate entities, the great companies, and their representative bodies and associations.
  This trend towards what could be called eventually the pattern of the corporate State is one which worries people, not

  1975
  merely in small businesses, who are trying to make a living and who are finding it increasingly difficult, but ordinary people who see the pattern of Government in which only those who appear to be able to deal with the Government or gain anything or carry on discussions with the Government get through. It is this pattern of the corporate State which is one of the worrying trends in the development of government and legislation today.
  We have heard instances from my hon. Friend of the way in which legislation and policy have worked against the small business in the last few years. There have been the avalanches of paper work of a kind which has virtually brought the Inland Revenue to a halt. What chance has the small business to cope with that? There has been the Corporation Tax development, which, intentionally or not, benefits the large and hurts the small, as we have heard graphically illustrated. There is the Companies Bill which, by abolishing private exempt companies, obviously must make life more difficult for the small man who wishes to get on.
  These things may or may not be part of deliberate Government policy, but the fact remains that this is the drift of events. That is the way that things will go on unless all those forces and energies which are available and are working in small businesses and new enterprises are consolidated and fostered effectively and made to operate inside Whitehall. I believe that a small business development bureau could help in the whole range of manufacturing, wholesaling, retailing and service industries in a highly effective way, perhaps more on a psychological level than the level of direct assistance in the sense that its very existence would help to remind those who are going about the business of implementing policy that the small business cause exists and it is vitally essential for the health of industry and the health of the economy that those firms should be fostered and encouraged. All firms are small firms at some time at the beginning of their lives, and it has been rightly said that today's small firms may be—and we hope will be—tomorrow's giants. We must encourage them.
  12.14 p.m.
  Mr. John Smith: My hon. Friend the Mem-
  1976
  ber for Croydon, North-East (Mr. Weatherill), who moved the Motion, said that this was not a political occasion, but it seems to have become even less political than it might have done. I hope we shall have the opportunity of hearing, even of seeing, at least one back bencher on the Government side before we are through.
  I am very glad to have caught your eye, Mr. Speaker, because although my work outside the House is now more concerned with very large businesses—indeed, in one case, with a monopoly—I have had a great deal to do with small businesses, and in particular I joined almost at its start, a small firm which became one of the largest electrical instrument manufacturers in Europe. Unfortunately, our taxation system made it impossible for us to save enough of our earnings to grow and at the same time to retain control; so, of course, in due time we were bought by an American firm. Today every warship, every defence establishment and most advanced industries in this country use and depend on the products of this firm, once British and now American.
  What is a small business? The growth of a business is, or should be, a continuous evolutionary process, starting at a desk, or in a garden shed; acquiring premises; employing family money, then friends' money, then perhaps money from a merchant bank, then possibly loan capital from an insurance company; then becoming a public company; then merging with one or two other firms; then being criticised in Parliament for failing the nation, and then being nationalised. From cradle to grave there is no obvious point at which a firm ceases to be small and becomes large. But probably the best point to choose is when a firm becomes publicly owned and quoted on a Stock Exchange, and hence, with luck, free from the dreadful trammels of the close company legislation. This is unlikely to happen before a firm is earning about £75,000 a year, which is therefore a convenient upper limit for the description of a small business.
  Why is it worth bothering with small businesses at all? I believe it is, first, because small businesses are, in general, more efficient users of talent than large ones. Of course, there are many qualifications to this. There are certain fields

  1977
  such as, for example, major computer design, where the cost of research and development and the speed of advance—of progress—the pace of obsolescence, are so great that only the very largest companies can attempt it at all, and even some countries cannot attempt it. But in an ordinary Parkinsonian sense, which anyone can understand, small businesses are more efficient than large.
  Secondly, a small business can be more adventurous. It can be more of an innovator than a large one. Any professional man running a large business or a department of it, has all sorts of responsibilities. He has a responsibility to his shareholders, to his staff, to the unions, to the public, and even to Parliament. But the owner of a small business is free from most of these responsibilities. It is true that he does have one of the most dreadful responsibilities of all, which is the responsibility to his staff in the face of death duty. It may be thought that Estate Duty is a method of getting at accumulations of wealth, but it is much more often a way of destroying accumulations of talent and putting out of business and out of employment those who have put together what may one day be a large firm of great value to the country. Both these men, the man in the big business and the man in the small, are probably equally capable of taking risks, but the owner of a small business is far freer to do so.
  These distinctive virtues of the small business, efficiency and innovation—in fact, the harnessing of talent—are well illustrated on an international scale by our relationship with the United States. In comparison with the United States economy, Britain itself is a small business. There are now, or soon will be, certain activities beyond us in scale altogether. Many people do not realise just how large the scale of United States enterprise is.
  It is occasionally brought home to one by stray incidents, such as when some time ago Mr. Paul Getty was interviewed on television and was asked why he chose to live in this country. Instead of saying that it was cheap, or beautiful, or that we were agreeable, he simply said that it was handy for the Middle East. But because as a country we are smaller, we have certain advantages, just as small businesses have. For example, the research and development of aircraft
  1978
  engines can be done much better and much more cheaply here than in the United States.
  If these small businesses have these virtues, what holds them back? There are many factors. It may be lack of management training, or lack of knowledge of production techniques, or problems of finance. I will not deal with the questions of management training and production techniques, because there are clouds of pamphlets on this subject and a list was put out by the Ministry of Technology in HANSARD on 27th January.
  However, the problems of finance are of two sorts. There is the problem of obtaining fresh resources for expansion from outside, and obtaining it reasonably cheaply—because a small business has to pay more for its money than a large one. This is a problem which has been much discussed, but there are reasonably well-known ways of trying to tackle it and many people, such as the I.C.F.C., bank managers, merchant banks, accountants, even myself, are ready to advise on it.
  The other financial problem is that of generating enough money within the business to enable it to grow. Here recent legislation has made the problem worse for all businesses, but immeasurably worse for the small. The Corporation Tax, the close company legislation and the Capital Gains Tax between them mean that taxation takes 62 per cent., 12s. 6d. in the £, of a close company's earnings, even ignoring Surtax, and the the rules about "participators", which I will not go into, make it extremely difficult to raise capital at exactly that point in its growth when it is particularly difficult for a company to raise capital from an institution.
  There is a point in the life of every business when it has become too big for the owner's family and friends, but too small for a merchant bank, or an insurance company, or a pension fund, to feel that it can take a hand in it. That point is probably reached when its earnings are about £25,000 a year. Hitherto, up to that point it has usually been possible to find private outsiders who will put in a certain amount of equity capital and perhaps rather more loan capital, but now, because of this legislation, they are prevented from doing so.

  1979
  In addition, the investment incentives have been reduced in value from 56 per cent. to 40 per cent. and abolished altogether for many businesses. They have been made very uncertain and they are received greatly in arrear. Even the official publication states that they are received 18 months in arrear. The Companies Bill, shortly to come before us, will put small businesses at still greater disadvantage. I will not go into that now, but these are all disadvantages from which companies in Europe do not suffer. We talk about entering Europe, but at the same time we pass legislation which makes it perfectly certain that we cannot compete with European firms. At this point I am reminded that when my electronics firm passed into the control of an American company, that company chose to manage it from Paris.
  The close company legislation, which forbids small businesses to plough back any profits while large businesses are encouraged by Corporation Tax to do precisely the opposite, is guided by prejudice rather than reason. Why is there this prejudice against the businessman? My hon. Friend the Member for Croydon, North-East said that there was a feeling in some quarters that it was not respectable to he in business. There is a very much larger feeling that it is not respectable to be in politics, and it ill behoves us to adopt this attitude to business. Someone has to make the money so that we here can take it all away and squander it, and surely who makes the money is a great deal less important than that the money should actually get made. It mostly ends up here in any case, and we here in this House do not seem very good at making it, if the nationalised industries are any guide
  Steel was mentioned just now and that reminded me of the curious workings of Providence in relation to the nationalised industries—that they always appear to be nationalised at the moment when there is a fundamental change in their fortunes. It is interesting that we have had this interminable debate about steel, that it was said to be too important to be left in the private sector, when a perfectly good Socialist argument, which was not advanced, might have been that this was the first moment in history when this country might not need a steel industry of its own at all.
  1980
  People talk about excess profits in relation to private businesses and small businesses, but it would be interesting to know how profits should be controlled. Exactly how does one estimate and control what profit is made so that it is not excessive? Studying the results of the nationalised industries would seem to show——
  Mr. Speaker: Order. The hon. Member is going rather wide of the Motion.
  Mr. Smith: I am saying that the criticisms made of small businesses do not appear to be valid criticisms when related to the actual results of those nationalised industries with which we here are more closely connected.
  The further prejudice against directors' earnings, limiting them to £4,000 a year in a close company, seems particularly damaging. I know that we get only £3,250, but then there is always severe under-employment among politicians and there are seldom unfilled vacancies here. But a man running a large close company for £4,000 a year must inevitably be tempted away to a larger company, or abroad. If we do not want our industry to ossify, we must accept the businessman as human and recognise that he is trying to edge Great Britain forward just as much as we here are.
  These financial deterrents to small businesses are bad enough, but I want to mention one other problem facing small businesses which has not been mentioned this morning. It is a planning problem, the planning difficulty of starting at all. In times gone by, one could just start in one's front room or in a shed, but now one has to get planning permission. In times gone by, housing and small firms existed side by side and every small collection of people had a builder, carpenter, blacksmith and, later on, light industries, in my view to their mutual social benefit. But now there is a feeling that industry has to be segregated. I have experience of this, because I run an industrial estate. There are very few industrial premises available for very small firms.
  If one wants to start with one's friend in a joinery business one will need perhaps 300 sq. ft., certainly not more than 500 sq. ft., and one will want it cheaply. One does not particularly mind about the excellence of its condition. But such

  1981
  premises nowadays are practically unobtainable, and those which exist are rapidly being cleared away on general grounds of municipal tidiness. They are not being replaced because it is much more expensive and more tiresome for a factory owner to provide small units than it is to provide large ones. I know from my experience that much the greatest demand, and it is the demand which one would most like to meet, is that for very small, cheap units of factory accommodation to enable people to start. What would help most here is a slight relaxation of the very strict planning requirements.
  There is a further deterrent to small businesses now operating. I hesitate to mention it, but must do so because it is very important. It is coming to be known as the B factor. The B factor is a coefficient of complexity. I do not think that the B in B factor stands for anything any more than the D in D-day. However, much recent legislation has a very high B factor, the Land Commission Bill possibly highest of all.
  The man running a small business is now saddled with the Corporation Tax legislation, the capital gains legislation, the redundancy payments legislation, the Selective Employment Tax legislation, the new arrangements about investment allowances, the Industrial Development Act and the Land Commission legislation.
  For a small business to flourish, it must have stable, intelligible conditions. Many men who run such firms have a very low threshold of tolerance of the B factor, and, unless they can have intelligible conditions in which to work, they simply drift off into larger firms, or abroad.
  To sum up, I feel that small businesses are worth encouraging because of their virtues of efficiency and innovation and because they harness talent. But if they are to serve the country they must have access to advice, they must not be subject to financial discrimination—against the business, the owners or the staff—and—almost the most important of all—they must be freed from the general complexity of much recent legislation.
  12.34 p.m.
  The Minister of State, Board of Trade (Mr. George Darling): I think it may be for the convenience of the House if
  1982
  I intervene at this stage—it is only an intervention—first of all to tell the hon. Member for Croydon, North-East (Mr. Weatherill) that, of course, we accept the Motion. I should have worded it rather differently if I had been asked to put it forward, and would have given it what I should have thought would have been a more constructive content. But we will not quibble about the wording; the spirit of the Motion is something that we accept entirely.
  I congratulate the hon. Member on a well-reasoned and carefully argued case. I see that he has now returned from the zone of silence in which the Whips sit, and if I say things on which he wishes to comment, perhaps he will now be in a position to intervene.
  I do not quarrel with the view that the hon. Member put forward that private enterprise should be enterprising and competitive, and that its success should be measured by the profits that it earns. A lot of nonsense has been talked this morning about the attitude of the Government and my party to profits, and I shall put the record straight in a moment. The hon. Member said that no Government had given adequate aid to small firms. He should have added—I shall develop this point—"until the present Government came into office". I shall explain the help that we are giving on an extensive scale to the small firms in our economy.
  The hon. Member went on to say that during the last two years there had been many fiscal decisions that had hit small firms very hard indeed. I shall not go through the list; they have been mentioned during the debate. I do not accept the views that have been expressed about the effects of these fiscal measures. There are counter-balancing things. In any case, hon. Members opposite will have the chance to impress and influence the Chancellor before very long when we come to the annual ritual of trying to get our fiscal measures straight. Perhaps I may be permitted not to deal with the fiscal arguments, which would take up a good deal of ime.
  I should like, to begin with, to cover the suggestions that the hon. Gentleman threw out in order, as he said, to improve productivity and to give smaller firms a better chance to develop. I would, in

  1983
  passing, make one comment only—we shall be discussing the matter in greater detail on Tuesday—on the Companies Bill. Hon. Members must face up to the question: what duties should small companies accept in return for the right—it is a right—of limited liability? People are involved in that limited liability. The shareholders have been mentioned, but the creditors are also involved. I leave it at that point, because the suggestion that small companies will be handicapped if they divulge too much information about their activities can be answered only by answering the other question: what are the duties that they must accept in return for limited liability?
  The hon. Member put forward a number of suggestions, and I shall try to deal with them fully as I go along. To begin with, the Government are very aware of the essential rôle played by the smaller firms in our economy, and also well aware of the need to encourage increasing efficiency—because this is where the profit comes from in a competitive community—and trade expansion among the smaller firms.
  We are, therefore, agreed on the aims of the Motion, and what we are discussing today is the means of providing help to the smaller firms so that they can become more efficient and more productive and can expand and contribute more to the general economy. For a number of years—I am not, of course, going to give all the credit to the present Government—the scope of Government assistance and service to industry has been increasing. We know very well that industry generally values the services that are provided. In many cases, of course, although the Government are involved, industry itself pays the cost. It is the Government who bring the services together. In some cases industry shares the cost of these services with the Government.
  Much of this assistance is available to large and small firms alike, but in many cases, for good reasons, it is the smaller companies who most welcome it and take most advantage of it. The larger firms, as has been explained by some hon. Members, in many instances have adequate resources to set up special departments in some fields, and they can become self-reliant more easily and can
  1984
  finance a number of activities that are beyond the scope of a small firm operating by itself.
  I agree with many of the references made about the sheer volume of information that is now available, some of it almost thrown at firms. I also agree with the remarks about the complexity of modern methods of trading and the fact that these may often deter a small business from moving into new markets or renovating its production methods or managerial set-up. I appreciate, too, that when many small firms are advised to obtain specialist advice to help them overcome these complexities, they probably find that the expense of employing specialist management consultants is a stumbling block.
  I assure the House, that the Government are aware of these problems. There are many Government services of particular value to small firms facing these difficulties, although I will not detail them all. Nor will I weary the House by detailing all the Government services that are available to firms generally. I will mention a few of the more important ones.
  The Ministry of Technology's Industrial Liaison Service provides valuable assistance. The hon. Member for Aldershot (Sir E. Errington) mentioned the hydrofoil. The Ministry of Technology has a business bureau which runs a number of production and advisory services designed to help small as well as large firms, and many small firms are taking full advantage of the services available. There is also the Production Engineering Advisory Service, a project which should be of tremendous help to small firms which wish to develop new types of production, new ideas, new projects and so on. Whether this service is working thoroughly satisfactory is something that we can look into, but at least the basis of the kind of service which the hon. Member for Aldershot is seeking is there.
  Sir E. Errington: One of the difficulties in the case I raised was that while it was admitted that finance was needed, the answer given was that the project should be achieved by an approach to a large private organisation, and that nothing could be done as things were.
  Mr. Darling: We also come across this problem of financing new enterprises in

  1985
  our development area legislation. I assure the hon. Gentleman that we are looking into the matter to see whether the present methods of giving financial help are altogether satisfactory. I accept that there are marginal cases for which the present rules do not work out satisfactorily, but we keep these matters under consideration.
  In addition, there are the Board of Trade's services, particularly its export services, which are generally considered to be about the best in the world. Hon. Members will agree that these services are probably the best that any firm in the Western world can receive. The Export Intelligence Campaign is worthy of note. It has proved extremely successful and since it was started less than a year ago there have been 25,000 telephone inquiries from firms seeking advice and information about export developments. Most of these inquiries have come from small firms, a large proportion of which wished to enter the export business for the first time.
  I need not go into great detail about the services provided by the Board of Trade. They are well known. We are doing all we can to advertise them and bring the benefits available to the attention of more and more firms. There are special incentives for firms setting up in the development areas and, because of this, I was surprised to hear the hon. Member for Cities of London and Westminster (Mr. John Smith) speak of the difficulty of obtaining planning permission and the other difficulties facing someone wishing to establish a small factory, even one as small as 300 or 400 sq. ft. I could give the hon. Gentleman a list of places in various parts of the country where such an enterprise could he established without the slighest difficulty—although they are all in development areas. Although I am not sure whether the hon. Gentleman had the development areas in mind, I assure him that there would be practically no difficulty facing anyone who wished to establish a factory in one of these areas.
  I was also surprised to hear him express a somewhat anti-social idea which I thought we had eradicated a long time ago. He expressed the view that workers should live next door to the places in which they work. I hope that he was not suggesting that as a practical proposition.
  Mr. John Smith: I was not suggesting anything of the sort. One cannot consider this matter in terms of black and white. It is necessary to consider the problems facing anyone wishing to establish a small firm, and it is not necessary to divorce small businesses entirely from housing. There are certain ventures which are not certain of success. People are not sure, when starting them, whether they will become business propositions in the long run. What is wrong with two brothers who wish to start a joinery works wanting to work near their home while finding out whether or not the business will prove successful? One cannot expect them to go hundreds of miles from their home to a development area, in case the business does not succeed.
  Mr. Darling: I must have misunderstood the hon. Gentleman. I imagine that he has never lived in a terraced house next door to the industrial concern in which he worked. It was that sort of anti-social prospect to which I was referring and which I thought we had got rid of in our planning developments.
  I turn to some of the excellent suggestions made by the hon. Member for Norfolk, South-West (Mr. Hawkins), particularly in regard to the Rural Industries Bureau. I will not repeat the admirable description he gave of the work of the bureau. He asked a number of questions and I will endeavour to answer some of them. He mentioned the need for an improved loan service. He thought that the present arrangements were too restrictive and rigid. I understand that money for the loan fund is increasing year by year and that the figures have gone up considerably in the last two or three years. I also understand that the bureau is examining its policy regarding the size of firms which it helps and the areas in which it operates. I am sure that the hon. Gentleman's suggestion about the size of firms being assisted will be considered by the bureau and that his other suggestions will be looked into. I should point out that these are not strictly matters for the Board of Trade. Although we are extremely interested in them, they are really matters for the Development Commission and the Treasury. However, I assure the hon. Gentleman that his views will be made known to those who are responsible.

  1987
  The hon. Member for Norfolk, South-West also referred to the stand which the Rural Industries Bureau had at a fair in Germany. The stand was at the Sports Goods and Open Air Epuipment Fair in Cologne. I visited the fair and spent some time on the stand speaking with the people whose products were being displayed. It was a Board of Trade enterprise jointly with the Rural Industries Bureau and everybody concerned seemed extremely happy about the outcome of it.
  Some of the people displaying goods at the fair were in a very small way of business indeed, some of them making bits of equipment in small buildings. One of the most successful enterprises was a very small firm which was displaying underwater rubber swim suits. The firm was making this equipment in an old chapel somewhere in East Anglia. It began with two or three people—a man, wife and friend—producing this equipment, and later other labour was employed. Many of the old ladies in the parish were working a few hours a day—turning up at irregular intervals and doing an hour's work here and there—and all concerned were making considerable profits out of these swim suits, sharing in the profits. At the Cologne Fair this small company was taking substantial orders in competition with large firms displaying this type of equipment. There were many other things on display at that fair which I thought were a great credit to the stimulating work which the Rural Industries Bureau has done. I assure the hon. Member that the points he has raised will be drawn to the attention of the Development Commission and the Treasury.
  Most of the questions put by the hon. Member for Croydon, North-East dealt with some of the more well-established services provided in this country for big and small firms alike, such as the British Institute of Management, the British Productivity Council, research associations, and so on. Of course all these varied and widespread agencies of service are used by small as well as by large firms.
  The definition which the hon. Member gave was of a small firm being one employing fewer than 500 people. I do not know what proportion of all the manufacturing firms employ fewer than
  1988
  500. At some point we have to make a distinction between manufacturing and distributing firms. Certainly 20 per cent. of those employed work in establishments employing fewer than 100, and 20 per cent. represents a pretty large number.
  We have been considering whether the advisory services which are available to these smaller firms should be specially further developed and expanded. Much of this follows from the discussions which took place at the Productivity Conference called by the Prime Minister. In collaboration with the National Economic Development Office, the C.B.I. and the T.U.C., we are now examining a wide range of Government and other advisory services which have an impact on efficiency in industry. There are a large number of appropriate organisations which have ideas about how this sort of thing should be developed. We have consulted them and a number have come forward, as the hon. Member himself has, with many constructive ideas.
  It will take a little time for the examination of these ideas to be completed in order to enable us to come forward with a report and recommendations, but this is only a matter of weeks or months. We do not intend that this examination should go on over a long period of time. We are aiming to have a report available by the time the Productivity Conference reconvenes, probably in late April or May—we are not sure when the date will be. The report which will then be made available to industry generally, to small as well as large firms, will give a more comprehensive picture of the services already available and will show where the gaps and weaknesses are.
  Mr. Weatherill: Could the right hon. Gentleman make quite certain that my suggestion about "the set aside programme" is included among the suggestions which are made?
  Mr. Darling: Yes, I will do what I can in that regard. I have an idea that it will be included. I was about to say that I have an idea it has already come forward, but I should like to check on that, I know that there have been discussions about it.
  In the meantime, we are not sitting still waiting for the report to come forward and for the recommendations on which

  1989
  we can work. As hon. Members may be aware, my right hon. Friend the First Secretary of State and the Secretary of State for Economic Affairs has recently written to several thousand smaller firms in industry drawing their attention to the services of the British Productivity Council and discussing with them the need to promote greater efficiency in industry, how to get greater productivity and so on. It is hoped that a large proportion of those firms in the 200 to 1,500 manpower range can be persuaded to ask for a visit from the British Productivity Council which will put them into touch with experts from some of the newer firms in newer industries so that, by seminars and visiting other firms and so on, they can get an idea of newer management techniques whic many of them need to reach the pitch of efficiency which they should reach.
  Sir E. Errington: Will this examination include the techniques of export as well?
  Mr. Darling: We do not need to go over again the techniques of exporting or the problems of exporting. These are constantly under review by the Board of Trade which is in touch all the time with industrialists who bring forward their problems and suggestions. What we are more concerned with in this examination is the development of efficiency and productivity within industry to find out just where the obstacles are, the handicaps to greater efficiency—if hon. Members like, the handicaps to greater profitability—and to see to what extent the Government can help to get smaller as well as larger firms in the frame of expansion with lower costs, greater efficiency, and higher profits.
  When we deal particularly with smaller firms the idea that some kind of State department should be set up on the lines of the Small Business Administration in the United States is bound to look attractive. I am not ruling this out. I think it might well be examined, but I should have thought that it would be better to deal with firms not so much according to their size, although not neglecting the special interest of the smaller firms, but according to their interests.
  Businesses, I am sure, tend to be more concerned with their business than their smallness. A small clothing firm is
  1990
  likely to have more in common with a larger one than with, say, a machine tools firm. We have to proceed far more on an industry-industry basis when thinking in terms of Government help of one kind or another than on the basis of size. We have no evidence to suggest that a special new Government organisation concerning itself solely with small firms is required, although we are prepared to look at this.
  We are well aware of the American experience in this field and of the work of the Small Business Administration. We are taking this into account in our examination of possible methods of assistance. The first reaction was that we should proceed on an industry-industry basis rather than looking at small firms, but it may be that the hon. Member's views will prevail. I am merely saying that there is a need for caution.
  Mr. David Howell: There is, of course, another point of view. What all small firms have in common is the invader policy. They are setting out to upset and challenge larger firms and, so far from being in line with the larger firms, they are in challenge against them.
  Mr. Darling: I was coming to that point. In the discussion hon. Members have drawn attention to what from many points of view seems to be the Government's approach on the size of undertakings. We are setting up the Industrial Reorganisation Corporation. One of its tasks is to arrange for mergers of small firms and so on. Hon. Members have said that it appears that the Government wish to go for size and to get the economies of scale, and in doing so we are likely to put smaller businesses out of existence. I am paraphrasing and making it sound rather crude, but that was the approach.
  We must face the fact that in some fields the small concern is at such a serious and growing disadvantage that it cannot hope to compete on equal terms with the leading firms in this country and overseas. We must pay far more attention to overseas competition than perhaps we have done in the past. As we said in the White Paper on the Industrial Reorganisation Corporation, size and efficiency certainly do not always go together, but it is sometimes only the relatively big company which can afford

  1991
  to make use of the opportunities for increasing efficiency which are available to modern industry.
  The small or medium sized company may be unable to achieve the economies of scale which result from long production runs using expensive modern plant and machinery. The small firm may be unable to afford effective research and development work. This is a problem we are constantly meeting in regard to small firms. The fact that I represent the City of Sheffield will give hon. Members a pretty good idea of the number of small firms that I am concerned with. I would not say that all of them are efficient or that their prospects of becoming more efficient are at all bright.
  It may be that some firms find it impossible to support special design and marketing staff. This is particularly a problem where the industry itself, in order to maintain its present position, let alone expand, must go into new markets and expand. It has got to reorientate its whole development from the point of view of marketing and going into new markets. This is not an easy job. I can name very many small firms that I know very well indeed which could not possibly afford the specialist designing and marketing staff which are needed if they are to do their job successfully in new markets. Many firms—here perhaps I get on to slightly more dangerous ground, having mentioned my constituency—may have difficulty in attracting well qualified management because of their smallness.
  In these circumstances, the best answer may well be for smaller companies to join together, either to form a larger and stronger unit overall, or to join together to share services which are common to them all. At any rate, the Government's main purpose in setting up the I.R.C. has been to stimulate structural changes in industries which are too fragmented at present to be successful in international competition. The I.R.C. will certainly not be always on the side of the big battalions, helping giants to swallow up their smaller competitors. Wherever possible, the Corporation will try, not only to help small and medium sized companies to preserve their identities and personalities and the special contribution which their flexibility and adaptability qualify them to make in certain fields, but will also help them to achieve the
  1992
  higher level of efficiency which in some cases can be reached only through mergers and rationalisation.
  Mr. Weatherill: Would the Minister of State deal with the nub of the whole matter? There are many ways of talking out a debate, if I may say that to him respectfully; I do not want to be in any way insulting. One of these ways is not to answer the main point. We all agree that the services exist. This is what the right hon. Gentleman is saying, underlining what all of us on this side know. The nub of the problem is the question of taxation and the close company provisions. It is not good enough for the right hon. Gentleman to say that he will not deal with these fiscal matters, because these are the nub of the problem. I beg him to deal with this problem, because he says that the close company provisions are an encouragement to the small business man. I say exactly the reverse.
  Mr. Darling: The hon. Gentleman can go on saying so, but he knows enough about the way our affairs are conducted to realise that no Minister, a few months before the Budget, can discuss such fiscal questions. These are a matter for my right hon. Friend the Chancellor of the Exchequer and the next Budget. As I said at the beginning—I am sorry that the hon. Gentleman was not listening—these fiscal matters are questions which hon. Members will be able to deal with. They will have plenty of opportunity to put forward their views, their pressures and their persuasions on my right hon. Friend the Chancellor, if they think that, if these fiscal matters are changed, the industries and companies about which they are concerned will be much better off and will do a better job of work.
  No doubt, if these fiscal measures were changed, the companies concerned would be better off. Whether they would do a better job of work remains to be seen. No Minister other than the Chancellor of the Exchequer, obviously, can come forward at this stage of the year and discuss the fiscal measures which will be dealt with in the next Budget.
  I think that I have made it clear that we are certainly not against small businesses. What we want is the greatest measure of efficiency throughout British

  1993
  industry The contributions that small firms can make are contributions which will be measured in the wider field of overall efficiency. It may be that there are certain industries where the small sized units are a handicap to overall efficiency.
  I am sure that here are other industries where the point made by the hon. Member for Guildford (Mr. David Howell) clearly applies. In order to get economies of scale, in order that some big corporation can take advantage of all the new and expensive techniques, in order to get the right kind of expensive management, and so on, it may be desirable that there should be concentration, but in that concentration it may be more than desirable to have smaller firms which are contributing new ideas and which are acting as a gadfly, as it were, on the bigger body.
  These are matters which must be taken into consideration in the review of all the Government services which is now being undertaken. I would not quarrel with the view that in many industries small firms have still got a tremendously important part to play. Neither would I quarrel with the view that the Government must do what they can in those industries to ensure that the small firms make their proper contribution profitably to the expansion of the national economy.
  1.8 p.m.
  Mr. Michael Alison: I found the speech of the Minister of State enjoyable, as always, and well-informed, but rather unsatisfying. When he bared his soul to us, which was when he got a little nearer Sheffield, he immediately showed that he was on the side of what might be called the big battalions: that was his instinct.
  Earlier we listened to a typical self-justifying Board of Trade list of the good things it does for industry. To me it sounded exactly like the recruiting sergeant outside Wellington Barracks—"Nice uniform. Nice life if you join us". However, as soon as one gets inside and really comes to grips with the environment of what the Board of Trade and the Government produce for industry, it is the pudding-basin-on-the-head haircuts, fines, confined to barracks, and goodness knows what. We are not persuaded. The
  1994
  Minister of State was disappointing. No doubt, he will have an opportunity to redress this a little later.
  One of the most encouraging things so far about this debate—it came particularly from my hon. Friends the Members for Croydon, North-East (Mr. Weatherill), Guildford (Mr. David Howell) and Cities of London and Westminster (Mr. John Smith)—is that we have steered clear of what might be called the Oliver Twist approach to small businesses—that is, the attitude that they should have sympathy because of their poor, weak position and we should ensure that a little corner is carved out for them where they can continue their modest existence.
  The whole theme of what we on this side believe is what might be called the more positive David versus Goliath philosophy of the small business. This is the philosopy that in a small business an instrument may be to hand—in the case of David and Goliath it was a sling and a stone and an agile and youthful mind—which is capable of striking down an existing monolith and replacing it with something which is immeasurably better, more enduring, more capable, and more beneficial to the community at large. This is exactly what happened with David and Goliath. With a sling and a stone, he not only destroyed the existing monolith but replaced it with something more prosperous and beneficial to the whole community.
  I stress this because I believe that in the familiar and rather heart-warming theme which is true of the David and Goliath story there is something which reflects an underlying and permanent reality in the conditions and nature of life on this planet, and we ignore this at our peril. I refer to the innovator, the newcomer with a new instrument who comes in and shatters the monolith.
  One of the things which continue to disturb me about the whole philosophy concerning the Industrial Reorganisation Corporation, which, we know, is a favourite of the Minister—the whole concept of conglomerating units into enormous monoliths—is that one often gets landed with something which, if it gets big enough, then ossifies and petrifies and becomes like the dinosaur, which is out of date and is by-passed very often by events occurring in the smaller bodies around it.

  1995
  I want to illustrate the whole of this danger of the monolith, of this concentration into something which will allow, perhaps, the sting of a gadfly, as the Minister described it—something which merely stimulates it superficially and locally—but which is too big to countenance more fundamental change. This sometimes happens when there are units of colossal scale.
  I want to be a little more specific by drawing the attention of the House to what might be called a David company among the Goliaths of the industrial giants. My example is a particular one in iron and steel. I make no apology for mentioning—I hope that the Minister will have heard of it—the name of the Millom Hematite Ore and Iron Company. I notice that the Minister nods his head. He will now be regaled with a little of the prospects and difficulties of this David company amongst the Goliaths. I have no interest to declare in the Millom Hematite Ore and Iron Company other than my stake in the national interest. That is the stake which we all have.
  Now let me particularise. Millom is a small town on the coast of Cumberland. Hematite is a special kind of ironstone ore which can be dug up locally in that part of Cumberland. The Millom Hematite Ore and Iron Company, as its name implies, through its blast furnaces, turns this ore into pig iron, which is then used in the great steel-making plants all over the country.
  It is, however, a very small company, because—this is where one has immediately to register where it fits into the context of this debate—in the White Paper on Steel Nationalisation, which gave the scale beneath which the State was not interested in taking over private companies, namely, 475,000 tons of crude steel production per annum, Millom would not so much as be noticed. It hardly produces any steel. It produces only a certain amount of iron ore, the basic ingredient of steel, to the scale of about 500,000 tons a year. It is way beyond the scope of even the threshold of discrimination set out in the Bill to nationalise iron and steel.
  Millom, however, has two particular features, which, I believe, are peculiar to small companies, which have brought
  1996
  it out into a significant and striking position vis-a-vis the steel industry, one particular sector of this big-versus-small dialogue with which we are concerned.
  Millom's two features are, first, that it has a small, vigorous and efficient management, which, as we have heard today, is very often a feature of a small company. Management is more effective because there is more sense of involvement between managers and workers in the enterprise, communications from top to bottom are easier and it is easier to move the manpower in a more flexible way among a whole variety of jobs. Above all, when a company is small its survival is not underwritten by anybody and it has to struggle on its own.
  In any event, Millom undoubtedly has an efficient management. This is one of the features and advantages of being small. It has, however, another interesting and perhaps indispensable feature to recognise, and it at least is capable of recognising this feature: that is, it is constrained in something of a straitjacket by its peculiar external circumstances. It is small and it is very much subject to the pressures and constraints of market conditions outside it. This is one of the dangers which are often overlooked in a big unit, which does not realise the extent to which it may be by-passed by changes and currents in the world outside and which simply drifts sublimely on its own way.
  Millom is a company small enough to be extremely susceptible to commercial and environmental factors in its own field. To that extent it has continually had to consider how it could adapt and change to fit in to the changing structure of the world of iron ore in which it worked.
  In the case of this ore company, the main difficulty was the discovery of rich ores in other parts of the world and the ease with which nowadays those ores can be reduced to pellets and transported and imported into this country very cheaply. Therefore, the Millom Hematite Ore and Iron Company found that the cheapening ore market was making its competitive position very difficult and prices were squeezing it. Because of changes which deeply affected it round about, it had to change and innovate in order to survive. It could not control its own environment. It had, therefore, to

  1997
  react to it and change accordingly. It therefore decided that it must make better use of its ore.
  It hit upon the revolutionary—I use the word advisedly—idea of seeking to try to make steel directly from iron ore. We ought to pause to reflect on the sheer audacity, the wild-eyed optimism of this idea of a small iron company of almost minimal size, seeking to jump the gap between iron ore and the semi-finished steel product. It is almost inconceivable that anybody should even think of it.
  For the last 150 years, almost since the birth of a modern steel industry in this country, there have been three distinct phases of steelmaking, of which the reducing of the ore in a blast furnace to pig iron is only the first. The two subsequent stages are in many ways the most difficult and expensive: namely, the transporting of the molten iron ore to the next stage, which is the purifying process in the steelmaking furnaces; and the third stage, the rolling and shaping of the hot finished steel into the primary shapes. There have always been these three stages.
  The enormous expense—this is perhaps significant—latterly in steelmaking has been in the last two stages, because the modern steel converter, the L.D. converter to use the technical term, must be on an enormous scale, often in excess of 300 tons capacity, let alone its outside weight, to be an economic unit. Correspondingly, because of the large size of these big steel converters, it has been necessary to have a big plant in modern rolling mills which will handle the growing volume of red-hot ingots which come out of the steelmaking process.
  These L.D. converters and the primary rolling mills have in recent years been the two growing sides of steelmaking and easily the most expensive. I am certain that the Minister of State, who represents a Sheffield constituency, is well aware of this. Indeed, the whole of the Benson Report on the future state of the steel industry is conditioned and governed precisely by these economic realities, including the enormous expense of steel-making through the oxygen process and L.D. converters and the huge cost of the primary rolling mills. The Benson Committee produced a plan for the
  1998
  British steel industry which is geared entirely to these economic realities.
  It is, nevertheless, possible to report to the House today that there is now in operation a small company which has succeeded in jumping the gap, in eliminating two of these most expensive stages by what has come to be described as the new revolutionary spray steel process. I have no hesitation in saying that this process is as revolutionary in its field as the jump in electronics and miniaturisation through the development of transistors to take the place of the former old mechanical processes in radio.
  It is now possible by the Millom spray process to produce steel from the iron ore stage right through to the steelmaking and shaping process, by the continuous casting method, at one-quarter of the cost of the traditional steel-producing method. It is an almost inconceivable change in one of the most capital-consuming sectors of industry. This process is capable of cutting plant and production costs by as much as three-quarters. This is the scale of possible change that we are now faced with by the new Millom spray steel process.
  The traditional method of making steel from iron ore was to put it in the bath and blow bubbles into the bath. Huge injectors push oxygen into the molten bath of steel and bubble it up so as to bring the molten iron into contact with the oxygen. The spray steel method is immeasurably more simple than traditional methods—like all great break-throughs. The molten steel drops through a spray, and is atomised by a jet of oxygen, water and lime in a powdered form. Because it is atomised a far greater surface of the molten metal comes into contact with the oxygen, and it therefore drops as steel, direct from the iron ore, into a bath or container underneath. The molten steel is so hot that it is capable when received in the receptacle, of melting 35 per cent. scrap steel along with it. From there it can flow, through the continuous casting method, into final primary shapes—by-passing the traditional steel furnace and the rolling mills. This revolutionary method of production was developed through the British Iron and Steel Research Association, and Millom has had the sense to initiate because it was constrained by circumstances to strike out and develop.

  1999
  But there is a fly in the ointment. I have no doubt that the Minister is aware of it. It is probably a fly of which the Minister of Technology and the Minister of Power are even more keenly aware. Having developed the new technique which B.I.S.R.A. invented, and having successfully produced a spray steel plant which can produce 35 or 40 tons per hour of finished steel direct from the blast furnaces, Millom found itself with the technical and theoretical possibility of raising this production to 500 tons per hour direct from the blast furnaces. So it set about trying to raise £1 million—which it will have no difficulty in doing—to go over from the prototype to the processing plant, or to scale up; it cost about £100,000 to produce this successful pilot plant.
  But the Iron and Steel Board has jumped in, typical of the big battalions. I am not trying to impute any unworthy motives to the Board, but it is absolutely typical of the situation in which a small innovating firm, having developed a revolutionary process, comes up against bureaucracy, vested interests and traditional methods. The application to raise £1 million in order to scale up has been "deferred", to use a polite description.
  Mr. Darling: The hon. Member may remember that when the Iron and Steel Board was being set up we warned the then Government that this was precisely what would happen. They did not take our advice.
  Mr. Alison: The reason I am concerned about this deferment is that the Chairman of the Iron and Steel Board, Sir Cyril Musgrave, is a member of Lord Melchett's Organising Committee, and I fear that Lord Melchett, no doubt under the influence of the Minister of Power, has let the Board know that it would be entirely wrong, in advance of steel nationalisation and the emergence of the National Steel Corporation, to allow this project to go ahead, because the organisation of the steel industry is in a state of flux. The tie-up between the Chairman of the Iron and Steel Board and Lord Melchett's Organising Committee, and the link between that committee and the Government—who, as we all know, set up the Organising Committee—must be suggestive when one considers the un-
  2000
  justified deferment ladled out to this small progressive firm.
  I hope that the Minister can reassure us that there is nothing conservative, in the wrong sense of the word—nothing stick-in-the-mud on the part of vested interests and the big battalions—holding up the Millom advance. This is far too important a matter for the nation, quite apart from the sound growth principle of David slaying Goliath. I would remind the Minister of State that this is not just the gadfly principle—the small irritant which may make a marginal change in the processes of the Goliath. This is a case of a newcomer which could force a whole industry to change over to a new technique and a new process.
  Such forced changes have occurred in the past. An obvious example of this situation was Wilkinson Sword Company's forcing the great Gillette to change over to stainless steel razor blades, or the little invention of Moulton, which produced a bicycle with small wheels and rubber suspension, thereby forcing B.S.A. and other large manufacturers of bicycles to change and adapt to the small wheel. David does not merely irritate Goliath; David slays Goliath.
  This is what could happen if Britain made a corner for herself in spray steel. The present fashionable way of producing steel is by the L.D. converter process. The Minister of State's own party was constantly criticising the Iron and Steel Board, before it came under the purview of nationalisation, for not paying enough attention to L.D. and the oxygen processes. But do not forget that L.D. originated in Austria—one of the least of the tribes of Israel, one of the least important of the producers of steel in the world. Why did it originate in Austria? It was because there was severe competition from France, Germany, the United States and Britain, and because it had peculiar qualities of ore to hand. It had to adapt, adopt and innovate in order to survive. Survive it did, and it has forced the whole world of steel production to change, in exactly the same way as Gillette's were forced to change to stainless steel blades and B.S.A. to small-wheeled bicycles.
  Here we have a chance of getting in on the ground floor through sprayed

  2001
  steel. Only about 25 per cent. of our steel production is tied to L.D.—the expensive oxygen converter process. The Japanese, whom we are always having thrown in our faces as bigger and better competitors, have 50 per cent. of their plant in L.D. If we produced a successful spray steel plant we should be able to turn the flank of Japanese steel production. Yet the Government are deliberately deferring this development and holding up this process.
  If we cannot go ahead, somebody else will take it up. That has happened before. It will go overseas, although Britain has developed the process. It reminds me of the alleged fact that the Rootes Company was once offered the Volkswagen design and engine, just after the war. It was told that it could take it up; but it said, "No, we are not interested, because it is not modern or good enough". The production went to Germany, and it is now leading the whole world. This will happen to spray steel if the Government do not wake up and intervene to tell the Iron and Steel Board to give the green light to spray steel before some other country takes it up and it is lost overseas.
  It is no good the Minister's talking about a gadfly. He must make allowances for small Davids who can slay Goliaths. British industry must be flexible if it is to take advantage of modern techniques, and nationalisation is the one guarantee that this cannot happen. It is essential that Millom Hematite should be allowed to get under way before the National Steel Corporation is set down on the country like a monolith which will in due course be all too likely to turn into a dinosaur.
  1.30 p.m.
  Mr. Stratton Mills: My hon. Friend the Member for Barkston Ash (Mr. Alison) has told the House of his suspicions about the activities of the Organising Committee of the steel industry. I think that he has made his case and that there is a point to answer.
  I warmly congratulate my hon. Friend the Member for Croydon, North-East (Mr. Weatherill) on introducing his Motion, which well repays close examination. The House is indebted to him for his studies of the Small Business Bureau in the United States, which have added greatly to the value of our discussions.
  2002
  I was very disappointed by the Minister of State's reply. He entirely avoided reference to the taxation matters which are among the most important factors. It is not good enough to say that no Treasury Minister can intervene in the debate because of the nearness of the Budget. I do not accept that the type of taxation reviews that we are calling for comes into that general category. That attitude is to be deeply regretted.
  I want to deal with two main subjects—the effects of the close company taxation provisions and the effects of the Capital Gains Tax on the small company.
  What should be the Tory attitude to small businesses? Undoubtedly there are good and bad small businesses. It is entirely wrong for us to adopt a Poujadist attitude in protecting and preserving the inefficient elements. The forces of competition deal with the inefficient elements, rather than the forces of the taxation system, which artificially hinder the development of good small businesses. This is wrong in principle and it hinders the development of the national wealth. It is wrong also because the small business is vital to a thrusting and pulsating competitive economy.
  I deplore the Socialist attitude to small businesses. The empty green benches on the Government side of the House make this point more clear than 10 speeches from this side of the House. I deplore it particularly because on the benches opposite there is tremendous superficiality combined with lack of knowledge about the problems of small businesses.
  Historically the Labour Party started off with a general hostility to all businesses, big or small. We have seen a change in this pattern. There has been a rather reluctant acceptance of the mixed economy by the Labour Party but they have favoured big and medium-sized companies in preference to smaller units. I believe that the basic reason is that the Government feel they have much greater power and influence over large and medium-sized businesses than over the more numerous and diverse smaller ones. They feel that if they want to speak to I.C.I. they can get Sir Paul Chambers along and he will listen attentively. Whether he will accept what they say is another matter, but he will listen attentively. But if they want the small businessman, the employer of 20 people, to come

  2003
  along to see the Chancellor, that is beyond their grasp. This frustration has coloured the Labour Government's attitude.
  I want particularly to talk about the problems of close companies. Many of these problems arise because of the type of Corporation Tax that was introduced by the Government in the 1965 Finance Act, and because of the way that the taxation was forced through the House by the Labour Government, with very little constructive criticism and examination from the Government benches. We shall have for many years the problem of correcting the structure of Corporation Tax, about which the Government made such a mistake in 1965.
  The first problem in regard to close companies with which I want to deal is that of the level of directors' remuneration. This is fixed at £4,000 for one full-time director, £7,000 for two full-time directors, and £10,000 for three full-time directors. If the profits are sufficiently large, there is the alternative of 15 per cent. of the company's profits, but that comes into operation only in the case of extremely large companies. This is an unreasonably low level of remuneration.
  For example, one can have the situation of a company with two full-time working directors which makes £50,000 profit and has a turnover of, say, £5 million, and those directors have to divide between them £7,000 as directors' remuneration. This is unreasonably low having regard to the heavy responsibility involved and the risk to their own capital in the enterprise.
  Yesterday I was looking at figures in the Financial Times of comparable salaries paid to directors and executives in other businesses. For example, the salary range of the deputy chief executive officer (administration) of the co-operative Wholesale Society is £8,000–£10,000. The salary of the chief executive officer of a large engineering group is £7,500. The salary of a group sales and marketing executive in the automotive components replacement trade is £7,000. I could go on ad infinitum giving examples to reinforce my point that the arbitrary figures for directors' remuneration in close companies are unreasonable low.
  Another problem arises when a director wishes his son to come into the
  2004
  business. His son may have gone to university or technical college and become a skilled engineer, scientist or accountant, but, no matter what qualities he has, he is limited to the same salary scale as I have outlined—about £3,000–£4,000. But if the son goes to I.C.I., it can pay him what he is worth. So there is an artificial limitation in the case of the close companies.
  Another point arises when a firm wishes to bring in an outside director with special technical skills. The Minister of State spoke of bringing in design and marketing staff, or perhaps a skilled engineer. Provided that the man is not given more than 5 per cent. of the company's shares, the company can pay him what he is worth, but if he is given more than 5 per cent. of the shares, his salary is limited to the £3,000–£4,000 scale. This is particularly stupid because it means that the small business is placed at a disadvantage compared with larger firms in attracting skilled staff and is also discouraged from giving a share of the business to skilled personnel. This is one way in which the Government are further assisting the brain drain.
  My second point about close companies concerns the statutory provision that the company must pay out 60 per cent. of its profits after Corporation Tax. That figure has been written into the Act.
  When the Finance Act, 1965, was going through the House my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) argued that it was wrong to put in a specific percentage because the Inland Revenue would take it as an automatic requirement that 60 per cent. was to be enforced. That is what has happened in many cases. I do not want to reveal what happens at private meetings between companies and the Inland Revenue, but I assure the Government that this is the attitude being adopted by the Inland Revenue, and it is in direct contradiction with the soothing words of the Chief Secretary to the Treasury, who said that the figure was merely a guide, that it could be very flexible and that all kinds of other things were to be taken into account.
  We argued then also that in any case 60 per cent. was too high. This point must also be reinforced once again in this debate. Of course we now have

  2005
  the anomalous situation whereby the Corporation Tax system encourages companies generally to retain profits while the Inland Revenue is forcing close companies to pay out profits, which is the opposite of the general intention. We thus have the comic result of some quoted companies being forced to increase their dividends to meet the 60 per cent. payout requirement, which is directly contrary to the Government's prices and incomes policy.
  The Treasury is unable to give any figures of the number of companies involved and has also specifically refused to limit them in dividend increases in the same way as they are limiting other companies. This situation bears out again the anomalous position that the Government have put themselves into on this arbitrary statutory requirement as to payment of dividends by close companies in the misguided legislation of 1965.
  Interest on a loan or debenture stock is not allowed as an expense before Corporation Tax if the capital is provided by a director or a director's family or other participators. For example, if a man is starting a business and wishes his father or brother to put money into it by way of loan capital, he is unable to pay him a normal rate of interest as an expense before Corporation Tax. This is madness. It is unfair because it is the small businesses which find the greatest difficulty of all industrial concerns in raising capital and they are being doubly penalised because there is also the Chancellor of the Exchequer's advice to the banks not to lend money except in very special priority cases. So, all in all, this is an absurd provision and I repeat our request that a reasonable rate of interest should be allowed for such loan capital or a formula decided as a rate of interest of perhaps 1 of 2 per cent. above the current Bank Rate.
  There is a reasonable and simple way round the Chancellor's intention. I am always glad to take an opportunity to give publicity to any method within the law of getting round tax legislation which I consider to be unfair and unreasonable. The method concerns the example I gave. The father could deposit his capital with a bank or merchant batik at an agreed special rate of interest. The bank or merchant bank would thin lend that money to the close company and then, of course, the bank
  2006
  would be paid its interest in the normal way and this would be allowed as an expenses before Corporation Tax. This method would get round the anomaly introduced by the Chancellor of the Exchequer, so I hope that we will see it being done rather more in the years ahead.
  Of course there are many other detailed unfairnesses which have been shown up in the close company legislation, such as the definition of a participator and other matters that I shall not go into now. The operation of this legislation has been highly undesirable. Where the company profits are under £10,000 a year with two full-time directors, I do not think that it matters greatly. But when one gets over that stage, it becomes more and more penal in its operation. The central theme of the debate is really the harm that this legislation is doing.
  In the recent debate on tax reform, I said that I had been told that the Inland Revenue had prepared a report on the working of the close company legislation. I said that I had heard this only at second or third hand and was not sure whether the information was correct. I asked the Financial Secretary to deal with it in his reply but he did not do so, so I repeat my question today. I am told that the Inland Revenue report says that the legislation is too tightly drawn and is harmful to the development of small businesses.
  I want to say something on the question of the Capital Gains Tax as it affects small businesses. This is immensely complicated. The tax can arise on the sale of a business and that creates its own problems. It can also arise on death or transfer of business or a share in the business to a son. This raises the problem of finding hard cash to meet the Capital Gains Tax.
  While the Government made a small concession when the Act was going through the 'House, this still has not met the essential problem. The Capital Gains Tax on small businesses will be seen over the years ahead, particularly with inflation, to be more and more savagely harmful in its effect and I hope that the Chancellor will look at this again in framing his budget.
  I occasionally have the responsibility of advising people who are looking at the problems of whether or not to commence

  2007
  small businesses. I try to advise them on their taxation position under a Socialist Government. I do not really feel that people have yet fully realised the grave seriousness of the taxation problems which have been created for small business by the 1965 Act. I am afraid that my advice is that, unless they are going to run their business in such a way as to keep their profits under £10,000 a year for ever, or unless they have strong personal motives in wanting to set up in business for the hell of it, or unless they can get their profits up to about £100,000 within 10 or 15 years and get a Stock Exchange quotation, my view is that, under present legislation, it is just not worth it.
  Sir Knox Cunningham: Is it not fair to say that the 1965 Act is crippling small businesses and that really this, as far as one can see, is what it was intended to do?
  Mr. Mills: I am obliged to my hon. and learned Friend. I suspect that there is a degree of Machiavellianism in this because I will never forget the remark made by the hon. Member for Edmonton (Mr. Albu), then Minister of State, Department of Economic Affairs, when the Act was going through the House on Second Reading. My right hon. Friend the Leader of the Opposition had said that this legislation would
  "… be damaging and lead to the break-up of family companies on death."
  The hon. Member for Edmonton replied:
  "And about time."—[OFFICIAL REPORT, 10th May, 1965; Vol. 712, c. 72.]
  I am obliged to my hon. and learned Friend the Member for Antrim, South (Sir Knox Cunningham). This makes the point very well about the Government's basic attitude of hostility to these small businesses. I am extremely pessimistic about the future. Like my hon. Friend the Member for Barkston Ash, I recall that 50 years ago today's industrial giants, such as I.C.I., G.E.C., Marks & Spencer were very small businesses indeed and grew within the last half-century.
  This present legislation will have the effect of severely harming the growth of the small company and bringing a new Ice Age to Britain's industrial structure, allowing the big to stay big while the small are artificially prevented from grow-
  2008
  ing by the party opposite. This is disastrous for Britain and we on this side of the House must reiterate our aim to use the individual efforts of tens of thousands of men to contribute to a growing and competitive economy.
  1.50 p.m.
  Mr. John Biffen: No words of mine will be half so eloquent about the indifference of the Labour Party to the fortunes of the small businessman as the empty benches opposite. It is extraordinary that not a single speech in this debate has come from the other side of the Chamber, with the exception of that from the Minister of State. His speech was extraordinarily disappointing in that he did not address himself to the central argument of my hon. Friend the Member for Croydon, North-East (Mr. Weatherill), namely, that it was the level of taxation and the framework of taxation which was leading to so many of the difficulties of small businesses.
  Naturally one does not expect the Minister of State to anticipate the Chancellor's statement. No one is so naive as to expect that, but at least we might have expected some glimmer from the Minister of State that he recognised that there was validity in the proposition that the Finance Act, 1965, and some of the consequential legislation and created special problems for small businesses. It was the absence of even a token recognition which has given us such acute disappointment in the Minister's speech, delivered as it was with his customary urbanity and charm.
  I should like to congratulate my hon. Friend the Member for Croydon, North-East on his good fortune in the Ballot, and for having chosen this subject. It is one of immense general interest, certainly outside this House, and it has enabled the House to concentrate upon an important aspect of our industrial structure, all the more significant in that the debate takes place a few weeks before the presentation of the Budget. My hon. Friend was absolutely right to say that he was not presenting the arguments about the small business as a plea for generous indiscriminate Government help, rattling the begging bowl for further subsidies.
  This is very alien to the thinking on these benches, and the argument was

  2009
  very well sustained by my hon. Friend the Member for Barkston Ash (Mr. Alison). It is true that in a discussion of the rôole of the small business we do not want to be obsessed with some kind of nostalgia about the god-given rôle of the little man, any more than we should be obsessed with some belief that scales of size produce more economic production and marketing. These assertions are often made and argued in this House but it ill becomes politicians, or civil servants, to be too confident in asserting that there is a given pattern of size which is desirable and which, more to the point, is inevitable.
  The market, if it is left to operate, will do much more than we are likely to be able to see with the crystal ball provided by the particular school of economics to which we lend our ear. That is why I confess to a little hesitation in endorsing any arguments that the Government's procurement policy should be biased in a certain way to produce the continued existence of a certain number of small businesses. This is something that I would not be prepared to endorse any more than I am prepared to endorse the use of public purchasing power to alter the structure of many of the supply industries, unless it appears to the Government in their procurement capacity to be a sensible, economic use of their purchasing resources.
  The idea that there is a Marks & Spencer rôle for Government Departments has some validity, but one must remember that these Departments are not normally operating by sheer commercial criteria. They are politically motivated and they are required, for example, to pay special attention to the provision of employment for the disabled; they are often required to pay special attention to the provision of employment for those in development districts. There are a host of other distorting factors which, wisely or otherwise, we often place upon political purchases. That is why I should like to enter a quite severe reservation about adding too much to the distortions applying to politically motivated purchases.
  There are two aspects of the problem to which I should like to refer. They relate to the responsibilities that we alone discharge in this House. The first is the legal and tax framework under which we expect small businesses to operate in
  2010
  future and the second, what rôle we see for the small business in an increasingly centrally-planned economy, as is quite clearly the intention of the party opposite. Undoubtedly the legal framework is very much conditioned by the 1965 Budget. My hon. Friend the Member for Belfast, North (Mr. Stratton Mills) has dealt with this in some detail and I do not want to elaborate on the argument which he put with such clarity.
  When one recalls that particular Finance Bill, and I do this with some trepidation in the presence of my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin), who played such a major part in those debates, it is to remember that it was a triumph of this House over the intentions of the Government which made the distribution requirements discretionary on the Inspector of Taxes rather than mandatory by the Government. I want to be as bipartison as I can—it was also due to the good work put in by the hon. Gentleman the Member for Manchester, Cheetham (Mr. Harold Lever) who now sits on the Treasury Bench.
  His promotion into the rôle of an ensnared gamekeeper augurs ill for this House, in a bipartisan capacity, being able to exert the same solid common sense on any Budget, this year or subsequently. I have a feeling that the hon. Gentleman will be much less effective now that he sits tamely on the Front Bench, than he was as that splendidly free-lancing character from below the Gangway. The legal consequences of the 1965 Budget, the question of the restriction of directors' fees allowed for Corporation Tax, the whole question of the close company status, taken in consonance with Capital Gains Tax, all of these have created among many small businessmen the feeling that the Budget was deliberately construed to harass them, because they were thought to be the rather anarchistic unorganised part of the economy which would be regarded with hostility by a Government dedicated to centralised planning.
  The point made by my hon. Friend the Member for Belfast, North about the significance of the restrictions on directors' fees is especially important, because when we talk about business operations we all too readily assume that one of the major factors—perhaps the major

  2011
  factor—is physical assets, and one of the great limiting and inhibiting factors on the expansion of small businesses to play a more profitable rôle in the economy is that there comes a time when they are unable to obtain the capital needed to take further steps forward.
  This is a view which should be challenged because at least of equal importance are human assets—the qualities of certain entrepreneurs, rogue businessmen, if one likes. It is the human skills in this country and the reward of the profitable application of those human skills which is every bit as important as our current concern about the level of physical assets.
  Another point which must cause the House considerable concern is that there is every indication that the abolition of the exempt private company status will harass the small businessman. The Minister of State took the view that this would be better discussed on the Second Reading of the Companies Bill. I fully accept that. None the less, the Minister might at least have attempted to answer the point made by my hon. Friend the Member for the Cities of London and Westrninister (Mr. John Smith) that we look like having a form of company legislation which is inconsistent with Continental practice and which, incidentally, would be detrimental to the fortunes of the small businessman. I am sorry that apparently we shall have to wait until next week, but I hope that the way in which the House was treated today does not give any indication of the way in which we shall be treated on this important point later.
  Under the French system, there are the Société de Responsibilité Limité for the family business and the Société Anonyme, which is more akin to our public corporation. I should like to see that system contained in the companies legislation which may eventually become law, because I think that it would be consistent with being good Europeans and with giving small businessmen the kind of framework in which it is desirable they should operate.
  We have to decide whether we want small businesses to operate within the framework of limited liability or force them into a framework or partnership. There are plenty of indications that,
  2012
  whereas limited liability is becoming a difficult proposition, partnership is becoming easier. There happen to be certain disadvantages about the partnership framework for industrial and commercial businesses, but I do not wish to argue that now. What the House is entitled to know is whether the concept of limited liability for small businesses is being attacked by the Government because it is thought to be unsuitable or whether the attack is on small businesses themselves.
  So much for the first point which I wished to make concerning the legal framework in which Parliament expects small businesses to operate. My second point turns on what future we might expect for small businesses in the centrally planned economy. One of the characteristics of small businesses is that they tend to be found in much greater profusion in the service industries and agriculture, and particularly in those areas because possibly there is greater ease of entry and where the initial capital requirements tend to be lower. That being so, the whole of the Government's policy, which has been avowedly against the service industries, is bound to have had the consequence of being particularly hurtful to many small businesses.
  However, the Government's search for new planning machinery to supplement their existing Whitehall framework, which was elaborated with such solemnity by the Minister of State when he told us about all the advisory services which had been spawned by the Government, turns on some kind of compact which the Government are trying to conclude with the C.B.I. The C.B.I. is singularly ill-equipped to represent small businesses and not least by virtue of its Charter.
  I took the precaution of obtaining a copy of the Charter from the Library. It is entitled "Supplemental Charter and Byelaws". On page 12, under "Qualification of Members", it is stated:
  "The following shall be eligible to be Full Members …:—
  (a) any company or firm which is wholly or mainly engaged in productive or manufacturing industry in Great Britain"—
  and then comes the important phrase—
  "(as opposed to trade of any type or services ancillary thereto)".
  At one sweep the C.B.I. Charter excludes many of the people about whom we are talking.

  2013
  All the evidence shows that the Government's present consultation with those whom they seek to affect by their economic policies is directed either through the C.B.I. or the N.E.D.C. and its proliferating offshoots. These are no more able to represent the small businessman than the C.B.I. But if we need any indication of where the Government's loyalty, interests and affections lie, I need only to turn to yesterday's Written Answers. In answer to a Question by my hon. Friend the Member for Guildford, (Mr. David Howell) about having another National Plan, the First Secretary of State said:
  "I had a useful discussion with the National Economic Development Council on 1st February about future planning work. Preliminary studies of likely trends in the economy are in hand and will, I hope, establish a basis for consultation with N.E.D.C. and industry about detailed revision of the Plan."—[OFFICIAL REPORT, 9th February, 1967; Vol. 740, c. 341–2.]
  It might be ungenerous and out of order to pursue that line too far. But, for the last couple of years, the C.B.I. has been riding in the Government's hip pocket with precious little result. Though there may be some sign that at last it is clambering out, throughout that time small businesses had not had their case represented to the Government with any degree of fluency. Certainly there had been no success. It has been left to hon. Members, particularly to those who argued during the Finance Bill, 1965, and who have argued against the Government's measures against the service industries, to put the case for the small businessman, just as my hon. Friend the Member for Croydon, North-East has put it today.
  Mr. Weatherill: This was why the Society of Independent Manufacturers was set up. I have a suspicion that the C.B.I. is not very much in favour of its activities, but it was set up simply because there was no voice for small industry and it needed one.
  Mr. Biffen: I could not agree with my hon. Friend more. I am delighted that the move which he has described was made, and we are all grateful that, inspite of his many business commitments, he has found time to facilitate the evolution of an alternative forum for small business, and I wish him every success with it.
  2014
  We live in the era of the antiseptic organisation man, a person who belongs to a self-styled managerial élite, who is contemptuous of shareholders and of consumers. He is the man with whom the Government seek to make a compact in the belief that they are talking to industry. I have no wish to make any offensive personal references, but the whole philosophy which I find so distasteful is contained and elaborated in Mr. Catherwood's book, "Britain with the brakes Off".
  What is it about the small business which so distinguishes it from its big brethren? It is this: that the proprietor and the manager have a common interest, whereas with large-scale industry today the managerial function very often has little interest with that of the shareholders, and very often it is directly hostile to the interests of the shareholders, a situation which I hope might be remedied by constructive and radical reform of company legislation. It is because the small business brings this healthy and anarchistic element to our economy that it is so distrusted by hon. Members opposite. My fear is that the tax harassment contained in the 1965 Budget is intimately linked with the whole philosophy of centralised planning for big business which has now become the central feature of this Government's economic policy. This could never have been more evident than it is today in the way that this debate has been conducted almost entirely by hon. Members on this side of the Chamber.
  2.12 p.m.
  Mr. David Mitchell: Today the attention of the House is called to the problems and increasing difficulties facing small businesses, and we are urging the Government to encourage the prosperity and growth of this enterprising and I believe, essential part of the community.
  I am speaking today as a small businessman, and, therefore, if I have an interest to declare, then I declare it. But it also means that I have some knowledge of the subject on which I am speaking. I am bound to say also that having sat through most of the debate, I am absolutely horrified at the total lack of any interest whatsoever by Labour Members in the subject we are discussing.
  Mr. Julian Ridsdale: Has my hon. Friend noticed the complete absence of the Liberals, who say they believe in the small businessman and the small shopkeeper?
  Mr. Mitchell: I am grateful to my hon. Friend for that intervention. It is perfectly true that there are no Liberal Members in the House. I have not seen any present during the whole of our discussion. If they were genuine in their belief, one would have expected at least one of them to be here. I was pointing out the total absence of Labour Members. I have never seen the House looking like this. There is not a soul on the back benches. There are only two Members of the Labour Party present, one a Minister and the other a Government Whip. I am delighted that another Member of the Labour Party—the hon. Member for Wandsworth, Central (Dr. David Kerr)—has been spurred by my remarks into taking his seat. The lack of Labour Members is a clear indication of the interest which the other side of the House has in this particular topic.
  Small businesses are essential to our country. I say this for four important reasons. I am glad that the Financial Secretary to the Treasury is present to hear the debate. I hope that he will agree that this is something in the longterm interests of the country. Almost every one of the large businesses which dominate British industry today started as a small business. I do not need to remind the House of the start of Lord Nuffield. I do not need to remind the House of the start of Lord Thomson and of the start of so many of our major industrial concerns. They started from the energy, the enterprise and the initiative of one individual who had something to give that the community wanted—one individual, whose driving force created what has now become a major industry. I could look at my own constituency at Andover and Basingstoke, where there are a certain number of industrial firms and substantially more coming in because of town expansion. Those firms started from small beginnings, and have grown up over the years. They started as family businesses and have grown into the major exporting and industrial firms that they are today.
  First, if we do not encourage small businesses, where will the large busi-
  2016
  nesses of the future come from? All the great businesses of today started in a small way. Second, we have to consider the essential part that is played by what I call the feeder industries to the large industries—people who make the parts and the accessories. This is especially important for the assembly industry, such as the motor car trade, where parts have to be efficiently brought forward at the time they are wanted in the assembly line. Small firms have a major part to play in this.
  Third, I should mention agriculture, a major industry of this nation which is dominated by small businesses. Agriculture plays an essential part in Britain's economy. As a nation—and this is true of Whitehall regardless of party—we tend to underrate the value and the importance to the nation of British farmers and British agriculture. British farmers are overwhelmingly small businessmen, and all of their production is a reduction in the amount of imports which this country has to bring in. They have a vital part to play in our balance of payments. It is small businessmen who overwhelmingly dominate this part of our economy.
  My fourth point concerns a matter of principle, on which I do not expect the Government to be with me. We have to consider the sort of society that one is trying to create. I was particularly impressed when the hon. Member for Croydon, North-East (Mr. Bernard Weatherill), in opening the debate, drew attention to the opportunities for the individual which are given by the small businessmen. In the whole of our economy and political life we see a division between those who believe that we should concentrate into the hands of the Government wealth, power, control and ownership. We have just had a Bill to nationalise the iron and steel industry. The Steel Corporation has been given powers to extend and to divisify into a major number of other activities, of which it has to give practically no account to Parliament. Here we have the whole concept of concentrating power and wealth in the hands of the Government, or, by contrast, spreading it among small businesses, with wealth, power, position and participation increasingly in the hands of the individual.
  Mr. Nicholas Ridley (Circencester and Tewkesbury): My hon. Friend has said that nationalisation of steel would concentrate power and wealth in the hands of the Government, but would he not agree that the Steel Corporation will be an enormous unit of economic power totally out of the control of the Government, or the House, or the market, and that therefore the effect of nationalisation is to provide these great blocks of economic power which are not responsible to anyone or anything?
  Mr. Mitchell: There is a great deal of truth in that comment. I remember that shortly after the nationalisation of the railways someone said, "Is it not nice? They are our railways". That theme and thought soon disappeared and today very few people feel any sort of sense of participation in British Railways or their activities.
  The Minister was very helpful. Broadly he gave a general welcome to the Motion and promised that the Government had an interest in small businessmen. But, regretfully, the House has had to record on more than one occasion that the promise of an interest is likely, like other promises, to show little fruit in practice.
  Mr. Weatherill: Would not my hon. Friend agree that although the Minister said that he would accept the Motion, he did not answer any part of it, except to say that small businesses were an important part of Great Britain's economy?
  Mr. Mitchell: I entirely concur with my hon. Friend. I was about to make that point. In his very first words, the Minister said that he could not deal with any fiscal matters, and yet the whole essence of small businesses and of the problems around them is fiscal—the financial problem of how to manage one's overdraft when it is costing the present rate of interest, how to make a profit at the end of the year with the decline in the level of economic activity which the stop-go policies of the Government have brought about. These are the essential problems—and they are financial problems—which face small businesses, which are less able to cope with them than are large businesses, and yet the Minister's first words on the subject were to say that the Government washed their hands of this aspect.
  2018
  I am delighted that the Financial Secretary to the Treasury is now here. I recognise that he cannot, and that it would be unreasonable to expect him to, give us any indication of what he and the Chancellor of the Exchequer may have in mind for the Budget, but I am glad that he is here to listen to the debate and I hope that he will read the speeches which were made before he entered the Chamber and which clearly showed the damage being done to small businesses and the business community in general by the Government's financial policies and particularly by the excessive level of taxation.
  I welcome what the Minister said about the assistance and advice which the Government give to small firms, especially those seeking to export, through the Board of Trade. Having had some recent experience of dealing with that Department, I am very ready to say how efficient and helpful it was when I contacted it in connection with some items for export. However, the Minister went on to refer to consultation with industry. I got the very clear impression that the consultation with industry was with the C.B.I., which is in touch with the major firms of British industry, such as I.C.I., but very little with the small firms. I have never been asked in my business to give my view of any aspect of Government policy to the C.B.I., and there are countless business firms which are not members of the C.B.I. and which have no connection with it. These small firms are never consulted by the Government and their case largely goes by default.
  I will give one small example of the way in which the Government can do a lot of damage to industry because of insufficient consultation. This may sound silly, but I assure the Minister that it is not. The Government have introduced a safety regulation for carrycot stands—Regulation No. 1610 of 1966. This is an item of consumer protection. It is highly desirable and it provides that carrycot stands should not be dangerous. The manufacturers of these stands were circulated with a draft of the regulations which it was proposed to introduce and were asked to comment. At least one, from whom I have had some complaint, did not receive any acknowledgement of his letter making comments.

  2019
  The very next thing to happen was that on 1st February the Government called a Press conference at the Home Office announcing that the regulations were to come into operation the following day. A manufacturer with 5,000 carrycot stands three-quarters of the way through production would have to change his specifications in the middle of production, and yet the Government expect industry to be cost-conscious and efficient. That is a very small example, but it can be repeated many times over and demonstrates the lack of consultation between Government and industry. What is worse, it also indicates a lack of notice of the Government's intentions.
  A whole range of problems is associated with this subject. Small businesses and large are both at risk of damage by the actions of the Government. The essential home market, which is the very basis on which an export trade can be built, in many cases has been substantially reduced by the Government's stop-go policies and their failure to take adequate action early enough. Small businesses are particularly affected, because they do not have the financial resources to ride out such a situation. Damage to the export trade arises because costs of production per unit rise enormously when there is a cut-back in demand and a cut-back in the number of articles produced, so that overheads have to be carried on a much smaller number of items. There have been all sorts of other increases in costs—petrol tax, National Insurance stamps, Selective Employment Tax on the service industries which supply manufacturers, and so on. A whole complex of problems has been worsened for industry when costs have been increased by Government action, and small industries have been affected most of all.
  I am delighted to see that the Minister of State has now returned, because I want again to refer to what he said. He said that he was not concerned with the fiscal aspect of this subject. But that is the essential part of the debate. There is nothing more important than that aspect. This is what makes business tick. Why do people start businesses? Why do they carry them on? Does the Minister think that they do it for love of the Chancellor of the Exchequer, or love of the Board of Trade? There is
  2020
  more affection for the Board of Trade, but I can assure him that it is not affection for the Board of Trade or the Chancellor of the Exchequer which makes a businessman start and carry on a business.
  It is true that there is the challenge, the fun of the skill and the craft and a desire for success and a sense of accomplishment, but far more important as a driving force over the major part of industry is the profit motive, the desire to enjoy the fruits of success at the end. What is it that drives people forward if it is not the hope of enjoying a better standard of living, providing for their old age, ensuring security for their widows and giving their children a better start in life than they themselves had? But now we find that taxation is killing incentive, initiative and enterprise, and it is on those three that the future prosperity of the nation is built.
  More than anything else, enterprise, initiative and incentive have been killed by the penal levels of taxation which the country is suffering and which affect the small businessmen worst of all when the driving force comes from the individual, the businessman proprietor, the working proprietor in his own business. When a company makes a profit, it has to pay 40 per cent. of that profit in Corporation Tax. As a result of the 1965 Budget, the businessman in a close company then has to distribute 60 per cent. of his profits. On that 60 per cent. he has to pay Income Tax and, if he runs a largish business, making an important contribution to the country's economy, he has to pay Surtax too. The total rate of tax on his profits is 66⅔ per cent. if he is not paying Surtax, and if he pays Surtax then he pays 2s. or 4s. in the £ on top of that, so that 75 per cent. of his profits are taken in taxation before he goes any further.
  The Government thus reduce the incentive for him to go out and to get business and to build up his business. They also reduce the incentive to economise within the business through eliminating restrictive practices and becoming more efficient; that incentive to economise is reduced by 75 per cent., because only 25 per cent. of the profits are left in the hands of the business man.
  Let us suppose that the man works his life in the business. The meter is ticking

  2021
  away. One day his estate will have to pay death duties. He may take steps to eliminate or reduce them, but he cannot take steps to eliminate Capital Gains Tax. The taxi meter in that respect is ticking away from April, 1965. If inflation continues at 5 per cent. a year, over 20 years that business doubles in value—on paper; it doubles not in real value but in inflationary terms, and purely as a paper item. If he sells the business and retires, or even if he gives it to his son, he has to pay in tax 30 per cent. of that increase in paper value.
  The essential problem is that he has to pay that out of his savings from his taxed income. I have made it clear that with the present level of company taxation and personal taxation, we have reached a situation in which it is not possible for a businessman to make those savings. In particular, farmers, whose returns are much smaller, are unable to accumulate enough cash to pay these taxes. Farms have been inherited from generation to generation, as have small businesses such as the grocery store in the high street. One day the farmer or the shopkeeper may want to give the farm or the business to his son. He has to find 30 per cent. of the paper increase in value in cash to pay the taxes, and it is totally beyond his financial ability to do so. Hardly a farmer in the country can do it. This will lead to the fragmentation of farms and businesses and to the break-up of the firms which should provide the great industries of the future.
  It is because of this severe damage to British industry in the long term—not in the next few months or weeks—that I plead with the Government to listen to the case which has been made by my hon. Friend, and in the Budget to take steps to restore incentive for initiative and enterprise which are so vital to our future.
  2.35 p.m.
  Dr. David Kerr: Taunted by the gibes of the hon. Member for Oswestry (Mr. Biffen), I felt it incumbent upon me, in my humble way, to remind the House that this side of the House includes a number of small businessmen, among them myself. It is often overlooked that there are no worse examples of small businessmen in the community than the general practitioners. We suffer from precisely the same disad-
  2022
  vantages as have been outlined with such predictable ennui by hon. Members opposite and unfolded with such pious drivel as has kept so many hon. Members away from the debate today.
  We all know that, for hon. Members opposite, the small businessman today occupied the rôle of the small landlord of perhaps 10 or 15 years ago, when they so often said that we must protect the small landlord because invariably he was a widow.
  I recall a colleague of mine, then chairman of a finance committee of a local authority, once scratching his head with bewilderment, because, he said, it seemed that all the small landlords were penniless widows. Today we are being instructed in the invidious position of the small businessman—small farmers, small doctors and small shopkeepers on the small corner of the small road. Our hearts bleed with pity for these people. They are in great difficulty.
  What I find insufferable is the suggestion by hon. Members opposite that this is all the fault of the Government's taxation system. I recall so well going around my constituency in the 1964 election. It contains many small shopkeepers. Indeed, I once said that one of the few big businesses was Wandsworth Gaol, and that is not doing too well at the moment. The small shopkeepers in my constituency were riven with terror, not at the thought of a Labour Government but because of the action of the preceding Conservative Government over resale price maintenance. Today hon. Members opposite come here with their political knives, cut their political onions and shed their political tears over small businessmen.
  Mr. Patrick Jenkin: Does the hon. Member support the abolition of resale price maintenance?
  Dr. Kerr: Yes—wholeheartedly. But when hon. Members attempt to defend the small shopkeeper, it is right to remind them that their defence of the small shopkeeper, when they had the responsibility of Government, was extremely badly handled.
  But resale price maintenance is scarcely the most important consideration which affects the small business man today. His

  2023
  grave problems are not resale price maintenance or taxation; they are the problems which arise from land costs and employment policies. Land costs have steadily driven the very valuable social amenity of the small shopkeeper from his place in the high street, and we have seen him replaced by the larger supermarket, the betting shop and other questionable social amenities. That is not the result of the present Government's policies. That has been determined for some years by the quite deliberate policies of Conservativism and capitalism.
  Hon. Members opposite shed their tears over a system which they are devoted to support, when that system can thrive only on the destruction of the incompetent, the inefficient and the disadvantaged. The very essence of competition is the preservation of the strong and the destruction of the weak. When we are talking about small businesses, it is no wonder that hon. Members opposite pay no heed to the number of bankruptcies. The hon. Member for Basingstoke (Mr. David Mitchell) spoke as though every tiny little engineering firm, every tiny little builders' yard in the suburbs of London, was a potential Trollope and Coils or a potential Nuffield Motors. I can assure him that mathematically they are potential candidates for the bankruptcy court as a much better bet than they are every likely to become another I.C.I. or Acrow or any of the other big firms to which the hon. Member referred.
  Mr. David Mitchell: Does not the hon. Member agree that if among these firms there are not potential Trollope and Colls, then the outlook for this nation is disastrous?
  Dr. Kerr: I do not accept that. The hon. Gentleman overlooks the essence of establishing businesses. The problem facing all hopeful developers of new industries, whether in this country or in any of the developing countries, is the search for capital. [Interruption.] I insist on my belief that the severest brake on the development of any new industry, no matter where it is to be established, is the difficulty of discovering new capital at a reasonable rate of interest.
  Mr. Biffen: If that is the hon. Gentleman's proposition, would he endorse the arguments adduced by my hon. Friends to the effect that the plough-back pro-
  2024
  visions of the Finance Act, 1965, are entirely detrimental?
  Dr. Kerr: The hon. Gentleman has caught me with my legs crossed, for I do not know precisely what the plough-back provisions of that Measure are and it would, therefore, be rash of me to support them. The essence of this problem is not the creation of new capital once a business is established but the discovery of launching capital.
  The 1965 Annual Report of Bankruptcies shows that small builders were subject to no less than 392 bankruptcy receiving orders. The liabilities of small builders at that time amounted to just over £1 million and their assets totalled about £349,000. The number of these small businessmen—which the Opposition is so busy promoting—is obviously too large for anybody's mental comfort. Their contribution to the building industry is little short of a disgrace. Their activities are absolutely inefficient and the twoman builder who sets up with a stepladder and a wheelbarrow is not assisting in the development of the kind of building industry which we want. In fact, that sort of organisation is carrying us away from the highly efficient, automated and mechanised building industry without which we cannot progress to the kind of programme we want. Yet this is the sort of small business which is suffering not primarily from the existing taxation system, which is only the development of previous taxation systems, but from its own in-built incompetences.
  I referred to the question of land values. It is not only in the high streets that the small shopkeeper is being driven out. The small business professional men—doctors, solicitors and so on—are finding it increasingly difficult to acquire office and other business accommodation in areas where they are not only most likely to prosper but where they are most needed.
  It is all very well for hon. Gentlemen opposite to shed tears over the plight of small businesses and attempt to use this as a stick with which to belabour the Government. But the damage which Conservative policy did to small businessmen over so many years cannot be allowed to be forgotten and the case being adduced by hon. Gentlemen opposite today cannot be allowed to go unchallenged.

  2025
  There is still a great deal to be done for small businesses. I hope that when the time is right—and I hope that that time is not too far ahead—we will look sympathetically at creating some sort of advice centre for the many people who think that they should spend their hard-won savings on establishing, say, a small tobacconist's in a side-street but who later find that they have gone in for a disastrous and laborious undertaking. We need a bureau to which these people can go for objective advice and assessment of the opportunities which face them. We also need to make capital available for potention growth industry. We need to devise new means of obtaining new capital at competitive rates of interest and not allow developing industries to fail because they are placed in the hands of financial interests which, I say bluntly, find their representatives on the benches opposite, no less than other industries do.
  The charge is a substantial one and I would deplore it if it was thought that the absence of hon. Members from this side of the House in any way indicates that we are on the defensive. We are not. We are only on the defensive against the unutterable boredom of hearing the re-statement of this case from hon. Gentlemen opposite.
  2.45 p.m.
  Sir Harry Legge-Bourke: The hon. Member for Wandsworth, Central (Dr. David Kerr) is quickly bored. He did not arrive in the Chamber until the debate had been running for over three hours and he was called to speak within half an hour of having arrived here.
  In view of his profession outside the House, he might, perhaps, care to look at an excellent address which Lord Bowden gave in Norwich on 4th September, 1961, to the British Association for the Advancement of Science. He was speaking particularly about the impact of automation and, during his remarks, he told his audience about a splendid ship's doctor who, during the Seven Years' War, used to tie a rope around the middle of his ailing sailors. If they had a pain above the rope he gave them an emetic and if the pain was below it he gave them a purge. All his patients died, but nobody thought his behaviour odd. The speech of the hon. Member for
  2026
  Wandsworth, Central followed that noble tradition.
  It appears that unless one has some involvment in the State—unless one is, certainly to some extent, under the benevolence of a Government Department—one has no right to state one's case. This is indeed Socialism writ large. The hon. Gentleman's speech was an outrage, if only for the fact that he admitted, after being questioned by my hon. Friend the Member for Oswestry (Mr. Biffen) that he had been caught with his legs crossed and was unaware of the state of the present legislation regarding close companies. For any hon. Member to have the presumption to take part in a debate such as this without realising the position resulting from that legislation is nothing but an impertinence.
  Dr. David Kerr: I do not accept that a lack of technical knowledge about close companies is of the utmost importance when talking about small businesses, the great majority of which are not companies of that type but are one-man or privately-owned concerns, about which I am in a very good position to talk.
  Sir H. Legge-Bourke: That merely demonstrates the hon. Gentleman's unwisdom in not having made certain of the law applying to close companies. Had he taken that trouble he would have realised how grossly unfair present legislation is in two directions; first, in the complete escape it gives to partnerships and, secondly, the escape it gives in many respects to the very big public companies compared with private close companies. The demand, visualised in forthcoming legislation, for details to be given by close companies—although that demand is, apparently, not to be made of partnerships and those in business on their own—is a grave unfairness and will be highly damaging from the competition point of view.
  Dr. David Kerr rose——
  Sir H. Legge-Bourke: I will not give way again. Many of my hon. Friends wish to contribute to the debate and the hon. Gentleman has not been in the Chamber for most of this discussion.
  Before proceeding I should, perhaps, declare my interest in that I am a director of two private companies and that I

  2027
  have known the experience of triumph and disaster, although I have tried
  "… to treat those two impostors just the same"
  however difficult that may have been. Nothing said in this debate has been more important than the pleas made by my hon. Friends for a revision of the fiscal use of Government powers. Governments have many powers at their disposal and there is no more important a weapon—whether it is used in a punitive sense or from the point of view of giving encouragement—than the fiscal weapon. If it is used in the wrong way, the Government can do far greater damage than they can do by omissions in other respects.
  It is true that the Government have set up a number of bodies and organisations. We are well aware of them and I will not list them. It is also true that the Government have a great deal of machinery through which they can give advice to industry. However, nothing is less impressive than when Government Departments, which are notorious for the monstrously incompetent way in which so many of them are organised, start laying down the law about how businesses should be run.
  Running a Government Department is not a commercial exercise. Government Departments always know that, if they overspend, the unfortunate taxpayer can be fleeced to foot the bill. That is not the case in commerce; nor is it the case in industry. Unless the Government are a little more humble in their approach to these problems and become a little less arrogant, they will go on making the sort of mistakes which led to the iniquitous 1965 Finance Act.
  I say to the Minister of State that it simply is not good enough to say that he is not proposing to deal with fiscal matters today because the next Budget is looming up. The least he ought in courtesy to say is that he will give an undertaking to convey to the Chancellor of the Exchequer the points which have been put to him. I hope that he will now rise and say that.
  Mr. Darling: I hope that the hon. Member will remember what I said at the beginning of my speech when I was replying to the point made about fiscal taxation. I said that hon. Members will
  2028
  have their opportunity to present their views to the Chancellor. It was implicit in all I said that I would convey the views expressed in this debate to the appropriate Ministers. It is very unfair of the hon. Member to make that kind of suggestion to me.
  Sir H. Legge-Bourke: I heard the whole of the right hon. Gentleman's speech. If I have done him an injustice, I gladly withdraw it. May I say how delighted I am he has said what he said just now. I hope that he will convey the points put to him about fiscal policy to the Chancellor well in advance of the next Budget, so that the Chancellor may take notice of them before he introduces his Budget.
  I wish to make one or two additional observations. I do not want to repeat much of what has been said already in the debate and with which I agree. There is one thing which might help to encourage small businesses. When there are big flatted factories in cities such as Birmingham, the rental for them is often a great deal less than for premises on the fringes of a fairly substantial town which is not yet a fully industrialised city where one has to occupy a single-storey building which probably has been built by private speculation. When those big flatted factories are built they tend to be hogged by one of the bigger public companies. This forces the small man outside the city where it may be more expensive for him. I can well understand that it is very much simpler for those administering such new buildings to let them to one tenant, or at the most to two, but this means that a small man has hardly a look in.
  It is very important that we should not be carried away with passionate emotion about the virtues of smallness for smallness' sake. As my hon. Friend the Member for Basingstoke (Mr. David Mitchell) said, in agriculture the vast majority of undertakings are small. By no means all of them are companies. I should say that companies in agriculture are still a tiny proportion of the total agricultural exercise, but there is one virtue in smallness which should not be overlooked. In a period of agricultural depression often the smallest farmer survives while the middle-sized farmer goes out of business. When he is relying on employed labour and the market suddenly

  2029
  dries up, he is hit far more quickly than the small man with a family helping him to farm. By taking up another couple of holes in his belt, the small farmer is able to carry on. This happened in the period between the two world wars.
  Another virtue, which was completely overlooked by the hon. Member for Wandsworth, Central, is that if something involves taking a calculated risk and it is proved to be unwise, if the undertaking has started in a small way this cuts down to the minimum those who are punished, whereas if we allow new enterprises to be started only by the great giants of industry, or under Government auspices, then if something goes wrong the whole organisation behind it suffers. When it is a Government undertaking, the taxpayers suffer. There is a virtue in smallness in that context.
  The hon. Member trotted out figures about bankruptcies, but it is interesting to read what has been happening in America. I commend to the Minister of State, if he has not seen it, a report presented by Mr. Roberts and Mr. Wainer to the Twentieth National Conference on Administration of Research at Palm Beach, Florida, on 27th October, 1966. I hope that that report is already in the Department. It is fascinating to note that 80 per cent. of new companies formed in the United States fail within their first year of operation. In contrast with that 80 per cent. first-year failures those companies which start within the reach of most modern technological resources such as the Massachusetts Institute of Technology survive in four cases out of five. This is of very great significance.
  We are living in an entirely different age from that in which Ely Cathedral was built. It was a magnificent achievement to bring timbers from Yorkshire to be erected in the Lantern Tower of that great Cathedral of the Fens, but we are living in an age when technology is on the march and we have some wonderful technical resources in our own country. By studying what has been done in the United States I think the Minister of State will find that where we can associate the development of an area on the fringe of a city within ready reach of technological resources those who start companies and enterprises tend to survive better than those who are without those
  2030
  facilities on their doorsteps. I should like to see colleges of advanced technology which are now being given university status linked with these enterprises. This could help to make small businesses as well as large ones innovation-minded. We are, perhaps, open to the criticism that our readiness to innovate is not what it should be. We could improve matters greatly by linking the academic technologist and research worker to the day-to-day problems of industry.
  I hope that we shall always recognise that this country's geographical position gives us one unique advantage. Not only is no factory in the nation further than 100 miles from the sea, but our centrality on the face of the globe is such that we are closer to a greater proportion of the rets of the world than any other country on earth. This is what has given us our standard of living in the past. It is still cheaper to export—and to import, alas—across the Atlantic than it is to move goods across the American continent.
  All these factors make it absolutely imperative that we have outward-looking management at all levels of industry. Unless new blood is coming in the whole time, we shall fail, and others will take our place. We have an advantage which we should be mad to throw away. The one thing which this Government's policy is tending to do is to make it more difficult for anybody who takes calculated risks to reap a fair reward. I emphasise the adjective "fair". It is all too often the case that legislation treats those who have done this sort of exercise as though they were all potential minor criminals who were trying to fiddle something the whole time. This is a gross insult to those whose initiative has given us our standard of living in the past. I hope that the Government will take note of this and do something in their forthcoming financial legislation to put right the appalling inadequacies of today.
  3.1 p.m.
  Mr. Julian Ridsdale: I want to make only a short intervention, because I know that some of my hon. Friends want to speak before my hon. Friend the Member for Worthing (Mr. Higgins) winds up. I congratulate my hon. Friend the Member for Croydon, North-East (Mr. Weatherill) on the excellent way in which he initiated the debate.
  Mr. Robert Edwards: On a point of order. As the Government have agreed to accept the Motion, and as a very important Motion on London housing follows, I wonder if we could bring this debate to a close so that we could discuss the vital issue of London's housing?
  Mr. Speaker: Is the hon. Gentleman asking that the Question be now put?
  Mr. Robert Edwards: I move, That the Question be now put.
  Mr. Speaker: I am not prepared to accept such a Motion at this time.
  Mr. Ridsdale: Anyone who has a number of small businesses in his constituency is bound to know the value of initiative and independence which the small businessman is able to bring to the community and to business as a whole. My hon. Friend the Member for Basingstoke (Mr. David Mitchell) underlined this point effectively.
  As the Member for Harwich, I am concerned with the Continent. The Minister of State knows the arguments I have had with him about granting industrial development certificates to persuade ventures to come into the area of the Port of Harwich, which I have the honour to represent. This is a factor which will come about, anyhow, but it is important that the Minister of State should realise that it would be far more economically advantageous, rather than giving industrial development certificates for the north of Scotland and some of the development areas in the north of England, to give industrial development certificates to enable small firms to come into the heart of the industrial complex which divides North-East Europe and the Midlands.
  My next point also concerns the Continent and the small businessman. I refer to the Government's failure to show more enterprise in encouraging the European Institute of Business Administration. This is a school, established at Fontainebleau in France, which trains business men in business methods on the Continent and also enables them to mix with their colleagues. This would be very valuable to us in the future contacts we hope to have when we enter the European Economic Community.
  2032
  Other Continental countries—France, Germany and others—provide considerable facilities in the way of scholarships for their members to go to the European Institute of Business Administration. Alas, we are taking up only a very small percentage of scholarships. INSEAD, as it is called, is recognised by the Ministry of Education. I am glad that the Marketing Council is holding its summer seminar at INSEAD this year, but if we are to give proper encouragement to business men in the coming years, we must give more help to this Institute, if we are to make progress with our exports and ensure that our small businesses survive in the European Economic Community.
  There has been no mention of the effect that the Selective Employment Tax is having on the hotel industry, not on the large hotels, but on the smaller hotels, many of which are dependent on retired folk helping them with much of their work. This additional tax has been imposed upon them at a very difficult time. Many of these smaller hotels cater for industrial workers from the Midlands and elsewhere, thus saving foreign exchange. It is vital that the Government should give more help to the smaller hotels and try to do something to relieve them of the iniquities of the Selective Employment Tax.
  In speaking in this debate, I am concerned not so much about policy as with the way of life. In the way of life which we on this side believe in and support, we are not so concerned about the paternalistic, monopolistic or socialistic society which the Socialist Government are trying to create. We are concerned with welfare and with seeing that help goes to those who need it.
  We want a free society in which the small businessman can develop his initiative. We want a society in which there are independent people to prevent the individual becoming a cog in a vast Government machine. The small businessman should be helped to make a start. Where did the man in Marks and Spencer, for example, make a start?
  Mr. Darling: In the Fulham Road.
  Mr. Ridsdale: I might add that I started off my political career in the Fulham Road.

  2033
  We want to help people to have this start in life. Under the Conservatives' 13 years of prosperous, excellent rule, we were able to give great encouragement to the small businessmen so that they had a chance to develop their business. One of the things which has prevented the small businessman from developing nowadays is the inability to get investment capital. The availability of risk capital in the kind of free society in which we on this side believe is the important factor and the growth point in any economy.
  Those of us who, like myself, have been out to Japan and seen the enormous growth rate in the Japanese economy know that it is due not only to technical training, but to the fact that risk capital has been made available. There is an enormous sector of small industry in the back streets of Tokyo and Osaka to which help has been given.
  Above all, progress is dependent on encouragement of the individual to go ahead and play his part in the economy. Instead of envying the individual who wants to work or trying to hold him back, we should give reward and incentive, because the way to help the weak is to reward the strong. [HON. MEMBERS: "Oh."] I know that this is against the philosophy of hon. Members opposite. I am not afraid to say it because I am convinced that unless we are able to create more wealth, we will not be able to have more wealth to share for the many people who need it.
  It is taxation and the kind of measures which the Government have introduced which are pulling the country down and which more than anything else are killing initiative, damping down the willingness of people to work hard and sending many of our best brains abroad to other parts of the world. I am therefore glad to have participated in this debate, to support the initiative of my hon. Friend the Member for Croydon, North-East and, above all, to underline that the small business man stands not only for enterprise and initiative, but also for independence.
  3.10 p.m.
  Mr. Henry Clark: My hon. Friend the Member for Croydon, North-East (Mr. Weatherill) deserves to be congratulated for taking the opportunity to raise a subject of wide scope,
  2034
  in which I have a personal interest. The definition "small business", as applied by the Government in their close company legislation, covers a wide range of businesses. It was terrifying to hear the hon. Member for Wandsworth, Central (Dr. David Kerr) suggest that small businesses started as tobacconists' shops and ended as two-man bricklaying companies. For generations my family has run a small, traditional, go-ahead textile firm. I see it today as a close company, with more of the directors' time being taken up with tax problems than with technical developments and export drives.
  At the other end of the scale, and more personally, I have a direct interest in that about four years ago I put a modest investment into a new invention which, without investment by myself and one or two friends, would probably have passed into obscurity until it was overtaken by other developments in that industry. I have not yet realised a penny for my investment, but I still hope that I shall make a fair profit, and that considerable export sales will result from my investment.
  But had I known that the Labour Government were coming in, and that Capital Gains Tax would be applied to the money that I hoped to make, that Corporation Tax would cripple a company of the size of my company, and that the limitation on small companies would prevent the earning of directors' fees, I honestly doubt whether I would have risked my money. There have been risks throughout the period of my investment, and at times I have not expected to see any of my money back. Even today, after having put in a great deal of unpaid work, I cannot be certain that I will get my money back.
  Without modest people like myself putting in small amounts of money, a good deal of sweat and a certain amount of "know-how", thousands of new inventions and new ideas would be left unexploited. Anyone who has considered the question knows that literally thousands of ideas are put forward every month. Perhaps one in 20 is a viable commercial idea; perhaps only one in a thousand or even one in 5,000 is a revolutionary one. I sincerely believe that today, because of the structure of our industry and the way in which we have tied oursleves up, many revolutionary inventions and new ideas

  2035
  are being left forgotten in the files of the Patent Office purely because no commercial set-up exists for their exploitation.
  We want a commercial set-up, a tax law, and a company or partnership structure which allow a man who invests money at risk—and risk capital means that the money can be more easily lost than increased—to get a decent return. If there are good returns, some of the revolutionary ideas which are now being overlooked will be backed up and will proceed, via small businesses, to big business, thus adding to the strength of British industry.
  The bleeding heart attitude of mind of the hon. Member for Wandsworth, Central is terrifying. The former Member for Ebbw Vale, Mr. Aneurin Bevan, might have reminded the hon. Member that what we want is not bleeding hearts but bloody brains. There are very few, or no, restrictive practices in small companies. One gets none of the nine-to-five mentality of so many of the bigger businesses. One gets more initiative, more teamwork, more dedication and more plain, simple but unrecorded productivity. I do not think that anyone would doubt that the small company is one of the happiest forms of industrial organisation. These companies serve the nation, and those which fail suffer heavy penalties. Figures have been quoted of the number of small builders who have gone out of business and faced bankruptcy.
  There are other aspects, and my hon. Friend the Member for Harwich (Mr. Ridsdale) has outlined them. There are the social aspects of small businesses. I represent a country constituency dotted with small manufacturing and marketing towns. It is ironic today that that area of great initiative received its first adequate transport service from the father of Mr. Catherwood, who seems today to be so anxious to kill enterprise on a small scale.
  In those small towns we see the real possibility of a break-up of the social pattern that we know, and like very much indeed, in Northern Ireland of a fair mixture of industry and agriculture, so that people in the country understand what industry is about and none of the people in industry in North Antrim considers that the farmers are featherbedded.
  2036
  But men are going off the land. There is not the employment per acre that there was five, ten or twenty years ago.
  I regularly motor from my home through my constituency to get an early morning aircraft, and I see hundreds of people standing with their lunch in their bag at six and seven in the morning waiting for a bus or a lift in order to go to work 40 or 50 miles away. I see them making their return journey after 7 p.m., in the pitch dark of a winter evening. if there is one thing that I want to stop in my constituency, it is the soul-destroying type of work whereby a man has to travel 40 or 50 miles in order to earn a living and then back again.
  The answer to this problem is to develop small businesses in the smaller towns in the country areas. However, frankly, if we allow the Government's present policy of taxation of small companies and penalisation of capital gains when they are made—capital gains in small businesses are more the exception than the rule—we shall not have people taking initiative to set up the small factories that we need in the smaller towns. A small town with only one factory has all its eggs in one basket. We want the small market town to have five or six growth industries so that if one sector of business suffers regression the town is not thrown into complete unemployment.
  We are beginning to achieve this, but there is undoubtedly a falling off in local initiative because the rewards seem far too few, and the safe, unenterprising job with a pension attached to it is attracting far too many whose fathers were men of real initiative.
  From the industrial point of view, small firms are vitally important. Time and again I visit larger firms which are opening up in my constituency, and am told, "We love to come here, but the real trouble is that we have not got the small businesses around to serve us." Every large factory, whatever its size, depends on a ring of satellite service industries. Each of these takes initiative to start, and that initiative needs to be rewarded, but the Government are taking the reward away.
  I do not think anyone in the House does not realise that it is a natural part of industrial evolution for big businesses to take over smaller ones, particularly

  2037
  smaller ones which have lost their initiative, drive and momentum. It is a naturally sound means of industrial growth.
  If we are to have a continuous process of takeover of small by big, we must also have a continuous process of creation of small companies. It is tragic that the Government, perhaps largely by accident, perhaps by design, perhaps just on grounds of prejudice, seem to be stopping that process of continuous development of small enterprises on which British industry has largely been founded.
  3.20 p.m.
  Mr. Patrick Jenkin: I was hoping that my hon. Friend the Member for Antrim, North (Mr. Henry Clark) would develop his closing theme because it is of immense importance. The development of small business is of the utmost importance to the country and I make no excuse for intervening in the debate. I was sorry that the hon. Member for Bilston (Mr. Robert Edwards) sought to move the Closure and was delighted when Mr. Speaker refused to accept it.
  The interests, the problems, the difficulties that face small businesses and, indeed, not so small businesses, do not often get an airing in this House and I add my congratulations to my hon. Friend the Member for Croydon, North-East (Mr. Weatherill) on using his good fortune in the Ballot to give the House an opportunity to discuss these problems today.
  The Minister of State will know that when I have spoken on industrial matters, I have perhaps tended to concentrate my thoughts on the problems of the country's major businesses, and obviously they are important. I make no excuse, therefore, for talking about smaller businesses because I count among my constituents a great many men who are first or second generation businessmen, who started business in a very small way in the East End—in Stratford, Bethnal Green, Tottenham, Walthamstow, Leyton and elsewhere—and who, because they made a success, achieved their life's ambition of buying a house in Woodford, Woodford Wells, Monkhams Valley or in Wanstead in my constituency and have made for themselves and their children a better life than that with which they started out.
  2038
  They have done this because they have been successful small businessmen in a wide variety of trades and activities and I count many of these people among the salt of the earth. They are splendid people upon whom the nation bestows not enough credit or value for the benefits they have conferred upon the country as a whole. Many of them have made it abundantly clear to me in recent months that they feel that the climate in which they are operating, particularly the legislative climate, is creating difficulties which they feel they should not have to face.
  I am not seeking necessarily here to make any exclusively party point. One of the Measures of which they complain the loudest is one that I support and which was passed by the last Government—the Industrial Training Act. Not only the problems of administering the Act but the levies which the Act calls for seem to be pressing very hard on a number of small businesses whose owners feel that it is unlikely that they will derive benefits from the Act commensurate to what they are being asked to put in. I believe that the Act was right because there was the justifiable criticism that, on the whole, the larger firms tended to do all the training while the smaller and medium-sized firms tended to employ the trained men without having contributed to their training.
  It should be noted that this is a source of complaint and grievance. Something should be done about it. The weight, complexity and sheer volume of legislation has increased enormously in the last two years. The Redundancy Payments Act, Corporation Tax, Capital Gains Tax and Selective Employment Tax—those four measures have imposed administrative burdens as well as financial burdens upon small firms which moved the Chartered Institute of Accountants, in a recent report, to complain about what it called:
  "… the unprecedented increase in administrative complexity consequent on recent enacted or proposed fiscal legislation".
  A complaint of that order, coming from a body of that type, is something of which the Government ought to take note. When there are added to that the changes in the investment incentive system, the Industrial Development Act and now the Land Commission Act, one begins to realise that the complaints of

  2039
  these businessmen that the legal framework within which they are having to operate makes the running of their businesses almost impossible, may be well-founded.
  There is a tendency in Government circles to look at these individual subjects in isolation. Each measure might be justifiable on its own but there is no single Government Department or Minister whose job it is to look at these things in the round and to listen to and deal with complaints from people who may say, "Look here. Each of these may be all right but, taken as a whole, they are becoming quite an impossible burden."
  The big company can afford to employ specialised staff and to go in for the mechanisation of records and all the other necessary information. The small company finds itself unable to do this, and increasingly the time, effort and enterprise of top management in those small companies—people such as the proprietor-director—is being devoted to administration matters rather than to the betterment and increased efficiency of their business, which is in the last resort what they and the whole country depend upon.
  I beg the Government not to underrate the seriousness of this problem. It is one affecting a very large number of businesses, and I am satisfied, as a result of complaints made to me by my constituents, that it is one to which the Government must pay some attention. Had there been more time, I would have liked to deal with the close company position because it is one to which I have, as my hon. Friends will recognise, devoted a good deal of time and effort in an attempt to put it right, with very little success. The close company legislation in the Finance Act, 1965, imposes savage penalties on smaller companies and is making life extremely difficult for them, not only in the raising of new money to plough back and invest, but also simply to carry on business.
  I found an echo of this in the now famous speech by Mr. Nial Macdiarmid to the annual meeting of Stewarts and Lloyds in Glasgow, the day before yesterday, when he said that bad laws were the worst kind of tyranny. In legislation there is no worse law than the cruelly penalis-
  2040
  ing provisions of the close company legislation.
  I would like to refer to two points of detail which will particularly affect the smaller company. The Selective Employment Tax was one of the features which we criticised fiercely when the Finance Bill went through the House last year. It leaves to Government Departments and the Minister of Labour in particular the unjustifiable discretions as to how companies should be administered and as to how the incidence of the tax should fall. We had an example of this the other day in relation to distribution depôts discriminating most unfairly against the smaller firm which operates only in the distribution field, which is the wholesaler, and in favour of the larger firm, the manufacturer, which runs its own wholesaling and distribution business. I hope that the Minister of State is listening to this and that he will feel it right to convey it to the Minister of Labour.
  By a simple diktat from the Minister of Labour, distribution depôts operated by manufacturers and which might be miles from the factory are to be treated as part of the manufacturing enterprise and, therefore, for Selective Employment Tax purposes, to be entitled to the refund of tax with the premium, provided that the overall numbers still fit in, whereas exactly the same depôt fulfilling exactly the same function with men engaged on exactly the same work which has to be operated by a wholesaler carrying out distribution for different industries—the wholesaler is almost inevitably much smaller than the manufacturer—has to pay the Selective Employment Tax and gets no refund or premium. This has been done entirely at the instance of the Minister of Labour who does not even have to present an Order or Regulation to the House in order to make that change. The Act was perfectly clear and the Minister, by a simple letter, has altered it.
  I refer to a matter which falls squarely within the purview of the Minister of State which is again bound to affect the smaller industry and penalise the smaller firm which may be in competition with a large firm. The right hon. Gentleman will recognise that one of the important provisions in the Industrial Development Act related to the giving of grants for computers. He will remember the lengthy

  2041
  debates which we had in Committee on the incidence and availability of those grants for computers in different circumstances. The basis of the scheme is that any firm which installs a computer is entitled to a grant, although it will be only at the lower rate even if the computer is installed in a development area. We had some arguments about that.
  I do not like quoting my own speeches, but a speech which I made in Committee seems to me to put the matter so shortly that I may be allowed to do so. I said:
  "… the pattern is growing up in the United States, and I have no doubt that it will develop here, of the service computor company operating centrally from input devices located in the premises of a large number of customers, who feed their own programmes into the computer entirely independently and get their own results out."—[OFFICIAL REPORT, Standing Committee D, 21st June, 1966; c. 258.]
  I pointed out that this would qualify only for the lower grant. What I failed to realise, and what has now been brought to my attention, is that the situation is much worse. Whereas the large firm can afford to put in its own computer and get a grant for all the equipment associated with it, the small firm which wants to make use of a computer bureau such as I described in Committee and needs only to install what I might call the peripheral equipment—the input and output equipment—gets no grant for that equipment.
  This point has been raised by a small firm of wholesalers wishing to mechanise its operations and which, as the managing director put it, has been looking at the question of putting
  "their statistics and accounting on to a computer basis in the very near future".
  It believes that on its level of turnover it could not possibly justify the purchase of a computer. Therefore it approached one of the growing number of computer bureaux in this country and asked about the possibility of its subscribing to the service which that bureau was providing. It discovered that, whereas, if it wanted the computer it would be entitled to a 25 per cent. grant, merely because it wished to buy peripheral equipment it would get no grant, notwithstanding the fact that the equipment would have qualified for grant if it put in a computer.
  2042
  This is the sort of nonsensical discrimination which we criticised when the Bill was going through the House and which is becoming apparent in more than one respect as the Measure is administered by the Board of Trade. No one can seriously seek to defend that sort of nonsensical and ludicrous discrimination. It is relevant in this debate because it is the sort of discrimination which discriminates against the smaller business which cannot afford the full equipment but wishes to install part of it and make use of these valuable services.
  These are but two examples of the way in which the interventionist legislation, which is so beloved of Socialists and Socialist Governments, is operating—not just can operate or might operate, but which is directly operating against the interests of the small business and the small businessman, and making his life so much more difficult than it might otherwise be.
  I am sorry that I was not here earlier to hear the words of the Minister of State. I was engaged in trying to advise somebody about the prices and incomes policy which, in itself, is not much joy. But the anodyne phrases which have been reported to me as having been said by the right hon. Gentleman gave no indication that he appreciated the problems which these industries are facing in these circumstances. Although he accepts the Motion, for which we must give some small thanks, the fact of the matter is that the Government have to show by their actions and not by words that they place great value on the activities of small businesses.
  3.36 p.m.
  Mr. Terence L. Higgins: The House has welcomed the Motion which we have been debating today, and which was so admirably proposed by my hon. Friend the Member for Croydon, North-East (Mr. Weatherill). I am sure that we have been right to do so. Perhaps I may take this opportunity to congratulate my hon. Friend on the moderate way in which he proposed his Motion, but to point out that none the less it contains a grave warning to those who fail to recognise the vital rôle played in the economy by small businesses, and their contribution to our past prosperity and to future progress which, I am sure, they will encourage.

  2043
  It has not yet been pointed out how important these firms are, but firms with less than 500 people employ about 50 per cent. of those in the manufacturing industry, and contribute about 45 per cent., by value, of the actual amount of industrial sales.
  In addition, there are the important contributions made by small businesses in agriculture and in the service industries. Therefore, this matter is really one of very great importance for the future of the country.
  We on this side of the House are glad that the hon. Gentleman the Minister of State, Board of Trade, is prepared to accept my hon. Friend's Motion. But I must admit that I received his acceptance with some doubt, because he accepts the Motion, which points out the increasing problems facing small businesses, but he made no attempt to point out why these problems should have been increasing, and what justification there is for the Government's policy which my hon. Friends have been criticising during the debate.
  Still less did he make any attempt to say what urgent and positive steps the Government were prepared to take to stimulate and encourage the prosperity and growth of this energetic and enterprising section of the community. We on this side of the House cannot accept his view that he can make no statement about the fiscal side of things because the Budget is impending. Budgets are always impending, but this does not preclude a general statement on fiscal policy. We are sorry that he did not feel able to go into great detail on this subject.
  One of the most significant aspects of this debate has been the way in which we on this side of the House have made a number of speeches which reflect the great experience of hon. Members in small businesses. Many hon. Members have spoken with great authority. I have listened to every speaker, though not literally to every word that has been said. The debate has brought out a number of interesting and very important points. It is sad that the only contribution from the back benches on the other side of the House was made by some one who arrived a few minutes before he made his speech. He made a speech which clearly he would not have made had he been listening to
  2044
  the debate, and he attacked small businesses rather than supported them.
  There was one misapprehension in what he said, which should be pointed out. We on this side of the House are not in favour of inefficient small businesses. We are in favour of small businesses which are the right size for the job they are doing, and which create increased competition and efficiency within the country. That is the stand which we have taken and it is not at all the position which it was suggested we were adopting.
  Mr. David Winnick: Would not the hon. Gentleman agree that the debate has been filibustered in order to prevent a debate on London housing and that hon. Members were conscripted after the lunch hour so as to prevent the debate on London housing from taking place?
  Mr. Higgins: I would not accept that for a moment. Three or four of my hon. Friends, for example, my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) and my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), are still hoping to catch your eye, Mr. Deputy Speaker. The debate has been by no means repetitious. Indeed, a remarkable feature of it has been the lack of repetition. It is true that certain broad subjects, such as Corporation Tax, have come up several times, but each of my hon. Friends has concentrated on a particular aspect. The hon. Gentleman would not suggest any element of filibustering if he looked at the record.
  Mr. Biffen: So that the somewhat juvenile intervention of the hon. Member for Croydon, South (Mr. Winnick) may be put in its true perspective, would it not be worth putting it on the record that both my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) and myself can be remembered among hon. Members who attended the debate from the outset almost non-stop until we were called?
  Mr. Higgins: That is certainly so and I am grateful for that intervention.
  The remarks of the Minister of State were moderate and reasonable and although the constructive suggestions which he made were extremely limited,

  2045
  we are glad to learn that the position of small businesses is being considered in the Productivity Conference Study which is now being carried out. However, as my hon. Friend the Member for Oswestry (Mr. Biffen) pointed out, in studies of this kind there is a tendency for small businesses not to be represented and for the larger organisations and the confederations to be represented, and I hope that the Minister will bear that in mind when he establishes and concludes these studies.
  The basic theme throughout the debate has been the growing pressure being put upon small businessmen. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) was right to stress that it is the accumulation of these things falling constantly on the small businessman and in particular the depressed state of the economy which is likely to have a bad effect upon him. While it is true that in the post-war period there were periods of stop-go, on the whole the periods of stop were short, whereas it is now becoming increasingly clear that the present period of depressed economic activity is likely to continue for longer than previously, which means that the reserves of the small man will probably be less than adequate to meet the situation, and the strain put upon him in the present credit squeeze will be considerably increased.
  Apart from the general economic situation, there has been considerable pressure because of the Corporation Tax. One point which has not been mentioned is the way in which the imposition of the Corporation Tax encourages plough-back by large firms and thus reduces the amount of capital going into the market itself. As a result, the capital available to the small rather than the large man is reduced. As my hon. Friend the Member for Harwich (Mr. Ridsdale) pointed out, this is likely to inhibit the growth of the small company. We have also had references to the close company provisions, but I would not presume for a moment to repeat the cogent arguments which have been adduced in that connection. My hon. Friend the Member for Croydon, North-East, in proposing the Motion, quoted from his considerable personal experience in the matter and pointed out the way in which the amount of finance which he can find from his own pocket is being limited by the
  2046
  provisions of the close company legislation. He is therefore having to go for capital elsewhere when he would prefer to provide it himself. It was also pointed out that the Government's provisions tend to encourage firms to adopt a partnership form rather than a limited liability company form, and the effect is to make the organisation of the small firm less efficient and less suitable than otherwise it would be.
  An important point about the Selective Employment Tax is the fact that on the whole the service industries, against which the tax discriminates, are normally smaller industries and firms which do not employ economies of scale. Service in-duties tend to operate on a relatively small basis. As my hon. Friend the Member for Oswestry pointed out, this means that the Selective Employment Tax is not merely a tax against service industries; because of the relationship between service industries and size, it also discriminates against the small man.
  There are also anomalies in the Selective Employment Tax. My hon. Friend the Member for Wanstead and Woodford made a point which I should like to elaborate. He pointed out that the small independent depôt or warehouse, purely because of a dictum of the Ministry of Labour which has not yet been debated in the House at all, will have to pay Selective Employment Tax whereas an integrated concern, under the ruling which the Ministry of Labour has made, will receive a premium. The effect is clearly to discriminate against the small man. This is unfortunate. It may be that the optimum size would be better achieved by the small man concentrating on distribution than by a number of firms, vertically integrated, which have a distribution system of their own which is below the optimum size.
  Mr. Arnold Shaw: The term "small man" has been used frequently. May we have a definition of what the hon. Member means by a small man?
  Mr. Higgins: If the hon. Member reads the speech made by the proposer of the Motion he will find that this was done at the beginning of the debate. I do not find it necessary to repeat it.
  I come, next, to the question of investment allowances. Here again, these tend

  2047
  to discriminate against service industries and therefore against smaller companies.
  Other points made concerned the effect of death duties, the Redundancy Payments Act, the Companies Bill—and all these accumulate into what my hon. Friend the Member for the Cities of London and Westminster (Mr. John Smith) called the B factor, a coefficient of complexity which is making it more and more difficult for the small businessman to operate without spending much of his time in coping with the increasing burdens which are imposed on him by the Government.
  My hon. Friend the Member for Croydon, North-East suggested that positive action should be taken by the Government to simplify the tax system and, in particular, to reduce the level of direct taxation in order to give more incentive to the small man. He also suggested other reforms. I was surprised that the Minister of State did not give any detailed consideration to the proposals which my hon. Friend made, based on American experience—first, the question of procurement programmes under the Government's present policy and also the proposals for the SCORE arrangement in America whereby a retired executive who wishes to go back into businesss can assist the small firm to be operated more efficiently. The Minister of State said that while he accepted the Motion he was sorry that it was not more constructive. It seems to us that my hon. Friend's proposals were very contructive, and certainly if the Government implemented them in nullifying the effects of their own measures on the small man, together with the positive proposals which my hon. Friend made, we should have a constructive policy.
  Mr. Darling: I agree that during the debate a number of quite constructive suggestions have been thrown out, as it were, but none of these are mentioned in the Motiton, which merely
  "… calls upon Her Majesty's Government … to take urgent and positive steps …"
  The Motion does not say what those steps should be, and that was the point I was making.
  Mr. Higgins: If the hon. Gentleman was restricting his remarks to the Motion, then that is one thing.
  Mr. Darling: We are debating the Motion.
  Mr. Higgins: My hon. Friend the Member for Croydon, North-East made a number of constructive suggestions and I was referring to those. I was saying that, although the Minister accepted the Motion, he did not put forward any constructive suggestions of his own.
  Mr. Darling: Really.
  Mr. Higgins: At any rate, those he did make were largely inadequate.
  I turn to some of the positive proposals which have been made by my hon. Friends. The House will recall that in our last manifesto we made the definite proposal that there should be set up a small business development bureau to help small businessmen to start and grow. That proposal has received widespread support from the public and I have received a considerable number of letters supporting the idea.
  My hon. Friend the Member for Croydon, North-East pointed out that the establishment of such a bureau could act as a focus for existing institutions. This is important because while there are a number of existing institutions which seek to help small businessmen, many small businessmen do not know to whom they should go for advice about the help available to them. In addition, there are gaps in the provision which is made for helping the small, growing company. I stress that in making this proposal we do not believe that it is in any way incompatible with a belief in private enterprise. It is necessary to do something to offset the fact that the amount of information in the market place for the small businessman is not being as adequately provided as it might be, remembering that it is a classic tenet of economic theory that one can have perfect competition only if the information is also perfect.
  Reference has been made to Small Business Administration. I have had the pleasure of visiting that organisation on two occasions when I have been in America and I assure the House that it is doing important work. The proposals which the White House Committee has put forward in support of Small Business Administration are somewhat similar to those for the small business development bureau which we are suggesting in that,

  2049
  first, the existence of a large number of small independent businesses helps to preserve competition, which ensures efficiency, high quality and reasonable prices for the consumer; secondly, because a large number of small independent businesses decreases the likelihood of excessive political power; thirdly, because they offer an opportunity for the expression and growth of personal initiative and individual competition; and, fourthly, because small businesses are frequently the source of new products and methods.
  For all these reasons, the sort of bureau which we suggest should be established is compatible both with the ideas of the United States Government on private enterprise and efficiency and with ideas which my hon. Friends believe should be implemented in this country.
  It is all a question of bringing into focus the various institutions which already exist. Some of these, like the I.C.F.C., help to provide capital. Others, like N.U.M.A.S.S. and National Management Consultants, help on the consultancy side. But it is important that there should be a focus for them so that the individual businessman knows what is available for him.
  I interpose a personal view by saying that there is also a gap from the point of view of the new firm which is starting up. Reference has been made to a book on the sources of invention. It stresses the need to give facilities to small inventors because about 50 per cent. of inventions of importance in recent years have come from that source, while the rest have come from large corporations. We believe that, if this is to be fostered and if companies are to grow and competition is to increase, there must be a body which is able to provide the risk-taking finance. A significant change in the approach of Small Business Administration shows the way in which, instead of taking a narrow range of risk—for which one can be reasonably certain of a moderate rate of return—one should take a number of projects which could possibly give a very high rate of return but which entail a very high risk. They hope that by taking on a number of those it will be possible for the ones with a very high return to pay off. That is where a gap exists, because the normal financial institutions such as the, I.C.F.C. do not
  2050
  provide the kind of risk capital which the S.B.A. in a number of cases is bringing in.
  My hon. Friend the Member for Barkston Ash (Mr. Alison) spoke about the idea of a small individual firm breaking into a new market. This is something to which the Minister of State gave scant recognition. He did not appreciate that what we want is the opportunity for a small firm with a new idea to break in and to compete with the larger firms. This is a basic necessity if the standard of competition is to be increased and the large firm is to be subject to greater and greater competition from new ideas, innovations and better technology.
  Finally I come to——
  Mr. Darling rose——
  Mr. Higgins: I am right at the end of my speech and I have only a couple of minutes to make an important point. There is a big difference in the attitude of the two sides to business. We are not necessarily in favour of big firms, nor are we necessarily in favour of small firms. We are in favour of firms having an opportunity to grow to the optimum size. They should have an oppor-to grow to that size where costs per unit of output are reduced to the lowest level, where they can compete efficiently in world markets, and have an opportunity of doing so in the Common Market. Therefore, in supporting this Motion, which I am glad that the House accepts, I suggest that there is a desperate need for the Government to ascertain what the economy of scale in production and marketing is in different industries.
  There have been studies recently, one by the Insitute of International Affairs and another by the N.I.S.R.D., to find the economies of scale in different industries. While some firms require to be very large and some to be medium-sized, there should be a definite place for small firms today in a particular job such as shopkeeping or warehousing. Only when there is a constant flow of new initiative coming from small firms can we hope to have a constant flow of new economy, which is what my hon. Friend the Member for Croydon, North-East and my other hon. Friends are desperately anxious to see achieved. We are glad to have had this debate which has covered

  2051
  one of the most important subjects in the economy today.
  Question put and agreed to.
  Resolved,
  That this House takes note of the increasing difficulties facing small businesses; recognises their important contribution to Great Britain's economy; and calls upon Her Majesty's Government, in the national interest, to take urgent and positive steps to stimulate and encourage the prosperity and growth of this energetic and enterprising section of the community.

  LONDON, HOUSING
  3.58 p.m.
  Mr. William Hamling: I beg to move,
  That this House welcomes the steps taken by Her Majesty's Government to assist London's housing problems.
  I wish to protest at the lack of time that has been given to discussion of the housing problems of 6 million people, some of whom are my constituents and some constituents of other hon. Members who have been here all day waiting to discuss these important questions. I wonder why the Opposition are so frightened about London's housing problems being discussed. What have they to conceal? Do they wish to conceal their housing record, their lack of ability to defend the tenants——
  Several Hon. Members rose—
  Mr. Speaker: Order. The hon. Member has not given way. Mr. Hamling.
  Mr. Hamling: The fact that they are announcing——

  ORDERS OF THE DAY

    LAW OF CONTEMPT (PRESS AND BROADCASTING) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    PUBLIC SERVICE AND ARMED FORCES PENSIONS COMMIS- SION BILL
    Order read for resuming adjourned debate on Question [3rd February], That the Bill be now read a Second time.
    Hon. Members: Object.
    Debate further adjourned till Friday next.

    EXPORT OF ANIMALS FOR RESEARCH BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    DISUSED GRAVEYARDS BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    BROADCASTING ENABLING BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    RENT ACT (AMENDMENT) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    MATRIMONIAL HOMES BILL [Lords]
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    HIGHWAYS (STRAYING ANIMALS) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    LOCAL GOVERNMENT (PROMOTION OF BILLS) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    LIVESTOCK EXPORT CONTROL BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    NATIONAL INSURANCE BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    FREEDOM OF PUBLICATION PROTECTION BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    PONIES BILL
    Order read for resuming adjourned debate on Question [24th June], That the Bill be now read a Second time.
    Hon. Members: Object.
    Debate further adjourned till Friday next.

    SUEZ OPERATIONS (SPECIAL COMMISSION) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    HOUSE OF LORDS (ABOLITION OF DELAYING POWERS) BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    MATRIMONIAL CAUSES BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    PRESS AND BROADCASTING FREEDOM BILL
    Order for Second Reading read.
    Hon. Members: Object.
    Second Reading deferred till Friday next.

    RAILWAYS BOARD (HOUSES)
    Motion made, and Question proposed, That this House do now Adjourn.—[Mr. McBride.]
    4.2 p.m.
    Mr. Julian Ridsdale: In the course of this Adjournment debate I propose to draw the attention of the House to the sale of houses by the British Railways Board, without advertising and without offering them to its previous

    2055
    tenants, many of whom wish to buy these houses.
    My attention was first drawn to this strange conduct of British Railways by the sale privately without advertising, although the Board had informed our local council in 1963, and without offering them to its existing tenants, of 74 houses in my constituency at Parkeston, despite the fact that a constituent of mine said he would overbid any private or secret offer the Board received and travelled to London in circumstances which led him to believe his offer was being considered and might be accepted, and despite the fact that the tenants were willing to purchase. After this I am prompted to ask—why was it all too much bother for the Board to look after the welfare of its tenants?
    Since tabling the Motion, my attention has been drawn to similar sales of houses owned by the Board, in some cases without advertising and privately, and without offering them to its existing tenants, at Sheffield, Bristol and Tonbridge and in Paddington. I have been led to believe that there are other cases in the north of England as well. This has led to houses which were bought privately for £300 or £400 being offered for sale to railway tenants at double the price. For example, the Sheffield Morning Telegraph of 29th June, 1966, reported that railway tenants of houses in Hague Lane were being offered the chance of buying their houses for £750 each, a little over £335 more than the original sale price which British Railways had received only a short time previously.
    I have not the details of the sales at Parkeston, but I would like the Minister to tell me the difference between the price of these houses which was obtained by British Railways and the price which the railway tenants who have bought these houses have had to pay.
    In the Sunday Express of 9th October last year, a railway clerk at Tonbridge, who had spent a lot of money in converting his house from a rather dreary place to a comfortable home, was reported as having been told by British Railways,
    "We will see what we can do."
    Without warning, he was told that his house had been sold to a property company.
    2056
    I have been told that at Paddington, British Railways sold 43 houses which they owned en bloc to the Freshwater Company without offering those homes to their existing tenants although they had asked to buy. They were told that it was all too much trouble to enter into individual negotiations.
    Is that the way a State-owned industry treats an individual? To me, this conduct is a kind of State Rachmanism of the worst type. Why were these houses not offered for public auction? Is it really to much trouble to offer houses to individuals who want to buy them at, say, district valuer's valuation? That is the normal custom in many Government Departments when a private sale is entered into. It could be done in that way.
    I am grateful to the hon. Member for Bristol, South (Mr. Wilkins)—who has asked me to apologise that, because of a previous pressing engagement, he cannot be here this afternoon—for supplying me with information about the sale of railway houses in Bristol. When I asked a Question in the House on 25th January about this kind of sale, the hon. Member for Bristol, South said:
    "This is a shocking scandal and it should have been stopped."—[OFFICIAL REPORT, 25th January, 1967; Vol. 739, c. 1469.]
    The more I look into these sales, the more I am convinced that not only is it a shocking scandal and that it should be stopped, but that the Minister should issue a general direction at once to order a public inquiry into the conduct and manner of these sales.
    In addition, my hon. Friend the Member for the Cities of London and Westminster (Mr. John Smith) has given me details of a private sale by the London Transport Board of commercial property. Although it is commercial, the principle is the same. It entailed the sale by the London Transport Board in Central London of premises bought by the Angus Steak House, although the Peter Evans House, had it known about it, would have offered competitive terms and possibly a better price than the London Transport Board obtained.
    I ask the Minister to give that his General direction because such conduct as this in the disposal of property in a Government Department led to Crichel Down and the resignation of a Minister.

    2057
    During the time that I was Under-Secretary of State at the Air Ministry, I had to deal with land and property. I could never have allowed such conduct as I have heard about since initiating this debate. Why can the British Railways Board hide behind the phrase "day-to-day management" when it is evident that we have on our hands a scandal of Crichel Down proportions? But whereas at Crichel Down one farmer was concerned, here we have several hundred railway-men, many of whom have given 25 years or more of service to British Railways or their predecessors.
    Because I regard this as such a shocking scandal, I want the Minister to give a general direction for a public inquiry to be held, because the public have a right to know why the houses were not offered in the first place to the railwaymen, many of whom had lived in them for many years.
    Why in many of the cases—for instance, at Parkeston, Bristol and Paddington—did not the Railways Board offer these houses for sale by public auction? Anyone who has had anything to do with property knows that that is the only way to get the best price. After such conduct as this, the public have a right to know who were the buyers and the prices at which the Railways Board bought the houses and sold them back to the railwaymen.
    I utterly reject the words that have been used—"It is often to the advantage of the Railways Board to arrange a lease or sale by private treaty rather than by inviting tenders." This cannot possibly stand up to close examination. The Board is in business to provide transport and cannot possibly have an expert knowledge of property. In those circumstances, I am sure that it should have been its duty, after offering the property first to the existing tenants, publicly to dispose of its undertakings.
    Why were not the houses in Bristol, Paddington and Parkeston offered for public auction? Why so much secrecy about the sale? Is it true, as at Bristol, that prospective buyers were circularising tenants telling them that they could purchase now but would not be given this opportunity in the future—and this before the sale was completed, and to railwaymen some of whom had been in occupation of these houses for 30 years? This
    2058
    is a scandalous way for any industry to behave towards its servants. Does not the Minister realise that the latest British Railways policy of not offering houses to its employees first inflames the passions of railwaymen? Is it too much trouble for British Railways to enter into individual negotiations? Why should not it have done so? Was it really too much trouble? I would have thought that it would have wanted to go to all the trouble it could to help men who had been in its service for 30 years.
    The fear that the Board might be faced with difficulty contrasts strangely with the attitude of the private railway companies which provided the houses for their staffs. I do not believe that in similar circumstances the Great Western Railway or the London and North Eastern Railway would have displayed such unconcern for the welfare of their employees and tenants as has been displayed by their successors. It is because there is much more in it than just this unfair approach to employees that I ask for this general direction for a public inquiry.
    I know that in many cases the management of the railways is concerned with the welfare of the men, and that this is especially so in the case of the General Manager of the Eastern Region, Mr. Fienns, who was very helpful to me during the difficult days of the shipping strike. It is to protect the good name of management, and to expose those who are to blame for such scandalous conduct, that I ask the Minister to give a general direction for a public inquiry to be ordered about the whole wretched business of the disposal of these properties by the Railways Board and London Transport. It is vital that this should be clone, for the welfare of the men and so that everybody should know the truth of what happened in these transactions, which have done so much to hurt and destroy the faith of some railwaymen of long service in British Railways.
    4.13 p.m.
    The Joint Parliamentary Secretary to the Ministry of Transport (Mr. John Morris): I must begin by emphasising that the questions raised today are essentially matters of managerial responsibility for the British Railways Board. The Government do not, and clearly should not, interfere in such matters, and my main purpose today must be to explain the

    2059
    nature of the Government's interest in certain general issues which arise from the Board's disposal of its land. It would be entirely inappropriate for me—despite the strong words of the hon. Gentleman—to enter into discussion about the details of any particular case. Commercial negotiations of the Board, as with any other undertaking engaged in such transactions, must be confidential.
    I understand that the hon. Member for Harwich (Mr. Ridsdale) has had a lengthy correspondence with the Chairman of the Railways Board about the particular case he has mentioned. This is the right channel for such matters, and I certainly cannot comment on, or add to, the information which the hon. Member has already been given by the Chairman. I regret that very much, but that is the position, which is well known to the hon. Member, under the nationalisation Acts.
    Mr. Ridsdale: Would the hon. Gentleman admit that it is in the power of the Minister to order a public inquiry into this conduct?
    Mr. Morris: The powers of the Minister are very familiar, I am sure, to the hon. Member. He and his side of the House were responsible for bringing in the 1962 Act, and he knows full well the Minister's powers with regard to investment, appointment of the Board and the issuing of general directions. These matters are well understood by the House. Indeed, if the hon. Member were to try to put down a Question on detailed matters of management it would not, as I understand, be accepted by the Table.
    This is the position, and this is why I am giving this explanation of where the Government's responsibility lies and where the Board's responsibility lies. I would, however, like to emphasise that I understand that there have been no complaints from the tenants about the handling of this case in the hon. Member's constituency. I understand that the houses were offered to the local authority, but the offer was not taken up. It would, perhaps, be helpful if I were to remind the House of the circumstances in which the Railways Board disposes of its surplus property.
    The Board has powers under Section 14 of the Transport Act, 1962, to dis-
    2060
    pose of any property which, in its opinion, is not required by it for the purposes of its business. The Board inherited from its predecessors about 42,000 houses. Generally speaking, these had been built many years ago when houses were often needed to meet operational requirements because staff had to live near their work. This was in the days when there were few, if any, houses available for letting from local authorities, and few railway staff were able to become owner-occupiers. Circumstances have, of course, greatly changed since the days in which the Board's predecessors built these houses. There are now very few cases in which there is an operational requirement to provide housing for railway staff. On operational grounds, such provision can now be justified only for staff such as station masters and crossing keepers.
    When the Board was set up in 1963, therefore, it found itself with a great many houses surplus to operational needs, and many of these needed money spent on them to bring them fully up to current standards. The Board is, of course, under a statutory obligation to conduct its business so as to eliminate its deficit at the earliest possible date. This is relevant to what the hon. Member has said. It would, therefore, not have been justified in incurring expenditure on the maintenance and improvement of properties not required for any operational purpose. It accordingly introduced a programme for disposal of surplus properties, and since 1963 has disposed of about 18,000.
    Mr. Ridsdale: While the Joint Parliamentary Secretary says that there have been no complaints from Parkeston, would he not agree that there has been a considerable number of complaints from other places all over the country?
    Mr. Morris: I shall come to the extent of the complaints in a moment. I take the hon. Gentleman's point. I take it also that he does not dispute what I said earlier, that there have been no complaints from the tenants at Parkeston. I think that one constituent of the hon. Member has made a complaint, the person who wants to purchase the 74 houses concerned.
    Mr. Ridsdale: It is on the principle of going to auction and selling privately.
    Mr. Morris: The position should be made clear to the tenant. There has been no complaint from the tenants in the hon. Gentleman's constituency.
    As I said, since 1963 the Board has disposed of about 18,000 houses. A census last year revealed that less than 50 per cent. of the tenants of properties to be disposed of were, in fact, railway employees.
    In any operation on this scale, there are bound to be complaints of one kind or another from people whose expectations have been disappointed. One sympathises with them. Indeed, it would be surprising if some errors had not occurred—perhaps a failure by an agent to keep tenants fully informed about an impending sale, for example. I have been aware from time to time, as the hon. Member indicated, of some complaints of this nature. But, given the scale of this operation, comparatively few complaints have come to my notice.
    The Board's policy is to give sitting tenants the first offer of single houses or of pairs of houses. But where a block of houses is concerned, very considerable difficulties would arise if individual tenants were offered the opportunity to buy. Some would not wish to do so and the Board would be faced with serious difficulties in disposing of the residual houses in a block. As the hon. Gentleman says, the Board's business is to run the railways and it is not an expert in housing and other activities. Its difficulties would become manifest if it were to dispose of houses in any other way.
    In these circumstances, the Board would be left with a continuing burden of management and maintenance. In order to avoid this piecemeal handling of houses in a block, the Board's practice is to sell blocks as a whole, and they are now invariably offered first to the local authority. Where the local authority is not interested, as in the case mentioned by the hon. Member, the Board must be left to complete its disposals in the manner it considers best suited to its circumstances and obligations.
    It is not my responsibility, and would not be in the Board's commercial interests, to explain its methods of disposal, but I understand that the Board is satis-
    2062
    fied that its methods are entirely appropriate and enable it to discharge its responsibilities to the full, including its social responsibility of ensuring that sales are made to bodies of good standing. I understand that in some cases sales are made by auction, while in other cases a measure of selectivity is considered desirable.
    There is no case for the Minister to intervene in such matters. But there are questions in which it is proper for the Government to interest themselves, and these we took up as soon as the Labour Government came to power. These are questions involving the wider national interest. It was, for example, vital to ensure that the first offer of surplus land including buildings, not only by British Railways but by other nationalised industries, was made to local authorities, so that the land can be put to the most advantageous use in the public interest. In the past the general practice had been to dispose of surplus land on the open market, without any priority being given to local authorities.
    Mr. Ridsdale: As far as Government Departments are concerned, does not the hon. Gentleman agree that the Crichel Down ruling was that land had to be offered to other Government Departments, including local authorities, and that therefore one would have thought that that practice would also have been the practice of the nationalised industries as well?
    Mr. Morris: I am given to understand that the position regarding the nationalised industries is as I have stated it. The advice tendered to me is that what I am stating is a reflection of the position as we found it on taking office. That is why it is necessary to make a change in the conditions as regards giving preference or at least first offer to local authorities in the manner that I have set out.
    When I was interrupted I was about to say that we consulted the nationalised industries and secured their agreement to a procedure under which they now make the first offer to the local authorities in whose area the land is situated. If the hon. Gentleman has not been aware of the position, I hope that, after what I have said, it is clear to him that there has been a marked change of practice in

    2063
    the disposal of land by nationalised industries since the present Government took office.
    Mr. Ridsdale rose——
    Mr. Morris: I am sorry. I have given way to the hon. Member on four occasions and I have several other things still to say. I think he will agree that I have been more than generous.
    This procedure was introduced last year and all local authorities were informed by a Circular issued by the Ministry of Housing and Local Government and the Welsh Office on 17th October. Under this procedure, the nationalised industries give local authorities in whose area surplus land is situated six weeks' advance notice of an impending disposal. During this period of six weeks an authority has an opportunity to give notice of its interest in acquiring the land; failing which the nationalised industry is free to go ahead and sell the land at its discretion. But if a local authority express an interest in acquiring, it is allowed a further period of six weeks in which to make a firm application to purchase. The price is a matter for negotiation.
    Local authorities are not expected to pay more than the district valuer is prepared to certify, but if agreement on terms cannot be reached the nationalised industry is free, at any time after the end of the second six weeks period, to dispose of the land by such other means as it thinks fit. As the Circular to local authorities makes clear, the aim of these arrangements is to establish a flexible procedure.
    It is intended that the system should be worked in a spirit of co-operation. In particular, the suggested time limits are intended to operate purely as safeguards. There may often be unavoidable difficulties which make a quick conclusion impossible, and in such circumstances it is not intended that negotiation should be broken off merely because a time limit has expired. On the other hand, the nationalised industries cannot be expected to hold surplus land indefinitely.
    2064
    Another broad issue is the question of whether the position of tenants is fully safeguarded when British Railways dispose of houses. This is a matter which may be one of great concern and I am glad that the hon. Member has confirmed that this issue has not arisen in the particular case that he has brought before us. This was another point that we looked at carefully when the Labour Government came to power, and the position has been explained to the House before. But in case any misunderstanding still exists, I want to repeat that when British Railways sell a house to somebody other than the tenant, the tenant continues to enjoy the wide measure of protection provided by the Rent Acts, including control of rents and security of tenure.
    I hope that this is a matter of further assurance to anyone in the hon. Gentlemen's constituency or anywhere else who may be worried. I would remind the hon. Member that the present Government had a small part to play in ensuring that the protection of tenants was improved following our coming to power. I would have thought, so far as his constituents are concerned, that this is a matter of some joy to them. The tenant is thus in no different position from that of any other tenant when his house is sold. Provided that the Board fulfils its obligations, as I am sure that it does, there are no grounds for any fear that its tenants are under any disadvantage.
    Broad issues of this kind are matters on which we have felt it right to satisfy ourselves. But this does not mean to say it is right for us to get involved in the facts of individual cases, or in details about the Railways Board's methods of obtaining offers from potential buyers. This is the sort of thing which any undertaking must be left to decide for itself, in the light of its financial and other obligations, and of its circumstances from time to time. These are essentially matters of judgment for management to take.
    Question put and agreed to.
    Adjourned accordingly at twenty-nine minutes past Four o'clock.

MINISTRY OF AVIATION
  Concord Aircraft (Cost)
  Concord Aircraft (Cost)
  FAMILY CIRCUMSTANCES
  FAMILY CIRCUMSTANCES
NATIONAL FINANCE
  Public Service Pensions
  Public Service Pensions
  Excise Duty (Whisky and Gin)
  Excise Duty (Whisky and Gin)
  Government Departments (University Applicants)
  Government Departments (University Applicants)
  Income Tax and Corporation Tax
  Income Tax and Corporation Tax
  Business Machine Companies (Discussions)
  Business Machine Companies (Discussions)
  £ Sterling
  £ Sterling
TELEPHONE SERVICE
  Bellshill Exchange
  Bellshill Exchange
MINISTRY OF LABOUR
  Employment (Regional Estimates)
  Employment (Regional Estimates)
ECONOMIC AFFAIRS
  National Productivity Conference (Investment)
  National Productivity Conference (Investment)
SOCIAL SECURITY
  Rents (Family Earnings)
  Rents (Family Earnings)
WALES
  Welsh Office (Translators)
  Welsh Office (Translators)
HOME DEPARTMENT
  Metropolitan Police (Airports)
  Metropolitan Police (Airports)
  Convictions (Appeals)
  Convictions (Appeals)
  Banks (Coloured Staff)
  Banks (Coloured Staff)
COMMONWEALTH AFFAIRS
  Secretary of State (Overseas Visits)
  Secretary of State (Overseas Visits)
AGRICULTURE, FISHERIES AND FOOD
  Smallholdings (Amalgamation)
  Smallholdings (Amalgamation)
  Bog Land Reclamation (Rural Development Boards)
  Bog Land Reclamation (Rural Development Boards)
  Store Cattle (Average Price)
  Store Cattle (Average Price)
  Animal Feedingstuffs (Cost)
  Animal Feedingstuffs (Cost)
  Eggs (Retail prices)
  Eggs (Retail prices)
BOARD OF TRADE
  Steel and Machine Tools (Imports)
  Steel and Machine Tools (Imports)
  Consumer and Capital Goods (Imports)
  Consumer and Capital Goods (Imports)
  Newsprint
  Newsprint
  Monopolies Commission (Professional Services)
  Monopolies Commission (Professional Services)
  Advance Factories (Approvals)
  Advance Factories (Approvals)
  Association of British Travel Agents
  Association of British Travel Agents
  State-Owned Industries (Wales)
  State-Owned Industries (Wales)
  Footwear (Exports)
  Footwear (Exports)
RAILWAYS
  Rail Accident, Moore (Report)
  Rail Accident, Moore (Report)
  Industrial Development Certificates
  Industrial Development Certificates
TRANSPORT
  Joint Steering Committee (Report)
  Joint Steering Committee (Report)
SCOTLAND
  Council House Tenants (Evictions)
  Council House Tenants (Evictions)
  Drugs (Misuse)
  Drugs (Misuse)
EDUCATION AND SCIENCE
  University and College Government (Student Participation)
  University and College Government (Student Participation)
  Animal Virus Research Institute (Foot-and-Mouth Disease)
  Animal Virus Research Institute (Foot-and-Mouth Disease)
  ADEN
  ADEN
LOCAL GOVERNMENT
  Local Government Officers and Teachers (Members Pension Fund)
  Local Government Officers and Teachers (Members Pension Fund)
  Departmental Circular Letters
  Departmental Circular Letters
  Planning Applications (Frimley and Camberley)
  Planning Applications (Frimley and Camberley)
HOUSING
  Rents (London)
  Rents (London)
  Rent Rebate Schemes
  Rent Rebate Schemes
MINISTRY OF DEFENCE
  Arms Sales
  Arms Sales
  Tracked Vehicles (Training Areas)
  Tracked Vehicles (Training Areas)
  Malta
  Malta
  Military and Private Funerals (Advice)
  Military and Private Funerals (Advice)
  Trooper Masters (Official Inquiry)
  Trooper Masters (Official Inquiry)
  Service Land, Ditton Priors
  Service Land, Ditton Priors
MINISTRY OF HEALTH
  Drugs (Prescription Costs)
  Drugs (Prescription Costs)

Preamble
The House met at eleven of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lincoln.
The Lord Joicey—Sat first in Parliament after the death of his father.

GRADING OF FRUIT AND VEGETABLES
11.5 a.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 they will consider extending the provisions of the Agriculture and Horticulture Act 1964 to include retail sales before the Act comes into force in July 1967.]
THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD WALSTON): My Lords, the grading provisions of the Agriculture and Horticulture Act 1964 were designed to apply to sales in bulk. Different provisions would be required for sales by retail, and we do not feel that, at this stage, it would be wise or indeed helpful to consider introducing further legislation.
BARONESS BURTON OF COVENTRY: My Lords, while, out of courtesy, I thank my noble friend for that Answer, is he aware that I regard it as completely unsatisfactory? I am wondering whether my noble friend could tell the House why it is that on matters of horticulture, Government, by either Party, seems to put the consumer last. It is the consumer, in effect, who is paying for this grading.
LORD WALSTON: My Lords, I am unfortunately well aware of the feelings of my noble friend and I am sorry that she feels in this way. I can assure her that the Government have no intention or desire to put the consumer last, and I should have thought that the pro posed legislation and what has already been done for consumer protection gives,
1558
if I may say so with all respect to my noble friend, the lie to that suggestion. I must point out to my noble friend that this particular piece of legislation is designed to promote the competitive ability of the British producer and to deal with producer matters. It would only be clouding the issue and making the legislation less efficient if we attempted to include legislation for dealing with consumer protection.
BARONESS BURTON OF COVENTRY: My Lords, is my noble friend aware that I still disagree with him and that the legislation that is now pending, and has-been pending for a long time, in regard to consumer protection does not give the lie to what I said? Lastly, is he aware that the shopper shopping for fruit needs a grading system more than anything, and can he further emphasise this point to his right honourable friend?
LORD WALSTON: My Lords, I will make certain that my right honourable friend is aware of my noble friend's views on this subject, but I would point out to my noble friend that the retail shopper—the housewife—shopping for fruit has the opportunity of seeing the fruit before she buys it and therefore to that extent is able to do her own grading, whereas the wholesaler buying the fruit has to buy it in crates, or whatever form it may be, and therefore has to rely on a suitable form of grading.
BARONESS BURTON OF COVENTRY: My Lords, does my noble friend ever buy from the barrows?
LORD WALSTON: My Lords, I do not.

ROAD PROGRAMME EXPANSION
11.8 a.m.
LORD CHESHAM: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will now provide information about the proposed expansion of the road programme in the 1970's announced by the Minister of Transport and whether they can state the years during which the new road schemes in London and the other major conurbations to the value of £1,000 million will be commenced.]
LORD SHEPHERD: My Lords, the Minister of Transport has recently announced an extension of the local authority principal road programme to around 1971. She has also stated that she intends to publish shortly the first instalment of a £1,000 million list of principal road schemes to be put in preparation now for further extensions of the programme in the 1970's. The £1,000 million list is to cover other towns as well as London and the other major conurbations.
The starting dates of particular schemes will depend on decisions yet to be taken by the Government about the levels of expenditure for the road programme in the 1970's, as well as on the progress made between now and then with preparing the schemes. However, it is envisaged that the schemes will start within up to eight years from about 1970, together with such other schemes as it may be decided to include in the principal road programme within this period.
The Minister has also said in another place that she intends to announce later this month a very considerable list of trunk road schemes for preparation for the early 1970's programme. It will be seen, therefore, that a large volume of additional work is being put in hand in readiness for extensions of the 1970's road programme.
LORD CHESHAM: My Lords, may I thank the noble Lord for his careful and, in some ways, encouraging Answer? I would ask him, however, whether he is aware that he has in fact added little to the practically nothing already provided by the Minister. Is he aware that those of us who are interested in such matters are quite unable to judge the significance of these high-sounding figures, in view of the fact that the Minister has not yet announced the rolling programme to the years 1970–71 and 1971–72? Therefore, is he aware that we have no means of judging the significance of an increase to £650 million, or to £1,000 million, because we have no yardstick against which to judge it? It is even possible that it might be a diminution, for all we can tell.
LORD SHEPHERD: My Lords, in the first place I do not expect that there will be any diminution. Also the figure I
1560
have given is a rough guide line to the local authorities and others responsible for planning. It is not the final figure. I appreciate that I have not added to the noble Lord's information, but as he will have noted in my original Answer, the Minister intends to make a statement shortly. I hope the noble Lord will then be provided with the information he now seeks.
LORD CHESHAM: My Lords, would the noble Lord convey to his right honourable friend the fact that the revenue now raised from the road-using community as a whole each year is in excess of this figure of £1,000 million? It is well over that figure per year. Is the noble Lord aware that his right honourable friend herself has assessed that traffic will double by the years we are talking about, and the revenues by that time will be huge? May I ask that this point will he fully taken into consideration in allocating adequate funds?
LORD SHEPHERD: My Lords, in regard to the first part of the noble Lord's supplementary question, my right honour able friend is well aware of that fact. I think this is a matter that has been in existence ever since the Road Fund was brought into being. In regard to the second part of the question, I am well aware, and so is my right honourable friend, of the growing congestion which arises from the increased number of vehicles on our roads. The noble Lord will appreciate that this is a matter which goes beyond the question of the finances available. One has to take into account the physical resources that are available for a large programme. I will convey what the noble Lord has said to my right honourable friend.
BARONESS STOCKS: My Lords, are Her Majesty's Government aware that the Malthusian law of population, whose implications we discussed yesterday evening, also applies to road traffic, in that motor traffic tends to increase up to and beyond the roads and parking places available for its accommodation, and that therefore car control must accompany road betterment?
LORD SHEPHERD: My Lords, my noble friend does not need to remind me of a difficulty from which I suffer every day when I drive to your Lord ships' House.
LORD POPPLEWELL: My Lords, is my noble friend aware that we note the safeguard in his Answer, that these schemes depend on the time taken in preparation of these schemes?
Further, is he aware that 31 different steps are needed from first approving the line for a road before the road can be commenced; and in this preparation to which my noble friend has referred, could he say whether his right honourable friend the Minister is taking any action at all to concertina some of these 31 steps, at the same time safeguarding to the full the rights of the public in so far as their objections are concerned? Furthermore, can we be assured that the rolling programme referred to will be a real consideration; and that, instead of certain mileages of road being completed and then reverting to narrow strips again, every effort will be made to see that the capital equipment and everything assembled for these jobs will not be left idle, but will continue in use and serve a useful purpose to us all?
LORD SHEPHERD: My Lords with regard to the first part of my noble friend's supplementary question, this is a very great problem of which we are all aware. Of course, one needs to protect the public to whom road building causes damage. With regard to the second part of the question, here again this is a matter for consideration. I should not like to answer the noble Lord now, because it does not strictly arise out of the Question on the Order Paper.

MOTORWAYS
11.16 a.m.
LORD CHESHAM: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they can state the date by which the first 1,000 miles of motorway in Great Britain will be completed, the mileage of motorways which will be completed by 1980, and whether they will provide details of any plans for expansion of the existing 1,200 mile motorway programme.]
LORD SHEPHERD: My Lords, the Government still envisage the completion
1562
of the first 1,000 miles of motorway in England and Wales by the early 1970s. The mileage of motorway completed by 1980 will depend on the decision by the Government on the level of public expenditure on inter-urban roads during the 1970s and decisions on the standards to which individual sections of the inter-urban road network need to he improved. My right honourable friend the Minister of Transport intends to announce later this month a further substantial list of new trunk road schemes for England on which preparations are to proceed with a view to subsequent inclusion in the programme; some of these will be built to motorway standards, others as all-purpose roads.
LORD CHESHAM: My Lords, in thanking the noble Lord for his Answer, may I ask him whether he is aware that a future statement on trunk roads goes no part of the way to answering my Question? Is he aware that the 428 miles of motorways we have today, with 176 miles building, indicates that to achieve the target to complete the first 1,000 miles the Government have got to get a real move on?
LORD SHEPHERD: My Lords, as the noble Lord is aware from his fairly long tenure of office in the Ministry of Transport, the length of motorways built fluctuates from one year to another. We believe that the forecast made by the previous Administration, which this Government have accepted, that by 1970 we shall have over 750 miles of motor way, provides reasonably conclusive proof that we shall achieve 1,000 miles of motorway for Great Britain in the early 1970s.
LORD CHESHAM: My Lords, is the noble Lord aware that the assumption we must draw from his Answer, that there are in fact no future plans for extending the motorway system, will cause a great deal of dismay and despondency? May I ask three short supplementary questions? Will Her Majesty's Government study what is being done in other countries, where they perhaps realise more acutely how to provide for efficient movement of traffic and the consequent economic advantages? Secondly, will they give urgent consideration to a seriously considered plan made by the County Surveys' society some years

1563
ago urging the need for construction of 2,700 miles of motorway in this country? Thirdly, will they give serious consideration to the urgent need to provide access to the ports, which was greatly stressed in the recent Report of the Economic Development Committee for the Movement of Exports, and in view of the Minister's own assessment of the very large percentage of exports which goes to the ports by road?
LORD SHEPHERD: My Lords, in regard to the noble Lord's last supplementary question, if there is any possible fear that my right honourable friend is not aware of the points made I will ensure that her attention is drawn to them. As the noble Lord knows, the Ministry of Transport always study closely what is going on overseas to find out what we can learn, and we have taken into account the submissions made by the various bodies in road transport.
In regard to the first part of the noble Lord's supplementaries, may I say that I did not say there were no plans for development of a motorway system beyond the 1970s. What I said, in dealing with substantial new trunk road schemes for England, was that some of them will be built to motorway standards and others as all-purpose roads. This is quite different from what the noble Lord alleged that I said.
LORD CHESHAM: My Lords, I am not going to argue with the noble Lord at the present time. Is he aware that the only fear I know of is, not that his right honourable friend is unaware of the matters I mentioned, but that she is acting insufficiently upon the knowledge?
LORD TAYLOR OF MANSFIELD: My Lords, can my noble friend say this morning when the northward extension of the M.1 from Nutgall, in Nottingham, will be open to the public?
LORD SHEPHERD: Not this morning; but I will endeavour to convey the information to my noble friend later.
LORD LEATHERLAND: My Lords, is my noble friend aware of the fact that the services of Mr. Ernest Marples are now available? Does he think it is worth while consulting him?
LORD SHEPHERD: My Lords, so I understand.

MERSEY DOCKS AND HARBOUR BOARD (No. 2) BILL [H.L.]
11.21 a.m.
Read 2a and committed to the Committee on Unopposed Bills.

METROPOLITAN WATER BOARD BILL [H.L.]
Read 2a and committed to the Committee on Unopposed Bills.
NEWCASTLE-UNDER-LYME BURGESSES' LANDS BILL [H.L.]
Read 2a and committed to the Committee on Unopposed Bills.
RHYMNEY VALLEY SEWERAGE BOARD BILL [H.L.]
Read 2a, and committed to a Select Committee.

SUNDAY ENTERTAINMENTS BILL [H.L.]
11.23 a.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Willis.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 1 agreed to.
Clause 2:
Prevention of payments' being made by public for watching competitive sports, &c. taking place between 2 a.m. and 2 p.m.
2.—(1) This section applies to a spectacle—
(c) taking place in such circumstances that any part of the time occupied by it falls on Sunday between 2 a.m. and 2 p.m.
(2) If the occupier of any land permits it to to be used on any occasion for enabling members of the public to enter on it for the purpose of watching thereon or there from a spectacle to which this section applies, he shall, if those persons or any of them make payment for the privilege of doing so (whether for the benefit of himself or another), be guilty of an offence.
LORD CHESHAM LORD CHESHAM moved, in subsection (1)(c), to leave out "2 p.m." and insert "12.30 p.m. "The noble Lord said: In moving this Amendment which stands in my name, I hope that I may have the leave of the Committee to make a brief personal remark. Since I last had the privilege of addressing your Lordships on any subject or of doing any work in your Lordships' House, my status has changed somewhat, and I think I should reveal to your Lordships that I now greatly enjoy the position of being executive Vice-Chairman of the Royal Automobile Club. I say that, not as a piece of advertising but so that when I presently move Amendments your Lordships will be quite sure that I have declared any interest I may have in them, if I may be said to have a declarable interest.
It is even possible that some of your Lordships have picked up the impression that I may even know what I am talking about in connection with these Amendments, because I admit that the group of Amendments as a whole has arisen out of consideration of the effect of this Bill on motor sporting events in all their wide variety as they take place all over the country in some numbers. Having said that, I am also perfectly aware that much of the principle or argument which I am about to put forward applies also to a wide variety of other forms of sport and spectacle.
If I may now turn to this Amendment, I would first say that in suggesting that in Clause 2 12.30 should be substituted for 2 o'clock as the time at which permitted events might begin, I am in no way anxious to create any breach of principle or to try to blow a hole in any form of principle which may be established by the provisions of the Bill. I propose this substitution simply as a matter of practical common sense. The reason I have for saying this—the suggestion incidentally was recommended in the Report of the Crathorne Committee—is that many motor sporting events, particularly during the winter, when it gets dark early, are of such duration that if they cannot start until 2 o'clock in the afternoon they simply cannot take place at all. At least, there would be a serious restriction on their capacity. I do not think I need stress to your Lordships the fact, which I am not arguing one way or the other, that there are many such events,
1566
and that many people enjoy taking part in them and, therefore, it is not just a small flatter but is a widespread problem.
Bearing in mind some views which your Lordships have put forward, and which have been put forward in the past in another place, upon which action has been taken governmentally, I would point out that these events would tend to be discouraged if 2 p.m. is to be the starting time for the holding of events on private property, and it would perhaps tend to drive them back on to the roads in the form of events of a quite different sort. While there is a control system for that, I think we should not discourage such events being held on land off the roads. For the reasons I have mentioned, I hope your Lordships will consider this Amendment reason able, and I beg to move.
Amendment moved—
Page 2, line 7, leave out ("2 p.m.") and insert ("12.30 p.m."),—(Lord Chesham.)
11.28 a.m.
LORD SOPER: I want to ask the Committee to reject this Amendment because in my judgment it strikes at the root of the Bill, and I believe it is objectionable on two counts, both of which I shall briefly deploy. The first is the religious count. I have found this Bill friendly to the true interests of what I think a Christian Sunday should be. It seems to me that it is indeed almost an angel in disguise, and not an impenetrable disguise at that. The fact that there has been this attention to the needs of Sunday morning as a time of worship, and therefore the postponement of the entertainment activities until 2 o'clock, is a genuine safeguard; and though there may be many who are clamorous, I would think, notwithstanding the protestant underworld as well as the fringes of totalitarianism theology, where it is thought that the Sabbath and Sunday are the same thing and to be equally preserved, that there is an in creasing recognition that it would do us all good in the Christian Church to get up earlier and to worship earlier on Sunday, and not seek to perpetuate the bad Nonconformist tradition of getting up late and concentrating all activities of a religious order in the evening. For this reason, I am the more glad that we have this safeguard, interpreted quite

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properly, it seems to me, by the mover of this Bill.
I should like to thank my noble friend Lord Willis for this attention to what I believe is essentially a Christian consideration. If 12.30 becomes the time then it will seriously impede many who would like to go to church from doing so; and, though I take it that sermons are not generally so long as they were, it will discourage many who would like, after they have been to church, to take part in some of these activities, including motoring activities. I myself am not particularly attached to them, but I understand that there are many who are addicted to them. It is a principle for which the Christian Church should stand, and in many cases I think it has already indicated that it is prepared to stand for it. But we do not want to be cosseted or supported by legislation to prevent people enjoying themselves on Sunday. We want a reasonable opportunity to do both those things which we believe to be right and to make it possible for those who seek other activities to be free to do so. I therefore hope that, from a religious standpoint, we shall not accept this Amendment in regard to the time of 12.30 p.m.
There are other, and not precisely religious grounds, for thinking that this is a very bad Amendment, one of which is that it will interfere with the Sunday dinner. I am not quite sure how widespread this particular occasion is in comparison with other days, but it is an occasion where families are accustomed to meet. If this Amendment is accepted it will mean the destruction, or at least a diminution, of the kind of social event which I think has very good therapeutic value in the community to-day. Furthermore, if activities begin at 12.30 p.m., the preparation for these activities will have to commence very much earlier. It will largely destroy the opportunity of many people who otherwise would have a free Sunday morning to do other things. They will be already engaged in the preparation for the activities which will begin so much earlier.
The more temperate, and, I think, more reasonable, attitude which has been adopted by the Christian Churches—and I now think of the Baptist Church and the Methodist, as well, I suspect, as the
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Church of England—is that here is a Bill which reasonable and sensible Christian people are prepared to accept, because they believe that it recognises both the claims of religious freedom and the claims of ordinary people to be free on Sunday to make what use they like of their leisure. Therefore, were this Amendment to be accepted by the Committee, it would destroy the good will already given to the Bill by many Christian authorities, and which has been welcomed by freedom-loving people generally. I hope that the Amendment will be rejected.
11.33 a.m.
THE LORD BISHOP OF LEICESTER: I suppose it is unnecessary, in view of my costume, to declare an interest in this matter, but I think I must fall in line with what has been said by the noble Lord, Lord Soper, on this subject. I do not want to go into the details about the manner of observing Sunday in Churches of various kinds, but I think that it is my duty to report to the Committee that this matter was fully discussed in the Church Assembly, the Church of England legislative body.
I would not obtrude the views of that Assembly on the Committee were it not for the fact that the noble Lord, Lord Stonham, in replying to the debate on the Crathorne Report, said that they awaited with interest the debate in the Church Assembly. Therefore, it is relevant to say that in the Church Assembly debate there was a very strong expression of opinion that the vital time should be 2 o'clock and not 12.30. I do not myself hold any romantic views about the likelihood of people who are going to compete in large sporting events being enabled by legislation to attend Divine Service, or prevented by the absence of such legislation. But I think as a gesture by the country to the whole question of the nature of Sunday, there is a difference between 12.30 and 2 o'clock. It is on those broad and general grounds that I am afraid I shall have to oppose the Amendment.
LORD WILLIS: I should like to thank my noble friend Lord Soper and the right reverend Prelate for their contributions. I would resist this Amendment, and I do not want to go over ground which has already been covered. It was

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nice to have the Bill described as "an angel in disguise". I do not quite know what that makes me, but we will work that out later.
I should like to throw in one other argument, which I think is inportant. I do not think that there is any particular magic about what hour one takes, but one has to bring down the knife somewhere. Some people will think that they are a little more hard done by than others. That is unfortunate, but I think that the weight of the arguments which have already been advanced are sufficient, if it were not for the fact that if you advanced the time to 12.30 p.m., the comparatively small number of people who would be involved in working to provide the entertainment would have to start their preparations a good deal earlier than 12.30. So if there is any argument about a few people working in order to entertain the many, it is surely fair and reasonable that we should try to give these people at least their Sunday mornings. If one makes it 12.30 then a number of sportsmen, transport people, and so on, would have to be on duty at 11 o'clock if not sooner.
This is a weighty argument against the Amendment. I recognise the difficulties. I have great sympathy with the point made by noble Lord, Lord Chesham, and for the sport with which he is connected. But in this case I do not think it is possible to help them, or indeed that it would be right to help them, and therefore I would ask the Committee to resist the Amendment.
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): I am deputising once again for my noble friend Lord Stonham, whom we hope to see back here fairly soon.
As the Committee know, the attitude of the Government is one of neutrality—which does not mean that I am incapable of forming or holding any views on this subject myself. But the Government's attitude is neutral, and I must adhere to that as strictly as I can.
On this Amendment there is only one point I should like to lay before the Committee as a suggestion. If 12.30 p.m. should be the terminal for restrictions on sport, it should presumably be applied also to entertainment under Clause 3, since it is difficult to see any distinction
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in principle between sport and entertainment. That is not a point the Committee need decide this morning, but if the Bill were to be changed in this way it is something I should imagine that your Lordships might wish to consider.
LORD CHESHAM: I have listened with great respect to what has been said, particularly to the speeches from the Benches opposite. I began by saying that I was not trying to breach any principle, but that I was trying to meet a practical difficulty in the lives of very many people. I rather disagreed with the noble Lord, Lord Willis, when he seemed to cast slight doubt on the estimate of the number of people who were involved in this matter. I think that it is rather higher than he gave us to understand—unless, of course, he was referring to the fewer people who are engaged in the preparatory work. There is some substance in the point he made, but I do not feel that it is one which would stand over-emphasis. It goes just so far and no further.
The noble Earl the Leader of the House raised the point of the differentiation between sport and entertainment, and that is a point I should like to think about. Having thought about this matter and the points that have been raised on the Amendment, possibly I might return to it at a later stage. At present, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
11.40 a.m.
LORD DERWENT LORD DERWENT moved to add to subsection (1):
"and
( ) to which the next following section does not apply".
The noble Lord said: I hope it will be for the convenience of the Committee if we discuss Amendments Nos. 2 and 6 together, because No. 2 is consequential on No. 6 and the meat of the whole matter is of course in No. 6. If we have to come to a decision later, we can come to it on Amendment No. 2 and let No. 6 follow whatever we decide on No. 2. I hope that will meet your Lordships' wishes.
The intention behind my Amendments is that, by and large—and I use those words advisedly—professional sport shall not take place on a Sunday. I think I

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must go into some detail as to exactly what happens under these Amendments, because it is quite clear from the Press and from my postbag that the way in which these Amendments work is not in the last understood. Clause 2 of the Bill is widely misunderstood, too, and as to some extent the Bill and my Amendments follow each other, and they all follow the Crathorne Report, perhaps I may explain the Amendments in some detail. As I say, to some extent the main Bill and my Amendment follow each other, but with the exception of this one point of professional sport.
What these Amendments say is that on a Sunday an offence will be committed, not by those taking part in or organising the sport, but by the occupier of the land on which the sport or game takes place, if two things happen. He will commit an offence if any or all the players are remunerated for playing and if the public are charged for entrance to go and watch them. If professionals play and no charge is made to the public for entry there will be no offence. If, on the other hand, a charge is made to the public and no professionals are playing, again there will be no offence. I hope that is clear, because it has been widely misunderstood.
To that extent, I depart from the recommendations of the Crathorne Com mittee—and I will explain why in a moment—who recommended that the promotion of spectator sports, as they termed them, should be prohibited if the participants receive, either directly or indirectly, any reward in money or kind for taking part. I have not gone so far as that. There are certain professional sports, which I shall mention in a moment, which would not be restricted under my Amendments, and I shall explain why. However, I follow the thinking of the Crathorne Report.
I would remind your Lordships that the Crathorne Committee, which considered this very difficult subject about which there are many different opinions, were composed of very diverse members and it is quite remarkable that the Committee produced a unanimous Report. I feel myself that they were right in what they recommended, and that in view of their unanimous Report we ought, by and large, to follow their recommendations.
The way in which they treated this question was this. They thought that in the public interest there ought to be one day in the week different from the others, and it seems common sense that that one day should be Sunday. There should be one day on which most families were able to get together and to spend the day as they wanted. There should be a day on which every possible relaxation in entertainment or sport should be allowed, provided that such entertainment or sport did not cause nuisance in the neighbourhood to those people who wanted to be quiet on a Sunday, and provided—and, to my mind, this is the most important part of all—that the additional recreation which was being granted under this new Bill did not entail much additional Sunday work for other people. So far as possible, people should not be required to work on this special day which is obviously going to be Sunday.
I am sure it is right that nobody should be penalised, and nobody should be put under pressure to work unnecessarily on that day. So a balance had to be found. On going into this, the Committee found that what was really going to cause extra employment and possibly great crowds—and this, of course, is important—was professional sports. As a general rule, amateur sports do not cause great crowds throughout the year, but professional sports very often do. In addition, when great crowds collect there is going to be a lot of extra work caused for catering staff, extra police on duty—and, heaven knows, the police have enough of their weekends interfered with—transport staff, and so on. The extra work would be caused not directly by the professional sports, but indirectly because that is where the great crowds would gather.
The Committee wondered how to deal with professional sport and they thought, first of all, that the best way was to say that one could not charge the public for entrance to sports. They came to the conclusion that that was a bad idea, because even small amateur clubs—football clubs and what-have-you—occasionally charge for entrance to pay their expenses, and no great crowds or trouble are caused by charging for entrance. Then they came to the conclusion that if a charge for entrance was prohibited it would, of course, stop most professional

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sport, but that was not really the way to handle the problem because of the amateur clubs They then said, "Well, the only thing is to ban professionals playing on a Sunday".
I have departed from that for this reason. I agree with the Committee that great crowds should be avoided, but there are certain professional sports where the public are not charged even for admittance, and which never draw great crowds. An example is cyclists. They do most of their racing on the roads, but they do not charge the public for entrance and they do not cause great crowds. Not only is cycle racing always carried on on a Sunday, but it would be almost impossible for clubs or operate at all if they did not race on a Sunday. So what I have sought to do in these Amendments is to say that the occupier of the land is the person who can commit the offence, as the Bill itself says in different circumstances, and he commits the offence if there are professionals playing and if, at the same time, the public are charged for admittance.
I believe that this Amendment is necessary, because if great crowds are created other people are disturbed on a Sunday and extra work is caused. One or two sports, which neither attract great crowds nor create a lot of extra employment, may be hit. But as the noble Lord, Lord Willis, said a moment ago, one has to put the knife down somewhere, and I believe that this is as fair a way of doing it as one can find. I beg to move.
Amendment moved—
Page 2, line 7, at end insert ("and
( ) to which the next following section does not apply.")—(Lord Derwent.)
11.49 a.m.
LORD WILLIS: I am most grateful to the noble Lord, Lord Derwent, for the very fair and precise way in which he has put the point. I think we all have some sympathy with the Amendment, but I feel I cannot accept it and shall ask the Committee to reject it for a number of reasons. I believe that the Amendment has the basic effect of re-enacting the existing law and even, in certain cases, making it worse. In effect it would produce very little liberalisation of Sunday sport, whatever it might do for entertainment, and it would create a whole welter of new anomalies. As the noble
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Lord, Lord Derwent, said, the main object in restricting Sunday afternoon sport is not on moral grounds but on practical grounds.
The two reasons advanced have been, first, that it would prevent disturbance in the neighbourhood through the gathering of large crowds, and, secondly, that it would restrict Sunday employment. On both counts the aim, as I say, is to stop the large gathering, and the noble Lord, Lord Derwent, proposes that this can be done by applying a test which is, in effect, a double test. To decide whether an event is or is not banned under the Bill, under this particular Amendment you would have to decide, first, whether people are charged admission and, secondly, whether the people participating in the spectacle are in fact paid. So you have a dual test. I believe that this in fact confuses the issue, and that the clear and simple proposal in the Bill, that the test should be whether people pay to go in, is far more simple and far more effective.
I say that, first of all, because it is reasonable common sense that no one is going to promote a really big event without charging admission. Certainly they would not in football, which is the one thing that is continually advanced by the opponents of professional sport on Sunday afternoons as being the sport which would be calculated to draw a large crowd. No one could imagine the Football League or the Football Association promoting one of their large events with out charging admission; and, indeed, it is very difficult to think of any sport which would not be covered by this very simple proposal.
The professional yardstick of the noble Lord, Lord Derwent, is less exact. If this is the test, and if the purpose is to keep down large crowds, then under the noble Lord's proposal you could have 70,000 people attending a rugger match at Twickenham but you would not allow 3,000 people to watch Surrey versus Lancashire at the Oval. The test of admission charges is simple and enforce able, but what is remuneration for professionals? Do you include in this prizes that are given to people who take part in horseriding, in horse shows, or the prizes that are given in golf tournaments? And what about the problem of concealed remuneration—sham amateurism?

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The great sporting associations have been in despair in the last fifteen or twenty years in attempts to stop this, and most of them have finally realised that in fact you cannot, and have had largely to turn a blind eye to it.
Thirdly, it would not be beyond the wit of man, since the wit of man is continually able to get round the Chancellor of the Exchequer in the realm of tax, to get round this test in the field of football, for example, and to devise the contracts of the players so that legally they were paid for six days a week and whatever they did on a Sunday was voluntary and unpaid. In my view, this really would not work. It would confuse the issue and, as I say, would create a whole host of new anomalies.
In my view, however, the principle is wrong, and this Amendment ought to be rejected by your Lordships' for that reason—because it introducesan amateur code by Statute. Almost for the first time in the history of this country it is proposed, by law, to define "amateur" and "professional", particularly in regard to Sunday afternoons, and a breach of the regulations would be a criminal offence. Under this particular Amendment, if there was an offence the owner of the land would be liable to a £200 fine or a twelve-month gaol sentence, or both. He might not know whether the players concerned are taking "back-handers"; whether there is this concealed remuneration. This Amendment would lay him open to something which was not an offence even under the old Acts. Under the old Acts, he could expiate his sin by spending three hours in the stocks, but under this Amendment he would be liable to twelve months in gaol for something it is almost impossible for him to know about. So I am more than ever convinced that we must be rational and sensible on this, and allow all sport after 2 p.m.
I should like to come back to the two main arguments—first, the noise and disturbance. I think we must frankly admit that some will occur. I think it is much exaggerated, but we shall have to learn to live with it. In effect, what is going to come about is a fairer distribution of noise and nuisance. Instead offal the noise being on the roads, all the noise going through the small
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villages and all the noise being at the resorts and the swimming lidos, there are going to be other, alternative sources of pleasure. We are going to spread the load a little. Anybody knows—and the police will certainly tell us—that the centres of big towns and cities on Sunday afternoons are thronged with milling crowds, particularly young people, who are bored and do not know what to do. That particular ration of noise can be spread if entertainment and sport is open to them. There is no evidence that civilisation in Ireland or Europe has collapsed under the weight of the noise of Sunday sport there.
Are we going to legislate in favour of some noises and against others? For example, I read the other day that Billy Graham is discussing having an 8.30 p.m. rally at Earl's Court on a Sunday evening which 25,000 people may attend. One can argue that this is for a religious purpose, and that it is reasonable; but I am sure that a large number of people who live in the Earl's Court area would not welcome that noise and the noise of cars parking there, any more than anybody would outside the Arsenal football ground. Are we going to have the anomaly that the noise of 1,000 people driving up in their various cars and public transport to the National Theatre to see Olivier on a Sunday night or the noise of 3,000 music-lovers going to the Festival Hall is to be allowed, while we object to the noise of 3,000 people spending a pleasant Sunday afternoon at the Oval watching a cricket match? It is illogical and nonsense. It is illogical to say that you can have 70,000 people at Twickenham for an amateur Rugby international, as I have said, but not 30,000 at Arsenal. I may be being a little generous to Arsenal as far as their gate is concerned these days, but let us put it at 30,000.
The second objection is that to more people working on Sunday, and I should like to deal with this briefly. It is already happening. We live in that kind of society; and, again, it is something which, while one wants to control it, we have to face. Nobody is proposing under this Bill, as we all know, that we open the factories and the shops, and that there should be mass working. No; the main object of this Bill is to recognise that most people do not work on a Sunday,

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that the shops are shut on a Sunday, that Sunday is a day that is different, and therefore to provide something for these people to do, in addition to religious observance, on their free day, on a Sun day. The fact is that 18 per cent. of our population—18 out of every hundred of the working population, that is—work on Sunday now in one form or another, on essential services. By the same token, therefore, a large percentage work on Saturdays and are robbed of any opportunity to see professional sport for that reason.
If every sport, entertainment, et cetera, took place on Sunday, only about 200,000 people would be involved in working, including the actors and the professionals. I am excluding transport from this argument, but, as I said on Second Reading, I understand that, in fact, apart from an increase in train crews, very little extra transport would be required. We have to remember that in fact most people have cars these days and use them for traveling to and from these particular events. I am not going to deny that there would be a cost in noise and a cost in people working. It would be foolish to do so. But I believe it has been much exaggerated by the opponents of the Bill as it stands, and I think that is wrong.
Here again, we come to this anomaly of whether you legislate against one form of work on a Sunday and not another. Nobody would argue about people working on Sunday in electrical undertakings or on newspapers, which are necessary. But, for example, in Brighton on a peak summer Sunday something like 200 to 250 people are employed by the Corporation, hiring out deck-chairs, as attendants at bathing pools and serving in cafés. That is about the same number of people as would be working in a big soccer international. Is it right for one and wrong for the others? The R.A.C. and the A.A. employ 2,500 patrolmen on the roads on a summer Sunday. No one screams at this. We all regard this as a valuable service by these two organisations. Yet if some pressure were taken off the roads, it is conceivable—I would not exaggerate this argument—that fewer patrolmen would be needed.
I believe that the clause as it stands is right and good; and, above all, I was much heartened to see today that it does mirror a very significant change in public
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opinion. The Daily Mail in its national public opinion poll today, for example, indicated that 75 per cent. of the people in their poll were in favour of professional Soccer on a Sunday. This represents an increase of 29 per cent. in eight years; it probably represents an increase since the Crathorne Committee sat. I know we can all say various things about the polls; but they do indicate certain tendencies and certain feelings among the public, and I think that this is worthy of being taken into account. In ray view the Amendment would cripple and maim the Bill. I believe that is wrong. It is still astonishing to me—I would not for a moment believe that this in any way represents Lord Derwent's opinion; but the view still exists—that in some of the newspaper articles that I have read which are opposed to this particular clause in the Bill (not against Lord Derwent's Amendment) it appears that sport is still regarded in certain places as a dirty word. Watching and playing, in my view, are two sides of the same coin; each helps the other. It is wrong to legislate against people's being able on Sundays to see the best in professional sport. Years ago at Lord's a kind of apartheid was in operation. Ae we all know, "Professionals" and "Gentlemen" came out by different gates. We do not want to go back to that and to create here an apartheid between amateurs and professionals on Sunday afternoons. We do not want to create the vast number of anomalies that this Amendment would create. We do not want to have a situation where people, as now, find devious, underhand ways to get round what is, in fact, an unreasonable law. For that reason I ask the Committee to reject this Amendment.
12.3 p.m.
THE EARL OF LONGFORD: It might be useful if I said one or two words from the Home Office point of view, still adhering to this rather trying neutrality. The Amendment is said to be defective in one or two ways—they might bethought to be serious ways or minor ways, but certainly the noble Lord would wish to clarify his Amendment in certain respects at a later stage if it were carried now or brought back in some other way. I need not go into the technicalities of the defect sat length, but there are obscurities about the use of the word

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"participants" and the question whether it is intended to bite even if only one of the participants is remunerated or whether it applies only if most or all are remunerated. More serious obscurities arise on the meaning of "remuneration", most of which have been dealt with by the noble Lord, Lord Willis. For example, does "remuneration" include expenses? There is the question of the player who is paid under a long-term contract. Will he count as being remunerated if he volunteered to play on a Sunday without extra pay?. And there are one or two other points. I mention those to the noble Lord; and no doubt he will consider his line of action accordingly.
On the general issue, I do not think that I can do anything more helpful than simply to recite, not for the benefit of the noble Lord, Lord Willis, who was clarity itself, nor for the benefit of the noble Lord, Lord Crathorne, who knows the subject backwards, but for the benefit of most noble Lords, the position in regard to prohibited forms of sport under various schemes. I am referring to the period after 2 p.m. on Sundays. Under the existing law, any sporting event is prohibited for which there is an ad mission charge; for instance, league football and rugby at Twickenham are both prohibited, but not county cricket as organised at present on Sundays, which manages on a silver collection and charges for parking and programmes.
Under the proposals of the noble Lord, Lord Crathorne, events would be prohibited if the players or participants were remunerated for taking part and were called professionals. That would prohibit league football and county cricket but not rugby at Twickenham—which is a slight change of emphasis. Then, tinder the Amendment of the noble Lord, Lord Derwent, in its present form, what would be prohibited would be spectator events for which there is an admission charge and where the participants are remunerated. He has the double test. It has to satisfy both those criteria before it is called a prohibited sport. He prohibits less than the noble Lord, Lord Crathorne. Under the Bill of the noble Lord, Lord Willis, there would be no restrictions at all; and that is perhaps the simplest of all solutions. But it is
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not for me to commend one more than the other.
I am sure that whatever the House decides on the question of principle would be workable; but I must say that from the Home Office point of view there is felt to be something of a difficulty in Lord Derwent's attempt in the Amendment to graft one kind of criteria to a system based on another kind under the Bill. Under the Bill the test is admission up to two o'clock. He wants to graft on another test, the professional test, for the later period. I do not say that you cannot produce a scheme that way; but it is felt that there would be some difficulty. I thought it my duty to set out the position as it is and as it would be under the various proposals. Now it is for the Committee, after debate, to see what it wants to do.
LORD CHESHAM: I should like to join with the noble Lord, Lord Willis, in expressing the hope that this Amendment will not commend itself to the Committee. I am not going to follow his arguments, but I would thank him for the germ of an idea that he put forward which could possibly lead to my putting down an Amendment for great restrictions on Sunday traffic—which perhaps I could do at Report stage—in order to give my hard-worked patrolmen a little more leisure. I thank him for that. I think the defect in the Amendment of my noble friend Lord Derwent is that he has managed to see differentiation between an amateur and a professional simply in terms of black and white; and he has completely ignored about 97 shades of grey that exist between the two. If I may again draw on my experience of the situation in motor sport in the widest sense—I think it must be applicable to quite a number of other forms of activity as well—I believe I can demonstrate very quickly what I mean.
Almost without exception, everybody taking part in these events does so on payment of an entry fee. He may get certain returns. In some larger events he may even receive starting money. Cash prizes in these and many other events are not uncommon. It seems to me, that in the terms of the Amendment as drafted, the noble Lord is going to scoop a good many more fish into his net than he intended. Certainly, he is going to I scoop in the majority of motor sporting

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events; because starting money, cash prizes or even prizes of any value such as a silver cup, seem to me to he covered by the definition in the proposed Amendment.
As I say, motoring sport certainly is expensive, and it is desirable, I think, that people should be able to get some contribution towards their expenses. I think I am absolutely right in saying that the majority of people take part in these events because they enjoy doing so and not because they intend or hope to make a financial profit out of it. Their expenses are very welcome to them, and perhaps some might not be able to take part in the sport unless they got a little back; but that does not make them professionals in any true sense of the word. I am sure that is so and I think that this argument could be extended over a much wider field, if one paused to work it out. I think that over a wide range of the country's activities this could prove to be a harmful Amendment and I hope your Lordships will not accept it.
12.11 p.m.
LORD NUGENT: I ask your Lordships to extend to me the usual measure of indulgence which is extended to those who address your Lordships for the first time. I must also declare my interest in this matter. I am a trustee of the M.C.C. and President of the Surrey County Cricket Club. Both these bodies are very much concerned about this Amendment, as indeed is cricket all over England. Your Lordships will be aware that lately the gates at county cricket matches have dwindled sadly. Some unkind people may say that this is due to the dullness of modern cricket, but people have been saying that cricket is going to the dogs since W. G. Grace's day and before, and I personally, perhaps naturally, do not agree with this view. I think there is a great interest in cricket throughout the country, but the reason that people do not go to watch it as they used to do is that the whole tempo of life has changed, and today there are many more attractions and things to do. Many more people have motor cars. Whereas in the old days father was allowed to go on his afternoon or day off to his county ground and watch cricket, and to talk about it afterwards with his friends in the bar, today he has to take the family to
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the sea or for a trip in the car to a stately home.
Then there is television on a Saturday afternoon, the afternoon on which in the old days cricket grounds were most crowded. From his own armchair, and at no extra expense to himself, father can watch for a few hours not only cricket but racing, running, athletics, swimming and lawn tennis, and, if his taste is this way, all-in wrestling. But on Sundays these distractions are not so available or so attractive. There is little or no sport on the "telly" on a Sunday afternoon; and it is much more pleasant to take the family to Lords, or the Oval or the local county ground than to sit in a snarl of traffic on the road to Bognor Regis. Last year as an experiment Surrey played three county matches over the week-end and the number of spectators on the Sunday—that is to say, the second day of the match—was apprecially higher than on any other day in the whole of the county cricket season; which proves, I think, that cricket on Sunday is popular. We could not, of course, charge a gate and we tried to make our expenses by raffles, lucky score cards and so on; but these improvisations can be followed only on a limited number of occasions, and it is quite clear that if a gate cannot legally be charged, Sunday cricket cannot go on. Not only would this be a blow to first-class cricket but it would deny an amenity which the public has shown that it wants.
There is another point of great importance, perhaps of even greater importance, which has been mentioned already by the noble Lord, Lord Willis. It is that by this Amendment the professional would be penalised and the amateur would be privileged. As the noble Lord truly said, it would be possible for England to play Wales at Twickenham before a crowd of anything up to 70,000 paying spectators, while a few miles away at the Oval it would be illegal for Surrey to play Kent or Lancashire. Surely in this day and age such a differentiation between the amateur and the professional, to the detriment of the professional, is both unjust and intolerable.
Your Lordships will be aware that in cricket today there are no amateurs or professionals; they are all cricketers, and most of them play under contract. The days when some splendid, excellent and

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keen cricketers were able, through having private means or through the leniency and kindness of the firms for which they worked, to play regularly for their county are over. Today all cricketers are paid. In 1963 M.C.C. approved, with the concurrence, indeed at the wish, of the counties, the abolition of the names "amateur" and "professional" and called them all cricketers. I do not suppose that today there are more than one or two players who, perhaps for the good of their county club, play for nothing. All the rest are paid, so that if it were illegal for professionals to play on Sundays there could be no county cricket on that day. The noble Lord, Lord Derwent, fears disturbances on Sun day afternoons, but cricket is not a noisy game—except, perhaps, when the noble Lord's own cricket county, Yorkshire, is appealing for a catch at the wicket against Lancashire. But even when our enthusiastic West Indian friends are here the applause at a cricket ground is a mere whisper compared to the continuous roar of rugger fans. In any case it is not intended to play Test matches or great matches on a Sunday.
Finance is the great worry of first-class cricket today. With dwindling gates and rising prices some counties find it difficult to carry on, and if county cricket were to collapse the whole level of cricket would suffer a mortal blow. First-class cricket is not only the feeding ground for our Test teams; it is the model on which cricket at every level—school, village or club, or the little boy playing in the street with three stumps chalked on a wall and shouting that he is Hobbs or Hutton or Dexter—is moulded. Every cricketer, whatever his standard of skill, must have the highest standard to aim at, and if there are no paid cricketers that standard will disappear and our national game will dwindle. The M.C.C. and the counties are doing their best to find methods of raising money to keep cricket going, and it appears likely that Sunday cricket will be one of the most profitable games. I beg your Lordships to help us by rejecting this Amendment.
12.20 p.m.
THE LORD BISHOP OF LEICESTER: I know that this is only Committee stage, but I think that even in Committee it would be the wish of your Lordships that
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I should express my own and your Lordships' appreciation of the speech we have just heard from the noble Lord, Lord Nugent, not only for its clarity but also for the pleasure it has given us just to hear cricket being talked about, particularly in the middle of winter.
At the moment I have to support the Amendment of the noble Lord, Lord Derwent, although by the time I have finished my speech he may feel I have so many qualifications to make that he will wish to say, "Save me from my friends! "I feel that it is my duty to report what happened in the Church Assembly, not because the Church Assembly is representative of the whole country, but because it is a representative institution for the Church of England and it gave almost a whole day to a debate on this subject. Strange as it may seem to your Lordships, who naturally think of Bishops as officially representing a Conservative and almost reactionary attitude in these matters, I had the greatest difficulty in persuading the Church Assembly to accept the main findings of the Crathorne Report, but after a long and thorough debate the Church Assembly decided unanimously to support the main provisions of the Report. They came to that decision on the recommendation in the Report that professional sport in the broad sense should not be allowed on Sunday. Therefore, I feel that, in fairness to the Church Assembly, I have to say that the unanimous opinion in support of the Crathorne Report could not be assumed to support the Bill of the noble Lord, Lord Willis, in its present form.
Having said that, I feel very much the force of some of the arguments that have been raised against Lord Derwent's Amendment. I need not repeat the many anomalies that might arise. They have been outlined with great clarity by the noble Lord, Lord Willis. But there are some other considerations which have been touched on by the noble Lord, Lord Nugent. A great change has come over the situation since our last debate arising from the fact that county cricket has been held on Sundays on a considerable scale. It has been found possible by various subterfuges within the existing law to hold a profitable county cricket match, and my own County of Leicester has been at the forefront of these ventures. I think

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that they were lucky in getting one of the most beautiful Sundays of the year for their first Sunday cricket match, and probably got an exaggerated idea of Sunday cricket from the slight excitement and sensationalism of their first Sunday match.
I am bound to say that it is extremely difficult to pass a Bill which would make it more difficult than it is now to hold a Sunday county cricket match. What worries us about the present Bill is that it opens the door to every professional sport and entertainment after 2 o'clock. The noble Lord, Lord Willis, has been perfectly frank and open with us in admitting that he thinks that is the right thing to do. Some of us feel that so to change the law that the Cup Final could be held on a Sunday—and we cannot avoid the fact that the Bill would allow this—would introduce something into the social life of the country which would make a very big change, which we believe would certainly not be desired by all, and which I think would be resented by a considerable section of the population. It is only on those broad grounds that we want to safeguard the position.
I feel unhappy about both these two Amendments. I have it seriously in mind to bring forward another Amendment on Report stage, if I think there is any support for it, making a totally different approach from that provided by either of these Amendments. I do not want to take the time of the Committee at this point by going into the matter in any great detail, but the root idea is that we should abandon all attempt in this type of legislation to define exactly what is or is not allowed, and there should be a system of licensing of groups of activities by the Home Secretary which could be reviewed (shall we say?) at five-yearly intervals. By some means of that sort a much more flexible and human judgment could be brought to bear on the total situation, taking into account not only all the interests involved but also the general mind and spirit of the nation at any one time. In choosing between a complete free-for-all after 2 o'clock and the rather severe restriction of Lord Derwent's Amendment, for the moment I have to side with the noble Lord, Lord Derwent.
12.28 p.m.
LORD CRATHORNE: I only wish to intervene for a moment in this debate,
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not in any way to argue the case in detail—because our view is laid down in the Report of the Committee over whom I had the honour to preside, which is published as Command 2528—but to support on principle the Amendment of the noble Lord, Lord Derwent, and explain to your Lordships why I do so. I support it in principle because I am very much in favour of this Bill and hope to see it on the Statute Book. If our Report had been drafted in line with the discussion in your Lordships' House to-day, I can assure your Lordships that our Report would not have been unanimous, but divided up into two, three or four different sections.
We sat for three years considering these problems. We started off as eight individual people of entirely different political and religious backgrounds. We could not have been more different. But the more we got together, the closer our views came together. The first point we agreed upon, and which enabled us to make a unanimous Report, was, as the noble Lord, Lord Willis, has said, that in this extremely difficult field we were bound to be illogical. I do not think there is any way to get out of that. So we decided that we would be illogical and try to make the proposals and suggestions which we thought would suit the general wishes of the people of our country in this particular time of our history.
There is no doubt that, as the Report was submitted, it received a wide measure of overall support. That is why I want to see this Bill on the Statute Book. This debate is beginning to frighten me, as I thought it might, because I feel that if we go into too much detail the net result may well be that we shall not get a Bill. This would be the worst of all worlds, because at the present time the law regarding sport and entertainment on Sunday (I will not say anything about trade) is absolutely chaotic.
It is not for us to talk about what happens in another place, but I am anxious about what might happen there. I would remind your Lordships that, if this Bill goes to another place as a Private Member's Bill, only one Member of the 600 Members there has to get up and say, "Object", and there is no chance of getting the Bill on the Statute Book. Therefore, the only hope that this Bill

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has of reaching the Statute Book, either modified or in its existing form, is by the Government of the day giving it not only time, but also moral support. The noble Earl the Leader of the House has quite rightly said that he is neutral on this matter in speaking on behalf of the Government, but he kindly pointed out to my noble friend certain difficulties of a technical nature in the Amendment now before us. I am sure that the noble Lord. Lord Derwent, will consider these difficulties before the further stages of the Bill.
I should like also to consider the possible implications of the suggestion made by the right reverend Prelate who has just spoken. I should not like to give an opinion one way or another on his suggestion at this stage, because again it is full of difficulties. But I certainly think that the suggestion he made is worthy of consideration during the pas sage of the Bill.
Finally, I would say that I wish this Bill well. I think your Lordships should be grateful to the noble Lord, Lord Willis, for giving his time to the Bill, and for introducing it in this House. I am sure that I speak for the whole of my Committee when I say that I want to see some measure of this nature on the Statute Book at the earliest possible moment, and I hope that we shall not forfeit the possibility of such an event by trying to put things into the Bill which I know could not he accepted by another place, or indeed by the majority of people in the country.
12.36 p.m.
LORD CORNWALLIS: May I declare my interest? I am a fellow Trustee, with Lord Nugent, and your Lordships are looking at one of those "old, potty fuddy-duddies" who sits in the Lords' Committee Room—at least, that is our description in some parts of the Press. I have had that honour, probably to the detriment of cricket, for32 years. We have heard the pros and cons concerning this difficult matter put very clearly. I could not begin to talk about this Bill with the clarity of the noble Lord, Lord Willis, or in the manner of the moving speech that we have heard from the noble Lord, Lord Nugent. But I did play cricket with professionals for seven consecutive years. I want to say that the
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one thing that upset me was the discrimination between amateurs and professionals. There is no such thing these days in a great many sports, but when I was playing the professionals played far more like amateurs than did a great many of the amateurs.
I hope that these Amendments will not be pressed to-day. As the right reverend Prelate and my noble friend Lord Crathorne have said, some arrangement may be arrived at during the further stages of the Bill to take out one or two small items that could cause trouble. But I beg your Lordships not to think that you can stop professional players from playing sports and games, and taking part in entertainment during the course of Sunday afternoon. For example, what is to be done with regard to benefits for professional cricketers? All professionals give their services to help a friend. They are not allowed to take a "gate", but the hat goes round the whole time, and some of these Sunday afternoon matches produce £200 or £300 towards a professional cricketer's benefit. Is that to be illegal? Will the man who allows that to take place on his cricket ground he "had up" because he has permitted money to be taken? Once you start looking into the question of the stopping of payment or the taking of a "gate", you get into the most etxraordinary anomalies. I beg my noble friend Lord Derwent not to press these Amendments to make this terrible discrimination and distinction between what is supposed to be an amateur and a professional.
VISCOUNT BARRINGTON: I intensely dislike saying even the few words that I am going to say to your Lord ships when I had not intended to say anything when I came here; and I dislike doing so even more when I have not heard the beginning of the debate on this particular Amendment, and, therefore, may say something that can be very properly corrected. I only want to say this. Having heard what I understand was a maiden speech from the noble Lord, Lord Nugent, I feel that I need not declare an interest, because some of the unhappiest moments of my life (unlike those of other of your Lordships, who have spoken this morning) have been spent playing cricket. I attribute this to the fact that my father and my grandfather were both captains

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of their cricket elevens, and therefore hoped that I should be as good a cricketer as they were. Therefore, I cannot be accused of being prejudiced, as some noble Lords might be, in favour of cricket as such.
But I know enough about cricket to know what is meant by a "maiden over"; and can therefore say that if I were a batsman (which I think nowadays is called "Batman", or something like that, by the younger generation), and if I were faced with a bowler (even a "square" bowler, of the type worn by some eminent statesmen, and, for all I know by the noble Lord, Lord Nugent), I would know that that particular maiden speech was a "maiden over", in the sense that if I had wanted to try and score off it I should have been unable to do so; and from what I have heard—I know, of course, that other noble Lords would not wish to "score off" a maiden speech in the colloquial sense—no one has yet been able to contradict any one of the noble Lord's arguments, which I thought were put up with a clarity, a cogency and, if I may use this word from the Liberal Benches, a humanity which we expect in your Lordships' House, and which I hope we shall always get; but which I know, from what I have heard in the last few minutes, that we shall get on every occasion when the noble Lord, Lord Nugent, speaks to us again.
LORD MOYNIHAM: There are only two small points that I want to make on this Amendment. First of all, I was most upset at the use of the word "subterfuge" by the right reverend prelate in regard to first-class cricket. Surely, throughout the entire world cricket has come to mean a game which breeds in English and Commonwealth people a sense of decency, honesty and fair play. To bring this game down to the level of having to employ subterfuge to exist is, surely, to take away the meaning of the word "cricket" in its widest sense in the world. If this Amendment is not withdrawn, I beg your Lordships to support the noble Lord, Lord Willis, and go into the Division Lobby with him. Cricket will not survive if this Amendment goes through—I am quite sure of that—and cricket is what this country has stood for, not in sport but in an attitude and a way of life.
LORD WAKEFIELD OF KENDAL: I should like to intervene for one moment and I must declare an interest in that I am a Trustee of the Rugby Football Union, a member of the M.C.C. and President of various amateur national organisations and clubs. I very much hope that these Amendments will not be pressed. I say this because I think the effect of them may well be far wider than is understood. The Amendments as drawn may prevent a great deal of absolutely amateur sport taking place. For instance, imagine a game where two teams are playing, perhaps the final of a Cup competition, in which medals are presented to both teams. Under this Amendment those medals could not he played for and presented because the participants would be receiving something in kind—something of value. Again, as we all know, when people take part in athletics there are prizes. Sometimes they are of not much value, but on other occasions they can be of considerable value. Indeed I remember on one occasion my wife greeting me with astonishment when I came home on a bicycle which I had won as a result of winning a particular race.
It will be obvious to your Lordships that if these Amendments are pressed to a Division in the form in which they now stand, a great deal of amateur sport as well as professional sport is bound to be included, when I do not believe it is the intention to include it. I was much attracted by the idea put forward by the right reverend Prelate, because I think that if some thought could be given to what he suggested it would be far better than trying to differentiate between professional and amateur sport, which it seems to me is what this Amendment is trying to do. For these reasons and for the many other reasons put forward by other noble Lords I hope that these Amendments will not be pressed.
LORD DERWENT: May I start by saying how glad we all were at long last to hear the noble Lord, Lord Nugent, make his maiden speech. We have been waiting for it for a long time. I hope he will not think me patronising if I say that I wish I could make a speech without a note, as he did; and now that he has started speaking I hope he will continue.
May I now deal with the question of cricket "apartheid", raised by the noble

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Lord, Lord Willis, and by my noble friend, Lord Cornwallis. It is not, of course, anything of the kind. The difficulty which arises is this. If we are to have the sort of restriction which I am suggesting, how are we to take one game out and leave the others under the restriction? It is not really a question of the professional and the amateur cricketer, because in other sports, if my Amendments were liked by the Committee, one professional would be enough, merely because there must be some sort of criteria. But it is not fair to say that there is apartheid in cricket.
May I briefly comment on what the noble Lord, Lord Willis, said? I will not deal with all the points he raised, because I think he scraped the barrel a little for some of them. This is a difficulty. And may I say that he did not deal with the object of my Amendments at all? He said he did not like them, and he gave reasons, but he made no suggestions as to how one was to deal with the situation if large crowds caused greatly increased Sunday employment and considerable disturbance. With the exception of the right reverend Prelate no one has so far made a suggestion. It is a real problem, in spite of what has been said today. The noble Lord, Lord Willis, said that there could be an international match at Twickenham, and so on. If he re-reads the Crathorne Report he will find that it has dealt with the occasional amateur match that might bring a large crown. Undoubtedly if professional football were allowed, it would occur every Sunday.
LORD WILLIS: May I interrupt the noble Lord? The right reverend Prelate mentioned the Cup Final. That is occasional, too.
LORD DERWENT: That is certainly occasional, and I agree with the right reverend Prelate that that might well be a special case, because a Cup Final draws crowds and causes transport difficulties which do not arise with any other match. So much for the occasional big amateur match.
The noble Lord also raised the question of remuneration. I have taken advice on this point and I should not like to say what the law might be, with the
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noble and learned Lord the Lord Chancellor sitting opposite me, but I am advised that both in the operation of Acts of Parliament and (perhaps to many people more important) in the operation of the collection of tax, "remuneration" is well understood. It does not include proper expenses; it does not include money prizes for winning or for being second or third. For instance, if one has a horse that wins a horse race the money that is won is not considered as income—it is not remuneration as such. I think the point made by the noble Lord, Lord Willis, in that connection was a little heavy-handed. I do not think it would fit any amateur sports which had cash prizes. Of course, payment for taking part is something quite different, and that might well be considered to be remuneration, both by the tax collector and in law.
The noble Lord Lord Willis, made rather heavy weather about concealed remuneration and breaking the law. There is no law which can be passed which somebody will not try to get round, but that does not necessarily make it a bad law. The noble Lord also mentioned the opinion polls. I wonder whether they would be the same if we had all read today's debate and heard all sides of both cases? As your Lordships know, the results of opinion polls often depend not only on the actual question asked but even on the tone of voice in which it is asked, so we need not pay much attention to that. Now may I come to what the noble Earl the Leader of the House said about the drafting. I am not in the least surprised that there are faults in drafting. I shall consult him later, but I do not understand why there is any difficulty at all in having two criteria for making a sport or a game illegal—the entrance criterion and the professional criterion. I re-read what I had written and I should have thought that covered it; but I hope that before the next stage of the Bill somebody on the Government side may be able to give me some advice about the drafting.
THE EARL OF LONGFORD: I will gladly bring some experts to a meeting with the noble Lord and will be of any assistance possible. What I said in connection with the last point he mentioned was that there was an administrative

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difficulty, and not a drafting difficulty. I did not say that it presented an insuperable obstacle but that from the point of view of my advisers there was an administrative difficulty.
LORD DERWENT: That, of course, they would know much more about than I should. I am grateful to the noble Earl for saying he would give me help at a later date. My noble friend Lord Chesham went on to this question of expenses, prizes, and entrance fees for competitors. None of them, I think, are remuneration, certainly not for an entrance fee to go in; only if they are paid for by somebody else to go in would it possibly be against the law.
May I finally refer to the right reverend Prelate's suggestion about licensing of certain sports. It is an attractive idea. It has been put to me before. There are certain difficulties; the principal difficulty is a question of political pressures. It has even been suggested by some people that the local authority should licence. I shudder to think what would happen. In many local authorities cricket would not be allowed and professional football would be, and so on. That, I think, would be quite wrong. I hope the right reverend Prelate will work out an Amendment and let us look at it at the next stage, but there are certain difficulties. We have a Minister of Sport. I do not know what happens if the Minister of Sport or the Home Secretary or another Minister is mad keen on one sport or game and the rest of the country does not like it. It seems to present opportunity for unnecessary pressures. But I am certain everyone would like to look at it.
For two reasons, I am not going to press these Amendments to-day. One is that in view of what has been said to-day a good deal needs to be looked at again; I quite admit that. There is another reason. This is a highly controversial Bill and I should not think it right or proper to ask your Lordships to divide on a Friday. I do not quite know why we are sitting so often on Fridays, but I think it would be wrong to have controversial business on a Friday when the House happens to be rather thin—it usually is, though it was not last Friday—and it is most certainly an unrepresentative House. I do not think a matter as controversial as this should
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be settled in a House of that kind. If later, after the noble Lord has replied, I ask for permission to withdraw the Amendment I will reserve the right, and probably will exercise it, to put down a similar Amendment on Report stage.
LORD WILLIS: I was not intending to reply. I merely wanted to say, first of all, that I do not think I could accept the view that this House is unrepresentative at any time. If this is in fact a controversial piece of legislation, I imagine that those people most interested will have come along to-day in order to take part in a vital debate. I accept that the noble Lord would wish to reconsider, in the light of the debate, the Amendments he has put forward, though I personally regret very much we cannot settle the issue to-day. I am afraid that if we go on much longer the Red Guards of the M.C.C. will be surrounding Lord Derwent's Embassy and shouting slogans and holding up placards.
I should like to thank and congratulate on my own behalf and that of the House, the noble Lord, Lord Nugent, on his magnificent maiden speech in support of the point I was making. Since we keep coming back to this question of crowds and noise, I would stress, first of all, that it is impossible in this day and age to penalise one sport as against another, and certainly it would be wrong to penalise Association football because it happens to be a sport that attracts large groups as against other sports. In other words, I do not think you can divide oft like that. Secondly, I would stress the point I made: that what you are in fact doing is spreading the load of noise and crowds. If, for example, Fulham or any big club, play at home on Saturday, people will go to that match, women are out shopping with their children, the shops are open and there is utter chaos and confusion. But if you have Saturday afternoon for shopping and Sunday for football or cricket, these conditions are spread over. I would stress that.
LORD DERWENT: When I said that this was an unrepresentative House I meant exactly what I said. The noble Lord must know perfectly well that many noble Lords have always made arrangements for Fridays weeks ahead, because they think they will not have to be here,

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and those arrangements cannot be altered. Many noble Lords cannot be here on Friday, and I think they should be given the opportunity to take part. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
12.55 p.m.
LORD CHESHAM LORD CHESHAM moved, in subsection (2) after "them" to insert "are required to". The noble Lord said: I am strongly of the opinion that unless these words in the Amendment I have put down are inserted, the Bill must, or may very likely, have an effect which I do not believe the noble Lord, Lord Willis, or anyone else would desire it to have. I am grateful to the noble Earl, the Leader of the House, in that he has made my task in explaining this Amendment somewhat easier by what he said in reply to the Amendment just withdrawn, when he pointed out what was permissible by way of charges under the present arrangements. He told us that as things are at the moment it is not an offence to accept voluntary contributions from spectators by having a silver collection, passing a hat round or something like that, or to make charges for programmes, or, in certain circumstances, to make charges for the use of a car park, so long as that does not impose conditions relating to entry on the land.
There will be, I take it—in fact I confidently assume there will continue to be—events which will not come within the scope of the Bill in its present form to which these arrangements will continue to apply. I think the Bill as drafted at the moment would cause grave doubt whether those arrangements could continue to apply. I want to make sure that an offence will be created only where I think it is the noble Lord's intention to create one, and that is where spectators are required to pay for the privilege of entering to watch the spectacle or whatever it may be. I do not believe there is any intention to change the present situation where these rather tenuous arrangements for admission could be maintained. If the words "are required to" are inserted in the appropriate part of the Bill I believe it will have the effect I hope for, and I trust the noble Lord will agree. I beg to move.
Amendment moved—
Page 2, line 12, after ("them") insert ("are required to").—(Lord Chesham.)
LORD WILLIS: There is in this matter no difference of opinion between myself and the noble Lord, Lord Chesham, except that I am advised—and therefore, because I am advised, I believe—the addition is unnecessary. I am told that the Bill as it stands is strong enough to take care of the point that has been raised. If the purpose of the Amendment is to make quite sure that voluntary payments or payments for programme, car parking and other facilities, are not excluded by the Bill, I am advised that the additional words are unnecessary. I will look at it again and take advice again, but I believe the Bill covers the point. Payments in such circumstances are voluntary, and the people are not paying for the privilege of watching the sport; they are paying for the particular programme or car park or something else, and the privilege of watching the sport is not conditional on that payment. Therefore, I feel that the Amendment complicates a clear and simple provision. That is the only reason why I am opposed to it at this stage. I will look at it again, but I am strongly advised that it would complicate the Bill and that it is unnecessary.
THE EARL OF LONGFORD: May I intervene? By a curious chance the advice given to me coincides with that given to Lord Willis. Therefore I shall do no more than repeat what he has just said, with the authority of someone speaking for the Government. The additional words are unnecessary if the intention of the noble Lord is as it appears to be, and it is felt that to put in these extra words would merely complicate the position.
LORD CHESHAM: Needless to say, as I said, my intention was only to try to make assurance doubly sure. My advice was that there was some doubt about this matter, and that these words were necessary to clear it up. But I learn with interest the opposite advice and view. In the circumstances, naturally I have no intention of doing anything other than withdrawing the Amendment at present. That being so, I should like the opportunity to study the matter again between now and the

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next stage. If the noble Lord, Lord Willis, would be good enough to allow me a word with him, to discuss his advice, and should I be satisfied (there is the possibility of coming back to it, but that may not arise) I am quite agreeable to leave it at that. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
1.5 p.m.
On Question, Whether Clause 2 shall stand part of the Bill?
LORD CHESHAM: My reason for not moving my last two Amendments is not because I do not consider that this clause does not still require some Amendment. I shall be brief. The Amendments the clause needs are concerned with two entirely practical points, which I think have little or no effect on the principle behind the Bill. They relate to the question of practising for events which are to take place at 2 p.m., and also the question regarding unnecessary crowding and congestion on the road by people getting to these events.
I must be quite frank and tell your Lordships that the reason why I did not move these Amendments was because, after a last minute consideration, it seemed to me that the Amendments I had down did not do exactly what I wanted. Therefore, rather than waste your Lordships' time with long explanations, and confusing your Lordships by trying verbally to make manuscript Amendments to other Amendments, I thought it better to withdraw them. I should say that I propose to put them down in a more correct form at the next stage.
THE LORD BISHOP or LEICESTER: I think this is the moment when I should say that I shall respond to the encouragement that I have received, partly orally and partly in writing, to endeavour to frame an Amendment expressing the idea that I adumbrated briefly about licensing. I have given a good deal more thought to the matter than I could possibly make clear in the few words that I addressed to your Lordships, and I think I have some answers to some of the difficulties already raised by the noble Lord, Lord Derwent. But I will not delay the Committee longer at this point.
On Question, Clause 2 agreed to.
Clauses 3 to 7 agreed to.
Clause 8:
Short title, extent one commencement
(2) This Act shall not extend to Scotland or Northern Ireland.
1.7 p.m.
LORD MAELOR LORD MAELOR moved, in subsection (2), after "Scotland" to insert, "Wales". The noble Lord said: I beg to move the Amendment standing in my name. My Amendment is rather exceptional and of its kind it is rare. Amendments are usually moved in order to change the content of the Bill, but this morning I am not opposing the Bill at all. Consequently, I see no reason why even the sponsor of the Bill could not support me in my Amendment. I am speaking as a Welshman, and I am articulating the feeling against this Bill which has been expressed in all parts of the Principality. I would readily concede that there are in Wales, as there would be in Scotland and Northern Ireland, other opinions.
It may be recalled that during the Second Reading debate I was the only one to speak against the Bill. That was the only course left open to me, because at that stage I should not have been allowed to move an Amendment. I did not proceed to divide the House, for the simple reason that if the compatriots of my noble friend Lord Willis, that is, the English, desired this Bill, then who am I, as a Welshman, to deny them their request? Conversely, I believe that no English or Scottish Lord or Lady on either side of the House would care to deny the people of Wales their wish.
In moving my Amendment, therefore, I feel that what I have need to do is to make out an unanswerable case for Wales being excluded from the provisions of this Bill. I feel myself less a politician this morning than a barrister addressing a jury in a court of law. I am going to appeal to your Lordships as a barrister would do in these circumstances. I am not a legal man and, in the presence of the Lord Chancellor, I feel shy to pose as such. But I shall be calling my witnesses in due course and, if I succeed in proving my case, then I am sure that this habitually generous House will acknowledge the fact by expressing itself content with the Amendment. If

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I fail to make a case I will respectfully accept your Lordships' verdict.
When speaking on the Second Reading debate, I made it clear that I was speaking as a Welshman. I would point out that the present Prime Minister, Mr. Harold Wilson, recognised in a practical manner, and for the first time in history, the nationhood of Wales. Sir Winston Churchill came near to doing so by placing on one of his Ministers the responsibility to be in charge of Welsh Affairs. The late lamented Earl of Kilmuir was the first Minister to hold that office. It was something new in our Parliamentary history. But the present Prime Minister has gone one step further, and indeed taken the final step by establishing a Welsh Office to give the Secretary of State for Wales a seat in the Cabinet. The fact that we are a nation apart is now therefore recognised by the Government.
Not only do the Government recognise that we as a nation have our problems, but also that we have our own ways of dealing with our problems; and this is asserted now nearly every day. Only this morning I saw in a newspaper this short paragraph:
"A new charter for the Arts Council, which would mean a change of name for the Welsh Committee, was announced yesterday. From now on the Welsh Committee will be known as the Welsh Arts Council."
All this used to be England and Wales. Of course, historically it should have been in any case Wales and England, because we were here when the Anglo-Saxons were paddling their canoes on the shallow waters of the continent. We have our own outlook on most things. What the Government now recognise is the fact that what may apply to England does not of necessity apply to Wales. We view things differently. We have our own traditions and our own way of life. I am not suggesting that we are a better people, but I am emphasising that we are a different people, because of our traditions, temperament, and may be our education. We view things differently from our English neighbours. This is definitely true of our view of Sunday. In spite of declining church attendances, I claim that we in Wales still respect and uphold the traditional Sunday.
I said in my last speech on the subject that this was put to the test in Wales some five years ago. The then Home Secretary decided to have a referendum on the question of Sunday opening of public houses. One would not dream of holding such a referendum in England. It would be preposterous and quite unnecessary to do so. But the very idea underlines our difference in outlook and way of life. As a result of that referendum in 1961 eight counties—Carmarthen, Cardigan, Pembrokeshire, Denbigh, Merioneth, Carnaervon, Anglesey, and Montgomery—all voted against Sunday opening. This was in spite of the fact that within those counties are the most popular holiday resorts in the British Isles and thousands of visitors are to be seen there every summer. Those counties also cover no less than four-fifths of the territory of Wales. If I may give another illustration, in South Wales we have the Rhondda Valley, a purely industrial area, and an area where a decline in church attendance is most pronounced. It has, however, a very strong religious and Nonconformist background. A plebiscite was held there to ascertain whether it was the wish of the inhabitants to have a cinema open on the Lord's Day. They voted against its opening, and the same thing happened in the industrial town of Neath in South Wales.
I said I should be calling on witnesses to prove that we have this peculiar outlook and our own way of life. My first witness this morning will be the immortal W. E. Gladstone, one of the three greatest Parliamentarians of all times. Gladstone was not a Welshman; he was an English man living in Wales. On May 4, 1881, a Private Member introduced a Bill in the other place under the title Sale of Intoxicating Liquors on Sunday (Wales) Bill. That private Member was the grandfather of the present Lord Clwyd. Gladstone was the Prime Minister, and he took the unusual step of taking part in a debate on a Private Member's Bill. If my oratory fails to touch the hearts of your Lordships, I am sure Gladstone will succeed. This is what he said:
"It appears to me that this is eminently a question on which the feeling of one of the great sections of the country may be well ascertained, and when tested by the experience of some length of time, when placed entirely beyond doubt by sufficient evidence, it ought to command the greatest attention, and I would even say a willing assent in this House".

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Then he proceeded:
"This is a question in regard to which it appears to me to be eminently right and fit that the desire of the Welsh should be kindly entertained by Parliament. Wales is, after all, a country with a people of its own, with feelings of its own, and with especially religious feelings and associations of its own. I do not think therefore that in a question of this kind it is too much to say that the House would do well to give kindly attention to the wish which is almost unanimously entertained by the people of Wales in these matters".
Those were the words of Mr. Gladstone. I could not have said it better myself! He carried the House with him. Gladstone's words are as appropriate this morning as if they were said in my support in moving this Amendment. I am sure that on any jury's mind it would have the desired effect.
I call another witness. This time the London Times. Having read the Hansard Report of that debate I have just referred to, I was anxious to know the reaction of the English Press to what had been said in the House of Commons. I looked up a copy of The Times for May 5, 1881, and to my great surprise I found that the Editor had devoted two columns in a leading article to this very subject. Let me quote two paragraphs of what the Editor said:
"In matters like this Welsh Bill it is not only a safe principle but it is the only principle compatible with rational freedom, and the opinions of the persons concerned should be the mainspring of legislation.
That Wales is a portion large enough and distinct enough, not only to form an opinion of its own interest in this matter, but to have that opinion listened to, is beyond all question. In language, in social habits, in the character of their intelligence, in religious associations, the Welsh are absolutely different from ourselves and singularly at one with each other."
I do not see the noble Lord, Lord Thomson of Fleet, present but were he present I am sure he would be tempted to reprint that article in to-morrow's Times, because the words are as appropriate to day as they were in 1881.
If I am reminded that this was 86 years ago, my retort to that would be that, throughout the length and breadth of Wales to-day, petitions are being signed in all the Welsh churches imploring their respective M.P.s to vote against the Bill if it is presented in another place. My nearest town is Wrexham, which is a border town and consequently much anglicised. One would not expect to find there the same amount of objection as
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in the Welsh villages and towns in the hinterland. I was therefore surprised to read the following paragraph in the town's local paper, the Wrexham Leader only last week. The paragraph was framed and appeared in thick print, and this is what it said:
"Forms petitioning for the rejection of the controversial Sunday Entertainments Bill have appeared in the porches of a number of churches in the town, and the number of names on the forms has risen sharply."
Indeed, only this morning from a still more anglicised town, Colwyn Bay, where there are many English business people now living in retirement I received this telegram in Welsh:
"Pobhdynuiniad da a Chefnogaeth Heddiw Cymrod Orion Colwynbay."
"All best wishes and backing for to-day". This was sent by the Welsh Society of Colwyn Bay. I have had hundreds of letters from religious denominations in Wales begging me this morning to move this Amendment.
I was reading only this week an article in the Expository Times and was struck by an observation which I saw there. It refers to England, and I quote:
"The pattern over a number of years has been of a full church for morning service, but a remnant of 50 or 60 people in the evening."
That is the pattern in England. That is probably why my noble friend Lord Soper and the right reverend Prelate the Bishop of Chichester gave this Bill their blessing during the Second Reading debate, as it provides for nothing new to happen after 2 p.m. on Sunday.
But in Wales the pattern is quite different. Our large congregations are in the afternoon and evening, because the after noon is devoted to Sunday school and in Wales it is as much an adult Sunday school as a children's Sunday school. Then, in regard to the evenings, I would say without fear of contradiction or fear of being charged with exaggeration that there are four times more people attending the evening services than the morning services in Wales.
I will only say in conclusion that this happens to be my birthday. I am sure that noble Lords, with their customary kindness, will readily wish me a happy birthday.
SEVERAL NOBLE LORDS: Hear, hear!
LORD MAELOR: This morning they can express that wish in a practical way. It will be the happiest birthday of my life if I find that this Amendment has been accepted by them. As I said, I am not opposing the Bill. Had the earlier Amendments gone to a Division I would have retained my seat. I am not concerned about the Bill so far as it relates to England, but I do say, as a Welshman—and I beg the House to listen to me—that the people of Wales do not desire to change the traditional Sunday. I beg to move.
Amendment moved—
Page 4, line 12. after ("Scotland") insert (",Wales").—(Lord Maelor.)
LORD OGMORE: I should like to congratulate the noble Lord, Lord Maelor, on his birthday to-day, but I must ask your Lordships not to give him a birthday present of the Amendment which he has moved. We all have great regard—myself particularly so, since I have known him for so long—for the noble Lord, Lord Maelor, and he is utterly sincere in what he said and in the view which he expressed, but I think that view is wrong so far as the majority of the Welsh people are concerned. That view no longer represents the view of the Welsh people, although undoubtedly it did so in 1881. But time has moved on since 1881, and even since Mr. Gladstone's day. To-day it is Mr. Thorpe who is the Leader of the Liberal Party.
I believe that the Welsh people are not desirous—the majority, at all events—of being excluded from this Bill. The county from which I come, Glamorgan, is the most cosmopolitan, the most colourful, the most enterprising and the most diversified county in Wales. Perhaps not all other counties will agree, but I make that claim. I think we must look at population figures. When we are talking about Wales we must talk about the population of Wales, because that surely has some bearing. The population of Glamorgan is 46 per cent. of the population of Wales, so almost one out of every two Welshmen comes from Glamorgan. Also, three-quarters of the population of Wales—and I include Monmouth shire in Wales, as I am sure the noble Lord, Lord Maelor, does—live within a radius of 50 miles of Cardiff, the
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capital of Wales, which is in Glamorgan. So when one talks about the population of Wales, one has to realise that to a very large extent it is centred within a small radius of Cardiff.
The situation to-day is that life in Wales has changed completely from the days when the noble Lord, Lord Maelor, and I were young, and there is not a great difference, as I see it, between the life there and the life in many parts of England or Scotland. So far as the language is concerned, only 26 per cent. of Welsh people to-day talk Welsh. That is the maximum. I should think it is even slightly less than that, but I accept the census figure. In Glamorgan, the percentage is only 17 per cent. and in Cardiff, the capital of Wales, it is only 4.7 per cent.
When the noble Lord, Lord Maelor, was speaking he referred to witnesses whom he had called. They were rather long in the tooth, as we know—Mr. Gladstone and The Times in 1881, even before the noble Lord, Lord Thomson of Fleet, bought it. But let us accept them as witnesses. Now I am going to call witnesses from this week, and from North Wales—I am not going to my own county. I will go to the area of the noble Lord, to North Wales, and I will even go to Wrexham which he mentioned as his home town.
In North Wales this week the biggest trade union, the Transport and General Workers', have come out in blank opposition to the Amendment of the noble Lord, Lord Maelor, and they have 50,000 members in North Wales. That is the Transport and General Workers' Union—Ernie Bevin's old union. This is what Mr. Tom Jones, the Regional Secretary, said when talking about this Amendment:
"Why should people be governed by centuries-old Acts that were never intended to apply to society as we know it to-day. People should be treated like grown-ups and not like little children."
Mr. Branwell, a delegate from Wrexham, argued the case for keeping Wales in the Bill, and a newspaper cutting which I have reports that he said that
"the object was to give people more freedom to enjoy Sunday sport and entertainment and to remove anomalies in the law governing Sunday activities. Lord Maelor's attitude in opposing the Bill was out-dated for most

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people in Wales. If Wales had different legislation from England, Welsh people would have to travel over the border for Sunday entertainment. It would also be injurious to the Welsh tourist trade. In supporting the Brighter Sunday Bill, the committee are understood to have had respect for the views held by Lord Maelor and religious organisations who share them. Mr. Jones and many of his committee members are churchgoers. Some are deacons. But as Mr. Jones explained yesterday, they had to take into account the situation as it was in Wales to-day. Many people working a shift system were having to regard Sunday as a day for recreation. Others working six days had only a Sunday to relax."
He goes on to explain how, if this Amendment were carried, young people would not stay in Wales and would go to England, because it would encourage them to travel in search of "brighter pastures".
I do not want to speak for long, because other noble Lords will also have something to say, but what entertainment are the Welsh people getting on Sunday now—not in 1881 but to-day? When the noble Lord, Lord Maelor, and I debated this subject on the radio some time ago. I put this point. I said that to a large extent the situation has changed completely since television was introduced, because people are seeing boxing and many other types of amusement in their houses on a Sunday, and what is the difference between its being piped into the house and being seen there and going out and seeing the amusement in the fresh air? I see no difference in principle.
This was the situation last Sunday. This is the kind of entertainment which the Welsh people saw on their television screens, and they seem to have a lot more channels than we have in London. There were "Gymnastics", "Film Matinee", "The Lucy Show", "Great Expectations", "Pinky and Perky's Island", "Bertram Mills' Circus", Much Ado About Nothing, "The Danny Kaye Show", "World Cinema", A New View of Politics, a play adapted from Sir Arthur Conan Doyle's short stories, "Rugby Special: Wales v. Scotland", "Lost in Space", "Tingha and Tucker", (what that is I do not know), "Attack!", "The London Palladium Show"—that is good Sunday entertainment, but not Lord Maelor's idea of entertainment—and "The Eamonn Andrews Show". Then there was another regional programme, on which there was "Batman". If one
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looks at the radio programmes on that day, there were "The Ken Dodd Show" and "The Clitheroe Kid". This is the sort of entertainment that the people of Wales are having to-day; and if they are having this sort of entertainment in their home what on earth is the difference if they have entertainment in the open air?
For these reasons I ask your Lordships, if this Amendment is pressed to a Division, to vote against it. But I hope that the noble Lord, Lord Maelor, whose sincerity I completely accept, will withdraw his Amendment before the Committee.
1.32 p.m.
BARONESS SUMMERSKILL: My noble friend Lord Maelor is a very old friend of mine because we worked together in another place. I suppose our association is that much greater, and that he has much greater respect for me, because 40 years ago I married a Welsh man—a real Welshman, who is Welsh-speaking, who has a tenor voice and an abiding love for rugger, who was fully immersed and baptised at the age of 17, and who bears a Biblical name. Therefore, when the noble Lord said, "We are different", I have had 40 years—and, after all, my children are half Welsh—learning that difference. Of course I agree with him that the Welsh approach to life in the old days was entirely different from that of the English. But he must recognise—and this has already been said—that the strongest quotations he can make in support of his case come from the last century.
When, as a young woman, I went to my in-laws in Llanelly, in Wales, I found that Sunday newspapers were not permitted in the house, which absolutely astonished me. This was in the town of Llanelly, Jim Griffiths's town. In the 'thirties, Jim Griffiths took over a cinema in the town on a Sunday afternoon and charged 1s. for a meeting, and I attended. It was packed and there were queues in the street. I confess that I went to my mother-in-law with my bouquet of red roses in fear and trembling and said, "Please forgive this, but the times are changing". I recall the chief constable by her side telling her about the queues, and she said, "If it were 25 years ago, I should have been upset. I realise now that people must have full

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relaxation on Sundays. That, surely, is what the Lord intended".
My noble friend—and I hate to say this—did not declare his interests. He is a lay preacher, and if this Amendment is rejected it will cut across his preaching in the afternoon and evening. I can quite understand that he may feel rather sore about that, because he knows as well as I do—and I know full well—that the Nonconformist Churches are as empty as the Church of England these days. One finds only a handful of people in them. But the Church is at fault, not the young people. The Church has failed to help the young people, whether they be Nonconformist or Anglican, and the result is that the churches are empty. This is not due to any progressive legislation. It is not due to our giving any special privileges to the youths in Wales whom I have seen kicking their heels on the corners on Sundays, wondering what to do because they did not want to go and listen to a preacher. It is not the fault of this House. This is the fault of the Church in our changing times.
I would say this to my noble friend, if my other noble friend would permit me. Apart from morals, there is the question of expediency. I know perfectly well that he will agree with me that the Welsh are quite aware of the meaning of expediency, and that he knows full well that there is a tragic emigration of the youth from Wales to England. Why? Is it perhaps because Wales does not hold them, for reasons which youth understands? It will be tragic, as somebody has already said, if this emigration is accelerated because more cross the boundaries and go over to England on Sundays.
Another thing I must put to my noble friend is on the question of drink. I agree that, when the referendum was carried out in Wales, South Wales supported Sunday licensing, with the exception of Carmarthen, and that North Wales opposed it. But could my noble friend tell me why he did not equally oppose drinking in working men's clubs on Sunday nights? Why? It is equally immoral. If it is immoral for people to go into public houses in North Wales on a Sunday, why is it not immoral for them to go into working men's clubs? Drinking in working men's clubs takes
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place in North Wales; and, although I do not like using the word about Wales because of my very close association, I think it is hypocritical to say that if you go into one building in the High Street you can drink on a Sunday night, but if you go into another building in the same High Street, in the name of religion you cannot.
My final word to my noble friend is this. I always regard Christ as a great social reformer of His day. That is my conception of Christ—a social reformer who challenged bigotry of all types. He even had some good words to say to the harlot. I have a feeling that North Wales would not. He spent a great deal of his time talking about youth, and the protection of youth. I can assure my noble friend that Christ would not have supported this Amendment.
1.37 p.m.
LORD STRABOLGI: I should like to say a few words against this Amendment. I am sorry to have to do so on my noble friend's birthday, and particularly after he has addressed your Lordships' Committee, as usual, with so much eloquence and charm, but if Wales is excluded from the Bill I think it will give rise to a certain number of anomalies. For example, there would be a completely illogical situation so far as the opening of cinemas is concerned. Here I should like to declare an interest in the film industry, and also the fact that I am a member of the Labour Party Film Group. I have also received some factual help from the Cinematograph Exhibitors' Association, but I speak entirely for myself. Indeed, on Second Reading of the Bill I said a few words about the Sunday charity tax, about which I have felt very strongly for a number of years.
I had the impression from the speech of my noble friend Lord Maelor that on Sunday in Wales there is no entertainment of any kind. In actual fact, there are 85 cinemas open, 13 in North Wales and 72 in South Wales; and according to a list I had yesterday from the C.E.A. one of those in South Wales is the Windsor at Neath, which my noble friend assured us was a town which had rejected Sunday cinema opening. Now if this Amendment were carried the situation would be that Wales would be excluded, and therefore the cinemas in

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Wales, the 85, would have to go on paying this Sunday charity tax while the cinemas in England would not. I do not want to repeat what I said on Second Reading about this tax, but I think it is generally agreed that the tax, which is levied under the 1932 Bill, is out of date and hypocritical. It also puts a very heavy burden on the cinema industry, which by itself, by its own voluntary effort, is raising very large sums for charity. As many noble Lords will be aware, cinemas can be opened on Sunday at the present time only if the local authority gives permission, and the local authority in many cases makes a condition of that permission the levying of this special tax.
The Crathorne Committee recommended that the permission of the local authority for Sunday entertainment should no longer be obtained; and I would submit that this should be equally applicable to Wales. The Crathorne Committee pointed out, I think rightly, that the local authorities' decisions are not always representative of local opinion; they are often the result of pressure by vociferous pressure groups. Furthermore—and this applies particularly to Wales—if the local population are not in favour of a cinema's being opened, the cinema is not attended; therefore, it will not be a commercially worthwhile proposition.
The situation has changed much since 1932. The noble Lord, Lord Ogmore, referred to television. How can one differentiate between entertainment on the television screen at home and entertainment in the cinema? It appears to be the view of my noble friend Lord Maelor that one should not be allowed to see a film in public, but that does not prevent one from seeing it in the privacy of one's home. To see a film in a cinema on a Sunday is considered wicked; to see it at home on television is not. This seems to me as illogical as to say that a local museum can be opened on Sunday provided you see the glass on display but not the china. I hope that this Amendment will be rejected so that when this Bill becomes law it will apply in the whole of England and Wales.
LORD AUCKLAND: I can claim no family connections with Wales but I know it to some extent, partly through Territorial Army camps which I have attended in South Wales and partly
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through two or three holidays I have spent in North Wales in the county of Merioneth. I should be the last person to hope that Merioneth should become even more depopulated than it now appears to be. Except during the height of the holiday season delightful resorts such as Barmouth seem to be virtually empty. When I was last there, out of season, I was able to enjoy the lovely coastline and countryside around, but I was told by some of the local residents that one of the reasons why young people had deserted the place was the lack of entertainment on Sundays.
I am certainly not an advocate of the Continental Sunday for Wales or else where; but I believe that the question of tourism which has been raised is a major factor. At Waterloo station recently Wales was for a fortnight extensively publicised as a tourist area. I think I am right in saying that the railways advertise cheap week-end trips to Wales—and all power to their elbow. But if one is going to encourage young people particularly to go to these places, there must be somewhere where they can indulge in or watch forms of sport and entertainment and, within reason, get a drink. Otherwise there will be clubs springing up, or trying to spring up, all over the place; and the very thing that we have been fighting against, the setting up of some of these clubs, will come about. Much as I respect the noble Lord, Lord Maelor, who I am sure moved this Amendment with the sincerest of motives, I certainly cannot support it.
LORD ARWYN: I have scrapped the speech I intended to make and I think that I can put what I have to say in a few words. Why are the Scottish and the Northern Irish allowed to work out their own salvation in a way that we are not allowed to do? Whatever our faults, and however far behind the times we may be, I still think that the core of Wales, the one which is operative to-day and the one which might be operative to a greater extent than we can imagine in the next twenty years, develops from the training which a few of them still get in the Sunday Schools. I happen to be "a son of the manse". I was brought up in the strict way of which the noble Lords, Lord Maelor and Lord Ogmore, are well aware. In my day we were not allowed even to carry water on a Sunday.

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But there is a happy medium. That which is taught in the Welsh Sunday schools is not the ordinary curricula one finds in other Sunday schools. It is very comprehensive. I knew of three boys who began to appreciate the reading of the Testament in Greek because they were taught Greek in Sunday school. One of them became an eminent Greek scholar.
The noble Lord, Lord Ogmore, referred to television programmes. I look at them. I am not a very good example of one who was brought up in a manse, I know. But if we are to rely on escapism for the rest of our lives and think only of that kind of thing, we are not going to get very far; because something will be lacking in the British nation. And, as my noble friend Lord Maelor said, we are the Ancient Britons—although I do not want to rub that in. I think that if we had been given some latitude here, if there had been some local option, that would have made the passage of this Bill easier. I personally agree with the Bill, but, for Heavens sake! do not let it start repercussions in Wales.
LORD MOYNIHAN: I had the pleasure recently of debating this subject with the noble Lord, Lord Maelor, on Welsh television. He seems also to have debated it on radio with Lord Ogmore. I hope that he, as a Socialist of 15 years' standing in another place, will join the appropriate union, Equity, if he is going to continue making these appearances. Entertainment, like water, finds its own level. It costs a lot of money to open cinemas; it costs a lot of money to stage professional sport and other activities. This is a commercial industry; people are not going to stage these things and open cinemas at a cost to themselves unless they are going to make money. Surely, if in any particular area of Wales the people feel so strongly about this that they do not want it, they could abstain from attending, and therefore vote with their feet. The people who were opening the cinemas would be losing money and would therefore close them. In that way the object would be achieved in a perfectly normal way. Bearing this in mind, and all the other valid points which have been made, I hope that the noble Lord, Lord Maelor, may be persuaded to join the newly created "Friday Observance Society" and withdraw his Amendment.
THE EARL OF LONGFORD: Perhaps I may pour one or two rather cold-blooded points on this warm-hearted debate. The Amendment is slightly defective in its present form. The changes would not require to be very large, but I should point out that, if Wales is to be taken out of the Bill, there should be written into it a specific Amendment to the existing law as set out in the Schedule of enactments repealed so as to secure its continuance on the Statute Book in such fashion as to apply only to Wales; and, secondly, an appropriate Amendment to Clause 7 would be required so as to continue the Cinematograph Fund in so far as contributions accrue from Welsh cinemas. No doubt that could be done quite easily if this Amendment were carried, but those are drafting points which it would be necessary to consider.
There is of course the wider issue, on which the Government preserve strict neutrality. There are precedents for the separate treatment of Wales in legislation, for example, Church Disestablishment where there is separate legislation, and also with regard to the Sunday closing of public houses, where there is a system of local option in Wales. While it is normal to exclude territories like Scotland and Northern Ireland from the general law, it is not normal to adopt the same expedient for Wales. I have asked whether there would be precedents for this, and I have not in fact been supplied with any.
On the other hand, to be fair, the noble Lord, Lord Maelor, who spoke with such eloquence, was able to argue that there has been a greater recognition lately of the independent character and "peculiar tendencies"—if I may use his expression—of Wales; and so I suppose he could suggest that it was time to make a precedent, even if one did not already exist. But I cannot find a precedent for what he proposes to do. It should be pointed out that there are rather better reasons for special treatment in the case of Scotland and Northern Ireland, as the noble Lord, Lord Derwent, suggested, because they do have a special corpus of their own law which provides a reason which does not at the moment exist in the case of Wales.
I am not going to try to influence opinion either for or against the Amendment. My grandmother came from

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Llandilo, but I am not sure what they are saying in Llandilo about this. If any Welshman present, from the North or the South, can tell me that, I might be influenced to vote in one Division Lobby or the other. But I am bound to say that, while the noble Lord, Lord Maelor, and I have so much in common, and I have the greatest feeling for Welsh nationality, I defer on many of these matters to the noble Lord, Lord Ogmore, who has assured me—I have it only on his authority—that if my Welsh relations had their rights, one of them would be a Prince of Wales to-day; so I am very biased in his favour also. But I am completely neutral, as are the Government, on this interesting Amendment.
LORD LEATHERLAND: My noble friend Lord Arwyn asked us to remember that the Welsh are the Ancient Britons. I think that the modern Britons also have an entitlement to have their voice heard on a matter of this kind. We have heard from the noble Lord, Lord Maelor, of what Gladstone said 80 years ago. I think things have changed since those days, and they have changed in Wales just as they have in other parts of the country.
After the noble Lord had finished speaking, I thought that I would go to the Library and look at the Western Mail which is one of the principal, if not the principal, newspaper in the Principality. I saw in the Monday issue of that paper a paragraph which said that hundreds of Welsh Rugby supporters returning by air from Scotland on Sunday were held up by fog. Then I saw in the advertisements that the A.B.C. Olympia Cinema was proudly announcing that it was having performances on Sunday evenings at 6.30, and that this Sunday's programme was the film Dr. Zhivago. I saw that the Park Hall Cinema was advertising that on Sunday at 7 p.m. Mediterranean Holiday would be shown. We have heard about the abstemious or temperate habits of the Welsh. I saw another paragraph saying that the 500 members of the London Welsh Association had filled up a questionnaire saying that they would not attend meetings less frequently if a new centre were opened where drinks were served, and only five of them were threatening to give up their membership.
I cannot speak, as so many have spoken, with a Welsh accent or back-
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ground, except that from the age of two to the age of five I did live in South Wales at Dinas Powis where my father happened to be a bandmaster. In those days I was conscious of the very sanctified atmosphere of the Sabbath but, as I say, that has changed very considerably in the last fifty or sixty years. I should like noble Lords from Wales to show me one Welshman who does not look at television or listen to the radio on Sundays.
LORD ARWYN: I am not arguing that. I am trying to uphold a feeling which is of great strength in Wales. It starts from the Sunday school and I am going to defend that.
LORD LEATHERLAND: But if it is sinful to be amused on Sundays, it is sinful to be amused by television as much as by a live form of entertainment, and you cannot have this argument both ways. If it will raise me in the esteem of my noble friend, I will say that not only did I go to Sunday school, but I was a Sun day school teacher for several years—but do not hold that against me. I do not want to see a system of apartheid growing up in this country, where we have one system of law and one standard of citizenship and conduct for one part of the country, and another for the little place called Wales. Let us all be on equal footing where this is concerned, whether for good or for ill.
I would listen more attentively to my Welsh noble friends if they would stop working as well as stop playing on Sundays. We have Welsh miners going down the pits on Sunday nights; we have Welsh railway men catering for special excursion trains which carry people to sporting events and bring them back again; and we have Welsh newspapermen having to work all day on Sunday, and at night as well. My noble friend Lord Maelor, for whom I have the highest respect, gave some figures about Sunday drinking in Wales. He pointed out, quite correctly, that under the local option scheme in Wales only 5 of the 13 counties have voted for drinking, whereas 8 have voted for not drinking. This is one aspect of Sunday entertainment and of the attitude of mind in which you can approach the Sabbath. My noble friend did not tell us that the eight counties which had voted against Sunday drinking were the middle and northern counties of

1615
Wales, the agricultural as distinct from the industrial counties. He did not tell us that the five industrial counties in the South had voted overwhelmingly for Sunday drinking. Another aspect of this Sunday drinking is linked with the clubs. It is undoubtedly a fact that in those places where Sunday drinking in the pubs has been stopped, Sunday drinking in the clubs has developed, and that has not been an improvement.
I know that we are to consider the question of football matches and cricket matches on Sunday. If they do come about, I do not want to see the cricket supporters of Glamorgan and the football supporters of Swansea deprived of an opportunity to share the same kind of entertainment and sport that is available to the rest of the country. My noble friend Lord Willis is not compelling any Welshman to do any of these sinful things on Sundays; he is just saying that if they want to take their wives and families out, on what is perhaps the only day during the week on which they are free to do so, to witness one of these sporting or recreational events, then let them have the opportunity to do so. But it does not go any further than that. There is no conscription or compulsion of any kind.
There was a stage during the speech of my noble friend when I wondered whether local option would not be the remedy, as it has been for the Sunday opening of public houses, but during the last few minutes I have altered my mind. There would still be a large minority in many counties who would want an opportunity to have Sunday entertainment, yet who would be denied it because a bare majority of people had voted against it.
I hesitate to express an opinion on a matter which is solely the concern of Wales. We have to bear in mind that a lot of people leave Wales, for various reasons, and a lot of them are in London. I do not see any distinction between the habits of Welshmen in London and the Cockneys who are native to the city. I feel that it would be detrimental to the worthy objects of this Bill if we inserted this special provision, which would make an apartheid territory of the Principality of Wales.
LORD WILLIS: Speaking as an Englishman who keeps away from Wales as
1616
often as he can, and who has suffered a great deal in the past at the hands of Welshmen, and not least to-day, when we stagger on lunch less into the afternoon, I should like to thank the noble Lord, Lord Maelor, for the courteous and eloquent way in which he expressed himself. I am reminded of a phrase from Shakespeare, though perhaps it is a little out of place—
"There is much kind and gentle in this Welshman".
On my noble friend's birthday, I give him that tribute from Shakespeare, but I am afraid that it is all I can give him. Under the generous and gentle manner of my noble friend lies a diabolically cunning political brain. Notice, for example, the cunning with which he approaches this question. He is much more circumspect than the Scots. When we had a Sunday Entertainment Bill in another place some years ago, though it did not affect Scotland, the Scots rose in their thousands and attacked it hook, line and sinker.
Now we have this Amendment, and I think I detect underneath it an authentic cry of despair—the wail of defeat. Now the Welsh are saying in effect, "Please leave us our Principality. You can go to hell in your own way, with Sunday theatres, football, cricket and drink. But erect a fence round Wales and we will look after it. "Indeed, my noble friend said that the English could do what they liked. The plea is to leave them Wales. My noble friend did not actually say that the Welsh are better people than the English, but I must say that he dropped some pretty strong hints in the course of his contribution.
My noble friend Lord Arwyn spoke up for the Ancient Britons. His body covered in woad, he shouts that we have to remember the place of Sunday schools in Wales.
LORD ARWYN: I must correct the noble Lord. This is a dastardly yarn put up by the English. We never wore it.
LORD WILLIS: I take that back and apologise. I was under the impression that woad was a dye that came from South Wales, but my noble friend has cleared up that misapprehension. I bow to the noble Lord's superior knowledge of, at least, ancient matters.

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May I say a final word on this, which will have to be serious? We cannot exclude Wales from this Bill for many reasons, the most telling of which was given by the noble Lord, Lord Ogmore, who I think spoke with the authentic voice of modern Wales, young Wales. I have received a great number of letters and have a great many Press cuttings indicating that there is a feeling in Wales for a change. I beg my noble friend not to be like Canute and try to hold back the tide. That is an impossibility, and I would beg him not to do it, not only because it is a negative occupation, but also because this Bill is not a harmful Bill. It is not a bad Bill that is going to take people away from Sunday school, church or chapel, or from anything they may wish to do. It restores a measure of freedom to Sunday, without affecting anyone's particular interests or what people believe in. If this Amendment were passed, it would set up Wales as a medieval fortress from which, I warn my noble friend, there will be such a drain of the young population that Wales will be left a Principality of old, bearded men and faded women. I beg my noble friend, therefore, not to press his Amendment.
LORD MAELOR: I should like to reply to a couple of matters that have been brought up against me this morning. The noble Lord, Lord Ogmore, referred to the resolution passed at a meeting of 50,000 workers the other day, but there is a vast difference between the union concerned and the churches who have had petitions signed every Sunday. Here may I quote the Wrexham Leader. Petitions are put in the porches and as members go out, they see them and sign them voluntarily. I am sure that if these 50,000 members of the Transport and General Workers' Union had been canvassed for their views, we should then see that A large proportion of them, knowing them as I do in North Wales, would be very much in my favour.
My noble friend Lady Summerskill referred to the fact that I am a lay preacher and that I should be losing my big congregations. I happen to belong to a peculiar denomination, the smallest in Wales, called the Scotch Baptists in Wales. Curiously enough, there are no Scotch Baptists in Scotland. There are Baptists in Scotland, of course. but no
1618
Scotch Baptists. I am a Scotch Baptist and I have always been used to preaching to small congregations.
LORD WILLIS: If I may interrupt my noble friend, may I say that that explains a great deal.
LORD MAELOR: All this is done voluntarily. I can claim one distinction. Probably I am the only Member of your Lordships' House who has been excommunicated from church membership because of holding broadminded beliefs. My noble friend Lady Summerskill must look again and say whether that is broad or narrow.
BARONESS SUMMERSKILL: Was it due to smoking or drinking?
LORD MAELOR: No, it was because of my theological beliefs. In regard to emigration, I do not know whether the noble Lord, Lord Auckland, appreciates that I was formerly for 15 years the Member of Parliament for Merioneth. Emigration has happened there, as in other parts of the Principality, through lack of industry. Indeed, the noble Lord contradicted himself when he said how in summer Towyn, Barmouth and other holiday places were packed out with people anxious to come and enjoy the good health that is provided in Wales and the Welsh Sunday.
LORD AUCKLAND: Scenery; not Sunday.
LORD MAELOR: Scenery and Sunday. We are told that there are no precedents. Well, the Welsh Office has been in existence for only a couple of years, and I am sure it is high time to set precedents for the future so far as that particular office is concerned. I cannot withdraw my Amendment. As one who has been begged by so many people in Wales to take the action that I am taking this morning, I think it would be cowardly on my part to withdraw it. I shall definitely divide the Committee, if necessary, and, as I said in my speech, if I sink, I sink, but I am hoping that I shall keep afloat.
2.11 p.m.
On Question: Whether the said Amendment (No. 7) shall be agreed to?
Their Lordships divided: Contents, 7; Not-contents, 28.*

CONTENTS

Arwyn, L. [Teller]

Kilbracken, L.

Moyle, L.

Falkland, V.

Longford, E. (L. Privy Seal.)

Stocks, Bs.

Horsbrugh, Bs.

Maelor, L. [Teller]

Strange, L.

NOT-CONTENTS

Airedale, L.

Gifford, L.

Popplewell, L.

Ampthill, L.

Hacking, L.

St. Davids, V.

Amulree, L.

Jessell, L.

St. Oswald, L.

Atholl, D.

Kinnoull, E.

Shannon, E.

Auckland, L.

Leatherland, L.

Stow Hill, L.

Barrington, V.

Mowbray and Stourton, L.

Strabolgi, L. [Teller]

Burden, L.

Moynihan, L.

Strang, L.

Chorley, L.

Ogmore, L.

Summerskill, Bs. [Teller]

Effingham, E.

Phillips, Bs.

Willis, L.

Gardiner, L. (L. Chancellor.)

Resolved in the negative, and Amendment disagreed to accordingly.
Clause 8 agreed to.
Schedule agreed to.
House resumed: Bill reported without amendment.

BRITISH RAIL DEFICIT
2.21 p.m.
THE EARL OF KINNOULL THE EARL OF KINNOULL rose to ask Her Majesty's Government what action they intend to take in view of the recent announcement of the Railways Board's deficit in their last financial year of £130 million. The noble Earl said: My Lords, after that stimulating Welsh debate, I ask your Lordships to address your minds to a subject which arouses equal passion in some quarters; namely, the railways. When I put this Question down for to-day I did so in a spirit of objectivity and in terms which, if digestion permits, could lead those who are taking part in this discussion to a fairly wide-ranging debate.
I believe such a debate gives us the opportunity to express views on both the current Government policy and the management policy of the railways. It also gives the opportunity, of course, of raising political red-herrings, but I very much hope that when the noble Lord, Lord Shepherd, comes to reply he does not fall into this trap and so cloud the clarity of his arguments and lead us to suspect the frailty of his case.
The purpose of my Question to-day falls into three parts. In the first place, it is simply to ask the Government whether they are satisfied that this country is getting good value for its money when it finds itself faced, this year, with a bill for approximately £130 million for the railway deficits. Secondly, it is to demonstrate that many of the economy measures taken by the railways in recent years have resulted in little financial gain to the country and have taken place at the expense of increased public hardship. Lastly, the purpose of my Question to-day is to ask the Government perhaps the million dollar question: What positive steps do they intend to take this year to correct this ever-increasing financial drain from the public purse?
Anyone who has recently examined the Annual Reports of the railways will have noticed that the total deficit is in fact made up from two main sources: the operational deficit, which is the main guide-line, and the interest deficit payable on accumulated losses. These two figures are currently running at approximately £70 million for the operational loss and £60 million for the interest payments. What the purpose is in adding to the operational loss every year a sum almost equal to it in interest charges on past losses is difficult to fathom, particularly when no Government can seriously expect to be repaid on these accumulated losses.
The surprising feature of the operational deficit is that since 1964 it has varied little from between £68 million to £70 million, and yet during this period

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there have been over 286 closures of passenger lines, innumerable closures of freight services and depôts, withdrawals of many weekend passenger services, and a considerable reduction in staff. Yet despite all these economies, despite all these reductions in passenger services, despite all the reductions in freight services, and despite all the public hardship that has occurred, the annual deficit has remained exactly the same. The only inescapable conclusion one can come to is that this is a highly unsatisfactory state of affairs and that the country was getting better value from the railways in 1964 than it is getting to-day.
Perhaps I may now turn briefly to the sensitive subject of rail closures. The Railways Board estimated some time ago that recent closures would save something in the region of £17 million annually. On a number of occasions this figure has been strongly challenged by leading railway economists, who claim that the Railways Board appear to forget that the branch lines are the grass roots that feed the main lines. I would ask the noble Lord whether he can state the actual savings gained as a result of these closures. Such information may afford some grain of comfort to those who have been deprived of their rail services, and who now suffer the inadequacies of the alternative bus services. These inadequacies are very real—the services are slower, they are less frequent, they are less comfortable, they are less reliable in winter, and in some cases they have been withdrawn altogether.
The Government policy on closures is, as the noble Lord, Lord Shepherd, will be aware, a very sore point. Out of the window went their 1964 pledge to halt closures, and out of the window has apparently gone their full transport survey that was promised. In view of this, surely the least that should be disclosed is the figure of the actual financial savings from these closures.
One of the many reasons for passenger dissatisfaction with the railways to-day, and one which I am sure has contributed at least to part of the 5 per cent. loss of passenger traffic for this last year, is the recent wide curtailment of Sunday services. The pattern has been to withdraw these services from many areas throughout the country during the autumn, on
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the pretext that they are not being properly used, and then never to reintroduce them in the spring. These services are withdrawn without reference to the Minister or to the T.U.C.C., and those objecting have little or no chance to offer any effective or real resistance. There is clear evidence of hardship here, and I have been informed of cases in Wales where families and friends cannot be happily reunited at weekends because of the lack of Sunday services. I hope the noble Lord, Lord Shepherd, will be prepared to look into this matter, which brings nothing but discredit to the railways.
There are those who argue that the only way of making the railways pay, or to make them more viable, is to reverse the present trend and to increase passenger and freight traffic every year. Such advocates produce figures which show that from 1938 to 1966 French railways increased their freight tonnage per kilometre by 250 per cent.; Swiss railways by 400 per cent.; Japanese railways by over 2,500 per cent., and British Railways by 2per cent. With passenger traffic, the French railways increased by 75 per cent.; Swiss railways by 400 per cent., and Japanese railways by 8,000 per cent. British Railways succeeded in fact in reducing their passenger traffic by 3 per cent. Why is it, people ask, that the foreign railways appear to flourish while British Railways appear to wither? In fact, as I am sure the House will be aware, in 1965 both passenger and freight traffic fell by 5 per cent. It is my submission that whereas a loss of passenger traffic is understandable to a point, the loss of freight traffic is inexcusable and a trend which must be reversed, both on social and on economic grounds.
Before cooling here to-day, besides reading from the Annual Report I have attempted to discover why it is this trend has occurred in the last year. The most common complaints that have been made are, first, that the railways have an inflexible commercial approach which is outdated. and the attitude "Take it or leave it" is losing them business fast; and, secondly, the so-called rationalisation of freight depots apparently did not take into account the fact that customers would not be prepared to tolerate the extended transit time that has resulted. In the case of the London area alone,

1623
where 18 depots were reduced to six, the freight traffic has dwindled to an alarming proportion over the last year, and the result of this loss, of course, is a further increase of road congestion.
When I discussed the question of rail deficits with an old politician recently I was told that the Government answer to day would be a "lemon". I hope it is not. The Government must take full responsibility, as any Government would have to, for this continual loss. I suggest to the noble Lord, Lord Shepherd, that what the taxpayer requires to know to-day is the answer to four questions. Why is he getting less value for his money than in 1964? Why has the transport survey not been made? Why have the closures not been halted? Why has no positive step been taken to arrest this ever-increasing financial trend? Those are the questions to which I would ask the noble Lord to address his mind to-day.
2.32 p.m.
LORD POPPLEWELL: My Lords, I think the pertinent questions put forward by the noble Lord which require an answer are very important ones indeed. I would only suggest, with regard to the first two questions, that these lie with the Government which he evidently supported, because of the policy that has been followed since 1951 to date; the effect of that policy has been to bring about this continual trend that is taking place. I think it is right that he should put the third question and ask what the present Government are going to do to stop that trend. That is something that concerns many of us who have taken a keen part and a great interest in transport as a whole. I think there is a cynical disregard of the ever-increasing deficit of the Railways Board. The present estimate for 1967 of £130 milion is alarming, to say the least. We seem to be taking this just in our stride, and one must seek the reason why this should be so.
Let us look at the global figure of these deficits. If we take them from when the deficit first commenced—I will deal first with total deficits and then working deficits—we find that the policy that was followed under the 1947 Act for the first time brought some real finance into railway operation. We all know the very serious financial position in pre-war days of railways as a whole. They had their
1624
temporary respite due to the war, and after the war we found, when the decontrol took place, that at once the railways commenced to run into the deficit that was so usual in pre-war days. As the operation of the 1947 Act became more effective, we found that by 1952, after paying all working costs, paying all interest and central charges and so on, there was a surplus of £3·7 million. That is why we have to look at what has happened since that date that has now led us to a gross deficit of—these figures are staggering—over £1,345 million to the end of 1966. That is astonishing. Let me repeat: in 1952, with the common-sense operation of the 1947 Act, after paying all interest charges and meeting all working costs there was a surplus of £3·7 million. In the intervening years to the end of 1966, there was a deficit of £1,115 million. The nation has a right to be alarmed about this. We have a right to ask questions in this House and to probe it.
What has brought this about? If we take central and interest charges, we find they have been pretty static. From 1952 onwards they have gone from £35 million —a big increase—to £55 million, but if we take an average out each year for central and interest charges we find they have been reasonably steady. The big difficulty has arisen, naturally, in the operating deficit, and we find that in the operations up to 1955 the railways were able to meet all working costs and provide a surplus of £1·8 million. As the full effects of the Tory Government Act of 1951 have been felt, these operating deficits have increased to a remarkable degree. The railways commenced, let me repeat, by showing a surplus in 1955 of £1·8 million; in 1956 a deficit of £16·5 million. I do not want to quote all the figures year by year; one can find them in the Hansard of the other place for January 22, 1964, column 136, in a reply to questions. It gives the figures up to 1962, and by that time the operating deficit had risen to £104 millions. This is a proper responsibility of the policy followed out in particular by the Marples-Beeching régime. Dr. Beeching at that time went out with a halo around his head for the modernisation of transport and rail. He has been the biggest murderer of transport following the Tory Government policy that this nation has ever known. If we go on from 1962 to

1625
the present time, we find that the working deficit continues at £75 million, £62 million and £71 million. This is some thing that is very alarming.
A policy has been followed of closing branch lines, of hiving off everything that has been profitable on the railways side, of closing down railway workshops and handing out to private enterprise the maintenance production that railways require. I have before me two wonderful brochures issued by the Derby work shops in 1954. How proud they were, when I visited them on Monday, October 11, 1954, to indicate in this brochure that it was the railway workshops which experimented with the first diesels. By 1938 they had the first prototype diesels running They go on to say that by 1954 they were producing a number of diesel units, both main line and for shunting; and then suddenly they were completely deprived of their production. It was handed out to private enterprise, and we all know the sad story of the North British, and so on, in this connection.
In 1953 48 diesel locomotives were produced. They were stripped, repaired and rebuilt; and 25 new ones were produced for main line running. All this was taken away from the railway workshops and handed over to private enterprise. The significance attaching to this will be noted, because it is from that time onwards that the operating deficit and the gross deficit of the railways commenced to leap to the astronomical figures at which they stand now. Therefore, in reply to the first two questions of the noble Earl, I would say that the Government he supported, that side of the House, must take full responsibility, for this particular reason, for the tremendously steep increase in the deficit of the Railways Board, going on year by year.
If we take the Beeching-Marples era, traffic was constantly falling. If we take the coal traffic carried by rail in 1963 and compare it with that of 1966 we find there has been a reduction of 4·7 per cent. One understands certain economic changes that have taken place in the use of oil and electricity for power producing units. But we have only to travel the countryside, and particularly my own part of the world, in the great North-East, the industrial area, and we see the amount of coal which is now being carried by road; vehicles are cluttering up
1626
the roads where there should be an adequate rail service to carry it. At one particular time there was such a service. Of course, the branch lines and so on have been closed down, and we see the added congestion that is caused through this.
Since 1963 to the end of 1966 we find that there has been a decrease of 15.4 per cent. in the iron and steel carried on rail. Again, as we travel up and down the countryside we see much of this heavy traffic cluttering up our roads when it ought not to be there. We even see our motorways being developed in order to carry much of this type of traffic, but those concerned have neglected to connect them up to the docks and seaports where, if we are to be really economically solvent, the steel ought to be travelling for export. Instead of that, we see what takes place.
We see also what happens in regard to other quantities of traffic. I am not going back too far. I am quoting figures only from 1963. We find that there has been a further decrease of 2.6 per cent. in the volume of traffic carried. This is the story. This is the reason why these deficits are constantly growing. We know that the Beeching—Marples policy has been to cut out all sundries as much as possible. The noble Earl referred to what is taking place in this particular direction. If we take the sundries traffic we find that the closing up of many branch line stations and collecting depôts has deliberately sent this traffic off to the road. Those of us who live in rural areas have seen our local stations being closed, and are having to depend upon distribution from a given centre. We know that freight that is carried by rail and sent on by road is often waiting two or three days before it is delivered. These, then, are the reasons for the deficit.
To take some global figures, the total freight receipts in 1963 were £291 million. In 1965, the last total gross figure was down to £282 million: and the estimate for 1966 is £271 million. This reflects itself in the falling gross receipts. This is the answer to the question posed by the noble Earl.
Looking at the Accounts, while all the accounts are legally scrupulously correct, one wonders whether they are not overbalanced a little to show more of a

1627
deficit than they should. If we take the Depreciation Account and suchlike which is written off, we find that the depreciation has been quite considerable over the years. But when we come to the assets —I do not mean the rolling stock assets, but land values and so on—while there are certain items in the accounts which indicate the book value of the assets, one queries whether the correct land values have been brought into them. I am subject to correction on this, but I think the last valuation of land values took place in about 1963. We all know that there has been an appreciation in many depôts and areas of land where the station buildings have been pulled down. The land is most useful in the centre of a town. I do not think that assets have been written up to quite the extent they ought to have been. This could have a certain effect upon the accounts in this particular direction.
We find, too, a point that has been emphasised on a number of occasions, that the railways have never acted, and under existing statutory regulations never can act, on a commercial basis. In fact, up till now it is a one-way traffic, because the railways have been placing large con tracts to outside industries for vast quantities of their materials. We have also found changes within the administration which are supposed to be modernisation. There is, indeed, much to be desired, be cause departments have been established. In addition to the higher price that has to be paid for goods coming from private production compared with what it used to be under railway production, let us consider changes that are taking place in the Chief Mechanical Engineer's department, the divisions and workshops. We find the workshops have to produce to sell. The accounts of one department have to be adjusted to another's. A really fantastic set-up is in operation. I sincerely hope that the Government are going to have another look at this.
We find that instead of the 28 railway shops we had a little time ago, we have only 16. This is significant. If we take a place like Wolverton, at one time not only was there a most efficient shop but it was producing gas to serve the town. This is something that has been hived off and sold. This is a consequence of the Beeching, Marples, Watkins, Len-
1628
nox-Boyd set-up in previous Ministries of Transport under the Tory régime. I am afraid that when the subject of railways comes up I am inclined to speak for a little too long, but I feel that these are matters which have to be pointed out.
If we look farther into the matter of reorganisation, we have before us the out standing example of the British Rail way-owned service from Southampton to Le Havre, which was sold to the Norwegian line on the grounds that it was not profitable. The policy of the Government, as implemented by their minions in the Railways Board of that time, accepted that situation. Although it was suggested it should be transferred to a car ferry service, they would not allow that to be done and the line was sold. Now, of course, we see the Norwegian Olsen line making a tremendous profit on this service. They built two new car ferries in Norwegian shipyards, which was an order lost to our own yards, and they are now building a third. One could go on giving many of these examples if one had more time. There was the case of the proposed sale of Milden Quarry, and it was only after a great deal of hard work that that sale was stopped.
These matters have all combined to lead to this increasing deficit, and it is as well that they should be on record, because the present Government, owing to the short period of time they have been in office, have not had the opportunity to bring in amending legislation, as I hope ultimately they will do, to put these matters right. Furthermore, on the question of the accounts the Railways Board have to find some £3 million in order to keep in being a separate police force. Is such a force in its existence only for the Railway service? Additionally, the Board carry a burden of some £6 million for pensions and other things. I see that in 1963 they paid £92,600 in order to keep unremunerative bus services in operation—in other words, as grants to private bus companies to keep the services running. All these matters are reflected in the financial statement which we have before us.
Both inside and outside Parliament there have been savage attacks on railway men who, it is said, are not doing a good day's job of work and are against change. I would point out that since 1947 the railways staff has been reduced

1629
by half; since 1960 there has been a further reduction in railway staff of over 150,000. At the same time, since 1960 one finds that there has not been a steep increase in wages and salaries paid by the Railways Board. Despite all that is said about staff problems, one must recognise that staff is the largest single unit for which the Board have to provide. Furthermore, one finds that since 1960 wage rates and staff remuneration have remained pretty static. It is interesting to note that in 1960 salaries and wages paid to railway men amounted to £373 million; in 1965, they amounted to only £389 million—in spite of all the inflation and rising costs; and at the same time there was a reduction of 167,000 staff.
There have been many instances where the railway management have wanted to follow a certain policy which, because of directives by the Ministry on the part of those at the top, they have been unable to implement. One knows that there has been a remarkable procession of change after change. If I may go back, one remembers the old British Transport Commission as a policy-making body, with its various executives responsible for various forms of transport. The policy-making body tit the top decided that the best change from steam to some other form of traction was by electrification in densely populated areas and by diesel traction in less dense areas. The railways management went to great expense to heighten the bridges between London and Newcastle in order to take the overhead electric equipment. But then the dead hand of the Tory Government came clown, and said that, instead of electric power, diesels would be used. And yet one finds that the cost of using the electrical equipment resulted in an expenditure of £25,000 less than that on diesels.
The Government of the day, in the interests of the oil industry, decided that it should be dieselisation. Then there was the great hold-up that took place in electrification on the route from Euston to Manchester. Electrification went on as far as Crewe for five years, and then came the dead hand of the Tory Government, and that electrified route was not completed until last year. Now every body is extolling the benefits of electri-
1630
fication when the old railway management wanted to go ahead in this direction years ago. These are all costs which have had to be borne by the Railways Board and they have all contributed to this large deficit.
A third and very pertinent question was put to your Lordships by the noble Earl, Lord Kinnoull. What steps are the Government going to take, and how soon, to produce legislation which will treat transport not from the angle that each section, or workshop or branch line must be balanced to pay for itself, but from the standpoint that it should be part of the whole overall transport policy? We are entitled to say to the Government: "These are the failures of the past. How soon are you going to put them right? How soon will you give freedom to railway workshops to embark on work which they can well do as compared with out side bodies?" How soon are they going to get back to the old system carried out by private-owner railway managements which established their own workshops because of the difficulties they experienced outside? We all know about the numerous failures of diesel engines, and most people realise that what is required is overall electrification.
This matter of restoring to railway workshops the right to manufacture their own equipment has been pursued by many Members of the other place. Certain promises were extracted from the Ministry some time ago that this would be attended to as an urgent matter. It has now been postponed. I would ask my noble friend to press the Minister to do something tangible about these railway workshops, without waiting for legislation to come along later.
We hear a lot of talk about the National Freight Authority. We shall all be very interested to read the White Paper which is coming along, and if what we hear is correct—that this is to be something separate from other forms of transport—then I would again ask my noble friend to have another look at this, because under this Government transport must be looked upon as a whole. There is wide scope for road transport, inland waterways, air and everything else, but transport must be looked upon as a service to the nation, and we should not just separate roads, inland waterways,

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docks and harbours and railways and treat them as separate factors. We are too much inclined always to refer to transport as an industry. Certainly, transport requires industry to produce the goods, but of itself transport is a service, and we must look at it from that angle. There fore, when he replies, I hope that my noble friend will be able to tell me something comforting in that direction.
In conclusion, I should like to turn to another most interesting point. I wonder whether my noble friend would convey to the Minister of Labour, in his exalted position, with his railway background and experience, the urgent need to try to secure the amalgamation of the three railway unions—N.U.R., T.A.S.S.A., and A.S.L.E.F. It is a long-standing disgrace that these three unions remain as separate identities. Down the ages we have seen the warring factor between those three. We have just averted a strike or a work to rule, because of A.S.L.E.F. and their attitude so far as mileage is concerned, and I sincerely hope that the Minister of Labour will be more energetic in trying to secure this amalgamation.
I also hope that he will try to ensure that we get away from the position in the railway world where, if the lower-paid man gets a little bit of something, there must be these wide differentials. At the present moment, railwaymen on base rates are not well-paid, but many of them are able to get a very good remuneration because of the introduction of these so-called bonus and piecework earnings. But in consequence of having introduced these bonus and piecework earnings in certain grades, we witness a very disgruntled staff in other grades where the bonus system cannot be so easily applied. This is a curse which has been introduced, and I think a leaf ought to be taken out of the book of Jack Scamp, who is responsible for getting some easement in so far as the rates of pay at London Docks are concerned, where piecework and bonus rates are rather going by the board and a decent base rate is being established. That type of arrangement, not only on rates but on other conditions of service, ought to be earnestly thought about, and I sincerely hope that it will.
I can understand the reason why legislation has taken so long and I can under-
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stand the noble Earl's reason for pressing this Question and seeking an answer. Of course, the Government have had tremendous difficulties—they have had to overcome the hopeless mess which was left them by their predecessors; there is the economic difficulty which we have been experiencing, and they have been trying to put the nation on the right lines. Those are some of the reasons why up to the present it has not been possible to have legislation embracing all these services. But now, when we may be getting towards the end of these difficulties, I hope we can receive some indication from my noble friend that legislation is to be brought forward at a reason ably early date. If two bites at the cherry are required, a certain section will have to be dealt with immediately and a bigger and more co-ordinated measure will have to come later. I sincerely hope that my noble friend will be able to give some indication when that might be expected.
3.5 p.m.
LORD AMULREE: My Lords, I was very pleased when I saw the Unstarred Question which the noble Earl, Lord Kinnoull, had put down for this afternoon, because it raises one or two very important matters in which I have been interested for quite a long time. I want to put certain questions to the noble Lord, although I am not expecting a very detailed reply.
The noble Lord, Lord Popplewell, said that the railways paid for a short time after the 1947 Act which was, taking the story of the railways generally, a very remarkable thing. I say that because, so far as I recall, they certainly were not paying, or were not paying very well, in the days of private enterprise for a long time before the 1947 Act came into operation.
The noble Earl mentioned what was happening in some foreign countries. He said that passenger numbers had increased and freights had increased. But although freights have increased in most of the countries which the noble Earl mentioned, the railways are paid a very substantial subsidy of one sort or another. They do not all get subsidies in the same way, and it is not very easy to find out exactly what form that subsidy takes or what sum is involved. But certainly the railways in Belgium, France,

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Italy and West Germany have a big Government subvention of some sort or another. I cannot talk about Japan, because I am afraid I did not have an opportunity to look into the figures, and I did not know that the noble Earl was going to refer to that country. I think one can say, therefore, that it is very difficult to ensure that a railway service is going to pay its way in the world at the present time.
I think the position might be greatly improved, as the noble Lord, Lord Popplewell, said, if one could get a co-ordinated system of transport, which I have always thought it was right to aim for, and that we should not try to make one branch of the transport system pay to the exclusion of the others. That is why one must regard the railway system as part of a general social service over most of the country; and that should be particularly applicable to those parts of the country where development is expected or wished to be encouraged. There has been considerable talk about whether some of the railways on the borders of Scotland should be shut down, although I do not think there has yet been any decision taken about that. But attempts are being made to develop that part of the country, and it is very difficult to develop part of a country if, at the same time, you take away the railway services.
Then there are those parts of the country where new towns are being built, and where overspill towns are being encouraged to take population from what are over-populated centres. There has been talk about closing the line between Colchester and Cambridge, while at the same time there is talk about certain towns along that line being developed to take more and more population. That again is a case where the railways should be used as a social service, and should be encouraged. The third group of which I am thinking consists of the holiday parts of the country, taking Suffolk, Norfolk and East Anglia generally, where again there has been talk about shutting down the railways because they do not pay. It means that the holiday towns will suffer a good deal because the roads are not big enough to take a great deal more traffic.
There were two things, however, which gave me some encouragement. One was the White Paper on Transport Policy,
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published in July, 1966, which in paragraph 17 says:
"For the for seeable future the country's transport system must include a substantial railway network."
In paragraph 25 it says:
"Certain services which are unremunerative but socially necessary will be assisted by the Government."
That seems to be the right kind of policy to pursue, because the railways must be regarded as a necessary part of the social structure of the country, and the expectation that the railways themselves are going to pay their way is not borne out by the experience of countries on the Continent of Europe.
3.12 p.m.
LORD STRANGE: My Lords, my name is not on the list of speakers, but I have asked for permission to speak. In fact, my name is represented by a blank on the list, and that is descriptive of the sort of speech I am going to make. I would declare an interest, in that I have recently gathered together a group which intends to try to preserve the Manx Steam Railway. This railway is unique in this country, being the longest steam railway, and I hope it will go into the future as a living railway, a permanent memorial to steam. I shall preach to this group what I have heard to-day, and tell them not to copy British Railways when they are deciding the way in which to run their railway in the future.
I shall explain to them that, in my view, and from what I have gathered, British Railways have failed because they made two cardinal mistakes. They have failed because they did not have regard to the passengers. They will not listen to what the passengers want, or study what they do. They regard them as so much material that is moved about on the railways, and not as customers. The same attitude, which is pathological, is adopted in the case of freight. They have laws laid down about freight, and they will not run it as a commercial business. They do not try to get new orders by bargaining and by providing new opportunities for commercial firms to transport their freight on the railways in a way which would be more attractive than the road services.
I shall also tell my group to follow the example of the Swiss, the French and the

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Japanese railways, which pay. Here I am very much indebted to the noble Earl, Lord Kinnoull, for some figures which he gave. I shall point out to them that they should study the methods of those countries rather than those of the British, because they had an increase of 2,500 per cent. in passengers and an increase of 8,000 per cent. in freight.
3.14 p.m.
Loan DERWENT: My Lords, I was very interested in the speech of the noble Lord, Lord Popplewell—one always likes to listen to an expert—but he cannot expect me to agree with everything he says. I am not a railway expert, but I am an expert on this question in another respect, in that I am an expert taxpayer. It is as such that my noble friend has asked this Question—I think, very wisely—and I hope we shall be given some satisfactory answers. I am not going to follow the noble Lord, Lord Popplewell, into the Party political aspect which he tried to raise, except perhaps in saying two things. Under the present régime, which has been in office for two and a half years—
LORD SHEPHERD: Which régime is the noble Lord talking about?
LORD DERWENT: The noble Lord fully understands. The Ministry of Trans port régime under the present Minister and the late Minister. Under that régime, nothing, specific seems to have been done to improve the rail services. The Marples Beeching régime at any rate attempted to get cracking on something. I merely throw that remark out to the noble Lord. He referred to the economic mess left by their predecessors. We are getting rather bored with hearing about this. I think it is now generally agreed that most of the economic mess was caused by a lack of confidence in the 1964 Government. Most economists now agree on that.
In this connection, there is one matter about which I do know a good deal, and that is the question of road transport. I agree with the noble Lord, Lord Popplewell, that it is very desirable that more goods should be put on the railways, but the fact is that one of the reasons why so much freight goes by road which should go on the railways is that the handling charges are so high nowadays
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when goods are being transferred from lorry to train, from train to lorry and so on, and it is far cheaper to put goods on a lorry and send them the whole distance by road.
Another thing is that, compared with pre-war, the delivery system on the railways is, I regret to say, extremely inefficient. The noble Lord touched on that subject. I have a particular friend who, ever since the war, has longed to put his goods back on the railways, as he did before the war. He just cannot do it. He has to run his own fleet of lorries, which he does not like doing, because he has to deliver from, say, Doncaster to Glasgow by a Tuesday, and the railways cannot tell him when they will be delivering. That is one great problem with regard to rail transport.
The noble Lord rather indicated, though he did not say so, that he thought the unions and the railwaymen had really very little to do with this inefficiency which has grown up. I do not think he can quite get away with that one. The controversy about liner trains, which ought to be running properly now, is a case in point. I was glad to hear him say (because he knows more about this than I do) that, as I have long thought, many of the railways' troubles would be overcome if there was one union. I entirely agree with him. Time and again we have seen trouble caused which has had very little to do with the management and very little to do with the men, but has arisen simply between the unions.
My Lords, I said I was going to speak for only a minute or two. I am speaking as a taxpayer, and it is in that respect that I am interested in my noble friend's Question. The noble Lord, Lord Popplewell, went long into the past. But what this Question, for which we are all grateful to my noble friend, asks is: What is in the Government's mind? What are they intending to do? We should like to hear that answered in some detail, if possible, and not be given vague generalisations. We do not want to be told merely, "We are going to amalgamate this", and so on. We should like to hear in some detail what the Government are going to do, if they know, and how soon they are going to do it. Those are the questions which all of us, in all Parties, hope that the noble

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Lord, Lord Shepherd, will be able to answer.
3.18 p.m.
LORD SHEPHERD: My Lords, at a quarter-past three on a Friday, which the noble Lord, Lord Derwent, admits is a rare occasion, I do not think he would expect me to deliver a major transport policy speech. As the minutes ticked by, and I again looked at the noble Earl's Question, I thought that as a kindness to the House I could merely draw his attention to the fact that the announcement to which he refers in his Question arises from an error in our newspapers, in that, of course, the 1966 accounts have not yet been published. There has been no announcement as to the deficit. The figure that the noble Earl had in mind when he put his Question down refers to the estimated deficit for 1967.
Having corrected that. I was wondering whether, again as a kindness to the House, I should merely refer the noble Earl to the White Paper issued in July 1966, which sets out in quite considerable de tail what the Government have in mind. But kindness is one thing, courtesy is another. The speech made by the noble Earl, Lord Kinnoull, was one of misery and woe, I thought; a damning indictment of the 1962 Act, for which his Party was responsible, because the railways and the Holding Company now operate under an Act of Parliament that noble Lords opposite put through against severe criticism from this side. But, in view of his speech, I will perhaps say a little on the points he raised.
First, the problems of the railways are not unique. I do not know whether the noble Lord did me a little justice by reading a speech I made in 1962 when I was leading for the Opposition in this House on the Transport Act. Your Lordships may remember that I quoted a speech made by my noble friend Lord Brabazon of Tara. I think he made this speech on what is now the 1947 Transport Act, an Act for which a Labour Government were responsible. He said this:
"For many years now, not, of course, because of any fault of the railway companies, but because of the advance of the internal combustion engine, transport by road has eaten into the guts of the railway companies and it will go on. And the question arises, and a question that we have decide: Are you prepared to let the railways go bankrupt and let
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everything go by road, or do the railways supply something which is of national importance and which ought to be kept alive?"
He went on:
"But if they are to be preserved in this country, to preserve them is to co-ordinate them with road haulage. I do not say you should take them over by nationalising, but anyone who takes over the railways without at any time taking a very close hand in road haulage is just taking over a bankrupt concern."
That was the situation in 1947 and the situation that had been prevalent before the war. The railways were in very grave difficulties.
We in 1947 thought that we should seek a co-ordination of road and rail. I will not say that the structure we then created was perfect. At that time we thought it was the best way to do it. But at least we had an integrated service and, as my noble friend Lord Popplewell pointed out, in 1951 the railways had an operative profit of some £39 million. In 1954 it was still a profit of some £16½, million. Then came the noble Lords opposite, with their competition as the one way of stimulating effort, and what happened? In 1956 we had the first deficit since the war, a deficit of £16½ million. In 1958 it increased to £43 million in operating deficits. In 1960 it was £67½ million. Then, after the 1962 Act, the Act which was to make the railways viable and efficient, we find that the deficit soared to £73 million. By 1965, it was £79 million; and it is estimated that for 1966 it will be about £71 million.
.Great efforts have been made by the noble Lord, Lord Beeching, by Sir Stanley Raymond and by members of the Board to make the railways efficient, and they have made a considerable improvement. I will give an indication of this to the noble Lord, Lord Derwent, in a moment. Certainly they have been able to keep their gross receipts, particularly for passenger traffic, fairly high and fairly steady in spite of the increasing use of motorcars and other forms of road vehicles. Some of the old freights of coal and steel have been declining, and much of the lucrative freight has been moving on to the roads.
But let us think in terms of improvements of service and what it can mean in increasing revenue. Take the new electrification of the London-to-Manchester line. We see that since April the number of passengers has increased

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by some 65 per cent. and the receipts have been increased by some 50 per cent. We should treat these figures with caution because it is a new service, but it shows that where the railways put on modern, efficient, speedy and punctual trains the public will support those services. Very shortly we shall see the London-to-Birmingham line electrified and I should not be at all surprised if the results were the same. But you can have this type of system only on the main lines.
The noble Lord spoke about the in creases in passengers and freight in Japan. I know something of these Japanese trains. They are all long-distance trains, very fast, very efficient, and all built since the war. And if my memory serves me aright, they run on tracks which have been laid since the war. But the trains in Tokyo, which are infinitely more crowded than we should be prepared to tolerate, run at a loss rather like our own internal services.
I think there is a strong case for moving freight on to the railways; but we must have a little sense in this. Let us see what the railways can do. It is clear to the Government and, I think, to most, that the railways are best for the long haul, for the cargoes from London to Glasgow, from London to Edinburgh, and between places like that. If I may say so to the noble Lord, Lord Derwent, he is right in this respect: that one of the problems is the cost of handling the cargoes. But this will be changed. I believe that we shall see a big revolution in transport in the next few years through containerisation. This means that there will need to be a greater co-ordination between road and rail, if only to see that the vehicles that run on the road can carry the containers that you put on the railways. It follows that in short haul the roads will still be the better means of transport.
But at a time when most trunk roads are carrying a large number of goods vehicles, heavily overloaded, the railways have spare capacity. The situation so clearly conflicts with the best use of national resources that the Government have put in hand a very comprehensive review of the policy for freight transport. I am afraid that one of the causes of the imbalance between road and rail has been the determination of noble Lords opposite to destroy the methods of integra-
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ing road and rail. They set the road hauliers free; that was one thing. But the 1962 Act set the Transport Holding Company and the private road services in direct competition. They did it deliberately; they set it in direct competition with the railways.
Therefore, we feel that we must provide the machinery for integrating the freight-carrying of this country to a greater extent. We are proposing a new national freight organisation. This is now being worked out with the Railways Board, the Transport Holding Company, the transport unions and the users' organisations. I shall not hide the fact that there are going to be difficulties in getting all these various groups to agree. I agree with my noble friend Lord Popplewell that if we could have fewer unions—not only in the railways, but throughout the country—many of our difficulties would quickly disappear. But those who say that this can be done quickly forget how and why the unions came into being. But I do not think it is for the Minister of Labour to push it. He can encourage; but this, in my view, is the responsibility of the Trades Union Congress. I think they are cognisant of the problem, but we must approach with care all these groups, so far as this new organisation is concerned, to see that we obtain the maximum of co-operation.
I think it was my noble friend Lord Popplewell who mentioned the labour force, and the noble Earl, Lord Kinnoull, drew attention to the fact that we have had considerable savings by railway closures and a decline in the number of workers, but we do not appear able to reduce costs in any big way. It should be borne in mind that the railways are one of the most labour-intensified industries in the country. Two-thirds of the cost of running British Rail is represented by wages. My noble friend Lord Popplewell drew attention to the decline in the working force. Since 1963 the labour force has been reduced from some 500,000 to 350,000, which is a sizeable reduction. I question whether any other industry, except perhaps the coal industry, has a higher rate of increased productivity than British Rail.
THE EARL OF KINNOULL: My Lords, they have, with respect, been reducing the services as well.
LORD SHEPHERD: The amount of service may have hurt particular areas, but the broad railway pattern remains the same. In many parts where railway services continue the service has been increased, and I would say that, by and large, the output of British Rail remains broadly the same as in 1963; but it is being provided by a much smaller number of workpeople. The cost of increased wages—and no one would say that the pay for railwaymen is high (I see that the noble Lord, Lord Derwent, nods his head in agreement with me)—is one of the problems confronting the Railways Board. Top management is needed and there is difficulty in finding the right men from among railwaymen because their pay is so low that the right people are not attracted. Therefore the Railways Board have been obliged to go to grammar schools and universities in search of top management material. I hope that in time we shall be able to find a greater percentage of people to fill top management positions directly from the rail way workers.
I think it is to the credit of the Railways Board that in spite of the increased cost of fuel and repairs, and the amount paid in wages, they have been able to hold the working deficit pretty steady over the years, though they have not been able to make any great reduction in it. I believe that those who work and manage London Transport and British Rail, and the provincial bus ser vices, are struggling to reconcile two mutually contradictory objectives: the provision of an adequate service for the public and one which will pay its way. As a result, they are finding it increasingly difficult to do either, and the Railways Board would be the first to admit that the solution will come only from a radical change in the provisions of the 1962 Act. The noble Earl, Lord Kinnoull referred, rightly, to the amount of some £17 million which has been saved by rail closures. I have not the 1966 figures—they have not yet been published —but if the noble Earl looks at the 1965 figures he will find that in respect of what is called stopping trains there was a loss of some £49 million and on suburban trains some £19 million. That makes a sizeable figure and we should try to make the necessary savings.
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The closures which have taken place have been in respect of railway services which were not supported. No one would disagree that hardship has been caused to a number of people, but I must say, though it comes hard to say it, that there are limits to which public money can be spent on providing services which people do not use. We may have to find other ways to assist our people in need. The noble Lord, Lord Amulree, drew attention to what the Government intend in the White Paper. We intend, not to subsidise, but to assist or relieve the Railways Board of the responsibility for the cost of operating those services which are maintained on service grounds. One of the first things we have to do is to identify them. I do not know whether the commuter service into London which conveys hundreds of thousands of people every morning to the City is regarded as a social service. Certainly the railways run it at a loss and in some respects I suppose that the railways are subsidising the merchants of the City and the West End.
These burdens are borne by the rail ways, and I am quite sure that the noble Lord, Lord Auckland, whom I saw shaking his head, would find it hard to argue that the commuter who uses these trains would accept a major increase in his fare to cover the deficits. But some way will have to be found to cover them, because I think most people would agree that it is unfair to place this burden on the railways, particularly if we say to the railways, "You must try to become commercially viable." The identification and the costing of these services is being looked at by a special committee under my honourable friend, Mr. John Morris.
The noble Earl, Lord Kinnoull, spoke about Sunday services. The responsibility lies with the Board, which takes out of service those trains which do not pay their way. I can hardly see how we can blame the Board if, under the provisions of the present Act, they close a Sunday service completely. But local people have a right to go to their transport users' consultative committee to seek redress. if they can make out a case, the matter has to be referred to the Minister, who will take it up with the Railways Board. During the summer

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period I have seen trains operating on the East Coast of England on a Sunday and carrying only two or three people, and I think it hard to expect the Railways Board to run services under those conditions.
THE EARL OF KINNOULL: My Lords, it depends on the time of day the trains run.
LORD SHEPHERD: My Lords, as I said to the noble Earl, if the services are withdrawn completely, the appropriate machinery comes into operation.
My noble friend Lord Popplewell asked about the value of the Board's land, and revaluation. I do not know how the Railways Board and their advisers arrive at the figures in the balance sheet, but profit and loss is not in any way affected; although were we to increase the value of the land, and then seek to devalue what was on it, it would have an adverse effect on the accounts. I think that is all, except perhaps what was said by the noble Lord, Lord Strange, about the Manx Railways. But the noble Lord has left the Chamber, and I do not think that what he referred to is the responsibility of Her Majesty's Government.
Perhaps the main question put by the noble Earl, Lord Kinnoull, my noble friend Lord Popplewell and the noble Lord, Lord Derwent, was "When?". As one who must be careful in your Lord ships' House, I will only say that your Lordships will see a Bill in the not-too-
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distant future which I believe will be a framework for our transport system with which most of your Lordships will agree. It will be a comprehensive measure and I imagine that we shall have a great deal of work to do on it.
As my noble friend Lord Popplewell said, most people now believe that trans port must be a service for both the community and industry. We have to see how we can make the best use of all the resources available to us. This requires integration and co-operation. I hope that co-operation will be the policy of the future instead of competition, with perhaps in that co-operation a little competition to see how great the co-operation can be. I believe that such a Bill would receive the overwhelming support of your Lordships. It would bring about a major development of the railways and be of benefit to the men who work in them and those who use them. I thank the noble Earl, Lord Kinnoull, for asking this Question, even though he has called on me to reply at a very late hour.

SUNDAY ENTERTAINMENTS BILL: DIVISION FIGURES
LORD AMULREE: My Lords, before the House adjourns, I have to say that nine noble Lords, and not seven, as was announced, voted in the "Contents" Lobby in the Division this afternoon.
House adjourned at eighteen minutes before four o'clock.