Sitting of 14 February 1967

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  MANCHESTER CORPORATION BILL (By Order)
  Read a Second time and committed.
ORAL ANSWERS TO QUESTIONS
  COMMONWEALTH AFFAIRS

    Malta
    Mr. Wingfield Digbyasked the Secretary of State for Commonwealth Affairs what speed of run-down of British Service personnel and of Maltese civilians he announced to the Maltese Government.
    The Minister of State, Commonwealth Affairs (Mr. George Thomas): I would refer the hon. Member to the statements by my right hon. Friend the Commonwealth Secretary in the House on 24th January, and by my hon. Friend the Minister of State for Commonwealth Affairs and by my right hon. Friend the Secretary of State for Defence on 2nd February.—[Vol. 739, c. 1274–1284; Vol. 740, c. 807–883.]
    Mr. Digby: Will the hon. Gentleman confirm or deny the suggestion that the Maltese counter-proposals have now been rejected and that there are to be new conversations with the Maltese Government, as forecast in The Times today?
    Mr. Thomas: I shall be dealing with that in reply to a later Question on the Order Paper.
    Mr. Wood: Can the Minister now give the date, which his right hon. Friend did not give at the end of the debate, when N.A.T.O. was informed of the plans of the British Government?
    Mr. Thomas: No, Sir, I am afraid that I cannot offhand, but I will communicate with the right hon. Gentleman.
    Mr. Wingfield Digbyasked the Secretary of State for Commonwealth Affairs what representations he has received from the Government of Malta about the rapid reduction of defence expenditure and of locally entered employees.
    Mr. Wallasked the Secretary of State for Commonwealth Affairs if he will make a further statement on Malta.
    Mr. Goodhartasked the Secretary of State for Commonwealth Affairs whether he will make a further statement about his discussions with the Maltese Government.
    Mr. George Thomas: We are at present in communication with the Government of Malta through the British High Commissioner there, with a view to securing agreement to early talks being held between the two Governments. While these exchanges are in progress, I hope that the House will agree not to press me further.
    Mr. Digby: Is the hon. Gentleman aware of the very strong feeling that there is in the country about this, and can he say where the talks will be held—in this country or in Malta?
    Mr. Thomas: I am quite unable to give any further details until the exchanges are complete.
    Mr. GoodhartIs the Minister aware that the reason why the Maltese Government are trying to pin so many conditions on these negotiations is because they do not trust Her Majesty's Government as a result of their past experience? Is he also aware that, despite the tension between the Maltese and the British Governments, relations between the Maltese and British communities in Malta are excellent because the entire British community there condemns the policy of Her Majesty's Government?
    Mr. Thomas: I do not know if the hon. Gentleman thinks that he is helping the country by his observations. I would only say that it is in the interests of us all to try to get these talks going, and then to make them succeed.
    Mr. Barnett: Would my right hon. Friend assure us that he will not give way to pressure on this matter? Will he ensure that the run-down of troops continues with all speed, making it clear that this is a question of aid which cannot be allowed to interfere with the vital need to reduce defence costs?
    Mr. Thomas: I cannot add anything to what I have already said; exchanges are under way between the two Governments, and I hope that they will be successful.
    Mr. Powell: Can the Minister give the House any assurance that the Malta Parliament will not proceed tomorrow with the Visiting Forces Bill? Can he say why, if the Government are prepared to enter into consultations with the Government of Malta now, they did not do so six or eight weeks ago, when all of this could have been avoided?
    Mr. Thomas: The right hon. Gentleman seems to be unaware that consultations have been going on for a very long time. They have been going on for at least five months. The Malta Parliament is due to meet tomorrow and we have naturally made clear to the Malta Government the undesirability of any irrevocable action while our diplomatic exchanges are proceeding.
    Mr. Roseasked the Secretary of State for Commonwealth Affairs what discussion he has had with the Maltese Government on the possibility of a British initiative to channel investment in tourism and industry to Malta.
    Mr. George Thomas: The needs of tourism and of industry in Malta have been discussed on many occasions in the context of our aid programme to Malta.
    Mr. Rose: Would my hon. Friend explore the possibility of setting up a joint development corporation between Britain and Malta, and would he perhaps also explore with his right hon. Friend the President of the Board of Trade the possibility of incentives for industrialists in this country to take industry to Malta in the wake of the withdrawal of our military establishment?
    Mr. Thomas: There already exists a Malta Industrial Development Board, under the chairmanship of a British industrialist. That Board exercises a continuing interest in investment in industry
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    in Malta. I hope that, if talks between the two Governments get under way, tourism may be a subject which we could discuss with advantage.
    Mr. St. John-Stevas: Since the moral responsibility for the present crisis in Malta rests upon the British Government, are not the Minister and the Government under a moral duty to find alternative means of putting the situation right?
    Mr. Thomas: We are anxious to discuss these questions with the Malta Government, and we shall approach the subject with goodwill.

    B.B.C. External Services
    Mr. Fisherasked the Secretary of State for Commonwealth Affairs whether the British Broadcasting Corporation's external services to the Commonwealth are to be reduced; to what extent; and in which countries.
    The Minister of State, Commonwealth Affairs (Mrs. Judith Hart): No, Sir. There will in fact be an improvement in services to Commonwealth Territories in Africa, as the new Ascension Island relay comes into full service.

    British Council
    Mr. Fisherasked the Secretary of State for Commonwealth Affairs whether the activities of the British Council are to be curtailed; to what extent; and in which Commonwealth countries.
    Mrs. Hart: British Council representation is being withdrawn from four territories namely in Jamaica, Trinidad, Barbados and Fiji, and some staffing economies are being made by reorganisation in Australia and Ceylon.
    Mr. Fisher: Surely, cultural propaganda—for want of a better phrase—is really a relatively inexpensive way of making friends and influencing people. Therefore, particularly when economies are necessary, this may be a false one, and not the sort of thing we should cut down on. Will the hon. Lady reconsider it?
    Mrs. Hart: I agree that it would be nice to think that no economies were

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    necessary. I can assure the hon. Gentleman that these have been made with the utmost care. The cultural side of the British Council's work in relation to these territories is largely to be continued by the High Commission's staff. It is the teaching of English, which is less necessary in these particular territories, which will be going.

    Hong Kong (Police)
    Mr. Patrick Jenkinasked the Secretary of State for Commonwealth Affairs why he will not disclose to the hon. Member for Wanstead and Woodford the report of the Governor of Hong Kong into a series of allegations against members of the Hong Kong Police which had been made to the Secretary of State for the Colonies by Mr. Alan Ellis of 5, Portman Drive, Woodford Green, Essex, a former officer in the Hong Kong Police.
    Mrs. Hart: It is not the practice to make public such reports on investigations into unfounded allegations. The hon. Member is aware of the reasons why the allegations are regarded as being without foundation.
    Mr. Jenkin: This is exactly the point. If the report discloses that the allegations that have been made by this young officer are without foundation, why on earth cannot the report be made public? How do the Government expect people who have genuinely-felt grievances to accept these assurances in this atmosphere of secrecy?
    Mrs. Hart: It is, as I think the hon. Gentleman will know, perfectly normal public policy in practice, not only in Hong Kong but also here, not to publish things of this kind if there has been found to be no truth in the allegations, for the simple reason that if there is truth in them, it is a matter for the courts, and if there is not, a great deal of harm is done to people who without foundation have been accused of these things. The case has been looked into by three Ministers, and the hon. Gentleman has had the relevant parts of the report read to him.
    Mr. James Johnson: May I support the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin)? Is the Minis-
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    ter aware—I think she is—that I was in Kowloon a few weeks ago? I told the Minister about my impression of that collony in our care. I have seen the Governor in Hong Kong and conveyed my impression to him. He has promised to look into the cases that I have put before him. I hope that the hon. Lady will bestir herself in the matter, because my impression is that it would do no harm for a Commission to visit Hong Kong.
    Mrs. Hart: My hon. Friend is under a slightly false impression. I am being asked to publish a report on a particular matter, about which we are satisfied, after detailed inquiries, there is no foundation. That is a very different matter from the kind of point my hon. Friend has in mind.

    Hong Kong (Light Electrical Assembly Industry)
    Mr. Frank Allaunasked the Secretary of State for Commonwealth Affairs what is the approximate hourly wage rate for workers in the light electrical assembly industry in Hong Kong in comparison with the rate for British workers engaged in similar work; and what are the numbers employed in this industry in Hong Kong.
    Mrs. Hart: I am afraid that the information needed to make an exact comparison between Hong Kong and United Kingdom workers engaged in similar work is not available.
    There are 30,186 men and women employed in Hong Kong in the manufacture of electrical machinery, apparatus and appliances.
    I am writing to my hon. Friend with those further details which are available.
    Mr. Allaun: Is my hon. Friend aware that a Salford firm and its 6,000 workers are seriously hit by this sweated labour? Would she give an assurance that she will look closely into what can be done to help to raise the scandalously low wages in Hong Kong by trade union, legislative or other action?
    Mrs. Hart: I sympathise very much with my hon. Friend's concern in so far as it relates to labour conditions in Hong Kong. The rest is for my right hon. Friend the President of the Board of

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    Trade. I shall soon be discussing this aspect of the problem with trade union representatives here.
    Mr. Ian Lloyd: Is the hon. Lady aware that the argument implied in this Question is dangerously tendentious, for the United Kingdom is now a low wage cost country to at least seven or eight of our major industrial competitors?
    Mrs. Hart: Questions relating to competition between Hong Kong industry and our own are for my right hon. Friend the President of the Board of Trade.
    Mr. Orme: Is my hon. Friend aware that many of us on this side of the House will be highly delighted that she is to discuss this matter with trade union representatives in this country? Would she say what consultations she has had with the International Confederation of Trade Unions and the I.L.O. about low wage rates in Hong Kong?
    Mrs. Hart: I have not had any consultations with either, but I have been looking very closely at the I.L.O. regulations.

    Rhodesia
    Mr. Colin Jacksonasked the Secretary of State for Commonwealth Affairs if he will arrange for accommodation to be made available to the main African parties from Rhodesia in the Rhodesia office in London.
    Mr. George Thomas: No, Sir.
    Mr. Jackson: I thank the Minister for that helpful reply, but would he not agree that a building purporting to represent the territory of Rhodesia in London should have accommodation available for African nationalists who represent far more people than does the Smith régime?
    Mr. Thomas: The staff at Rhodesia House since I.D.I. merely give assistance of a consular nature to Rhodesian citizens, and give factual information about the country in reply to inquiries.
    Sir F. Bennett: If the Minister should, unhappily, change his mind in regard to the original Answer, may I ask whether he would care, at the same time, to make representations to all the other High Commission offices in London with a
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    view to the various one-party African States allowing Opposition Members access to their Commissions?
    Mr. Paul B. Roseasked the Secretary of State for Commonwealth Affairs if he will make a statement on the current effect of sanctions against Rhodesia; and what proposals he has to make these politically effective rather than economically punitive.
    Sir Knox Cunninghamasked the Secretary of State for Commonwealth Affairs if he will make a statement on the current effect of sanctions on the economy of Rhodesia.
    Mr. George Thomas: We estimate that voluntary sanctions had reduced Rhodesia's exports from an annual figure of £143 million in 1965 to about £80 million by the end of 1966.
    Mandatory sanctions should reduce Rhodesia's exports by up to a further £30 million.
    The whole purpose of our policy is that sanctions should have a political effect, namely, that Rhodesia should be restored to the rule of law.
    It would, therefore, be wrong to regard sanctions as having been imposed in any spirit of vindictiveness; rather it is to make the people of Rhodesia realise the importance of returning to constitutional paths.
    Mr. Rose: Is my hon. Friend aware that, among others, the Government of Portugal are conniving at the breach of sanctions through Portuguese East Africa? Would he agree that sanctions can be fully effective and productive only if they are fully enforced and backed up by other means? [HON. MEMBERS: "What means?"] Will my hon. Friend say what steps he is taking to ensure that the spirit of the United Nations resolution is carried out by all nations?
    Mr. Thomas: Governments are required to inform the Secretary-General of the United Nations by tomorrow of the measures which they have taken, and the Secretary-General will report to the Security Council by 1st March concerning progress in enforcing sanctions.
    Sir Knox Cunningham: When does the hon. Gentleman expect sanctions to end—in three, five or ten years—and, when

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    the end comes, what conditions will Her Majesty's Government expect to find in Rhodesia?
    Mr. Thomas: I only wish that I could tell the hon. and learned Gentleman the answer. We hope that sanctions will be ended as soon as possible, with Rhodesia returning to constitutional rule.
    Mr. Alexander W. Lyon: Will my hon. Friend consider issuing a White Paper setting out the Government's information about the effectiveness of sanctions? If any evaluation is to be made of their effectiveness as against the effectiveness of other methods—for instance, the use of force—it is essential that the House should have all the facts before it.
    Mr. Thomas: We must wait until 1st March, when the Secretary-General will know from the Governments concerned in the United Nations the extent to which sanctions are observed.
    Mr. Wood: Does not the recent statement of the Swiss Government underline the difficulty of making effective this policy of mandatory sanctions? Secondly, will the hon. Gentleman confirm or deny that the Government recently told other Commonwealth countries that the cost to the British balance of payments would be something like £80 million a year? If so, could not this information have been given to the House of Commons?
    Mr. Thomas: I am in no position this afternoon to confirm or deny what the right hon. Gentleman seems to have heard about conversations with Commonwealth Governments. In reply to the first part of his question, it is, of course, made more difficult to impose mandatory sanctions if everyone does not observe them. This is self-evident. We are hoping for, and I believe that we will receive, overwhelming support from the United Nations countries in the application of mandatory sanctions.
    Mr. Sandys: A very serious charge is being made and the Minister must reply. Does he deny that the British Government have given to Commonwealth Governments a much higher estimate of the cost of sanctions to Britain than they have given to Parliament?
    Mr. Thomas: My right hon. Friend the Chancellor of the Exchequer, my right
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    hon. Friend the Commonwealth Secretary——
    Mr. Sandys: Answer.
    Mr. Thomas: I am answering. The right hon. Gentleman's privilege is to ask the question. It is my privilege to answer as I want to answer. My right hon. Friends have already dealt with this question and I can add nothing further.
    Mr. Biggs-Davisonasked the Secretary of State for Commonwealth Affairs whether it is part of the Government's policy of sanctions to reduce food production in Rhodesia.
    Mr. George Thomas: The object of sanctions in the agricultural sector is to deny Rhodesia overseas markets and foreign exchange so long as unconstitutional rule persists. Whether this leads to a reduction in food production or the reverse depends on the alternative uses to which resources hitherto devoted to export crops are put.
    Mr. Biggs-Davison: Since the Chancellor of the Exchequer and the Attorney-General have contradicted each other in this House about remittances from the Freedom from Hunger Campaign to Rhodesia, will the hon. Gentleman now give an assurance that funds may be remitted to Rhodesia for the improvement of African agriculture?
    Mr. Thomas: Perhaps I may apologise to the House. It was I who gave the information to my right hon. and learned Friend the Attorney-General, who was speaking at the Box. I supplied him with the information, which showed that I had been in my office only a month and I ought to have known better. My right hon. Friend the Chancellor of the Exchequer had indeed been considering it. The answer now is that further representations have been received from the Freedom from Hunger Campaign and are being considered.
    Sir C. Osborne: Would not the Minister agree that any settlement that is imposed at the point of the sword cannot endure?
    Mr. Thomas: The hon. Gentleman's interest in theology is similar to my own. [HON. MEMBERS: "Answer the question."] It is a very general question. [An HON. MEMBER: "Do not wriggle."] Of

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    course I am wriggling. It is a wriggling sort of question.
    Several Hon. Members——
    Mr. Speaker: Order. I called Lord Balniel for another wriggling question.
    Lord Balniel: The Minister's answer epitomises the Government. I should like to ask him a rather blunt question on the policy of sanctions. Does he recollect that Lord Caradon said at the United Nations that action under Chapter VII of the Charter could be taken only
    "when an immediate threat of hostilities exists"?
    While I deplore many aspects of the setup in Rhodesia, may I ask what is the immediate threat of hostilities which exists?
    Mr. Thomas: The House has gone over and over this question. The noble Lord knows that the answer has been given so often that it would be unfair of me to repeat it.
    Mr. Speaker: Order. The Question is about the effect of sanctions on food production.
    Mr. John Leeasked the Secretary of State for Commonwealth Affairs if he will make a statement on the circumstances leading to the illegal expulsion from Rhodesia of certain members of the staff of the British Broadcasting Corporation on 31st January.
    Mr. George Thomas: I understand that three members of the B.B.C. were informed on their arrival at Salisbury airport on 30th January that they were prohibited immigrants. After being held in a police station overnight, they boarded a plane for South Africa. The illegal régime later announced that the B.B.C. had earlier been required to remove their personnel from Rhodesia and that, if the B.B.C. chose to ignore the wishes of the régime, the régime would
    "not admit itinerant personnel and thus allow the B.B.C. to further their campaign against Rhodesia".
    I am sure all members of the House will regret this further example of the régime's attitude to those concerned with reporting events in Rhodesia.
    Mr. Lee: While thanking my hon. Friend for that Answer, may I draw his attention to his earlier Answer with
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    regard to Rhodesia House? Does not this suggest that it is rather silly to allow the illegal régime's personnel to continue to be represented in Rhodesia House?
    Mr. Speaker: Order. We cannot go back on Questions.
    Mr. Ronald Bell: Is the Minister aware that the B.B.C. has been grossly biased in its reporting of the dispute between the Prime Minister and the Rhodesian Government? Will he not get over all these problems of illegality which have been raised by according long overdue recognition to the de facto Government of Rhodesia? [HON. MEMBERS: "Shame."]
    Mr. Thomas: At least, the hon. and learned Member makes it clear that he is Mr. Smith's man on this question. We consider that the B.B.C. has behaved with impartiality. As the House knows, the B.B.C. is not controlled in any way by Her Majesty's Government and the reputation of the B.B.C. over the world for giving news correctly is such that the hon. and learned Member should be ashamed of the slur which he has cast.
    Mr. Biggs-Davisonasked the Secretary of State for Commonwealth Affairs what financial assistance the Government has given the British Broadcasting Corporation for the dissemination in Rhodesia of information about its World Service and African Service transmissions to Rhodesia.
    Mrs. Hart: The B.B.C. is responsible for originating all its publicity. At the Corporation's request the British Government paid for the postage of B.B.C. pamphlets containing information about the services mentioned.
    Mr. Biggs-Davison: Can the hon. Lady say how much it is costing to send all these leaflets by first-class airmail to members of the Rhodesia public? Will the Government seriously try again to reach a settlement so that the B.B.C. can be released from these hole and corner, cloak and dagger operations and get back the freedom of the Rhodesia air?
    Mrs. Hart: Were I to give the hon. Gentleman the answer which he wants, the régime would know how many pamphlets were dispatched. We do not choose that they should know that. May

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    I add, in suport of my hon. Friend's remarks in reply to a previous Question, that, whereas one can well understand the eagerness with which many hon. Gentlemen opposite accept the censorship imposed by the régime in Rhodesia, it is difficult to understand why they resist the spread of truth.
    Mr. Biggs-Davison: On a point of Order, Mr. Speaker. Is it in order for the hon. Lady to suggest that hon. Members like myself support Rhodesia censorship—[Interruption.] When I was in Salisbury, I went to see the Minister responsible for the censorship to give him my views upon the undesirable nature of that censorship.
    Mr. Speaker: Order. I have heard nothing out of order.

    Zambia (Aid)
    Mr. Evelyn Kingasked the Secretary of State for Commonwealth Affairs what conditions he proposes to attach to the £14,000,000 loan to Zambia.
    Sir G. Nabarroasked the Secretary of State for Commonwealth Affairs, in view of the switching of Great Britain's European industrial competitiors of valuable orders from Zambia, including a 1,100 mile oil pipeline to the coast, whether he will seek to continue his conversations with the Zambian Government, initiated at the last Commonwealth Conference, requiring Great Britain's contemporary tranche of £14 million Zambian aid to be spent only on British goods and services in order to initiate a policy of British-African tied aid.
    Mr. George Thomas: The assistance to Zambia of up to £13·85 million is related to a list of projects agreed between the Zambian Government and ourselves, designed to help Zambia reduce her economic dependence on Rhodesia, and thus take an increasing part in economic sanctions against the illegal régime.
    On the question of tying this assistance to British goods and services, have nothing to add to the remarks made by my right hon. Friend the Prime Minister, on 26th January.
    Mr. King: Would the Minister contradict the assertion made in the Press, which is harmful, that it was any part of
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    these negotiations that Zambia should remain in the Commonwealth?
    Mr. Thomas: I do not want to be drawn into details about the agreement, but I assure the House that, as far as I know, that was certainly not part of the understanding.
    Sir G. Nabarro: The Minister referred to Zambia reducing her "dependence on Rhodesia". Is he not aware that the pipeline referred to in my Question No. 24—a pipeline 1,100 miles long—is for the specific purpose of reducing dependence on Rhodesia? As British funds have been given to Zambia for this specific purpose, why is the Commonwealth Office allowing this important contract to be placed with our Italian competitors? Why should I subsidise Italian industry?
    Mr. Thomas rose—
    Sir G. Nabarro: Come on. Do not waste time. Get on with it.
    Hon. Members: Order.
    Mr. Thomas: I am not offended. I do not expect anything better from the hon. Gentleman.
    Sir G. Nabarro: Now answer the question.
    Mr. Thomas: Mr. Speaker——
    Mr. Speaker: Order. Asperities do not help.
    Mr. Thomas: I was not expressing any asperities, Mr. Speaker. I had the rudeness levelled at me, and I will reply. This pipeline was not part of the Agreement to which the hon. Gentleman referred. Furthermore, it is agreed that British firms, on this question, had to compete with international firms.
    Sir G. Nabarro: In view of the most unsatisfactory reply, I beg leave to give notice that I will raise the matter on the Adjournment.

    Australian and New Zealand Forces (Vietnam)
    Mr. Martenasked the Secretary of State for Commonwealth Affairs what practical aid Great Britain is rendering to the Australian and New Zealand forces in Vietnam.
    Mrs. Hart: None, Sir.
    Mr. Marten: In view of the fact that the Russians are quite openly giving aid to the North Vietnamese, is it not really rather shaming that the British do not offer to give more aid to our Australian and New Zealand allies fighting in Vietnam?
    Mrs. Hart: If the hon. Gentleman wishes to explore questions of policy on Vietnam, he should put down a Question to my right hon. Friends the Foreign Secretary or the Prime Minister.
    Mr. John Lee: Is my hon. Friend aware that the only assistance we should like to give the Australians and New Zealanders is to provide the passages to take their troops home, which they should never have left?
    Sir A. V. Harvey: Ask Mr. Holt.

    Canada (Expo 67)
    Mr. Gwynfor Evansasked the Secretary of State for Commonwealth Affairs (1) whether he will sub-divide the expenditure of £2,500,000 which is to be incurred by Her Majesty's Government on participation in Expo 67 in a manner which will permit the distinct and adequate representation of the national life of each of the nations of the United Kingdom;
    (2) if he will make a statement on the policy he follows when presenting the character and achievements of the industry and culture of Wales, Scotland, and England, respectively, in international exhibitions, such as Expo 67, where the countries of Great Britain are represented by a Government-sponsored project.
    Mrs. Hart: The United Kingdom participates as an internationally recognised State in general international exhibitions. As my right hon. Friend informed the hon. Gentleman on 26th January, we seek to present an image of the United Kingdom as a whole, all its peoples, their history, achievements and future.—[Vol. 739. c. 356–7.] It would not be practicable to subdivide the expenditure involved in the way the hon. Member suggests.
    Mr. Evans: Is the Minister aware that 70 to 80 countries, including, for instance, Monaco and Togoland, are separately
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    represented in this great international exhibition? Does she realise that the people of Wales are getting sick and tired of seeing their industrial and national life ignored on the pretext that this is a national State, a one-nation State, whereas it is a multi-national State and should be so recognised?
    Mrs. Hart: Nobody will be more aware of the multi-national nature of Britain than the Canadians, with all their Celtic ancestry. The hon. Gentleman will be delighted to know that among those whose names are clearly put forward in the pavilion are Richard Thomas and Baldwin, of Newport, Dylan Thomas, Lloyd George, and Robert Owen, although I would claim a little part of Robert Owen for my constituency.
    Mr. Elystan Morgan: Does not the Minister agree that if distinctive and separate mention can be made of firms and individuals, it would be only just and practical to make distinctive mention of Wales as a national entity?
    Mrs. Hart: One can assume that there is sufficient public knowledge in Canada, particularly of the background of people like Dylan Thomas and Lloyd George, for it to be known that they come from Wales.

    Bahamas (United Kingdom Visitors)
    Mr. Tilneyasked the Secretary of State for Commonwealth Affairs why citizens and residents of the United Kingdom visiting the Bahamas have their passports endorsed for a limited number of days, in view of the fact that citizens of the United States of America are accepted as visitors without passports.
    Mrs. Hart: United Kingdom citizens may visit the Bahamas for periods up to three weeks without passports. United States citizens have been exempted from the requirement to have passports to encourage tourism, which is mainly with the United States. They are, however, required to produce evidence of nationality and to declare the period of their proposed stay. If a person presents a passport it is endorsed with the permitted period of stay.
    Mr. Tilney: Why, then, is the passport of someone from Liverpool endorsed for staying four days—I saw it only last weekend—and why do British citizens appear to be treated in the Bahamas as second-class citizens?
    Mrs. Hart: No, that is not so at all. This whole question is for the Government of the Bahamas since they have internal self-government, but the restrictions on British visitors are no more severe than those on Americans, who must provide proof of nationality.

    Republic of Ireland (Taxi-Cabs)
    Mr. Forrestasked the Secretary of State for Commonwealth Affairs why taxi-cabs entering Eire still require a bond when all other forms of transport are now excused this requirement; and if he will make a statement.
    Mrs. Hart: The arrangements for the entry of motor vehicles into the Republic of Ireland are the responsibility of its Government but I understand that regulations require a bond, not only for taxicabs but also for most types of commercial vehicles and omnibuses.
    Mr. Forrest: Surely this is a terrific handicap to the few taxi owners in Northern Ireland and should be abolished immediately.
    Mrs. Hart: I assure the hon. Gentleman that if he were to produce any evidence that these formalities were a real impediment to cross-border traffic, I should be prepared to consider telling the Government of Eire that that was so. These are the only grounds on which one could make representations to them. I do not think the hon. Gentleman has proved his case on that point.

    Gibraltar
    Mr. Channonasked the Secretary of State for Commonwealth Affairs if he will make a statement about the situation in Gibraltar.
    Mrs. Hart: Within Gibraltar the general situation remains unchanged, with the land frontier still closed to vehicles and merchandise though open to pedestrians including tourists and Spanish workmen.
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    We are considering what our policy should now be, in the light of the General Assembly resolution of 20th December, consistently with the interests of the people of Gibraltar which, as we made clear in New York, we regard as paramount. It would not he helpful if I were to go further at this stage.
    Mr. Channon: What representations has the Minister or her right hon. Friend made to the Spanish Government in recent weeks about the present frontier restrictions?
    Mrs. Hart: As I say, the frontier situation has not changed and there have been no new representations.

    Commonwealth Countries (Diplomatic Relations)
    Mr. Channonasked the Secretary of State for Commonwealth Affairs how many Commonwealth countries do not have diplomatic relations with Her Majesty's Government.
    Mr. Goodhartasked the Secretary of State for Commonwealth Affairs what discussions he has had about the resumption of diplomatic relations with Tanzania.
    Mrs. Hart: Tanzania is the only independent Commonwealth country which is not in diplomatic relations with Britain.
    There have been no discussions with a view to resuming them. As my predecessor informed this House on 26th July, 1966, it is normal practice to look to the country which has broken diplomatic relations to take any such initiative
    Mr. Goodhart: Is the hon. Lady aware that since Tanzania broke off diplomatic relations with us we are giving her £6 million of aid, which is more than the annual savings we are to make in Malta? Is she further aware that Tanzania has nationalised a great many British companies? As she has said that she wishes to be independent of foreign aid, will we therefore stop trying to force unwelcome aid down her throat?
    Mrs. Hart: I would refer the hon. Gentleman to previous replies on this point. My right hon. Friend the Prime Minister said as recently as 27th January:
    "Aid, when it is a question of … teachers, hospital staffs and others … cannot and should not be switched on and off like a tap".
    Mr. John Lee: Would my hon. Friend bear in mind that, although it may be the normal practice for a country which has broken off diplomatic relations to ask for their resumption, bearing in mind that many hon. Members on this side of the House have great admiration for President Nyerere, may I ask whether Her Majesty's Government will take steps to resume discussions as soon as possible?
    Mrs. Hart: These matters are always extremely delicate. We should be very happy if we were to receive approaches from the Government of Tanzania.

    Ghana (Assistance)
    Mr. Tilneyasked the Secretary of State for Commonwealth Affairs what Great Britain has done and will do to help Ghana tide over the difficulties which the present Ghana Government inherited from the Nkrumah régime.
    Mr. George Thomas: I have written to the hon. Member giving him details of the various steps we have taken and are taking to help the Ghana Government.
    Mr. Tilney: I thank the hon. Gentleman for his letter, which I hope can be embodied in the OFFICIAL REPORT. Considering the economic condition of this country, would he do all he can to show that Great Britain is an old and real friend of the new Ghana which is trying to show the whole of Africa the benefits of sane government?
    Mr. Thomas: I welcome the hon. Gentleman's observations. I have just returned from Ghana. I am well aware of the deep fund of good will which Ghana as a whole has towards this country. This Government is very anxious to sustain that good will and to do what we can to help Ghana.
    Sir A. V. Harvey: Would the hon. Gentleman say how long the Government will allow Mr. Nkrumah to continue as a Privy Councillor? Does it not
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    make a nonsense of this high office to allow a man in exile who is despised by every Ghananian citizen to retain this right?
    Mr. Thomas: That does not arise from this Question, although a lot of people would like to take his place in the Privy Council.

    Swaziland (Constitution)
    Mr. James Johnsonasked the Secretary of State for Commonwealth Affairs what political parties or organisations in Swaziland have been consulted about the new constitution.
    Mrs. Hart: All political parties and organisations in Swaziland have been given full opportunity to express their views on the new constitution, both by written representations and by discussion with my hon. Friend the Minister of Aviation during his visit to Swaziland in October of last year.
    Mr. Johnson: Would not my hon. Friend agree that to invite the views of parties is not genuine consultation? Is it not a fact that not one delegate to the Mbabane Committee is to the Left of the Imbokodvo, which is the Government party, and that the Left-wing parties feel that they have not had a chance to be in at the discussion and at this constitution-making?
    Mrs. Hart: The parties which were represented on the Committee were those which had members in the Legislature. Apart from that, all the other parties and groups have had a real opportunity, which they have taken, to present their views both in writing and by making representations to my right hon. Friend and by discussion with my predecessor at the Colonial Office.

  MINISTRY OF POWER

    Retail Coal Distribution
    Mr. Eadieasked the Minister of Power how many schemes for rationalisation and concentration of retail coal distribution are going ahead; and in what areas.
    The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): There are 45 mechanised and 100

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    non-mechanised coal concentration depôts under construction or under examination by the interests concerned. They have a combined capacity of 7½ million tons a year, and are in many parts of the country.
    Mr. Eadie: Is my hon. Friend aware that there is still some urgency about the matter raised in my Question? If he reads the Robson Report of 1958, he will see that there were 81 per cent. of private traders. The Report of the Prices and Incomes Board of last year showed that the position had worsened in that there were 12,000 private traders, which represents 83 per cent. Is it not time that this matter was treated with some urgency?
    Mr. Freeson: I can assure my hon. Friend that there is considerable discussion and negotiation going on at present in the field of rationalisation in an endeavour to increase the number of coal concentration deôots throughout the country. We are treating the matter with urgency.

    North Sea Drilling Operation
    Mr. Hector Hughesasked the Minister of Power if he is aware that in 10 years there have been 23 serious accidents on mobile drilling platforms exploring for oil in the North Sea, and that Norway's State Oil Council has proposed an international conference aimed at reducing the relevant dangers; if he will seek representation for the United Kingdom at that conference; and what relevant conditions he inserted into licences to drill granted by him.
    Mr. Freeson: My hon. and learned Friend has got some of his facts wrong.
    The magazine "Offshore" reported in its March, 1966, issue that there had been 23 serious accidents to drilling rigs in the last 10 years throughout the world. Of these only one—the collapse of the "Sea Gem" in December, 1965—happened in the British sector of the North Sea.
    The Norwegian Petroleum Council has issued invitations to countries interested in offshore activities in the North Sea to attend an informal conference to discuss matters of common interest with particular emphasis on safety. The Conference
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    will be at official level and the Ministry will be represented.
    Licensees are required to carry out operations in accordance with the relevant Institute of Petroleum Code of Safe Practice.
    Mr. Hughes: Does my hon. Friend realise that he has missed the essential point of my Question, which relates to the relevant conditions in the licences? Will he ensure that serious accidents and cases of defective machinery are dealt with in this country by British workmen and not sent abroad as heretofore?
    Mr. Freeson: I assure my hon. and learned Friend that I have discussed this in the Ministry. As I stated in reply to a similar Question when I was last at the Box, it is important to get repairs undertaken in the best manner and as speedily as possible, irrespective of where they are undertaken.

  TELEPHONE TAPPING (PEERS)
  Sir T. Beamishasked the Prime Minister whether his decision not to allow the telephones of peers to be tapped on the authority of the Home Secretary applies to peers generally or only to peers who sit as Members of the Upper House.
  The Prime Minister (Mr. Harold Wilson): The statement which I made on 17th November extends to holders of peerages in receipt of Writs of Summons to the House of Lords.—[Vol. 736, c. 634.]
  Sir T. Beamish: How does the Prime Minister square his high-handed and personal decision not to allow the telephones of peers and hon. Members to be tapped on the authority of a Secretary of State with the fact that he was Chairman of the Labour Party in 1961, when, it is said, at least a dozen Labour Members had their loyalty investigated by the Special Branch, including having their telephones tapped, at the request of the Labour Party?
  The Prime Minister: That may have been said at the party conference, but I know nothing about any such request. This is a Question which, if the hon. Gentleman was as interested then as he is

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  now, he should have put to his own Home Secretary at the time. This is not highhanded, but an act of government within the control of Government. I gave the House my reasons. I said that on balance—very much on balance—I thought the previous practice was undesirable.

  MR. KOSYGIN (VISIT)
  Mr. Martenasked the Prime Minister if he will make a statement on the visit of Mr. Kosygin.
  The Prime Minister: I would refer the hon. Member to the Statement I made to the House yesterday.—[Vol. 741, c. 109]
  Mr. Marten: Now that the Vietnam question has become considerably less delicate than it was at this time yesterday, can the Prime Minister tell the House whether, during Mr. Kosygin's visit, the Hanoi Government made any significant gesture towards getting peace talks going?
  The Prime Minister: There are a number of Questions later on the Order Paper about Vietnam. With your permission, Mr. Speaker, I shall ask leave to answer them at the end of Questions.
  Mr. Murray: Did my right hon. Friend have, during the visit of Mr. Kosygin, any discussions about the possibility of an early summit meeting?
  The Prime Minister: No, Sir. That was not discussed at this stage.

  VIETNAM
  Mr. Norwoodasked the Prime Minister in view of the fact that since the United States are unable to win the war in Vietnam by conventional means sooner or later pressure will be brought for the use of nuclear weapons, if he will now as a precautionary measure give an assurance that Her Majesty's Government will refuse to acquiesce in any proposal on the part of the United States Government to use these weapons.
  The Prime Minister: This is a hypothetical Question. I have no reason to think that either side would ever contemplate the use of nuclear weapons in Vietnam.
  Mr. Norwood: While acknowledging that it is a hypothetical Question, it is not so hypothetical that it does not deserve an answer. Could my right hon. Friend not give a clear and blunt assurance, whatever may be his doubts about the intentions of the United States Government and whatever may be their intentions, that he will never give his sanction or acquiescence to the use of these weapons in that country?
  The Prime Minister: I am sure that the House would deplore the use of nuclear weapons in Vietnam. I have said that I think that this is hypothetical. There is no suggestion of using them, and that is why I gave the Answer that I did.
  Mr. Philip Noel-Baker: Can my right hon. Friend confirm that the use of gas for defoliation kills the forests for 50 years——
  Mr. Speaker: Order. This is a Question about nuclear weapons.
  Mr. Noel-Baker: With great respect, Mr. Speaker, the Question is about both conventional and nuclear weapons. In Vietnam, gas is being regarded as a conventional weapon. Therefore, may I ask the Prime Minister if he can confirm that the use of gas for defoliation kills the forests for 50 years, that the use of gas for destroying crops starves the children but not the fighting Vietcong? Is this a good way of promoting the pursuit of life, liberty and happiness in future Vietnam?
  The Prime Minister: Without notice, I could not say whether my right hon. Friend is right about the effect of particular gases on the life of trees and forests. If he will put a Question down to the appropriate Minister, I am sure that we shall do our best to give him an answer.

  PRIME MINISTER'S ADVISERS
  Mr. Peytonasked the Prime Minister if he will state the rules governing the publication by his advisers of books on subjects within the area of their official responsibility.
  The Prime Minister: My advisers are subject to the normal rule that civil servants who wish to publish a book upon a

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  subject connected with their official duties must obtain the previous consent of the head of their Department.
  Mr. Peyton: I am very grateful for that Answer, but may I ask the Prime Minister whether he is aware that I put the Question down when I first heard of Dr. Balogh's book, "The Economics of Poverty", and then unreasonably but hopefully assumed that it might contain an explanation of the economic policies of the present Government?
  The Prime Minister: Since my Answer made it clear that these rules require consent by the head of the Department, since this book was written a very considerable time ago, and since he had consent, the point raised by the hon. Gentleman does not arise. But as he has taken such a deep interest in this, I hope that he will read the book right through. He will learn a lot from it.

  LINER TRAINS
  Mr. Huntasked the Prime Minister what reply he has sent to the representations on the subject of liner trains recently made to him by the Chairman of the Road Haulage Association.
  The Prime Minister: As the Answer is rather long, I will, with permission, circulate it in the OFFICIAL REPORT.
  Mr. Hunt: Is the Prime Minister aware that here was an opportunity for him to show some real leadership, rather than the kind of wriggle and waffle that we have had to put up with for the last two years? Is the Prime Minister aware that there are still 200,000 lorries barred from liner train terminals at the whim of one union? How much longer is the Prime Minister going to condone this scandalous situation?
  The Prime Minister: The hon. Gentleman has got his timing of wriggle and waffle wrong. The sum of £6 million was authorised in March, 1964, by the right hon. Member for Wallasey (Mr. Marples) but he imposed the condition that no money was to be committed until the N.U.R. had agreed to open terminals. It was this Government who, in April 1965, authorised the Board to go ahead with construction. My right hon. Friend
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  is in close touch with the union. There has been a considerable easement in recent months, and she is pressing the matter further.
  Mr. Peter Walker: Is the Prime Minister aware that in his statement on 20th July last on the economic crisis he said that one of his measures was his determination to see that the freight liner trains operated at open terminals. Now, six months later, we see the Transport Holding Company spending £500,000 to appease the unions in their closed terminals policy. Is the Prime Minister going to take action instead of just preaching on this subject?
  The Prime Minister: The point is that we have been taking action, unlike the Government which the hon. Gentleman supported. I have given the facts on this. Thirty thousand freight liner containers have been carried since November, 1965.
  With regard to the question of terminals, there is now agreement, not only with the N.U.R. but with the union representing lorry drivers, on the London-Scottish route. My right hon. Friend had a meeting with the unions concerned earlier this month. She is pressing the matter further. She is making progress. It is a difficult matter, but progress is being made.
  Mr. Spriggs: Is my right hon. Friend aware that railwaymen are operating the liner trains, and that they are a great success?
  The Prime Minister: Yes, Sir, and I think that greater realisation all over the country that the operation of liner trains is a success, and is going to help to provide employment and greater profitability for these services, is beginning to break down the opposition in the railway union concerned to the question of liner trains.
  Mr. Heath: Will the prime Minister address himself to the question of liner trains operating at open terminals? On 20th July he pledged himself to operate that policy. Yesterday, by the complete nationalisation of Tartan Arrow services, he completely succumbed to blackmail from the unions. He cannot say that progress is being made with the unions when yesterday his Minister proved the reverse.
  The Prime Minister: Progress is being made on the question of open terminals. I have said that it is a difficult thing. These matters are not settled by the right hon. Gentleman's usual suggestion about passing a law about them. It is quite clear that the right hon. Gentleman's concern is more about public acquisition than about whether the open terminals operate or not.
  Mr. Ogden: May I ask my right hon. Friend whether this programme was really initiated by the right hon. Member for Wallasey (Mr. Marples), and, as he is now redundant, whether we can offer him some useful employment?
  The Prime Minister: I said that the right hon. Gentleman authorised £6 million in March, 1964. To that extent, of course, it was initiated by him, but, as I said, he imposed a condition which we then withdrew so that the work could proceed.
  Mr. Heath: Can the Prime Minister say how many open terminals are operating as a result of the progress made?
  The Prime Minister: No, Sir. If the right hon. Gentleman puts down a Question on that, I shall answer it. [Interruption.] The right hon. Gentleman obviously thinks that this is all very funny. [HON. MEMBERS: "No."] Of course, he does. [HON. MEMBERS: "Answer the question."] The right hon. Gentleman is more concerned—and we know the kind of briefing that he gets from his hon. Friend on these matters—to attack the Government than to get results.—[Interruption.]
  Mr. Speaker: Order. I want to hear the question and answer.
  Mr. Hunt: In view of the totally unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.
  Mr. Kenneth Lewis: On a point of order.
  Mr. Speaker: Order. The hon. Member can raise his point of order at the end of Question Time.
  Following is the Answer:
  The Association has been told that the Government fully support the need for the fullest use to be made of the freight liner system; that
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  my right hon. Friend the Minister of Transport is making every effort to encourage the wider availability of terminals; that the Government are continuing to press their views on those concerned; and that in my judgment it would be better to allow the work which is already being put in on this subject to continue rather than for me to call a meeting of the kind the Association has suggested.

  CHANCELLOR OF THE EXCHEQUER (SPEECH)
  Mr. Bruce-Gardyneasked the Prime Minister whether the public speech of the Chancellor of the Exchequer in Cardiff on 23rd January on investment represents the policy of Her Majesty's Government.
  The Prime Minister: Yes, Sir.
  Mr. Bruce-Gardyne: Has the Prime Minister noticed that his right hon. Friend referred in his speech to firm and definite policies for the regions? Has the Prime Minister noticed that the result of these policies is that unemployment in Scotland is now running at about 90,000, and that the latest count for emigration is running at the record level of 50,000 a year? What is the Prime Minister going to do now to discourage the Scots, to coin a phrase, from voting with their feet?
  The Prime Minister: My right hon. Friend referred to the regions and to the specific new measures taken during the past few months further to increase incentives for the regions. The hon. Gentleman will know not only that Scotland has suffered less from unemployment than in previous similar periods under our predecessors, but also that the percentage of new factories going to Scotland out of the total has increased very remarkably indeed compared with 1963–64. These are the measures that we are taking.

  EUROPEAN COAL AND STEEL COMMUNITY
  Mr. Ridleyasked the Prime Minister which Minister is responsible for conducting negotiations with the European Coal and Steel Comunity.
  The Prime Minister: If, as I assume, the hon. Member is referring to possible future negotiations, the question does not yet arise.
  Mr. Ridley: Will the Prime Minister give an assurance that the present Minister of Power will not conduct these negotiations? Is the right hon. Gentleman aware that the Minister of Power consistently refused to make any concessions which might have altered the Steel Bill to make it acceptable to the signatories of the Treaty of Rome?
  The Prime Minister: I give an assurance that when the hon. Gentleman and his hon. Friends begin to address themselves for the first time in two years to matters of policy and not petty sniping at personalities I shall listen to him and some of his hon. Friends.
  Mr. Barber: Will the Prime Minister recognise that the points which we put to the Minister of Power in those debates and which were turned down were based on advice which we received from the headquarters of the European Coal and Steel Community?
  The Prime Minister: It is not for me to inquire where the right hon. Gentleman gets his briefs from. Some of us, in all these matters, including negotiations with Europe, like to feel that we are speaking for Britain and not necessarily for the European Coal and Steel Community. The Amendments which were put down by the right hon. Gentleman and not accepted were rejected by the House as a whole.

  FOREIGN OFFICE POLICY (DEFENCE)
  Mr. Bruce-Gardyneasked the Prime Minister if he will delineate the precise line of demarcation between the responsibilities for Foreign Office policy in matters of defence of his right hon. Friend the Member for Dundee, East (Mr. George Thomson) and Lord Chalfont, respectively.
  The Prime Minister: I would refer the hon. Member to the Answer I gave on 23rd January to a Question by the noble Lord the Member for Hertford (Lord Balniel).—[Vol. 740, c. 281.]
  Mr. Bruce-Gardyne: In that Answer the Prime Minister said that his right hon. Friend was responsible for policy to N.A.T.O. and Lord Chalfont for policy towards defence. Why
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  is N.A.T.O. divided from defence? Is not this a pretty curious arrangement? While the Prime Minister is about it, can he explain why his right hon. Friend was taken away from dealing with Europe where he had established such valuable contacts in the past nine months?
  The Prime Minister: I think I am right in saying that the hon. Gentleman was once in the Foreign Office. He will know the problems when it is necessary to have some division of the work on a regional basis and some on a functional basis. The Foreign Office has great responsibility in the matter of advising on questions of defence. It was right that these defence questions, including disarmament, which are very closely linked, should come in the junior Ministerial level under the care of my noble Friend, but all of them act under the direction of the Foreign Secretary.
  With regard to the second part of the question, I felt that it was necessary to strengthen not only the economic department of the Foreign Office but to have more and continuing responsibility for European economic questions, so my right hon. Friend, who was the former Minister of Aviation, has gone to them. My right hon. Friend the Member for Dundee, East (Mr. George Thomson) has responsibilities over a wide field including N.A.T.O.
  Mr. Michael Foot: Is my right hon. Friend aware that the indication that he has given that the hon. Member for South Angus (Mr. Bruce-Gardyne) was removed from the Foreign Office is the best information that we have had from that institution for years?

QUESTIONS TO MINISTERS
Mr. Kenneth Lewis: On a point of order. In view of the fact that the Prime Minister is clearly incapable of giving us an answer on open terminals, may we have it from the Minister of Transport, who is sitting just alongside him and could have given him the answer?
Mr. Speaker: This shows how right I was not to take a bogus point of order during Question Time. I take the view that hon. Members have gone to great pains to put their Questions down and to

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frame their supplementaries during the 60 minutes of Question Time. I try to protect them if I can.
Mr. Hugh Fraser: On a point of order. Today the Prime Minister had three Questions on telephone tapping—Numbers 1, 16 and 19. He chose to answer only Question No. 1. May I assume that he is afraid to answer the other Questions?
Mr. Speaker: The second half of that spoils the point of order that the right hon. Gentleman is trying to raise. On the point of order—it is for the Minister to decide how he groups the Questions that he chooses to answer.
Sir Harmar Nicholls: On a point of order. I understand your reluctance to have Question Time interfered with, Mr. Speaker, but is it now a new rule that on no occasion may points of order be raised during Question Time?
Mr. Speaker: No. Mr. Speaker mentioned no absolute rule. The House must have confidence in Mr. Speaker. I know that it is sometimes difficult.

VIETNAM
The following Questions stood upon the Order Paper:
Mr. MICHAEL FOOT: To ask the Prime Minister if he will make a statement on the discussions he has had with Mr. Kosygin about attempts to secure a settlement in Vietnam.
Mr. RANKIN: To ask the Prime Minister what discussions he had with Mr. Kosygin on the situation in Vietnam during his visit to London; and if he will make a statement.
Mr. HEFFER: To ask the Prime Minister whether he will make a statement on the visit of Mr. Kosygin, with particular reference to the discussion on the situation in Vietnam.
The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I will now answer Questions Nos. Q17, Q21 and Q22.
I apologise for the length of this Answer but I believe this to be necessary because of its importance and complexity.
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As I told the House yesterday, Mr. Kosygin and I devoted the major part of our discussions to the problem of Vietnam. Our discussions were urgent and constructive. They were also confidential and must remain so, as must equally my contacts with the President of the United States.
My right hon. Friend and I made a sustained effort to try to secure conditions during the Vietnamese New Year truce period which would make possible negotiations for a settlement. I believe there were moments when this could have been very near.
The tragic disappointment of these hopes for the truce period which became public last night must not, and will not, deter us from pressing on for a solution. As I told the House yesterday "if the present opportunity is missed we must not give up hope; the road to a solution remains open".
That is the position.
I do not underrate the renewed dangers that accompany the resumption of the fighting; and we must all deeply regret that the Tet period, the period of the Vietnamese New Year, was not utilised to create the conditions that were needed for a move to the conference table. In particular, the massive southward movement of troops and supplies in the north, on a scale far greater than in the Christmas, or indeed in any previous, cease-fire, threatened to create a severe military unbalance. It also made it harder for the Americans to believe that the North Vietnamese leaders wished to use the truce for an effort to peace rather than for a further effort in war.
As I made clear yesterday, what is lacking for a settlement is, first, enough of a general realisation that sooner or later there must be a political settlement and, secondly, the necessary degree of trust and confidence on the part of each of the nations fighting in this war about the sincerity of the desire of the other to work for a negotiated political settlement.
North Vietnam will still not seize the present opportunities for negotiation because, presumably, they do not accept the sincerity of the repeated American statements that when negotiations take place they will be unconditional or about

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American willingness, given appropriate guarantees, to stop the bombing.
Equally—and suspicions have been aggravated by the military movements during Tet—the Americans do not for their part feel able to trust the North Vietnamese to negotiate with genuine intent and to refrain from using a period of negotiations to build up military strength and compel South Vietnamese, American, Australian, New Zealand and other forces to fight with their hands tied behind their backs.
Trust has got to be built up. For my part, if this needs saying, I accept one hundred per cent. American sincerity to negotiate for peace. And I must add this. I believe that the North Vietnamese are also genuine in their desire for peace. They equally are concerned, at the same time, to avoid a situation in which they feel they would be leaving perhaps 100,000 North Vietnamese at risk in the south, denuded of necessary supplies.
It is to bridge what I described yesterday as a very small remaining gap by creating the necessary confidence and guarantees both ways that my right hon. Friend and I have been so active in this past week to do our best to see that the breathing space provided by Tet was used. The deep concern all of us feel that this has not proved possible must not blind us to the fact that peace is attainable now at any time on the basis on which we have been working.
These disappointments should not drive any of us into panic measures, reversals of policy or into the delusion that peace can be secured by dramatic but ineffectual declarations. Those of us who have a rôle to play in this matter have a duty to keep cool and to keep our eyes fixed on the goal we set ourselves last week, to use the influence we possess to prevent the bitterness as well as the fighting from escalating, and to begin again, however difficult the circumstances, to create two-way confidence—and to remember above all that our objective is not to strike allegedly moral postures or to make unhelpful denunciatory declarations—our objective is to secure peace.
Mr. Michael Foot: I certainly appreciate—[Interruption.]
Mr. Speaker: Order. This is a very serious matter.
Mr. Foot: I certainly appreciate the efforts made by the Prime Minister to try to secure a settlement of this dispute, but will he recognise that there is a widespread sense of outrage throughout the country that the United States Government have refused to respond to the appeal made by the Secretary-General of the United Nations for an unconditional and unqualified stopping of the bombing—an appeal which I trust was supported by my right hon. Friend during recent days? Will he now say that he will give unqualified support for that appeal, which has been made on behalf not merely of many members of the United Nations—and probably a majority of nations there—but of vast numbers of people throughout this country?
The Prime Minister: My hon. Friend is quite right to express his feelings and to speak for others about the resumption of the bombing, but on the broader question that he raised I must make this clear: my right hon. Friend and I have been living very close to this subject for the last seven or eight days. I think that we know most of what is going on. I think we know exactly what is required—and it is not a great deal—to get the parties to the conference table. My hon. Friend must make his own decision, but I do not believe that what he has proposed would in any way help to secure a settlement. I am saying this with some knowledge of what it is about. If I thought that it would, if I thought that that were the way, that full association with what U Thant has said was the way to get peace, I would follow that course tomorrow, but I know enough about it to know that that is not the road to follow.
Mr. Rankin: Would my right hon. Friend not agree that the spontaneous welcome accorded Mr. Kosygin in Great Britain last week wherever he went was a reflection of the widespread support of his policy in Vietnam—[HON. MEMBERS: "Oh."]—of course it was—and at the same time, an obvious criticism of the policy which is being followed by America in that part of South-East Asia? Does that fact not have some influence on the action which he ought to take at this time?
The Prime Minister: I think that my hon. Friend misconceives both the purpose of Mr. Kosygin's visit and the

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reactions to it. I believe that the great warmth of his reception, as I said yesterday, was due to his own manner and charm in going around the country and to the great desire of all our people, whatever their political points of view on Vietnam or anything else, to see a closer rapprochement between Britain and the Soviet Union, a desire which I believe has been achieved to a very high degree by the communiqué published yesterday. I do not think, therefore—in fact I would very much hate to think—that Mr. Kosygin's reception was limited to support one way or another for a particular aspect of policy, however important.
Mr. Heffer: Is my right hon. Friend aware that his statement this afternoon is very disappointing? Was he told by the Americans before the bombing that it was likely to take place, or was he kept in the dark? If so, how does this leave our so-called special relationship with the United States? Is it not clear that they do not give a fig for the opinions of this Government? Is it not time that we told the Americans quite categorically that we do not go along with them and that we dissociate ourselves entirely from their policy?
The Prime Minister: My right hon. Friend and I were in full possession of all relevant facts, both current and prospective, and they did not apply only to the facts which we got from the United States. The problem here—I will not go into any of the details or proposals which we were working on and which still stand open—is that it was clear to everyone that if both sides failed to take advantage of the opportunity of the Tet truce, there would be a return to the conditions prior to the cease-fire. That was clear to everyone. I have given my account of why things went wrong in that connection.
My hon. Friend is absolutely wrong to suggest that the Americans pay no attention to us. If we were to follow his proposal—he is free to follow it, but I am not—that might have the effect that we would have little influence in any quarter in this matter.
Lord Balniel: Mr. Kosygin frequently made it clear in his public speeches that the Soviet Union is the major supplier of arms to the North Vietnamese forces.
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Did he, in discussion, also make it clear that the Soviet Union still considers itself as having responsibilities as the Co-Chairman of the Geneva Conference? Did he suggest any specific initiative to bring the contending parties to the negotiating table? The Prime Minister also said that he knew exactly what is required to bring the parties to the negotiating table. Could he give us some indication of what is in his mind?
The Prime Minister: The noble Lord will understand my difficulties here, including the difficulties of saying exactly what Mr. Kosygin said to my right hon. Friend and myself in these very lengthy negotiations. On the main part of his question, in addition to being, of course, an ally of North Vietnam and a supplier of arms, Mr. Kosygin and his whole Government obviously take very seriously their responsibilities as Co-Chairman.
I think that the result of the examination which we have made in these past few days would suggest that their view is that there must first be a willingness to go to the conference table on the part of the main parties to the fighting. Then, I am certain—in fact I know—that Mr. Kosygin, or, in this case, Mr. Gromyko, would join my right hon. Friend in taking any measures to make these negotiations a reality. There are various ways, which we cannot pursue at this time, in which this can be done, but there is a prior condition required for that kind of activation.
On the question of what proposals might be put forward, it is not a question of proposals being put forward. There is an initiative; there is a plan—I cannot tell the House what it is and I am sure that the noble Lord will not press me for it—which would bring peace tomorrow and would require a very small move to activate all the very complicated machinery which could bring us to peace.
Sir C. Osborne: Despite the Prime Minister's natural disappointment that his efforts last week should have failed, is he aware that most people hope that he will continue to seek for peace? Does he think that peace can be secured in Vietnam without co-operation from Peking? When conditions become normal there, will he do his best to get all the influence he can brought to bear from that quarter to secure peace?
The Prime Minister: I thank the hon. Gentleman for what he said at the beginning of his question. On the second part, he knows the difficulties probably as well as anyone, from his contacts in that part of the world, and, of course, it is not a currently realistic proposal. The hon. Gentleman will remember that, when the Commonwealth Peace Mission was proposed, it was proposed that the Commonwealth Prime Ministers should visit Peking, Moscow and Washington as well as North and South Vietnam.
Mr. James Davidson: What was the exact source of the information that there were massive troop movements coming south during the truce period from North Vietnam?
The Prime Minister: It is not usual, of course, to give the sources of this information, but I am not aware of anyone who is denying this——
Hon. Members: Oh.
The Prime Minister: My hon. Friends may——
Mr. Orme: Give us the source.
The Prime Minister: It is not usual to give the source in this matter——
Mr. Orme: Why not?
The Prime Minister: I am satisfied about the details and figures of movements, which were on a very large scale. I still believe that it would have been possible despite that, if we could have had one small move, to have activated the whole peace proposals and for the Tet truce to have continued until we got them around the conference table.
Mr. Mendelson: While it is clearly emerging that the most positive part of last week's work was the co-operation between the two Co-Chairmen to try to find a way, is it not equally clear that when Mr. U Thant said yesterday, after the extension of the suspension of the bombing, that he welcomed it and that what is needed now is a quiet period of a few weeks to allow, not declamations, but quiet diplomatic work, is not that the path of wisdom and is it not regrettable that the bombing should have been resumed now? Should not my right hon. Friend give complete support to U Thant's proposal?
The Prime Minister: No one has greater respect for U Thant than I. I think that he is a personal friend of many of us in the House. I agreed with him when he welcomed the suspension of the bombing and the other military activities. That is why it was such a bitter disappointment that we were not able to seize on the urgency of those few days of truce to get a settlement. That is why the task is now harder, because of the danger of bitterness, although I believe that everything which we discussed last week is as relevant today—leading to a cessation of the bombing—as it would have been last week, leading to a decision not to resume the bombing, and it is just as possible, if the will is there. Not much is needed to activate all this. Therefore, with the disappointment which my right hon. Friend and I felt—I know that my hon. Friend shares it—I am also disappointed that these things happened during Tet which fouled the atmosphere and also that we did not have a little more time to get them to the conference table.
Mr. Marten: Is it not during these quiet periods that the North Vietnamese abuse the offer of a peaceful time? Would the right hon. Gentleman answer the question which I put earlier—without going into details, was there any significant gesture or move by Hanoi during Mr. Kosygin's visit to get the talks going?
The Prime Minister: I think the hopes which were built up last week—I have not lost them, despite the disappointment—will be best fulfilled if I say as little as possible of the exchanges last week and the part played by Mr. Kosygin or anyone else in them.
Mr. John Hynd: In view of the Prime Minister's satisfaction at the fact that both sides—the Vietcong, the North Vietnamese and the Americans—are anxious for peace, in view of the intervention of U Thant and in view of the fact that for the first time we are satisfied that the Russians are anxious to take part in recalling the Geneva Conference, is this not an opportunity for the intervention of the United Nations to provide the necessary assurance to both sides which would enable the Geneva Conference to be resumed?
The Prime Minister: I hope that my hon. Friend was not suggesting that there was ever any doubt about the willingness

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of the Soviet Union to play their full part as Co-Chairman. It is not felt that a Co-Chairman's initiative in that form is the way to start things off. There must be an act of will on the part of the main parties to the fighting, after which the Co-Chairman would, I am sure, go into action in any way that would be helpful to consummate what had been begun. In regard to my hon. Friend's suggestion about the United Nations, as I have said more than once in this House, we all know the difficulties that exist about putting it through the machinery of the United Nations. Obviously the help of the Secretary-General is extremely valuable, but I believe that the lines on which we have been working in the past week are the right lines and, as I have said, those lines remain open.
Mr. Longden: While sympathising with the Prime Minister in his struggle for peace against so many of his hon. Friends—[Interruption.]—is it hypercritical to suggest that Mr. Kosygin could have helped the end which we all have in view by taking time off from trying to detach us from our allies and publicly suggesting and exhorting his protegé Ho Chi Minh—[HON. MEMBERS: "Sit down."]—to go to the conference table?
The Prime Minister: I wish that the hon. Gentleman, in the manner of his question and in its content, was one-tenth as helpful as Mr. Kosygin and as my hon. Friends. I hope that, despite the hon. Gentleman's cynicism and the Motion which he has on the Order Paper, he is not attributing a lack of sincerity to my hon. Friends. I thought I knew that all hon. Members, on both sides of the House, passionately desired to see peace in Vietnam. There are different ways of achieving it. My hon. Friends have one way, and I have said that if I thought it was the right way, I would be with them tomorrow in doing it that way. I do not believe that it is the right way, although I do not doubt their sincerity in putting it forward. What the hon. Gentleman said does not provide a way at all, except to abuse a very distinguished visitor to this country.
Mr. Atkinson: Would not my right hon. Friend agree that it would be right and proper for him now to say whether or not the information which he has about the North Vietnamese movement
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of troops and supplies during the truce period was gained from one of the belligerents? Would he say whether the source of information was, in fact, the Americans?
The Prime Minister: I have said that it is not usual to give information about the source of information, but I assure my hon. Friend that I did not obtain it by pure introspection and that I am satisfied as to its accuracy.
Mr. Heath: Is the right hon. Gentleman aware that we support him and the Foreign Secretary not only in the work they have been doing but also in the efforts which they have told the House they will continue to make to try to bring about a settlement? Is he further aware that I believe him to be right in that he will not help this process by either condemning what the United States are doing or by calling on them for an unconditional cessation of bombing, although Mr. Kosygin himself in public made this a condition of any successful negotiation? Would not the right hon. Gentleman agree that the best hope lies in being able to show one side that if the bombing ceases, the other side will be prepared to cease reinforcing, and that from that position of diplomacy, further action might ensue?
The Prime Minister: I thank the right hon. Gentleman for the last part of his remarks, in which he put his finger on one of a series of very complicated problems; and, of course, I agree with him. It is right that this must now be pursued as far as possible by private and secret contacts—Government contacts, of course—and not by public declarations.

LESLIE PARKES (ARREST)
Mr. Hogg (by Private Notice)asked the Secretary of State for the Home Department what action he proposes to take consequent upon the report of the Chief Constable of Stoke regarding the circumstances of the arrest of Mr. Leslie Parkes.
The Secretary of State for the Home Department (Mr. Roy Jenkins): I fully understand the concern which is felt in all parts of the House about this case. I share this concern. As soon as I saw the Press accounts, I asked for a report

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from the Chief Constable of Stoke-on-Trent, who has told me that he is causing the circumstances to be fully investigated by a senior officer of another force and that he will then consider what disciplinary action would be appropriate. In view of my appellant responsibility in police discipline cases, the House will, I believe, understand that it would be wrong for me to comment further.
Mr. Hogg: While fully accepting what the right hon. Gentleman said in the last words of his Answer, would he, however, confirm his view, which I believe is widely held, that unless one is dealing with a very dangerous professional criminal, which is not the case here, it only undermines the confidence we all wish to feel in the Police Force to lure a man into a police station by means of a deliberate untruth? Would not he agree that one is not dealing here with a serious professional crime, and that even a suspect is entitled to be treated in good faith?
Mr. Jenkins: I think that that is so, and that was probably felt to be so by the Chief Constable himself, which was the reason why he issued his forthright statement yesterday and has acted as promptly and vigorously as he has in this case.
Mr. Ashley: Would not my right hon. Friend agree that this prompt admission by the Chief Constable of Stoke-on-Trent is to be welcomed and that it will facilitate early and effective action against those responsible? However, would not he also agree that it would be deplorable if this admission were to be used as a basis for a successful attack upon the police of Stoke-on-Trent or the police throughout the country?
Mr. Jenkins: I very much hope that that will not be so and I do not believe that it will be so. My view is that when the police show, as they have in a case like this, their great desire to deal with any possible faults, this can do nothing but help the reputation of the police throughout the country.
Mr. Powell: Would the right hon. Gentleman make it clear that the inquiry to which he referred in his Answer is not in derogation of the Government inquiry which was promised yesterday by a
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Minister representing the Defence Department?
Mr. Jenkins: I believe that this is an entirely separate matter relating to circumstances following the arrest of Mr. Parkes and that it in no way touches on that other matter. This is a question of discipline within the Stoke-on-Trent Police Force.
Mr. Shinwell: There are several aspects of this case which appear to need investigating by my right hon. Friend's Department and also by the Ministry of Defence. Is my right hon. Friend satisfied with the reports and pictures which have appeared in the Press of Mr. Parkes being handcuffed to a military policeman, with another policeman with a pick-handle to the ready? Surely this is not the kind of thing that we expect in this country. Is he aware that this is not a police State, and will he consult his right hon. Friend the Secretary of State for Defence in order to put an end to these most obnoxious proceedings?
Mr. Jenkins: I take note of my right hon. Friend's remarks. The conditions relating to the present custody of Mr. Parkes are inevitably a matter for my right hon. Friend, with whom I am in consultation.
Mr. Powell: Further to the right hon. Gentleman's reply to my question, would he be good enough to look at the terms in which the Government inquiry to which I referred was promised yesterday?
Mr. Jenkins: I will certainly look at those terms. I do not believe that there is any misunderstanding or difference between us here. This is a question of police discipline, for which I am ultimately responsible and about which I am answering today. There is a separate question which my hon. Friend the Under-Secretary of State for the Army answered yesterday.
Mr. Alexander W. Lyon: Would not my right hon. Friend agree that, as the Chief Constable of Stoke said that it was completely unnecessary to adopt this ruse, as Army personnel had full power to arrest this man, there may be an explanation for the somewhat surprising manœuvre of the inspector which would show that, though misguided, he was acting from proper motives?
Mr. Jenkins: I would certainly not wish to say anything in answer to that question which might in any way impair my appellate responsibilities which I mentioned in my original Answer.
Sir Knox Cunningham: Can the right hon. Gentleman say whether, if the photographs mentioned had appeared in connection with a civil case, there would have been some Question of contempt of court? If so, is there anything comparable in the case of a military tribunal?
Mr. Jenkins: I would hesitate to advise the House about this. Had it been a civil case, I think that it would have been for my right hon. and learned Friend the Attorney-General to consider the question of contempt of court.
Mr. Thorpe: Can the Home Secretary say a little more about the scope of the inquiry? Has he seen reports alleging that a military spokesman said yesterday that Parkes was invited to go to the police station because it was in his own interests? Apart from this somewhat odd evaluation of his own interests and inclinations, in so far as this gives some indication of collusion between the civil and the military authorities will the inquiry be sufficiently wide in scope to investigate that matter?
Mr. Jenkins: As I said in reply to the right hon. Member for Wolverhampton, South-West (Mr. Powell), there are two separate issues. What the inquiry is concerned with, and properly concerned with, is a disciplinary offence within the police force of Stoke-on-Trent
Mr. Hogg: May I ask the right hon. Gentleman a question which may exceed the rôle of his own office? Does there not come a point in all these cases when, irrespective of the ultimate merits, the Government ought to step in and realise that the authorities have made such a mess that they ought to drop the matter?
Mr. Jenkins: The Government are dealing with the disciplinary aspects of the matter as quickly and as effectively as they possibly can.

ORDERS OF THE DAY

  COMPANIES BILL [Lords]
  Order for Second Reading read.
  4.2 p.m.
  The President of the Board of Trade (Mr. Douglas Jay): I beg to move, That the Bill be now read a Second time.
  The Bill was introduced a year ago with only 45 Clauses. It is now reintroduced here, after examination in another place, with 96 Clauses and 34 pages of Schedules. As I think all of us on both sides of the House agree on the main purposes of the Bill, all will, I hope, share my dilemma of ensuring that the Bill is long enough to do what most of us want to do urgently, and not so long as to fail to reach the Statute Book during the present Session. I have already, to meet the urgent need to check abuses in the insurance industry on the one hand and, on the other, to respond to suggestions from hon. Members and others, more than doubled the length of the Bill. I think that it is now quite long enough if we are to be sure of enactment this Session.
  The reason why many further changes are omitted, though some may be desirable on sheer merit, is not necessarily that a case cannot be made out for them, but that they are less urgent and that a Bill fully revising our company laws after 20 years would need well over 200 Clauses at least. We seem to reform our company law in this country about every 20 years—the last major Act dates from 1948—usually during Labour Governments, it seems, between which there are, apparently, periods of deep slumber in this matter. This time we must all be grateful to the Jenkins Committee without which the politicians, or, at any rate, most of them, would be almost powerless in this matter.
  Sir Gerald Nabarro (Worcestershire, South): The Jenkins Committee was set up by the Tories.
  Mr. Jay: It was not merely set up by the Tories, but it reported during the period of the Tory Government, without any response in legislation. The exhaustive labours of that Committee remain the starting point of the Bill.

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  We have gone beyond Jenkins now in quite a number of reforms, but we have not tried, for the reasons which I have given, to enact everything from that Report in one Bill. Since there have to be limitations, the limitations must be decided according to some principle and some theme. The theme which we have chosen is the inclusion in the Bill of proposals for much greater disclosure of information by limited companies together with other provisions which are the most urgent in practice on other grounds. Proposals which do not pass either of these two tests we have felt bound to omit.
  This does not mean that we are abandoning them. It means that we are proposing to embody them in further legislation, which we intend to introduce during the present Parliament. Nor do we stop at that. I am hoping to legislate for wider reforms in the structure and philosophy of our company law. I think that it is time—it has hardly been done for 100 years—to re—examine the whole theory and purpose of the limited joint stock company, the comparative rights and obligations of shareholders, directors, creditors, employees and the community as a whole.
  At present, there would not be enough general agreement, quite apart from time, to legislate radically on all this and, therefore, I am putting in hand a systematic review of all these issues. I hope to make a statement shortly about the way in which the review will be handled, but we shall certainly be inviting views from all those expert, or less expert, including bodies outside the Government, who are interested.
  The most sweeping reforms in the Bill ensure, as I have said, greater disclosure of information and the most sweeping of all is the abolition of the exempt private company. About 75 per cent. of the 500,000 companies in this country are at present exempt private companies, so that this provision alone means that nearly 400,000 companies will for the first time have to file their accounts with the Registrar of Companies, where they can be examined by the public, disclosing in them both the information formerly disclosed by public companies and nonexempt private companies and the additional information required by the Bill.
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  The 1948 Act attempted to exempt small family businesses, but in practice all sorts of companies, very far from being small family companies in some cases, have taken advantage of this to avoid disclosure. It will still be open for any company to choose to be either a limited company and accept the obligations of disclosure, or an unlimited company and avoid them. That seems to be fair. Limited liability is, of course, to the general advantage and has made a huge contribution to economic growth in this country over many generations. But it is also a great privilege conferred by Parliament on privately-owned business, and Parliament and the public can reasonably expect limited companies to accept obligations in return. That is our justification for imposing this new duty on more than 400,000 companies.
  I also regard the far-reaching proposals for greater disclosure as a further contribution to the Government's general drive, through this and many other methods, to enhance industrial efficiency and productivity and ensure greater democratic control. It is right, both from the point of view of efficiency and of fair distribution of rewards, that full information should be available to shareholders, employees, creditors, potential investors, financial writers, and the public as a whole. Publicity in all these things is one great safeguard against abuse, and unquestionably other countries, notably the United States, have been ahead of us in this respect, and the United States appears to have done well out of it.
  In abolishing the exempt private company we are in one respect going beyond the Jenkins Committee's Report. It recommended that "unquoted" companies other than subsidiaries of quoted ones should be allowed to withhold certain information from their filed accounts. We have not accepted this; we intend that all limited companies should file their full accounts.
  The first additional type of information required to be disclosed by this Bill is turnover. Paragraph 15 of Schedule 1 requires turnover to be disclosed in the accounts for the first time under our company laws, and Clause 17 requires that companies carrying on substantially different types of business must show in the directors' report the proportions in

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  which these are divided, and the profit attributable to each. This also goes beyond the Jenkins Report. The Bill will also require all limited companies to give information about their subsidiaries and associated companies, and the name and country of incorporation of an ultimate holding company.
  Next, the Bill will require all limited companies to show in the directors' report the value of goods exported. I believe that a public statement of exports will be an incentive, both to the company itself and often to others, to intensify their exporting efforts, and it will emphasise again the paramount importance which Parliament and the Government attach to the export drive in the long as well as short term.
  Mr. John Hall (Wycombe): I apologise for interrupting the right hon. Gentleman just as he is developing his argument, but could he tell the House whether this will apply also to those who contribute very considerably to indirect exports? If not, information given on the accounts can have very little value.
  Mr. Jay: I am coming to that point. The hon. Member will find that I shall get on more quickly if he waits for me to reach these points. We have been able today to publish a further export record in our monthly trade returns. We are glad of that, but this should not blind us to the fact that although we have done well, we shall have to do better to get our balance of trade under control.
  Some, including the hon. Member—I was coming to him in the next sentence—have argued that this obligation may be unfair to some companies which cannot in the nature of the case export directly, or burdensome to the very small company. Those, however, which cannot export can easily explain this in their directors' report; and to meet the case of very small firms we have excluded—for this purpose only—those whose turnover does not exceed £20,000 a year.
  The Bill also lays down rules for far wider disclosure of the emoluments of company chairmen, directors and highly-paid executives than we have ever had before in this country.
  Sir G. Nabarro: Before the right hon. Gentleman leaves exports, may I say that I am very much in sympathy about the disclosure of direct export performance—
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  there is nothing between us there—but he has not stated the problem, which does not relate only to small firms but also affects large companies which manufacture goods which are subsequently incorporated into manufactured equipment which is exported. Those firms cannot ascertain precisely what volume or value of their indirect exports finds its way overseas ultimately.
  Mr. Jay: Yes, the Joseph Lucas case is a classical one, but it is open for these companies in their directors' reports to make this perfectly clear and to say exactly what contribution they are making
  As I have said, the Bill also lays down rules for far wider disclosure of the emoluments of company chairmen, directors and highly-paid executives than we ever had before in this country. Here again we have lagged woefully behind the United States. If there is to be mutual confidence in industry, if investors are to know what their directors are doing, and if there is to be some reasonable parallel in these matters between publicly and privately owned industry and services, it is surely clear that we must now go much further than the old portmanteau provision for the disclosure of total directors' "emoluments".
  What this Bill does is to ensure the separate disclosure of the receipts of the chairman and also, if there is a director paid more highly than the chairman, of that director also. Companies will in addition have to show the number of directors receiving up to £2,500, the number receiving between £2,500 and £5,000 and so on in bands of £2,500.
  The number of highly-paid executives—that is employees who are not directors—who are paid more than £10,000 will also have to be shown. This information will also be given in bands rather than for individuals; and will all appear, of course, in the company's filed accounts. We have tried here to strike a balance between the present grossly insufficient disclosure, and going too far in revealing everybody's private individual income to the public gaze, though some people may think there is a case for doing even that.
  Some recent events in the company world, however, have shown that disclosure of what are strictly emoluments

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  alone—salaries, fees, pensions payments, etc.—is not enough to cover all the devices by which sometimes very high rewards have been channelled to some individuals and concealed from shareholders. We have, therefore, provided that information should be kept at the registered offices of the company, and be available for inspection by shareholders, about directors' service contracts and that the register of dealings by directors in their own company's shares, which is already required by the Act of 1948, should contain more detailed information than at present and should be more widely available.
  As part of our general aim in this Bill is to meet the shareholder's and the public's right to know what is going on, it also lays down that companies should in future, in the directors' report, give figures of both charitable and political subscriptions made at the expense of the shareholders.
  Mr. Anthony Barber (Altrincham and Sale): It would be very helpful if we could clear up one point. I believe I am right in saying that certain amendments have been put forward relating to disclosure of directors' emoluments in the case of non-quoted companies. It would be helpful if at the outset the right hon. Gentleman would say whether he accepts those amendments or intends to take any action in regard to them.
  Mr. Jay: No, we do not accept those amendments. If the right hon. Gentleman is particularly interested, my right hon. Friend in his reply to the debate tonight will explain what we propose.
  We propose that in future companies should give figures both for charitable and political subscriptions made at the expense of the shareholders. The Bill does nothing, of course, to prevent directors both making donations to anyone they like, and keeping them secret, if they make them out of their own individual incomes. Any company can also under the Bill, provided that it is within its powers, donate the shareholders' money to anyone the directors like, if they let the shareholders know what they are doing. All the Clause does is to prevent them using the shareholders' money for these purposes and at the same time re-
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  fusing to let the shareholders know that they are doing so. I cannot really believe that anybody in 1967 can seriously object to that.
  To avoid companies, however, being burdened with very long lists of trivialities—this also was in response to representations made to us in another place—we are only asking for disclosure where the total of political and charitable subscriptions exceeds £50 in any one year, for the split of this total between politics and charity and for details of political subscriptions exceeding £50 to any one recipient. Details of charitable subscriptions exceeding £50 to any one recipient have also to be disclosed, but in a register open to inspection at the registered office of the company and not in the directors' report.
  I must also advise the House that I have decided in the course of the Bill's passage that, in the interests of industrial efficiency and modernisation generally, we ought to add one more item of disclosure to those in the Bill; that is a record of the total manpower employed by the company concerned, and of the total wages and salaries bill. In the National Conference on Productivity held by the Prime Minister last September, the view was strongly expressed from both sides of industry that such disclosure would be a further spur to industrial efficiency; and the C.B.I. supports this.
  I therefore intend to move an Amendment in Committee to this effect, but to limit this obligation to companies employing more than 100 persons, so as again to avoid imposing excessive extra paper work on small companies where the information might be of least public value.
  Mr. R. Gresham Cooke (Twickenham): Does the right hon. Gentleman intend to move an Amendment to bring out the total of salaries and wages, or separate totals for salaries and wages?
  Mr. Jay: The total of the two is our present intention. I am sure that the hon. Member will serve on the Committee and will be able to advise us on this.
  When the first version of this Bill was introduced into the House almost exactly a year ago, I also undertook to include in it two further provisions for

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  disclosure, even at the cost of lengthening the Bill, if there was a general wish for this from all sides of the House: fuller disclosure of directors' dealings in the shares of their own companies, on the one hand, and of the names of large equity shareholders who have up till now been able to shelter behind nominees and remain anonymous under our law, on the other hand. We have included both these reforms also in the present Bill. Directors will not merely have to disclose dealings in their own companies' shares but will be actually prohibited from dealing in options in those shares. Here again we are bringing our law more up to date, and more in line with the standards of the United States and some other countries.
  Nominee shareholdings are a more difficult issue. It can be argued, on the one hand, that a man's private savings invested in shares should be just as confidential as his bank account, or his Post Office Savings deposit; or, on the other hand, that if anybody holds any shares, there is no reason why the fact should not be disclosed. I have often heard both these points of view. The Jenkins Committee reached what seemed to me a sensible compromise: that when a shareholding is a trivial proportion of a quoted company's capital, that is a private affair, but that it becomes of public interest when the proportion of shares held in the company is substantial, because then an element of control is involved. We have decided, therefore, difficult though this is to enact—this was one of our reasons for hesitating a year ago—to adopt the Jenkins' proposal that names of the beneficial owners of 10 per cent. or more of a class of equity capital in a quoted company should be disclosed at the registered office of that company.
  Our company law at present also gives special exemption from the obligations of disclosure to three types of business: banking, insurance and shipping. Here again, there have always been two schools of thought, one believing that full disclosure might be injurious to our overseas earnings, or indeed to depositors and policy holders, respectively, in the case of banking and insurance, and the other that all these companies should be treated like any other under the law. In the case of banking and discount companies, a majority of
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  the Jenkins Committee recommended continuance of the present exemptions. What we are doing in this Bill by Clause 12 is to give the Board of Trade power to take away from banking and discount companies the present exemptions in the 1948 Act. Any regulations doing this would have to be approved by each House of Parliament. I am in consultation with my right hon. Friend the Chancellor of the Exchequer, and indeed, the banks about the use of these powers, but it is not, of course, possible to act on them until the Bill becomes law.
  In the case of shipping, the Jenkins Committee recommended withdrawal of the exemptions. There are, however, some delicate questions of international business here and our shipping earnings are, in my view, much too vital an element in our balance of payments to take serious risks in this matter. I have, therefore, included in the Bill an amendment to the 1948 Act which will enable the Board of Trade to determine which shipping companies shall be granted these exemptions. The aim will be to publish all reasonable information so far as is consistent with protecting our overseas earnings.
  Next, on insurance, there are two major instalments of reform of the law in this Bill. First, it provides for improved powers to make regulations about disclosure in the accounts of insurance companies, which were in any case needed, and, secondly, more drastic remedies for the abuses in motor insurance which have emerged rather luridly in the past year since the first version of the Bill was debated a year ago.
  Under existing law, insurance companies have exemption permitting hidden reserves, and undisclosed transfers to and from these reserves, before arriving at published profits, as have the banks. But insurance companies have, under the Insurance Companies Act, 1958, to deposit with the Board of Trade balance sheets, profit and loss accounts and revenue accounts in a prescribed form. Copies of these are available then for public inspection. The Jenkins Committee recommended that the general exemption should remain, but that all insurance companies should in future have to give new information in their annual accounts about the income derived from different kinds of investment. We take powers in the

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  Bill to carry this out by prescribing the contents of the accounts of insurance companies through Statutory Instruments made under the 1958 Act rather than under the Bill.
  Secondly, we are taking rather drastic powers to control the future activities of insurance companies, and this is particularly necessary, I think the House will agree, in the case of motor insurance. These powers, though they do not spring from the Bill's first main theme of disclosure, are clearly justified, in my view, on grounds of urgency. Stronger powers are necessary both to protect policy holders, and also the reputation of the great majority of British insurers who are widely respected throughout the world. The obligation on Parliament to act here seems to me to be particularly strong, because Parliament compels motorists by law to insure against third party personal risks, but it has not given them any clear guidance in return with whom they should insure. It is true that the Motor Insurers' Bureau scheme, which has been agreed between my right hon. Friend the Minister of Transport and the industry, provides compensation for third party risks which are compulsorily insurable if a company fails, and that is something. But although this is valuable, it is not a fully adequate safeguard.
  The best advice that I can give to motorists meanwhile in, I hope, the few remaining months before the Bill becomes law is to repeat what I said in answer to a Question on 27th January from my hon. Friend the Member for Oldbury and Halesowen (Mr. Horner)—and I quote—that
  "anyone who is offered insurance at what appears to be a cheap premium to seek advice from, for instance, such bodies as the British Insurance Association, Lloyd's, the Corporation of Insurance Brokers, the Association of Insurance Brokers or Lloyd's Insurance Brokers' Association."—[OFFICIAL REPORT, 27th January, 1967; Vol. 739, c. 381.]
  That is for the immediate future.
  For the long-term future, however, present legal powers are, I believe, clearly inadequate. At present, an insurance company is free to start up and conduct its business as it chooses if it first, publishes financial results in a form prescribed by the Board of Trade, second, has a paid-up share capital of £50,000,
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  and, third, in the case of a company undertaking non-life insurance, has an excess of assets over liability of at least 10 per cent. of its annual premium income—that is, what is known as the solvency margin. But this solvency margin does not apply in the first two years of operation.
  The Board of Trade's existing powers under Section 14 of the 1958 Act to investigate a company alleged to be dubious have proved insufficient. We can under this Section ask for explanations, accounts, and so forth if a company appears to us to be insolvent, but we cannot properly act simply on suspicion that there may be trouble falling short of actual insolvency. Moreover, if we do act and a company refuses to give information, we have to go to the courts to get authority to appoint an inspector. We then have to show that we have reasonable grounds for doubting the solvency of the company. To act without reasonable grounds, or, in other words, without grounds sufficient to stand up to the test of legal challenge, would not only be likely to fail and to incur severe criticism from the courts but the result might be to undermine a company which otherwise might have maintained its solvency and so damage the policy holders as well as everyone else. We have, in these circumstances, in a number of cases, by private consultation with companies, enabled them to pull round and so protected the policy-holders without any damaging public rumours.
  Details of these cases cannot be revealed because the affairs of the companies in question cannot be disclosed by the Board of Trade. Indeed, everybody would suffer if they were. In other cases we have been warned, from what appeared to be very good sources, that certain companies were insolvent. We have judged it wise not to invoke our powers, and these companies have, in fact, survived and built up a strong position after a period of time. In other cases, again, we have seriously doubted the solvency of companies that have subsequently failed, but we did not have the evidence which my legal advisers judged would have proved adequate in court.
  For some time, I have believed this to be a thoroughly unsatisfactory situation. The Bill now proposes to give the Board of Trade the following new powers.

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  First of all, the Bill lays down that any insurance company starting in business, or starting in a new line of business, after 3rd November, 1966, when the Bill was published, will have to get a licence from the Board of Trade when the Bill receives the Royal Assent if it is to carry on the relevant business after that date. Any company starting up, or starting new business, after the Bill becomes law will, of course, have to get permission from the start of the business. This licensing system will apply to all classes of insurance business covered by the Act of 1958, including motor insurance. It is in a sense retrospective to 3rd November last in that any company going into, for example, motor insurance since that date runs the risk of not getting an authorisation when the Bill becomes law. Therefore, the Bill has already had some effect in protecting the motorist since November. It is not retrospective, however, in that it does not make it unlawful, or render anyone subject to prosecution, for starting a business before the Bill becomes law. In my view, that would be going too far.
  These are, admittedly, drastic powers, because they give the Board of Trade at its discretion authority to refuse an application to carry on, for example, motor insurance, without our giving any reasons or right of appeal. I must make perfectly clear that that is what we propose, but I am convinced we have got to be as drastic as this if the public is to be protected and recent abuses stamped out. Experience shows that if it were necessary for the Board of Trade to state its reasons for refusing authority—the grounds might be that we did not regard a certain individual as a fit and proper person to carry on the business—we should be in the dilemma of either authorising a highly dubious company or else having to disclose information given to us in confidence. I would also say in defence of this drastic course that it follows the system introduced by a Conservative Government in the Prevention of Fraud (Investments) Act, 1939, controlling unit trusts. This legislation appears to have worked over many years under various Governments without any serious cause for complaint.
  Sir G. Nabarro: What happens to the policy-holders if the right hon. Gentleman refuses to allow a motor insurance busi-
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  ness to carry on? They have made an investment in accordance with the requirements of the Statute to insure their vehicles for the current year. If the Board of Trade then refuses the company permission to carry on, what is the policyholders' position?
  Mr. Jay: I am coming to the existing companies. So far, I have dealt only with either new companies or companies starting in motor insurance for the first time. But I have anticipated the hon. Gentleman's question, and I shall come straight to that.
  Not only do we have to prevent the dubious new insurance business from starting up but we need power also to control a company already in existence which might be liable to become insolvent. To meet this problem the Bill empowers the Board of Trade in certain circumstances to direct an existing company to restrict its business by not undertaking any new contracts or renewals in a specified class of insurance. Contracts previously entered into, of course, would stand. This could be done only if the company had failed to fulfil obligations under this Bill or under the 1958 Act, or if the Board of Trade were in doubt about the solvency of the company or about the fitness of the persons associated with it. We have thus tried to cover both new companies and existing ones.
  There are a number of other safeguards in this matter of motor insurance. The minimum financial resources initially required by a company are increased by the Bill. Adequate reinsurance arrangements are made a condition of licensing. The Board of Trade has to be satisfied that a company is under the management of persons fit and proper to be associated with it. We are given power to obtain more information about the financial resources of insurers at more frequent intervals. The minimum solvency margin for non-life business is increased, and will apply in the first two years of business, which has not been the case hitherto. The Bill also gives us power in certain circumstances to require a company to realise unsuitable investments, and to hold adequate assets in this country. Finally, it gives the Board of Trade wider and less clumsy powers of investigation, and removes the need to get leave of the court before petitioning for a winding-up order.

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  I think that the House will agree that all these powers, when taken together, make a formidable array, admittedly drastic but nevertheless, in my view, necessary if we are to protect the public from recklessness and, in some cases, fraud by insurers. From the public's point of view, the sooner these essential safeguards are passed into law the better it will be.
  Mr. John Hall: The right hon. Gentleman has considered measures for the control of entry into insurance business by new companies and has had in mind general matters of conduct. Did he consider also how he could control entry into the business by insurance brokers who are in part responsible for some of the troubles which have been experienced?
  Mr. Jay: Yes, we have considered that. It would be much more difficult, and I hope that, if there are no longer any dubious insurance companies in business, there will be no dubious insurers to whom brokers could direct the public. However, this is a matter which could be discussed further in Committee. We have, at least, gone this far.
  Hon. Members will have guessed already from my excessively long speech that there is a good deal in the Bill. I have not covered it all yet and there is a good deal more—in the Bill, I mean, not in my speech. I shall leave the many other detailed reforms either to my right hon. Friend, if he catches Mr. Speaker's eye later today, or to the Committee stage. Any questions, of course, can be put to my right hon. Friend today.
  I should mention that Part III of the Bill amends the Moneylenders Act, because urgent clarification is necessary of the rather mysterious distinction—mysterious to laymen; I know that everything is clear to lawyers—between mere moneylending, on the one hand, and moneylending which is dignified by the name of banking, on the other.
  The House will be glad to learn that in one respect we can shorten the Bill. Certain noble Lords in another place inserted a provision which would enable companies to issue shares of no par value. A technical case can, perhaps, be made for that on the ground that the existing system can be misleading, but I
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  am not sure that no par value shares would be much less misleading. That issue is in no way related to disclosure and is in no way urgent or pressing. Therefore, it has nothing to do with the main theme of the Bill and would be much more suitable, if the case is made out, for inclusion in the later and wider Bill.
  Incidentally, we found on investigation that its enactment would also require a number of consequential changes in tax law for which at present there is no prospect of finding time. We therefore propose to omit Clause 35 from the Bill. If we did not, there would be many other reforms, of much higher priority on merits but not related to disclosure, which would have a good or possibly better claim to be included.
  I believe that the Bill, no doubt perfected in Committee and at Report stage, will contribute substantially to wider information and understanding about our company affairs, both among experts and non-experts, and therefore to greater efficiency in British industry, more intelligent investment and greater exporting capacity. As I have said, we need further legislation to carry through the further Jenkins proposals and to tackle even more drastically the wider relationship in a modern social democracy between shareholders, employees, directors and the public.
  If hon. Members give us their views on those wider issues today—and if that is in order, as I should guess that it was—I shall certainly take account of them in preparing the future legislation. Meanwhile, I am sure that it is best to accomplish now what can be done in this Session, including the immediate protection of the public, particularly the motorist.
  For those reasons, I ask the House to give the Bill an unopposed Second Reading today.
  4.42 p.m.
  Mr. Anthony Barber (Altrincham and Sale): Before I come to certain aspects of the Bill with which we on these benches are in fundamental disagreement, and which we shall oppose in Committee, I should make two points abundantly clear. First, we believe that there should be greater accountability of companies, which inevitably means greater disclosure of information. But in every case where disclosure is demanded it is incumbent

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  upon those who demand it to establish that it will serve a useful purpose. Secondly, we shall support the right hon. Gentleman the President of the Board of Trade and his colleagues in their efforts to tighten up the law governing insurance. My hon. Friend the Member for Gloucestershire, South (Mr. Corfield) will have more to say, if he catches Mr. Speaker's eye, in winding up for the Opposition tonight.
  I have no need to refer to matters which are now sub judice to establish that during the past six months or so a number of instances has come to light, particularly in the field of motor insurance, which has caused widespread concern. It is a remarkable tribute to the British insurance industry that the exposure of a few seamy operations has not tarnished the general reputation of British insurance for integrity and efficiency. But the fact that the general reputation of British insurance remains high owes nothing to Ministers at the Board of Trade.
  One of the means whereby the Bill seeks to tackle the problem is to provide that a new insurance company shall have a paid-up share capital of not less than £100,000. Last month the President of the Board of Trade was asked to publish the names of motor insurance companies which did not satisfy that criterion. The Minister of State answered the Written Question in a manner which I can only describe as appalling and as showing complete ignorance of the factors which determine whether or not an insurance company is sound.
  The Minister of State, Board of Trade (Mr. George Darling): That was not the Question.
  Mr. Barber: The Minister was asked a straightforward Question. He answered it, but it would have been easy for him to take steps to explain the significance of his factual Answer. He chose not to do so. I shall not weary the House with a whole lot of newspaper cuttings, but, as every reputable newspaper indicated at the time, the result was that the motor insurance world was thrown into "unprecedented disarray", as one newspaper put it.
  I mention that unhappy incident not to embarrass a Minister for whom we all have a very high regard but because as long ago as 8th July last year my
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  hon. Friend the Member for Worcester (Mr. Peter Walker) wrote to the President of the Board of Trade about the introduction of a short interim Bill governing the share capital of insurance companies He concluded his letter with these words:
  "The Opposition would certainly give every assistance in seeing that the Bill was passed speedily through all its stages and I know that the British Insurance Association would welcome such a measure."
  That offer was turned down, and instead of the speedy introduction last summer of a new Companies Bill to safeguard the public, priority was given to a Bill to nationalise the steel industry, a Bill of almost exactly the same length as that now before the House.
  Mr. Jay: My right hon. Friend was asked a question of fact, and if he or I are asked a question of fact by an hon. Member we are bound to answer it. We do not do it for fun.
  Mr. Barber: No, but I have had enough experience of these matters to know that if one is asked a question of fact, in addition to giving a factual answer one can add an explanation or qualification. Alternatively, it is open to a Minister at precisely the same time to take steps with the Press to ensure that the answer is put in its proper context. I repeat that I think that the way this was dealt with by the right hon. Gentleman was appalling, and that was the view taken by every financial writer throughout the country.
  Mr. J. Bruce-Gardyne: Does my right hon. Friend recall that on occasions the President of the Board of Trade, in giving factual answers which he has not liked to give, has given detailed explanations to try to put them in a different context?
  Mr. Barber: That is perfectly true.
  I now turn to Part I of the Bill, which deals in the main with the extent and the nature of disclosure by companies. The right hon. Gentleman said a few minutes ago that the theme of the Bill, apart from the urgent question of insurance, was greater disclosure. I should like to dwell on that for a little while, and I want first to say something about the principles which I believe should underlie any new proposal for greater disclosure in company accounts.

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  Originally, the main purpose of accounts was merely as an aid to the internal efficiency of an enterprise. Later, as individuals joined together in enterprises, the accounts provided information for the joint owners of the continuing businesses. It was in the middle of the last century, with the general conferment of the privilege of limited liability by the simple act of registration, that there came the pressing need for information to be made available to a company's creditors as well as its owners.
  I suppose that it is true to say that one of the purposes—one might say one of the primary purposes—of greater accountability has in the past been the prevention of abuse, and I for one accept that we are no longer concerned merely to safeguard the shareholder and creditor but also to stimulate industrial and commercial efficiency. One of the ways of doing this is to provide sufficient information for discerning investors.
  It is just because we in Britain have a sophisticated capital market and because we in the Conservative Party believe in a market economy that we take the view that the provision of adequate information makes a real contribution to industrial efficiency and so to the best use of our available resources. But if the disclosure of information is necessary to safeguard the shareholders and creditors, and if it is an aid to efficiency, it does not follow that there should be disclosure without limit and we believe that, in a number of instances, the requirements for greater disclosure in the Bill and the intentions which the right hon. Gentleman has made known today go too far.
  But, lest there should be any misunderstanding, I should make it clear that we take our stand on the criteria laid down by the Jenkins Committee. The right hon. Gentleman said that he paid high regard to the Committee. But I shall show that, in the case of disclosure, the Government do not accept the Jenkins Report. When the previous Companies Bill was before the House in February, 1966—it lapsed with the end of the last Parliament—I quoted a passage from the Jenkins Report which I still believe should govern the nature and extent of company disclosure, and the argu-
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  ments which I then adduced were never refuted. Throughout the whole of the proceedings on this Bill in another place, no explanation was ever forthcoming as to why the Government rejected the view of the Jenkins Committee and today once again the right hon. Gentleman said, as a result of an intervention by me, that he did not accept the recommendations of the Committee on disclosure affecting 400,000 companies in this country and he gave us no explanation as to why.
  Therefore I make no apology for again quoting paragraph 13 of the Jenkins Report, for I believe that it is basic to this whole question. This is what the Report said and it is what I accept:
  "While … we share the views of the Cohen Committee as to the importance of ensuring that companies should make available to shareholders, creditors and the general public as much information as is reasonably required, we also recognise the importance, where the desirability of some proposed new statutory obligation to provide information is in question, of considering whether the additional information would be of any real value to the persons receiving it, and if so whether its ascertainment would involve an amount of work disproportionate to its value, or its publication might be detrimental to the company's business, and thus indirectly to its shareholders and creditors."
  These are the criteria which the Government should have applied to the 400,000 companies which at present have the status of exempt private companies. Within this category is every single one of the small incorporated family businesses. The Government are taking in the Bill powers to compel every single one of these family businesses to make public information which will in no way contribute to efficiency and will in many cases be detrimental to the business. Furthermore, the Government are doing this against the unanimous recommendation of the Jenkins Committee on Company Law, which was set up by the last Government to advise on this very matter.
  Mr. Kevin McNamara: There is some concern here for the small family company, which one can appreciate. Would the right hon. Gentleman be willing to take a certain fixed level—say, £15,000 or £10,000 in assets—and say that below that level there would be no need for disclosure?
  Mr. Barber: Perhaps I can come to that point in a moment. The point now is that the President of the Board of Trade, without explanation, is taking steps which will seriously affect hundreds of thousands of companies. The attitude of the Government to the family business was epitomised in the attacks already made upon it by close company provisions and the Selective Employment Tax and this further attack does not therefore surprise me. I will be more specific.
  It is common ground that, among the 400,000 exempt private companies, there are a number of very large enterprises. It is also common ground that the overwhelming majority are small. I readily grant to the Government that there is a case for some additional disclosure by all these companies, small and large. But, of course, the Government in the Bill have gone beyond what the Jenkins Committee recognised as reasonable, and this is where we take issue with the right hon. Gentleman.
  Since hon. Members opposite appear to be in some doubt as to whether my remarks about the attitude of the Government to small businesses are reasonable, I will refer them to what the Lord Chancellor said in another place, for he made quite clear what his own attitude was to this type of business. He said:
  "I think that most lawyers and accountants would agree that, apart from any other factor, the exempt private company has really been the backbone of all the most successful tax frauds and tax evasions that there are."—[OFFICIAL REPORT, House of Lords, 22nd November, 1966; Vol. 278. c. 130.]
  The implication of those words is wholly unwarranted and I am speaking with five years' experience at the tax bar and as a Treasury Minister for a number of years, when I had some responsibility for the Inland Revenue. What the Lord Chancellor said there about these 400,000 companies is simply not true.
  If it is necessary, in order to protect those who trade with small family businesses and who extend credit to them, and if it is in the public interest, to compel these companies to file information about their affairs, I have no objection and I make it clear that I am prepared to lend all my support to any public disclosure to the extent that it is necessary for this purpose. But in the case of the small companies—and it is
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  these with which I am dealing—the Government have gone further and have gone against the advice of the Jenkins Committee.
  Jenkins recommended that the distinction between exempt and non-exempt private companies should be abolished. The hon. Member for Kingston upon Hull, North (Mr. McNamara) appears to take the same view as a great many of my hon. Friends—that it is going too far to abolish altogether the status of exempt private companies, and that there is perhaps a case for keeping that status in respect of companies with net assets of less than a specified amount. I want to be perfectly fair. I believe that there is great attraction and merit in this proposal, but, having looked into it, I am doubtful as to whether it is a practical proposition. I hope, as there is considerable force from many reputable quarters behind this suggestion, that there will be an opportunity in Committee of going into this very fully, because if it should be the case that this provides a practical solution, then it would probably be the answer to most of the criticisms which I am levelling against the Government.
  Mr. John Hall: Would it not be a possible solution that companies below a certain level and size should apply to the Board of Trade for exemption and the Board of Trade would have the power to make a decision?
  Mr. Barber: This is another way of approaching the matter, based on the same principle which I was putting forward. That certainly ought to be looked into. But let us assume for the moment that the hon. Gentleman the Member for Kingston upon Hull, North and others on this side of the House do not get their way, then even so I can see no reason at all why the Government should not accept the recommendations of the Jenkins Committee, that certain matters which have to be disclosed by a public company should not be disclosed in the case of a company whose securities have been neither quoted nor offered to the public.
  This was the advice of the Jenkins Committee, and it has been turned down. We have never had, last February, during the whole of the proceedings in another place or today, any explanation as to why the right hon. Gentleman will not accept this.
  Mr. Jay: The right hon. Gentleman says that I have put forward no explanation. I have given the explanation that in our view limited liability is a privilege. We feel that with the privilege there should be obligations of disclosure. The right hon. Gentleman may not agree with us, but that is our explanation.
  Mr. Barber: I do not think that it is a very convincing argument merely to say that one is giving a person privileges and that they therefore have obligations. What we want to know is what is the purpose of imposing the obligations? What good will it do to provide the information which the Jenkins Committee said should not be provided by these small companies? On this the Jenkins Committee was precise and specific and I cannot improve on its language. At paragraph 352 it says:
  "We recommend that companies whose securities have been neither quoted nor offered to the public and which are not subsidiaries of companies whose securities have been quoted or offered to the public should be permitted to withhold from accounts filed with the Registrar of Companies … the information … about the directors' emoluments … the details of turnover …"
  and other matters there mentioned. It is the case that neither Parliament nor the country has ever been given the reasons why the right hon. Gentleman thinks that it will help to improve the efficiency of industry if these 300,000 companies concerned have to provide this information.
  Mr. John M. Temple: Would not my right hon. Friend accept that there is another argument in support of his case and that is that already the accountancy profession is over-burdened with work and this will put an additional strain upon it and upon the Registrar of Companies which is quite unjustifiable?
  Mr. Barber: This is true, and it is a practical consideration, which I believe was mentioned in another place. I would prefer, because of the time available, to limit myself to the issue of principle. I ask the House to consider, for example, the reasoning behind the recommendation of the Jenkins Committee over the disclosure of turnover. I repeat that I have no objection at all to the disclosure of turnover by a public company, a quoted company. I am concerned here with something approaching 300,000 small companies, including all of the
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  small family businesses in the country. It is right that these companies should know what the Labour Government intend to compel them to do.
  Let me give an example. The small incorporated family business, with one shop in, say, Manchester, will in future have to publish its turnover to the world. Anyone will be able to get hold of that information if this Bill goes through, but the small company's principal competitor, with a chain of shops throughout the country, including one in the same street in Manchester, will not be obliged to publish any information at all about its turnover in Manchester.
  The result will be that once again the Government will be deliberately loading the dice against the small business. What I have said is factually correct and cannot be denied. This is a grossly unfair provision. In the first place, it will lead to unfair competition because the chain store company will have all the information that it wants if it wishes to put the small, single shop company out of business, while the single shop company will have no comparable information about its larger competitor.
  Secondly, this disparity of information disclosed by the small and large company will be nectar to the take-over bidder who will be in a position to make a bid, not as the result of equality of treatment, but of disclosure, favourable only to the larger store.
  Mr. Joel Barnett: The right hon. Gentleman talks about the advantage to a take-over bidder. He is surely talking about small private close companies which presumably would be wholly-owned by the shareholders and directors? How would it help if someone else has the information? They are still perfectly entitled to refuse to sell.
  Mr. Barber: Of course they are entitled to refuse to sell. But Tartan Arrow had no need to sell until pressure was brought upon it, and it had to sell. [HON. MEMBERS: "Answer."] I will
  answer. The point that I am making is that the small company will have to provide information such as the details of its turnover in respect of a specific enterprise, while the large company, in direct competition, will not have to give that information. That is grossly unfair, and

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  that is why we shall oppose it in Committee. I have used the illustration of a shop, but the same principle applies throughout the whole of industry and commerce.
  Then there is the proposal, which the right hon. Gentleman confirmed today, that every small incorporated family business should be obliged to publish to the world details of the directors' emoluments. Again this proposal is against the advice of the Jenkins Committee and we have been given no indication of what good, in the eyes of the Government, this disclosure will do. Let me make two matters clear.
  I have no objection whatever to the publication of directors' emoluments in the case of public companies. Indeed, disclosure in their case will, I am sure, inevitably push up the salaries of some of our senior executives and, incidentally, will finally ensure that the Government are forced to pay the rate for the job to the members of the National Steel Corporation, which will be a very good thing. The second matter which I want to make clear is this. Of course the directors' emoluments in even the smallest incorporated company must be made known to the shareholders of that company. No one would complain about that, but what we object to is that the salaries of the man and his wife, running a grocers shop somewhere as a limited liability company, should be made public to every inquisitive busybody in the town.
  I would accept this if I could see some useful purpose in it. Here again we take our stand on the Jenkins Report. In paragraph 351 it says:
  "We recognised, … that some information required in the accounts, while of interest to the members, was not of prime importance to creditors, and that its public disclosure by some small companies might be embarrassing to them; we had in mind particularly the requirement to disclose directors' emoluments, To meet this, in our opinion well-founded objection to general disclosure we would give a limited exemption to companies whose securities had been neither quoted nor offered to the public and which are not subsidiaries of companies whose securities have been quoted or offered to the public. While requiring such companies to circulate full accounts to their members and their debenture holders, we would permit them to exclude from accounts filed with the Registrar of Companies:
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  (1) the information about directors' emoluments."
  I hope that the Minister of State, when he replies, will deal specifically with the recommendations of the Jenkins Committee, to which I have referred. That reasoning which I have quoted seems to be beyond reproach. This affects the directors of 300,000 companies, and, it includes every single small incorporated company throughout the length and breadth of our land. This is a matter of importance, and we are entitled to have an explanation as to why these specific recommendations have been thrown overboard. We stand by that recommendation and we shall do everything in our power in Committee to see that it is reflected in the Bill.
  There are two other matters of disclosure to which I want briefly to refer. The provision compelling companies to publish the value of goods exported by them will, I believe, prove to be both misleading and dangerous—[An HON. MEMBER: "And abortive."] And, as my hon. Friend said, abortive. It will be totally misleading in the case of those companies which do not export directly, but, as my hon. Friend pointed out, supply components to other companies who then export the finished product.
  It will, I believe, be positively dangerous in some cases, because the information to be published will—I agree that this applies only to a limited number of cases—provide our overseas competitors with just the information they want in order to give them the edge over the British manufacturer of similar products.
  Sir G. Nabarro: Would my hon. Friend not agree that we are all interested to see exports promoted but with the objective of improving permanently our balance of payments; but why, in this context, are exports more important than imports? Is it not essential that companies should minimise their imports and maximise their exports if we are to get the greatest, the best, the optimum, balance in our trade arrangements in the future? If we disclose exports, why not disclose imports?
  Mr. Barber: I have no doubt that an Amendment—perhaps a probing Amendment—to that effect will be put down in Committee, but I doubt whether my hon. Friend will ever get a satisfactory

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  answer. If the Board of Trade wants this information, by all means let it be supplied to the Government, but on a confidential basis?
  On 21st February, last year, I elaborated our objections to this proposal, and I do not intend to repeat them today. We shall certainly return to this provision in Committee.
  In answer to the point which the right hon. Gentleman made about this proposal when he moved the Second Reading, if he really thinks that the publication of these export figures by various companies will really be an incentive to companies to increase their exports, then he has not the remotest idea of what makes industry tick. That is why my hon. Friend is perfectly correct in pointing out that not only is this proposal misleading and dangerous, but it is also abortive.
  Mr. Temple: Perhaps the President of the Board of Trade requires this information in order to help his right hon. Friend the Prime Minister to prepare a future Honours List.
  Mr. Barber: That is always a possibility. Finally, regarding disclosure, I want to comment on the requirement to disclose charitable and political contributions.
  When the Second Reading of the previous Company's Bill was debated last year, the significance to the Government of this proposal, which was then limited to political contributions, was apparent from the extraordinary fact that the Minister of State, in opening the debate, spent almost half his speech in dealing with this particular Clause. I can dismiss it with a couple of sentences. The new provision for the disclosure of charitable contributions and the provision for the disclosure of political contributions are both mean and irrelevant—[Laughter.]—and they will make no contribution—I hope hon. Members will laugh at this—to an increase in industrial production which, under the Labour Government, has now fallen back to the same level as October, 1964. Those are the latest figures.
  That is the only comment I make on these provisions. I have no doubt there will be many Amendments moved in Committee to deal with the position of
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  charities which may well be affected by these Clauses.
  I turn now to one important change made in the Bill in another place, namely, the inclusion of provisions permitting the introduction of no par value shares. I was bitterly disappointed when this afternoon the right hon. Gentlemen rose and said that he would take out of the Bill these provisions which are universally desired throughout industry, finance and commerce. Indeed, every argument of logic and common sense must lead anyone to the conclusion that shares of no par value should be permitted.
  We should be indebted to my noble Friend, Lord Eccles, for his persistence and ingenuity in another place in moving this Amendment. The introduction of shares of no par value would certainly add to the clarity and accuracy of company accounts and would avoid the present nonsense of declaring dividends as a percentage of nominal value which bears no relation to reality.
  There is everything to be said for the introduction of shares of no par value, and, indeed, the Minister of State in another place said that he personally—and, after all, he has had some experience of business—found the proposal acceptable. The President of the Board of Trade's attitude really is incredible since, as the Bill comes to us from another place, these provisions are incorporated in it. If the right hon. Gentleman cannot get his advisers, and, in particular, his Parliamentary draftsmen, to knock them into proper legal shape and to include these provisions in the Bill—provisions which I believe would be almost universally accepted—then I can assure him that when he moves his Amendment in Committee to delete these provisions, it will be bitterly resisted by my hon. Friends.
  The Bill, when it started in another place, was a better Bill than that which was introduced in February last year and which lapsed with the General Election. It is all the better for the scrutiny and the Amendments which have been made in another place. I hope the House will join with me in paying a tribute to the work of another place in making our task in this House all the easier.
  When this matter was last debated in the House a year ago, there were complaints that various matters had not been

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  covered, such as directors share dealings, the position which arises where directors have an interest in contracts entered into by their company, and so on. Many of these matters are now covered and they will require careful consideration in Committee. There are, of course, still many omissions, and it would take me a long time to detail them.
  We are told that we are to have a second Companies Bill during the lifetime of this Parliament. We shall believe that when we see it. However, we have already been given a hint of what is in the Government's mind. The right hon. Gentleman this afternoon issued an open invitation to both sides of the House to suggest what might be included in the second Companies Bill. It was quite significant that during the Second Reading in another place the Lord Chancellor said
  "The Government will hope to be able to deal in the other Bill with the question of the protection of minorities …. as the success or failure of a company naturally depends so much on those who work for the company, the employees—of whether they ought not to have a more settled place or places on the board of directors of the company by which they are employed than English law allows them now"—[OFFICIAL REPORT, House of Lords, 22nd November, 1966; Vol. 278, c. 136.]
  But, of course, there is nothing whatever in the law at present—and I am dealing with the law at the moment—to prevent an employee from being elected to the board of directors. I am now coming to the point of substance [An HON. MEMBER: "The Lord Chancellor is a lawyer."] The Lord Chancellor is supposed to be a lawyer. There is nothing in the law to prevent this at the moment. I put it to the right hon. Gentleman and his colleagues that if the Government are thinking of making it a legal reqirement that representatives of trade unions should sit on the board of directors, I would, since the right hon. Gentleman has invited us to give our views, quote the words of a very respected trade unionist, Mr. Leslie Cannon, the General President of the Electrical Trades Union. It is useful to get this on the record so that before the next Bill comes along this aspect can also be considered. It clearly runs counter to what hon. Members opposite seem to want and what, apparently, the Lord Chancellor had in mind. Mr. Cannon said:
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  "They"—
  that is, the unions—
  "certainly want to be involved in discussions to increase the efficiency of the enterprise in which, after all, they have to earn a living and to feel part of the complete scheme of things. A line must be drawn at their participation in management. It is my view that little can be gained by such participation. If trade union representatives are in control of an undertaking they will require, quite properly, to take into consideration the views of other interests in the process of decision making. They will, in other words, be acting as managers and no longer as trade unionists. If, however, they are in a minority they will have no control over decision making and there is a danger that due to their participation in decision making they might be inhibited in the use of their countervailing force as trade unionists. The likelihood is that they would receive the odium of being obstructionists from their management colleagues and the odium of being collaborators from their trade union colleagues."
  I thought it right to quote these words to the House in the light of the hint given by the Lord Chancellor which may reflect the thinking of right hon. and hon. Members opposite. No one should lightly disregard the view expressed by Mr. Cannon.
  I have deliberately concentrated on those issues on which there have been, or still are, differences of opinion between the Government and the Opposition, but taking the Bill as a whole we in the Opposition welcome it and we shall do our best in a constructive manner to improve it in Committee.
  5.22 p.m.
  Mr. Ben Ford: I wish to draw attention to Clause 13. It has not been mentioned by either Front Bench speaker. It was mentioned very airily in passing by the Lord Chancellor in another place during the Second Reading debate. It is quite important to a large number of people who are in business on their own account. It deals with the qualifications of auditors.
  The Explanatory Memorandum states:
  "Clause 13 allows the Board of Trade to authorise a person, who was on 3rd November, 1966, auditor of an exempt private company and had for the previous twelve months been in practice as an accountant on his own account, to be auditor of companies of the class mentioned in subsection (1). The Clause also permits a person, who is auditor of an exempt private company but who as a consequence of the abolition of that status would not otherwise be qualified, to continue as auditor of the company for a limited period."
  This refers to the transitional arrangements mentioned in the Jenkins Report.

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  The nub of the matter is this. The Board of Trade will no longer be able to authorise a person to be auditor of a company simply because he practised as an accountant before 6th August, 1947.
  In pursuing this Clause, the Government are in danger of throwing out the baby with the bath water. I think that we would all agree that it is not desirable for auditors to be members of or associated with companies for which they are carrying out the auditing, but there are a number of associations of auditors which hold examinations which, in some cases, they maintain are comparable with the examinations held by the chartered institutes which are not recognised by the Board of Trade under Section 161(1) of the Companies Act, 1948.
  Putting my case in a nutshell, to put this provision in the Bill is the back-door way of trying to squeeze out the small man. We heard something about the small man during a recent debate on a Private Member's Motion. The President of the Board of Trade is advised by his Department and his Department is advised on accountancy matters by a committee upon which are representatives of the chartered institutions and nobody else. Therefore, one perhaps could be forgiven for assuming that the advice of that committee would tend to be slightly biassed.
  I suggest to the President of the Board of Trade that he might reconsider his attitude to certain of the non-recognised bodies under Section 161(1) of the Companies Act, 1948, or he might consider including, under the present qualifications in the Bill, the possibility of recognising accountants who are members of bodies which were in being prior to 1935. Such bodies, at least one of which I have knowledge, have been holding their own internal examinations for many years. At present non-qualified people are not admitted, and this was possibly the case post-war.
  I urge the President of the Board of Trade to give thought to these matters. Perhaps we shall have the opportunity to discuss them with him. I am making only a short intervention, but if necessary I would be tempted to debate the matter at length.
  Mr. John Hall: Would the hon. Gentleman agree that members of highly
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  reputable bodies such as the Chartered Institute of Secretaries are also caught by Clause 13?
  Mr. Ford: I would agree. I hope that in Committee we shall have an opportunity to discuss these matters at length and to put some of these little injustices to rights.
  5.28 p.m.
  Sir John Vaughan-Morgan: The hon. Member for Bradford, North (Mr. Ford) will forgive me if I do not follow his argument in detail. He made a very cogent speech which was commendably short. I think that the whole House would agree with him. If he is condemned to servitude on the Committee, we shall probably be so won over by his eloquence that we shall join him, if necessary, in voting against the Government.
  The President of the Board of Trade introduced the Bill with a very happy speech—a happier occasion than last year's when he was ill. We could almost certainly have begun the proceedings today by singing "Happy Birthday" to the Bill so much improved on last year's version. The prime object of the previous Bill was to introduce the Clause about political contributions. This year's Bill has been made more respectable by the addition of the cloak of charity. It is typical of the priorities of the party opposite: politics first and charity second.
  There are some other rather odd omissions from the Bill and I deeply regret that the President of the Board of Trade has not found it possible to include some of them. One rather craven omission is the tackling of the whole problem of non-voting shares. This is a matter on which the Jenkins Committee deliberated and on which there has subsequently been very much talk and such action in certain quarters. Today, we might at least have had some views from the President about his line of thought in this matter.
  There are other matters, which I should have thought could be included without great difficulty, in which company legislation lags behind the demands of the Stock Exchange Council. I do not want to elaborate too much because I know that many hon. Members wish to speak. I deeply regret, however, that

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  the right hon. Gentleman has told us that he will move to delete the Clause about the no-par-value shares. One of the cheering things about the debate in another place and about our debate last year was that some hon. Members opposite were beginning to see this as a reasonable and sensible proposal, and only an old-fashioned socialist prejudice inhibits them now.
  The other matter which I regret the President did not deal with and which many people must have in mind is the machinery for the policing of companies. We all know that the Board of Trade is always about three scandals behind and it is the recent spate of insurance scandals that has hastened the Bill. We know that the Companies Department is understaffed and overworked and that legislation is cumbersome and always trying to catch up. In view of all that has been said, however, we might have had more from the President about this.
  The Board of Trade—this is not a party matter; it is true—is always locking the door not only after the horse has escaped, but in some cases after it has died from exposure in the public Press. I hoped that the President might indicate to us that he was beginning to consider whether the time was not coming when we should not see whether the American model of the Securities and Exchange Commission might not be more suited to our need, than the Board of Trade. I am not arguing the case one way or the other—I do not know enough about it—but I have been impressed by the more positive and speedy action that the S.E.C. in America can take, and I am disappointed that the President had nothing to say today.
  The Board of Trade has most of the powers of the S.E.C. except, I understand, the right to subpoena, but it operates under ministerial aegis and is responsible to Parliament, as, in a sense, the S.E.C. is responsible in the long run to Congress. I think, however, that the fact of ministerial responsibility inhibits some of the actions that might have been taken in some cases.
  As both Front-Bench speakers have pointed out, the main purpose of the Bill is greater disclosure, and rightly so. We live in an age when frankness is all, and we are enthusiasts for the disclosure of other people's affairs. There is no doubt that in the case of quoted com-
  390
  panies, shareholders and the institutions which are now the largest shareholders are supine and not nearly active enough in keeping the boards of directors up to the mark. We all owe a great debt to the financial Press, which does some of the work which shareholders might do for themselves.
  I certainly favour greater disclosure for quoted companies, and also for unquoted companies where there is no reason for exemption if they are large and established. I must, however, add my plea to that of my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) that there should be an exception for the small and budding business when disclosure might give a competitor, foreign or home-grown, unfair and unreciprocated advantages. Of course, the public interest demands in the main greater disclosure, but it must be seen to be in the public interest and proved not to damage irreparably other partial interests.
  The President of the Board of Trade rehearsed his arguments twice over. He told us—this was his only argument—that limited liability is a privilege, and that is perfectly true. What he did not say was whether, over the enormous field of 300,000 or 400,000 companies, that privilege had in the main been abused. The right hon. Gentleman is seeking to withdraw a privilege which has not been abused by the vast majority of companies for an undisclosed reason, a privilege which cannot in any way damage the public interest. The onus is still on the right hon. Gentleman to show a better reason than that for altering this law.
  It is no answer to say that these companies can be unlimited or partnerships. We all know of the many cases where there are sleeping partners who merit the protection of limited liability and where the company cannot operate as a partnership. If these pleas fall on deaf ears, I refer the President to the remarks made in the debate a year ago by the hon. Member for Stepney (Mr. Shore), who has now disappeared into the limbo of the Government and has become Joint Under-Secretary of State of the Department of Economic Affairs. The hon. Member gave what I regarded as an excellent argument. He said:
  "no one should imagine that this will not be an immense clerical job."

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  The hon. Member added later that
  "someone has to register and collate all this information."—[OFFICIAL REPORT, 21st February, 1966; Vol. 725, c. 63.]
  If this task will require a bigger and better bureaucracy, there must surely be far more worthwhile tasks in this field that it could carry out.
  I was delighted to hear the hon. Member for Kingston upon Hull, North (Mr. McNamara) suggest that exemption should be given on a certain basis. For my part, this would meet most of the difficulties. We all have different ideas, and I am not impressed at this stage by the argument that it is administratively impossible. It should be perfectly possible to fix a limit when the net tangible assets were below a certain sum or the annual turnover was below a certain figure. Such companies should have exemption, not from filing their accounts, but from disclosure of turnover and directors' emoluments.
  If it is impossible to have that exemption, I suggest that the Board of Trade should operate a separate register and that the President could authorise companies on application to be included in that register rather than in the public register. There must be many ways in which it could be done and it cannot be entirely beyond the imagination of the Board of Trade to find a solution to this problem. Otherwise we shall finally kill off some valuable family businesses and stifle great corporations in embryo at a stage when they are "viable but not quotable". Apart from that, I am all in favour of disclosure.
  I find it rather oddly squeamish that the President of the Board of Trade is still not as far advanced as the Americans and that salaries are to be quoted in "bands". If we get as far as that, I see no reason why names should not be given. Anybody will be able to work them out by comparing one year's annual report with another.
  The proposals concerning export figures, however, are the most ridiculous of the lot. For what purpose are they to be disclosed? To help the creditors? Will the President of the Board of Trade or the Exports Councils spend time going through the files of companies to see whom they should chase to export more? Is it to help foreign competitors? It
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  would be most useful to my own company to know of our foreign competitors' experience. If companies wish to boast of their exports, they can do so. Nothing sounds better than for the chairman or managing director to say how many countries he has visited in the company's interest, but he is wise not to be too specfic when it comes to details.
  This stems from the curious theory of the present Government that exports are always good and imports are bad. But there should be provision for the exemption from such disclosure of some firms and groups of firms, particularly those in the capital goods business, where these details can be extremely damaging.
  I find all this slightly odd. As the President of the Board of Trade and I both know, in his constituency there is a large factory making carbon brushes, and about 45 to 50 per cent. of its production is exported. I am never certain why it is virtuous to ship carbon brushes abroad to be included in Volvos or Volkswagens which are brought back to this country, but wrong to send them to Coventry to be included in motor cars which are then sent to the American market. The whole idea is completely "cracked" and based on a curious sense of values.
  And now, we are promised yet another Companies Bill in the lifetime of this Parliament. The right hon. Gentleman says that such a Bill will deal with the whole philosophy of the Company. I dread such a Bill. Its philosophy will be false, its politics worse and, judging from recent trends in taxation, its economics will be disastrous.
  There is only one fundamental philosophy needed for companies, and it is high time that someone said it and that it was realised. It is to earn the highest return on its assets. That, incidentally produces in the long run the best employers and is best for the consumer. However, I fear that we shall have woolly phraseology woven into the text of the Bill about "social accountability", which somehow is never applied to the large nationalised corporations but only to private businesses. It is monopoly, not profit, which is the ugly word; and it is still monopoly, whether it is public or private.
  I dread such a Bill, drafted by men who do not believe in private enterprise and who deride profit-making.
  5.42 p.m.
  Mr. Brian Parkyn: This Bill does not fill our bellies with fire, it will not change the basic structure of our industrial society. It is not revolutionary. It is hardly controversial, and I am surprised at some of the arguments which have been advanced by hon. Members opposite. Even Clause 18, relating to the declaration of donations for political and charitable purposes, only brings companies into line with trades unions and co-operative societies.
  It is true that the Bill contains many necessary reforms of the 1948 Companies Act, but it follows fairly broadly the recommendations of the Jenkins Committee on Company Law, and might have been brought to the House by right hon. and hon. Gentlemen opposite at any time after May, 1962, when its Report was published.
  Following on the remarks made by the hon. Member for Reigate (Sir J. Vaughan-Morgan), there is a great deal of substance in the problem of the declaration of information concerning exports. That is the only part of the Bill where there are practical difficulties, where there could be real dangers for certain firms, where it might be necessary to have certain provisions for contracting out of the obligation since it could provide a good deal of useful information in certain countries and where, inevitably, one has the problem of firms which do not export goods but know-how under licence agreements which most firms would regard as a form of invisible exports. There are tremendous problems, and it is a matter which merits careful consideration.
  To get back to the Bill, it is a timorous reform, and I hope that soon, as the President of the Board of Trade has indicated, we may have a Companies Bill which will transform the relationship between the four essential elements which go together to make an industrial enterprise. Those are the shareholders or owners, the customers of the enterprise, the community at large and, of course, the employees.
  This Bill and much of the earlier legislation dealing with companies has been concerned with the obligation of a company to its owners or shareholders. In a society where we have still largely a market structure, the obligations of a
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  company to its customers are discharged by supplying the right product or service at the right price. Provided that a free market is maintained by adequate monopoly legislation, a company will not sell its products for long if the price and quality are not right. In other words, it is self-regulating.
  The obligations of a company to the community at large, which is the third main element which goes to make up an industrial enterprise, are covered by the various Factories Acts, by the alkali legislation, and by those provisions in this Bill such as Clauses 17 and 19 which require more detailed information to be provided on turnover, types of business, and so forth.
  I come, then, to the obligations of a company to its employees. I am not just referring to conditions of work, rates of pay, or bonus schemes, but to the real obligations of a company to its employees.
  No company can make profit without owners, without customers and without workers. I have been associated for many years with a chemical company, Scott Bader and Company Ltd., which owns itself entirely. However, because of the present company law, we cannot directly own ourselves, and so we have a holding company, Scott Bader Commonwealth, which owns the share capital of the trading company. Each employee is an equal member of the holding company and, in that way, he helps control the trading company and the directors of the trading company. My hon. Friend the Member for Bilston (Mr. Robert Edwards) is also associated with the enterprise, being a trustee of Scott Bader Commonwealth Limited.
  The information which the directors report to their owners—the employees—is considerably more comprehensive than that required by the Bill. The directors are subject to a good deal of questioning and examination by the owners, and, because the owners are also employees, the questioning is always well-informed and often, though not always, constructive.
  It is not a large industrial enterprise, but, with a turnover running into several million £s, it is large enough now to indicate that direct worker participation in management and ownership works.

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  I should like to add a point here. It is that one should not believe that one will have success and bring workers and management together merely by electing directors to a board. Experience in Germany has shown that that kind of thing does not work. The right hon. Member for Altrincham and Sale (Mr. Barber) made that point very strongly during his speech, and I support what he said.
  I am coming to the view increasingly that there is a great deal to be said for having a non-executive board of directors. In the old days, when one had non-executive directors, who probably wore their top hats and did not really know what the company was doing, they did not confuse their jobs as directors with those of managers and executives in the company.
  A great deal of trouble is caused nowadays by people who are directors and also managers confusing the two responsibilities, and I believe that there must be much more worker participation in organisations. I believe in the common ownership of the means of production, distribution, and exchange, and we must work towards this end. I do not believe that we shall achieve what we want by assuming that by taking directors from trade unionists we will overcome this problem.
  One naturally looks at the Bill to see whether it is pointing in the direction of the common ownership of the means of production, distribution and exchange, or at least whether it is vaguely pointing in that direction. I think that it is pointing in the right direction, just. It is a good Bill, with the exception perhaps of the question of exports which I mentioned earlier. It is good as far as it goes, but, like the little girl licking her third ice cream, it does not go far enough. Why should not the full accounts and balance sheet and detailed, unabridged, unbowdlerised directors' report now required by Part I be available to each employee, in addition to the shareholders, the Board of Trade, and the Inland Revenue? I am all for exposing as much as possible of company affairs to break down the embarrassing feelings which exist between both sides of industry. They probably arise because
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  both sides of industry become suspicious due to a lack of knowledge.
  My argument for doing this is not based on political theology—I am not a fundamentalist in any sense of the word—but, on the changing nature of industrial enterprises since the limited liability company was invented about 100 years ago. There have been two principal changes in this time. First, and this has already been touched on by an earlier speaker, the enormously wealthy private investor, often willing to take considerable personal risks with his capital, has been largely replaced by insurance companies, unit trusts, and other forms of institutionalised capital investors—in general unprepared to take commercial risks on the scale of the mid-nineteenth century capitalist.
  Secondly, the investment in an industrial enterprise nowadays by employees of their skill and experience, both in management and on the shop floor, is a far greater factor in the success of the company than it was 100 years ago. For these reasons I believe that the Bill should make it mandatory for all employees to be given annually a full copy of the balance sheet and directors' report of the company of which they are a part, just as much a part as the shareholders of the company.
  Mr. John Hall: We are very interested in what the hon. Gentleman is saying, and I think that some of his ideas would command support on this side of the House, but, with regard to his proposal that it should be made mandatory to issue a copy of the full balance sheet and directors' report to every employee, would not he agree that it would be necessary to explain it very fully, perhaps even by running a course on how to read and understand balance sheets, otherwise many people would arrive at the wrong conclusion?
  Mr. Parkyn: That is an important point. There is no doubt that amongst many workers there are people who know how to read balance sheets, but we have found in our company that an explanation of certain aspects of the balance sheet is necessary, and this needs to be a two-way discussion so that questions can be asked and answered, perhaps by the company secretary or someone like that.

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  During the Second Reading of the Bill in another place last November the Lord Chancellor said that it was the intention of the Government to introduce a further Companies Bill in the lifetime of this Parliament. I was delighted to hear what my right hon. Friend the President of the Board of Trade said a short time ago, which indicated that perhaps even during this Second Reading debate we might consider a little further where this is all going. This is good news and I hope that when the Government consider this further legislation—and it is highly overdue—they will realise that the Jenkins Committee was far too restricted in its terms of reference really to run over the whole gamut of the relationship between workers, directors, shareholders, customers, suppliers, and the community at large. I hope that the Government will frame their new legislation around the Socialist principle of worker participation in management and common ownership.
  5.56 p.m.
  Mr. Anthony Grant: In his enthusiasm I thought that I was going to follow the hon. Member for Heywood and Royton (Mr. Barnett). I was prepared to say, "It was always a pleasure to follow the hon. Gentleman", because he is about the only Member on the Government side who knows anything about the subject of company law, but since I have listened to the interesting speech of the hon. Member for Bedford (Mr. Brian Parkyn) I am pleased to say that this is a red, or blue, letter day, for there is yet one more Member on the benches opposite who knows something about this subject and takes an interest in it.
  We listened to the hon. Gentleman's speech with great interest. It is obvious that he is enthusiastic about the arguments he advanced, and I share his views about encouraging share ownership. I was interested in the experience in his company. My only reservation is that perhaps it is better to encourage employees to spread their investments, rather than put all their eggs in one basket.
  I was glad that the hon. Gentleman reiterated the point made by my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) on the question of directors of boards being compulsorily made up in part by trade unionists or
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  employees. I think that if one goes into the realm of future philosophy, as the President of the Board of Trade invited us to do, this may be very tempting, particularly to hon. Gentlemen opposite, but I think that it can be scotched by quoting the remarks made at a recent conference, which follow the line of thinking of the hon. Gentleman and of my right hon. Friend.
  Referring to the participation of workers as directors on the boards of companies, the speaker said:
  "It is not possible to believe that any worker director in a company … would be content with anything less than the maximum wages obtainable from that particular company, without any sort of regard to the general wage levels available for those skills in other comparable companies."
  Precisely the same considerations would apply if there were consumer directors compulsory on the boards of companies. They would be concerned solely with the question of price, and between these two the directors would fail in the duty which they have to maximise the profits of a company. The person who said those wise words was none other than the hon. Member for Manchester, Cheetham (Mr. Harold Lever), who now adorns the Treasury Bench as a Minister, and I commend them to anybody who is minded to follow this line.
  The limited liability system is, of course, the basis of a free capitalist economy, and that it should work efficiently and honestly is vital to the economic health of the nation. It is wrong to regard it, as some do, as an occult, faintly dishonourable, device manipulated for the benefit of sharp financiers in the City of London, because everyone in the country—be they company directors, shareholders, workers or consumers—is affected by company law and this Bill, and it is in this context that we should judge the Bill.
  The purpose of company law should be to provide a framework and wide boundaries within which individuals and entrepreneurs can combine to develop their skill and energy freely. It should also encourage the spread of ownership and investment throughout the community. A wide disclosure of company activities is obviously necessary if an increasing number of the public are to be persuaded to invest surplus earnings and

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  savings in capital, and, in so far as the Bill deals with greater disclosure of company affairs I welcome it. In so far as it fails miserably to deal with many outstanding and overdue reforms necessary to make company law relevant to the 20th century, many of them recommended by Jenkins more than five years ago, I regret it. To the extent that the Government are using the Bill as a sort of packhorse on which to load a pretty mean piece of party political spite, I utterly condemn it.
  But, like the curate's egg, the Bill is undoubtedly good in parts. I support the provisions concerning insurance companies. These are welcomed by Lloyds and the City of London generally. The standards set down in the Bill are already freely provided by all reputable insurance companies. It is right that these provisions should be in the Bill, because it is State compulsion which places people under an obligation to engage in insurance. I also welcome the provisions of Clause 91, concerning the repeal of the Money-lenders Act. A new definition of moneylenders is long overdue. Many reputable finance companies and hire-purchase companies have found this to be inhibiting recently.
  There is one point about which I am anxious, and which I hope one of the Ministers will consider. As the law stands, it is possible for a debtor who has borrowed money from a reputable finance house or hire-purchase company, in a normal transaction, to avoid repayment by pleading the Money-lenders Act. This has been happening recently. If the Bill becomes law the provisions of Clause 90 lay down that the Board of Trade can, from such date as it may specify, exclude a company which it is satisfied is a bona fide finance company from the rigours of the Money-lenders Act.
  If litigation is pending before the Bill becomes law, will the provisions be backdated so as to avoid serious damage, running into millions of pounds, being done to this section of the market, through defaulting debtors avoiding their obligations by pleading the Money-lenders Act? I hope that the Minister will consider that point, if not now, at any rate in winding up, and certainly in Committee. I hope that he will also consider the point raised in another place concerning marine mortgage companies.
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  I also welcome the provision extending the limitation on partnerships, which is wholly in line with the recommendations of the Jenkins Committee. It is quite absurd to put an artificial limitation on partnerships. I hope that the little chink in the door provided by Clause 41(2), which enables the Board of Trade to allow other bodies through, by Statutory Instrument or Regulations, will enable that splendid institution, the Investment Club movement whose aims I always seek to advance, to get through the door and become lawful without having to form a limited company.
  The Bill contains many sins of commission and omission. The sins of commission have been dealt with already. The need to disclose particulars of exports is little more than bureaucracy gone mad, and Nosy Parkerism in the extreme. I cannot see that it can fulfil any useful function.
  I violently oppose the provision relating to the exemption of private companies. This is absolute nonsense. I have had many representations on this subject. If I set up in business as a grocer in the High Street and decide to make myself into a limited company, what business is it of anybody else, let alone my competitors down the road, what my accounts and balance sheets may look like? What business have they to know what I pay myself or my wife, who is on the board with me? It is no business of anybody else. It was condemned by the Joint Under-Secretary for the Department of Economic Affairs, the hon. Member for Manchester, Cheetham (Mr. Harold Lever), at the conference to which I have referred.
  The hon. Member for Kingston upon Hull, North (Mr. McNamara) asked whether there is some sort of limit. A formula could be found to exclude small family companies. One suggestion is that we should exclude from these provisions those companies of which the owners and directors are the same people. I can see no reason why they should not be exempt.
  The other error of commission concerns the disclosure of income. At best, this is pointless and at worst it is nosey parkerism of the worst sort. It will encourage the switching of executives. There will be a temptation to lure an

  401
  executive from one company to another. Also, if it is intended merely, by some vague powers of stupid public opinion, to keep the income of directors down, it will lower the standards of company leadership, to the detriment of shareholders and business as a whole.
  The omissions are more numerous than the errors of commission. We are told that there is to be another Bill, and we look forward to it. I hope that when we discuss it we shall be able to dilate on the deep philosophical matters referred to by the President of the Board of Trade. But I should like to know why some smaller and more immediate reforms cannot be included in this Bill. It is all very well for hon. Members opposite to complain that nothing was done when my party was in office. As was made clear in another place, plans were made and a Bill was in draft in the summer of 1964, two years after the Jenkins Report, and, but for the General Election, it would have been brought before the House.
  The Government have had three years to bring forward a Bill and more than that to think about it. They have now brought forward this half-hearted Bill. If they could not bring forward a proper Bill, I regret that they could not have included in this Bill provisions dealing with non-voting shares, which are generally criticised in the City. I know that there are views that non-voting shares, or A shares, should be allowed, and that they have enabled certain companies, such as Marks and Spencers, to develop. But there is a very good argument for saying that these shares should be labelled as such and not described as A shares or something else. Provisions on these lines could have been included in this Bill.
  I also bitterly regret the Government's decision to throw out the provision allowing no par value shares. Another place decided that this should go in, and the Jenkins Report was in favour. Every conceivable informed opinion in the City or elsewhere has argued that no par value shares should be allowed, yet, for reasons which to me are totally obscure, the Government dig their toes in. We shall return to this subject in Committee.
  I regret that not more has been done to deal with the serious cases of fraud and company manipulation which have
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  taken place in recent years. Some of the cases of fraud of defalcation make robberies like the mail train robbery seem like peanuts, but they do not get the same publicity. The Fraud Squad is grossly overworked. I understand that unless the amount of fraud is at least £100,000 only a sergeant deals with it. This has caused great concern in the City and among the investing public.
  I am not sure what the solution is—whether the Board of Trade should have more powers, or should be able to operate more quickly. Certainly it operates remarkably slowly at present. What happens is that somebody gets board room control, with a large, inert mass of shareholders, and then salts off his money into either existent or nonexistent companies in Lichtenstein, or Switzerland, or similar places, and then vanishes. Two years later, the Board of Trade considers whether it dare have some sort of inquiry into this company, for fear of a run on the Stock Exchange. I do not know the answer, but something is clearly wrong. Perhaps the Board of Trade needs more powers, or perhaps there should be a city "watchdog" body to move in more quickly and perhaps with less dangerous publicity than the Board of Trade. This should be dealt with now rather than in the future.
  Many more people lose money through directors' negligence than through downright fraud. The Government give too little attention to the rights of minority shareholders in such cases. There are far too many errors of commission and omission to enable me to praise the Bill. It stems largely from the inherent suspicion of companies of hon. Members opposite. They have a tendency to regard companies as enemies to be interfered with and restrained, but the Government should realise, despite their doctrinaire supporters, that we depend for our existence on a free enterprise system of which the limited liability company is an integral part. This is a half-hearted Measure—one tinge, nevertheless, of the acid. If we cannot remove some of the prejudices opposite in Committee, we may be able to enlighten their ignorance.
  6.12 p.m.
  Mr. David Marquand: I welcome the Bill, but what I welcomed most was my right hon. Friend's assurance that he would bring in a much more

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  fundamental reform in the lifetime of this Parliament. I take up his invitation to speculate on the issues with which a further reform of company law ought to be concerned. The right hon. Member for Altrincham and Sale (Mr. Barber) rightly said that modern company law should be concerned not just with the interests of the shareholders but with the contribution of the company to the economic efficiency of the whole community. This is right, but I think we should go further, and think also of the social rôle of the company.
  The 19th century laissez-faire system, the ghost of which still seems to linger in the subconscious of hon. Gentlemen opposite, assumed that the best allocation of economic resources would result from the working of free competition. If there were free competition, it was thought, the inefficient would be destroyed. Those that destroyed them would be those best fitted to survive. But, as we all know, when we are not being ideologues but we are looking at the real world, this is not how the capitalist system in any of the Western developed countries works today. We have had the growth of what economists call "imperfect competition"—the development of giant firms which can "rig the market". So the laws of unrestrained laissez-faire capitalism no longer work in large parts of the private sector.
  This is why it is necessary, to achieve the optimum allocation of resources, for the Government to intervene in many ways. This is why we have set up "Little Neddies" and the I.R.C. and this is why the encouragement of economic efficiency should be one of the criteria which should govern the next reform of company law. In addition, we should recognise that the modern private company is a massive aglomeration of social power and that its activities have repercussions on people's lives to such a degree that we cannot simply allow its activities to be regulated by economic considerations alone——
  Mr. Gresham Cooke: When the hon. Member talks about a private company, is he talking about an exempt private company or one publicly quoted on the Stock Exchange?
  Mr. Marquand: I am sorry—I meant the privately owned company, as opposed to the public corporation——
  Sir G. Nabarro: He means I.C.I.
  Mr. Marquand: Yes, I mean big, privately-owned companies.
  As the Government recognise, I think, the present Companies Bill does not, and is not designed to, go very far to meet either of the two general principles which I have set out. The next instalment of company law reform should try to do both of these things. It ought particularly to concentrate on the company's responsibility to its employees.
  There are all sorts of obvious dangers in the idea of direct election of worker representatives to boards of directors. The difficulty is that such representatives would either be "captured" by their fellow directors and try to promote the economic well-being of the company, in which case their relationship with their worker "constituency" would be somewhat confused and difficult; or they would still retain their primary loyalty to the people who elected them, in which case their economic contribution might be of little value.
  This conflict, which would inevitably be created, between these two responsibilities makes a proposal for directly elected workers' representatives one to be carefully considered. What the next reform could do, however, is to make mandatory throughout the private sector the practices of the best parts of it in regard to consultation between management and workers. This is the right area to consider, rather than direct formal, elected participation in the boards of directors.
  I turn now to Clauses 6 and 8, which deal with the disclosure of directors' emoluments and those of high-paid executives. We have heard a lot today—and I have the depressing feeling that we shall hear a lot more—about the appalling suffering and hardship of the grocery store owner with a little shop in the High Street and the iniquitous practices of the Government towards him. I do not believe that it would be difficult to devise an exemption to safeguard the smallest family firms from disclosing these statistics. However, it is absolutely vital to ensure that the larger companies, whose shares are not quoted on the Stock Exchange, disclose their figures in this matter.

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  The argument in favour of very full disclosure—not just the disclosure of directors' emoluments but also the pay of top executives—is very strong. One hon. Gentleman opposite asked why the Government were taking this action. He called it "Nosy Parkerism" and said that it would serve no useful purpose. That is rubbish. This provision will serve two extremely important functions. There is absolutely no doubt that at present there is a shortage of basic information in this sphere. We do not know the details of the structure of managerial rewards in private industry. What evidence exists suggests that the structure is a haphazard one and is arbitrary and illogical.
  Sir G. Nabarro: Even if all this information were available, what would the hon. Gentleman do with it? I suggest that even if he had it he would not know what to do with it, and that even if he had it the information would be purposeless. A vast mass of information and statistics about what 400,000 little businesses are doing—what is paid to their partners or directors—would be useless to the hon. Gentleman.
  Mr. Marquand: I do not agree. The mere publication of the information would itself help to make the system more rational and logical because people would become aware of how extraordinarily illogical and arbitrary the present arrangement is.
  Sir G. Nabarro: Rubbish.
  Mr. Marquand: People do not know where they stand.
  Mr. John Hall Mr. John Hall rose——
  Mr. Marquand: I do not wish to detain the House, and if I keep giving way my speech will become inordinately long.
  Hon. Gentlemen opposite frequently claim that managers are underpaid. None of my hon. Friends is arguing in favour of a policy deliberately to underpay managers. We are aware of the scarcity of highly-skilled managerial talent and, in these circumstances, it is sensible for managers to know just what is the market rate for the job. Hon. Gentlemen opposite keep talking about the need to pay the rate for the job, but what is the rate? What rate should directors receive? Should they receive the rate paid
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  by I.C.I. or the very much smaller rate paid by some other big firms? If this information were disclosed, the mere fact that it was available would help these people to know where they stand, and it would make the whole situation more rational.
  Mr. Hall Mr. Hall rose——
  Mr. Marquand: No. I trust that hon. Gentlemen opposite will allow me to complete at least one part of my argument without interruption.
  The second reason why it is important that the fullest possible information should be made available is the assistance it will give to the Government's incomes policy. There is continuous pressure in the public sector for salary increases as a result of the magnetic attraction of what are perhaps wrongly believed to be the high and inflated salaries paid in the private sector. One sees this clearly in the Civil Service and in the pay award made to doctors last year.
  People working in the public sector believe that very high rewards can be earned in the private sector by people with similar skills and education to their own. There is, therefore, a natural pressure for the levels of pay in the public sector to be raised to a comparable standard. This has been one of the weakest spots in the Government's incomes policy. Since we have not known what is going on in the private sector we have not been able to take appropriate action to prevent excessive increases in the rates of emoluments in that sector from taking place. Thus we have been unable to damp down the pressure for equivalent increases in the public sector.
  I am not saying that if this information becomes available it will necessarily follow that any action will be taken. Maybe there is no very rapid rise going on in the rate of increase in rewards in the private sector. We do not know because the evidence either way does not exist. If it did exist, it would at least be possible to frame a rational policy in this matter. We cannot begin to operate a successful incomes policy unless it is made to apply not simply to wages but to earnings generally, including very high earnings. But we cannot begin to solve our basic economic problems unless we

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  have a successful incomes policy. I therefore welcome this part of the Bill, because it will help to extend the incomes policy to the whole sphere of salaries and total emoluments, and because an extension of that kind is essential for the success of the policy.
  6.28 p.m.
  Mr. Rafton Pounder: There is much to commend in the Bill, but I will not occupy the time of the House by reiterating any of the arguments adduced by my hon. Friends. Instead, I wish to direct the attention of the Government to a problem to which reference has not been made in this debate.
  For some time a new and, in my view, deplorable condition has been appearing on a growing number of share issue application forms. The growing practice to which I refer is that in an ever-increasing number of offers for sale to the public, a condition is being imposed which requires that the cheques in support of applications must be drawn on banks within Great Britain, as distinct from the United Kingdom. The result has been to debar those applicants, like myself, whose cheques are drawn on Northern Ireland banks. [Interruption.]
  Sir G. Nabarro: Order.
  Mr. Pounder: This is tantamount to a very unsavoury form of financial discrimination. It was first brought to my attention about 12 months ago and I immediately wrote to the Government. Since then there has been a considerable increase in the number of share issues which have discriminated against Northern Ireland applicants and the situation has reached the point when this form of discrimination is almost the general rule.
  In recent months my hon. Friend the Member for Belfast, North (Mr. Stratton Mills) and I have been compiling a list of the more glaring instances. Regrettably, hitherto the whole question of responsibility—certainly from the point of view of Departmental responsibility—for share issues has fallen into a kind of administrative no-man's land somewhere between the Treasury and the Board of Trade. This Companies Bill provides an admirable opportunity to remedy this
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  discrimination. I hope that the Government will desist from the attitude which they have hitherto adopted of saying that this is a field of activity in which they would rather not engage.
  I have had two kinds of answers from the Treasury Bench to questions submitted on this subject recently. Firstly, the argument was advanced that there had been a bank strike in Northern Ireland and that consequently cheques drawn on Northern Ireland banks could not be cleared. That strike took place in May and June of last year, but it was in February last that Neville Securities imposed what I term the offending discriminatory condition, and there was no bank strike then, nor a hint of one.
  Afterwards there came an even more novel kind of official answer, namely that it takes considerably longer for Northern Ireland cheques to be cleared than for English and Scottish cheques to be cleared. That is an utterly nonsensical line of argument. It takes two days to clear cheques drawn on Northern Ireland or Scottish banks and presented in London. It probably takes exactly the same time to clear cheques drawn on provincial banks and presented in London.
  My hon. Friend the Member for Belfast, North and I have been engaged in an exercise on this which shows that a cheque drawn on the National Bank in Belfast and a cheque drawn on the District Bank in Manchester, both presented in London on 13th December, were both cleared two days subsequently. The argument that it takes too long to clear the cheques is utterly invalid. Of course, there is a time factor which is important when one is considering shares issues. I am fully aware of Section 50(5) of the 1948 Companies Act which, by implication, provides that applications for securities issued or offered for sale should be revocable after three days, but that is by implication rather than by statutory obligation.
  It has been repeatedly stated in correspondence which I have had with Government Departments on this subject that there is no intention to discriminate against Northern Ireland investors. That may be so, but the cold fact remains that Northern Ireland investors are being discriminated against. I have even heard

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  the absurd argument that it takes even longer to have cheques cleared when they are drawn on banks in the Republic of Ireland. What relevance this has to Northern Ireland cheques eludes me.
  About two months ago there was a case relating to the issue of the House of Sears (Holdings) Limited in which one of the conditions was that cheques accompanying applications must be drawn on a bank in Great Britain. The bank handling the issue was the Midland Bank. Yet the Midland Bank has as wholly-owned subsidiaries two of the major banks in Northern Ireland—the Belfast Bank and the Northern Bank. In this case the Midland Bank was not accepting cheques drawn on wholly-owned subsidiaries. The statutory period for the clearance of cheques in connection with share issues is four days but I hope I have shown that cheques presented in London and drawn on banks in Northern Ireland can be cleared in two days. I hope that the Government will take the point seriously because it is affecting a considerable number of people.
  I am not seeking to make a mountain out of a molehill but this is not a small molehill. We in Northern Ireland have a substantial investing public who are being precluded from applying for almost all new issues, and that is a serious situation.
  Mr. Speaker: Order. I hesitate to interrupt the hon. Member. I am listening to him with care, but I hope that he will link what he is saying with the Bill that we are discussing.
  Mr. Pounder: I am certainly trying to do so, Mr. Speaker. It is implicit in company legislation that the public at large should be given an opportunity to subscribe for shares. That is provided in the 1948 Act. That opportunity is now being consistently denied to Northern Ireland investors. I take as another illustration, which I hope is in order, a rights issue. There was a case in November of an issue where separate preferential application forms were issued to existing holders and separate forms for new applicants, and existing Northern Ireland holders were precluded from applying.
  Mr. Speaker: Order. I want the hon. Member to link the point he is making not with company legislation in general
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  but to the Second Reading of this Bill which has certain definite purposes.
  Mr. Pounder: What I am trying to do—and I hope this is in order—is to ask the Government to include a new Clause in the Bill to this effect. I am trying to describe the background for what I am seeking in all seriousness and sincerity, namely a new Clause which I believe could be fitted into the framework of the Bill without altering the spirit or the other contents of the Measure.
  Only last week there was an issue with seven clear days between the closing of applications and the commencement of dealings. Again, this exclusion operated against us. I beg the Government to consider this. If they would like me to draft a new Clause, I should be delighted to do so because this matter has now got to a point where all the best issues are being ruled out and we in Northern Ireland are becoming second-class investors. I believe this is the opportunity and the relevant occasion on which something could be done by the Government to remedy this omission.
  Mr. Jay: May I ask what the new Clause would do?
  Mr. Pounder: The Clause which I envisage would prohibit any issuing house from restricting the number of banks situated in areas within the United Kingdom on which cheques in support of applications may be drawn.
  6.37 p.m.
  Mr. Joel Barnett: I hope the hon. Member for Belfast, South (Mr. Pounder) will forgive me if I do not follow him into the realms of his new Clause referring to Northern Ireland.
  I wish to refer to the main part of the Bill and the question of the privileges at present given to exempt private companies. In the last debate on this subject I said that I was not in favour of a Bill for Nosy Parkers. I still am not in favour of that sort of thing. I do not want unnecessary information, nor information for its own sake. From this standpoint I look at Clause 37 first in relation to turnover and rents. While I agreed with the conclusions of the right hon. Member for Altrincham and Sale (Mr. Barber) I found some of his arguments very weak indeed. They were

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  nothing more than had been stated in another place by the noble Lord, Lord Erroll. The only valid point was that there would be some disadvantage as against major competitors.
  This needs to be examined because it might affect our whole thinking on the matter. What sort of disadvantage is it? We are thinking of small companies of three types, retail, wholesale and manufacturing. The example given of the retail company was that of a small retail shop which, it was said, would be at a disadvantage against a major combine because that combine would know the turnover of the smaller company. It was suggested that it would then be more liable to takeover. The right hon. Member did not reply to my intervention, that such a company would not have to allow itself to be taken over. Any capable estate agent considering a small retail shop and the site on which it stood could give a very fair estimate of the turnover, and anybody with a reasonable understanding of a balance sheet and, given the stock and debtor figures, would be able to come to a very good estimate of the turnover of a wholesaling or manufacturing business.
  Mr. John Smith: There is an important consideration which my right hon. Friend did not mention, and which is that if a large company can accurately estimate the turnover of a smaller company with which it does business, it can tell how much of that smaller company's turnover is represented by the business which it does with it and it can, therefore, see whether by withdrawing its custom suddenly, as has often been done in the past, it will not only lay the small company open to take-over, but ruin it. This is a material consideration.
  Mr. Barnett: The only point which I was making and which the right hon. Gentleman did not answer was that the information would be available to a major company anyway. The right hon. Gentleman did not say that he disagreed with me. I do not necessarily disagree with the right hon. Gentleman's conclusions. The only question at issue is whether having the information would help, whether it would be of any particular value. I believe it would be of no value at all with the very small company.
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  When we discussed this matter in our last debate on the subject, I suggested that we might consider limiting these provisions by the size of the assets, profits, or share capital of the companies with which we were dealing, but because I am doubtful whether it would be an additional spur to efficiency in companies where the shareholders and the directors were one and the same and because of the difficulty of drawing a dividing line anywhere, I am prepared to say that we should exempt all unquoted limited companies from the requirement to publish details of turnover and rent. This would be reasonable, because in any case large unquoted companies are those most likely to apply to become unlimited because they would not want their balance sheets to be disclosed.
  I have some comments to make on the subject of unlimited companies. My understanding of the Bill as it stands is that it would be possible for a company to go unlimited when the return is to be submitted so that it would not have to submit the return. Presumably—and I can see nothing to prevent this—immediately afterwards it could become limited again, and by doing this once a year it could exclude itself from submitting accounts at all. If that is not the case, I should be glad to be told where the appropriate provision is to be found.
  Another matter arises in connection with the first year, the transitional year. As I understand Clause 36, if a holding company or a subsidiary company is limited during the course of the year for which the return is submitted, it would not be exempt from submitting accounts. That seems to indicate that if a small company is a single company that is all right and it would be exempt, whereas if it is part of two or three companies one of which in the first year is a holding or subsidiary company, it would not be exempt from submitting accounts. I would be glad to have my right hon. Friend's views about that.
  This brings me to another aspect of Clause 37, the subject of the disclosure of directors' remunerations. This is an entirely different matter from that of turnover and rents. I have given much thought to this, because I was unhappy about these provisions in the first Bill. If a profit and loss account, which Clause 37 would not

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  exclude, has to be shown, all that will be shown is the net profit after directors' remunerations. For a small private company to show the net profit after directors' remunerations would be to give a totally meaningless figure and we might as well exclude the whole of the profit and loss account. That may be what the Opposition have in mind, but certainly as the Clause stands such a figure would be quite meaningless.
  I return to my criterion of the value of any information for which we are asking. To most creditors it would be of no particular value to have disclosure of the directors' salaries. They would only Want to see the balance sheets—although I know many creditors who, if a balance sheet was not healthy, would like to be aware of how much of their money—and it would be their money—the directors were taking as salaries. However, by far the most important group of creditors are the workers in a company, because, of course, they are creditors of the company for at least one week's wages and possibly also holiday pay and so on—quite apart from other reasons which would entitled them to be interested. Many instances will come to the minds of hon. Members opposite of when companies have gone into liquidation and this type of creditor, that is, the workers, have suffered because of the company's insolvency.
  These creditors are very much entitled to know just how much the employers are taking of what might be their money. There is some value in giving this information to them, but, while I would make this information available to creditors, including the workers, I would not want it to be given to every local busybody, because I regard the information as being of value only to creditors. Therefore, provided that it is made available to creditors, I would not make it available to everybody else. I say that with much heart-searching. I am not altogether happy about giving the impression of clobbering small companies, but I believe that it is right that they should pay for this considerable privilege of limiting their liability.
  Mr. Bruce-Gardyne: Would not the hon. Gentleman agree that all the creditor needs is the global sum of directors'
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  salaries, so that if Section 196 of the original Act were applied, that would meet his case?
  Mr. Barnett: I do not accept that. That could be very misleading with a small company.
  I now want to deal with the provisions affecting insurance companies. I have been rather surpised by the comparative complacency with which both Front Benches have accepted these Clauses as being adequate. I accept that these Clauses have been drafted in consultation with the British Insurance Association and that they lay down some very stringent conditions. However, the only way in which to consider them is to ask the straight question: "With these Clauses, could it happen again?" In other words, could there still be motor insurance company failures?
  We all know the dreadful consequences of some of the things which have happened and of the experience of constituents who have been affected by insurance company failures. The important question is whether that could happen again if these Clauses were passed. If it could, we would not be fulfilling our responsibility by allowing these Clauses to stand as they are.
  I am thinking of a young girl who is a constituent of mine and who was injured in a crash, seriously disfigured and who suffers semi-paralysis. She could not get a penny, because the man ultimately responsible was without real means. This, of course, is the nub of the problem. There are many people who drive cars which they cannot afford to buy, let alone run. Nevertheless, it is a fact that they do so and we must recognise it. But because they buy cars of that sort they find themselves in the situation of trying to find the cheapest forms of maintenance, repairs and insurance.
  Mr. Temple: Will the hon. Gentleman tell us whether the girl to whom he referred was a passenger?
  Mr. Barnett: Yes, she was a passenger. I am still hoping that we may be able to do something for her.
  I regret that my consideration of these Clauses leads me to the conclusion that the answer to the question, "Can it

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  happen again?", must be "Yes". Unfortunately, there could still be motor insurance company failures.
  In advising the Government, the British Insurance Association was genuinely trying to prevent more failures. It was trying also not to recommend a system which would prevent small companies from entering the field and thus create a monopoly for the big companies, and, because the Association is understandably biased, it did not want to hand the whole thing over to the Government. But I believe that these three aims are incompatible. Incidentally, I am not sure why insurance companies should be so concerned because motor insurance, as I understand it, is not profitable. I cannot help being reminded of the businessman losing money who, when asked why he did not close down, replied, "What would I live on if I did?". It seems a little odd that the British Insurance Association set itself that particular aim. However, because my overriding priority is the safeguarding of the public interest, I should be prepared to sacrifice the two latter aims, and I shall now explain why I believed that the provisions of the Bill as drafted will fail to prevent further motor insurance failures.
  Too many of the powers to be given to the Board of Trade are permissive, and I doubt that it has adequate staff to prevent companies which are getting into difficulties from continuing in business longer than they should. For example, Clause 54 gives the Board of Trade power whereby it "may" add to the requirements with regard to investments and so forth. Under Clause 55, it "may" impose certain restrictions. Even where the powers are mandatory, there tends to be ambiguity. For example, Clause 51 deals with the question of sufficiency of assets, but, although it begins with a reference to an excess of assets over liabilities of £50,000, it goes on to refer to £100,000 share capital. It is not clear to me—I should be glad to have an assurance on this—whether this Clause means that, if a company has £100,000 share capital and it then loses £50,000, because it will still have a surplus of assets over liabilities of £50,000 it can continue in business. According to my understanding of the Clause, it could still do so.
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  Perhaps the most stringent of all is Clause 52, the one insisting on reinsurance, but the value of this is reduced because, although the Clause begins by saying that there must be reinsurance, it goes on to refer to adequate arrangements which "will be made" or it being "justifiable not to make arrangements", in which case, apparently, everything will be all right. Again, the mandatory is reduced to the permissive.
  It seems to me, therefore, that fraud could still go on, though admittedly, perhaps, for not so long as before. Equally, the genuine company in difficulties, the company losing money, could still continue in motor insurance business. My experience is that directors of companies which are losing money are notoriously optimistic. All the evidence of liquidations shows this to be true. They generally carry on far longer than they should, certainly far longer than it takes the Board of Trade to find out that they should not be carrying on. In my view, it is clear that there is not enough in these Clauses to prevent further motor insurance company failures.
  Mr. Jay: My hon. Friend has not mentioned the most drastic power of all, the power of the Board of Trade to refuse authority to companies to carry on motor insurance at all. There could be no more drastic power than that, unless we are to forbid private insurance companies to engage in motor insurance.
  Mr. Barnett: I shall come to that in a moment. I was dealing with the permissive powers of the Board of Trade, and I had it in mind to refer to another Act, the Protection of Depositors Act, 1963, under which the Board of Trade has had permissive powers to prevent companies from advertising for deposits. This has not prevented, for example, the Davies Investments company going "bust", with £8 million involved. There were permissive powers in that case, but they were not effective, and I do not believe that the permissive powers given to the Board of Trade under this Bill will prevent companies from getting into difficulties, with consequent loss for many people and other serious problems arising before the Board of Trade takes action.
  Something must be done. There are two alternatives. Either we make the

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  Bill so stringent as to prevent small companies coming in—which the British Insurance Association did not want to do—or we have a Government motor insurance corporation. Those are the only two alternatives. I have my own preference there, but I am certain that what we have in the Bill will not do.
  If we are deliberately to prevent competition and, at the same time, we insist, quite rightly, on third-party insurance being compulsory, we must not shirk our responsibility. In my view, we must have a Government motor insurance corporation. I believe the arguments lead conclusively to this alternative.
  Mr. Jay: My hon. Friend will agree that even that would not prevent frauds unless it was a statutory monopoly and no one else was allowed to carry on the business.
  Mr. Barnett: Precisely. That is what I have in mind. My overriding priority is the safeguarding of the public interest, and I can see no other way of doing it. I accept entirely the implication of what my right hon. Friend has said.
  Sir G. Nabarro: I recognise these difficulties, but will not the hon. Gentleman agree that if we had a statutory State monopoly for motor insurance, we should be asking the State to take over an undertaking which has so far proved unrewarding. As only a minority of citizens own motor cars, would it not be tantamount to asking the majority, the non-motor car owners, to subsidise motor car owners through their rates and taxes?
  Mr. Barnett: I do not accept that. I start from the basic assumption that one must protect the public in this matter. It is not only people who own motor cars who are involved. We all know this from letters we have had from constituents. People who do not own motor cars can he sufferers under the present system. To talk of a minority of people who own motor cars and to use that as an argument against doing what I recommend, just because they are a minority, is not an argument which I should expect to hear from the hon. Gentleman.
  Sir G. Nabarro: I did not put that argument.
  Mr. Barnett: But it is tantamount to that. [HON. MEMBERS: "The hon. Gentleman did say that."] I should be happy to argue the matter with the hon. Member for Worcestershire, South (Sir G. Nabarro) on another occasion, but I know that there are others who wish to speak and I want to get on.
  There is another urgent matter of public interest, the question of small banking companies such as Davies Investments to which I referred earlier. I know that it can be argued that those who want a higher-than-average interest rate are greedy, foolish or simple—or a combination of all three—but this is no reason why we should not protect them. Such protection was intended by the Protection of Depositors Act, 1963, but, as I have said, that Act has proved ineffective.
  Sir Harmar Nicholls: Not enough cotton wool to go round.
  Mr. Barnett: The hon. Gentleman may prefer not to protect them, but, presumably, he supported the Protection of Depositors Act in 1963.
  In this matter, as in the matter of motor insurance, we are trying to balance incompatibles. We try to give protection to small investors and, at the same time, we allow small banking companies to carry on as they have been doing. When a small banking company of the Davies Investments type starts off by offers of high interest rates, as it must, it is in trouble from the start. In order to pay a high interest rate—it usually borrows from other banks and then has to borrow money from more depositors—it runs into more and more trouble because it has to invest with a degree of risk so high as to enable it not only to pay the high interest rate it has offered but also to pay itself some profit as well. Generally, the end is inevitable.
  We need not be fortune tellers to forecast that there will be more failures of banking companies like Davies Investments. I understand from an Answer to a Question today by my right hon. Friend that there are 111 companies authorised under the Protection of Depositors Act. It is clear from the ineffectiveness of that Act that it is no use going for a halfway house. The priority must be the public interest, and if that is incompatible with allowing such

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  companies to exist, then I am afraid that they must not be allowed to exist.
  We must strengthen the Protection of Depositors Act. I hope that my right hon. Friend can assure us that under Section 3 of that Act he will refuse all advertising pending such revision. Meanwhile, I hope that he will help in this matter with perhaps another new Clause in the Bill, a Clause which would perhaps restrict the companies' borrowings, including those from depositors and other banks, to at least a reasonable proportion of the amount of their issued share capital. Otherwise, it is rather ludicrous that so many depositors can lose so much whilst the shareholders—generally the promoters—of the companies have so little at stake by comparison. I hope that I have not trespassed beyond the rules of order, but in Clause 93 of the Bill there is reference to the Protection of Depositors Act, and amendments to it.
  In opening for the Opposition, the right hon. Member for Altrincham and Sale did himself and the Opposition no good by trying to get the best of both worlds with generalised and unsubstantiated attacks on the Government for allegedly having some kind of vendetta against small companies, when he knows in his heart that he really agrees with the Bill. I believe that there is a great future for small companies; their management is far more dynamic in many instances than that of the larger ones. With the exceptions that I have mentioned, I support the Bill, because I know that the efficient small company will not be hurt by it.
  7.2 p.m.
  Mr. John M. Temple: Like the hon. Member for Heywood and Royton (Mr. Barnett) I attach a great deal of importance to the insurance Clauses of the Bill. The public will be more interested in those Clauses than in any other.
  My right hon. Friend the Member for Altrincham and Sale (Mr. Barber) wisely also picked out the insurance Clauses, but he made his views well known on the general approach of this side of the House to the Bill. I agree with him that the recommendations of the Jenkins Committee were adequate, that they should not have been exceeded, and that where the Government have exceeded them they have fallen into error.
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  I congratulate the President of the Board of Trade on being very much less contentious in his opening speech than was the Lord Chancellor in another place. I think that that bodes well for the progress of the Bill in Committee, because I felt that if he made as contentious a speech as the Lord Chancellor the Bill might well be in Committee until Christmas or even longer.
  There was one aspect of the President of the Board of Trade's speech which I noticed particularly. He said three times that he was bringing our company law into line with that of the United States.
  Mr. Darling: In some respects.
  Mr. Temple: I agree. But there was no reference to aligning our company law with that on the Continent of Europe. If the Government claim to be forward-thinking, it would have been wiser to adjust company law now to the provisions in the European Economic Community rather than making adjustments which would have suited us had we been forming an Atlantic alliance directly with the United States of America.
  The President of the Board of Trade gave the House an invitation which I shall take up. He invited hon. Members on both sides to make suggestions of further provisions which might be either in this Bill or in a future Bill. High on a priority list of omissions, I would put the question of dealing with further legislation on unit trusts. They have hardly been mentioned in this debate today, but they are the subject of 21 specific recommendations in the Jenkins Committee's Report. I believe that the unit trust movement, growing fast as it is, needs the implementation of those recommendations.
  My right hon. Friend the Member fur Reigate (Sir J. Vaughan-Morgan) said that very often the Board of Trade was responsible for locking the stable door after the horse had departed. I admire the unit trust movement enormously. However I have great sympathy with the many small people who invest in it, in that they are small cogs in a very large and intricate system.
  Today we see investment trusts converting themselves into unit trusts, and

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  the unit trust movement itself is growing fast. The Jenkins Committee recommended legislation several years ago and my right hon. Friend the Leader of the Opposition gave a commitment in 1964 that we would legislate on unit trusts; yet in this Bill, which cries out for the inclusion of unit trust legislation, it is entirely ignored.
  The lack of further control over takeover bids is another serious omission. In my reading about financial matters—and I have been connected with financial matters to an extent all my life—I have been interested in the growth of takeover techniques. It is high time that this was dealt with in an immediate Bill, and I am very disappointed that the specific recommendations of Jenkins are not being dealt with in this Bill.
  It is a great disappointment to me that no par value shares are not to be dealt with in the Bill. In my early days I worked on Wall Street, which was then dealing in no par value shares and had been for 30 years before. We have not brought ourselves up to the standard of the United States of America in that respect, although the President of the Board of Trade was pleased that he was moving in the direction of the United States of America in other ways.
  Tonight I want to devote most of my time to the question of insurance companies. Before coming to that, may I say that I entirely agree with my right hon. Friend the Member for Altrincham and Sale about the abolition of exempt private companies, and I think that we shall have support from the hon. Member for Heywood and Royton. I think that the publication of turnover figures is unnecessary in the case of those companies which do not have a share quotation on the Stock Exchanges.
  But there is one aspect of the exempt private companies which I believe will damage the small traders very much. Representing as I do the City of Chester, a great retail centre, I have in mind those small traders in the High Street. They are mostly operating under limited company status, but are subject to severe competition from the multiples. They are also in competition with the unlimited company and with partnerships. I am afraid that what the Government propose
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  will drive a great many limited companies into the unlimited company class, and I would regard that as a retrograde and most unfortunate step which should be wholly unnecessary.
  Another small but important matter concerning exempt private companies is the question of one or two very large exempt private companies which are shipping companies, and which have been having exemption from publication of their reserve position because they were exempt private companies, rather than because they got special exemptions from the Board of Trade. Will the Minister of State say how forthcoming he will be about granting further exemptions to shipping companies? The President of the Board of Trade said in his opening remarks that he was conscious that there was severe competition in the international trades, and therefore it would be valuable if the Minister of State could give further reassurances on that matter.
  I pass briefly to the question of the disclosure of what I can only call the extraordinary and misleading export figures. I know a little about statistics, and they can be very misleading, but the publication of export figures of limited companies positively makes me laugh, because the whole thing is a complete nonsense. The figures will not be compiled in any way that will give statistical advantage to anyone. The Board of Trade can easily get the statistical information about exports if it wishes to. If it wishes to have evidence of the exporting capabilities or capacities of a company, it should go about the matter in a much more sophisticated manner. It would then know how much of the ultimate component sent abroad is manufactured by the particular company, or in what respect that company is purely an assembler of other people's components. I believe that this will be shown in Committee as absurd.
  The Board of Trade has also slipped up badly in another respect. The Bill ignores very important invisible exporters, such as a big limited company in insurance broking. The big international insurance brokers with offices in this country have about 45 per cent. of their busi-

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  ness in overseas premiums. They are probably the best dollar and other currency earners that we have. Yet they are not going to publish these figures of exports because they are to be excluded specifically from doing so under the Bill.
  We have had many indications of the Government's dislike of the hotel industry, but it is a very valuable earner of invisible exports and it should have the opportunity of publishing its figures, and at least a chance of getting on the Honours List which we have heard about. No doubt, the Prime Minister will be having regard to export figures as published by certain companies when making his selections?
  The gravamen of my speech concerns insurance. The Clauses dealing with insurance are immensely important but, like the hon. Member for Heywood and Royton, I am dubious as to whether the strength of these provisions is adequate. British insurance has had a magnificent name all over the world and I am sorry to have to tell the right hon. Gentleman that the recent failures have had a damaging effect on the good name of British insurance. London is probably still the habitat of the most important insurance firms in the world but other insurance centres are growing very fast and anything occurring in London that has a detrimental effect on any insurance company is news in insurance throughout the world.
  I suppose that the turning point for British insurance throughout the world was the San Francisco fire and earthquake in 1907. Liverpool, where I was born, has been in the forefront of insurance for many years. A company I know of recently absorbed by the Royal Insurance Co.—the London and Lancashire—was one of those very much involved in the disaster. It paid up the next day, like the other British companies. From then onwards, British companies had a worldwide business in insurance.
  Recent crashes have done a considerable amount of harm. Unfortunately, a company can set up with a high-sounding title—such as the London and Cheshire. It was a most unfortunate title linking two great and important parts of the country. In such circumstances, a great many policy holders are left uncovered. That is why I mentioned the point about
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  passenger insurance when the hon. Member for Heywood and Royton spoke. On the Continent, passenger insurance is to a large extent compulsory but that is not the case here. I believe that it should be and this is an aspect of the Bill that we must look into extremely closely.
  I am doubtful whether the Board of Trade has not all along had very much more power than it has made out. The chief general manager of the Royal Insurance Co., in an interesting letter to The Times recently, pointed out that the Board of Trade could have acted had it wanted to.
  Mr. Darling Mr. Darling indicated dissent.
  Mr. Temple: The Minister of State shakes his head, but this is a matter of legal opinion and lawyers can err on either side. The fact remains that the opinion is held very widely in responsible insurance circles. I believe that we must make certain that the insurance provisions of the Bill are strong enough to hold the position so that we shall not see more failures on the scale of recent months.
  I have pointed out that this matter affects the public very much. Very often, when a person is trying to insure a car or a motorcycle it is the first time that he meets an insurance company and, therefore, motor insurance is important. It is our duty as legislators to see that motor insurance companies are as secure as it is humanly possible by legislation to make them.
  A great many people today are, from the accountancy point of view, running cars which they cannot afford. Naturally, they go to the company offering the cheapest insurance. I am afraid that they shop around to see where they can get the cheapest cover so that they can obtain a cover note just to satisfy the licensing authority.
  Mr. Keith Stainton: Would not my hon. Friend concede that there is ample ground for confusion in the minds of the insured, especially the new insured, when there are tariff offices quoting rates much of a muchness as distinct from non-tariff offices, most of which are quite reputable? Is not the confusion within the structure of insurance itself?
  Mr. Temple: I would not confirm what my hon. Friend says in that non-tariff

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  rates are always lower than tariff rates. But the fact remains that I am now speaking about uninitiated people seeking insurance for the first time and it is our duty to see that all motor insurance—indeed, all insurance—is as financially sound as is possible because otherwise what I would call the brokers "on the fringe" of the business are inclined to channel business to those companies giving the largest commission rather than to those which are soundly based.
  I do not believe that it is possible to import into this Bill legislation with regard to the registration of insurance brokers. That is a separate but allied matter but it is one which should naturally flow from the Bill. Passenger insurance, as I have said, is I believe obligatory on the Continent and I believe that we should take powers in this Bill to align ourselves to future legislation which we shall have to get used to if we join the E.E.C. Therefore, we should now seek to move towards compulsory passenger insurance which would cover just those circumstances that we have had drawn to our attention today.
  I do not believe that the figures of £100,000 issued capital and £50,000 surplus assets are anything like enough. Perhaps I have omitted to say that I have a financial interest in insurance for I have been for almost 30 years an underwriter at Lloyds. In the case of the Lloyds syndicates, large reserves are called for and we also have a central guarantee fund.
  The question of re-insurance has been mentioned and it is also referred to in the Bill. Here again I do not believe the provisions are strong enough. I believe that there should be compulsory re-insurance as between companies setting up and that the question of experience, which has not yet been mentioned with regard to motor insurance, is also important. This is a tricky aspect of insurance and is not particularly profitable, but if a company has been operating for, say, five years, in general accident and other aspects, it should be capable of running a motor department. I believe that it is wrong for a company to start off in motor insurance, which is about the most difficult and treacherous insurance activity. It should have previous experience in another insurance activity.
  Mr. Darling: I intervene only to tell the hon. Gentleman that we have examined all of these questions and there are difficulties. Let me explain one. The five-year period is something that we might put into the Bill, but what about a new insurance company employing people who have had over 21 years' experience? Should they be rubbed out?
  Mr. Temple: I am not claiming that to put in all of these provisions will be simple. That is the task of the Government draftsmen who I am confident, if the Minister of State agrees with me, could import these provisions into the Bill. I regard all this as having the highest priority; insurance should be watertight and strong and we must have solvent insurance companies.
  On this Bill I feel that the Government have gone some way towards improving insurance legislation but they have missed a certain number of opportunities. They have delved into rather petty matters such as the listing of charitable and political subscriptions. I call those paltry and petty matters. But they have left out protection for unit trust holders, and, in my opinion, they have not gone far enough to protect the interests of those who seek to be insured. With those criticisms I give this Bill a fair wind, and I hope that its Committee stage will be concluded long before the Christmas Recess.
  7.20 p.m.
  Mr. Norman Atkinson: I begin by going back to the speech made by the right hon. Gentleman the Member for Altrincham and Sale (Mr. Barber). In the closing stages of his speech he referred to the words of Leslie Cannon, the President of the Electrical Trades Union. He compared Leslie Cannon's words with some things said by the Lord Chancellor in another place. I want to put on record that there is no one in the trade union movement who has advocated any representation of trade unionists, by law, on the board of directors of any company. This is the case, and it is wrong for the right hon. Member to suggest otherwise. The Lord Chancellor was referring to workpeople, employees of a company, and he went on to wonder whether they should be represented on the board of directors. This

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  is another matter and one which I hope will be debated throughout the whole of the Labour movement.
  I want to deal with some of the private politics of the Bill and to make some comments from the point of view of an active trade unionist who has taken part in discussions throughout our movement about the future of company law and how we as a movement see the future rôle of the limited company. I shall perhaps do a little bit of crystal gazing about the future Bills which will make up the long series that the Government intend to introduce.
  We welcome the Bill and the fact that the Government have gone far beyond the Jenkins proposals. Having said that, it is true to say that the trade union movement would be critical of many of the omissions from the Bill. The Bill needs some bone, and we hope that during Committee there will be Amendments tabled to inject a firmer spirit into some of its provisions. I regret that we have had no outline from the President of the Board of Trade about the way in which the Government are thinking of future legislation.
  If we look at this Bill in its true perspective, it must be related to the intended legislation which this or subsequent Governments are to bring in so that we can reach the kind of political objectives that we set out to achieve. That is assuming that we get a continuity of Labour Government to provide the second, third and fourth stages of the process begun in this Bill. We need much more radical reforms in company law than is currently envisaged. We are moving into a very technologically advanced, sophisticated and professionally managed society. This means that the rôle of the limited company will be different from its rôle of today.
  I hope that my right hon. Friend the Leader of the House, who elsewhere has been put in charge of a group of people undertaking research into the formulation of ideas about the future rôle of the private company, will bear this in mind when considering the kind of mixed economy which is envisaged during the next few years. Many of us have discussed our ideas with young people who
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  are politically enlightened and who have a contribution to make. We have spoken to people aged about 20 to 30 with some ideas about their future, at trade union schools and political discussions. If we think of these people who will be coming up for retirement in about the year 2000, it is interesting to analyse some of their views about the private sector of our economy.
  The remaining 33 years of this century is not a long time for the reform of company law. The President of the Board of Trade pointed out that we have been in the habit of reforming our company law, in the last century and this century, in 20-year cycles. I accept that the rapidity with which our society is now changing under the leadership of a Labour Government will result in many more reform Bills of this kind being introduced and at much more frequent intervals than in the past.
  We should relate the provisions of this Bill to the lengthy period which they are intended to cover. Most of us agree, when we talk to young people about the kind of society they envisage, that we will, in the remaining years of this century, even with a continuity of a Labour Government, be unable to eliminate unearned income. We will still have a mixed economy; we may not be able to establish a Socialist society. What we are saying in the Bill relates to the kind of ideas which the leader of the House must consider when dealing with the kind of legislation to be brought before the House in these 33 years.
  We all recognise that there is no instant Socialism and that this is a very slow process. It is important that we should get our priorities right. It is important to examine the proposals in this Bill to see whether they are the best possible to help us along the road that we intend to take. There is the question of the character of private investment, how we see the rôle of future shareholders, and how we should make provision and introduce changes in our law which will democratise the rôle of the shareholder and the rôle of the company relevant to shareholders.
  We are not very far away, when we talk in terms of 13 years ahead, of the sort of changes that will take place in that period, and how they will affect

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  the reforming zeal of this Government in terms of company law. By 1980 we shall see almost a complete abolition of the present investment system and with it, of course, the Stock Exchange. The main idea which has been developed inside the Labour movement to replace that system, which could broadly be described as investment collectives, will be the main basis of company investment in the not too distant future. Investment collectives will be an amalgam of the kind of group investment we see at the moment. That is one of the major things likely to emerge in the future as a result of our political thinking.
  Reference was made to unit trusts, savings groups, pension funds and other methods which are at the moment the basis of collective investment. The unit trust movement will develop very rapidly and within a few years will take on quite a different character. We can see the embryonic change taking place in our ideas on investment. It is from that kind of embryo that will emerge this thing called "investment collectives". We see these changes in our kind of mixed economy, and we should carefully examine the Bill to see whether it fits into that process.
  The Lord Chancellor was perfectly entitled in another place to make the comments he did about the changing political scene and about how the Government intended to set about bringing in a series of reforming company law Bills to ensure that those changes take place at an organised rate.
  Looking back over the post-war years, it has taken about 20 years to expand the public sector of our economy, from something like 5 or 6 per cent. to 22 or 23 per cent., which is now publicly owned or, if I might put it, democratically controlled by State investment. There is a tremendous job to be done in order to double the size of the public sector of our economy and to achieve the kind of mixed arrangement which we will see emerge in the next 20 years.
  My hon. Friends mentioned insurance and banking in connection with the Bill, but they omitted to mention that the public ownership of banking and insurance is Labour Party policy. The Government are committed to carrying out the nationalisation of insurance.
  Mr. Speaker: Order. The hon. Member is just a little wide. He must get back to the Bill.
  Mr. Atkinson: The President of the Board of Trade gave a personal invitation for us to develop some of our own ideas about the future. I have scrapped some of my notes about the technicalities of the Bill, but my right hon. Friend was anxious to learn from back benchers what they were thinking, not on this Bill, but on the second and third Bills which he intends to introduce.
  Mr. Speaker: Order. The hon. Member will be able to gratify his right hon. Friend's anxiety but not in this debate.
  Mr. Atkinson: I appreciate that, Mr. Speaker. The tragedy was, of course, that the President of the Board of Trade gave that inivitation during your absence. It is no doubt on record that he did offer a very wide invitation for us to take part in the debate in this way. He particularly said that he wanted suggestions and proposals about the second Bill. I am following on from the remarks that were made by the Lord Chancellor in another place. I believe that we should make some comments germane to the future function and structure of limited companies.
  My final comments will be brief because, being a campaigner for shorter speeches, I do not wish to be the exception to the rule. I propose to deal with the five points that were made by the right hon. Member for Altrincham and Sale in his opening remarks. I shall deal first with the question of the information that is to be made available by the provisions of the Bill in terms of greater worker participation on company boards.
  The situation that arose in Vickers' Walker yards in Newcastle this week, where practically the whole of the labour force threatened to resign because of lack of information and security about the future, could have been avoided had the provisions which are now contained in the Bill been available.
  Referring to the question of exempted companies, there are, in our opinion, too many such companies, even with the provisions of the Bill. The trade unions cannot see why even the smallest unit should not be included within the provisions. There is no necessity at the moment to have these massive exemptions.

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  Comment was made about higher executives. One thing that worries a lot of people, including myself, is that nowhere in the Bill is there reference to executives or directors' families. A dodge which is practised is this: a director has to declare his remuneration, but there is nothing to stop him from putting one or two members of his family, his wife particularly, on the pay roll for no other reason than to augment his undisclosed income. I would like to see the Bill strengthened in that respect.
  The question of nominee shareholders was also raised. The trade unions are on record as having something to say about this. The whole of the trade union movement is unanimous in its declaration that nominee shareholding should be totally abolished. There should be no percentage of exclusions in this sense. The whole of nominee shareholdings should be abolished, because we see no justification in any degree for secrecy in the matter. Some people argue that it is wrong that because they have money in a company it should be declared to the world, but there is nothing to stop a person, if he is afraid of that kind of publicity, from transferring his money from a shareholding into a bank. By so doing he would have complete secrecy.
  Regarding political donations, Lord Gardiner listed the total donations prior to the 1964 elections as being over £2½ million. This represents over £4,500 per constituency. Labour research has gone further than this and shows that well over £3 million was expended before the 1964 General Election on behalf of the Conservative candidates. They are, after all, only anti-democrats. Surely only myopic anti-democrats could object to any kind of daylight being brought into a situation of that kind, where that kind of money can be poured out.
  Regarding insurance, I share my hon. Friends' concern about the present situation. We all recognise that no matter what is said in the Bill, if there are people who wish to exploit weaknesses in British law, whether it be company law or any other kind of law, they will do so. Even the best law has never prevented criminal action from being taken, nor has it prevented fraud. No matter what we write in the Bill, it will not stop activities of that kind.
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  There is, however, one thing sadly missing from the Bill, and that is provision to strengthen the Board of Trade. I understand that at the end of last year the Board of Trade were having about 18 investigations undertaken. All of them were being carried out by outsiders. The Board of Trade was incapable of carrying out the provisions of the 1948 Act. Therefore, if we are to strengthen companies legislation, surely we should have an assurance from the Government Front Bench that the staff of the Board of Trade will be extended so that it may carry out the kind of investigations envisaged.
  If the argument is that the Bill is to act as an early warning system in insurance and company problems of this kind, it can do so only if the Board of Trade has sufficient people capable of carrying out immediate investigations when they believe that a problem is likely to occur. At the moment it takes about three years to carry out an investigation, and by that time the damage has been done.
  I am sorry that I strayed a little from the Bill in the opening stages of my speech, but it is important that some of us put on record our long-term views about the rôle of the private company and the kind of society which we see for the future. That rests with leadership from this Government. I believe that we shall have uninterrupted leadership from this Government throughout the remaining years of this century. I look forward to tremendous changes taking place and an extension of commercial democracy in every sense. While I believe that we shall see a tremendous extension of public ownership in industry and commerce, I look forward to the day when big changes take place in the structure and function of private companies. If the object of the Government is to have continuous growth, full employment and stable prices in order to create a classless society, then we shall achieve it only when we start to interfere basically with the private company as we see it at the moment.
  7.43 p.m.
  Mr. Richard Wainwright: The hon. Member for Tottenham (Mr. Atkinson), in his interesting speech, alleged that one dodge being practised was that of a company director who put his wife and/or some of his children

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  on the payroll to dodge some of the disclosure provisions. He has forgotten the Inland Revenue. As far as I am aware, in practice, the only way in which such a "dodger" could have the amount of his wife's salary allowable to the company for Income Tax purposes would be to make her a director. By doing that he would fail to dodge the Companies Act because her remuneration would have to be disclosed. I know of no instance in which a business has succeeded in persuading the Inland Revenue to allow as a charge a wife's salary for just being about the place with no function and no work to perform. To pay tax on it at present rates would be a very expensive way of dodging the Companies Act.
  The hon. Gentleman's remarks brought to the forefront of my mind the position of the Inland Revenue in respect of this Bill. With the advantage of the presence of the Chief Secretary to the Treasury, I should like to ask to what extent the Inland Revenue is behind the Bill. It was said quite frequently in another place that the provisions of the Bill about exempt private companies were necessary because of the scandalously large number of exempt private companies which were not keeping proper accounts or which were not fulfilling their accounting obligations.
  I find it extremely difficult to believe that the Inland Revenue has tolerated a situation in which a large number of companies are either not keeping accounts or keeping them very badly. That has not been my experience with the Inland Revenue. The House should know to what extent the Inland Revenue has inspired or assented to some of the provisions for extra disclosure of information outside the accounts, in the directors' reports. Is the proposal to disclose turnover related to the possibility of a turnover tax? It would be of interest to know whether that is behind some of the Bill's provisions.
  I have always believed, from some little experience, that the Companies Act, 1948, although now in need of some amendment, was a splendid achievement of the 1945–50 Parliament and therefore a great credit to the post-war Labour Government. Compared with the solid timber of the 1948 Act, this Bill, especially if it is to be shorn of the good done to it in
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  another place, is the merest flotsam, and, I am afraid, flotsam which may sink some small businesses and specialised exporters.
  What makes the Bill particularly discreditable to me is the humbug with which some of the onerous new provisions are alleged to be linked to what is called the privilege of limited liability. I cannot see how the splendid device of limited liability, which has been operating for nearly a century, can suddenly be prayed in aid of an obligation to disclose a whole lot of information for the first time, as if limited liability were a new invention of Socialism which has just recently been bestowed on a grateful British trading public.
  It also seems to me humbug because if there is any purpose in the requirement about the disclosure of turnover, exports, the age of the directors' grandmothers, and so on, it must be for the better economic management of the country, for which I can see a case for disclosure. It is nothing to do with whether the economic unit happens to be of limited liability or whether it is quoted on the Stock Exchange. The other place slipped up in that respect. If we want to consider the place of the glass industry in the economy, for instance, it is no good talking about getting information from quoted companies because, as we all know, Pilkingtons, the leaders of the industry, have never been, and probably for some time will not be, quoted.
  If we want information about commercial professions it is no good tying it to limited liability. We are wanting information from what are unincorporated partnerships. I hope that during the stages of the Bill we shall be freed from the humbug of the claim that this is something to do with the privilege of being quoted or being limited and that we shall have a frank admission that what the Government want—and there is a good case for this—is information from the leading units of every economic occupation.
  The Bill is presented, in somewhat lugubrious tones, as an interim Measure. I can see two justifications for interim legislation. The first is that something is required in relation to the condition of Parliament, some constitutional issue which happens to involve limited companies and their affairs. This I conceive

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  to be the case with the proposal for the disclosure of political contributions. The Liberal Party, as must be known by now, takes no exception to the relevant Clause or its urgency as an interim measure. If it does anything, we think that it will do good.
  The second, and only other, reason I can think of for an interim measure is to protect the public from widespread and menacing fraud. This justifies the insurance company part of the Bill and, equally, should justify some clauses, which, alas, are missing from the Bill, for strengthening the powers, and certainly a long overdue strengthening of the practice, of the Board of Trade in relation to other company frauds.
  I wish that the Bill had shown traces that the Board of Trade had been talking, after the report had been published, to the two inspectors who did the Cadco job, who would have plenty to say about the deficiencies of the law concerning a barefaced scandal of that kind which did so much damage to innocent people. I wish that the Board of Trade had listened to the chambers of commerce, who are positively enthusiastic for measures to promote decent trade and track down much more effectively, and much quicker, the occasional rogue.
  Instead of those urgent measures against fraud, we have the largest and what is admitted on all sides to be the most significant section of the Bill requiring much more disclosure from companies, and especially from exempt private companies. While I am in sympathy with the idea of a certain amount of additional disclosure, I cannot see any justification for including this in an interim and allegedly urgent Measure.
  Mr. Stainton: Would not the hon. Member agree that the field of the exempt private company is the breeding ground of the long-term fraud? If the hon. Member were to go to New Scotland Yard and talk to the Fraud Squad, he would find that this was predominantly true of the smaller company frauds.
  Mr. Wainwright: I am glad that that intervention contained the word "smaller". While I do not deny that there is fraud in the sphere of the small private company—it would be odd if there were not among 400,000 such bodies—nevertheless it is no more than the
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  smaller type of fraud. I would not have thought there would be objection to measures involving the exempt private companies if they were part of a Bill designed specifically to deal with important fraud of all types in relation to companies. That, however, is not the case.
  That was brought out particularly offensively in another place, when those who pleaded, I believe rightly, for the Government to be willing to include provision for no par value shares were told that this was an almost impudent claim because the Government wanted all the time they could have to pursue this disclosure provision for exempt private companies—indeed, to abolish the exempt private company status altogether. Why something that the Jenkins Committee rejected should be put into what is alleged to be an urgent Bill, while something which the Gedge Committee as long ago as 1953 unanimously recommended—namely, the introduction of no par value shares—should be omitted, I cannot imagine.
  The Liberal Party—not, of course, alone—followed up the recommendations of the Gedge Committee with a specific plea—I quote now from a Liberal document called "Own as you earn"—
  "for permission to treat an Ordinary Share for what it really is, namely, ownership of a fraction of the company."
  The reason for that plea was mainly to promote employee shareholding and to make the whole business of shareholding much more rational and comprehensible to wage earners.
  Mr. Stan Newens: The hon. Member said that the Gedge Committee unanimously recommended the introduction of no par value shares. I think I am correct in saying that the T.U.C. submitted evidence to the contrary and that Wilfred Beard made a minority report to the Gedge Committee on this subject.
  Mr. Wainwright: I am grateful for that intervention. I acknowledge at once that my memory has failed me. I now realise that the T.U.C.—not, I think, to its credit—was retrograde in this regard. The hon. Member will, I think, agree that the Gedge Committee's majority recommendation was wholeheartedly in favour of no par value shares.

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  All that we are given to look forward to is a promise, without any date attached, of further stages of company law reform. I hope that hon. Members opposite, who have spoken eloquently about their ideas for the future of companies, will make life very uncomfortable for their Front Bench until the Government produce a much clearer idea, with dates attached, of what those future stages will mean.
  If any of the ideas of the hon. Member for Tottenham or the hon. Member for Bedford (Mr. Brian Parkyn) are to be expressed in those future and indefinite stages of company law reform, there is bound to be some legal provision for the separation of very large companies from very small ones. This will be completely contrary to the whole trend of the Bill, which tries to impose on the commercial community one type of limited company.
  If, however, as I hope is the case, we are to extend greatly by legislation the social obligations, obligations to employees, obligations to the whole community and especially to the local community in which the company is situated, surely we shall have to tackle the difficult job of separating the very small companies, which because of their tiny size cannot be expected to go a long way in practising widespread social obligations, from the giants which owe a very great obligation to the community which trains their workers, which provides them with orderly markets, which helps to promote their exports and all the rest. Therefore, the next stage of company law will have to go clean contrary to this stage, if it deserves the name "stage", which is now before the House.
  I turn briefly to the proposals for the disclosure of information outside the accounts. It will, I think, be generally agreed that trading figures are of little use except in relation to other trading figures. The absolute figure for a company's turnover is of extremely little significance, if any, unless one relates it to the assets of the company, its stock in trade, wage bill or some other figure. One must have at least two sets of figures to make the whole exercise meaningful.
  Company accounts simply are not prepared, and cannot be expected to be prepared, for the enlightenment of economists, economic managers, civil
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  servants or the admirable staff of "Neddy", because company accounts have to be prepared for the benefit of the proprietors. The exercise of the company accountants' judgment is for the information of those who have supplied the original funds and those who have a proprietorial interest in the business. It is for this reason that nowadays no accountant dreams of presenting to a works manager, for instance, historical accounts which have been provided simply for shareholders.
  Anybody who produced to a works manager figures of stock or work in progress which had been valued for the purpose of shareholders would be told to go away and not appear again until he had learned something about accounting for management. It is, therefore, trying to get poor figures on the cheap to use the company system for the enlightenment of bodies like "Neddy".
  I will weary the House with only one example of the danger to which this can lead. "Neddy" recently produced an alleged league table of the major clothing firms and tried to relate their recent earnings to the alleged value of the capital which they were employing. At first glance, it was a fascinating table, especially to anyone who has always lived in the centre of the ready-made clothing trade. But it did not take more than a moment's inspection to find that a number of companies, generally admitted to be extremely efficient firms, were low down the table for the sole reason that they had recently revalued their assets and were, therefore, working on a relatively high figure of capital employed.
  I do not quarrel specifically with that exercise, because it may be that "Neddy" was anxious simply to stir the pot. I take the view that energetic companies of the size of Montague Burton, Hepworths and Alexandre are quite big enough to defend themselves, as they did straight away in the financial Press and otherwise.
  The point that I wish to make is that, since the Government propose to insist upon identical disclosure by very small companies, they will themselves be making meaningless comparisons between companies which are not big enough seriously to defend themselves. If some financial journalist, or a well-meaning civil servant or Government economic adviser decides,

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  shall we say, to publish an investigation of the stepladder industry or the tin trade, under the provisions of the Bill he will have all the information from small and medium-sized companies available. He will collate together information which was prepared only from a shareholders' point of view and is purely historical, of mills brought in at the value at which they were bought in the year 1899, compare them with new premises bought by another company, or revalued, in 1967, and make other nonsensical comparisons of that kind. The Bill will produce information from very small companies, and the errors will not be demonstrated in the dramatic way that they were at once in the "Neddy" case, when there was a very quick come back from the public relations officers of the big clothing companies.
  In short, if the Government want to be burdened with a great deal of meaningless information without economic significance, let them burden the Board of Trade with all these disclosures from a lot of very small companies. The more of that kind of work that the already overloaded Board of Trade is asked to do, the less time, energy and staff it will have at its disposal to pursue the real job of policing the Companies Acts, which, in my opinion as a practising accountant, are very inefficiently policed from time to time at the moment.
  I fear very much that, by pressing the Bill in the form in which it was introduced in another place rather than the form in which it left the other place, the Government run the severe risk of so prejudicing and depressing business opinion that the next stage of their intended company law reform, whenever it comes, will itself be severely prejudiced.
  8.4 p.m.
  Mr. Robert Sheldon: The right hon. Member for Altrincham and Sale (Mr. Barber) asked why my right hon. Friend the President of the Board of Trade did not accept the arguments of the Jenkins Report, the arguments against the disclosure of the remunerations of directors of small companies. The arguments are contained in paragraph 351, because I can find no other arguments against it in the whole of the Report, and it will be seen that they consist of the following:
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  "… public disclosure by some small companies might be embarrasing to them."
  That is not an argument which needs rebuttal. It is an opinion, a view; and the Government, the right hon. Gentleman and I myself are entitled to take a contrary view. There is here no argument that needs counter arguments. It should be understood that whereas the Jenkins Report in so many of its conclusions proceeded from a weight of argument and understanding, in this particular case there was only a view expressed, and that view can be countered by another view.
  Mr. Barber: With great respect, there was a view expressed but, in the following paragraph, the Committee made a specific recommendation that although the information concerning emoluments and turnover should be available to the members and to the debenture holders, it should not be made public. I only mentioned that because it was, after all, a specific and calculated recommendation unanimously put forward on behalf of the Committee. Therefore, the point that I was making was that we might have had during our deliberations in another place and here some explanation of why the President of the Board of Trade did not accept that recommendation which affects the directors of 300,000 companies.
  Mr. Sheldon: That was not the argument put forward by the right hon. Gentleman. He argued that the Jenkins Committee proceeded to argument. Therefore, that argument needs rebuttal. If he looks at HANSARD tomorrow, he will find that he is wrong in that respect.
  Mr. Barber Mr. Barber rose——
  Mr. Sheldon: No, I will not give way again. We can look at HANSARD tomorrow——
  Mr. Barber: I quoted the passage to which I have just referred, as well as paragraph 351. I quoted both this afternoon. I said exactly what I have just said.
  Mr. Sheldon: Paragraph 352 is no argument. It is even less of an argument than paragraph 351. I was being charitable to the right hon. Gentleman.
  To return to the Bill, it is coming round a second time. Because of that, it might have tended to have the savour of recooked meat. However, during the

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  delay of 12 months, we have had the addition of some rather valuable Clauses. In particular, I am happy to see the Clauses about disclosure of shareholdings of directors and changes in them, and also those relating to the level of wages and salaries and numbers of employees. In addition, we are all glad to see the relevant change relating to insurance companies.
  I must show a little disappointment in that non-voting shares have not been included for legislative change. That is rather a pity because that is a great abuse which ought to be corrected.
  The second Bill which is promised to us probably in the lifetime of the present Parliament will need a much wider level of discussion and debate. I myself hope that we shall have something akin to the hearings which go on in the United States.
  Normally, legislation is a hurried process because it is presented to meet a particular requirement. In this case there is not the same need for speed, and I hope that we shall get the greater debate which is possible. Representations to the President of the Board of Trade are not sufficient by themselves for that purpose. We get representations made by those people with interests which are not the subject of close scrutiny. I hope that my right hon. Friend the Leader of the House applies his fertile mind to seeing whether it is possible, having such long notice of the second Bill, to initiate some form of specialist committee where it could be discussed over the next two or three years and be a model for the type of legislation particularly suited for such a committee.
  With these matters we could discuss the question of the separation between the advisory functions necessary to any board and the executive function, together with the relationship between the two which is of great importance; also the rôle of the employees in the company, at what level they should be represented, what sort of function and what sort of powers, if any, they should have. Greater disclosure I expect to see as a continuing process built on an acceptance of the disclosures provided in this Bill. I look forward to having these further arguments. The responsibilities, which my
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  hon. Friend the Member for Bedford (Mr. Brian Parkyn) mentioned, to employees, to shareholders, to the suppliers, to the community and to the nation can also be discussed. It is in this way that we can get full probing and can provide the framework for future legislation.
  Last February, when we reached the Second Reading of the other Bill, I said that disclosure, which was the essence of it—and it is an important part of this one—resulted in a happy alliance between those who wished to protect the investors, and those who wanted disclosure for the benefit of economic efficiency, and I hope that this happy alliance between those two kinds of people pursuing similar ends for only slightly different purposes will continue throughout the Committee stage and after of this Bill.
  It is necessary that much more be known about the individual firm in future so that comparisons can more usefully be made. I think that the disclosure provided for in this Bill will enable more relevant information to be obtained by those investing, as well as by those who have the wider interests of the industry or firm at heart. Such matters as the measure of efficiency based on the return of capital, properly valued as specified in the Bill, will be one of the important results to flow from this Measure. The level of output per employee, knowing as we shall do the wages, salaries, and the number of employees, is another measure of efficiency which will be produced because of the Bill. We might even hope to be able to make some assessment of the marginal return on new investment, which is crucial in making investment decisions.
  These are three spheres in which an informed outsider or an informed shareholder will be able to come to some decision about the efficiency and profitability of the firm in which he is directly concerned. These are some of the results which I hope to see from the Bill.
  We as a nation are extremely coy about the level of our personal remuneration, but when we examine this it is not obvious why this should necessarily be so. Civil servants, the heads of nationalised industries, Ministers and Members of Parliament, have their emoluments open to scrutiny by all, and I believe that this coyness is a convention which society can break with advantage.

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  In Sweden they have the highest gross national product per head outside the United States, and there they practise an extreme form of disclosure. This is not necessarily proof of a connection between a high g.n.p. and the level of disclosure, but I think it is an indication that a high growth rate is not entirely consistent with secrecy. In Sweden they have an annual tax book, of about 1,500 pages, in which one can see the name of every taxpayer in the country, the amount of income that he earns in a year, and also his personal fortune.
  Sir Cyril Osborne: What does that do? The hon. Gentleman will, no doubt, remember that Sweden made money out of two world wars. If he is going to make a correlation between what happens in Sweden and what happens here, perhaps he will remember that Sweden has the highest suicide rate.
  Mr. Sheldon: It would be a pity if the hon. Gentleman were to try to correlate those two facts. No correlation of the other kind could be employed, because here we have an example which shows the contrary. All that I was showing was that one does not depend on the other, and the fact that Sweden has this extreme level of disclosure which does not affect the g.n.p. is a case for arguing that secrecy does not provide some of the terrible things which have been suggested. The other point which is claimed for this disclosure is that it prevents a great deal of tax avoidance because so much is known about the individual, but that is by the way.
  The disclosures in this Bill are much more limited. I should like to widen Clauses 6, 7 and 8 so that each director has his remuneration disclosed, not by name, but merely the level of remuneration of each director. I think that the elaborate way in which this secrecy is to some degree preserved is quite unnecessary, and I find it difficult to accept. Although I would prefer to widen the level of disclosure, I would be very unhappy if it were narrowed.
  I think that the second Bill might proceed to the widening of the amount of disclosure. Industry has come to feel, quite mistakenly, that it has absorbed a large number of changes, and it has tended to resent these. Because of this
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  there is a need to proceed fairly cautiously.
  There are a number of reasons for disclosure, and I should like to go into them. First it is needed for the investors and for outside comment on individual companies. Company reports are much more informative now than they used to be. Even as recently as a year ago it was difficult, from reading the reports which were issued, to understand what a company manufactured. The aphorisms of the chairman ought to be open to scrutiny and if they are wrong they ought not to go unchallenged. A comparison needs to be made frequently between the efficiency and profitability of one firm compared with another in the same industry. We need a number of figures to be able to make that comparison, and it is this inquiry by those interested in the company, whether as an onlooker or as a shareholder in a number of companies, which is so important to improve the performance of companies in any particular industry.
  The point has been made a number of times today that the level of remuneration of the directors of a small business is no concern of anybody else. We know that this is not true. It is of particular interest to the creditors of such companies, because these companies have certain advantages as limited liability companies. With an unlimited company, whether as a proprietor, or as a partner, a person has the whole of his personal wealth at stake, but with a limited company there is no such risk. At the present time it is disgraceful just how much credit a limited liability company is able to claim for itself when one bears in mind the amount of information available about it. The individual or firm who risks a large sum of money in supplying credit to another company about which he knows so little needs rather more protection than he receives at the moment. More information should be available about such companies because when they fail, the failure is likely to be substantial and there is little left to compensate those who are unprotected.
  I am less convinced about the need to disclose exports. I think that this is of marginal value, but it may be of use in our present difficulties, when so much attention is being paid to the level of

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  exports by individual companies. I think that it might promote direct exports, as opposed to supplying goods for export by other companies. To me, an exporter is a person who goes overseas to find markets for himself. The person who supplies goods to another company which exports them is not an exporter. A person engaged in such a business is a supplier of goods. The goods may go to the home market one week, and go abroad the next. He is not an exporter. It is the direct exporter about whom we are particularly concerned at the moment. This provision is of some marginal value at the moment because of our difficulties, but I think that it may become rather less important in the years ahead, and this is what we should be considering in a long-term Bill of this kind.
  The need for disclosure for Government economic planning is obvious, and a number of hon. Members have drawn attention to this. The hon. Member for Colne Valley (Mr. Richard Wainwright) disputed the need for these figures. He said that these absolute values were incorrect and inadequate. It is true that absolute values of the level of stocks may not reflect the true values of the stocks, but in economic planning we are much more concerned with changes than with absolute values. If companies report a down-turn, the extent of this down-turn can be of real significance. Although I admit that changes of values may not have quite the same significance as absolute values, they are necessary, and will lead to an improvement in our statistical information from which the Government can make useful decisions.
  There has been talk about lifting the veils of secrecy, and a great deal of uneasiness has been caused at the thought of the changes ahead. This, however, is one of the changes with which people will learn to live quite easily. In a year or so the fuss will die down and people will regard it as normal for this information to be generally obtainable for the benefit of people and organisations dealing with companies.
  I welcome the Bill. There are some things that I hope to see in it before it gets through Committee, but it has gone a good way towards achieving some of the aims we had when we talked about the introduction of the last Companies Bill. For this we should be grateful.
  8.21 p.m.
  Mr. J. Bruce-Gardyne: It is always a privilege to follow the hon. Member for Ashton-under-Lyne (Mr. Sheldon), whose comments command our respect and, to some extent, our agreement. This evening has been no exception. I make one proviso. The hon. Member's anxiety about the position of the creditor of the private company who is unable to know the amount that directors of the company are taking out of it by way of salaries could be met by excluding from the new Clause 37, introduced in another place, the exemption of these companies from their obligations under Section 196 of the principal Act. This would precisely meet the problem.
  However, the President of the Board of Trade invited us to philosophise about the background of the Bill and we have had some very odd philosophies from hon. Members opposite. To my mind they have very little to do with what company legislation should be about. As my hon. Friend the Member for Harrow, Central (Mr. Grant) remarked earlier, the Bill is something of a curate's egg—a curate's egg with a difference. Parts of it are excellent, parts are indifferent and parts are bad; parts are missing and parts do not belong at all. Nevertheless, it is a considerably better meal than that which was presented to us last spring and it has been greatly improved in another place. I was, however, deeply depressed to hear the right hon. Gentleman announce that the Government intend to remove some of those improvements.
  This is a highly important Measure. I do not subscribe to the view that we are likely to see another piece of company legislation in this Parliament. Unlike the hon. Member for Tottenham (Mr. Atkinson), I regard the Government as a transient and embarrassed phenomenon, and I do not think that we are likely to see them introduce another piece of legislation of this sort, which will take up a lot of time on all occasions.
  Mr. Jay: Does not the hon. Gentleman mean "phantom" rather than "phenomenon"?
  Mr. Bruce-Gardyne: I prefer to use the word "phenomenon". I cannot regard the right hon. Gentleman as a phantom. We can see him, alas!

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  This is a highly important Measure, because company legislation is essentially concerned with the relationship between the owners and the management of companies. Unlike hon. Members opposite, I regard the rôle of the shareholder in our society as vital. Shareholders form the only group in our society which is exclusively concerned with profit and profitability. Hon. Members opposite have talked about the other obligations of management—social responsibilities, and so on—but my impression is that many managements today are only too conscious of their other responsibilities, including social responsibilities and status. Profits come in, but in many cases they come a long way down the scale.
  That is why it is dangerous for us to proceed with the divorce which has been going on—I do not entirely exempt my right hon. Friends when they were in power, but the process has been greatly accentuated by the present Government—between shareholders and management. It is the sheerest hypocrisy for hon. Members opposite to proclaim their belief in the profit motive when they are trying to remove the influence of the one group which is essentially concerned with profitability.
  Another sad effect of this divorce between shareholders and managements is that the inclination of the misbehaving management to defraud and oppress its shareholders is greatly increased. It does not lie with hon. Members opposite to complain about any increase in the number of frauds in limited companies in recent years, to the extent to which these have been encouraged by the divorce of management from shareholders. For this reason the improvements in this Bill are definitely overdue.
  I put the essential chracteristics of company legislation as three in number, in descending order of importance. The first is the movement of resources towards the most profitable companies by the disclosure of all information, enabling investors to choose where their money can be most profitably invested. That is the technique of encouraging the competent and penalising the incompetent. That is the essential national interest aspect of company legislation. I am here referring to public companies, because the same
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  considerations do not arise in the case of unquoted companies. Secondly, there is a need to protect shareholders from oppression by management, and, thirdly, a need to protect creditors.
  I cannot see that Clause 19, dealing with exports, fits into any of these categories. Several of my hon. Friends have pointed to the dangers of this Clause, and they do not over-estimate them. I object to its invidious nature. A number of firms in my constituency produce textiles, a small part of which, no doubt, are exported direct. But a very much larger part is either exported through merchants or installed in motor cars, for instance, which are exported in thousands. The right hon. Gentleman said this afternoon that directors can say what contribution they are making indirectly to exports. But they do not and cannot know. The right hon. Gentleman is trying to make an invidious and unreasonable comparison.
  The obligations which the Government seek to impose on unquoted companies go much too far. Shareholders in these companies are certainly entitled to the same information as those in public companies, but they can get it and the Bill's additional requirements are not necessary. This is why I hope that the Government will think again and accept the new Clause 37 introduced in another place, with perhaps the addition which I have mentioned with reference to Section 196 of the principal Act. There is too much pathological suspicion opposite that someone may have been getting away with something more than someone else. The Lord Chancellor said this time and again in the Second Reading debate in the other place. This is an idle and pernicious curiosity. The other side have given no justification for it.
  I make a special plea for another type of curiosity, a creative and constructive one, that of the City Press and financial newspapers. I am sure that the right hon. Gentleman would agree that the financial Press has, on many occasions in the past, provided an invaluable safeguard and ally for the small shareholders. One has only to think of such unfortunate incidents as Third Mile, A.F.A., and, I might say, things like the Garda and Atlantic Assets affairs, which would never have been exposed without the work of

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  the City journalists, who require the maximum information on quoted companies as opposed to unquoted companies. In this respect, the Bill does not go as far as it might.
  I am delighted by the information required on insider dealings and beneficial holdings of shares. But is the right hon. Gentleman satisfied that the provisions for disclosure of beneficial holdings of 10 per cent, are sufficiently watertight to deal with nominee shareholdings? I draw his attention to the Stock Exchange rules as set out in the publication "Admission of Securities to Quotation", page 98, which deals with the definition of an indirect interest through families and children and the like. This may be a happier definition than the one in the Bill. It is something which I hope the Government will look at in Committee.
  I am not happy about the provision that information about insider dealings and beneficial holdings of more than 10 per cent. should be available at the registered offices of companies. There might be something to be said for having them published, for instance, in the Board of Trade Journal. I think that this is the procedure operated in the United States, by the Department of Commerce.
  Valuation of assets was mentioned by the hon. Member for Colne Valley (Mr. Richard Wainwright), who made a strong case. There ought to be some provision for regular revaluation of assets if we are ever to have a meaningful estimate of return on capital employed by quoted companies. I hope that the Government will go further and follow the Stock Exchange along the way to require the publication of six-monthly statements of sales and profits——
  Sir C. Osborne: Oh, no.
  Mr. Bruce-Gardyne: My hon. Friend says "Oh, no", but if we are to encourage people to channel their savings and investments into the companies which can use them most efficiently, this is the sort of information which is desirable.
  I am sorry that the Government have not included any provision for dealing with the procedure regarding take-over bids. The recommendations were in Jenkins and have been left aside. Particularly after the recent and unsavoury affair of the Philips bid for Pye, there was a
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  case for looking at the Jenkins recommendations on this matter very closely.
  I was surprised at what the President of the Board of Trade said about the exemption for shipping companies. He seemed to suggest that considerations of public and national interest applied in that case although they did not apply in the case of export figures. Paragraph 415 of the Jenkins Report dismisses this argument effectively, and the right hon. Gentleman would do well to study this matter again.
  There are many aspects of the Bill which I could discuss, but I do not wish to delay the House. I have made some criticisms of the Measure, but I very much welcome the provisions for disclosure of turnover—again, by quoted companies; I have all along been referring to quoted companies—and the disclosure of contributions to profits by different branches of diversified companies. I also welcome the provisions for the disclosure of insider dealings, as I have explained, and I have no great complaint about the provisions covering the disclosure of directors' and top executives' salaries. I think this will help to promote a healthy "upward mobility" which I believe we need.
  We have come a long way in our company legislation from the days, 200 years ago, which produced what I have always regarded as the most splendid of all companies—that which was floated
  "… to carry on an Undertaking of Greater Advantage, but Nobody to Know What It Is".
  This is an approach which we have wisely put behind us. The Bill goes some way along the lines we should be following. In some respects it does not go far enough, while in others it goes too far. However, I hope that we shall not kid ourselves that we are going to have another instalment of company legislation from the present Government.
  8.37 p.m.
  Mr. Peter Archer: This is the stage of a debate when hon. Members who succeed in catching your eye, Mr. Speaker, abandon the points which they had originally intended to discuss and which have already been fully ventilated. It is the time when one can extract the general trend from what has been said. I will

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  do so briefly because several hon. Members hope to contribute to the debate.
  I suspect that when my right hon. Friend the President of the Board of Trade introduces his subsequent Bill he will find that he has on his hands something more controversial than he has today. Although a number of important debating points have been made, a broad measure of agreement has been expressed. But what has emerged is a fundamental difference beween the parties which, I suspect, will exemplify itself more forcefully in future discussions of this matter.
  Although I will not comment on the many interesting subjects raised by the hon. Member for South Angus (Mr. Bruce-Gardyne), I was obliged to him for pointing out that what we are discussing is what company legislation should be about. I agree with the hon. Gentleman that there is a fundamental disagreement of philosophy here. He spoke of the necessity to look again at the whole question of take-over bids. Surely this is an example of accepting that those who are in control of companies should have at least one eye on what he called "social responsibilities and things like that".
  The essential differences which have become crystallised in this debate can be summed up in the words of the right hon. Member for Reigate (Sir J. Vaughan-Morgan), who said that the obligation resting on company directors was to secure the higest return on assets, and the hon. Member for Harrow, Central (Mr. Grant), who said that their obligation was to maximise their company's profits. Some of my hon. Friends, on the other hand, hold what the hon. Member for South Angus called "rather odd philosophies". Unfortunately, the obligations on company directors mentioned by hon. Gentlemen opposite accurately express the present state of the law and it is singularly unfortunate that even those many boards of directors who are anxious to have a sense of responsibility, even generosity, find that they are not only entitled but compelled to adopt an attitude which is thoroughly narrow and selfish. If they seek to be generous, they have to disguise their motives by pretending that they are in
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  the purely narrow interests of their company members. This appears to have emerged from the decision in 1962 in the case of Park and the Daily News. Any attempt to be generous to employees involved exceeding the powers they held.
  While I do not entirely accept the view of the hon. Member for Harrow, Central—who, unhappily, is not in his place at the moment—that hon. Members on this side of the House basically regard the limited liability company as an enemy, I hasten to say that I do not necessarily take the same eulogistic view of its functions as does the hon. Member. The whole history of the matter is singularly uninspiring. In 1844 an unwilling legislature, after bitter debate, conceded that groups of people who wanted to participate in commerce should be entitled to do so as corporations—which, putting it brutally, is another way of saying that they would not be held responsible individually for their collective decisions. Eleven years later there was a concession that they should be able to trade with limited liability, which is another way of saying that although their profits might be unlimited any losses they might make would have to fall, at least partly, on someone else.
  Unhappily, the whole concept then ossified. The vocabulary froze, and in subsequent legislation—including, I hesitate to say, the present Bill—those concepts have been adopted. Certainly any historian of the future who seeks to obtain a picture of commerce in 1967 by looking at the legislation on the subject, including even this legislation, might get a very odd account of what goes on. His impression would be that a group of people who intended to participate in commerce get themselves incorporated Then they democratically elect their directors who faithfully carry out the policy determined on by the shareholders. They undertake activities by engaging employees, who each undertake an individual and freely negotiated contract of service. They sell their goods to the consumer at a freely negotiated price. That is their sole relationship with the remainder of the community, unless by mischance one of their drivers happens to runs down a pedestrian.
  That is the conception which is still in the whole of legislation on this subject.

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  We welcome the invitation of my right hon. Friend to offer suggestions for future legislation and to keep within the rules of order by complaining that they have been omitted from this Bill. Without carping it is unfortunate that my right hon. Friend spoke of "reforming company law". The word "company" has on occasion rather inhibited discussion of some of the wider implications, as seen in the Jenkins Committee, when Mr. George Woodcock sought to raise the question of disclosure to employees he was courteously but firmly told that it was outside the province of company law and was to do with master and servant. Even the word "law" is likely to inhibit consideration of the wider social policies which my hon. Friend the Member for Ashfield (Mr. Marquand) attempted to introduce.
  When one looks at the provisions for disclosure one finds oneself up against just these inhibiting factors. I should have thought that my hon. Friend the Member for Ashton-under-Lyne dealt fairly successfully with the objection that the obligation to disclose goes too wide because it takes in the present exempt private company which consists of the honest hard working grocer and his wife, who are concerned only with minding their own business. Not every exempt private company is necessarily represented by the hard working grocer. But I would have no objection if there were some way in which to limit the obligation which excluded those companies where disclosure might conceivably be a burden, without at the same time leaving all the loopholes for the professional escapologists who, until now, have succeeded in evading almost all the legislation which was designed to protect ordinary members of the public.
  One possible way in which to deal with the objection of the right hon. Member for Altrincham and Sale (Mr. Barber), that there would be unfair competition by the big combines which operate locally, is that we might invite the big combines to offer, along with the remainder of their disclosures, an analysis based on geographical and regional concepts. This would at least put the two types of company very much on a par at local level. But if some satisfactory distinction can be hammered out in Committee, most of us on this side of the House would be satisfied.
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  The right hon. Gentleman's other objection was rather different. He adopted paragraph 13 of the Jenkins Report, which speaks of excluding disclosure where the work of preparing information is disproportionate to its value. I am not so sold on that objection. It is terribly easy for any company, particularly if this entails a little extra work, to arrive at the conclusion that the work of preparing the information will be disproportionate to anything which can possibly emerge from it.
  I would have welcomed the obligation to disclose purely on the ground that it compels that company which does not have the information already to work it out. It is very surprising if boards of directors do not already have it. Certainly at a time when control by the shareholders is progressively vanishing, one would have thought that anything which might present a clear picture and which would be conducive to efficiency would be very much to be welcomed.
  Some of us would have welcomed in Clause 14 some obligations on the auditor going rather further than the present financial obligations. Is not the time rapidly arriving when there should be an obligation to conduct an efficiency audit, quite separate and apart from the purely financial audit, which is made at the moment for the protection of people other than the doctors; should there not be an audit for the guidance of the directors?
  About Clause 18 one can only say that it must be very surprising, by any standards, if shareholders are not entitled to know what is happening to what, by any legal criterion at the moment, is their own money. One's heart bleeds for the Conservative shareholder who discovers that his money is being poured by a Left-wing inclined board of directors into the funds of Transport House. One wonders whether hon. Members opposite would regard this as just a pernickety point.
  Mr. McNamara: Would not my hon. Friend agree that one of the most appalling omissions from this part of the Bill is a provision for shareholders to contract out of making such contributions? Does he not look forward to the time when outside his own committee rooms there is a notice to notify shareholders that they

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  can contract out of levies to political party funds?
  Mr. Archer: I thank my hon. Friend for that comment. Certainly the proposed restrictions on companies are not within 100 miles of the present restrictions on trade unions. If a trade union wishes to make contributions for political purposes, it is compelled to maintain a quite separate fund. I would have thought that there might even be a case for requiring that shareholders must be invited to contract in, but it would certainly be interesting to see what the results of contracting out might mean.
  There are obligations which go very much further than the obligation to shareholders and creditors. Much has been said about the obligation to employees, and I will not retread the same ground. But is it not incredible that someone who picked up a bundle of shares last week, and could not even now say what the company makes, should in law be a member, whereas an employee who has devoted 50 years of his life exclusively to the purposes of the company—which most of the directors have not done—will qualify for nothing more elaborate than the right to a gold watch?
  In the circumstances, could not something be done to recognise that there is a status more than the purely subordinate status at present afforded to employees? Obviously, there would be difficulties in abolishing the chain of command on the workshop floor, and no one seriously suggests that. There are difficulties also because there is not one homogeneous interest applicable to all employees. For example, there is a difference between the labourer engaged two or three weeks ago and the highly paid executive who is expecting shortly to be invited to take his place on the board. But it should not be impossible to work out a method by which some control over the general policy of the company, not over its day-to-day activities, could be put in the hands of people who are, when all is said and done, largely responsible for the prosperity of the company.
  One thinks, perhaps, of the issue of some kind of shares, with or without a capital value and with or without a right to dividend, but with voting rights. This might, possibly, be a way of solving the problem. However, if that is going too
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  far, one still wonders whether it would be possible to include a number of measures calculated to protect employees in a way in which they are certainly not protected at present.
  To take a Committee point—I promise that this will be the only one—I am disappointed at the omission from the Bill of any provision to amend Section 319 of the 1948 Act. The present position, as I understand it, is that the people whose financial interests are most closely wrapped up with the prosperity of a company, the people whose interests above all are shattered if the company fails, are protected only to the extent of four months' wages or salary or £200. This was the provision in 1948, and since that time, wherever the blame may lie, there have unhappily, been considerable changes in the value of money. I hope that this matter can be looked at in Committee.
  Now, the interest of the consumer. Why should not the consumer be entitled to know whether the price charged for an article fairly reflects the prosperity of the company, the costs of production and the proportion of the profits which goes into the pockets of directors? These are relevant questions when the consumer considers the price which he ought to pay for the article.
  A great deal has been said about the protection of the consumer in the insurance business, and I am delighted to know that even right hon. and hon. Members opposite are much concerned about this aspect of consumer protection. Why not consumers of other commodities? There are in existence already a good many consumer associations. The Board of Trade is hopelessly overburdened. The limiting factor on Board of Trade investigations into company frauds will not be the Department's legal powers, but the resources at its command. Could not some function be found for private consumer associations which, without introducing further powers in the hands of the Government, could be given the opportunity to investigate a company's affairs from the point of view of the consumer? There we have it—an obligation to shareholders, creditors, potential investors, employees, consumers, and the public at large. But what that raises is the question whether our present concept of a limited liability company, a private corporation,

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  is wide enough to do justice to all those obligations.
  Whatever the final outcome of the discussions on those subjects, one hopes that the subsequent legislation will ensure that the protection at present given is only proportional to the function carried out.
  8.55 p.m.
  Mr. John Smith: I am glad that I have caught your eye, Mr. Deputy Speaker, because there are undoubtedly more companies in my constituency than in any other, and the whole of my working life has been spent with companies.
  Apart from a few blemishes and omissions, the Bill improves the legal framework within which companies work, and it will therefore improve the public reputation of companies in general. The hon. Member for Rowley Regis and Tipton (Mr. Archer), to whose constituency I have made many visits by boat, spoke about the trade unions. It is said that the Government are prepared to render this service to companies but are not prepared to render the same service to trade unions by giving them a similarly legal framework within which they could work and be free, instead of frozen, and which would improve their reputation with the public.
  The principal criticism of the Bill is that it imposes on all companies provisions some of which are reasonable enough for large public companies but all of which are unreasonable when applied to smaller ones. That is particularly true of the disclosure provisions which, we should admit, are partly just pandering to the current universal urge for over-exposure of every kind, physical, financial and statistical and partly a reflection of the Government view, oft expressed, and damaging to the economy, that companies are basically wicked things, and that if one wants to enjoy the supposed advantages of being a company one must be tormented a little. That view came out very clearly last Friday.
  In fact, the idea of limited liability, which, if it was not the launching pad of the industrial revolution, was most certainly its second stage rocket, is far from being a privilege. It is a service to the community, and that is why it
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  was introduced. The notion that the savings of aunts, widows and cousins should be denied to industry because they would have to go into the thing down to the buttons of their boots and take a personal interest in the business, is absurd and was dismissed before the middle of the 19th century. The idea of limited liability, to put it at its very lowest, has produced an enormous reservoir of taxable capacity for us to squander here.
  Some of the disclosure provisions will have very unexpected results. We have already discussed the effect of disclosing turnover on large and small companies. I repeat the point that although it is possible to calculate the turnover of a company roughly, in some cases, from its annual accounts, yet if one knows the turnover of a small company perfectly accurately and does business with it, one can tell to what extent it is dependent on one's larger company. There have been many cases of a large firm egging on a small company until it is its principal customer, and then confronting the small company with absorption or extinction. This Bill will undoubtedly encourage the unscrupulous in that direction.
  Mr. Barnett: Surely there is no difference between the present situation and what will apply under the Bill. The hon. Gentleman has not explained in what way it would be different. He agrees that this information as to turnover would be available generally anyway. In what way, therefore, would the situation be different?
  Mr. Smith: It is not always possible to calculate turnover; but we cannot go into this aspect now. One can calculate accurately turnover of a company making a simple product like a brick, but many companies have diverse activities. In any case, there is inertia in human affairs, and people are more likely to go for this type of operation if the information is handed to them on a plate.
  The Bill is also designed through disclosure to reduce the earnings of directors and highly-paid employees. It will have the opposite effect. As has been pointed out, there is at present an enormous variation in the earnings of directors. I know that from my own experience. Many firms, when these figures are

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  published, will be obliged to increase the earnings of their principal people if they want to keep them.
  The management selection firms whose job it is to hunt about for people to fill the top positions will find it much easier than before to spot the underpaid men who are likely to respond to the offer of a better paid job elsewhere—and those management selection firms will not be Engish, but American or European. Anyone in doubt about the dangers should read the advertisements in the local Derby newspapers—Derby is a centre of the aircraft engine industry—and see who advertises and for what.
  To publish the amount of earnings waived is particularly ridiculous. This provision made me inquire for the first time what I waive. I was profoundly surprised by the amount, and if the Bill is to force this figure to be published I might as well take the money instead.
  As for subscriptions, both political and charitable, I have always found that boards prefer to make fewer rather than more subscriptions. I shall not go into the merits of companies subscribing at all. I do in fact think that subscribing to charity through a company is rather a bloodless way of giving alms and I prefer causes supported by the shillings of the multitude. They are more fun to run and one gets much more satisfaction from the support of all these people. But taking the situation as it is, the attitude of any board is usually, "I suppose we shall have to subscribe to this in case it gets out that we haven't". If subscriptions are to be published, it is far from certain which will increase and which will diminish.
  The provisions about export figures are irrelevant, and one of the most important illustrations of this is that many firms are not exporters but are import avoiders by manufacturing here something that we must have, which is not a luxury nor even dispensable—something like aircraft engines, for example. If we did not make them, they would have to be imported. I urge that the disclosure provisions should be reviewed and that, in any case, they should not be made applicable to smaller companies.
  One of the points which have not been made, although instances of it have been
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  mentioned quite often, is that the Bill further erodes the rule of law. Whether a company is or is not a bank is now to be decided, without right of appeal, not by the courts but by the right hon. Member for Battersea, North (Mr. Jay). In the past the courts have made some very odd decisions under this head, but we would be better employed here in improving the law so that the courts can interpret it instead of trying to do the job ourselves.
  The issue of no par value shares has been dismissed on the grounds that this Bill is to do with disclosure and protection, but no par value shares are very much to do with protection. Not only do they do away with a great deal of clerical drudgery, but shares of nominal value can mislead the simple in the same way as insurance misleads the simple. They are bound to think that a £1 share is worth more than a 5s. share, and that the share paying a dividend of 20 per cent. is better than a share paying 5 per cent. On the score of protection of the innocent, no par value shares have a claim to be included in the Bill.
  I urge the Government to leave that provision in the Bill. There are other measures of protection with which I will not deal, as we must get on. This Bill will improve companies. It is a very reasonable effort for a Government and party who, with honourable exceptions, some present, do not like or understand money or companies. But it may still be greatly improved even at this late hour, if we can remove from it some of the spite and the cant.
  9.8 p.m.
  Mr. F. V. Corfield: My right hon. Friend the Member for Altrincham and Sale (Mr. Barber), has made it clear that there is no dispute between us that it is very desirable that we should take a further look at the provisions of company legislation. He and my hon. Friends have also argued cogently against going beyond Jenkins in relation to the disclosures demanded of small companies which are at present exempt. With the smaller companies, at any rate, there has been a degree of sympathy demonstrated from the other side.
  My right hon. Friend went on to express our disappointment that the Government appeared to be determined to

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  use their majority to expunge the very considerable improvements to the Bill inserted in another place. I am particularly thinking, although not exclusively, of the Clause providing for shares of no par value, in respect of which I would associate myself very strongly with the views of my hon. Friend the Member for Cities of London and Westminster (Mr. John Smith). I do not wish to reopen those arguments, but there remain a number of other factors. There are so many instances of thoroughly woolly drafting that one cannot but be left gravely in doubt as to whether those who instructed the draftsmen really clarified their minds and knew what they intended to achieve.
  Nor can one be sure, even where one can discern the intention of the provisions, that the Bill will achieve them. Even in this Bill where certainty is very much the essence of effective legislation, I join with my hon. Friend the Member for Cities of London and Westminster in deprecating this departure from the rule of law and the Government's failure to resist their inherent urge to increase the powers of the Executive in an arbitrary manner.
  I refer to Clause 12, which confers upon the Board of Trade powers to amend a Statute by Regulation, with the widest possible powers in relation to defining companies, and then makes the Board of Trade the interpreter of the Regulations which it has drawn, making it necessary, if there is any dispute at all as to what companies are covered, that the Board of Trade should be the arbitrator and there should be no appeal from its decision.
  This is wholly unacceptable in any form of legislation. I agree whole-heartedly with my hon. Friend that it is our job to legislate clearly. When that legislation is delegated—and I hardly think that Regulations are the right method of doing it—it is the job of Government Departments to say what they mean and to say it clearly.
  I do not, in this context, refer to Part II of the Bill. Although in Committee we shall examine with care the various discretionary powers conferred upon the Board of Trade, we recognise their need. Indeed, we welcome that part of the Bill as far as it goes.
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  Certainly I and most of my hon. and right hon. Friends have some reservations and share some of the doubts expressed by the hon. Member for Heywood and Royton (Mr. Barnett) as to whether they go far enough, and the doubts expressed by my hon. Friend the Member for the City of Chester (Mr. Temple). I certainly have some misgivings both as to the competence of the company branch of the Board of Trade to compete with all these extra powers and the very heavy duty which faces them, and also with regard to the facilities and skills available to the fraud squad.
  I do not intend to dwell upon the omissions in the Bill. We have been promised this other Bill, which, we are told, will reflect the Government's philosophy towards limited liabiilties. I do not propose to follow into the realm of philosophy, which I leave to Members on the other side of the House. Apart from the fact that to take two bites of this cherry is to miss an opportunity, to absorb eventually much more Parliamentary time, and to postpone unnecessarily much-needed reform, it is surely time that a party which has had four years to look at the Jenkins Report, which came to the 1964 election "poised and ready for action", should be able to tell us the philosophy underlying its Bill.
  But, of course, the philosophy underlying this Bill is discernible. To begin with, as we have learned from almost every major piece of legislation introduced by the Government, they have either not grasped, or they are determined to ignore, the wisdom and the basic approach of the Jenkins Committee, the principle of which is applicable to nearly all legislation, and which is set out admirably in paragraph 11 of page 3 of the Report. To save a little time, I do not wish to read the whole paragraph, but starting about halfway down. it says:
  "But controls and regulations carried to excess may defeat their own object; and we share the views expressed by the Greene and Cohen Committees as to the undesirability of imposing restrictions which would seriously hamper the activities of honest men in order to defeat an occasional wrongdoer, and the importance of not placing unreasonable fetters upon business which is conducted in an efficient and honest manner."
  Equally, the Government seem to go out of their way to ignore the warning that,

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  having accepted a need for greater disclosure, it cannot follow that disclosure as such is necessarily a good in itself, or that too much disclosure can well be counter-productive. That is admirably put in paragraph 13 which was quoted earlier by my right hon. Friend.
  The Government's philosophy is clearly to be found in the remarks of the Lord Chancellor in another place, which appeared to have the wholehearted support of the hon. Member for Ashfield (Mr. Marquand). When referring to provisions requiring disclosure of emoluments of directors and the more highly paid executives, he said:
  "We live in days when there is an incomes policy, and everybody's income is very interesting to everybody else. Why not?"—[OFFICIAL REPORT, House of Lords, 22 November 1966; Vol. 278, c. 131.]
  I do not question that people are interested in other people's incomes, but I question very much whether it is particularly praiseworthy, let alone something which should have positive encouragement.
  On the contrary, I should have thought that the greatest single problem in the formulation, let alone enforcement, of any incomes policy was the fact that people who freely negotiate contracts and are satisfied they are completely fair reject them as being fair not because the other side is reneging on its obligations or because circumstances in that employment have changed, but solely because other people who negotiated another contract between different parties and in different circumstances have done rather better. In short, this is nothing more nor less than the philosophy of envy and, apart from its unattractiveness in itself, the Government still have not the wit to see that in preaching it over the years it has become the principal obstacle to any incomes policy in the past and will remain so in the future.
  Moreover, as my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) and my hon. Friend the Member for the Cities of London and Westminster pointed out, it will not be difficult to identify the individuals falling within the salary brackets described in the Bill and thereby providing management accountants, or whatever they are called—"head hunters" I believe they are called in the slang—with a ready-made directory from
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  which they can identify the individuals to whom the salaries they are prepared to offer are likely to be attractive.
  No doubt there may be much to be said for greater competition for the exceptional skills and ability, but I cannot think that the impetus which the Bill is likely to give will be anything but inflationary or that there will not be many instances in which the effect will merely be to unsettle staffs and undermine loyalties. Nor can I have any confidence that it will not be American business men who will be the main beneficiaries of these provisions. If, as I thought was suggested by the hon. Member for Ashfield, when these figures emerge steps are taken to lower them, the brain drain, which is already a considerable flow, will become a positive torrent. If that is what right hon. and hon. Members opposite want, they seem to me to be going the right way about it in the Bill.
  The same philosophy underlies remarks made by members of the Government about the provisions for the disclosure of political and charitable contributions. We all know them. The Minister of Power:
  "If firms want to get involved in politics they must do so with the knowledge that some of us are determined to hit back where it hurts."
  The Minister of Technology:
  "Just as Government contractors are disqualified from election to Parliament they should also be prohibited from making direct or indirect contributions to any Party funds".
  The Prime Minister:
  "We have made it clear that these directors will be called to account".
  Nobody can say that this is unalloyed concern with the good of company law. As The Times put it,
  "The bit about political contributions of course is vengeful, the bit about directors' fees is envious and the bit about export earnings invidious".
  If we can agree, which I hope we can, that disclosure is not good in itself, there must be some test by which to judge the value of any disclosure. The first test which I suggest is to test it against the principles set out in paragraphs 11 and 13 on page 3 of the Jenkins Report. Secondly, if there is a criticism of the Jenkins Committee, it is that it was mainly composed of people experienced in the affairs and problems of very large companies. Therefore, if there was a bias,

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  it was towards looking at company law in terms of the large companies rather than in relation to the very large preponderance in numbers of small companies. Even with that reservation concerning the Jenkins Committee, its Report clearly recognised that some information which was required in the accounts, while of interest to the members, was not of prime importance to the creditors and that its public disclosure by small companies might be embarrassing.
  We should bear that in mind. The onus is still on the Government to tell us why they have departed from that view, which is not merely the view arrived at from the arguments recorded in the Report but is the view which was arrived at after hearing a good deal of oral evidence and reading a good deal of written evidence.
  I suggest, however, a second test. The courts have often said that the smaller companies are, in effect, incorporated partnerships. To equate them with large public companies, to which in many respects quite different considerations apply, may have exactly the opposite effect to that which is intended. Although these are fairly complex matters appropriate more to the Committee stage, the lesson surely is that if a rule of company law is wholly inappropriate to a partnership, the question to be asked before applying it to a private, unquoted company must surely be whether it becomes relevant as a corollary to the privilege—we all admit it as a privilege—of limited liability. If the answer is still in the negative, I suggest that there have to be cogent reasons for insisting upon its disclosure.
  I add, however, one further test. Would the disclosure nevertheless materially stimulate desirable competition? I say "desirable" because I cannot see that it is at all desirable to stimulate the competition of our foreign competitors. That, however, would seem to be the only likely effect in many cases of the provisions of Clause 19.
  Mr. Darling: I take it, therefore, that the hon. Member is opposed to our going into the Common Market?
  Mr. Corfield: Not in the least, but I see no reason to present to our foreign competitors the information which would make them better competitors when we
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  are trying to put our balance of payments right. I cannot see the relevance of the Minister of State's intervention.
  Obviously, desirable competition can only be fair competition. I cannot accept that there is anything fair in the example given by my right hon. Friend the Member for Altrincham and Sale of the small company having to disclose matters which may be of immense value to the branch of the chain store next door. Nor can I accept—and I have some experience in valuation—the suggestion of the hon. Member for Heywood and Royton that assessment can be made by a valuer with no access to the books or other records of the firm concerned.
  Mr. Barnett: I was saying as regards wholesalers and manufacturers—and I take it that the hon. Member agrees that the balance sheet should be published—that the stock and debtors figure would be available and that from this it would be possible to ascertain a reasonable estimate of the turnover.
  Mr. Corfield: I must have misunderstood the hon. Member. If I did, I apologise.
  There is nothing whatever to be said for giving this information on a plate. I agree entirely with my hon. Friend the Member for the Cities of London and Westminster that the mere fact that it is on a plate merely encourages rather than otherwise. I do not believe, as my hon. Friend pointed out, that in many firms this is a possible operation without access to more of the information than would be disclosed if our proposals were accepted.
  Most of us would agree that the way to compete is by price and service. Even where we may not be worried about competition with the branch of a chain store, in itself there is not much to be said for forcing companies of that sort to make information available to wealthier competitors who are in a position temporarily to undercut with the object, not of maintaining competition, but eventually of eliminating it.
  Again, regard must be had to the value of the information in relation to the burden of providing it, and the diversion of energy from productive enterprise to unremunerative form-filling. It may be true that much of the information is available anyhow, but it takes no account of

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  the work of compiling it in the form required or the immense labours which apparently will be involved in Companies House. As a corollary, it must be borne in mind that, if the volume of information to be made available is excessive, the inessential is likely to obscure the essential.
  There is an old saying that by far the best place to hide a pebble is on a beach. The best example of a beach in the context of this Bill is Clause 30, which provides for the keeping of registers, which will become prodigious in their length, recording all changes in interests in securities which may bring people within or take them out of what may be called the "10 per cent. rule" of Clause 29. In that connection, what is relevant is the set of rules provided in Clause 27, which defines the relevant interests both for the purposes of Clause 26 and Clause 29.
  I suggest that the manner which the Government have adopted to solve this problem illustrates very well the criticisms that I have been making. I have sought the advice of people with a greater knowledge of company law than I have myself and probably greater than any Minister of the Board of Trade has. Clause 27 produces, amongst other things, the following curious results.
  First, in so far as Clause 27(1) applies to a private company, by reference to Clause 26, it seems to have been forgotten that in such companies each member, including directors, frequently has a preemptive interest in all the company's shares, so that every director will always have a registrable interest in all the shares held by anyone else.
  What conceivable good that disclosure can do or how it can do anything other than confuse anyone searching the register is beyond me. So also is the value of including, again for the purpose of Clause 26, which deals with private companies amongst others, persons interested in shares only as mortgagees, of which the most obvious and frequent example is that of a bank holding shares as security for an overdraft.
  Secondly, the effect of Clause 27(2) appears to be that among the registrable interests will be the following: the interest of any person in an employees' pension fund in the whole portfolio of
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  the shares comprised in the fund; similarly, on a death intestate, each next of kin will immediately acquire interests in all the shares in the estate; so would every annuitant and life-tenant, however small the interest, under the will or other trust.
  One could go on with a very long list of the sorts of interests which in no case give the director any extra power over the company, yet a person who may have a far bigger interest, including a director, will be privileged from disclosing it if it takes the form of an interest, however substantial, under a discretionary trust, or if he has an absolute sole reversion to a fund of which the only life-tenant is aged 96.
  This series of Clauses, Clauses 26 to 30, provides a really striking illustration of wholly unnecessary paperwork, messy drafting, obscure purpose and a resulting complexity of those registers which makes it highly conjectural whether the information that may really be important will ever emerge.
  Finally, may I dwell for a moment on Clause 19. This has nothing whatever to do with company law. Indeed, the Minister of State has admitted as much in correspondence that we have had on the subject. It really may be very harmful indeed not only to a particular company but to the national interest, and I should like to take as an example the company about which I wrote to the right hon. Gentleman, although naturally I do not wish to disclose its name or product.
  This company manufactures a certain product of which by far the greater proportion—more than 80 per cent.—is exported, and again by far the greater proportion of that export element goes to a single overseas market, and a highly sophisticated one, too. It is surely obvious that the information required by Clause 19 in regard to exports, coupled with that required in relation to turnover, will provide a very good guide to foreign competitors of profit margins. But to disclose profit margins can only be an incentive to indigenous firms to set up in competition, and in the meanwhile to increase the bargaining power to existing customers. It so happens that the profit margins are large, but in this case—this is almost entirely an export

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  company—whatever the philosophy of the party opposite, it is entirely in the national interest that they should be so, and nothing but harm can come if this sort of thing is broadcast abroad. Even if we accept the need for this information, as some of my hon. Friends have said, it can well be supplied direct to the Board of Trade, and in confidence.
  I have already referred to some of the defects in drafting, and, of course, the main problems here will be problems for the Committee, but I cannot resist a plea that we should at least try to limit the affront to our language. I suggest to the Leader of the House that instead of these fatuous morning sittings some hon. Members might sit down and see, before Bills come to this House, whether it is really necessary to have the absolutely monstrous sort of language that appears in Clause 8.
  There is one other matter about which I should like to ask the right hon. Gentleman, and it is with regard to Clause 24. What on earth is the justification for making the transactions there specified criminal? These are the option transactions by directors. When all is said and done, the object is to protect the company, its members and creditors, not one of whom will be benefited by the fining of the director or his imprisonment. What is important, I suggest, is that the offending director should be fully accountable to the company for any profit that he may make as a result of a particular transaction.
  Some of these transactions may be quite innocuous. Let me give one example. Let us suppose that a small company needs £10,000 in cash and a recently appointed director has this sum available but is unwilling to risk it. Would it really be wrong for some other member of the company to agree, for a nominal consideration, that if this director subscribed the £10,000 this other person would undertake to purchase the shares or debentures from him, if the director so wishes, at a certain date? If there is a consideration at all, it is criminal, if there is none, it is not. I cannot see that anybody is harmed.
  I think that there is a grave omission from the Bill. It is not enough merely to ensure that the disclosures which are required are made, or indeed to ensure
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  that they are made in the right place where the information is assessable. It is also essential that it should be made in time to be any good. The Jenkins Committee had a good deal to say about this, but there is nothing in the Bill to get away from the idea that the filing of the annual returns and the directors' report should remain rigidly tied to the completion of audit. The result is that many large and reputable companies are not yet due to file their annual returns for 1964, simply because they are still waiting for audit.
  To a large extent the purpose of this disclosure is to prevent fraud, and it is precisely in these cases where every effort will be made to cause the maximum delay. The Jenkins Committee pointed out at least one method by which this could readily be done. I suggest that however much the right hon. Gentleman may argue that some of the Jenkins recommendations should come along afterwards, it is no good putting in the Bill all these provisions concerning disclosure unless there is some provision for tightening up the time limit.
  In my view this is a rather ill-thought-out Bill. Apart from the fact that it is incomplete, it is badly drafted. But because it contains good as well as bad: because, in some instances, the good is badly needed, and because, despite all our experiences in the past, we retain some minimal hopes of improving it in Committee, we shall support it.
  9.36 p.m.
  The Minister of State, Board of Trade (Mr. George Darling): The right hon. Member for Altrincham and Sale (Mr. Barber) surprised me by approaching the debate in a quite unnecessarily acrimonious way. I know that he always does a considerable amount of homework on such Measures as this, but on this occasion he seemed to have spent all his energies searching for party issues and then dressing up the chosen parts of the Bill for this purpose as sinister moves by the Government to undermine companies and the whole fabric of the private sector of the economy—which is sheer nonsense.
  Both he and the hon. Member for Gloucestershire, South (Mr. Corfield) attributed motives to us which my right hon. Friend and I have never even

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  thought of. I was tempted to reply in the same party spirit, but to do so would have been most unfair to all the other hon. Members on both sides of the House, who have contributed to a very good, well-informed and, on the whole, constructive debate. I intend to reply in that spirit, with perhaps one or two partisan points in the time available.
  When it fell to me to introduce the first somewhat truncated edition of the Bill, nearly a year ago, the provisions for the disclosure of political contributions aroused most controversy. As the right hon. Gentleman rightly said, I had to spend some time on that. I do not know whether it was the quality of my advocacy, the strength of my case, or the fact that very few reputable companies, big or small, are afraid to disclose their political contributions, but all this controversy has now died down. The criticisms made about the introduction of charitable contributions is somewhat misguided, because we included charitable contributions as a result of the debate on the previous Bill, in response to observations made by hon. Members opposite. In accepting their observations we are putting the matter into its right perspective.
  Today's debate has brought out several other controversial features, the most important of which are, first, the degree of information which small companies should be compelled to disclose, secondly, the question whether we should retain the provision for the introduction of shares of no-par value and, thirdly, whether the provisions for stricter control of insurance companies are strict enough. Many other issues were raised, but I shall try to reply briefly to the three very important points to which I have referred and then, if there is any time left, I shall try to deal with some of the other points.
  Several hon. Members complained that my right hon. Friend did not discuss the many issues involved in the numerous Jenkins recommendations which are not in the Bill. The right hon. Member for Reigate (Sir J. Vaughan-Morgan) thought that my right hon. Friend should have discussed three or four other issues. The hon. Member for the City of Chester (Mr. Temple), who has explained to me why he cannot be here, raised the question of unit trusts, and about a dozen more sug-
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  gestions have been picked up from Jenkins and elsewhere, so let me explain again—I do not know how many times we tried to do this—that this Bill covers only a quarter of Jenkins, the disclosure recommendations; its other proposals, and suggestions which have emerged since, will be dealt with in subsequent legislation.
  I will try to explain why we have gone beyond Jenkins in various aspects of the Bill. Those hon. Members who say that we have gone too far have forgotten the general reception that the Jenkins Report received on publication. In the financial Press, in the City and elsewhere, it was described as timid and inadequate and it was said that it did not go far enough to provide a satisfactory basis for a new Companies Bill. Since the publication of the Report, there have been many further proposals from public discussion and from the Stock Exchange for the strengthening of the Jenkins recommendations.
  We have accepted these criticisms and the subsequent proposals and have, where appropriate, strengthened the recommendations made in the Report. The hon. Member for Gloucestershire, South said that we have had four years to consider the Jenkins Report. This was a naive way of glossing over the fact that the previous Government had two years to consider it and did precisely nothing——
  Mr. Corfield Mr. Corfield rose——
  Mr. Darling: The hon. Member took up a considerable time.
  There were no preparations. We came in to find a completely bare larder. There was nothing there at all——
  Mr. Corfield: But the Government were "poised ready for action".
  Mr. Darling: So far as we were concerned, the Jenkins Report was published in October, 1964, and within 15 months we had prepared the Bill and brought it before the House.
  Let me deal with the case which the hon. Gentleman and others attempted to make in defence of the small companies, as he would call it. My right hon. Friend explained that in accepting the privilege of limited liability—I disagree with some views expressed opposite on this point—any company, whatever its size, must

  473
  accept obligations to tell in its published accounts how the company stands financially—not only to shareholders, but also to its creditors and its employees.
  Hon. Members have argued that to publish all the information we ask for in the Bill would be damaging to some small companies. I will ignore the right hon. Gentleman's grossly exaggerated numbers and claims and say, as many others have said, that some small companies may be damaged. There is a genuine difference of opinion here. As my hon. Friend the Member for Heywood and Royton (Mr. Barnett) explained, anyone can now get hold of a good deal of information about the operations of small companies and their financial standing, even their turnover, by looking at their accounts—the kind of information which, I gather, the right hon. Gentleman wishes to conceal.
  We have given a good deal of consideration to the extent of any damage to small companies if the Bill is not amended. We have genuinely tried to discover this, and our conclusions are very different from those offered by the right hon. Gentleman. Nevertheless, we have looked at the possibility of applying the de minimis rule here, but there are, as the right hon. Gentleman said, practical difficulties of definition in trying to exclude certain companies. However, our minds are not closed to this and to some other aspects of the Bill; and in Committee we shall see whether any practical proposals emerge which we have so far failed to find.
  The right hon. Member for Altrincham and Sale asked me to comment on Clause 37, which he described as one of the key Clauses in the Bill. We intend to remove Clause 37 from the Measure and to make all companies subject to the provisions relating to filed accounts, full information of turnover and details of directors' remuneration. We believe that the information we require on turnover is in the interests of economic efficiency and that the information of directors' remuneration is in the interests of an incomes policy. I gather that the hon. Member for Gloucestershire, South is in favour of an incomes policy, provided that incomes are concealed.
  Mr. Corfield: I did not say that.
  Mr. Darling: The information may also be of value to creditors and employees, as I have explained.
  Some hon. Gentlemen opposite have attempted to ridicule our intention to ask for information about exports. As we see it, every company in this country which can market its goods or services overseas should be doing so. Companies engaged in overseas marketing should say so. They should say it in their published accounts, directors' reports, annual meetings and elsewhere. If they wish to export and are able to do so, they should be boasting of their achievements, just as we are boasting about the export figures today. Companies which are not in export markets, but should be, should explain why they are not exporting, and that explanation should be given in their accounts, directors' reports and so on.
  If the hon. Member for Worcestershire, South (Sir G. Nabarro) were in his place I would tell him that I agree that we should try to make some arrangement for the import savings which are provided by the activities of companies; by firms which are making an indirect contribution to exports by providing the components for goods which are sold overseas. This is the sort of information for which we are asking.
  Sir C. Osborne Sir C. Osborne rose——
  Mr. Darling: I cannot give way. Very little time remains for me to complete my remarks. Whatever the hon. Gentleman wishes to say, we can discuss it on another occasion. We are perfectly willing to discuss these matters in Committee and my right hon. Friend and I will explain, properly and convincingly, why this proposition should be in the Bill.
  I come to the question of whether or not companies should be permitted to issue shares of no par value. Because of the shortage of time at my disposal I must discard my notes about the merits of the case and will merely mention that our decision is that we will ask the Committee to delete Clause 35 and Schedule 3. We intend to have the case, for or against no par value shares, examined and debated in the House of Commons and a decision taken by Parliament, but this must be done in the context of the wider amendments and the many recommendations for changes in company law made

  475
  by the Jenkins Committee and other bodies, as well as arising out of Board of Trade experience, and this will be presented in later legislation.
  We are also concerned not to have in the Bill any provisions which may have to be amended before they can be brought into operation. Hon. Members must recognise that permission to issue no par value shares cannot be provided simply by adding a Clause to this Measure. Considerable and substantial amendments will also be needed in fiscal legislation. There will have to be changes in Income Tax, Surtax, Corporation Tax and so on. These necessary changes must be considered before we can be sure that the provisions in respect of no par value shares in company legislation are properly drafted. If, as I say, Parliament decides in favour of the introduction of no par value shares, then we intend to have the appropriate legislation, both for company law and fiscal matters, properly drafted and done as one operation. The necessary Amendments to the Finance Act will follow the changes, if the House agrees, in the later companies legislation.
  If it is the wish of the House to have no par value shares, then no time will be lost in their introduction if we take Clause 35 out of the Bill. Clause 47 says that Clause 35, the no par value share Clause, will come into operation on a day which the Board of Trade may by order appoint. It must be obvious, even to the noble Lords who insisted on putting this into the Bill, that my right hon. Friend cannot introduce such an order until the Treasury is ready to make the consequential changes in fiscal law, and the Treasury time-table is the same as ours. These changes, if the House agrees, will follow on the second Bill.
  Mr. Barber: The right hon. Gentleman asked for 25 minutes in which to make his speech and this is the first time he has given way to an interruption. The Minister of State, Lord Brown, said in another place that in principle, so far as he was concerned, the proposal for no par value shares was acceptable. Does the right hon. Gentleman take the same view?
  Mr. Darling: My noble Friend, Lord Brown, expressed his own personal view. I shall express my personal view when
  476
  the time comes. At the moment I do not want to discuss the merits of the case because in effect this is a technical issue. There is an intriguing aspect to the campaign in another place to rush and push no par value shares into this Bill. I think it important. Two of the leaders and foremost advocates are former Presidents of the Board of Trade, and their tenures of that office fit neatly into the time-table of this controversy. It began in 1952, strangely enough in Christmas week, when the Gedge Committee was set up to look into the question of no par value shares.
  The Committee's Report was published in March, 1954. Three years later Lord Eccles took over at the Board of Trade, and he was there for a couple of years and did precisely nothing about the Gedge Committee Report. He was followed by the right hon. Member for Barnet (Mr. Maudling) who also could not be bothered with the Gedge Report. He was succeeded by Lord Erroll, now a fervent advocate of no par value shares in another place, but he showed no interest at all in the Gedge Report when he was in office. He was followed by the Leader of the Opposition who was also typically disinterested.
  One can understand the attitude of Lord Eccles. He is saying in effect, "You cannot expect the Tories to put this legislation into operation. You have to leave it to a Labour Government to do it." We accept the challenge, but we shall undertake this change, if the House agrees to it, in a sensible and constructive way without any undue delay. If the right hon. Member for Altrincham and Sale carries out his threat to try to stop us taking the Clause out of the Bill, for technical reasons which I shall explain in Committee, he will delay the operation which he wants to set going.
  I wish to deal briefly with the insurance section. The right hon. Gentleman made a surprising statement which I think showed that he had not properly understood what we have tried to do. He said that we turned down the suggestion made by the hon. Member for Worcester (Mr. Peter Walker) last summer to help us to get an amending Bill quickly on to the Statute Book. This is incorrect. We had, in fact, started the preparation of this amending legislation before we heard anything from the hon. Member and here

  477
  it is in this Bill. We put it in this Bill because it is the quickest route to the Statute Book.
  Whether our provisions are severe or drastic enough to prevent future abuses in the motor insurance world, is an issue which we are prepared to discuss with an open mind in Committee. I hope that with that assurance, hon. Members who have been pressing me to answer specific questions about this part of the Bill will agree to let us deal with the whole range of questions on this subject in Committee.
  I want to refer to the future legislation which has been the subject of some speeches. As I have explained, most of Jenkins is still to come. My right hon. Friend has said that we want at some point to consider the whole philosophy of company law. That was ridiculed. The right hon. Member for Reigate was very ungenerous about this, and his comments were well below his usual standard. I can assure him that a great deal of interest is being shown in this subject among industrialists in the City, and elsewhere. They are showing an interest in the question which is here posed—whether the private sector of the economy in these days is adequately based on the old concept of the joint stock company, or whether a new type of company might be more suited to the needs of private enterprise in the second half of the 20th century. We want all this to be examined, and we want the discussions to begin.
  The place of employees in company law, the content of the Lord Chancellor's observations which have been somewhat criticised, has been mentioned several times. The point is that in company law the employee does not exist. Neither in the 462 Sections and the 18 Schedules of the 1948 Act nor in the Bill is the word "employee" mentioned once. He does not exist. In company law the employee has no interest and no rights.
  Many of my hon. Friends have made valuable suggestions to bring employees within company law, to have them recognised and to ensure that they are given the fullest information about the operations of the companies in which they are employed and that provision to be made so that, if they wish, they can have a genuine share in the management of
  478
  their companies. We shall look at all these ideas and many more which are coming forward. We have taken note of the suggestion of my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) that we might have a Select Committee to look into all these matters.
  I was asked a number of detailed questions by hon. Members who are no longer present, and I will pass over them.
  I want finally to reply to some of the questions of my hon. Friend the Member for Heywood and Royton (Mr. Barnett). He mentioned the Protection of Depositors Act and such bodies and such failures as the Davies Investment Company. We will seriously consider his proposals about advertisements. The general amending legislation which is needed is something which we would be prepared to discuss with him and to see what suggestions he has. We ourselves have some suggestions on this matter and we will see how well we can go towards getting them on the Statute Book.
  Other questions have been raised with which I would like to deal when we reach the Committee stage. I am sure that, when that stage arrives, the somewhat partisan attitude which has been displayed on one or two occasions today will entirely disappear and, as has happened so often in the past with legislation of this kind introduced by the present Government, we shall have constructive proposals and will agree that it is the duty of the Committee as a whole to put this very good legislation into the best possible shape and to ensure that it makes its proper contribution to the development of the private sector of our economy.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  BUSINESS OF THE HOUSE
  Ordered,
  That the Proceedings of the Committee of Ways and Means, on the Local Government (Termination of Reviews) Bill and on the Export Guarantees Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Fitch.]

  COMPANIES [MONEY]
  [Queen's Recommendation having been signified]
  Resolved,
  That, for the purposes of any Act of this Session to amend the law relating to companies, it is expedient to authorise the payment out of moneys provided by Parliament of any expenses incurred under that Act by the Board of Trade.—[Mr. Darling.]

  1. That, upon the re-registration of a company under the Companies Act 1948 in pursuance of and provision included in an Act of this Session to amend the law relating to companies (hereinafter referred to as 'the new Act'), there shall—

  (a) if the company is registered with limited liability and is to be re-registered as unlimited, be charged on articles lodged with the registrar of companies with the application for re-registration, a stamp duty of ten shillings; and

  (b) if the company is unlimited and is to be re-registered with limited liability and a share capital, be charged on a statement of the amount of the share capital to be delivered to the registrar of companies the like ad valorem stamp duty as would be charged if the company were being registered under the Companies Act 1948 with limited liability and a share capital of that amount.

  2. That, in respect of the several matters mentioned in column 1 of the Table set out below, there shall be paid to the registrar of companies the several fees specified in column 2 of that Table, or such greater fees as may be specified in regulations made by the Board of Trade.

  TABLE

  Matter in respect of which Fee is payable

  Amount of Fee

  For registration on its formation under the Companies Act 1948 of a company as one limited by shares, registration under that Act in pursuance of Part VIII thereof of a company as one so limited (not being a company in whose case the liability of the members thereof was, before registration in pursuance of that Part, limited by some other Act or by letters patent) or re-registration under the Companies Act 1948 in pursuance of the new Act of a company as one limited by shares.

  If the nominal capital does not exceed £2,000, the sum of £20.

  If the nominal capital exceeds £2,000 but does not exceed £5,000, the sum of £20 with the addition of £1 for each £1,000 or part of £1,000 of nominal capital in excess of £2,000.

  If the nominal capital exceeds £5,000 but does not exceed £100,000, the sum of £23 with the addition of 5s. for each £1,000 or part of £1,000 of nominal capital in excess of £5,000.

  If the nominal capital exceeds £100,000, the sum of £46 15s. 0d. with the addition of ls. for each £1,000 or part of £1,000 of nominal capital in excess of £100,000.

  For registration on its formation under the Companies Act 1948 of a company as one not having a share capital, registration under that Act in pursuance of Part VIII thereof of a company as one limited by guarantee and not having a share capital or re-registration under that Act in pursuance of the new Act of a company as one so limited and not having a share capital.

  If the number of members stated in the articles does not exceed 25, the sum of £20.

  If the number of members stated in the articles exceeds 25, but does not exceed 100, the sum of £20 with the addition of £1 for each 25 members or fraction of 25 members in excess of the first25.

  If the number of members stated in the articles exceeds 100 but is not stated to be unlimited the sum of £23 with the addition of 5s. for each 50 members or fraction of 50 members after the first 100.

  If the number of members is stated in the articles to be unlimited, the sum of £38.

  For registration on its formation under the Companies Act 1948 of a company as one limited by guarantee and having a share capital or as an unlimited one having a share capital, registration under that Act in pursuance of Part VIII thereof of a company as one so limited and having a share capital or re-registration under that Act in pursuance of the new Act of a company as one limited by guarantee and having a share capital.

  The same amount as would be charged for registration if the company were limited by shares or the same amount as would be so charged if the company had not a share capital, whichever is the higher.

  For re-registration of a company under the Companies Act 1948 in pursuance of the new Act as unlimited.

  £5.

WAYS AND MEANS
Considered in Committee.
[Mr. SYDNEY IRVING in the Chair]
COMPANIES
Resolved,

Matter in respect of which fee is payable

Amount of Fee

For registration of an increase in the share capital of a company.

An amount equal to the difference (if any) between the amount which, were the company being registered on its formation under the Companies Act 1948, would be payable by reference to its capital as increased and the amount which, were the company being so registered, would be payable by reference to its capital immediately before the increase.

For registration of an increase in the membership of a company limited by guarantee or an unlimited company.

An amount equal to the difference (if any) between the amount which, were the company being registered on its formation under the Companies Act 1948 as a company limited by guarantee or as an unlimited company, would be payable by reference to its membership as increased and the amount which, were the company being so registered as such a company, would be payable by reference to its membership immediately before the increase.

For registration of a copy of an annual return or copies of documents delivered to the registrar of companies in compliance with section 410 of the Companies Act 1948.

£3.

For entering on the register the name of a company assumed by virtue of the passing of a special resolution by virtue of section 18(1) of the Companies Act 1948.

£10.

3. That it is expedient to authorise the payment into the Exchequer of fines imposed under any provision of the new Act.—[Mr. Darling.]
Resolution to be reported.
Report to be received Tomorrow, Committee to sit again Tomorrow.

LOCAL GOVERNMENT (TERMINATION OF REVIEWS) BILL
As amended (in the Standing Committee) considered; read the Third time and passed.

LOCAL GOVERNMENT, TEES-SIDE
10.3 p.m.
The Minister of Housing and Local Government (Mr. Anthony Greenwood): I beg to move,
That the Teesside Order, 1967, dated 18th January, 1967, a copy of which was laid before this House on 25th January, be approved.
I hope to move the adoption of this Order with reasonable brevity, concentrating on what the Order does and how it came about, and commenting on the Amendment, that the Order
"be not approved until after this House has received the Report of the Royal Commission on Local Government".
tabled by the right hon. Member for Thirsk and Malton (Mr. Turton), who enjoys the respect of all of us on both sides of the House. I shall not deal with the Order Article by Article.
The Order results from proposals for the reorganisation of the local government of Tees-side made by the Local Government Commission in its Report on the North East General Review Area. The Order constitutes a new county borough, the County Borough of Teesside, which will come into full operation on 1st April next year. It will comprise the areas of the County Borough of Middlesbrough, the Boroughs of Thornaby-on-Tees, Stockton-on-Tees, and Redcar except for a small part, most of the Urban Districts of Billingham and Eston, part of the Urban District of Guisborough, a very small part of the Urban District of Saltburn and Marske-by-the-Sea, and parts of the Rural Districts of Stockton and Stokesley.
A single administration will take the place of the present mixed system, under which the present urban area of Teesside is administered by two counties, one county borough, three non-county boroughs, three urban district councils, two rural district councils and a number of parish councils. It is estimated that the new county borough will have a population of about 398,000 and a rateable value of more than £18 million.
The Order is the culmination of a long process of review by the Local Government Commission and of further inquiry by the Minister under the pro-
484
visions of the Local Government Act, 1958. The Commission began its review in the autumn of 1959. It consulted the local authorities and it published draft proposals in April, 1962. It held a statutory conference with the local authorities in November, 1962 and the final report was published in October, 1963. A public inquiry into the objections that had been lodged was held by the Minister's inspector in November, 1964.
After that, the Minister announced his acceptance of the recommendations on 6th October, 1965, subject to some boundary modifications. He excluded most of the Urban District of Saltburn and Marske, and extended the boundary of the county borough southwards. There was also a small extension of the boundary at Preston-on-Tees to bring within the county borough an art gallery and a museum which belonged to Stockton.
Tees-side as a whole is an area of rapid growth, both actual and potential. In the past 15 years the population has grown by 50,000, and the potentialities of the area are still not fully realised. The Commission came to the conclusion that Tees-side is now substantially a single entity—economic, physical and social—and that the present administrative structure is irrelevant to the area's needs. That was the reason for proposing a single county borough.
In its Report on the North-Eastern General Review Area, the Commission said at paragraph 95:
"It therefore seemed to us necessary to ensure that the pattern of local government was such as to make the planning of development and the organisation of services fully effective, and to make certain that new development, such as houses, main roads, bridges and shops would match the growth and location of industry instead of perpetuating the patterns of the past. We were impressed by the need on Tees-side for more housing to relieve overcrowding, to replace outworn properties, and to meet the increase in population due to industrial expansion. Yet unless Teesside could be planned as a whole, it seemed to us impossible to ensure that new houses would be built in places most convenient for the people who would live in them, as it was difficult for the present ten separate housing authorities, each with their own housing list, to do other than build within or near their own boundaries."
Later, at paragraph 129 in its conclusion, the Commission said:
"With the southern moorland, the coast and the river, Tees-side has a splendid setting and

485
it ought to be made worthy of its 400,000 inhabitants. This task requires a comprehensive plan for the whole area designed to secure the benefit of its port, its industries and its commerce, the reclamation of its marshlands, the building of new roads and bridges, the renewal of obsolete parts of the old riverside development, the designing of new centres and the provision of new amenities. This formidable task gives scope not for ten authorities to develop or redevelop ten towns but for a single authority to work out the details of the probable future growth and needs of Tees-side, and then prepare and carry out a single plan for the whole area."
It is, I think, significant that, since the proposal for Tees-side was made, a full scale survey of the area has been undertaken and is under way. After putting it to the test of public opinion, the Minister substantially endorsed the Commission's proposal and it had the full support of Middlesbrough, Stockton and Redcar, representing between them about 70 per cent. of the electors in the area.
It is only right to say that two counties will be adversely affected by the Order. One is County Durham. We have already in this House approved an Order amalgamating Hartlepool Borough with West Hartlepool County Borough. Orders for the extension of Sunderland and for a small extension of Darlington have also been laid, and, taking these Orders in conjunction with this one, Durham will still have a population of over 814,000 and a rateable value of about £22½ million.
The other county which will be adversely affected is the North Riding of Yorkshire. It will be reduced from a population of about 428,000 and a rateable value of £15·8 million to a population of 318,000 and a rateable value of £9·3 million. I have no wish to underestimate the effect of this change, but, even so, the county will still be able to support an administration which will serve it adequately and effectively, and I take this opportunity of expressing the gratitude of all of us to the two county councils for the co-operation they have given in the preparation of the Order, in spite of the adverse effects they knew it to have upon themselves.
I want to say something about election arrangements. These are set out in Articles 6, 8, 9 and 10. The new wards reflect my right hon. Friend the Home Secretary's decision after a public inquiry, and elections for the new county borough will take place on 4th May next so that there will be almost a year in
486
which to complete arrangements, with the assumption of full responsibility on 1st April, 1968. Article 10 cancels the elections that would otherwise have been held in May next for those authorities which cease to exist next year.
Now I shall deal with the Amendment on the Order Paper. It is, of course, at first glance an attractive argument that reorganisation on this scale should await the Report of the Royal Commission and I have basically a good deal of sympathy with it. But when it was decided to set up the Royal Commission on Local Government, it was thought right to make the most of the work which the Local Government Commission had completed, and my right hon. Friend the Lord President of the Council said in the House on 10th February last year, in referring to the work of the Local Government Commission:
"The Commission has produced some valuable results within the limits open to it. …
Most of the work it has completed will be carried through. Where decisions have already been announced on proposals by the Commission, the necessary orders will be brought before Parliament as soon as possible. Other proposals on which decisions have not yet been taken will be considered on their merits, in the light of the decision to appoint a Royal Commission."—[OFFICIAL REPORT, 10th February, 1966; Vol. 724, c. 644.]
The decision broadly to accept the Local Government Commission's proposals for Teesside had been announced several months earlier, on 6th October, 1965, and this Motion represents the honouring of the firm commitment given then that the Order would be brought forward as soon as possible.
The question of Government commitments apart, there are strong practical reasons for the new county borough to be set up as soon as possible. The suggestion that this should be deferred until the report of the Royal Commission has been received can only reflect a misunderstanding, on the one hand of the urgency of the need for a united administration on Tees-side, and, on the other, of the essential processes which must follow the Royal Commission's Report. While I have every hope that the Commission's recommendations can be given speedy effect, there must still be time for consideration and consultation on issues so fundamental for the health of local government for many years to come.

487
After the decision has been taken on what should be done, time will be needed for the preparation and enactment of legislation and for any new authorities set up to get ready for taking over on the ground. It is impossible at this stage to estimate accurately just how long these processes will take, but it is evident that with the best will in the world, and everything going as smoothly as possible, it must be some years before the present local government structure can be replaced by a new one. Meanwhile the needs of Tees-side are pressing and the development of the area will not wait.
This is something to which both the previous Government and this one have attached the utmost importance. The House will recall the Hailsham Report of November, 1963, on regional development and growth for the North East. That Report picked out Tees-side as one of the areas fitted to support rapid economic growth and said that there could be discussion with local authorities there about the exceptional step of a planning survey of the area, to be undertaken with Exchequer assistance.
This was followed up, and early in 1964 the authorities reached agreement on the project. In mid-1965 work began on the Tees-side survey and plan, commissioned by the local authorities, acting jointly, with the Ministers of Transport and Housing and Local Government together contributing about half of the cost. The work is being carried out by consultants and consists of a comprehensive land use and transport survey and plan for the area. The consultants' report and recommendations are expected to be ready early in 1968. It is vital that as soon as these are available they should be energetically followed up. For that reason I believe that this new administrative unit, the County Borough of Tees-side, is essential.
Mr. Speaker: I have not selected the Amendment in the name of the right hon. Gentleman the Member for Thirsk and Malton (Mr. Turton).
10.18 p.m.
Mr. Michael Shaw: I thank the Minister for his very full explanation of this Order. In speaking to it and in adding my name to the Amendment I do so not in any
488
spirit of not wishing to look forward, because I think that we all appreciate that there have to be some very big changes in local government boundaries in the years ahead.
As the Minister so rightly says, we are faced with a period of inevitable indecision in that, since the Local Government Commission started making some of its reports, there was announced in February, 1966, the proposal to appoint a Royal Commission on Local Government in England and Wales. This is the very real problem. I will admit at once that the North Riding of Yorkshire, the county council in which my constituency lies, takes very strong exception to the Order, and has produced many arguments against it. However, for myself and for it, this is water under the bridge.
The objection has been taken—and I freely state that I raise the matter because they have put it to me—because it is felt that their interests will be seriously prejudiced by the Order going forward, because, as far as we can see, the Royal Commission on Local Government in England is likely to report early in 1968, just at the very time, in April, 1968, when this Order comes into effect. It appears, on the face of it, that there is likely to be a double bite of this cherry before the reorganisation in this important area is thoroughly digested and the area is reorganised on a basis that is acceptable for the future.
I believe this to be the real problem. I am grateful to the right hon. Gentleman for the care with which he developed the arguments on this particular point. I was glad to notice that he expressed sympathy for this point of view. However, I have learned over the years spent in this House to realise that as soon as sympathy is expressed, hope can almost at the same time go out of the other door. So, alas, it has proved in this case.
There has, I am sure, been co-operation on the part of the North Riding County Council. I make this point quite clearly, but it must not be understood that there is now agreement. Let us take some practical examples.
The Ministry of Housing and Local Government has now published its evidence to the Royal Commission on Local

489
Government, and presumably this evidence was submitted with the approval of the Minister. It proposed 30 to 40 major authorities covering wide areas on the basis of "city regions", the main object of which appears to be to get away from what is referred to as
"straitjacket of built up areas"
and to provide
"elbow room and flexibility to ensure that the solution of problems of growth as yet unforeseen will not be inhibited by narrow boundaries inherited from the past".
There was no map with that evidence, but The Guardian on this occasion proved helpful by producing a map of its own, trying to interpret the ideas put forward by the Ministry.
If we look at this map dividing the country in a manner that would fit in with the submissions of the Ministry, we see that there is an area of local government covering Middlesbrough and Darlington and a wide section of country around those two areas. To the south there is a large area with its centre based at York, and another to the west with its centre based at Leeds.
If we look at that, surely it must be clear that if the recommendations of the Ministry are carried out in anything like this fashion—and I do not believe there can be large differences in interpreting their recommendations other than in the way The Guardian has done—we shall see that if the Order goes through and the recommendations of the Royal Commission are accepted, there will have to be a further large reorganisation of that area. There will thus be an interim period which will adversely affect the interests of the North Riding County Council. I have seen too often, when it is proposed to amalgamate local boroughs with others, the practical difficulties of local authorities about staffing, and so on, when their future is clearly unsure because the authority might well disappear in the next year or two.
Practical difficulties such as these will arise in this interim period. There will be a lack of confidence in this area knowing, as it must know, that the new set-up may well be altered in the next few years. I know that it is a long time since it was first mooted and, therefore, that there is great anxiety to get the Order into operation, but, since there has been this wholesale investigation by the Royal Commis-
490
sion, there is a strong case for taking one sure step towards the final pattern which is to last for the foreseeable future rather than cause this widespread uncertainty which is bound to occur by taking this interim measure in the full knowledge that a later and major revision must follow.
10.26 p.m.
Mr. James Tinn: I do not intend to detain the House long, but if I were not to speak on this Order I should be failing in my duty as, I believe, the only back bench Member whose constituency is considerably affected, although I recognise that there is an hon. Member opposite whose constituency is less seriously affected.
This is a decision taken as a result of a democratic procedure followed over a considerable period and after very full inquiry. While inevitably it aroused a conflict of opinion and a tremendous conflict of loyalty, it has been accepted and imaginatively and thoroughly implemented in the area directly concerned in Tees-side. I pay my tribute, which I know my right hon. Friend the Minister of Housing and Local Government will share, to the officials and members of the local authorities concerned. While understandably there was a tremendous conflict of loyalty and interest among them, with many of them seeing the prospect of a lifetime of service in their own local communities being taken from them by the creation of this larger authority, they have accepted the decision loyally.
The difficulties in the way of an amalgamation such as this do not have to be outlined. We are all only too well acquainted with local government to be aware of the sort of difficulties which arise. It is remarkable, and it reflects the greatest credit on all concerned, that these difficulties have been overcome. The area concerned is now poised on the brink of local elections for the new authority. The impression which I have gained in my constituency and on Teesside is that everyone is taken aback at even the possibility of a check being made in this process which all have accepted and have furthered in the interests of the areas a whole.
There is a particularly urgent need on Tees-side. As my right hon. Friend pointed out, this is a growing dynamic

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area, in contrast to the rest of my native North Country. The increase in population in the Tees-side area is three times that of the national average, which is certainly a marked contrast with the rest of the North. This poses particular problems, making particularly and peculiarly urgent the need to strengthen the responsibilities of the local authorities in question and for the six authorities directly concerned to be reformed into a viable whole. I see no reason to suppose that this new authority, which we on Tees-side anxiously await and to which we look forward with hope and optimism, should in any way conflict with the Report of the Royal Commission.
Mr. Albert Roberts: My hon. Friend will appreciate that if the Order goes through, it is bound to have a bearing on the Royal Commission's Report. It is a case of robbing Peter to pay Paul. It is bound to have repercussions into the North and West Riding.
Mr. Tinn: The Minister specifically made the point that it will have repercussions, certainly on the North Riding. Any major—indeed, minor—step in local government reorganisation is bound to have repercussions on other local authorities, but on balance those repercussions on the existing authorities, certainly after the fullest inquiry, have to be accepted.
Without anticipating the findings of the Royal Commission, I would have thought that this step towards a new city area on the Tees, which will rank second only to Birmingham, is a step towards the regional development which many expect the Royal Commission to favour.
The people of Tees-side have cooperated vigorously and ably in making a reality of the proposals of the Local Government Commission and of the report of the Minister's inspector. It would be sad indeed if, after the local loyalties and, perhaps, prejudices have all been sunk by the people most directly concerned for the greater good of Tees-side as a whole, this House were to take a different view, as I am confident that it will not, and postpone or even negate the development which is generally welcomed in my constituency and, I believe, on Tees-side as a whole.
10.33 p.m.
Mr. Timothy Kitson: We might have had a much longer debate this evening if all right hon. and hon. Members who represent Teesside constituencies had been able to take part, but regrettably, for some reason or another, those on the Government side of the House all seem to sit on the Front Bench, with the exception of the hon. Member for Cleveland (Mr. Tinn).
I would like to say a few words on the Order because the hon. Member for Cleveland has suggested that all his constituents welcome the Order. I suggest to him that the many in his constituency who will be left in the North Riding—and there are a considerable number of them—will probably suffer quite considerably when the Order is put into operation.
Mr. Tinn: What I thought I said, and what I certainly intended to say, was that all my constituents on Tees-side, in the area delineated by the proposal, accept it. I agree that others who have been left out understandably may not share that view, but they, too, have come to accept it and, indeed, are discussing an amalgamation of the urban districts on the outskirts of the area.
Mr. Kitson: Yes, but I think that the constituents who are left out will probably suffer in some way by the very substantial reduction of the population and the rateable value of the North Riding.
I have been a member of the North Riding County Council, and part of my constituency will go into the Tees-side borough. I accept that there are probably few areas in the country which have a greater need for reorganisation at local government level than Tees-side. For that reason, I do not oppose the Order, but I agree with my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) that this seems to be a very inopportune time for introducing it.
The North Riding County Council will lose 25 per cent. of its population. It will lose 40 per cent. of its rateable value. On the Tees-side side of the North Riding, there will be a loss of 75 schools, 900 full-time teachers and about 1,000 part-time teachers. One extraordinary situation which will be created is that at

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Cleveland Girls' Grammar School, there will be more children in attendance in September, 1967, from the North Riding than there will be from the Teesside borough. That is the sort of problem which will be created by the decision to introduce the Order before the Report of the Royal Commission is published. What worries me is that, on the south and south-west sides of the Tees-side borough, there is very little room for expansion of the borough.
I was interested in the remarks that the Minister made about the Tees-side Survey and Plan. I am sure that I speak for hon. Members on both sides of the House when I say that we all wish to see that Survey and Plan brought to a successful conclusion. It will cost the local authorities something like £380,000, and the Minister is aware of the considerable concern that we have felt on Tees-side in the last few weeks about the dismissal of the Director of the Survey some 10 months before the completion of the Plan. We all recognise the job which he has done, and we feel that it is essential for the Tees-side area that, the Plan having been produced, it should be put into operation. We hope very much that the proposed reorganisation of management will have no detrimental effect eventually on the Plan.
The reason the Amendment has been tabled is that there is a very genuine feeling that the creation of the Tees-side borough before the Royal Commission reports is putting the cart before the horse. Our argument is that, rather than face a major upheaval and the consequent disruption of services twice in a period of something like five to 10 years, which is what could happen if the Order is accepted, it would have been better to wait until the Royal Commission reported.
At the same time, I recognise that, because of the local elections which are approaching and the great necessity for the reorganisation of local government in Tees-side probably the House will have to accept the Order.
10.40 p.m.
Mr. Ted Leadbitter: I propose to deal only briefly with this Order because I have a particular desire to be associated with it.
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My constituency is next door, just north of the river, and last week I had the pleasure of having the House accept the Hartlepools Order which brought a great deal of relief to my constituency.
Although we are a smaller borough, I can imagine the great amount of pleasure there will be on Tees-side where there is a greater complex of industry, of population, and of other economic and commercial undertakings which hitherto have had to depend largely on an overlapping of authorities, numbering about 12 in all. Here there is an opportunity for unity in this area, an opportunity for one authority to deal with the many problems which arise out of industrial growth and expansion.
I am satisfied—and this is the essence of brevity—that the House is in the mood to let us have the Order, but it is important, in saying the last few words on the long-drawn-out procedural requirements of the local boundary commission, to be able to say the right things.
We have here the need for a radical change in local government administration. The case for it has been made out. It is desirable, and it is accepted by the vast majority of the people. A single county borough certainly provides the best way of meeting the needs of this complex industrial area. A strong unified authority is best able to harness the energies and the resources of the area to deal with the tasks which lie ahead.
During the months ahead there will be a pertinent examination of the work and recommendations of the Tees-side Survey and Study, and it is important that the House should recognise that it is essential to implement this Order so that the new single authority, representing as it will most of the previous 12 authorities, will be able, with the expertise that it will have at hand, with the staff which it will have, and with the administrative integration which it will possess, to implement the recommendations of the Tees-side Study and Survey.
Having had the pleasure in my constituency of seeing the advantages which flow from an Order of this kind, and knowing full well that the 398,000 people in this area south of the river to be known in future as the new County Borough of Tees-side are in favour of it, I am satisfied that my experience will

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be the experience in this highly important part of the country, and I wish it well.
In an exercise such as this, someone is bound to appear to lose, but I suggest to the House that any local government reorganisation must carry with it the principle that the primary consideration must be the interests of conurbations such as this, and their interests have been made out. It may be regrettable that Durham appears to lose, and that the North Riding appears to lose, but the considered calculation is that they will not lose in the manner in which they fear they will.
Unless we are bold enough to carry out this local government reorganisation in the manner recommended by the Local Boundary Commission, the country will suffer, and this Order provides the right answer for Tees-side, just as the Order approved by the House last week provides the right answer for the Hartlepools.
10.45 p.m.
Mr. Geoffrey Rhodes: For a Tyneside Member to intervene in a debate about Tees-side may be a case of fools rushing in where angels fear to tread, but this fool will be on his feet for less than two minutes. We must congratulate the Minister on bringing the Order before the House. As a Member for Tyneside, where local authorities are still divided on their future, I look with envy at the fact that the Tees-side authorities have pulled together to decide this problem.
The essence of the Amendment is simply that nothing should be done about the problem of the conurbation and the administration of Tees-side, or anything else, until the Royal Commission has not only received all its evidence but has reached its conclusions—in other words, that there should be no alteration of local government structure at all for another two, three or more years. But when the Minister appointed the Royal Commission on Local Government this was never his intention. There were some areas of the country where a decision had not yet been reached as to their future. It was clearly the Minister's intention that these areas should not be radically altered until the Royal Commission had made its recommendations.
Mr. Deputy Speaker (Mr. Sydney Irving): Order. The hon. Member is getting wide of the Order. He must relate it to Tees-side, and to no other area.
Mr. Rhodes: There were other areas of the country—and Tees-side is one—where the Minister had already announced his decisions and proposals, and it is precisely in those areas that it was intended that the Minister should proceed with the Order and bring it before the House, even before the Royal Commission had met and received its evidence. There was only one area which was in no-man's-land—Tyneside. It is precisely in Tyneside that we have been unable to reach the kind of conclusions that our friends on Teesside have been able to do. That is all I wish to say about Tyneside, except to express some regret at the fact that tonight there is no order in respect of Tyneside, too.
I congratulate our friends from Teesside in pulling together for their mutual benefit. Those who wish to amend the Order are saying that it is very bad because in solving the problems of the conurbation of local government the counties will suffer. They are bound to suffer—and they will be bound to suffer after the Royal Commission has made its recommendations, because there is no solution to the integration of transport and civic planning, and police and education administration, in these growing conurbations with between 500,000 and 1 million populations, except through a unified system of local government, and this automatically brings into the new county boroughs parts of adjoining counties. This will be so whether we have the Order tonight or wait until the Royal Commission has reached the same kind of conclusions about conurbations.
The only outcome of the deliberations of the Royal Commission is that perhaps the conurbation would be a larger area than is provided for under the Order. It would not be a benefit to county authorities; it would be even more to their detriment. There will be uncertainty on Tees-side whatever happens tonight, but the uncertainty will be less if a decision is taken tonight. I wish that Tyneside were doing the same thing as is Tees-side.
10.50 p.m.
Mr. Bob Brown: I do not agree with the assertion of my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Rhodes) that the Tyneside authorities are not agreed——
Mr. Deputy Speaker: Order. The hon. Member will remember that I ruled the other hon. Member for Newcastle-upon-Tyne out of order for discussing Tyneside. The Order relates to Tees-side, and Tees-side alone.
Mr. Brown: I bow to your Ruling, Mr. Deputy Speaker. I also want to say how lucky the people of Tees-side are to have this Order. Like my hon. Friend the Member for Newcastle-upon-Tyne, East, I envy Tees-side for the fact that this Order is going through this evening. Tees-side will forge ahead as one big conurbation, but I fear that unless my right hon. Friend makes a decision which the majority of authorities on Tyneside, with the exception of——
Mr. Deputy Speaker: Order. The hon. Member cannot relate his remarks to Tyneside; he must stick to Tees-side.
Mr. Brown: I have made the point which I wished to make. I congratulate the people of Tees-side on having this great benefit bestowed on them by the Government.
10.51 p.m.
Mr. Albert Roberts: My hon. Friends who have spoken come from north of the Tees. As a Yorkshireman, I am opposed to the Order, which is bound to affect the Royal Commission's negotiations. We are robbing Peter to pay Paul. It may mean some demands being made on the West Riding, and, as one who represents a West Riding constituency, I would favour Yorkshire being a province. I do not believe some of the patronising talk about those living on the Tees being in favour of the Order. The decisions have been made in advance of the Royal Commission Report.
I disagree with my hon. Friends on another point. This spread and sprawl from our boroughs and county boroughs has been going on for generations, and agreeing to the Order will encourage the trend. I hope that an Order will go through, but I am opposed to this one,
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just as I was opposed to the Sheffield Order taking in a mining village nine miles away. It would have been better to deal with the county as a whole instead of hotch-potches here and there.
Those who have been paying tribute to the Order live in Durham and Northumberland. My sympathy goes out to the North Riding. I want to preserve all three Ridings. The only thing which I would concede would be a province of Yorkshire——
Mr. Kitson: I am also a Yorkshireman. Would not the hon. Gentleman agree that we would be better off with home rule for Yorkshire at the moment?
Mr. Deputy Speaker: Order. The Order is concerned with Tees-side, not with Yorkshire as a whole.
Mr. Roberts: I am not ashamed to speak up on this, and I am not patronising. Some of these decisions were made by the Leader of the House, when he was Minister of Housing, and were inherited by the present Minister. It is only right that we should express our views. Many hon. Members on this side disagree silently with what my right hon. Friend is doing in pushing the Order through. I hope that it will be the last pushed through before the Royal Commission reports.
10.54 p.m.
Mr. Graham Page: The hon. Member for Normanton (Mr. Albert Roberts) introduced some welcome liveliness into the debate, but we are, in discussing this Order, dealing with perhaps one of the most exciting areas of development in the country, if not in Europe, over the past few years.
The towns of Tees-side between the North Yorkshire moorlands and the hills of South Durham, with the level land bordering the tidal waters, have had a phenomenal growth and modernisation of industries in the past century, based on the natural resources of the area. The development of the Tees-side towns over this period undoubtedly calls for a reconstitution of local government in the area. The industrial development of coal, shipbuilding, ironstone, the constructional steel works and the great single concentration of the chemical industry at Billingham make it a unique

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area for local government consideration in relation to the recommended population of about 400,000 people.
My hon. Friend the Member for Richmond, Yorks (Mr. Kitson)—whose remarks were confirmed by the hon. Member for Cleveland (Mr. Tinn)—said that this was an occasion for reform in local government but that when a Measure dealing with an area of this importance, with a population of 400,000, comes before the House, hon. Members should be told more about Government policy for local government reform and the way in which the Order fits into that policy.
The Government have stopped the work of the Local Government Commission and have appointed a Royal Commission. Yet in the past few weeks we have had Orders coming before the House creating county boroughs with populations ranging from fewer than 100 to 400,000. How many more of these piecemeal orders are we to have and what policy is emerging from them?
We are tonight considering a population of 398,000, to be formed into a county borough. The Department of Education and Science has said that the figure of population for urban areas should be about 500,000. The Ministry of Health has said that, for certain purposes, it should be less than 250,000. The Home Office has said that 250,000 would be appropriate from the point of view of the children's services, while figures of from 500,000 to 1 million have been suggested from the police point of view. Thus there is a controversy between Government Departments about the right unit of local government for the central Government services administered by local government.
In presenting the Order the Minister's statement was desperately disappointing, but of vital importance. He said that it would be a long time before any new local government structure could take effect. We had hoped, from the statements of the former Minister of Housing and Local Government—who I am pleased to see in his place, and who is now Leader of the House—that there was a dynamic policy for reforming local government. A Royal Commission was to be set up; it was to report quickly and the
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new structure was to be brought into operation quickly. Do the Government consider that these piecemeal Orders represent dynamic policy? Do they think that these Measures—one or two orders a week presented to Parliament during farcical morning sittings at which hon. Gentlemen opposite do not bother to turn up to support their Ministers—represent dynamic local government policy?
Mr. Bob Brown: Does the hon. Gentleman accept that the Orders which are being presented to Parliament are being introduced as a result of many years' work by the Local Government Boundary Commission and that it would be wrong for the Government to ignore that work? Is he aware that people who advocate that because we have a Royal Commission we should do nothing, are really saying that we should stand still in local government matters, remembering that to stand still in these matters is the same as going backwards?
Mr. Page: I agree with the hon. Member. A great deal of work has been done by the Commission, and by the county reviews before that, in order to decide what form local government should take. I am surprised that those who support the Government have taken so little interest when these Orders have been brought forward. We have had them at morning sittings and at this late hour of the night. Is this the policy of the Government in having an overall review of local government structure? This policy is wholly undefined and it is time that we knew where all these Orders fitted into future policy relating to local authorities and the reform and reconstitution of the structure of local government.
We have before us tonight a very important Order. It is one which causes controversy in the county authorities and the county district authorities now to be formed into a county borough. It is proper to bring it forward and for the House to accept it. In saying that, I wish that the Minister had told the House more of the Government's policy and had stated whether this Order represents that policy and whether the other Orders which we have discussed lately, like the Torbay Order, represent that policy. We are left in complete doubt as to what is meant by this great drive by the Socialist Government to reform local government.
11.3 p.m.
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl): I appreciate that the hon. Member for Crosby (Mr. Graham Page), whatever he may say about this Order, is in a rather delicate and embarrassing position. He thinks that it is a very good Order but he cannot say that too loudly without offending some of his very revered friends. I understand that, and I would not bully him about it.
I am surprised that he took this line about the Government's policy on local government reform. This is something which we have deployed fairly frequently in the course of the debates. My right hon. Friend dealt with it on the Second Reading of the Local Government (Termination of Reviews) Bill which passed through the House a few minutes ago. It was raised when we discussed the Shropshire review and it was debated on the Salop Order and the Torbay Order. On all these occasions we explained the attitude which we were adopting. We do not want to waste the work of the Local Government Commission. In any cases where the Local Government Commission has completed its job and handed its report to my right hon. Friend, the report is looked at by the Minister who makes his decision on whether it should be carried out, on the merits of the case. It is as a result of that, that we have had the Torbay Order, the Tyneside Order which has been alluded to, and this Order.
My right hon. Friend said in answer to a question that he would refer the Tyneside Order to the Royal Commission to get the Commission's views, on whether it was consistent with its ideas on local government reorganisation. He has carried out a consistent and coherent policy to get as much practical value out of the work of the Local Government Commission as he could. The point of doing that, and not merely scrapping the work while we wait for the Royal Commission, has been shown in this debate. Practically nobody has been able to make out an argument against the proposals.
In a desperate attempt to find some ground of opposition, my hon. Friend the Member for Normanton (Mr. Albert Roberts) expressed surprise that nobody south of the Tees had supported the
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Order. However, in all fairness, the hon. Member for Richmond, Yorks (Mr. Kitson) explained the reason. My right hon. Friend the Member for Middlesbrough, East (Mr. Bottomley) was here fervently desiring the Order to go through, but was muzzled. So brilliant is the renaissance of Tees-side, of which this Order is an expression, that practically all the hon. Members from the area are members of the Government and in very high office. My hon. Friend the Member for Cleveland (Mr. Tinn), whose constituency is south of the Tees—I have checked with the map to make sure—has only a short pause until he joins the rest Tees-side ranks second only to Lancashire as a centre of political power.
The most valuable thing about the Order is that it is an early experiment in regarding a river not as a frontier, but as a source of common interest, and this is true of Tyneside and Merseyside. The hon. Member for Crosby and I have similar interests on Merseyside in that sense. It is of value to the work of the Royal Commission and not a handicap to it that this experiment should begin of seeing how, building on an area of substantial agreement, this can be made to work. As my hon. Friend the Member of Cleveland fairly said, in getting to this agreement on the Order there has been a democratic resolution of a great conflict of opinions and loyalties, and there is now a determination to get on with it.
The only substantial objection to the Order is that it is made at the cost of the North Riding to which it will be a severe blow financially. It will not severely cripple Durham which, in the league table of counties, will remain substantially above the middle, worse off, but not absolutely crippled. I am certain that we can be confident that it will continue to do a useful job.
I remind the House that Article 64 of the Order provides for transitional assistance from Tees-side if the increase in the rate burden on the North Riding gets beyond a 6d. rate. I do not say that that provision was welcomed by Tees-side with an outburst of filial loyalty to the North Riding, but it has been accepted as a responsibility which Teesside will shoulder.
For those reasons, the fact that the Order has had general approval, that it

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is consistent with the new approaches to local government and that it will not cause substantial harm to the counties from which the area is taken, I ask the House to accept the Order.
Question put and agreed to.
Resolved,
That the Teesside Order, 1967, dated 18th January, 1967, a copy of which was laid before this House on 25th January, be approved.

EXPORT GUARANTEES BILL
Considered in Committee [Progress 13th February].
[Mr. SYDNEY IRVING in the Chair]

Clause 1.—(RAISING OF LIMITS ON GUARANTEES, ETC.)
Question proposed, That the Clause stand part of the Bill.
11.10 p.m.
Mr. Terence L. Higgins: There are some serious points on this Clause, the major Clause of the Bill, on which we must ask the Minister of State for clarification. The Bill raises the limits within which the Export Credits Guarantee Department is enabled to operate, and we on this side have already made clear that we support the action which the Government propose. When I spoke on Second Reading I said that the Department was doing a very good job in promoting the nation's exports, and I stressed the importance which this had for the working of the whole economy. But one has heard some criticisms of the way the Department works, and I think it right to say what these are alleged to be and to ask for explanations.
The questions of particular importance arise in connection with shipbuilding credit. The rôle which the Department plays in shipbuilding is vital because there is no market in which competition on credit terms is more severe than this. The shipbuilding market has been distorted in the post-war period by the development of flags of convenience, the advent of flag discrimination, the question of shipbuilding subsidies and changes in the whole basis on which shipbuilding is financed.
Before the war, shipbuilding was financed largely on the basis of knowledge of the expertise of the ship-owner concerned. In the post-war period, it has been based largely on the fact that the person building the ship has been able to obtain a long-term charter from a certain company, frequently an oil company, and raise credit on that basis. This has led to a general intensification in the competitive credit terms offered by various countries in order to stimulate the activities of their shipbuilding industries.

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The Committee will agree that the terms now offered by the Export Credits Guarantee Department are very good. Eighty per cent. of the total cost spread over ten years is offered at 5½ per cent. interest, and this is available to foreign ship-owners buying from British yards. But these loans are subject to the Department's cover, and, as one sees from the admirable E.C.G.D. booklet explaining the work of the Department, this can take two alternative forms. It can either come under a special shipbuilding policy or it can come under a financial guarantee. On this basis, the Department will ask the person who requests the guarantee to provide a certain collateral, and this can take the form, in the case of an owner of considerable standing in the international market, of a purely personal guarantee, or, if his standing is, perhaps, not sufficient on a personal basis, it can take the form of a mortgage on other ships in his fleet. Alternatively, a long-term time charter of the kind I mentioned just now can be taken into account.
As I understand it, the Export Credits Guarantee Department does not have a standard basis for deciding how the collateral offered by the ship-owner shall be calculated, and one hears complaints—perhaps valid, perhaps not—that other countries which are notable for their shipbuilding activities make clear to those who wish to raise credit to purchase ships the basis which they will use when evaluating the first mortgage on the ship itself. This means that the person concerned can form a very clear idea of how much additional collateral he has to raise. It is very similar to someone undertaking a house purchase, where it is a question of how much a building society will advance on the basis of the house itself, and then how much additional collateral the building society will ask the owner-occupier to provide.
11.15 p.m.
Clearly, as with a house so in the case of a shipbuilder it is a great advantage to know how much the person offering the mortgage is prepared to advance on the value. A number of other countries, anxious to promote their shipbuilding, have made it clear to international purchasers that they will regard a certain percentage of the value of the ship as collateral.
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If the ship is valued at £1 million, they might say, "We will take 40 per cent. of the value of the ship as collateral," or alternatively it might be 60 per cent., "and this will go towards the percentage on which we are prepared to give you a loan". I presume that over and above that amount, the purchaser has to find the whole amount out of his own resources.
The point which troubles us on this side of the Committee is that we feel that unless the Export Credits Guarantee Department is prepared to make a similarly clear statement of the amount of the value of the ship which it is prepared to take as collateral it might be that although the terms are extremely good and competitive compared with those of other countries, none the less the order goes to a Japanese or Scandinavian shipbuilding yard rather than to this country. This is something which I think the whole Committee will agree we need to avoid if it can be done by a fairly simple administrative change.
Clearly, there would have to be exceptions. One would not expect the E.C.G.D. to take as collateral the same percentage of the value of a ship, let us say, of the heavy-lift sort, a special vessel the market for which may be uncertain. But so far as the general run of tramp or line shipping is concerned, one would have thought that a clear statement of this kind would do a great deal to make it easier for those who wish to sell British ships from British yards to become competitive in offering standard terms.
The second point which I think needs to be made is concerned with the way in which the application is treated. It is sometimes said that the E.C.G.D. is not as rapid as similar organisations, or organisations for fulfilling the same purpose in other countries, in carrying through the negotiations, which involve considerable sums, of the order of £1 million, more or less.
If it were possible for the E.C.G.D. to provide a standard form—clearly with some sections which would allow for exceptions for a particular vessel—this would provide something which a British yard could show to a prospective purchaser. It could then say, "This is the

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type of form we normally need completed", and could indicate which pages needed to be filled up automatically and which might need to be discussed. If a standard form could be provided, it might help to speed up the process, and in this kind of market speed may well be the deciding factor whether an order comes to this country or not.
Thirdly, there is a case for standardising the terms on which the E.C.G.D. itself offers to finance the purchase of a ship. I understand that it has been the practice of the E.C.G.D. in recent times to impose certain conditions. I understand, for example, that it is required that the vessel concerned shall be insured directly at Lloyds. Is this the normal practice of the E.C.G.D.? If so, is it done off its own bat or at the request of Lloyds? Who is responsible for adopting this policy?
Whether the insurance is placed at Lloyds or elsewhere it is statistically likely to come back to Lloyds through the reinsurance market. The danger is that if restrictive terms of that sort are imposed by the E.C.G.D. foreign owners may well feel that because they are forced to insure the ship concerned directly at Lloyds the insurance they already have directly with Lloyds should be withdrawn. When our position in insurance is so pre-eminent, and the conditions we offer so good, there may be a case for eliminating that kind of term. I should be glad if the Minister could confirm whether restrictions of that kind are imposed, and whether there are good reasons for their imposition.
I studied with considerable interest the booklet on the E.C.G.D., particularly as it concerned shipbuilding, and a question arises on the rate of interest discussed on page 46 under the heading, "Financing a major project"—of which shipbuilding is regarded as one—"Financial Guarantees". The normal advance is 80 per cent. over 10 years, at a rate of interest of 5½ per cent. The paragraph concerned says that
"… the banks have agreed to provide such finance at a fixed rate of interest of 5½ per cent."
When I discussed interest rates on Second Reading I said that I thought that in
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general terms there was a case for this country adopting the same rate of interest as other countries, and for there not being a kind of Dutch auction on interest rates.
That competitive rate of interest is granted for shipbuilding by the banks themselves, apparently. It is significantly below the present Bank Rate, and has been so for a number of years. Can the Minister tell us whether the banks grant it entirely on their own initiative or whether it is something with which the Government help them in some way?
The Committee will appreciate that my points on the Question, That the Clause stand part, are designed, as our probing Amendments throughout have been, to ensure that the exports of this country are given every facility in a very competitive market to enable them to earn the foreign exchange on which we inevitably depend. It was for that reason that it seemed to me to be worth while to put forward those points which arise on the raising of the limits. As I pointed out on Second Reading, we get an opportunity to discuss this whole matter only every three, four or five years. If anything can be done that will improve the position of our exporters by raising those points in Committee I think that the Opposition are right to raise them.
Mr. R. Gresham Cooke: The Export Credits Guarantee Department is doing a splendid job. It is helping our exports every year, probably by a larger and larger amount, but two complaints were made to me recently when I was talking to a ship-owning friend. He said that by the Department's operation foreign ship-owners were getting a more favourable rate on borrowing money to buy British ships flan was the home ship-owner. If that is the result of this legislation and the policies of the Department, this should be seriously looked into. Obviously, we want to increase exports but we do not want to penalise the home ship-owner.
The other point which has been made to me from time to time is that, whereas the big companies are pretty well satisfied with the work of the Department, the small man always seems to have a little more difficulty. He has to pay a higher rate than the big man when he goes for the small parcels of insurance. Perhaps

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he does not know his way round the Department and does not quite find the information that is so easily found by the big company. By and large, the small man is not so satisfied as the big man with the work of the Department. These two points have been made to me over the last few months about the work of the Department, which generally is excellent.
Mr. John Wells: I want to address my remarks mainly to something said on Second Reading by my hon. Friend the Member for Worthing (Mr. Higgins) and about which the Minister of State very kindly wrote to him. My hon. Friend mentioned specifically the problems of the horticulturist. As he has just said, we get the opportunity to discuss this matter only every four or five years and I urge upon the Minister of State the problems that are likely to lie ahead of British horticulturists during that period.
We are passing a Measure to provide a sizeable sum of money which is quite essential to the work of the Department, and I am wholly behind it. But the British horticulturist has a curious problem. He has to get over the hurdles of plant health restrictions in other countries after getting a certificate from a Ministry of Agriculture inspector in this country.
I would like the Department, within the framework of the cash we are giving it, to be able to guarantee a small exporter who has a certificate from the Ministry of Agriculture that his produce complies with the regulations of the other country concerned. He would be able to go to the Department and insure the certificate, given in good faith and expected in good faith to be accepted in the country of delivery.
The right hon. Gentleman wrote to my hon. Friend after the Second Reading debate because there was not time to answer the point and I thank him for his courteous letter. Where the small horticultural exporter is not flouting the laws of the other country—I realise that he could not be guaranteed against that—but where an inspector in that country is, to put it bluntly, bloody-minded in face of a reasonable certificate given here by the Ministry of Agriculture, and declares the product unacceptable for
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health reasons, with the result that it is destroyed, there is no further evidence and no come-back for the poor chap here, who has to meet the loss involved.
The right hon. Gentleman made the valid point in the letter that there is no limit to the amount of guarantee but that the small exporter has to pay a slightly higher premium because he is able to shop around for all the cover he needs, but as we are unlikely to have another opportunity to raise this matter again for some four or five years it is essential, even if such a provision cannot be incorporated in the Bill at this late stage, that the Department should seek to give this special umbrella to the horticultural exporter.
11.30 p.m.
I say this because at this juncture we are getting closer to the Common Market, and the British nurseryman is the one section of the horticultural industry who is likely to do well in the export sphere. As the Minister of State is well aware, some of our leading chrysanthemum houses have an extremely good record in exporting cutting materials and rooted cuttings. The great tradition of the British gardening and the nursery trade, as opposed to the trade in foodstuffs, is likely to have great export potential. It is here that the Health Regulations, and the relations of the Ministry of Agriculture inspectorate between one country and another, come into the picture.
The Minister is aware of the constituency case which I raised with him, and I am most grateful to him for his help although it was negative. I appreciate the interest that he has taken. I am not addressing my remarks to any single constituency matter but to British agriculture as a whole, in view of the problems which will lie ahead in the next four or five years.
There is one final point, arising out of what was said by my hon. Friend the Member for Twickenham (Mr. Gresham Cooke). This dealt with overseas ship-owners being in a more favourable position. I remind the Minister of State of another matter to do with shipping, which I have raised with him by correspondence and which was raised by my noble Friend, Lord Drumalbyn, on the Report stage of the Companies Bill in

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another place. As I understand it, the matter was also raised by my hon. Friend the Member for Harrow, Central (Mr. Grant) earlier this afternoon, on the Companies Bill. I hope that the Minister will bear in mind the point about marine mortgages, and tie it in with the thoughts that must arise out of the principal monetary Clause of this most important Bill.
The Minister of State, Board of Trade (Mr. George Darling): I am glad co say that the hon. Member for Maidstone (Mr. John Wells) is under a misapprehension about the raising of matters from time to time. He does not need to wait for the next Export Credits Guarantee Amendment Bill. I invite him, because the points that he has raised by correspondence and in conversation are germane to the export trades of this country, to raise matters at any time that he likes. The hon. Member for St. Ives (Mr. Nott) pointed out in the House on Monday morning, in a truncated debate, during some actions that I cannot, in language unguarded, describe, that as a merchant banker he could go to the Export Credits Guarantee Department and raise questions, but when he wanted to raise matters with the Department as a Member of Parliament he had, for obvious reasons to act through me.
I hope that the hon. Gentleman will bring his questions to me, and I will endeavour to deal with them as quickly as possible. The point about the horticultural trade, is being looked at again and I can assure the hon. Member that the Export Credits Guarantee Department has a sympathetic approach to the problem. It does arise in other instances——
Mr. John Wells: It does not occur in any other instance so finally, because once stocks have been destroyed by what I call a bloody-minded inspector, they have gone for all time.
Mr. Darling: It is not so clear-cut. I was going on to say that it arises where, because of unexpected rules and regulations in the importing country, the export order disappears and the poor exporter is left with the whole cost of the operation, receiving nothing in return. This occurs in other cases. It is a problem that we have to deal with. As I say, we shall look at the horticultural
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question again and try to deal with it sympathetically.
The question of marine mortgages is a little more difficult. I think we can discuss it on another occasion. As I have said, the future occasions are not limited in any way.
The hon. Member for Worthing (Mr. Higgins) raised two very important issues on shipbuilding. We understand and appreciate their importance. However, I think that I can answer him fairly briefly.
First, there is the question of a formula for evaluating mortgages. As we understand it, the overseas shipbuilding country to which he has referred uses a formula whereby the mortgage is normally taken as 55 per cent. of the total cost of the ship. That is where it begins. But there are exceptions, we understand. We have friendly relations with the country concerned and are having discussions about just what the exceptions are.
The approach of the E.C.G.D. has been somewhat different. This is the way in which the Department has worked in the past. Rather than have a standard formula, the Department has been far more flexible in its general approach to securities, whether they are mortgages or otherwise. I understand that, generally speaking, this has been favourable to British shipbuilders seeking to sell their ships abroad.
It must also be remembered in this regard that the credit period available through the Department is often longer than that given by the country to which the hon. Member referred, but because it has been the policy of the Department to put British exporters at least on level terms with their competitors, we are looking at the whole matter again. We are taking account of the recent representations made to us by British shipbuilders, and we are looking urgently into whether it would be desirable to offer similar arrangements for mortgage evaluation to those provided in other countries. So again we stick to the claim that we make, that we will match the best credits that are being offered by other countries.
I think we had better leave it at that point. The operative word that I have used is "urgently". We are looking into the matter urgently. The representations that we have received make it

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quite clear that this is an urgent problem and that we must get it right.
The hon. Member's second point was about what I would call standard documentation. Most shipping credits at the moment take the form of loans from a British bank to the buyer, guaranteed by the Department, which enables the buyer, in effect, to pay cash for the sale contract. Standard application forms for this type of cover are already available from the Department. The Department's view is that it is not possible to produce a completely standard form of loan agreement because the circumstances, needs, trades, markets, borrowers, lenders and so on vary so widely, but we agree that it would be useful to have a standard specimen form of agreement that could be shown to buyers and used as a basis for drafting the final contract in a great number of cases. The Department has already got this form in preparation, and it will be available very soon.
I think that the criticism that has been made by the hon. Member has been anticipated, but, of course, he is not the first person to make the criticism. I have asked the Department to look at the question of Lloyd's reinsurance and the possibility that this may go round in a circle. I am not sure of the answer, but I will get in touch with the hon. Member and we can discuss it again.
As to Bank Rate, I understand that since 1962 the banks have been making available medium-term finance at the fixed rate of interest mentioned by the hon. Member of 5½ per cent. for export transactions which are covered by the specific bank guarantees. These arrangements were later extended to include longer-term finance provided against the Department's financial guarantees. For business on short-term credit of less than two years, arrangements were introduced early this year whereby the banks agreed to make finance available at Bank Rate for business covered by the comprehensive bank guarantee. At present, I understand that this applies only to bill business, but the Department is discussing with the banks the possibility of widening the scheme to embrace open account business as well.
The 5½ per cent. arrangements were originally for five years from January, 1962. The arrangements are continuing
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unchanged, but the Department and the Board of Trade will be reviewing all the circumstances relating to these bank guarantees and the rate of interest in a year's time. I do not know whether the hon. Member can wait so long, but we will certainly have opportunities for discussing these matters before then. I will keep the hon. Member informed of the progress that we make in the discussions.
I am sorry that the hon. Member for Twickenham (Mr. Gresham Cooke) has not caught up with the proceedings under the Bill. His question concerning British buyers of British ships getting credit terms less favourable than for foreign buyers of ships built in the United Kingdom does not arise on the Bill.
When the question was raised on Second Reading, I made it clear that we were considering a Bill dealing with export credits and that, therefore, the question of credit terms for British buyers of British ships did not come within the scope of the Bill. As I explained on that occasion, however, my right hon. Friend the Minister of Technology, who includes shipbuilding under his umbrella of responsibilities, had made an announcement in the House. My right hon. Friend said in answer to a Question on 17th January:
"I am now considering representations made to me by shipbuilders about credit facilities in the light of the overriding need for reorganisation of the industry."—[OFFICIAL REPORT, 17th January, 1967; Vol. 739, c. 21.]
The question raised by the hon. Member for Twickenham is, therefore, being considered fairly urgently by my right hon. Friend the Minister of Technology, whose responsibility it is. This Bill is an exporting Bill and not a Bill to provide credit terms for British buyers of British ships.
Mr. Gresham Cooke: Is it true, however, that by the operation of the Bill the foreign shipowner gets more favourable terms than a British shipowner?
Mr. Darling: Yes—at least, that is the allegation which is made. As I have said, the position is being looked into. If the hon. Member refers to the Second Reading debate, he will find that it was dealt with then.
Mr. Higgins: I should like to take up the point made by the Minister of State, who will, I am sure, agree that the

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foreign purchaser aspect of the shipbuilding side is important.
11.45 p.m.
I welcome the statement that the right hon. Gentleman has made on standard documentation, as I am sure will British shipbuilders and foreign purchasers.
On the extent of collateral, I am sure that he is right in saying that a certain other country appears to be much more specific than we are. On initial inquiry, they may say that the value of a ship will be taken as 55 per cent. of the total cost, so that on an 80 per cent. mortgage, the owner is expected to find some 25 per cent. of the cost as collateral security.
While I accept that there must be some exceptions, I hope that in the urgent consideration which the right hon. Gentleman has promised to give to this matter he will consider whether some specific statement cannot be made, both in the case of dry cargo ships between certain specified tonnages and equally in the case of oil tankers presumably between somewhat larger tonnages. If these minimum figures can be set down, it will enable the ordinary purchaser of a standard dry cargo vessel or oil tanker to be in a better position to assess the credit position. It is much the same as the distinction between houses and purchase-built flats in the housing market. If that can be done, it will be a great help.
Another point which has been worrying me is that the E.C.G.D.—the bank between them—is asking for a lot of collateral guarantees, a down-payment, and so on, yet there is still an E.C.G.D. guarantee. What is it that the Department is guaranteeing, when it is already covered by collateral where the value of a ship, which is presumably worth 100 per cent. of its cost, is only valued at 55 per cent., and on top of that there has to be a personal guarantee, and on top of that there has to be a long-term charter? I faced much the same situation when I came to buy a house, but in that case a guarantee was not required in advance.
I am sorry to spring this on the Minister of State, but it has been worrying me. What is being guaranteed in this context? I appreciate that the right hon.
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Gentleman will not be in a position to answer at this moment, but perhaps he will be good enough to let me know in due course.
Mr. Darling: I will write to the hon. Gentleman about that.
Question put and agreed to.
Clause ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
Bill reported, without Amendment.
11.48 p.m.
Mr. Darling: I beg to move, That the Bill be now read the Third time.
In spite of some unfortunate episodes on Monday morning, the hon. Member for Worthing (Mr. Higgins) and the House generally have dealt with the Bill sympathetically. It has received the full support of the House both on Second Reading and in the subsequent proceedings during which we have discussed its terms. If there are any more issues which hon. Gentlemen care to raise, they can do so now or by correspondence, and I shall do my best to answer their queries.
11.49 p.m.
Mr. Higgins: I cannot accept the right hon. Gentleman's view that the events of yesterday were necessarily unfortunate. What was unfortunate was that two quite separate issues became confused. On the one hand, there was a debate on various Amendments which we were considering. On the other hand, there were some very important procedural innovations whereby an important matter was dealt with without there being any quorum rule at all. I think that my hon. Friends were justifiably incensed about these innovations, but I agree with the Minister that it was unfortunate that these became entangled with the discussion on the specific points which were raised in Committe.
I want to make one or two points in response to the Minister's invitation. In particular, I want to thank the right hon. Gentleman for the very full way in which he has replied to a number of points which my hon. Friends and I raised during the Second Reading debate by writing to them. We are grateful to him for the manner in which he has answered

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the various matters which were raised, in particular the matter which was raised by my hon. Friend the Member for Maidstone (Mr. John Wells).
There are one or two points which the right hon. Gentleman made in a letter which he was kind enough to write to me which I think deserve to be mentioned, and also one or two which have arisen spontaneously as we have considered the various aspects of the Bill.
One of these was prompted by the excellent document which has now appeared in the Library, I imagine at the instigation of the Board of Trade, a survey by the Port of London Authority concerning Britain's foreign trade which is very relevant to the matter we are considering, and which gives figures and regional destinations of imports and exports which have hitherto not to my knowledge been available. On a previous occasion I had reason to need figures of this kind, but they were not in existence.
With regard to the proposals for container traffic, does the Bill cover export credit guarantees on containers? This is undoubtedly a growth sector of the economy and something about which I am sure the Board of Trade is concerned.
I turn now to the specific points which come up in the Minister's letter. In cooperation with one of his right hon. Friends the Minister wrote to me about the change which has been introduced with regard to aid. The Minister said that although aid would now be considered by the Ministry of Overseas Development and that the policy of the Government was being centralised, none the less Section 3 of the parent Act—and this Bill increases the limits—would remain in existence. During the Second Reading debate we suggested that there was a case for transferring the whole matter to the Ministry of Overseas Development.
The Minister said in his letter:
"We do not think there would be any virtue in transferring credits already given under section 3 to the Ministry of Overseas Development; this would be a complex operation from the legal and accounting point of view and would not serve a useful purpose. The present position is straightforward and should not give rise to any difficulty: outstanding Section 3 credits, which figure as liabilities in the E.C.G.D.'s books (but separately from, not in the accounts relating to credit insurance opera-
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tions), will be gradually reduced and finally eliminated as repayments are received."
The right hon. Gentleman went on to explain the loans which had been given to overseas countries under this procedure.
Mr. Darling: With due respect to the hon. Gentleman, I do not want to stop him discussing Section 3 of the main Act, but there is nothing in this Bill about Section 3 of the Act and I understood that on Third Reading we could discuss only the things in the Bill.
Mr. Higgins: I accept that. The point which I want to make is that the Bill increases the limits and there has been a change so far as the Government are concerned which alters the position with regard to Section 3.
Why are the Government certain that we should extend the financial limits to cover Sections 1, 2 and 3 of the parent Act? Would it not have been much more convenient to transfer responsibility for section 3 covering aid to the Ministry of Overseas Development? As I understand it, the repayments which now come in and which are affected by limits imposed by the Bill will go back to the Export Credits Guarantee Department, and will then be refunded to the Treasury. Would it not be better for the Ministry of Overseas Development to take over the whole operation, when the funds would presumably go back to that Ministry and be reallocated in the aid programme?
I am not clear why the Minister does not feel that this would be a more convenient arrangement than that which he is proposing. My hon. Friend the Member for Dorking (Sir G. Sinclair) and I feel that it could be a much better arrangement to centralise this in accordance with the Government's own policy.
11.56 p.m.
Mr. John H. Osborn: To intervene in a Third Reading debate just before midnight is always a dangerous thing to do, but I hope the Minister will bear with me. This morning I read that an interesting debate took place between 11 a.m. and 11.30 a.m. yesterday morning and that there were particularly interesting contributions by my hon. Friend the Member for St. Ives (Mr. Nott) and my hon. Friend the Member for Oswestry (Mr. Biffen).

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During that time there was a reference to the American A.I.D. Department and the sort of assistance given by the equivalent Department to the Export Credits Guarantee Department in the United States. We now have an opportunity of debating that issue.
Mr. Deputy Speaker (Mr. Sydney Irving): Order. That is outside the scope of the Third Reading debate.
Mr. Osborn: I have to be guided by you entirely, Mr. Deputy Speaker, but surely something which was discussed on a Clause in Committee is relevant to our discussion now.
Mr. Darling: On a point of order. Mr. Deputy Speaker, the Amendment that gave rise to that discussion was withdrawn. It is not in the Bill, and in view of that fact I feel that it would be an imposition on the House at this time of night to debate an issue which I think—I do not know whether I am right—is completely out of order.
Mr. Osborn: The Minister of State is saying, with a certain amount of arrogance——
Mr. Deputy Speaker: Order. Whatever the language of the Minister, he was confirming the Ruling that I have given that the hon. Member's remarks were outside the scope of the Third Reading debate.
Mr. Osborn: I have to be guided by you, Mr. Deputy Speaker, and I want some guidance how this Bill operates in extending the powers under Clauses 1 and 2, referring to commercial transactions and transactions in the national interest, respectively. The publication that I have deals with medium and long-term matters—heavy engineering loans and so on, and I was seeking clarification how these provisions would be used. If my remarks are not relevant to this debate, perhaps they could be raised in an Adjournment debate at another time.
Mr. Darling: During the discussions on this Bill I made it quite clear, time and time again, that when any Government have been asked for an increase in the insurance cover an opportunity has been given to discuss the general principles and, if there is time, some of the details. I have always said that if
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hon. Members have any issues of interest to raise, if they write to me I will see that they get the fullest possible information, of which they may make the fullest public use.
I suggest that it is an imposition, at the end of all these discussions, to raise issues like this at this time of night. I would also point out that, because of the way in which these matters were raised, I had to have representatives of the E.C.G.D. at my house yesterday morning to get ready for the debate. There is a limit to what I am going to take.
Mr. Osborn: I try to treat the House with the greatest courtesy, and I would not wish to be discourteous to the Minister of State, but there were lengthy debates yesterday on this——
Mr. Darling: Yes: the hon. Member should have been here.
Mr. Osborn: There have been lengthy debates on this and it is only by reading the issues raised in Committee that undoubtedly matters of great interest on policy and other issues have to be considered by the House now. I have taken part in other Third Readings and consider that it is right for matters like this to be discussed. If we cannot do this, it means that we will be gagged. The gagging of back-benchers is a new aspect of Parliament. It is something which I would accept——
Mr. Deputy Speaker: Could I help the hon. Member? The only concern of the Chair is to ensure that the rules are carried out. On Third Reading, only things actually in the Bill may be discussed.
Mr. Osborn: I do not wish to argue with the Chair, but it is obviously impossible to deploy relevant arguments if the Minister of State walks out of his seat and the Chair questions points which I am trying to raise——
Mr. Deputy Speaker: Order. The Chair is only enforcing the rules which the House itself has laid down.
Mr. Osborn: Obviously, this raises major points of principle. I have taken part in very important debates recently, particularly on the Iron and Steel Bill, and I understood that, contributions by a back-bencher who was unable to speak

521
in the Committee were welcomed on the last stage. If not, I will withdraw the point which I wished to raise about the attitude of E.C.G.D. in supporting the export of capital goods from this country.
Mr. Darling: On a point of order. This, too, was raised on the early proceedings. This Bill has nothing to do with the insurance cover of overseas investments.
Mr. Osborn: It is the insurance cover of the capital which goes out from this country——
Mr. Darling: No.
Mr. Osborn: Capital goods, which are all part of it.
I have been arguing for longer than I intended. It is a new slant on the conduct of Parliament. There are plenty of other opportunities to raise these issues, but it seems that Parliament is no longer the forum to raise——
Mr. Darling: The hon. Member should have been here yesterday.
Mr. Deputy Speaker: Order. The Minister of State does not apply the
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rules of order; the Chair does. The Chair has said that the hon. Gentleman is entitled to raise on Third Reading only matters which are in the Bill. He sought to go outside the provisions of the Bill. That is the only bar which has been put on the hon. Gentleman.
Mr. Osborn: I had intended to deploy a constructive speech and I have already taken five minutes longer than I had anticipated it would take me to ask a few questions. There seems to be a general reluctance on the part of the Minister to deal with this issue and it is with a certain amount of regret that I am obliged to leave this matter until another occasion.
Question put and agreed to.
Bill accordingly read the Third time and passed.

ADJOURNMENT
Resolved, That this House do now adjourn.—[Mr. McBride.]
Adjourned accordingly at six minutes past Twelve o'clock.

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  South Orbital Road
  A1 (Accidents at Roundabouts)
  A1 (Accidents at Roundabouts)
PORTS
  Public Ownership
  Public Ownership
WALES
  Helicopter Services (Mid-Wales)
  Helicopter Services (Mid-Wales)
  Welsh Language
  Welsh Language
  Water Consumption
  Water Consumption

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

INDIAN DEPORTEES FROM TANZANIA
2.35 p.m.
LORD ALPORT: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what action they will take with regard to the plight of Indians in East Africa possessing British passports, who are to be deported from Tanzania and have been denied entry to the Republic of India.]
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR COMMONWEALTH AFFAIRS (LORD BESWICK): My Lords, I am not aware that the Indian authorities have refused to admit to India any persons of Indian origin who are in possession of British passports. As far as citizens of the United Kingdom and Colonies are concerned, they are not subject to the United Kingdom immigration control unless their citizenship is derived from their connection with a remaining Colony.
LORD ALPORT: My Lords, may I ask the noble Lord whether the High Commissioner in Dar-es-Salaam is in touch with the development of this problem, because all of us who know anything about East Africa realised that the Asian population were most likely to be victimised at some point or other in the development of those territories, and we in this country still have a residual obligation to look after their interests, particularly those who carry British passports?
LORD BESWICK: My Lords, I quite understand what the noble Lord is saying in the latter part of his supplementary question, and the implications of
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what he is saying. This is of course appreciated by Her Majesty's Government, who are at present looking most carefully into the whole question.
LORD SALTOUN: My Lords, may I ask Her Majesty's Government whether they will again look into this question of British passports, with a view to dealing with specially hard cases? The noble Lord, Lord Clifford of Chudleigh, asked a Question on the subject some time ago, and it seems to me that there are considerable cases of hardship in connection with British passports. Could the matter be looked at again?
LORD BESWICK: My Lords, if there are particular cases of hardship I shall, of course, be happy myself to look into them. Perhaps the noble Lord will let me have details of any individual cases that he has in mind. With regard to this area of difficulty—the Indian High Commissioner in Dar-es-Salaam was mentioned—I think I realize to what the noble Lord was referring in the statement which was made by the Indian High Commissioner. But I believe it is relevant to say that the Indian Minister of State, speaking in the Indian House on August 23, 1966, stated that if people were in possession of British passports—and those are the people to whom the noble Lord refers—they do not require permits or visas to enter India and would normally be admitted if they came of their own free will. In the last few days the Government in Delhi has confirmed that position.
LORD BROCKWAY: My Lords, could my noble friend give any indication of the number of Indians who are to be deported from Tanzania? And is it not the case that both the Indian Government and the Government in Tanzania are seeking in every way possible to secure co-operation between the Indian and the African communities in that country?
LORD BESWICK: My Lords, I hope that the position is as indicated by my noble friend; that in fact the Tanzanian and the Indian authorities are cooperating together. I cannot give him the figures for which he asks. For one thing, the question of definition comes into the matter. I am not sure what he means by an "Indian"—whether he means a person born in Tanzania or

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one who has emigrated from India to Tanzania. In any case, I am afraid I cannot give him the figures for which he asks.

FIRE LOSSES
2.42 p.m.
LORD RATHCAVAN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what has been the total value of properties destroyed by fire in Great Britain in the years 1963, 1964, 1965 and 1966 respectively; and whether they can say how these figures compare with those of the preceding four years.]
LORD BOWLES: My Lords, the only available statistics are the estimates of annual fire losses published by the British Insurance Association, which before 1962 related only to the United Kingdom. Since that date the estimated fire losses for Great Britain have been as follows—I give the figures to the nearest £1 million: in 1962, £54 million; in 1963, £65 million; in 1964, £76 million; in 1965, £74 million, and in 1966, £80 million.
LORD RATHCAVAN: My Lords, may I ask the noble Lord two supplementary questions? The figures which he has given show quite considerable increases in recent years. Can he give any reason or cause why fire losses now appear to be so much greater than they used to be? Secondly, can he say what action, if any, has been taken by the Government or by local authorities to bring home to the people the danger of fire and to suggest precautions which may be taken against it?
LORD BOWLES: My Lords, in answer to the noble Lord's first supplementary question, I will, with permission, circulate in the OFFICIAL REPORT the number of fires since 1958. While there has been a general upward trend in the number of fires, these figures bear no direct relationship to the increase in estimated fire losses. This is because a small number of fires make a major contribution to fire losses each year. For example, in 1965 less than 1 per cent. of the fires accounted for 62 per cent. of the
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estimated fire losses for that year. The Government view with concern the increase in the estimated fire losses. Several factors have contributed to it, including the growth in population; the larger number of properties; the general increase in the value of property and materials; and the increase in the number and variety of potential sources of fires in industry as a result of the introduction of new and potentially hazardous materials and sources. There is no doubt, however, that most of the fires are caused either by personal carelessness or by ignorance.
In answer to the noble Lord's second supplementary question, as to what action, if any, the Government are taking, publicity is undertaken by Government Departments, lire authorities and insurance interests to make the public more aware of the dangers to life and property caused by fire. This is important, as it is clear that most fires are caused by personal carelessness or ignorance. Publicity is undertaken through the medium of television, the Press and education in schools. These activities are co-ordinated by the Information Sub-Committee of the Joint Fire Prevention Committee of the Central Fire Brigades Advisory Councils for England and Wales and for Scotland. One of the general matters which the recently announced Departmental Committee on the Fire Service will consider is the need for further fire prevention measures.
LORD FARINGDON: My Lords, I wonder whether my noble friend could tell me if it is not a fact that there is throughout the country a severe shortage of fire prevention officers?
LORD BOWLES: My Lords, I am afraid that without notice I cannot answer my noble friend's question; but I will certainly have the matter inquired into and will write to him.
LORD PEDDIE: My Lords, is my noble friend aware of the considerable contribution towards fire prevention that is made by industrial auxiliary fire brigades, operated by private firms? In the light of that evidence, which I am sure will be in my noble friend's possession, may I ask what steps are being taken by Her Majesty's Government to encourage such efforts by private firms within industry
LORD BOWLES: My Lords, it is well known, of course, that a great deal of help on fire protection matters is given to various managements by local fire brigades. I am also certain, from my experience, that a great deal of help is also given by fire advisers in the factories themselves.
Following are the figures referred to:

NUMBER OF FIRES—EXCLUDING CHIMNEYS, GRASS HEATHLAND AND RAILWAY EMBANKMENTS

United Kingdom

Great Britain

1958

80,008

78,920

1959

115,416

113,892

1960

99,960

98,188

1961

114,604

112,990

1962

122,378

120,456

1963

125,732

123,802

1964

148,568

146,478

1965

138,460

136,463

(provisional)

(provisional)

CONSOLIDATED FUND BILL
Read 2a (according to Order): Committee negatived.

GENERAL RATE BILL [H.L.]
2.45 p.m.
Order of the Day for the House to be put into Committee on Re-commitment read.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, this Bill has been amended by the Joint Committee on Consolidation Bills, and there is a further Amendment to be moved in Committee this afternoon. I shall therefore go through the Bill in the usual way.
Clauses 1 to 115 agreed to.
Clause 116 [Construction of references etc.]:
THE LORD CHANCELLOR (LORD GARDINER): This is a minor drafting Amendment, the object of which is to
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make it clear that Clause 116(8) is concerned with the identification of a geographical area, and not with nomenclature. It has arisen since the matter was before the Joint Committee because somebody with some knowledge in this field wrote to ask which meaning was intended. The wording had been thought to be perfectly clear as it was, but, if there can be any possible doubt about it I feel that the Bill should not leave this House without that doubt being resolved. This Amendment would resolve it. The noble and learned Lord, Lord Upjohn, Chairman of the Committee, has been consulted and in the circumstances approves of the Amendment. I beg to move.
Amendment moved—
Page 93, line 33, after ("to") insert ("an area which is").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 116, as amended, agreed to.
Remaining clauses and Schedules agreed to.
House resumed: Bill reported, with the Amendment.

TEACHERS' SUPERANNUATION BILL [H.L.]
Order of the Day for the Third Reading read.
THE LORD CHANCELLOR: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(The Lord Chancellor.)
On Question, Bill read 3a.
THE LORD CHANCELLOR: My Lords, this also is a Consolidation Bill which has come back from the Consolidation Committee. It consolidates Teachers' Superannuation Acts over the last 41 years. We are, as usual, indebted to the Joint Committee on Consolidation Bills for the work they have done on this Bill. I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(The Lord Chancellor.)
On Question, Bill passed, and sent to the Commons.

CRIMINAL LAW BILL [H.L.]
2.50 p.m.
Read 3a (according to Order).
Clause 12 [Commencement, savings and other general provisions]:
THE LORD CHANCELLOR: My Lords, the fiat Amendment which appears in my name is to change a date because, as your Lordships know, the Bill provides for alterations in the procedure of the trial of criminal cases arising out of the abolition of felonies. In criminal cases certainty is essential, and courts will want to know from which date the procedure is to be altered. It has been thought that, on the whole, August 29 is the date when fewer criminal courts are likely to be sitting, and for that purpose it would be a much more convenient date than March 25. Accordingly, I beg to move.
Amendment moved—
Page 7, line 44, leave out ("25th March") and insert ("29th August").—(The Lord Chancellor.)
LORD AIREDALE: My Lords, I would just draw your Lordships' attention to the fact that we are now considering a Marshalled List of two Amendments which I think is identical to the list of two Amendments which was published last week. I should have thought that any member of the public who was induced to part with 5d. to the Stationery Office for this particular Marshalled List might feel that he had been swindled. Since I think it is established practice that one Amendment does not need to be marshalled, perhaps we can, in the interests of economy, go one step further now and say that where two Amendments have already appeared in their correct order in one list those two Amendments need not be subsequently marshalled.
LORD WILLIS: My Lords, I do not know whether it is appropriate for me to come in with this point at this particular moment, but it has occurred to me that we were in Committee on the General Rate Bill and I did not hear the Motion, "That the House do now resume." May I be told whether we are still in Committee?
THE LORD CHANCELLOR: My Lords, the House has resumed, although I think the Motion was not formally put. I do not know that the point which has been raised by the noble Lord, Lord Airedale, is really a matter for me to deal with. I understand that it has always been the practice in your Lordships' House to have a Marshalled List. If there are only two Amendments—one by Lord A and one by Lord B—it is still convenient to have all the Amendments on one piece of paper. The present example of two Amendments in the name of one noble Lord may seem a minimal case, hut, again, it has been found convenient to be able to refer to an Amendment by its number, and to be able to call it by its number. Otherwise there may be some confusion about which Amendment is being discussed. But I will see that the noble Lord's point is given further consideration.
On Question, Amendment agreed to.
Schedule 4 [Repeals (obsolete crimes)]:
THE LORD CHANCELLOR: My Lords, I beg to move Amendment No. 2 standing in my name on the Marshalled List. This Amendment corrects an error by removing the reference to Section 8 of the Statute of Monopolies from the list of repeals in Schedule 4. When that repeal was proposed, it was overlooked that the section had already been repealed by the Administration of Justice Act, 1965, and accordingly we do not want to repeal it again. I am sorry that that had not been noticed before. I beg to move.
Amendment moved—
Page 29, line 45, column 3, leave out ("Section 8.")—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: My Lords, I beg to move that this Bill do now pass. I am sorry to be moving these Motions in your Lordships' House to-day, because it is due to the absence of my noble friend Lord Stonham. But we are all very pleased, I know, to hear that he is getting on so well, and I hope that he will be back with us long before the Criminal Justice Bill arrives in your Lordships' House.
We are indebted to noble Lords on the Committee who made various suggestions

155
for the improvement of the Bill, a number of which I was able to accept on the Report stage. I am only sorry that, despite the best endeavours, we were not able to find any really satisfactory alternative for the "arrestable offence". As the noble Lord, Lord Conesford, knows, it was not for lack of trying. There were meetings but none of us, I think, was able to find a really satisfactory alternative. Some may regret the disappearance of such old friends as felony, allocutus and misprision, but this is, I think, a small price to pay for a worthwhile piece of law reform.
I have always very much encouraged our newspapers to criticise our law and our administration of justice, because criticism is good for all of us, and it has been right for a generation to point out that the distinction between felonies and misdemeanours was a complete anomaly which ought to be removed. Now that has been done, after a good deal of work by Lord Justice Sellers and the members of the Criminal Law Revision Committee. This work has been done after their ordinary day's work, and I am sure that we are all grateful to them for it. But I wish that the Press, on such occasions, would sometimes take note of the fact that anomalies are being removed from the law—certainly during the life of this Administration—and that it is the lawyers themselves who have played the originating part. I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(The Lord Chancellor.)
LORD BROOKE OF CUMNOR: My Lords, throughout the proceedings on this Bill I have spoken with great diffidence and as little as possible, not myself being a lawyer, and knowing that this is essentially a lawyers' Bill. But I feel happy to-day that it is passing from your Lordships' House, inasmuch as I was the Home Secretary who referred this question of felonies and misdemeanours to the Criminal Law Revision Committee. I should like to join the noble and learned Lord the Lord Chancellor in the tribute which he has paid to Lord Justice Sellers and the members of that Committee. We all feel a debt of gratitude to them for working so hard on a subject which, if I may respectfully say so, they understand
156
a great deal better than most of us lay noble Lords. I just wanted to say this, because I should not like it to be thought that this Bill passed from your Lordships' House without a word of appreciation for the preparatory work which the Committee did.
THE LORD CHANCELLOR: My Lords, I am sure that the House will wholly approve what the noble Lord, Lord Brooke of Cumnor, has said in expressing our thanks to the Criminal Law Revision Committee. May I add what I should have said before: that I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Criminal Law Bill, has consented to place Her interest, so far as it is concerned on behalf of the Crown, at the disposal of Parliament fen the purposes of the Bill.
On Question, Bill passed, and sent to the Commons.

LONDON GOVERNMENT BILL
Returned from the Commons with the Amendments disagreed to, with a Reason for such disagreement: the said Amendments and Reason to be printed.
EDUCATION BILL
Read 3a (according to Order), and passed.

WEST INDIES BILL
3.0 p.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 Shackleton.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
THE CHAIRMAN OF COMMITTEES: I have to inform your Lordships that no Amendments have been put down to this Bill. The question therefore is that I report this Bill to the House without amendment.
LORD OGMORE: Before we move away rather rapidly from the Committee stage of this Bill, I should like to mention a matter which I raised on Second Reading and which the noble Lord, Lord Beswick, who is always very helpful to us, promised he would look at. Or, rather, I do not think he actually promised that on Second Reading, but I am sure that in his heart he meant to promise it, even if he did not do so. It concerns the question I raised in regard to the possibility of conflict between Her Majesty's Government, who are responsible for external affairs and defence, and the Government of an Associated State, whichever one it may be, in the field of foreign relations.
Your Lordships may remember that I put the case—it was a rather extreme case, I must admit—of perhaps one of these Associated States (St. Vincent, or any one of the others) wishing to join with Cuba, and there being an immediate conflict, as indeed there would be, between Her Majesty's Government in this country and the Associated State. Cuba is an extreme example, and I mentioned it because it was an extreme example, but there may be other examples less extreme in that area, of non-British territories. The noble Lord, Lord Beswick, rather "shot me down" on this point. He said I had not read some paper or other, to which he referred, and that there was nothing in the point at all. I felt that there was something in the point; and I understand from the noble Lord, Lord Beswick, who has been, as I have said, very helpful and kind, that he is going to say a word on it now.
THE CHAIRMAN OF COMMITTEES: As several noble Lords wish to speak on this Bill, I will go through it in the usual way.
Clause 1 [Status of association with United Kingdom]:
On Question, Whether Clause 1 shall stand part of the Bill?
EARL JELLICOE: I hope that this is the right moment to raise a matter which has come to my attention only recently. Clause 1 deals with the appointed day, and the matter which I wish to raise is certainly one on which I hope that we may receive a satisfactory assurance from Her Majesty's Government well before
158
the appointed day. I hope, therefore, that this is the appropriate clause under which I should raise this subject. It concerns the provisions for local government in two of the smaller islands which are linked with St. Kitts—that is, Anguilla and Nevis. Anguilla happens to be some 70 miles from St. Kitts, and it is therefore quite reasonable that there should be, as is found in the Report of the Constitutional Conference for St. Kitts, local government provisions laid down for this other island and for Nevis.
The provisions regarding local self-government for those islands are to be found in paragraphs 14 and 50 of the Report of the St. Kitts/Nevis/Anguilla Constitutional Conference. Paragraph 50 of the Report lays down that:
"The Constitution will provide that there shall be a Council for Nevis and a Council for Anguilla; that the Council for each Island shall be the principal organ of local government for that Island; and that at least two-thirds of all members of each Council shall be elected on the same franchise as members of the House of Assembly"—
that is, the Assembly for St. Kitts as a whole.
There are two major Parties in these three islands. There is the majority Party, which rejoices in the name of the Labour Party and which secured 44 per cent. of the votes at the last election, and there is the minority Party, the People's Action Movement, which secured 39 per cent. of the votes at the last election. The People's Action Movement is, I am assured, despite its name, a non-Communist Party. There are two representatives of the People's Action Movement in this country at the present time. They have been able to come over as a result of money raised at a Party meeting last Saturday because of the grave concern felt in the two smaller islands, Anguilla and Nevis, that the local government provisions of the Constitution will not be honoured on the appointed day, on February 27. It is not for me to say whether or not their fears are justified: all I can do is to report these fears, and I shall be very grateful for any assurance which the noble Lord can give me.
These fears, as I understand the position, are as follows. In the first place, according to my information, they have not been able to secure any assurances at all from the Chief Minister of St. Kitts that the local government provisions are

159
being prepared. Indeed, in answer to a letter which one of the representatives of the People's Action Movement addressed to the Chief Minister recently, he was informed that there were no proposals before him at this stage. This, if true, would certainly seem to be curious.
The second Main reason for their disquiet— and this, again, is only my understanding of the position and slightly contradicts the report that no preparations are being made for self-government for these two islands—flows from a meeting of the Executive Council just before Christmas at which a document embodying the proposed arrangements for self-government was discussed. At the end of that document there are to be found the words:
"The Central Government must retain the power to suspend or abolish an Island Council."
If that provision is going to be incorporated in the local government arrangements in fact enacted, it would certainly appear to be contrary to paragraph 14 of the Constitutional Conference Report, which lays down that when the local government constitution is to be amended or abolished the matter should be
"submitted to the electors qualified to vote in elections in Nevis or Anguilla, as the case may be, to the House of Assembly and approved at the referendum by not less than two-thirds of the valid votes cast".
That would seem to be quite a different procedure from the St. Kitts Government retaining the power to suspend or abolish an Island Council. There has been certain disturbance, I understand, connected with all this in the last week or so in Anguilla, directly stemming from disquiet on this issue.
I should therefore like to bring this matter to your Lordships' attention before we pass from this Committee stage, and I should like to ask the Minister who will be replying whether he has any information about the position; if he has any information about the reported disturbances in Anguilla; if he can assure me that the local government provisions provided for or foreseen in paragraph 50 of the Report of the Constitutional Conference will in fact he brought into effect; and if it is his information, too, that they will be in accordance with the provisions of paragraph 14. I hope that the noble Lord, when he replies, will
160
be able to give me these assurances. I apologise to your Lordships' Committee for trespassing on your time on this matter. It may appear to be a relatively small point affecting two very small communities, but to me, at least, it seems extremely important that before this legislation is approved, we should be satisfied that it is completely watertight, whatever the size of the communities concerned may be.
3.10 p.m.
LORD BESWICK: I should like to thank the noble Earl, Lord Jellicoe, for the full and fair way in which he has put forward the fears which are undoubtedly held by certain individuals. I entirely agree with him that though we are talking of very few people in a very small part of the world, nevertheless, for these individuals in that part of the world this will be an important matter. The noble Earl has every right, and indeed a duty, to raise the matter in your Lordships' House. At the same time, I hope that he and other noble Lords will appreciate that I am in something of a difficulty myself. The noble Earl is asking for an assurance, not about the good intentions of Her Majesty's Government, but about the possible actions of other people in another part of the world: namely, the Government of one of the communities about to become an Asociated State.
The position at the present time, as I understand it, is that the Government of St. Kitts have every intention of implementing the provisons of the Constitution mentioned in Clause 50 in the Conference Report; indeed, my understanding is that the necessary implementing legislation has already been drafted; that its terms will be published within the next few days, and that in due course it will go before their Parliament in St. Kitts. However, the noble Earl, Lord Jellicoe, has now raised certain other matters, a refinement of this point, arising out of what is set out in Clause 14 of the Conference Report. I must confess to the noble Earl that I have not had an opportunity to check on this particular point, but I will certainly get the information which is necessary before I can give any assurance, and probably I can deal with it at a later stage of the Bill.
EARL JELLICOE: I am grateful to the noble Lord, Lord Beswick, for his

161
careful reply on this point. Clearly, I must leave it at that for the time being. But I would remind noble Lords that, while it is quite true that we are dealing with islands which in a very short space of time will acquire this new status of association, yet at this moment the responsibility is ours, and no one else's. I hope that before we pass on to this stage of association, Her Majesty's Government will assure themselves that the provisions of the Constitutional Conference are going to be honoured, not only in the spirit but also in the letter. I think that the spirit is most important of all in this context.
The noble Lord, Lord Beswick, said that probably before the next stage he would be able to give me further information on the specific point regarding paragraph 14 of the Constitutional Conference Report which I put to him. I hope very much that he can undertake to telegraph forthwith so that we may have the full information on this particular point on Third Reading, before we pass this Bill. I also hope that it will be possible for a Minister of the Commonwealth Office to see the two representatives of the People's Action Movement who have come over to this country. I know that they have come at short notice. I know, too, that they have been seen by an official, but it seems to me, in view of the gravity of their fears, that it is only right they should be seen also by a Minister. I hope that this can be done before this Bill comes to us for Third Reading.
LORD BESWICK: May I say that I am not trying to escape any responsibility in this matter, and I agree that until this Bill becomes law we have a continuing responsibility in these matters. Nevertheless, the fact is that the physical action to implement the constitutional provision mentioned in this clause is required, not from Her Majesty's Government, but from people in another part of the world. We have been assured that they are in process of legislating to the required effect. We have been given assurances to that end. The noble Earl now asks whether this particular legislation incorporates certain words. On that point I cannot at this moment give a definite reply, but I will find out and let the noble Earl know. I certainly
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intend to find out the information before Third Reading.
LORD BROCKWAY: I think that probably I am in order in saying something on this clause. This is the first occasion when, in a British sphere, Colonies have been accepted on the basis of association. Before we pass this Bill I think that we should pay tribute to the Dominion of New Zealand, which set the precedent in this matter. I have been present at Conferences called by the Colonial Office when these problems were discussed, and where the example given by New Zealand over the Cook Islands was generally recognised. I do not feel that we should pass this Bill without paying our tribute to the example which the Dominion Government of New Zealand has set in this respect.
This new principle now being applied to our Colonial Territories, whereby we remain responsible for foreign affairs and defence, but yet at the same time give them the right to self-determination and to become completely independent, is an advance in our treatment of the Colonial Territories, the importance of which should be recognised, and for which we should pass some tribute to the Government of New Zealand which set the new pattern we are now following.
LORD WILLIS: I should like to reinforce the point made by the noble Earl, Lord Jellicoe. There is a very strong feeling about this matter. Since it is a question of the spirit and the letter, as the noble Earl said, is it not possible for the British Government to insist that, before this Bill becomes law, there shall be suitable legislation passed guaranteeing the freedoms that have been outlined in the Agreement which has been made? Otherwise, if this House passes a Bill and the Bill becomes law, we may be in a position in which there is no guarantee that the required legislation will, in fact, contain the words or the necessary legalities that are required. It seems to me that this is a matter on which we ought to insist that the British Government take the strongest possible line for the protection of minorities.
Clause 1 agreed to.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): The question is that Clauses 2 to 9 stand part of the Bill.
LORD OGMORE: With permission, I should like to speak on Clause 7. The noble Earl the Chairman of Committees has put Clauses 2 to 9 which would block me out, and I want to speak on Clause 7.
LORD BESWICK: If I may, I would say that the noble Lord, Lord Ogmore, raised a matter fully and very properly. I had not replied to him immediately because I thought it more appropriately came on Clause 7.
THE CHAIRMAN OF COMMITTEES: I apologise to your Lordships, but it is a little difficult for me sometimes when I have not had notice that noble Lords wish to speak.
Clauses 2 to 6 agreed to.
Clause 7 [Power of Her Majesty to make laws for associated states]:
On Question, Whether Clause 7 shall stand part of the Bill?
LORD OGMORE: I apologise to the noble Earl the Chairman of Committees for not giving him notice, but owing to "the exigencies of the service" it was not possible for me to do so. I will now, if I may, put the point to the noble Lord, Lord Beswick, which I put earlier on when we thought we should not have a Committee stage at all, and I should like to ask him to be good enough to reply.
LORD BESWICK: The noble Lord asked me on Second Reading whether the Associated States could engage in a customs union or so arrange their tariff affairs that they made an economic arrangement between one island and another. I gave him a reply which, although accurate so far as it went, did not completely cover all the contingencies which he had in mind. I am grateful to the noble Lord for providing me with this opportunity of giving in more detail what the position is in this field.
It is one of those cases where internal matters overlap with external matters. The internal affairs of any Associated State will be entirely a matter for the Government of the Associated State, whereas by the Bill which we are considering external affairs will be a matter for the United Kingdom Government. But there are certain areas which can be for either the one or the other. What I said was perfectly correct, that the actual decision as to whether a matter
164
relates to external affairs will be for Her Majesty's Government to determine by certificate. However, the tariff policy of an Associated State should be primarily a matter for that State, though of course it must be conducted in conformity with existing international obligations. I think that the noble Lord had this point in mind. If a local decision to seek a customs union or a free trade area is made, obviously external affairs will be involved, but under the new relationship we shall not in the name of external affairs assume a responsibility for deciding that the Associated States should pursue a policy of entry into a customs union. It is in that sense that I meant that it was entirely a matter for the States themselves, and for that reason that I mentioned as an example the agreement already reached between Antigua, Barbados and Guyana.
As for the question of the United Kingdom deciding by certificate what matters relate to external affairs, we intend that everything should be done by consultation and agreement, and although in the last resort we have the power to legislate where in the opinion of Her Majesty's Government it is necessary to do so in the interests of their responsibility for defence and external affairs, I should not like anyone to think that the giving of a certificate was an automatic matter or that such responsibility as Her Majesty's Government would have in relation to a customs union could be got rid of by means of a certificate. An example would be one of the States contravening GATT. We could not get rid of that international difficulty by issuing a certificate.
I should like to reiterate that while in the Bill it is correct to say that there is no need to mention anything about a customs union because it is not an appropriate matter for legislation, nevertheless if the Government of an Associated State wish to proceed with a customs union or an arrangement of tariff affairs in conjunction with other islands, it would be a matter for them, and the question of a certificate and of interference from us would not arise.
LORD OGMORE: I am grateful to the noble Lord for clarifying the position.
Clause 7 agreed to.
Clauses 8 and 9 agreed to.
Clause 10 [Provisions for terminating status of association]:
On Question, whether Clause 10 shall stand part of the Bill?
EARL JELLICOE: This is a point which I should have mentioned on Second Reading, but your Lordships will recall that we were going rather fast because we were about to listen to Mr. Kosygin. We all hope that this new formula of association will last. I think that it is a happy formula, and I personally hope that it will last. Nevertheless, the drafters of the Bill and those concerned with the constitutional conferences were right to envisage the possibility of termination, because it is that which gives this new system its flexibility, and indeed its ultimate freedom.
I am concerned about one point in Clause 10. Paragraph 23 of the report of the Windward Islands Constitutional Conference says that the Secretary of State undertook not to terminate the association from our side without giving six months' prior notice, without a further conference, and without obtaining the specific approval of Parliament. What worries me about Clause 10 is that there is nothing in it about the six months' prior notice, the further conference, or the specific approval of Parliament being obtained. I should like to ask the noble Lord why these three important safeguards are omitted, especially when on the other side of the coin—that is, possible action taken by the associated islands to terminate the association—detailed provisions are laid down in Schedule 2. It seems to me odd that detailed provisions are laid down for them and not for us. All that is said about termination by the United Kingdom is a brief reference in Clause 10(2).
May I also ask, in parenthesis, a further point, on which I think the noble Lord can give me an assurance? I noted that this procedure was agreed at the Windward Islands Constitutional Conference, and also at the Constitutional Conference for Antigua and St. Kitts, but there is no mention of it in the reports of the Antigua Constitutional Conference. Perhaps that: was merely because it was the first of the series and this matter did not come up. The Minister in another place
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was able to assure the other place that the same procedure would operate for Antigua if necessary, but I should be grateful if the noble Lord would reaffirm that assurance.
LORD BESWICK: I am obliged to the noble Earl, particularly because he was kind enough to give me prior notice that he was going to raise this point. It is true that we gave an assurance to the four Windward territories and St. Kitts that we would not terminate the association without giving six months' notice, and these assurances in their respective cases are embodied in the relevant Conference reports. As the noble Earl invited me to do, I confirm that this assurance also applies to Antigua and that he is right in speculating that the reason why it is not embodied in the Conference report is that it was not raised at that Conference. It did not become an issue, and therefore, naturally, did not appear in the report. Subsequently, Antigua raised this question and they have been assured, both verbally and in writing, that the assurances given to the others apply equally in their case.
The noble Earl also asked me why these assurances are not embodied in the Bill. That is a fair question. I think I may say that had there been any demand that this assurance should be included in the legislative provisions, it would have been included. But there was no insistent demand that it should be embodied. The fact is that the representatives of these various territories—and they included both the Opposition Party and the Government Party of the day—were quite content that there should be given an undertaking in the Conference report (with the exception of Antigua's, whose position I have just explained) which, as the noble Earl knows, was signed by all the parties concerned.
There is possibly another reason why they are not actually embodied in the Bill, and that is that the possibility of termination by the United Kingdom was considered not simply as an act, but as part of a situation which would arise. The assurances were given in a threefold form. First, there was the assurance that six months' notice should be given. Secondly, there was the assurance that in the event of this happening—and I gather that the noble Earl, like myself, hopes

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that it will not arise—not only would there be the notice, but a conference would be held at which the economic and political implications arising could be discussed. It was agreed, again by all parties—and I should hope that it would be agreed by the noble Earl—that an undertaking to hold a conference is probably not best embodied in a piece of legislation; but mention of it is included in the Conference report. Thirdly, there was the undertaking that if Britain terminated the association unilaterally the necessary legislative procedure would come before the British Parliament. If the noble Earl looks at subsection (2) of Clause 10, I think he will find that the provision there covers the third part of the package undertaking.
I might also say, because it is partly relevant, that in the case of Antigua we were also asked for an assurance that our legislative powers in respect of defence and external affairs would not be used in order to amend, suspend or revoke the Constitution of Antigua. That assurance was not only given, but is embodied in the Defence and External Affairs Agreement which will be signed by Her Majesty's Government and by the authorities of Antigua.
I agree with the noble Earl, as no doubt do other noble Lords, that this is a complicated matter. There is a report of the Conference which has, as we accept it, binding effect. There is also a Bill. There is a Constitution which will be put into operation by Order in Council. And in the case of Antigua there will also be this Agreement covering certain matters in connection with defence and external affairs. If the other Associated States want a similar agreement to that which we propose to sign with Antigua, we shall be happy to accede to their request.
EARL JELLICOE: I am grateful to the noble Lord for the full explanation he has given. He paid me the compliment of saying that I had asked a fair question, and I think he has given, so far as it goes, a full and helpful answer. I should be the first to agree with him that it would have been probably inappropriate for a Parliamentary draftsman to try to write into the provisions of Clause 10 the provision relating to a further constitutional conference. I am absolutely with the noble Lord there.
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I am still somewhat puzzled, however, why it was thought necessary to set out the very detailed provisions for termination on one side—and the provisions are detailed, as a glance at Schedule 2 will show—but we have not been prepared to lay similar obligations on ourselves or, at least, to spell out in legislation the important provision of six months' notice. I should have thought that, even given the noble Lord's explanation, this could well have been done. But certainly at this stage I do not wish to press the noble Lord further on the point.
LORD BESWICK: My Lords, may I just say this? I can understand the noble Earl being puzzled about this point. Frankly, I cannot see why it was not put in the Bill. But the demand was not made and therefore it was not met. I hope, however, that nothing he has said will indicate that the assurance we have given is any the less binding because it is not in the legislation.
Clause 10 agreed to.
Remaining clauses and Schedules agreed to.
House resumed: Bill reported without amendment; Report received.

MATRIMONIAL CAUSES BILL [H.L.]
3.36 p.m.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR: My Lords, I beg to move that this Bill be now read a second time. During the course of the debate on divorce law reform which we had in your Lordships' House in November I referred in some detail to the proposals now set forward in this Bill. They are proposals which have had a long history. The matter was first considered by the Royal Commission on Divorce and Matrimonial Causes, under the chairmanship of Lord Gorell, in 1912. That Commission rejected the suggestion that any divorce cases should be tried in the county courts, though they recommended that nine or ten selected county court judges should be appointed to sit as Commissioners of the High Court. However, nothing was done on that recommendation.

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At the end of the war, when there was a great increase in the number of divorce cases, a Committee was appointed, of which the noble and learned Lord, Lord Denning (then a Judge of the Divorce Division), was Chairman, and some of us proposed to that Committee that undefended cases should be tried in the county courts. One reason at that time—and this was before the days of the Legal Aid and Advice Act—was that there were a great many women who were entitled to a divorce but who simply could not obtain one because, whether or not they could have afforded the cost of a county court case, they certainly could not afford the cost of a High Court case. Nevertheless, that proposal was objected to by the Churches, and the conclusion of that Committee was what I think I have previously described as the usual brilliant English compromise; namely, that undefended cases—and, indeed, some defended ones—should be heard by county court judges dressed up as High Court Judges for the day. This pleased everybody, because the cases were still in the High Court, although use was able to be made of the much greater number of county court judges to try the cases.
The Royal Commission on Marriage and Divorce, which was presided over by the noble and learned Lord, Lord Morton of Henryton, and reported in 1956, thought it unsatisfactory that what was nominally a High Court jurisdiction should be exercised by Commissioners, and they expressed the hope that in due time we should be able to return to a situation in which High Court Judges heard all these cases. But the fact is that for the last twenty years by far the greater number of divorce cases has been disposed of by the county court judges, and, I think, without any dissatisfaction. Last year, out of a total of 38,000 undefended cases, the county court judges tried 34,000. In addition, they tried 894 of what are called the short defended cases—cases which it is anticipated will not last more than three hours. Of course, divorce cases cannot be tried in every town where county court judges sit, but only at what are known as divorce towns, of which there are at present 49 outside London. In London two county court judges every day attend at the Law Courts to try undefended cases.
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I am not the first to suggest that the time has come now to recognise the realities of the situation and give the county court judges in name the jurisdiction which they have in substance exercised for the past twenty years. It was, in fact, suggested by my noble predecessor on the Woolsack. What is proposed is that in future every matrimonial cause should begin in a county court designated by the Lord Chancellor as a divorce county court, or else begin in the Principal Probate Registry in London, which will be treated for this purpose as if it were a divorce county court. This is simply a practical question. If you have 40,000 cases a year, of which 36,000 are undefended, do you start all 40,000 in the High Court and then transfer 36,000 to the county court, or do you start 40,000 in the county court from which you have to transfer only 4,000? The latter is obviously the more practical. It means that if the case is proceeding in London it will be transferred from the county court side (if it is transferred to the High Court) to the High Court side of the Principal Registry, and if it is proceeding in a divorce county court outside London it will be transferred to the nearest district registry of the High Court, which will be in the same building and the same man will be both county court registrar and High Court registrar. When the case comes to be tried, it will, if it is defended, be tried by a High Court Judge and not a county court judge. Of course, a good deal of the detailed administrative arrangements have to be made by rules of court.
Clause 1 requires every matrimonial cause to be begun in a divorce county court, and the intention is that these should be the courts at places at which there is at present a district registry of the High Court with divorce jurisdiction. There are at present 101 registries of this kind at each of which the county court registrar is also the district registrar of the High Court, so that he and his staff will already have expert knowledge of the divorce procedure. There is no intention of giving the new jurisdiction to the county courts at the smaller places where the staff have no experience of the work.
The only county courts where the registrar is not at present a district registrar with divorce experience which may nevertheless become divorce county

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courts, are likely to be some half-dozen courts on the periphery of Greater London at places like Croydon, Kingston or Ilford. There is, of course, no district registry of the High Court at these places because in Greater London all High Court cases have to start in the Strand. But when the county courts are given divorce jurisdiction it may be convenient for litigants and practitioners on the borders of Greater London to be able to start their cases in a few selected county courts, although it does not necessarily follow that the cases will be tried there, because it may be more convenient for them to be tried by a county court judge sitting at a central court. Owing to the absence of any suitable county court in Greater London in which all the undefended cases could be tried, I think it will in fact be necessary for the county court judges to sit at the Law Courts, as they do at present, but they will then be sitting as county court judges and not as Commissioners of the High Court.
Clause 2 of the Bill will give the divorce county courts power in undefended cases to make orders for maintenance, custody of children, and the like. Where the case itself is undefended, the county court will be able to deal with the questions of custody and maintenance even though these may be matters on which the parties are unable to agree. This is in fact what they do now, and have done for the last twenty years, without any dissatisfaction.
It would plainly be very inconvenient to have to send all disputes of this kind to the High Court, but the rules will enable the county court judge to send to the High Court any disputes which appear to him to raise difficult or complicated issues which he thinks it better not to deal with himself. The only forms of ancillary relief which the county court judges will not be able to deal with are the power to make an order for the payment of maintenance out of a deceased person's estate for the benefit of his or her former wife or husband, and the power to vary a maintenance agreement after the death of one of the parties. The power to order the payment of maintenance out of a deceased person's estate is really linked up with the corresponding power of the Chancery Division under
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the Inheritance (Family Provision) Act, and it seems better to confine the county courts to the limited jurisdiction which Parliament conferred on them by the Family Provision Act last year in the case of small estates.
Clause 4 deals with the position of the Principal Probate Registry in which all divorce proceedings in London are at present begun. As I have said, it will in future be possible for cases to continue to be begun in the Registry, which will be treated for this purpose as if it were a divorce county court so far as undefended cases are concerned. The rules to be made under the Bill will make it possible to apply to proceedings in the Principal Probate Registry the usual county court procedure under which process is served by officials of the court and riot by the parties or their solicitors, and this will, I hope, lead to a sensible simplification and cheapening of the procedure.
Clause 7 provides for the setting up of a new rule-making authority, which will make rules of court governing the procedure in all matrimonial causes whether in the High Court or the county court. It will obviously be convenient to have one self-contained set of Matrimonial Causes Rules under which the procedure will be linked with that in the county court so far as undefended cases are concerned, and with the High Court procedure so far as defended cases are concerned.
The Government naturally hope that one important effect of this Bill will be a substantial saving to the Legal Aid Fund. The cost of providing legal aid in civil cases has increased five times in the last seven years and much the greater par: of the cost is attributable to divorce proceedings. The total cost of legal aid was over £5½ million in the year 1965–66, of which over £3¼ million was represented by the cost of divorce. It is surely evident that whatever is possible should be done to reduce these charges which have been mounting steadily in recent years. It is not possible to say with any accuracy what exactly the savings will be, although a figure of £400,000 a year was mentioned by my right honourable friend the Attorney General in another place some time ago. Much, of course, is bound to depend on the extent to which solicitors avail themselves of their right of audience in the county court. I think it would be

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unrealistic to suppose that solicitors will in future conduct the majority of undefended cases themselves, and we shall have to see, accordingly, how it works out. I would rather anticipate that solicitors will do about 25 per cent. of the cases themselves.
One of the ways in which costs could be reduced would be if solicitors were ready to accept fixed costs instead of spending time and money in the preparation of detailed hills of costs which then have to be taxed by a court official. At present taxation is necessary in legal aid cases by virtue of the provisions of the Legal Aid and Advice Act, but under Clause 9 of the Bill it will be possible to make rules dispensing with the need for taxation. The intention is, of course, that a solicitor should continue to have the right to demand taxation if he wishes, but I anticipate that if he receives on taxation no more than he would have been allowed under the scale of fixed costs he will have to pay the cost of the taxation out of his own pocket.
My Lords, like the Criminal Law Bill, this Bill raises no question of Party politics at all. Indeed, he will tell your Lordships if I am wrong, but I think the noble and learned Viscount, Lord Dilhorne, would probably have put similar proposals before the House if his Administration had continued. The only objections of any kind I have heard have come in part from my clerical friends and in part from my barrister friends. So far as my clerical friends are concerned, I have been told what we should all agree that it is very important to uphold the dignity and status of matrimony. I have been told. "After all, divorce cases are now heard in the High Court, and this means, I suppose, by a High Court Judge in a dignified court with the more formal procedure of the High Court, whereas, with your proposals, as I understand, in future divorce cases will be tried by a county court judge in a scruffy kind of court, sandwiched, I suppose, between a running-down case and a hire-purchase case; This would very much lower the whole status of matrimony." indeed, it has been suggested to me that if a marriage can be dissolved in a county court people will rush round committing adultery like anything.
I have been able to reassure them. In the first place, I have pointed out that
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when a person is concerned in a divorce case he or she comes into contact with the law at three points. First of all, there is the office. One goes to the office to have the petition settled initially, and it is the office to which the respondent also has to go. The second point is that before the case is heard disputes may arise. The respondent may say, "I am charged with adultery, but you do not say when or where. I want further particulars". If the petitioner will not give them, the matter goes before a minor judge called s registrar, and that hearing takes place in a court or room called an office. Similarly, the wife may want an order against her husband for a weekly or monthly sum for herself and the children pending the case being heard. This again is heard by the registrar. I am afraid registrars have a great deal of experience of husbands who always make out that their income is less than it is. In London these offices are in Somerset House. Of course, as part of the High Court they are High Court offices, and the registrars are High Court registrars.
There are also offices outside London; and not only an office, but a registrar, who again is a High Court registrar because it is a High Court district registry. But that High Court district registrar is also the local county court registrar, and the High Court office and the county court office are combined. So that at the moment, in relation to undefended cases and a few defended cases also, outside London disputes are in fact heard by men who, of course, are lawyers, and who are not only High Court registrars but county court registrars as well.
Therefore, if the changes provided for in this Bill are carried out, in London one will still be able to go to the High Court district registry in the Strand, which will be treated under the Bill as a county court registry. The disputes will be heard, and one will then be able to go to the Law Courts or to the county court judge for the cases to be tried. Outside London, the man who deals with the cases at present is a High Court registrar, and he will simply do the same thing, the only difference being that he will be wearing his county court hat.
When I told my clerical friend this he was amazed. He said, "I had no idea what goes on at the moment. The only thing I cannot understand is this: if

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what you say is right, and everything is going on as it is now, what changes will the Bill make?" The answer to that is that it is a modest Bill, and the only changes it makes are these. First of all, the county court judge, instead of hearing the case in the black robes of the High Court judge, will wear his own purple robes, and instead of being called "My Lord", which he is not, he will be called "Your Honour", which he is. Secondly, at present the county court judges outside London may sit in any court. If the assize court is free they may sit there; if it is being used as an assize court or as a court of quarter sessions, then they use their own rooms. When it is transferred to the county court judge he will always sit in his own court.
The third difference will be that in Greater London, at points as far removed from Central London as Croydon, Brent-ford, Ilford, and so on, there will be half a-dozen county courts, because if, for instance, the parties, the solicitors and the witnesses all live in Croydon, it seems quite unnecessary to make them go to London. They will still be entitled to deal with the registrar in the Strand and to have their cases tried there if they prefer it. If they do not, it is proposed that there should be half-a-dozen county courts at the periphery which would be made divorce county courts. They would be supplied with registrars from the Divorce Registry, properly trained for the work.
The only two other changes are these. First, solicitors have the right of audience in the county court but not in the High Court, and when the cases are in the county court the parties will no longer be compelled, as they are now, to have a barrister as well as a solicitor for an uncontested divorce case which lasts, on average, about twelve minutes. That brings me to the last point, which is the cost to the taxpayer. As your Lordships may know, I am an enthusiast about legal aid and I do not feel like apologising if it costs money. I know of no other country which has a legal aid system anything like as good as this; but, of course, there must be a cost to the taxpayers.
In 1962, and the years prior to that, the amount which the taxpayer had to
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find each year worked out at about £1 million. The next year it was £2 million, the year after that £3 million, and the year after that £4 million. Last year it was £5 million, and now it is running at something like £5¾ million. About 70 per cent. of this goes on divorce. The reason why such a high proportion goes on divorce is that in Queen's Bench actions, for example, 85 per cent. of the cases are successful, and the costs are then recovered from the other side. The reason why the divorce proportion is so high is because, in undefended cases in particular, so much of it represents the case of a woman who has been deserted by her husband, who may or may not have gone off with somebody else, and she has no money at all.
As your Lordships know, under our legal aid scheme everybody has to pay what he or she can afford and the State only makes up the remainder; but in the case of deserted wives as a rule they simply cannot afford to contribute anything at all, and it is not always easy at the end of the day to get it out of a husband. I have heard many Members of your Lordships' House say that the Government ought to reduce public expenditure. Well, here is one Minister who is humbly doing his bit—I hope with your Lordships'approval—because, while there is nothing wrong with legal aid, we want to save the taxpayer what we can, and this ought to make a sizable contribution.
Finally, with regard to my barrister friend, he goes on about the need to uphold the status and dignity of matrimony, and then he says what a terrible thing it would be if solicitors handled cases in the courts on their own, as one cannot trust a solicitor as one can a barrister. But, of course, I have known him a long time, and I simply say, "Come off it, George! The fear of the Bar is simply that they are going to lose a certain amount of work to the solicitors, and you remember the language you used when there was that demarcation dispute between the shipwrights and the boilermakers". That is really all it is.
I have heard it said that this change might delay the rationalisation of our divorce law. If I thought that, I should not be putting this Bill before your Lordships' House. I am delighted to hear that the gap in views which separated the

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committee appointed by the most reverend Primate and the Law Commission is being narrowed, and I am as much in favour as any Member of your Lordships' House of a real rationalisation of our law. It has long been suggested that to have a Probate, Divorce and Admiralty Division is an extraordinary historical anachronism: that Probate ought to be done by the Chancery Division which construes wills, and that Admiralty ought to be allied to the Commercial Court. We could then have a Family Division of the High Court, and possibly family courts throughout the country.
This is not perhaps the time to consider the composition of these courts. I have always been a good deal in favour of courts which consist of both lawyers and laymen. This choice you give the civil litigant of a jury— "Would you like all The facts found by one lawyer or by 12 laymen?"—is the most extraordinary choice, when you come to think of it. Any sensible man would say "I should not like either; I should like two laymen and one lawyer sitting together and the majority to decide." A family court might well consist of a judge of the status of a county court judge, and either two or four justices of the peace, whose experience in matrimonial affairs it would be a pity to lose. However, I must not pursue that theme now. All I want to say is that I am quite sure that if this Bill is passed into law it will in no way prejudice a real reform of our divorce law, and, if Parliament thinks it right, the constitution of family courts. But it is clear, I think, that we shall not see a Bill in that field this year. I see no real reason why we might not see it next year. I beg to move.
LORD WELLS-PESTELL: My Lords, before the noble and learned Lord concludes, may I be permitted to ask him a question? I have not quite followed his argument about this procedure lessening the cost of divorce. As I understand the situation (I speak as a layman, and therefore may be quite wrong), the cost of an undefended divorce is in the region of £120 to £140, give or take a few pounds. If the action is undertaken by a solicitor, will the cost be very much less to the litigant, bearing in mind that in an undefended divorce case, I understand, the barrister gets very little, and presumably
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what is saved in a barrister's fee may be required by the solicitor for the extra work he has to do? I may be quite wrong, but I wonder if the noble and learned Lord could explain this.
THE LORD CHANCELLOR: Certainly my Lords. One of the consequences of the fact that divorce cases have always remained, technically, in the High Court is not only that the litigants must have a barrister as well as a solicitor but that the lawyers' fees are on the High Court scale. An undefended divorce case is not, however, in any real sense, a High Court case. I appreciate that it does not consist simply of the twelve minutes of the hearing: obviously, solicitors have to take careful statements from clients, and possibly from witnesses, and see whether or not the action is going to be defended, and so on. At the same time, the case is not of the size as the ordinary High Court case. If, therefore, these cases are heard in the county courts, obviously the lawyers will be paid on the county court scale instead of on the High Court scale. The exact scale is in process of being agreed with them, and one might save something, I think, by reason of the fact that if one provides some agreed fixed fee for the average case solicitors are usually prepared to take less because they do not have to draw up bills of costs and attend for taxation and all that.
Moreover, whereas in the High Court you have to serve your own process, in the county court the court serves the process for you. And of course where no counsel has to be employed there will obviously be a substantial saving there. I can only say, on the best estimate I can give, that the saving would appear to be of the order of about £400,000 a year. This is, of course, after discussing what lower fees than the present fees would be paid both with the Bar Council and with the Law Society. Clearly, however, one cannot be exact until one knows what proportion of the cases will in fact be done by solicitors.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
4.5 p.m.
VISCOUNT DILHORNE: My Lords, this is for me both an unusual and a slightly embarrassing occasion, for to-day I can say that I agree with all that the

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noble and learned Lord the Lord Chancellor has said in support of this Bill; and, as your Lordships know, to adapt a phrase which the noble and learned Lord recently used, he is an "awful Socialist". No one, so far as I am aware, has suggested that I have any unfortunate tendencies in that direction, and I hope that my support for this Bill will not give rise to any such inference.
I was very glad to hear the noble and learned Lord say in the course of his speech that the passage of this Bill would in no way delay the rationalisation of our divorce law, and very glad indeed to find that the opposing views are getting closer together. I am sure that that is urgently needed, and I hope very much that the Lord Chancellor's hope that a Bill may be included next Session will be realised. But what has been said by him about that should not let us minimise the importance of this Bill. It may not sound very exciting, but the effect of it will make a considerable difference to a number of people; and I would support it.
There are, as the noble and learned Lord the Lord Chancellor said, some who oppose it; some lawyers whom I know and he knows dislike it intensely, but it is never easy to get agreement among lawyers, even when they belong to the same Party. I think the same can be said about right reverend Prelates, and I am glad to see that that Bench is so fully occupied to-day. It is very rare indeed that they all speak with the same voice. Indeed, the only recent occasion on which I can remember that happening is when all who spoke from that Bench spoke in favour of Lord Arran's Bill.
I suspect that such opposition as there is to this Bill will come from lawyers and the Churches, and I believe that the opposition of the Churches is founded, as the Lord Chancellor has indicated, on a complete misconception of what this Bill does. For, contrary to what appears to be thought in some quarters, this Bill contains no relaxation at all of the existing law relating to divorce. None of the grounds on which a divorce can be obtained is changed in any particular. All the Bill does is to make it possible for the Lord Chancellor to order trial of undefended divorce cases in the county courts. When this power is
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exercised, there will be more courts where such cases can be heard, and that will be for the convenience of litigants. It will be easier for them to get to the court of trial, and only in that sense does the Bill make the obtaining of divorce easier. Objection to this Bill, therefore, must mean that those who are opposed to it do not think it should be made easier to get to the places where the cases will be tried.
The noble and learned Lord referred to the Report of the Commission presided over by Lord Gorell, which reported in 1912. That Commission said that the gravity of divorce and other matrimonial cases, affecting as they do the family life, the status of the parties, the interests of their children and the interests of the State in the moral and social well being of its citizens, makes it desirable to provide, if possible, that even for the poorest persons these cases should be determined by the superior courts of the country. That is to say, of course, the High Court, assisted by the attendance of the Bar. I entirely agree—I am sure we all do—about the gravity of divorce and other matrimonial cases, about the effect on family life, and so on. But it does not follow from that, in my view, that these matters should be dealt with and considered only in the High Court of Justice. After all, do we not know that many matrimonial matters nowadays come within the jurisdiction of the magistrates' courts? I know, too, that the Royal Commission on Divorce in 1956 endorsed this recommendation of the Gorell Commission and said that they considered it of the highest importance that the principle should be maintained that the jurisdiction in divorce is essentially one for the High Court, and it was their view that as many High Court Judges as were required should be appointed to try these cases.
But we surely should not shut our eyes to what has been happening in the last twenty years. As the noble and learned Lord the Lord Chancellor said, during that time the vast majority of undefended divorce cases have in fact been tried by county court judges. They have sat in the High Court as Commissioners; they have sat in the assize court and in county courts in the country, often in the same county court as that in which they have been functioning perhaps the

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day before as a county court judge. As the noble and learned Lord has said, the only difference has been that they have worn different robes and been addressed on one occasion as "My Lord" and on the other occasion,as "Your Honour".
I believe that the way in which the county court judges have tried these cases when sitting as Commissioners is in no respect inferior to the way in which they have been tried by High Court Judges. Indeed, I do not know how the administration of justice could have been carried on without the assistance of the county court judges, and I think a great debt is due to them, which we should acknowledge, for undertaking this additional burden of work. I have seen it suggested that because in fact they have dismissed a lower percentage of undefended divorce cases than have High Court Judges it is to be inferred that they do not try them as well. I think this is a fallacious conclusion, for it may well he that a lower percentage of cases that ought to have been dismissed came before the county court judges. In these cases there never is what we lawyers call a lis—the judge never hears the other side of the story because the cases are undefended. And the fact that there is, or would be, no lis was, if I recall aright, one of the objections advanced against the proposals which had the blessing of the most reverend Primate the Archbishop of Canterbury in the pamphlet Putting Asunder. Yet divorce judges have been and are deciding thousands of cases where there is no list of any kind.
In the light of experience, I see no reason at all to conclude that in future it will be easier to get a divorce in an undefended case before a county court judge than it has been to get one before a county court judge sitting as a Commissioner. I know the view has been expressed that trial in the county court of these cases will diminish the view people take as to the sanctity of marriage. A Committee presided over by my noble and learned friend Lord Denning, who I see is going to speak later, reported after the war in these words:
"If there is a careful and dignified proceeding such as obtains in the High Court for the undoing of a marriage, then, quite unconsciously, the people will have a much more respectful view of the marriage tie and of the marriage status than they would if
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divorce were effected informally in an inferior court."
With the greatest respect to my noble and learned friend, I must say that I regard that statement as almost a classic non sequitur. I do not believe that the place in which the parties to a marriage which has broken up go to get the marriage terminated has, or can have, the least effect on the sanctity of the marriage vow. I do not believe it is any inducement to married people to observe their marriage vows to know that a divorce can be obtained only in the High Court. The passage which I have quoted from the Report assumes that a hearing in the county court will be informal and less careful and dignified than a hearing in the High Court. I do not think that any such assumption is warranted. After all, it is the county court judges now who try the majority of these cases, and I see no reason to suppose that when they try them in the county courts they will try them less carefully, with less dignity and less formally than they do now.
I noted that the Lord Chancellor referred to these cases being sandwiched in the county court between a running-down case and a hire-purchase case, or perhaps between a judgment summons and the hearing of a rent restriction case. I hope that when he comes to reply the Lord Chancellor will make it clear that in the rules that he is acquiring the power to make he will secure that these cases are heard together, and at a different time from any other type of case, because I think it important that in the exercise of this jurisdiction the county court judge should put aside either a whole day or half a day separately for dealing with cases of this sort. They ought not to be intermingled with his ordinary list. If that is so—and I suspect that the Lord Chancellor will give that assurance—then a great deal of the fears held quite sincerely by a number of people will be diminished.
Another reason why I have been in favour of these proposals is on the grounds of finance. The Lord Chancellor referred to that, and during my time on the Woolsack I was worried about the increasing expenditure on legal aid. I think I am one of the only people now remaining in Parliament who sat on the Rushcliffe Committee which devised the system of legal aid which is now being

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operated, and, like the noble and learned Lord, I have always been keen on it. But I was anxious about the rise that was taking place—I think the Lord Chancellor said it had multiplied five times in seven years. Divorce accounts for 70 per cent. of that, and I believe that something like 80 per cent. of that 70 per cent. goes on undefended divorce. It is also true to say that the average cost is something like £120—it may be more. Over recent years there has been a great increase in the average cost of an undefended divorce case. It has always puzzled me why that should be so, but it is the fact.
One reason—it is only one reason—why I am in favour of making this change is that I think it will lessen the financial cost of such proceedings. It will lessen the burden which will fall on the Legal Aid Fund by something like £400,000 a year, which is not a small sum, and, what is more—I do not think the noble and learned Lord referred to this, although I am sure he will not disagree—it will lessen the burden of costs on the unassisted litigant. I do not think that that is by any means unimportant. Of course, the contents of this Bill are a blow to those members of the Bar whose practice included the conduct of such cases. It is true that they may not be employed so frequently, but certainly I feel that they will continue to be employed in a considerable number of cases. Though, naturally, I regret that any member of the Bar should be adversely affected, I think it is clearly in the public interest that these changes should be made.
My only regret is that the introduction of this Bill should have been so long delayed. I do not know the reason for that. The noble and learned Lord the Lord Chancellor in his book Law Reform—Now advocated this change and said it was one which should be made. He has held his high office since 1964 and it is only now, three years later, that the Bill comes before us. I should be grateful if he could tell us why there has been this delay. At first sight, it hardly seems to be an example of dynamic, purposive government. I have long been in favour of these changes. Indeed, as the noble Lord indicated, had things gone differently in 1964, I myself had hoped to introduce such a Bill—and, may I say, sooner.
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I would have gone a little farther than this Bill goes. At present, county court judges sitting as Commissioners are trying the short defended cases, and are trying them satisfactorily. I would have made it possible for them to continue to try that category of case in the county courts. However, I do not quarrel with the Lord Chancellor on this matter and do not intend to move an Amendment about it, for I think there is something to be said for seeing how this plan goes before one adds a further burden to that which is already carried by those who sit in the county courts.
I end by saying that I hope there will be no Division on this Bill, for if there is I shall be embarrassed by having to go into the same Lobby as the noble and learned Lord the Lord Chancellor, and that, I think, will be a unique experience. If I have to do so, I cannot promise that it will ever be repeated. I hope that none of your Lordships will put me in that embarrassing position by dividing on this Bill.
4.23 p.m.
THE LORD BISHOP OF EXETER: My Lords, whether one regards this as an important Bill or as a relatively small one, a mere tidying, administrative Bill, as the noble and learned Lord the Lord Chancellor has suggested, depends on whether or not one thinks that one of its inevitable consequences must be a cheapening of the value which society places on the institution of marriage—a further step towards the complete acceptability of the notion of divorce; a further step towards its becoming a quite unimportant, almost normal, event, though an unhappy one, in anybody's life. But all this is a matter of opinion. There can be no evidence as to what would be the result of this Bill, and each of us is entitled to his opinion.
It is perfectly reasonable to hold that the content of the marriage law and its administration are almost wholly irrelevant to the question of whether marriages, and how many marriages, will break down. It is quite reasonable to hold that if a marriage is going to break down, it will break down whatever the law is and however, it is administrated. On the other hand, it is also reasonable to hold that if divorce is made easy, if it becomes more frequent, then it enters more easily and more frequently into the minds of

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those whose marriages are under strain, and they are more ready to see in divorce the only solution of their troubles. Either point of view of reasonable.
It would appear that the Gorell Commission in 1912, and the Morton Commission in 1956, took the view that it was a mattter of immense importance whether divorce cases were heard in the High Court or in the county court. Their opinion, it seems to me, holds the field at the moment, and it is for the proponents of this Bill to throw them out of the field. I do not think that so far in the course of this debate they have succeeded in doing so. In a way, it is true that the Bill will not bring into existence any very striking changes in administration. I imagine that the ordinary layman getting a divorce probably would not know that the law had been changed. On the other hand, of course, great publicity would be given to the fact that divorces no longer have to be heard in the High Court, and I should have thought that in the long run that would be likely to have an adverse effect on society.
The Bill has the further defect that it stresses, underlines, reinforces, the distinction drawn between defended and undefended cases, with the corollary that the ordinary man thinks that an undefended case is something which is not quite so important and does not matter quite so much as a defended case. It also, I think, carries with it the suggestion that an undefended case is easier to try, and therefore can safely be left to the county court judge; whereas a defended case may be extremely difficult and must therefore be reserved for the higher expertise of the High Court. I myself should have thought that in fact it was far more difficult to arrive at the truth in an undefended case than in a defended case. It must be extremely difficult for the judge hearing an undefended case to spot the phoney one. Though there are comparatively few undefended cases which are in fact dismissed by the county court judge, sitting as a High Court Judge under the present province, it is the quasi-automatic result of the undefended divorce cases as they are now heard which is to me, one of the gravest criticisms of the present system. And I fear that this Bill will make matters worse.
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My main objection to the Bill has been completely removed by the noble and learned Lord the Lord Chancellor. My objection was that some of us had been very disappointed that since this Administration took office we have heard nothing, or almost nothing, about the creation of a comprehensive family service, with comprehensive family courts on a regional basis—something along the lines proposed by the Committee which was presided over by the noble Earl, Lord Longford. It has been a great disappointment to many of us that so far we have heard nothing of this, and I had thought that we were being offered this Bill as a wretched substitute for the more radical reforms which are gravely needed. I was therefore greatly reassured by the speech of the noble and learned Lord in which he has virtually—I was going to say that he had virtually promised us, but he has given us some reason to hope, that a radical Bill may be brought in during the next Session. This is indeed good news. But I cannot help wondering, if that is indeed the case and if this radical reform is to be introduced next year, whether it is really necessary to have this very minor reform introduced this year, with a certain amount of controversy and a certain amount of depreciation in the general opinion held in the country about marriage.
As your Lordships will have observed, I am not desperately opposed to this Bill. I do not think that it will make an enormous amount of difference, but I cannot see that it is necessary. I cannot see that it will do any real good, except by way of saving money. But if those who consider that one of the consequences of this Bill will be a depreciation in the value set on marriage, and consequently a greater number of divorces, are right, this Bill will prove a very expensive way indeed of saving money, because there is a proportion between the number of divorces, the number of broken homes, the number of delinquent children, and the number of children in need of care and protection. If this one view turns out to be right, then the saving in expenditure brought about by this Bill will prove in the end to be very expensive. I think that, on the whole, the Bill is unnecessary; it will probably do little harm and will do almost no good, but I do not propose to ask the House to divide on it.
4.33 p.m.
LORD SILKIN: My Lords, the concluding words of the right reverend Prelate have become fairly familiar to me in recent debates. It is a sort of formula which is adopted by the Opposition on all occasions when they cannot really oppose the principle of a Bill. They do not want to support it, and so they criticise it in a variety of ways. The right reverend Prelate thinks that the Bill will in some way affect the sanctity of marriage. Does he not realise that by the time these divorce cases come before the courts the marriages have already broken down beyond repair? Sometimes, as in the case of desertion, the parties have lived apart for a great many years. Sometimes, as in the case where a petition is on the ground of cruelty, very great hardship and suffering has been inflicted upon the innocent party and, obviously, the marriage has broken down already. How, therefore, the manner in which the marriage is finally determined can effect the concept of the sanctity of marriage is beyond my conception.
I think that in these days it is appropriate that a Bill of this kind should be introduced in this House. Over the years this House has been gradually—and I am not suggesting since the advent of the present Government—gaining a reputation for progressive legislation in this kind of sphere. The noble and learned Viscount made rather mocking reference to a certain Bill, but in fact it has been a very popular Bill, and one which has been generally accepted. I might also make reference to another Bill with which I was primarily concerned. That, again, has had very general acceptance. I think it is to the credit of this House that Bills of this kind should emanate from here and work their way to another place.
I would also refer the right reverend Prelate to the fact that in the last 10 years the number of divorces, under the present system of divorce procedure, has increased by 50 per cent., and that explains, at least partly, the increase in costs. Last year I think there were something like 40,000 petitions for divorce. The remedy, if one wants a remedy to ensure the sanctity of marriage, must come much earlier than the day of the hearing of a divorce petition. Action must be taken years before the
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divorce petition is heard to induce a greater conception of sanctity of marriage, and I hope that that will be done. But a great many factors must be taken into account to secure this.
The noble and learned Lord the Lord Chancellor referred to legal aid in connection with divorce, and it is a fact that over 80 per cent. of divorce cases are aided to a certain extent out of public funds. I think there is a good deal of exaggeration as to the extent to which they are aided. Nearly every petitioner is asked to make a contribution towards the cost of the petition, and a great many pay the whole cost, although they may pay it over a period of time. The normal cost was somewhat reduced by the fact that the members of my profession—and they are the only ones—accept only 80 per cent. of their legitimate fees and make a sacrifice of 20 per cent. To that extent, a legally-aided petitioner is able to get a divorce at a reduced charge.
I suppose that this is one of the very few Bills which have been introduced over a long period where it is actually stated on the face of the Bill that it will reduce public expenditure. The noble and learned Lord the Lord Chancellor has referred to a sum of £400,000 a year. I would prophesy that the saving will be substantially more. I should not like to challenge the statement as to the number of solicitors who will appear in person on these petitions at the expense of counsel, nor do I think that that is where the greatest saving will come. I think savings will be found in other directions, such as those to which the noble and learned Lord the Lord Chancellor referred. Moreover, there will be a saving to the petitioners themeslves. At present they must get to the court wherever it may be. Sometimes they have to stay overnight at the place of hearing, and it is very often a considerable burden on them to have to do this. To be able to get their petitions heard at greater convenience, and within reasonable distance of their homes, must mean a very great saving.
I do not think I can add very much to what the noble and learned Viscount, Lord Dilhorne, said about the Bill. He found himself in the uncomfortable position of agreeing with the noble and learned Lord the Lord Chancellor. I find myself equally uncomfortable in agreeing

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with him. We have had so many conflicts in the past, particularly on the Bill to which I have just referred, the Abortion Bill, that I wonder whether, after all, I am right when I agree with what the noble and learned Viscount has said. I wish he had gone a little further, and I wish the noble and learned Lord the Lord Chancellor had gone further. The principle of trying these cases in the county court having been accepted, I can see no reason why it should not apply to defended cases of a simple type. The total number of defended cases is only about 1 in 15 of the total number of petitions which are filed, 14 out of 15 being undefended. Only 1 in 15 is a defended case; and even among the defended cases a good many of the defences are merely formal and the cases are not seriously contested when they come to court.
As the Lord Chancellor will know, in the case of a defended divorce petition there are pleadings. The petitioner sets out his case in full, the respondent sets out her case and copies of documents are exchanged; and by the time the pleadings are closed each side knows exactly the kind of case which the other is going to put up. I see no reason why, at that stage, the pleadings should not come before the registrar of a court for him to decide whether the case is of such magnitude as to make it necessary to go to the High Court, or whether it is a simple defended case which can be disposed of in an hour or two, or even three, and dealt with in the county court.
While I would not press that this should come about at once, I am very sorry that the form in which the Bill has been drafted makes it impossible to carry this out, even at a later stage, if it should be found desirable to do so. I hope that in Committee the noble and learned Lord the Lord Chancellor will not resist an Amendment which would make it possible, at any rate in cases such as those I have described, for the simpler forms of defended divorce cases, also, to be heard in the county courts.
There is one matter which I should like to ask the noble and learned Lord the Lord Chancellor to explain when he comes to reply. I am not very clear as to the meaning of Clause 1(1), in which there has to be a double designation. One has to designate a court as a divorce county court and one has also to desig-
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nate it as a court of trial. Why should there be this double designation, and what is the point of it? It may be merely a matter of drafting, but I found it somewhat puzzling.
Another matter is one about which the Law Society has been very much concerned with successive Lord Chancellors. I dare say the noble and learned Viscount, Lord Dilhorne, has heard about it, and possibly his predecessors did also; and it will be most applicable in cases of divorce. The county courts at which these cases will be tried are often at a distance from the office of the solicitor who is conducting the case, and it may be convenient for him to appoint an agent to deal with the case—an agent who is actually practising in the town in which the county court is situated. I have not come across an instance myself, but apparently this is not possible. The judges do not recognise an agent appearing, either as an advocate or even to instruct counsel. On the face of it, that seems an unreasonable restriction. I have not given the noble and learned Lord the Lord Chancellor notice of this point, and therefore I do not expect him to give me a reply to-day unless he knows that situation and can do so, but I should be grateful if he would look into it. I will gladly supply him with more information if he should so desire.
Having said that, I should like to welcome this Bill cordially. I think it is a very important and far-reaching Bill. I would quarrel with only one word which the noble and learned Lord the Lord Chancellor used. He called it a "modest" Bill. I think it is not a modest Bill; it is a far-reaching Bill, and I wish it every possible speedy success.
4.46 p.m.
LORD PEARCE: My Lords, may I venture, with diffidence, to put forward the view of one who was for a few years a divorce Judge, who has tried many undefended cases, who has tried many defended cases and who was a member of the Royal Commission on Divorce? That Commission inquired very deeply into the matter which is now before your Lordships' House. Over three years it heard vast amounts of written and oral evidence. It worked very hard; and this was one of the matters it had to consider. It was not a Commission of lawyers.

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They were people—men and women—from England and Scotland, chosen by Mr. Chuter Ede as a very wise cross-section, though, in addition, they had from England and Scotland a judge, a barrister and a solicitor. After considering the evidence, they expressed the view which your Lordships have heard read: that it was a principle of the highest importance that divorce should be confined to the High Court. They said that in this connection, and in another connection, in dealing with relief in magistrates' courts, they said it again.
Of course, to those who think that divorce should be available to all who want it—those who hold what some people cynically refer to as the "postage-stamp view", that if you want a divorce you should have it purveyed to you when you want it—the language in which the Commission talk is wholly meaningless. And to those who think that divorce should be a matter of the individual wish of the parties, again this Bill must seem a matter of common sense and obviously a step in the right direction. But the Royal Commission did not take that view, and one will rarely find anybody who has tried divorce cases who does take that view. There was no reflection on the county courts in the recommendation of the Royal Commission. The county court judges are excellent, and have done splendid work. The way in which they do the work is not the point of the criticism at all.
The point of the view taken by the Royal Commission was this. Every country—do not take this country alone, but any country you like—has it stop court, whether it be called the Supreme Court, the High Court or any of the various other names that have been given them. In the last century every country has had its secondary courts—courts which can deal with matters which are not of sufficient weight and importance for the top or the High Courts—and those courts are given facilities for dealing with smaller matters, and for dealing with them expeditiously. If a country thinks that a matter is of primary importance, of real national primary importance, it is inconceivable that this or any other country will give it to its secondary court. It is entirely irrelevant to say whether the secondary court can handle it well. If
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they are as good as our county court judges are—and they are very good—of course they can handle it well. But they are not the High Court.
If you think, as many people do think, that divorce is a matter of national importance and that it is important to stress its importance in the eyes of everybody; if you think that from broken homes comes so many ills of which we constantly hear—delinquency, crime, vice, unhappiness—then surely the logic is that divorce is a matter which ought to be dealt with in the High Court. That is the reasoning which lies behind the Gorell Commission, the Denning Committee, and the Royal Commission under Lord Morton of Henryton, and it is quite useless to give sophisticated reasons why a second court can try a matter well and adequately and why it is more convenient to go there. I mean "sophisticated" reasons, not in the sense that the reasons are not perfectly genuine, but in the sense that to the eye of the man-in-the-street they simply carry no meaning; and that was the view of the Royal Commissions of the man-in-the-street. It will make divorce seem a bigger thing if it is tried in the High Court. It will make marriage seem a more important matter.
In dealing with divorce you are beset by this simple overall problem. A humane society must give relief in various circumstances to people who find themselves intolerably saddled with a marriage which has broken down. As soon as you give relief to someone who is genuinely suffering, twenty other people come forward who have nothing but minor aches and pains. A judge may know quite well that, with these people, if only they would try a little, and be a little more tolerant, they could easily overcome their difficulties. The problem is to distinguish between the two types of case. If you give some prestige to a thing and show that you think it of national importance, you are doing something to buttress up those people who will try genuinely to cure their little aches and pains: you are doing something to make divorce less likely. That is a view which I suggest is tenable; and it is the view of those Royal Commissions. As has already been said, the saving, which may be as great as is suggested (it has been prophesied that it will be more, and if prophecy be in order, I would prophesy that it will

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be less), is not really the deciding factor. Because when we think of the millions of pounds spent on combating delinquency, on dealing with crime, on educating people and on welfare in general, that is a very small matter compared to those.
My Lords, the final point with which you are faced when you decide about this Bill is: Do you think that divorce is a very, very important matter? Secondly, do you think it is of any help in propping up marriage, in discouraging divorce, that it should be dealt with by the highest court in the land? If your answer is, No, then the argument does not appeal to you; but if you think it is true, or if you think that it may be true, then, my Lords, it is a grave step to relegate divorce to the county courts.
4.54 p.m.
BARONESS SUMMERSKILL: My Lords, I am tempted to intervene in this debate because, like the noble and learned Lord who has just spoken, I feel the great importance of this Bill as a measure which is designed to deal with some of the social problems in our society. Indeed, the Bill has tremendous social implications. I listened to the moving speech of the noble and learned Lord, and I feel as deeply as he does about these people. But I must say to him that I cannot see how the picture of a county court or the High Court will deter any individual from committing a matrimonial offence. That is the essence of the problem—will it deter a man from hitting his wife? Will it deter a man or a woman from committing adultery? I should like to think that what the noble and learned has said is correct, and that there was some way of deterring husbands and wives from misbehaving. I cannot, however, and I also have had tremendous experience of how people behave. I cannot believe for one moment that the type of court will act as a deterrent.
When I first read the Bill I realised, of course, that any adverse criticism would come either from the Church or the Bar. I recall that when we debated divorce a year or two ago on the Church Report, Putting Asunder, the Gorell Commission was quoted at length, and that strong objection was expressed to any suggestion of transferring the divorce jurisdiction to the county courts. It must
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be remembered that the Gorell Commission reported in 1912, when the number of divorce cases was comparatively small, and mounting divorce lists did not present a serious social problem. Also, in 1912 a woman did not possess the right to obtain a divorce from her husband on the ground of his adultery alone. That, again, must have reduced the numbers considerably. In my opinion, it is therefore quite unrealistic to relate the recommendations of the Gorell Commission to the matrimonial problems of to-day.
My Lords, I think that there is little new in this Bill. I agree with my noble and learned friend who sits on the Woolsack that this is a very modest measure, and I am astonished that the right reverend Prelate, the Bishop of Exeter, has revealed such ignorance of what is happening in the country to-day. For nearly twenty years county court judges have been trying the vast majority of undefended cases. This is not a new proposition. In 1966, for example, there were 11,800 undefended divorce cases heard in London, and 26,689 in the Provinces. Of these, nearly 90 per cent. were heard by county court judges sitting as Special Commissioners. In London the county court judges take it in turns to sit approximately once a fortnight at the Royal Courts of Justice for the hearing of undefended cases; and in the Provinces they sit at 149 divorce towns, of which 29 are Assize towns. This, my Lords, has been going on for twenty years.
I understand—and I have made a number of inquirie—that there have been no complaints about the way in which the work has been done; and despite the considerable volume of business it has been dealt with in a manner not lacking dignity. Nevertheless, as my noble and learned friend who sits on the Woolsack has said, I cannot believe that when a county court judge sits in a black gown instead of his purple robe, and is addressed as "my Lord", instead of "your Honour", he undergoes a change of personality. He is the same professional man, with the same background, the same training, and the same courtesy that we know judges possess.
When it comes to the Bar and their reactions to this, I feel it is a little hard on the solicitors for it to be noised abroad that they may not be competent to conduct undefended divorce cases; for I

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am informed that in many cases a barrister is briefed only to appear at the hearing of the case, and that the rest of the proceedings are conducted entirely by a solicitor. I presume that in the legal profession, as in other professions, there are individuals lacking in integrity. We read in the papers that there are some of those in my profession. But they are not confined to one section of a profession. Of course, many solicitors who do not undertake advocacy will continue to brief counsel, and therefore this point is not likely to arise. Barristers with whom I have discussed this think that it will be still common for solicitors to ask barristers to conduct these cases.
Although the Bar may be a little embarrassed to mention financial considerations, and may regard the provisions of this Bill as an unwarranted encroachment on their preserves, I hope that young barristers will accept this change in their fortunes philosophically, having regard to the pressing need for this transference of functions. I hope also that they will remember that barristers have benefited considerably from the legal aid scheme, which has afforded them a security never enjoyed by many of their predecessors. When contemplating this change designed to meet a specific social problem, I hope that they will regard it as another great change such as the legislation which gave legal aid to the poor, although this time barristers will be asked to endure happily a diminution of their income.
I said that the Bill has social implications. I believe that the objections of the Church and the Bar pale into insignificance beside the all-important social implications of this measure, of the provision of a means whereby we can deal effectively with a large number of divorce cases which involve thousands of men and women. For the most part these people have endured years of unhappiness and mental torment, and after long consideration and consultation with their families and friends, perhaps with marriage consultants, they have finally decided to end their marriages. I believe that to prolong the waiting period unnecessarily is not only inhuman but can amount to a denial of justice. Consequently, the provisions of this Bill will make an important con-
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tribution, not only to our jurisdiction, but also to the pressing social demands of the community.
5.3 p.m.
LORD MESTON: My Lords, I am desirous of opposing this Bill. So far as the county courts are concerned, I have no doubt that the learned county court judges are very able and distinguished people, and I am not going to say anything derogatory about the county courts. But there is no doubt at all that the High Court and the High Court Judges enjoy a unique status, dignity and prestige throughout the whole country. We should be very proud of them. Business is business, and we cannot run it on the basis of sentiment, but if we are going to have no sentiment in this country we might just as well give ourselves numbers and not names and be regarded as mere pawns in the game. There should be sentiment about matrimony, which is a very serious matter, and the break up of matrimony is an equally serious matter. Therefore I say, without any hesitation, that the highest court in the land—namely, the High Court—should deal with judgments relating to the break-up of matrimony. There are ancillary matters, such as the maintenance of the spouse and the children, the custody and care of the children and access to them. In my humble submission, the High Court is the most suitable tribunal to deal with these matters, as they deal with them to-day most satisfactorily.
The question of expense is undoubtedly important. I am Scottish, and every time a Bill is introduced I think that we should talk about the expense of it. I am glad that this point has been raised. I wonder whether in practice there is going to be any material saving of expense. I speak under correction, but I understand that county court costs are going to be materially increased in the near future. Then what is the objection to the Government—perhaps I may say the noble and learned Lord the Lord Chancellor—meeting the two branches of the legal profession in London and saying to them that the cost of these undefended cases have to be reduced or else something serious will happen? I am sure that both branches of the profession would support the noble and learned Lord in cutting down expenses.

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I believe that this question can be tackled and matters so arranged that the expense of the present system need not be any greater than the expense under the proposed system.
It is not for a person in .a humble position such as mine to talk about appointing new Judges, but why not appoint two High Court Judges to deal with undefended divorce cases alone? I do not know what the state of their mentality would be after a year, but that is neither here nor there. A Judge sits from 10.30 to 4.30 and with an hour's adjournment—that is, five hours a day. Mathematically and theoretically speaking, he ought to be able to do 20 undefended cases in five hours. Therefore in a week he could do 100, and in the course of a working year two Judges could do about 8,000 cases. That is a mathematical way of looking at the problem and also an economic way. It means that we might save just as much as by spreading divorce cases all over the country in county courts, having new buildings, new offices, new administration and new rules of court—though why they cannot learn the present ones I do not know.
I think it is a mistake to say that the present system in the High Court cannot be made less expensive. So far as travel is concerned, the parties and witnesses will not spend any more money in coming to London or any other big town than in going to the county courts in the country. What is more, the work of the county court judges is increasing and is likely to go on increasing. Their jurisdiction has been enlarged and is likely to be enlarged again. Every form of legislation—landlord and tenant and so forth—is growing every day and likely to find its way to the county courts. The Bill has been criticised by other noble Lords who are far more qualified to speak on this subject than I am. I may be alone, but I have in my pocket the names of 9,000 people who would oppose it but who unfortunately have no vote. I only say, with the greatest respect to the noble and learned Lord the Lord Chancellor, that I am opposed to this Bill.
5.10 p.m.
THE EARL OF MANSFIELD: My Lords, despite all the clarity with which the noble and learned Lord on the Woolsack introduced this measure, I remain
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totally unconvinced that it is either timeous or in itself desirable. Nor have we had any real explanation why the recommendations of the last Royal Commission should be thus ignored. As the noble and learned Lord has hinted, there may be a further measure connected with matrimony in the comparatively near future. Surely it would have been better not to treat the Bill before us to-day as a matter of urgency but to keep it and try to work out some form of consolidation which would put the admittedly unsatisfactory matrimonial laws of this country somewhat more into order.
I do not think very much has been said this afternoon about the fact that Commissioners sitting as High Court Judges were supposed to be, when they were first introduced, a mere temporary measure to get rid of the backlog of divorces caused by the war. It was never intended to be permanent. It has been suggested that the county court judges have done the job equally well as the High Court Judges; but, while no one would in any way seek to denigrate the quality of the county court judges, I am not sure that that claim can be altogether substantiated. I know there are a number of barristers who hold the view that county court judges are not all as well qualified to try even these undefended divorces as are the High Court Judges.
I have been supplied with certain figures for the year 1964, and I am told that in other years the proportion is usually not dissimilar. In that year, the High Court Judges heard 649 cases of divorce, of which they rejected 6; that is to say, one in a little over 100. The county court judges heard 8,759 cases, of which they rejected 12; that is to say, one in 730. I think that this can be taken as showing fairly conclusively that some, at least, of the county court judges do not inquire quite as carefully into the bona fides of the petitioners as do the High Court Judges. My several friends who take part in divorce work on occasion assure me that if a barrister is to do his work properly in an undefended divorce he has to do a great deal of homework upon it, and there are many of the Judges who are extremely, and quite rightly, insistent upon being assured that the facts are as they are set out.
Unfortunately it is a commonplace that there is more perjury in divorce cases than in any other kind of case; and

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everyone knows that quite a high proportion of these cases are collusive. That is, unfortunately, something which it is difficult to avoid. But I submit that the number of collusive divorces that will succeed, and the number which will be brought to the courts, is likely to be increased rather than decreased by this proposal, and that it might lead to a lowering of the standard of investigation made into them.
As has already been said by other speakers, to transfer this important question from a High Court to an inferior court seems to be a remarkable way of dealing with the problem. Are we then to anticipate legislation whereby those offences hitherto known as felonies are to be transferred to the jurisdiction of quarter sessions in England and of the sheriff substitute in Scotland? I can hardly imagine it. But that is really what is being done in the present case. I submit that what was necessary at the end of a war, though even then undesirable, is not something which we should make a permanent part of our legislation.
Finally, the noble and learned Lord the Lord Chancellor spoke with complacent approval of the way in which the Government might save some £400,000 by the introduction of this measure. That struck me as being rather an odd assurance on the part of a member of a Government which is raising taxation by something like £400 million and more. Is it really worth saving a problematical £400,000 for the sake of lowering the status of matrimony and of transferring from the High Court to a lower court these important questions which would be much better settled by a High Court Judge? Surely, as I said before, it would have been better to keep this measure until it could have been consolidated with other measures, rather than to bring these measures forward piecemeal.
5.15 p.m.
LORD DENNING: My Lords, I am sorry that I was unable, owing to my judicial duties, to be here at the opening of this debate, but I was very glad that I was able to be in time to hear my noble and learned friend Lord Pearce addressing your Lordships (I believe for the first time) with his accustomed eloquence. I should like to congratulate him on his moving speech.
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It is now over twenty years since I had the privilege of being the Chairman of the Committee which considered the great increase in divorces after the war. Divorce cases were then running at over 60,000 a year. We had not the Judges or the courts to deal with them. Then this Committee sat, as a matter of urgency, to make recommendations. One of the recommendations we made was that to meet this situation the county court judges should sit as High Court Judges—and let me emphasise that—to do the work at that time. We had all the usual arguments. But having considered not only the Gorell Report of 1912, but a vast amount of new evidence, we recommended that county court judges should sit as High Court Judges, and do the work as High Court Judges, for this reason: that the dignity, calm and lack of haste, and the careful inquiry, is far more available in a High Court procedure than in the necessarily speedy procedure of the county courts. And we added:
"They should have power to try both undefended and defended cases. If they were to be restricted to undefended cases, it would mean that they would be regarded as courts of inferior jurisdiction, which in our opinion is undesirable."
This Bill, my Lords, perpetuates that undesirable distinction. There will be the county courts of this country for the undefended divorce cases; the High Court will be the court for the defended cases. What a want of appreciation of real values! The undefended cases are equally important, and sometimes more important than the defended cases. On the issues depend the future of the children, matrimonial maintenance and property. It is an entire reversal of those valuations that we shall have.
Let me add this. I sit in the Court of Appeal where we have appeals from the county court judges who sit as Commissioners. At the present time, we have an opportunity of considering those proceedings. There is the shorthand writer, who has taken it down, and we can see word for word what has been said. We can, and do, correct decisions where divorces have been wrongfully refused; and, as sometimes happens, where children have been wrongfully bastardised and proved illegitimate. This new system which is proposed means that in the county courts there will in many instances be no counsel to present the case, and there will be no shorthand writer to take

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a note which we in the Court of Appeal can consider. The inevitable pressure will be such that the county court judge will be unable to take a note, and, indeed, will feel almost inclined automatically to grant a divorce in every case because there is no machinery for appeal.
No one, I hope, would suggest that at the moment the work is being badly done or, with respect to the noble Baroness, that there has been any delay. The sole objective, as I can see it, of this Bill is to save expense, because the Legal Aid Fund is finding it hard to meet the cost of all the divorces. My Lords, if you have a shorthand writer there, that is going to run up the cost. For myself, I very much doubt whether this anticipated saving will take place. Solicitors are so busy that they will not themselves have time to go into the county court, unless the fees are raised much more, and they will go on instructing counsel just as before. This saving is dubious in the extreme, and that is the only benefit which, so far as I can see, this proposal will effect.
When, twenty years ago, we made that recommendation, I said to myself, "In twenty years' time I hope that we shall have family courts". Twenty years have come and gone. We do not have them yet. But the procedure is plain. We should not have, for instance, this distinction between defended and undefended cases. I would have a judge, with a lay justice or two, sitting; and in every case, if need be, having not only the one party present but the other party too. There are the two parties present when they get married: both ought to come when they are divorced. As it is, the innocent party has to go to all the cost, and all the embarrassment, of turning up in court for a few minutes, while the guilty party just rubs his or her hands and says nothing. Both ought to be heard, not only on this question of divorce; far more at the time on the question of the future of the children, and on the question of maintenance and the matrimonial home and the hundred-and-one things that are involved. It ought not to be just a formal running through, with the really important matters dealt with later.
That is why I would say that we should consider the provisions which have been outlined by the most reverend Primate's
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Committee in Putting Asunder—and this, I may add, has been indicated by Mr. Justice Scarman, Chairman of the Law Reform Commission, on these very lines. We should have regional courts presided over by a High Court judge or a county court judge, with lay justices or assessors, and with the help of a probation or welfare officer. We should have both parties coming before them on the day, and the matter should be dealt with more on a social than on a legal aspect. In case points of law arise, there should be a High Court which is supreme above them for appeals. That is what should be done. This Bill, I am afraid, is just a measure for saving expense. It will be worse than that if it perpetuates a bad system and does not lead the way to a new and better system.
5.24 p.m.
THE LORD CHANCELLOR: My Lords, this has been an interesting discussion, and I find very little to reply to because the arguments of those who differ from the Bill are based on an assumption which they are quite entitled to hold. The noble Earl, Lord Mansfield, will no doubt agree that the figures which he gave to the House were taken from a document which has been circulated to a number of noble Lords by the Secretary of the Divorce Bar Association; and, of course, they have an axe to grind. Apart from those figures, I was interested in the fact that nobody has opposed the Bill who is not either a cleric or a lawyer.
The noble and learned Lord, Lord Denning, through no fault of his, had not heard me say how anxious I was personally to see our divorce law rationalised and the establishment of real family courts. I said that this Bill would do nothing to prejudice that, but it was quite obvious we should have no such Bill this year. I hoped, however, that it might be possible next year or the year after. I did not suggest it would be a Government Bill; it might very well be a Private Member's Bill. But divorce law reform is in the air; everybody is thinking about it. Our thoughts, I think, have been much clarified by the Report from the most reverend Primate's Committee, and also the Report from the Law Commissioners. It is in social fields of this kind that this House, in particular, has already started

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measures for reform, and no one hopes more than I do that this will proceed.
The only argument to the contrary is the general view that this Bill will lower the status of matrimony, if undefended divorce cases, which are in truth tried now in the country court, were admitted to be tried in the county court. Some misconceptions have arisen. The noble Lord, Lord Meston, said that the county court judges were going to be very busy. But there will not be more divorce if this Bill is passed; there will be less, because it is intended gradually to get them to stop trying any of the defended cases. The Government take the view that if there is a dispute between citizens which will determine right or status, it is right that it should be tried by a High Court Judge. At the present time in London the county court judges deal only with undefended cases; it is the High Court Judges who deal with the defended cases. It is at the moment hypocrisy to pretend that undefended cases are being dealt with in the High Court. They are not being dealt with in the High Court; they are being dealt with by the county court judges, and in most cases actually in the county courts. All this Bill does is to remove a piece of hypocrisy and substitute reality.
I yield to no Member of your Lordships' House in my view that the family is the unit on which the whole of our civilisation depends, and that it is important to uphold the status of matrimony. But what I really cannot believe is that people will either commit a matrimonial offence who otherwise would not, or have a divorce who otherwise would not, because an undefended divorce case is heard in a court which their means can afford. But I quite recognise the sincerity of the views of those who think otherwise, particularly of the noble and learned Lord, Lord Denning, and the noble and learned Lord, Lord Pearce. If to-day we were in a situation in which all divorce cases were heard in the High Court by High Court Judges, then I should have thought there would be much more force in the argument, "If we suddenly make a complete change, may this not lead to some degree of lessening of respect or regard in some way or other on the part of married people for the sanctity of marriage?" But, from that point of view, this
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Bill does not really change anything. It only recognises what to-day in fact happens.
At the end of the day, while I feel as strongly as anybody about the sanctity of marriage, I cannot believe as a matter of reality that there are any people in the country who are going to commit a matrimonial offence because undefended divorce cases are heard in a court which their means can afford, or, having committed a matrimonial offence—or if the partner has committed a matrimonial offence—are going to have a divorce, when they would not if cases were heard only in the High Court. That has been the primary question at issue.
On matters of detail, may I assure the noble and learned Lord, Lord Denning, that there will be, shorthand-writers present. There are shorthand-writers present now, and there will go on being shorthand-writers present, at least until, as I hope in due time, we have mechanical recording in all courts. I can assure the noble and learned Viscount, Lord Dilhorne, that, as now, no cases other than divorce will be taken on any half-day, or, I think, day on which divorce cases are being taken. The question of agency, raised by the noble Lord, Lord Silkin, I will consider. I have already discussed it with the Law Society and I see difficulty about altering the rules to apply to divorce cases only. In conclusion, I ought to say that I have, of course, consulted the President of the Probate, Divorce and Admiralty Division in relation to the Bill, and he raises no objection to it.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

OVERSEAS STUDENTS' FEES
5.31 p.m.
LORD GLADWYN LORD GLADWYN rose to ask Her Majesty's Government whether, on reflection, they will now reconsider the advice given by the Minister of Education on December 21 last to the University Grants Commission and to local education authorities, that overseas students' fees should be raised to the levels given in the Statement referred to. The noble Lord said: My Lords, in asking Her Majesty's Government the Question which stands in my name on the Order

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Paper, and in order to save perhaps a little time in the debate which will follow, !and in which such a gratifying number of your Lordships have put down your names to speak, I think I ought to start by rehearsing briefly a few facts which, as I understand it (and the Government will correct me if I am wrong), are not disputed.
There are about 71,000 overseas students in this country of whom rather over half, that is to say, about 39,000, are in institutions which are not affected by the proposed increase in fees. They are people who, as I understand it, are studying law, nursing or accountancy, or something which does not affect us this evening. About 32,000 remain who are affected, and many of them seriously affected, by these fees. These are divided fairly equally between the universities and full-time and sandwich courses in further education. Rather less than a quarter of them, that is to say, about 7,000, come from the so-called "rich" countries, such as the United States of America, Western Europe, the old Commonwealth countries, Scandinavia, and so on. The remaining 24,000-odd are from the so-called developing countries; for a large part, of course, those African States which, until fairly recently, formed part of the British Empire and even now form part of the Commonwealth.
That is one division. Another division to which I think I should draw your Lordships' attention, in order to make the position clearer, is that of the 7,000-odd who come from the so-called "rich" countries, about 2,200 are undergraduates in our universities. 2,700 are postgraduates, 600 are in advanced courses in technical colleges, and 1,100 are in non-advanced courses in technical colleges. Of the 24,000—in fact, I believe some statistics say 25,000, but one cannot be absolutely sure—who come from the less developed countries, about 6,000 are undergraduates, 5,500 are post-graduates, 5,200 are at advanced technical colleges, and no less than 9,000 are on non-advanced technical courses. So that of the students from the non-developing countries a much greater proportion are, so to speak, in a lower category of education than the ones from the richer countries, and of course this is only to be expected.
The fees which all these students have so far been paying—that is to say, the
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32,000— average about £70 a year for a university course and about £50 a year for a course at a technical college, although at the technical colleges the fees vary considerably. It is now proposed that these fees should be stepped-up to £250 a year for students at universities and those at technical colleges in advanced courses, and to £150 a year for those in technical colleges who are taking courses at other levels. It is estimated by the Department of Education and Science that on the important, but, I suggest, scarcely tenable assumption that there will be approximately the same number of overseas students in this country after the increases as there are now, an increased income of some £5 million per annum will accrue to the universities and the technical colleges, which of course will have their own income from the University Grants Committee or the local educational authorities correspondingly diminished.
To these increases in fees there are certain exceptions, and I think reference was made to them the other day by the noble Lord, Lord Chalfont, in replying to the debate in this House on World Population. In the first place, all students on British Government or British Council grants will, I think I am right in saying, have their higher fees paid by the British Government out of an increase in overseas aid funds. In the second place, no student who has already embarked on a course will have to pay more than a £50 increase in the annual fee. In the third place, a fund will be established to reimburse the Governments of the developing countries for the £50 which they will have to pay in respect of students whom they are financing, and who have already embarked on courses. Those are the exceptions and they are, naturally, welcome as such.
Of the 32,000 overseas students, it is estimated that about 15 per cent. come under the first exception, that is to say, that their grants will continue; another 30 per cent. or so are those who are here on grants made by their own Governments, though whether the grants will be renewed in future, when they have to cover large increases in fees, remains to be seen. Be that as it may—and this is the real point which we are considering this evening—over half of the 32.000 (in point of fact, I believe about 17,000) are students who, to the extent that they do

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not have means of their own (and this is the case with the vast majority of them and particularly, of course, those coming from the developing countries) will have to pay up to £200 a year more for their education in this country. I think those are facts which are indisputable.
As explained by the Government, the general case for this rather drastic increase in fees seems to be as follows—and in stating it I hope I shall be completely objective. If I am not, then no doubt the noble Lord who is to reply will correct me. But I shall try to be as objective as I can in stating their case as I have learned it from the Press. First, even when raised, the fees will cover only about one-third of the average cost of the courses. The remaining two-thirds will thus remain a subsidy from British public funds.
Secondly, the total amount of this concealed subsidy (for such it is) is likely to be something of the order of £18 million a year in 1967–68, which is now, the Government feel, too great a burden for the British taxpayer and ratepayers to bear. Thirdly, if the increased fees result at least in stabilising the present position and in a diminution of the concealed subsidy by about £5 million, this will be in the general interest and should not be too hard on the students, many of whom, it is thought, could well afford it.
Fourthly, the number of overseas students has been increasing and is now rather over one-third more than it was in 1959. Fifthly, there is therefore what is always referred to as "an open-ended commitment" of considerable proportions, and it is wrong that the British taxpayer or ratepayer should be asked to foot this bill at a moment when there is admittedly very great need for teachers, school buildings, nursery schools, technical schools, Plowden improvements and so on; in other words, a very great need for carrying out the whole new educational policy of the Government. Sixthly, in any case—this, I think I am correct in saying, is the position of the Government—the percentage of overseas students to the total student population is much higher in the United Kingdom than in most of the developed countries, the richer countries, and there is no reason why at least some of the students should not make more use of the existing facili-
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ties in their own countries, and thus cease to enjoy cheaper education in this country than they would have elsewhere.
Now all this appears on the face of it, perhaps, to have a certain justification, unless one examines the situation a little more fully and perhaps from a rather broader point of view. So let me take, if I may, the arguments apparently advanced by the Government seriatim. It is true, no doubt, that even the increased fees which are now proposed would represent only some 30 to 40 per cent. of the cost of the courses. It is difficult to say exactly how much they represent, because it is difficult to say what the cost of the courses, technical and other, is. But let us assume that the increased fees would cover only some 30 to 40 per cent. of the cost to the taxpayer of these courses. The whole of the education programme of this country, is, of course, subsidised by the State, or, rather, by the British taxpayer, and the overseas students, most of whom, after all, come from the Commonwealth, constitute only about 11 per cent, of it: that is to say, 11 per cent. of those engaged in higher education in this country are from overseas, and largely from the Commonwealth.
In his admirable Report on Higher Education in 1963 the noble Lord, Lord Robbins (whom I am glad to see in his place; and I believe that he is to intervene later), recommended that the general level of fees for all students in this country, whether British or from overseas, should be raised so as to cover at least 20 per cent. of the cost of the courses. The Government, as I understand it, have rejected this proposal on the ground that to do that would be, as it were, robbing Peter to pay Paul. But at least if this proposal were adopted it would not result in any discrimination as regards overseas students.
The noble Lord, Lord Robbins, continued in his Report to the effect that he strongly favoured some inter-mixture of home and overseas students in British institutions of higher education, and though this inter-mixture as he saw it did result in a concealed subsidy over which the nation admittedly had no control, he did not suggest that any higher fee should be charged to overseas students than to other students. In fact he was

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strongly against this. He further stated, and here I quote:
"The presence here in institutions of higher education of students from abroad is widely regarded as valuable, and rightly so. In our judgment it fosters a sense of international community on both sides which encourages a valuable give and take. The communications to which it gives rise are not without their diplomatic and economic advantages, and where students from developing countries are concerned it provides a helpful contribution to their countries' advances. We should greatly regret a dwindling in the number of overseas students."
Yet this is what the effect of the Government's action will, as I think, certainly be.
At least 55 per cent. of the overseas students in universities and technical colleges are what is called "unsponsored," and though some of these may have some private means—and a very few of them may, indeed, be rich—the vast majority have little or no private means. It is their families, presumably, who have to produce the £500 or £600 a year which is the minimum required for their physical upkeep in this country. If. in addition, they have to pay another £200 or so per annum they simply will not for the most part, I think, come to this country for their education; and I cannot see how this simple point can be seriously disputed. The total amount of the concealed subsidy, as it is called, to overseas students, say the Government, is now something in the order of £18 million a year. But owing to the fact that the new fees, as we know, will cover only one-third of the economic cost, it is estimated that the total savings to the country, or to the British taxpayer, in any one year will be only £5 million or so. But this depends, of course, on the maintenance at the present level on the number of overseas students which, as we have seen, will inevitably, as I think, at any rate be fairly heavily reduced. In practice, for this, and indeed for other reasons that I need not enumerate here, most of the experts seem to think that the saving is more likely to be something in the order of £3 million a year.
But against this, and again from the purely economic point of view, surely we have to face the fact that, as I have said, all students who come here have to spend a minimum of £500 or £600 a year in this country. If, therefore, you get a reduction out of 16,000-odd or 17,000-odd
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students of a half, more than 8,000, as you very likely will, you will clearly lose an invisible export of something of the order of £4 million a year.
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, it has taken me a long time before I replied. Is the noble Lord seriously saying that he thinks there will be a reduction of nearly half the overseas students? I can hardly believe my ears.
LORD GLADWYN: No, my Lords; the noble Earl should not believe his ears. I am saying that 16,000 or 17,000 students are sponsored and they are particularly affected, the poorer ones. With these heavily increased fees you might quite likely in the next year or two find that about 8,000 of them will fail to come. It is certainly a small proportion of the total number, 71,000; but I do suggest that it is possible, and likely, that by next year, or the year after that, the number will be diminished by about 8,000. If that is so, there will be clearly a diminution in our invisible exports of £4 million a year. That of course will unfavourably affect our famous balance of payments. Apart from any other consideration, this would not seem on the whole, and from the purely economic point of view, to be a very remunerative deal; and if it is not economic, what exactly is the point of it?
In addition to that, on the economic side always there is the thought that we may well over the years be losing many thousands—I have suggested 8,000; but even 2,000 or 3,000 would be bad enough—of potential trade missionaries who, if they are happy in this country, will exercise a very important influence in their own countries in favour of importing British goods in the various spheres in which they specialise. So we shall probably, in addition, be sacrificing an unknown but substantial sum in the way of British exports. Again, on the face of it, this would seem to be at least short-sighted. Generally speaking, the whole economic effect of these measures would, I suggest, be wholly deplorable.
I come to the next point, the allegation that the number of overseas students has been increasing during recent years. My Lords, of course it has. That is true—though I think I am right in saying that the curve has been recently flattening out,

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and over the last year may well have flattened out altogether. But this increase since 1959 must surely be judged against the recent enormous increase in those who as a result are profiting from higher education in this country generally. If, as the noble Lord, Lord Robbins said, it was a good thing to have a certain proportion of overseas students in 1963, it surely is right that this proportion should at least be maintained in 1968. Generally speaking, I think we ought not to grudge but should welcome the arrival in our centres of learning of intelligent and, for the most part, enthusiastic young men and women from abroad. It is a compliment to us that they want to come at all. Moreover, we must remember that the great majority, in order to pursue a course, have to have an adequate knowledge of English and quite high educational qualifications. This in itself is a serious limiting factor. So why proceed against them further? I cannot see that it makes any sense.
As for the so-called "open-ended commitment", which is said to be carried at the expense of our own urgent needs, well, one can see the force of this argument to some extent. But if you must limit foreign students for this reason, why not go in for the solution suggested by the noble Lord. Lord Robbins, and increase fees all round to an agreed but limited extent? That would mean that, instead of paying £70 for a university course, as they do now, they would pay something of the order of £130 to £150. This, more particularly I suppose owing to the progress of inflation in recent years, might be thought to be acceptable by some, and I would not deny it: although even an increase of this order would, in the nature of things, probably result in a drop in the numbers of desirable students. Therefore, if this solution were adopted, I would suggest that it might well be accompanied by some provision for a special fund for assisting worthy students who are really in necessitous circumstances.
As for the claim that we have a higher proportion of overseas students here than do the majority of developed and richer countries, and that, anyhow, we charge students less than they do, I have been into the figures so far as I can. They are rather complicated, and difficult to obtain, but I must suggest that this claim is simply not in accordance with the
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facts. Apart from Switzerland, which has 30 per cent. of overseas students in her universities, our 11·4 per cent. compares with France, which apparently has 10 per cent., and Germany, which has 7·2 per cent. So there is no enormous difference here. As for the cost, no less than eight developed or richer countries charge lower fees than we do, and at least two underdeveloped countries do so as well. As I understand it (I may be wrong), France charges only a nominal sum in fees in respect of overseas students at her universities. As I say, this is the limit of my present researches, though perhaps I could do better if I had more time.
Why, in any case, we should want to diminish the numbers of students coming from Common Market countries at a moment when we are moving heaven and earth to get into it, I find quite difficult to understand. Were the Foreign Office consulted on this point? Perhaps the noble Earl would like to tell us that. Anyhow, there are, for instance, many more British students in France who are enjoying courses of higher education—incidentally, as I say, at quite nominal fees—than there are French students in this country. It is an illusion, I suggest, to imagine that students from European countries, and indeed from America, are necessarily rich because their Governments are richer than those of the underdeveloped countries. Many of them have no private means at all. Surely we ought to welcome them with open arms, if only because here especially there is room for a cross-fertilisation of ideas and for the elimination of what might be called inward-looking and provincial tendencies to which we are so drawn.
I am approaching the end of my remarks, but here, I suggest, lies the fundamental objection to the altogether regrettable action which the Government have taken. It is, I fear, symptomatic of the way in which many people in this country are turning their backs on the outside world and longing to be an isolated and highly directed "tight little island". The old Imperial tradition that led us into the generous Commonwealth conception has gone sour, and we are now, it seems, chiefly concerned with our own standard of living and the production, through the great new comprehensive schools, of large numbers of highly provincial technicians and teachers. The

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idea that we may have something to impart to the outside world, some message, forward-looking and democratic, to communicate for the guidance of young people all over the world, seems to have vanished. We are getting into a sort of provincial rut, and if we pursue this line we may well end up where Spain ended up after the loss of her Empire.
As your Lordships know, I have for many years asserted that the best way for us to avoid such a fate is to join the European Economic Community. If we did that, not a mere trickle but tens of thousands of British students would be likely to go to European universities, and thousands would come to our universities from across the Channel. This, after all, when you think of it, has been one of the few concrete but good results of the Franco-German Treaty. So I would earnestly beg the Government to reconsider the action which has aroused such just resentment and indignation, not only in academic circles but throughout the country as a whole, and not least in the Confederation of British Industry.
In his admirable letter to the Financial Times of February 7, which some of your Lordships may have seen, Mr. Peter Tennant expressed himself as follows:
"The strength of our balance of payments in the years to come will depend more and more on the sale overseas of sophisticated capital goods and know-how. The education and training in this country of our future customers overseas is an important investment in our own prosperity so as to ensure that they are familiar with the latest developments in our science-based industries, new processes, standards, specifications and engineering practice. British firms have for many years taken in foreign apprentices, students, postgraduate students, qualified engineers, teachers and professors either on their own schemes of a general nature, those specifically connected with the fulfilment of contracts overseas, or in contributing to the C.B.I. scholarship scheme for post-graduate engineers."
"They have also given generously to the universities in this country, not only for our own students, but also for the benefit of those foreigners who will now he deterred. We can be proud of what has been achieved by industry and Government, the British Council and the Ministry of Overseas Development. But we are aware that we are as a country by no means meeting the demand, nor do we think we are matching up to the performance of the United States, France, Gemany or Russia, to mention only four of many countries which are involved in this investment in the future. It is felt that far too little is known of the many dispersed efforts which exist in this country or how they compare
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in size and quality with the efforts of other countries. It seems to many that the action in cutting back aid to foreign students in our universities has been taken without knowledge of the facts, and no action, civil or military, should ever be taken without a proper collection and appraisal of intelligence".
Though Mr. Tennant was dealing with only one part of the subject which I am raising to-night, I feel I can hardly do better than that.
I would therefore end with a renewal of my plea that if the fees have to be raised—and I agree they very well might—at least the method of doing so indicated by Lord Robbins should be adopted, together, perhaps with some rational system of relief, which is also recommended by him, for those overseas students who would otherwise not be able to make use of the great facilities which Great Britain is still able to afford. The continuing "concealed subsidy" would thus be recognised for what it is; namely, a small but highly desirable and effective form of "aid" which happily has no adverse effect on our balance of payments. I know that it is difficult for any Government to admit that they have made a mistake, but I have some faint hope that the present Administration, which, after all, contains many of our most intelligent and civilised citizens such as the Leader of the House, may on reflection, after hearing the views of the many Peers who have far greater experience in this matter than I have, at least bring themselves to make some qualified confession of at any rate partial error.
6.3 p.m.
LORD MURRAY OF NEWHAVEN: My Lords, I should like to support the eloquent and well-argued plea of the noble Lord, Lord Gladwyn, for reconsideration of this extraordinary decision. I do so on three grounds. First, I think that the instrument which the Government have chosen is an extremely clumsy one. If there have to be economies in educational expenditure, then the Government are using a singularly blunt instrument for what should be a very intricate and selective operation.
Are we certain to whom this applies? So far as I know, there is no clear definition of what is an "overseas student", and surely this is a prerequisite for such a directive if we are to avoid hardship and achieve a satisfactory

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administration of policy. It is by no means clear what is an "overseas student". Does it, for example, include the 4,000 overseas students who are now taking their G.C.E. and who, under present arrangements, after three years are entitled to qualify for local education authority grants for further and higher education? Does it include the children of British civil servants or British personnel overseas, Service officers, experts, and so on, who are serving their country overseas, and whose children may well, unless the term is clearly defined, be classified as "overseas students".
The noble Lord, Lord Gladwyn, has given very cogent answers to the various reasons put forward by the Government for introducing this new policy. I should like to emphasise one of these reasons. It has been argued by the Government that the need for overseas students to study in this country has been lessened as facilities have increased in their own land. This may be true of some, but not all, first degree courses, but it is certainly not true of post-graduate education, for which about half the overseas students in the universities come to this country. Nor is it true, as has already been mentioned, of much of the technical college training, based on sandwich courses, in which periods of training in industry are just as important as training and education in the classroom.
Few of the industries in the underdeveloped countries have yet reached a stage where they can give what industry in this country is so well qualified to provide, and what is essential to the future economic development of these underdeveloped countries. There may be good reasons for discouraging a relatively few overseas students, but not for the indiscriminate action adopted in the present proposals. This decision on policy and the blanket nature of proposals for carrying it out are bound to give rise to injustice, bitterness and hardship, which I imagine will not be alleviated by any ad hoc arrangement for building up a hardship fund in this country.
My second ground for objection is the element of discrimination which, I venture to say, is both deplorable and shortsighted. It has been suggested that justification for this discrimination can
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be found in the Robbins Report. That is manifestly untrue, and I am prepared to leave it to Lord Robbins, who is to speak later, to disclaim any intention in that direction by his Committee. It has also been claimed to be justified by the Report of the Select Committee on Estimates. I think that, equally, is a misinterpretation of what they said.
One must sympathise with the Department of Education and Science, which has been put in a position of having to save up to £5 million a year at the expense of overseas students, many of whom are ill able to afford it. On the other hand, they might have considered a general rise in fees. That, I believe, would not have been discriminatory. They say, however, that they were unwilling or unable in present circumstances, to pass on the burden to local education authorities. The Department's own proposal to adjust Exchequer grants to local authorities to meet the consequences of higher fees in the transition period suggests that there were abnormal means available to meet an abnormal situation if they wished to employ them.
But more important in my opinion, however, is that this particular economy in expenditure should not have fallen solely, or even primarily, on the Department of Education and Science. As the noble Lord, Lord Gladwyn, pointed out, the education and training of overseas students in this country can and should be regarded as possibly the most direct and most economic means of granting overseas aid. It is of direct importance as a matter of industrial and commercial investment in education. In this context, an economy of £5 million, in the face of our annual expenditure on overseas aid which now extends to far beyond £200 million per year seems to be niggling. Even the £18 million mentioned by the Secretary of State as a total subsidy still would seem to be a modest investment.
Other countries regard the provision of education to overseas students as an investment, and I would cite one instance from a recent event. The School of Medicine in Nigeria admitted its limited annual intake of 30 students, and there was still a large number of qualified applicants left over. Germany stepped in and took 20 of them en bloc to give them a free medical education. This was not merely philanthropy; it was also

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sound, good business. I have also ascertained that in fact very few other countries in the world discriminate in fee charges against overseas students. I can find very little evidence of higher fees being charged to overseas students.
Taking, first, Europe, no distinction between fees charged to home and overseas students is made by universities in Germany, the Netherlands, Belgium, Italy and Switzerland. In France, where, as has been pointed out, so many of our students go, only two private technical institutions concerned with textiles charge higher fees to foreigners. Only in Austria is there any general discrimination. In the Scandinavian countries—those models of democracy—the levels of fees, if any, do not distinguish between home and foreign students.
In the Commonwealth countries, similarly, only one Canadian university among 30 charges differential fees. In Australia, the figure is only two among 13. There are, however, three universities in the Commonwealth which do charge discriminating fees: Ceylon, Malawi and Nanyang, in Singapore. But these are all in developing countries which can ill-afford to do otherwise. Thus the Commonwealth picture is overwhelmingly one of non-discrimination. Coming to the United States, one finds the same picture. There is no distinction in the State universities between foreign students and American students from other States. In the private American institutions, there is no discrimination whatsoever. Among other countries, I can find only four where fees to foreign students are higher than to home students: Eire, Ethiopia, Sudan and Japan—and even in these the fees for overseas students tend to be lower than in this country.
I should like to emphasise, from my experience overseas, that I believe that it is not merely the higher fees that will cause resentment and discourage overseas students, but the very implication that these students are less welcome here than they were. But this discrimination, as I have said, is not only objectionable in principle: it is also short-sighted. We are, I believe, deliberately reducing an inflow of good scholars from developed countries, such as the older Commonwealth
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countries and Europe, who offset to some extent the brain-drain of which we are at present complaining.
I happen to be Chairman of the Board of Management of the Royal Commission for the 1851 Exhibition which has for over seventy years awarded post-graduate research scholarships in science to Commonwealth students, as well as to home students. The quality of these is indicated in the fact that, of just over 1,000 appointed since 1891, of whom about half were overseas students, 109 have become Fellows of the Royal Society, two have become its Presidents and eight have become Nobel Laureates. The overseas students among them have achieved a fair proportion of these successes.
The Government's new proposal, if accepted by the universities, will certainly mean a reduction in these awards because the Commission has a fixed income, and the additional expenditure will be about £6,500 on an annual expenditure of £30,000. We are bound to reduce the number. Nor can it be assumed that these high-quality students will come to this country under other auspices. There is clear evidence—and I have found it myself in the Commonwealth countries—that it is the prestige of the 1851 scholarship which attracts them here, and tips the balance against their going elsewhere—to the United States, for instance.
I should like to give your Lordships one more example, if you will bear with me. The advantage of attracting high-calibre students from overseas can be seen in the staffing of one of the best chemistry departments in this country, known nationally and internationally. Of its total full-time staff of 29, 12 come from overseas, and they came in the first instance as overseas post-graduate students. Finally, as Director of the Lever-hulme Trust, I have on my desk at present a number of applications from university institutions in this country asking for funds to support scholarships, to enable them to promote the interchange of advanced students with European universities. It is surely inconsistent to claim, on the one hand, that this country might serve as the spearhead of scientific and technological development in Europe, if at the same time we are taking the unparalleled step of discouraging European advanced students coming here.

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For a comparatively wealthy country, with a long tradition of liberality in matters of education and the spread of learning, of encouragement of international trade and commerce, and of constructive overseas aid, the Government's recent decision seems to me to be sadly out of pattern. Overseas it will certainly appear narrow-minded at a time when the Government claim—and I believe with justification—to be international and inter-racial in their attitudes and actions.
My Lords, my third objection to the present proposal is that it seems to me to further the tendency for academic interchange to become concentrated in Government-sponsored schemes. The noble Lord, Lord Gladwyn, has referred to the fact that the British Government have agreed to increase the funds at the disposal of its agencies, such as the British Council and the Ministry of Overseas Development. Overseas Governments will be in a position to do the same, so far as their means allow. But it is the student who comes on his own earnings or his family's limited means, or who is sponsored by non-governmental organisations, who will be hit; and the majority of overseas students, as many as two-thirds of those in the universities, are in these categories. I would ask your Lordships: Do we, in the world of today, in which ideological and political considerations appear to be growing in importance and in influence, want to encourage this trend? I believe that we should stimulate greater not less freedom of interchange and thought. It is for these reasons that I should like to support the noble Lord, Lord Gladwyn, in his plea for a reconsideration of this increase.
6.18 p.m.
LORD ABERDARE: My Lords, in the powerful list of speakers to-day there seems to be an unusually large gap between the first 18 names on the list and that of the noble Earl the Leader of the House, who is to reply to this debate. I have a horrible feeling that he may find that he is somewhat isolated in this debate, and that the preceding speakers are likely to be somewhat critical of the Government's action taken on December 21 last. I hope for his sake that he may find an ally among them. Perhaps the noble Lord, Lord Mitchison, will be
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good enough to say a kind word for the Government—but I see that even he shakes his head.
But, certainly, this proposal of the Government has excited a great deal of anxiety and doubt throughout the country, a feeling which will be reflected in this House this evening. There are speakers on the List from all quarters of the House, and I feel sure that there will be a great deal of serious questioning about the Government's policy in this matter. This is reflecting a great deal of anxiety in the country at large. Letters have been written to the Press, there have been demonstrations of students, there have been pronouncements by senior university staff; and only yesterday there was a unanimous resolution in the Church Assembly. My colleagues on these Benches share the great anxiety that has been so eloquently expressed already by the noble Lord, Lord Gladwyn, and by the noble Lord, Lord Murray of Newhaven.
Furthermore, we think it is regrettable that so serious a statement was issued without, evidently, any adequate prior consultation. The Committee of Vice Chancellors of Universities was not consulted, nor were the local education authorities, nor were any of the other multifarious bodies which deal with overseas students. We are at this moment witnessing a serious decline in British influence overseas.
THE EARL OF LONGFORD: My Lords, may I interrupt the noble Lord on one point—because I am afraid that by the time I come to speak it will probably be past midnight. There was consultation with the British Council and with the University Grants Committee. It would not be right to say that there was no consultation.
LORD ABERDARE: I am very happy to hear that, although I still think that the Committee of Vice-Chancellors would have been grateful if they had been consulted. But at this moment, when British influence is on the decline, when so many of our former dependent territories are becoming independent and when we are cutting down our military commitments overseas, we should surely he doing everything we can to strengthen the voice of Britain if we believe that we have something valuable to say. Yet

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what has happened recently is that we have seen reductions in the British Council's activities, reductions in the B.B.C.'s overseas broadcasts and a limit of £50 placed on foreign travel; the Minister of Overseas Development is no longer in the Cabinet; and now, most serious of all, we have this discrimination against overseas students.
I agree with the noble Lords who have already spoken that the receiving of these overseas students into our universities and technical colleges is one of the best investments we can make for the future. Moreover, as I think the noble Lord, Lord Murray of Newhaven, implied, it is a method of overseas aid which is completely under our control, in that the money is spent in this country and, we may be sure, can be used to the best effect and most economically. As well as engendering a great deal of good will at the present, it is a hidden export for the future. It must surely make the task of our overseas salesmen that much easier in the future if a number of people have had some advantage in the way of higher education in this country. The right reverend Prelate the Bishop of London used a telling phrase yesterday in the Church Assembly when he spoke of the Government's measures as "a tariff on educational exports".
We are fully aware of the rising cost of education and we would willingly support any sensible economies, but I do not think that the present measure is either a sensible or a real economy. In fact, it may cause considerable harm in dissauding many future students from coming to this country. The noble Lord, Lord Gladwyn, gave us some of the figures; and it is important to realise that of the total number of overseas students at universities, less than half are supported by a scholarship grant or fellowship. Even with the present fee of approximately £70 per annum, there are cases of hardship, as every Vice Chancellor knows and as is also apparent to all those who are working in this field on a charitable basis.
Only this afternoon I came across two small trusts, the Council for Aid to African Students and the Zebra Trust, both of whom are trying to help students who are now unable to raise the necessary fees for studies here. Undoubtedly many students who are not supported
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either by British Government funds or by overseas Government funds will not be able to raise this extra £50 fee and will discontinue their studies. What a terrible advertisement for us when they return to their homeland, and what a frightful prelude to the Fourth Commonwealth Educational Conference in Nigeria this year!
Many universities and technical colleges are feeling that they are being forced by this Government action to break faith with their overseas students. Some of them have already promised places at the previous fee to those students who are working for their "A" levels, and they have already sent out their prospectuses for the next academic year. Many of the less advanced countries send their students over to this country because they have not got sufficiently good sixth-form arrangements of their own, in order to study for "A" levels and for subsequent study at British universities. These countries have set aside money to provide the fees for these students, which fees, if they are increased, they may now well be in no position to find.
But what, also, of those who are not supported by Government grants? What of the private students, who form two-thirds of the total? Do we really want to dissuade them from coming here? Among them are young men and young women who have shown enterprise and initiative in saving up and paying their fares to this country and whose very qualities will probably mean that in time to come they will occupy positions of influence and importance in their own countries. If we put these fees up, may they not well choose to go elsewhere in the future, and may we not find that they will obtain their higher education in Germany, in America or in Eastern Europe? It has obviously been apparent to our own students that this is not a very encouraging step. They must realise the importance to themselves of coming into contact in our universities with others from overseas; and although it may be true that the total number of overseas students is rising, certainly the proportion is falling. And what will be the position if other countries take reprisals? I am sure we shall certainly regret it very much if this action were to lead to similar action elsewhere, and if

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the whole free interchange of students between one country and another were to be affected.
THE EARL OF LONGFORD: My Lords, may I ask the noble Lord one question, as he is speaking, I am sure, very carefully for the Opposition? Is he objecting to raising the fees at all? Fees have been raised in the past, and I am sure that in any event they would have been raised to some extent very shortly. There are doubtless a number of arguments as to whether the fees are to be raised too far, or in the right circumstances; but is the noble Lord saying that the fees should not be raised at all, and is he not going to set any limit to the amount of total subsidy?
LORD ABERDARE: No, my Lords, I am complaining about the discrimination against overseas students. I think there would be a much better case for proposals such as those which we have already heard from the noble Lord, Lord Robbins. I think this is a much more sensible way of setting about things. I am complaining of the fact that overseas students are having to pay more than is charged to the normal British student, and I fear that this will dissuade a number of students who come here on their own means from coming here in the future.
In conclusion, I should like to put two questions to the Government and to make three possible suggestions for the future. First of all, I would ask how the saving of £5 million in a full year is arrived at. Is it on the assumption that the same number of students will come as have been coming recently to this country? Or does it take into account what I fear: that there may be a fall-off in the number who can afford to come? Secondly, I am interested to know—although it may not be possible for the noble Earl to give me an answer this evening—what the position will be in specialist schools like the School of Hygiene and Tropical Medicine or the School of African and Oriental Studies, which exist mainly for overseas students. If places are not taken up by these overseas students, what will happen?—because there will be no British students available to take them up.
My Lords, I would make three possible suggestions for the future. In the first
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place, I understand that the Committee of Vice Chancellors have requested that a delegation might be received by the Prime Minister; and I hope that due consideration will be given to that request. After all, it was only a few months ago at the 20th anniversary of UNESCO that the Prime Minister said:
"We have done our best not to reduce our aid to developing countries and we have expanded, wherever possible, the assistance our schools and universities and Colleges of Further Education give to students from those countries."
Secondly, would the Government consider giving some emergency help to present students and to those who are in this country with assured places at universities conditional on their passing their "A" Levels? Would they give some emergency help to these students—through, say, a hardship fund established perhaps through the British Council—which could avoid the terrible plight of those students who may have to break off their studies and return home? Thirdly, in the long term, would they have a close look at this matter again in the light of this debate and, although the cost may be very heavy in terms of educational funds, see whether, in terms of overseas aid, some help could not be given so that we may continue to receive gratefully and willingly the maximum number of overseas students of which we are capable?
6.33 p.m.
LORD FULTON: My Lords, I must begin by asking for the indulgence of the House in addressing your Lordships for the first time. I hope to conform to the proprieties of these occasions by being both brief and, to the best of my ability, in a matter which has stirred a great deal of feeling, non-controversial. In the former aim I am assisted by the knowledge that there are many noble Lords speaking to-day who will examine the various aspects of the matter with a knowledge that I could not myself hope to match; and in the latter, by confining my remarks to the general question of why the universities have registered such alarm at the proposal to raise the fees of overseas students. I speak not only as one with some responsibility for a university in the United Kingdom, but as the Chairman, for the past three years, of the Inter-University Council for Higher Education Overseas, a body representative of all

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the home universities which, where appropriate, advises the Government of the day on overseas education, and which also promotes a close association between our universities and those in the former colonial territories.
My Lords, the universities asked for an increase in the fees of all students, irrespective of domicile. Accordingly, they cannot, and do not, complain at the mere fact of a rise in fees. They are, I think, deeply concerned at the very sharp increase to three and a half times the present figure which is proposed to be applied only to those from overseas. Arrangements of a quite elaborate kind now proposed to cushion the effect on a large number of those who will be subject to the increases, have left the universities still uneasy and, indeed, alarmed. Why? First of all, as your Lordships have heard, they have always been extremely sensitive on behalf of the free-lance student or the student financed by private or charitable sponsors. It is on this class of overseas student that the increases in fees will bear in all their severity. These are generally people of high academic quality; if they are post-graduates they are individually vouched for by overseas academics and carefully scrutinised before being accepted. It would be a matter of profound regret to the universities if the proposals now being debated were to result in a serious reduction in the number of private students; even if their places were taken by others officially sponsored.
There are other, deeper reasons for unease. Many members of universities, senior as well as junior, see this issue as one of aid to the developing countries. In this, of course, they are right. Let me invite your Lordships to look on two contrasting pictures, one of 1946 and one of 1967. In 1946, in the whole of our colonial and former colonial territories there were only two small university institutions, one in Hong Kong and one in Malta. There was also a small though distinguished college, affiliated to the University of Durham, Fourah Bay College in Sierra Leone. To-day, in Africa alone—and I am, of course, speaking only of our former colonial territories—there are some twenty universities or university colleges, and in South-East Asia, the Far East and the Caribbean, at least another ten. These have been
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largely built with British capital and staffed by the universities of this country at a time when they were trebling their own numbers.
As a result, undergraduate education is becoming available to increasing numbers of young people in their own countries. To-day, accordingly, there is less need to offer undergraduate places here except for particular subjects and for particular territories, where there are no university institutions so far. What still desperately needs to be done is to provide in our universities here post-graduate opportunities to build up African and Asian staffs for African and Asian universities, and to provide the developing countries with post-graduates trained here until their own post-graduate schools are able to take over the task. To have any setback to this programme would be to suffer a reverse in a noble enterprise of which history undoubtedly will speak well.
But there is more in this than aid to developing countries. We are the gainers, too, from the present overseas students in our universities. The universities of the West know from centuries of experience that they stand or fall by being open institutions. I was once head of an institution which, when I first knew it, was almost wholly composed of students from the immediate neighbourhood. It is very different to-day. But in those earlier days, when a special programme under the Colombo Plan brought in succession to this country groups of some 25 students from South-East Asia for a short intensive course in the social sciences, the institution was transformed for everybody—and most of all for the local students.
I have spoken of the association built up between the Inter-University Council of the United Kingdom universities and new universities in the developing countries for which we were once responsible. They have followed us, willingly followed us, in the example we set of admitting students from other countries to our universities on the same terms as our own. The battle of the open university is never won; it is constantly being fought, over and over again, as the tides of tribalism, nationalism and racialism threaten to engulf infant universities before they have found their strength and maturity. We in the universities of

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this country believe that our own institutions of higher education are richer in the measure that they are diversified. A student body should be a meeting ground for those of as many different backgrounds and as many different experiences as possible. There is no age like that of 18 to 23 or 24; no environment like that of university studies in which to meet other challenges, other attitudes, other convictions and other philosophies. The unversities, I think, wish to have an assurance that obstacles will not be created which will reduce the free flow of ideas between those in different countries of the world in whose hands the future lies.
6.41 p.m.
LORD ANNAN: My Lords, I am extremely fortunate this evening in being able to rise immediately after the noble Lord, Lord Fulton, has delivered his maiden speech. I am sure that, on behalf of all, your Lordships would wish me to congratulate him most sincerely on a distinguished speech; a speech which had exactly that mark of distinction which we associate with him in his capacity as the first Vice Chancellor of, if I may so put it, the first of the new universities really to get off the ground and which now is so far off the ground that it is already in the first rank of the universities in this country. Our sadness in realising that he will retire from his Vice Chancellorship at the end of this academic year is, I hone, mitigated a little by the expectation that he will be able to be heard a great deal more often in your Lordships' House.
I came this evening to your Lordships' House direct from a meeting of the Professorial Board at University College, London. I was there left in no doubt whatsoever as to the feeling in academic circles about this measure. There is very strong feeling on this issue of discrimination. There is a feeling among students who have in them a very strong streak of idealism with regard to the developing countries. The feelings of academic staff have been admirably described by the noble Lord, Lord Fulton. We must understand that this has nicked a sensitive nerve in the universities, and I do not think anyone should be under any illusion that the issue of discrimination is felt very
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deeply. I will not elaborate further; quite enough has been said already on that matter.
The other thing which is also exercising all our minds is the issue of hardship; how, in fact, we are going to meet cases of hardship (and there will be many, I think) among those students who are already in our midst. Those who are to come, if this measure is to go through, will, of course, have had full warning of what their rate of fees will be. But if fees are raised for those who are here, even by as little as £50, it will mean a very great deal to someone who has come from West Africa supported by contributions from his tribe; or to those who come from India supported by offerings from families and relatives; and to those, indeed, who come from countries in Europe which are not among the richer countries, and where, very often, great sacrifices have been made to enable a student to come here. I think we should bear these points in mind. It is a little astonishing, as was said, I think, by the noble Lord, Lord Murray of Newhaven, for us to find ourselves in this matter in parity with the countries of Eire, Ethiopia and Sudan.
My Lords, on those two issues I should like to make three requests. The first is that if it is impossible to alter this measure, will the Government as soon as possible give an indication of the date at which the Secretary of State hopes that he will raise the fees all round to home students? I think that this feeling about the issue of discrimination would be allayed if such an indication could be given. The second is, would it he possible for help to be given through the Department of Education and Science to set up a fund to meet cases of hardship? I hope it will be possible for such a fund to be, as it were, administered by the universities themselves, rather than to set up an impersonal organisation to which appeals had to be made. Surely the universities can be trusted—I do not think this is too much to ask—that they should examine cases of hardship and then be able to call on a fund to meet those cases. I hope this could be done, as I say, by a special fund, and not for the universities to be asked to do this at their own cost. All universities are at this moment experiencing what has been

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a very cold winter indeed—that is to say, a winter which has produced the first indication of the look of the next quinquennium. It is a very frigid experience indeed, when one reads the papers and sees exactly how sparingly the universities are inevitably being treated at the moment. So if a fund could be set up which was not financed by the universities but by the Department, this would do a great deal to allay discontent.
Finally, my Lords, may I emphasise the point made by the noble Lord, Lord Aberdare, with special reference to the University of London, which has a very high proportion of overseas students because of the facilities in the capital city, particularly of libraries, the Public Record Office and other specialist organisations? The noble Lord, Lord Aberdare—I thought very properly—drew our attention to two of these institutions, the School of Oriental African Studies and the School of Tropical Medicine and Hygiene. If some special provision could be made for these two instutions—and any others, I hasten to say, which fall into this category—it would be greatly appreciated.
Having said that, and made these requests, may I also put some points on the other side of the case? I think there has been a lack of feeling and understanding in universities about how this issue of discrimination came about. First of all, surely we must recognise that it was impossible in the present freeze for the Government to put up the fees of home students, because had they done so, inevitably part of the cost would have fallen on the local authorities; and local authorities had been ordered to keep their own costs down. Hence, with the whole philosophy of the freeze, it would have been a difficult undertaking, indeed almost impossible. The second point is this. There was, I think, a lack of understanding in the universities about the actual issue of raising fees. There is some confusion, and the noble Earl, the Leader of the House, in a question to the noble Lord, Lord Aberdare, gave point to this by asking whether the noble Lord, Lord Aberdare, was against the raising of fees at all. There are some people in universities who believe that fees should not be raised at all. Yet the Committee of Vice Chancellors is on record in 1965 as having been in favour of agreeing to
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a rise of £150 for all students; though of course with the reservation that cases of hardship from the developing countries should be met. So I do not think that there can be any case made out for no rise in fees at all.
Thirdly, there is the question of cost. Here it seems to me that if one is to be dispassionate one must have some sympathy with the problem which the Government face. The noble Lord, Lord Gladwyn, said that the proportion of students from overseas should not be allowed to fall. I wonder whether that is right. If the noble Lord means the number as it was before the great expansion of our universities took place, I am sure we would be in total agreement, but when the number of university students has doubled, is it reasonable to say that the proportion of overseas students must be the same?
It is the escalation of the cost of aid to overseas students which has drawn the attention of the Government to this as something which might have to be curbed. And when I say "curbed", I do not mean diminished to nothing, but slightly reduced: or rather that the way in which the graph is moving at present should be changed. Where is the end to come? There must be some check on this matter. Individual universities are used to admitting overseas students largely on their merits. They pick the best of those who apply. Sometimes they admit students on compassionate grounds, because they come from developing countries and need the courses which the university in question can offer. But when universities do this, they have been slow to realise that inevitably in the end a quota would have to be set for the number of students who are accepted from overseas. It seems to me that the universities cannot have it both ways. They cannot say that they are against any kind of major increase in fees, and at the same time say that they are against any kind of limitation on the student number.
There were warnings on this question of fees. The Robbins Report warned that this was something that was in the air. The Select Committee again drew attention to this question of fees. If I may be critical of my colleagues, perhaps the Committee of Vice Chancellors were a little slow to realise that this was going to be one of the major points

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on which universities would be asked to make economies. It is true that in 1965 they put their case for a rise in fees to the U.G.C., yet they have been slow to realise the feeling in the Department about the escalation of the number of overseas students coming to the universities. However, I believe that the Committee are rapidly gearing themselves to being more on the ball in all these matters. For example, they have set up committees to discuss how academic buildings can be used more profitably, and under what conditions more students could be induced to live at home. Obviously, these are two matters which will come up in the next five years and it is wise for the Committee to have their own views prepared.
In the protests to The Times I was slightly saddened to see no letter suggesting any alternative cut which might be made. This would have been a difficult operation. It could be suggested, of course, that the universities should accept a 2½ per cent. reduction across the board, which would undoubtedly reduce their efficiency, but would produce the figure of £5 million which the Secretary of State had been told he must obtain. I think that there was a reluctance to understand that one cannot always get away without economies being imposed simply because one belongs to a highly privileged section of the community.
Here, of course, the question arises: why should there have been a cut at all? One of the reasons is that inevitably ways have to be found to diminish the cost of higher education, because they are rising so exceedingly sharply. To give one example, the cost of providing scientific equipment, which becomes so rapidly obsolescent, is causing grave anxiety to the universities, for it is essential that some of this equipment be bought if we are to maintain our position in the world of research. Another reason why there must be a cut is the economic crisis which struck this country in the middle of the summer. This imposed the situation with which anyone connected with the Government is familiar. A Minister brings his Estimates before the Cabinet, but before he does that, he has to go to the Treasury, who tell him that if he wants an increase in expenditure, that can be obtained only by a cut in another direction.
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Why was there an increase in the costs of the Department of Education? The answer to that question is simple. This winter the Plowden Report was published. I am sad that no one in your Lordships' House has put down a Motion drawing attention to that Report.
THE EARL OF LONGFORD: My Lords, I must remove that undeserved slander on the House. There is a Motion down on the Order Paper.
LORD ANNAN: My Lords, I apologise to the House and to the noble Earl. I read my Paper too quickly coming down to the House. May I say this on the Plowden Report? It suggested that there is an enormous need for expenditure on our primary schools, and because of years of neglect the sums required are astronomical. The £5 million which will be obtained by the increase in the fees of overseas students is obviously nowhere near the sum required; but it could do something to meet what the Plowden Report singled out as something which could be done quickly: the setting up of a crash programme for the slum schools—the ghetto schools.
This is a point which I would bring to the attention of noble Lords who are particularly concerned about the developing countries. We have two kinds of people who come from the developing countries: those who come for a time as students and those who emigrate and then live in bad conditions in our great cities. In these bad conditions they have bad schools, schools staffed often by a handful of devoted teachers, a handful because other teachers are not willing to go there to teach children, many of whom cannot speak English. This creates what is known as ghetto conditions.
Can something be done for the education of these children from developing countries? Since we are talking to-day about discrimination, can we do anything about the discrimination against them? If I have to choose between subsidising overseas students from the developing countries and subsidising a crash programme to do something about these schools I hesitate, as someone connected with the universities, to say what action should betaken. But I do not hesitate long. I think that the school programme has the priority. We are always being told that politics is a matter

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of priorities. Here I respectfully suggest that if we have to surrender this particular matter of overseas students, then the savings should be applied in this particular way.
7.0 p.m.
THE LORD BISHOP OF CHICHESTER: My Lords, I was warned just now that if I spoke from the Bench in which I was sitting I should be speaking from a Government Bench. While I sympathise with the noble Earl the Leader of the House in the apparent isolation to which he has referred, I cannot support him on this particular issue. Nevertheless, I am glad that the noble Lord, Lord Annan, who has just sat down, while making clear his own repudiation of the decision that has been taken, also recognised some of the difficulties under which this Government—as, indeed, would any Government—labour. Some of the criticisms that have been levelled against the decision, more vociferous outside this House and more moderated inside it, perhaps, do not take into account the duty of a Government at this juncture of time to scrutinise carefully all forms of spending, and in particular the mounting bills for education, especially in the field of further and higher education, and to recognise the difficulty, to which a great deal of thought and study was given in the Report which bears the name of, and was presided over by the noble Lord who will follow me in this debate, the noble Lord, Lord Robbins, about the open-ended nature of our subsidy towards overseas students.
It is also true to say that there is a vast number of people, and perhaps the bulk of the people in this country, who have no idea how much we subsidise all further and higher education, and how much is our contribution towards overseas students. Certainly a Government have to bear that in mind. In other words, it would be necessary for any Government to consider this issue and to take some steps about it, and I think that none of us would wish to deny this. It is the manner in which it has been done; and I should have thought the whole crowd of criticism which has been raised in protest would have convinced the Government that they have been unwise in the particular form which their decision has taken.
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Some of the criticism has been rather of an emotional character. But the fact that so much has come from leaders engaged in education in this country, and experts in their own field, as has already been expressed in our debate so far, should convince the Government that the real obstacles are of a much greater nature than the kind of emotional appeal that has sometimes been issued. It is not for me to attempt to deal with some of the educational features with which so many others of your Lordships will deal. Indeed, I am uneasily sandwiched between a number of speakers of high academic distinction, and I will leave this to them. I should like to say, however, with what great interest I listened to the speech of the noble Lord, Lord Fulton, the Vice Chancellor of our University of Sussex, speaking not only from his wide experience but from that wealth of experience in the development of university life in most parts of the world. I am sure we all hope that there will be many occasions in future when he will address us from his wisdom and experience.
But there are other people and other bodies who have expressed their concern about this matter, quite apart from academic institutions. Perhaps I may quote a resolution which was passed yesterday in the Assembly of the Church of England and which has been sent to the Minister. It states that it would:
"welcome the reconsideration of the Government's advice to universities and colleges that the fees charged to many overseas students shall be greatly increased regardless of their circumstances, and an inquiry into the finance available and the alternative educational facilities open to such students in their own countries before a final Government decision is made."
It may be asked why a Church body should claim to have any particular interest in this issue. But the churches in this land have shared in the expansion of this country and its reaching out into so many parts of the world. They have very often preceded that expansion. They have been pioneers in much of the education. They know the kind of basis upon which a healthy community life in a new country can be built. They are sensitive, through their contacts on the spot, of the relations between many of those countries and this land. And may I add that they are very jealous of the good name and the place of this country in the present unfolding situation of our

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world. It is a situation in which hunger for education is one of the significant matters. It is, therefore, a situation in which this country, above all, ought to consider its own fullest possible contribution. If, in fact, a curtailment of our contribution was needed on financial grounds, no doubt we should have to accept it. But the financial gain on this particular step, as the noble Lord, to whom we are all grateful for posing this Question, has already pointed out, is likely to be very small, and much less, it may be, than the actual figure of £5 million, which itself is not very considerable in the whole field.
It may be that the consideration is not finance. I believe the Parliamentary Secretary to the Ministry of Overseas Development has expressed the hope that many more students will now go to their own universities or places of education in their own countries; and perhaps this is part of the objective.
THE EARL OF LONGFORD: My Lords, may I clear up that point? The reasons for this step are financial.
THE LORD BISHOP OF CHICHESTER: I am grateful to the noble Earl, the Leader of the House. I was referring to a quotation of what the Parliamentary Secretary had Certainly any deliberate curtailment of possible students to this country would be of concern not only to academic institutions, but to a wide section of public opinion. Our concern would be what it may signify in terms of Britain's own position and role in the world. Coming with the suddenness that this decision has, it seems to us somewhat illiberal. It suggests a drawing back from our commitments to a world where international exchange and association is on the increase. We should recognise that our role in this world must not be so much in terms of power, as it was in the past, or our own exact place at the conference table; our influence ultimately in our world will stem from what we have to give to it and what we are willing to do for it.
One of our chief contributions must be our own long investment in all the knowledge, skill and culture which is embraced in the word "education". It is especially our contribution now to the poorer and
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developing countries. This has been recognised by our former aid. Surely where that aid is most wanted is not in things, but in the equipping of persons who themselves may be able to exercise their responsibilities in their own country more effectively. It is, of course, invisible aid. Perhaps it should be made more visible. But it is wrong to think of this purely in terms of part of an education bill at home. I find it surprising when I recall how, from the Government Bench in a debate not long ago on overseas aid and development, a strong statement was made that we would not fall short on our commitments to the overseas world, that this particular point and the aspect which it presents to the world of a cutting down in some way of what we are giving to them has been overlooked.
I suppose we should be concerned, too—and this again has constantly been referred to—in terms of what one might call the justice of the present decision. Perhaps "justice" is not quite the right word, since our obligation to provide for overseas students is certainly not an official duty; but I mean justice in the sense, as has been fully recognised, that the effect of this decision is discriminatory. We cannot get away from the fact that it will hit the poorer countries and, more particularly still, those students—the very great bulk of them—who come to this land without any sponsorship from their own Government or ours. I know that this is not the intention of the step and it is hound up to some extent with administrative convenience, if not necessity.
It is an accident, too, that it may seem to the developing countries, to whom we shall be to some extent restricting our aid in this respect, to be not only discrimination but even racial discrimination. This is not the intention; but an act must be judged in the end not by its intention but by its actual results. I do not believe it will be any good saying to a young man in Botswana or Lesotho (to take the latest independent States) that this step is really aimed at the comparatively affluent young student from New York or Toronto. He is already far too sensitive about anything that suggests discrimination to accept this argument. He will say that this does not help him to believe what Britain wishes to do for him. Again, I think this step

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is a little out of character for a Government who have in many ways, in legislation and otherwise, tried to make a stand about anything that savours of discrimination. I regret that this point seems to have been overlooked or disregarded in the decision.
I must briefly refer, as others have, to the question of actual hardship at present. There are, we are told, a large number—how large we do not know—of students in this land who are sub-standard in ability, who have come here chancing their arm educationally and maybe to some extent are a drag on or an embarrassment to our own resources. If the Minister had them in mind, then, as the noble Lord who has just spoken quite rightly said, this is a very poor way of dealing with it. To penalise the bright as well as the less bright in the same action is not the right way to cut down on the kind of students one might wish to discourage. We are not thinking—at least, I am not—primarily of the students from the better placed, richer countries, though they have an argument in their favour. I am not thinking only of the sponsored students from developing countries. I must think especially of that very large number of students of one kind or another who are not sponsored. Some of them come with the help of voluntary trusts which are trying to assist in a pecuniary way student life to spread itself and take the opportunity it cannot get at home.
Missionary societies were quoted by the noble Lord, Lord Gladwyn. I know one such society in England, of our own Church, which in its budget for next year has put down, out of money contributed yearly from private sources, between £4,000 and £5,000 for bursaries for students coming to this country. Well, they will pay for fewer students, unless indeed we can persuade more people to give more money for this purpose. I know of one comparatively small impecunious religious community which has planned and paid for two men to come from Bantustan for higher education in this country, with a view, after a year or two, to their going back to teach in their own land. This kind of example could be multiplied in a great number of ways. Unless there is some aid, it will mean simply a cutting down of the opportunities for such students to come here.
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Of course, a great many of them, perhaps the larger bulk, have come through the contributions which have been made by their own homes—their families and communities—and there are many people working in university and technical college life who would testify to the sacrifices which have been involved and the fact that this decision will be quite shattering to some of them, especially those who have come to qualify for university or further education courses and have not yet done so. Many of them are the kind of people we want to help. They are people who will go back and serve their community or their church in ways in which they will never be able to do otherwise. And it may be that they will serve us in the process, for I think the old phrase is true educationally:
"Cast thy bread upon the waters and it will return after many days."
Is there no way in which this process of what would seem to be restriction or increasing hardship can be alleviated? Hopes have been expressed, though not very buoyant hopes, that this Government might be prepared in some way to reconsider their decision. I believe it was a great Parliamentary figure, Oliver Cromwell, speaking in another place, who besought the Members to believe that they might be mistaken. It may be that the wrong kind of official advice has been given in view of all the circumstances. But if it is not possible fully to reconsider the decision, are there not steps, some of which have been mentioned, which could alleviate this situation?
In the first place, could the Government look again at the dating of this proposal? It starts in its new form and with its fullest weight for those who come here at the end of this year. Most of them, I presume, have already made their plans. Others have come over in preparation, in good faith that they will be able to work their way through the course. Some postponement of the date would itself be some alleviation to them, and I should have thought that, without any great loss of face, something of this kind might be achieved.
Beyond this, it is quite clear that some kind of fund must be provided—a development fund, I would call it, since it is in line with our major development fund—to meet the needs of students, not merely now but in the future. It is sim-

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ply not enough for them to be assured, or for us to be assured, that the Minister or someone else will consider cases of need if they are brought to him. You cannot conduct educational planning on this basis. There should surely be a fund which has for its administration not merely officials from the Treasury or the Ministry but a body representative of those who are conducting education in this country and who know the pressures and possibilities of selection. They would, I hope, consider not merely those who are sponsored by Governments but also those who are sponsored by other bodies. It should be possible to find some way of selecting students on a basis of both need and ability which would remove from us the charge either that we are receiving those who are unable to benefit from education or that we are contributing too much to those who do not need that contribution. I hope that the Government will undertake to set up such a body, as well as such a fund, which would consider both the kind of scale on which overseas students can be admitted and the kind of way in which they can be aided, and, therefore, the kind of way in which this decision, if it must rest, can be alleviated.
7.20 p.m.
LORD ROBBINS: My Lords, I cannot resist the privilege which I enjoy because of my position on the list of speakers to add my voice to the voices of the noble Lord, Lord Annan, and the right reverend Prelate who has just spoken, in welcoming the noble Lord, Lord Fulton, to your Lordships' House. The noble Lord and I are one time colleagues, and I can assure your Lordships that in all sorts of ways he will bring to this House and to our debates a quite special authority on a wide variety of subjects.
My reasons for taking part in this debate are twofold. First, I disagree profoundly with the policy under discussion; and, second, in the course of earlier talk about it there have been references to the recommendations of the Committee of which I was Chairman, and I fear that some of these may be apt to mislead. Fortunately, having regard to the masterly speeches which have already been made, especially by the noble Lord, Lord Gladwyn, and the noble Lord, Lord Murray of Newhaven, I can be brief. I hope that this will not bring
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false comfort to the noble Earl the Leader of the House. May I make it clear that, unlike some critics of the Government, I am not at all opposed to the principle of raising fees, as such? Indeed, I am very much in favour of it. Before the war the fee income of the universities was in the neighbourhood of one-third of their total revenue. Now it is probably nearer 10 per cent. I do not think this increased dependence on direct grants is altogether a healthy state of affairs. I think it is desirable that it should be ended, and the right way to do this is to put up fees.
I think we should remember, too, that if fees remain stationary, as they have tended to do since the war, while prices and other costs rise, their real value in terms of general purchasing power is continually diminishing. Surely it is an unsatisfactory state of affairs that this should be happening, not as a positive act of policy but as a by-product, so to speak, of the process of inflation. It is unhelpful when we are thinking of the allocation of real resources. Nor, I venture to say, is it conducive to a suitable frame of mind on the part of those who benefit by it—the students who are all too apt to take this side of things for granted and not to realise what they are getting.
I submit that it is no valid objection to the policy of raising fees to say that since the greater number of fees charged to native students are in fact paid by local authorities, an increase in fees would put a greater burden on the rates. The noble Lord, Lord Annan, seemed to suffer from some apprehensions in this respect, but when this matter was discussed before the Committee on Higher Education, the Treasury representatives assured us that if the policy was thought desirable on general grounds there need be no insurmountable difficulty in adjusting the subsidies to the local authorities concerned. And since, other things being equal—I repeat, other things being equal—an increase of fee income to the institutions of higher education would mean a lesser need for direct grants, no increase of the burden on the general taxpayer need result.
There is no doubt, my Lords, that what I am urging is a serious and practical

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policy. It was not the members of the Committee on Higher Education, it was the representatives of Her Majesty's Treasury who wrote that
"from the point of view of public finance, it may be regarded as sounder to subsidise the students than to subsidise the institutions".
And it was the same high authorities who made it clear that if we favoured the policy we should not be deterred from recommending it by the thought of administrative difficulties.
Perhaps your Lordships will bear with me, since the noble Lord, Lord Annan, has spoken of this matter, if I read from the published evidence given by the Treasury to the Committee to which I have made allusion. Mr. Clarke (now Sir Richard Clarke), at that time a high official of the Treasury, said this:
"If policy required an increase in fees, and more of the cost was therefore to be borne as it were in the first instance by the local authority, the general grant could be adjusted and this expenditure incorporated in the general grant to give a fair distribution over local authorities. The general grant formula could if necessary be changed to give weight to this, and the general grant could be so rearranged that the burden on the ratepayer would be much the same."
He went on:
"I was putting forward the hypothesis that the general grant could be changed. But if that was not equitable, a special percentage grant could be arranged. I would emphasise that the crucial question here seems to be whether it is desirable on general policy grounds to raise fees. The question of distribution between central and local government and the arrangements for operating the mechanism would not present insuperable obstacles."
LORD ANNAN: My Lords, would the noble Lord agree that it would take several months of negotiation between local authorities, the Treasury and the Department for such a policy to emerge? It is, I think, a question of time, and that may have been the reason why it was impossible to do it.
LORD ROBBINS: My Lords, I completely agree with the noble Lord, but I deplore the fact that this thought should only just have occurred to the authorities concerned. They have had it before them for some three years.
I now come to the position of overseas students. I was chairman of the managing committee of one of the largest graduate schools in the Commonwealth for over 25 years, and some of my hap-
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piest personal relationships have been with graduates from overseas. I am proud of what we do for overseas students, and I am not at all unmindful of the indirect benefits which flow to us, both from their presence here and from the loyalties which many of them take back to their own countries. But I cannot see that it is sensible to assume as a moral principle that we should never increase the charges, however much the costs increase. Nor, frankly, do I see the point in providing all and sundry with a heavily subsidised training without any means test whatever. If we wish to give overseas aid to education—and I think it is a very good thing—let it be done overtly, in part at least, by a system of grants, not in a way for which we receive no credit. Yet I have heard it argued—not this evening in your Lordships' House, I hasten to say—that we should refrain from any increase in fees all round just because of the extra burden on this section. That seems to me to be absurd.
In short, my Lords, so far from being opposed to a general increase in fees, I think the arguments for some increase are very powerful. I see no reason to retract the recommendation of the Committee on Higher Education that fees should be raised so as to make fee income at least 20 per cent. of institutional revenue. I personally, indeed, should like to see the increase go much further. Why, then, am I opposed to the policy under discussion to-night? I am opposed to it because it is blatantly discriminatory. It is a sort of financial apartheid. It is a policy which charges the overseas student a different fee just because he is from overseas. It introduces into the world of higher education a distinction which is quite alien to the spirit in which higher education should take place.
THE EARL OF LONGFORD: My Lords, may I interrupt the noble Lord? Surely he would agree that at the present time there is an effective discrimination. The vast majority of the students in fact are financed by local authorities, and the others have to pay the fees. The discrimination is there: it is not being introduced by this Government.
LORD ROBBINS: With respect, my Lords, I will come to just that argument. For the moment let me say that I have not consulted the other members of the

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Committee on Higher Education, but I am fairly sure that had such a proposal been submitted while we were sitting, we should have rejected it without hesitation, as I am sure it would have been rejected by most of the Vice Chancellors and Principals if they had been given the chance to comment. Our proposal was for an increase in fees all round, and we went out of our way to recommend that to mitigate any hardship to the poorer overseas students there should be set up a fund to provide bursaries for such cases. But to increase fees to overseas students only is a policy which lay right outside our philosophy.
What possible defence can there be for what I may describe (without wishing to give offence) as such a ham-handed policy? How comes it that a Government which professes attachment to high educational ideals and international understanding has done something which must certainly make our name stink in the nostrils of educationists the world over? We do not know how it happened. From the way it happened it might almost seem as if a few millions of economies were needed from the Department of Education and Science and that this must have seemed an easy way of getting them; so that without overmuch reflection or consultation on the wider implications of the policy it was forthwith adopted. I have always contended that that Department had too much on its plate, and I am confirmed in this view by what has happened.
But the fundamental question—and here I come to the question which has been posed to me by the noble Earl, the Leader of the House—is: How can this policy be defended? What can be the official reply to the fundamental objections to discrimination in this field? I have racked my brains for an answer, and the only one I can find is one in which I have been anticipated to some extent by the noble Earl the Leader of the House; namely, that the subsidy which we give to most of our own students is in itself discriminatory; that a subsidy can be regarded in technical economic jargon as a negative price, so that one can say that there is already discrimination of a sort. So what is the fuss about? That seemed to me, as I
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was meditating upon it last night, quite a good brief for a Minister.
But, my Lords, it will not do. It is formalism gone quite crazy. There really is a substantial difference between making the foreigner pay a different price, just because he is a foreigner, and providing a subsidy to native students who are thought to be needy, especially if at the same time the advice be taken to provide also some subsidy to needy students from abroad. And I confess I find it difficult to understand—again I hope that I speak without offence—the (dare I say it?) spiritual myopia which cannot see the psychological asymmetry between the two policies. The one is something which is surely to be expected of an enlightened and humane Government; the other is in fact, and certainly will be taken as being, an exhibition of xenophobia, the very last thing I should have expected from this Minister and this Government.
For those reasons, my Lords, I sincerely hope that, even at this late hour, the policy will be reconsidered. If, instead, the policy were to be adopted of a non-discriminatory increase, with the appropriate internal modifications of central and local grants, and a fund for the provision of overseas bursaries for an appropriate number of deserving students, the Government would get all the advantages it hopes from the present scheme, in the shape of financial economies, and much more beside, and it would avoid the almost universal opprobrium which persistence with the scheme will involve.
7.35 p.m.
LORD TAYLOR: My Lords, the noble Lord, Lord Robbins, said he would be short—I shall try to be even shorter. I have always been very proud of the fact that the National Health Service is nondiscriminatory. I have regretted the element of discrimination which exists, as my noble friend the Leader of the House pointed out, in our fees for universities. I was always rather pleased that the Labour Party Committee on Higher Education over which I presided, and on which the present Minister of Education and Science sat, recommended the abolition of fees for all students, both home and overseas. We knew that we should not get everything we asked for in that report. We got most of it, because we asked for almost exactly the

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same things as the noble Lord, Lord Robbins, recommended a few months later. We got them all out of Conservative Governments.
One thing about which we were quite sure was that there should be no discrimination against overseas students and, furthermore, contrary to the views of my noble friend Lord Annan, that there should be a continuing percentage of overseas students maintained at the level at which we were then maintaining it. I remember very well fighting with the noble Earl, Lord Dundee, on this very issue, when we thought that the noble Lord, Lord Murray of Newhaven, in his capacity on the University Grants Committee, was going back on the promise which we had extracted from the Government that there would be no reduction in the percentage of overseas students in our universities which, of course, is a temptation which comes to all Governments at times of financial crisis.
THE EARL OF LONGFORD: My Lords, I may have misunderstood my noble friend, because he appeared to be saying that he and Lord Robbins came to much the same conclusion. If I understood my noble friend aright, he wanted to abolish all fees, and Lord Robbins wanted to raise them much higher. So there was a total contrast.
LORD TAYLOR: My Lords, there was a contrast on one issue. There was agreement on 54 others, which I think is satisfactory.
THE EARL OF LONGFORD: It is the one issue we are talking about.
LORD TAYLOR: That is a perfectly legitimate point of difference, if I may say so, because it applies to so very few people in practice. It applies only to those who do not have their fees paid for them by the State, and that is the defect of the present fee situation. When I was a member of the governing body of a medical school, the only people who in fact paid fees were the sons of doctors, because they were the only people who were rich enough among the incoming medical students to justify the full payment of the fee at the time. Therefore, it was the policy of the board of the medical school to try to keep down fees for reasons of professional solidarity until directed by the Government to raise them.
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The noble Lord, Lord Robbins, was quite right when he said that the policy about fees has not been thought out at all—it has just happened. I am very glad that my noble friend the Leader of the House has told us the reason for the decision. He said that the reason is financial. He said that, I think, in an intervention in the speech of the right reverend Prelate. That is an absolutely honest and straightforward statement, and I suspect it is a completely wrong statement, because the noble Lord, Lord Murray of Newhaven, was explaining the situation that will obtain. He is, I understand, Director of the 1851 Exhibition Commonwealth Fellowships, and they have £x thousand per annum to award. If the fees are increased two-and-a-half times, it simply means that £x thousand per annum will go round a smaller number, that is, two-and-a-half times fewer students from overseas.
I am Vice Chancellor elect of a Commonwealth university, and in a few months I shall have at my disposal a sum of money wisely invested by Lord Rothermere in this country for the benefit of the students from my university. There are twelve post-graduate students from the University of Newfoundland studying in this country at Oxford and Cambridge and London, and if the fees are raised from £70 to £250 it simply means that we shall have to cut the number of students from twelve to four or five. That is all it is. The Government will not get any more money coming into the universities.
This is a situation which, I am told by my colleagues in the Association of Commonwealth Universities, applies in virtually every Commonwealth university in the old Commonwealth countries. The Vice Chancellors and the Senate have available a sum of money for sending their best postgraduate students to this country. There is the same sort of strigency with every university everywhere, apart from the exceptional American universities. They cannot increase this sum. They will simply have to send fewer of their best students. What a stupid thing to do! If there is no financial gain in it there is no point in it at all; and I honestly think that there is no financial gain in the idea. I think it is just a mistake. As the noble Lord, Lord Robbins, indicated more politely, I think it is a botched idea, a

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muddled idea, which has not been thought through. I cannot see that there is any financial benefit to be obtained.
But what a tragedy it will be for the country! It might well be that among the postgraduate students excluded from Australia will be the next Lord Florey. They will get the credit of him in Australia, or he will go to America—and serve us right! Among the postgraduate students excluded from New Zealand may well be the next Lord Rutherford, or the next Professor Porritt, who, having been professor of surgery at St. Mary's Hospital and President of the Royal College of Surgeons, is now going back to New Zealand as Governor-General. He is just the sort of person who might not have come in the top five; he might have been, No. 7 or No. 8. I must not go into his academic equipment. He is a great man, far greater than I am. But what a folly! What a thing to do!
THE EARL OF LONGFORD: My Lords, I am sorry to keep interrupting, but many noble Lords will, I am sure, have gone by the time I come to try to explain the Government's argument. The noble Lord seriously tells us that he does not see that there can be any financial gain. On the face of it there must be. We are going to reduce the subsidy to many thousands of students. That must, on the face of it, represent a financial gain.
LORD TAYLOR: My Lords, I am sorry to disagree with my noble friend. I am glad that he has raised this point. I will explain it again. The situation is that the numbers of students will be correspondingly reduced, because most of this money is coming from overseas universities which are subsidising their students to come to Oxford and Cambridge and London. Even in developed countries these students are not rich: they earn their money to go to university in the first place. There will be an actual reducation in the number of students who are coming.
The noble Lord, Lord Gladwyn, was quite right in pointing out the large number of students who are coming on their own resources, marginally. It is a marginal operation for them. I remember so well meeting a Nigerian student in
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Moscow and saying, "What on earth are you doing here?" He said, "Well, I am here, not because I want to study engineering in Moscow, but because it so happens that the University of Moscow not only gives me free education but pays me a small salary on which I can just live." He, in fact, has just completed his engineering education in Moscow. He kept up with me. He was a fine chap. That was the reason he went there. He did not go to the Patrice Lumumba University; he had no money at home. He went to the ordinary University of Moscow. What a sensible policy on the part of the Russians! But what a silly thing for us not to continue to do as we have done!
I entirely agree with the noble Lord, Lord Robbins, that if we are going to do anything we ought to increase all fees, even though it is complicated. I must say that I remember so well that there was one occasion during the life of the last Government when I said to myself, "They are 'souped': they have had it." That was the point at which the entire academic profession made it absolutely clear to this House that this could not go on. It was from that moment that the last Government went downhill steadily. We must not have this happen now. I beg of my noble friend to take back to his colleagues the message from this House, that this is a most unwise and unhappy decision, and that it is not wrong to reverse your opinions when you make a mistake. Every doctor makes mistakes. Every politician does, too, sometimes. But you jolly well learn from them; and the sooner one reverses them the better.
7.47 p.m.
LORD SHERFIELD: My Lords, my reason for intervening in this debate is that I have the honour to be the chairman of the governing body of Imperial College, which has a high percentage, perhaps one of the highest percentages, of overseas students among the institutions of higher education in this country. They number nearly one-quarter of the student body, 850 out of some 3,100. Of these 450 are continuing and 400 are freshmen. About half are studying for higher degrees, 100 are supported by the British Government and agencies,200 by foreign Governments,

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300 by other bodies and 250 are self-supporting. It is anticipated—this, of course, must largely be a matter of conjecture—that as a result of the fee increases there are likely to be declines in the numbers of the last three categories of students after the increase of fees has gone into effect.
The noble Lord, Lord Fulton, in his admirable maiden speech, laid special stress on this last category, the students who have come here under their own steam. Any decline in these numbers would be a serious loss to the college which we should greatly regret. We should feel particularly the absence of these overseas students, especially post-graduates, coming from European countries and the United States, and indeed many other countries. These make a real contribution to the college and are a valuable asset. Many of them are now liable to go elsewhere. It has been alleged in this matter that students from developed countries and the U.S.A. can afford to pay the increased fees. But this seems to me to be pure assertion; I have seen no evidence for it. The principal disadvantage for us, therefore, is the loss of talented students, but there are other disadvantages of a lesser kind with which I will not worry your Lordships.
On the main issue, I need add little to what other noble Lords have said, but I find myself much in agreement with most of them, especially the point made by the noble Lord, Lord Gladwyn, about the long-range advantage of young overseas students acquiring a knowledge and understanding of British technology. I agree with those who consider that there is the strong case for putting up tuition fees for all students to British universities. It was recommended in the Report of the noble Lord, Lord Robbins. It has been repeatedly urged since, and nothing has been done. If fees were put up all round there would be no valid cause for complaint on the overseas student front, and presumably an all-round increase could be at a lesser sum. The reasons given against such an increase have been effectively dealt with by the noble Lord, Lord Robbins, and I need not pursue them further.
There is also a strong case for devising a system of loans to students. We were told in this House at the end of 1965 that this would be studied, but I have
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myself seen no sign of any result. All we have is a measure, clumsily introduced, which overtly discriminates against the foreign student. It seems to me to be bad policy and worse psychology. We are told that the reason is financial. I am not quite sure what the financial savings are. The noble Lord, Lord Beswick, informed the House on January 19 that they would be £2½ million in a full year. To-day we have heard a figure of £5 million.
THE EARL OF LONGFORD: My Lords, may I intervene to clarify the matter? My noble friend was not referring to the total of all students. I think I am right in saying that he was dealing with university students only, but certainly not with all students.
LORD SHERFIELD: Thank you. It was not at all clear. The noble Lord, Lord Taylor, said that there would be no saving at all. I assume that the noble Earl who is to reply will ultimately be able to demolish his arguments, and, if he can, as a former Treasury official I must admit that even£2½ million, and certainly £5 million, is no trifling sum. But I suggest that the bad effect of this measure is out of all proportion to the financial savings involved and that in looking for an economy the Government have picked a bad horse. The Secretary of State has, I believe, been reported as saying that he is sticking to his decision, come what may. Here I add my entreaties to those of many other noble Lords. Is it really too late to hold up this measure, for example until fees can be increased all round? I believe it would be quite reassuring to many—and here I echo sentiments expressed by the noble Lord, Lord Gladwyn—if every once in a while the Government would listen to representations and modify a decision.
7.53 p.m.
LORD RITCHIE-CALDER: My Lords, I have to declare an interest because I am a Professor of International Relations in the University of Edinburgh—I repeat of "international relations"—a university which, for 400 years, has never closed its doors by financial discrimination against any student. Yesterday in the University of Edinburgh was Meal Monday, and in the tradition of the University that was the day when the poorest student, the ploughman's son, went back to his

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croft to get the oatmeal for his next term's porridge. That was the spirit, which we have maintained. We have never discriminated, and certainly never against foreign students. The peripatetic student since 1583 and onwards did a sort of gypsy trek of Padua, Bologna, the Sorbonne, Leiden, Edinburgh. There haw, been wandering students for 400 years against whom we have never discriminated.
In our university to-day, 900 out of 8,000 students are from overseas. I assure the Leader of the House that he will find that very few universities have been in a position to estimate what in fact an overseas student is, for it is hard to define. We have been unable to determine what proportion of the whole the overseas students represent, certainly in regard to the unsponsored students. But of those 900 students, 600 will have to meet the increased fees.
This decision is a great embarrassment to everybody in the universities at the moment, and great indignation has been engendered. Between now and the beginning of the next term a great many students, even if they are not directly suffering this hardship, will have to withdraw or will not be reinforced in the universities from home. The suggestion is that somehow we are going to encourage them to go to universities in their own countries. I have spent a great deal of my life travelling around and I have seen the development of universities in the developing countries. I know the struggle they are having, not only to create universities but to staff them.
I should like to ask the Leader of the House how one creates the training and the education in those universities to accept and reinforce the student undergraduates in their own universities if one is not training and teaching the people who are going to train and teach them. The only places at which they can be trained and taught are in the centres of higher learning in this country or elsewhere. I assure you that if it is not this country it will be elsewhere. There again, I suggest we are making a serious mistake. Let us make no mistake about it, in the present situation we are discouraging the students from coming here and we are losing them. Whatever hardship machinery one creates, we are at this
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moment losing our present students, who are now dithering about whether to go home. We are losing our future students because at the moment there is no way in which they can judge what will happen beyond this term.
I ask your Lordships to consider the people who are training for G.C.E. and who expect to be accepted in our universities—people for whom no institution at home can provide. And I wonder whether anybody has considered the position of the unsponsored student. I am not referring to the Government-sponsored student who will possibly get a£50 rebate via the bookkeeping system between the Ministry of Education and the Ministry of Overseas Development; I am referring to people who have no cover at all, but who are financed by their tribes, like the Ibo villagers who come from Nigeria to our universities, or those who are sent by their churches—in this way Julius Nyerere came to us in Edinburgh in this way Bill Moyers (President Johnson's late special assistant), came to Edinburgh from Texas. In these situations there is no way in which the students can be reinforced from home, nor any way in which they can anticipate continuing here. The hardship is not merely a question of what is going to happen. We are wrecking the confidence of students who are now in this term moving into their examination period. We are disturbing the whole equilibrium of the university.
I should like to follow my noble friend Lord Taylor, and assure the Front Bench that if ever there was a situation which has produced complete and absolute solidarity in the whole academic world of the universities, it is this. There has been complete unanimity on this matter between the Courts—and I have a member of our Court here in Lord Balerno£senators, the professors and the entire student representative body. This is one case in which the students are absolutely and completely identified with their colleagues in other spheres. We have, in Edinburgh, as I say, a particular interest in this question because we have over the years encouraged overseas students, particularly those from the Colonies, and from a quick breakdown of the figures I see that we have had students from every country in the world.

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In these circumstances, what this decision amounts to, and must amount to, can be nothing but absolute discrimination. At one protest meeting in Edinburgh a Nigerian student got up and provided a salutary example. He said, referring to a number of his fellow students from overseas: "He, and others, has to-night in his pocket a blank cheque for millions of pounds, because he and those other students are going back to be a Minister, a director of irrigation, a man who is going to be ordering, a man who is going to teach people to do the ordering." This I believe to be the situation. It is so extremely shortsighted. With deference, I ask the Leader of the House to do his arithmetic, because I am afraid that none of us in the universities is convinced that the Minister of Education has done his arithmetic. We do not believe that there is going to be recoupal of this amount—and I agree with my noble friend Lord Taylor—because the students are not going to come, and if they are not coming they are not paying.
THE EARL OF LONGFORD: My Lords, may I ask one question? Does the noble Lord really mean that we lose money every time a student does not come? We may lose spiritual values, but does the noble Lord say that we lose money?
LORD RITCHIE-CALDER: My Lords, if a student does not come you are not recovering. The University of Edinburgh, for example, are not recovering in the increased charges the comparative increase which you are not charging to your own students.
THE EARL OF LONGFORD: My Lords, since the noble Lord has accused the Minister of being ignorant of elementary mathematics, may I very humbly suggest that the noble Lord is ignorant of elementary logic?
LORD RITCHIE-CALDER: I am sorry, my Lords. There must be some weakness somewhere in our accountancy.
THE EARL OF LONGFORD: There is.
LORD RITCHIE-CALDER: if we are going to recover £2,500,000 or £5 million or whatever it may be from the incoming students and the students do not come, how will you recover anything? Would the noble Earl tell me?
THE EARL OF LONGFORD: My Lords, to put it very simply, you do not have to recover it if you do not spend it first.
LORD RITCHIE-CALDER: My Lords, I come from a country where we say, "When the kale pot is on the hob, what is an extra plate?" We are spending the money on the universities and the places, but I assure your Lordships that the places which would have been occupied by overseas students will not be occupied in the coming terms, because we shall not even be replacing them by our own students.
THE EARL OF LONGFORD: My Lords, the noble Lord is incorrigible, but I hope he will still be here when I reply.
LORD RITCHIE-CALDER: I will.
8.2 p.m.
THE EARL OF PERTH: My Lords, I am not going to intervene on that particular argument, except to say that whether or not there is a saving in money there is certainly a loss of foreign exchange. I understand that the Government are very anxious about our present foreign exchange position, so from that angle the argument is unanswerable, and the proposal is unwise. Having said that, as a taxpayer I think all your Lordships would rejoice if the Government could find ways of saving £5 million in a full year and £2 million this year.
Before I would accept this relief to the taxpayers, I should like to ask two questions. First, is the proposal in our long-term interest and, secondly, is it fair and just? All noble Lords who have spoken to-night have brought out very clearly that it is certainly not in our long-term interest. A great number of overseas students go back home and do great things in the political or commercial worlds, which later accrue to our advantage. Nowadays this is of particular importance for us, when our great Colonial Civil Service is no longer operating in those territories. The people who have been students here are just those who will keep our interests going, but in some way or other we intend to damage that relationship.
My other question was whether it is fair and just. I will not talk on the question of discrimination; many of your Lordships have hammered that home hard

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enough. I am worried, as so many other noble Lords have been worried, about those who are working here already, and about the hardship that will come to them, particularly the unsponsored private students, who represent about half the number. Your Lordships may say, "Well, they are going to be hurt only to the tune of £50 a year". But £50 a year is a 70 per cent. increase in the charges to them, and that is very serious. I know that in some degree the Government themselves have recognised this fact, in that they have said that they want to help those who are sponsored by this Government, or those who are sponsored by Governments overseas. But why discriminate? Why not help the unsponsored ones at the same time?
There is one point of detail about which I am very worried, and that is the question of the safeguards for students who have already embarked on courses. Will those safeguards apply to the students who at this moment are doing "A" level courses, and who have been told that if they succeed in passing they will in due course have a university career, because if they do not I should like to ask what will happen to them. They will 20 through the rest of the course, and then subsequently be asked to pay £250 a year at the university, which they cannot do, so that in a sense they are here entirely under false pretences. I only hope that this detailed point will be taken into account.
I very much hope that the Government will withdraw altogether the circular of December 21. What a Christmas present it must have been for many of the students to hear about! If the Government find that they cannot withdraw the circular, then we must go back to the suggestion in the Robbins Report of a fund to help those who are working here at the present time. I have seen a memorandum put to the Minister by a group of bodies who are very interested in overseas students, headed by the Africa Educational Trust, in which they suggest that the figure for that fund should be £1 million. I hope that the Government will consider that suggestion, and if they will not support it, I would appeal to the students and say to them, "Do not strike, but draw up your own fund. Try to raise £2 a head among you." That would pro-
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vide £500,000, and I am quite sure that with all their experience of schemes like the Oxfam Fund they would be able to raise a similar amount from others of their friends. I am sure there is not one of your Lordships who has spoken to-night, who would not willingly subscribe if appealed to. That fund would be a testimony to the bad faith of a Government, to the unfairness of a Government's action. It would be a testimony from all of the students, and it would not be forgotten in future days at elections or otherwise.
I do not like threats, and I would appeal to the Government to yield altogether. But if they cannot do that, I would ask them to postpone action for another year so that they may have a chance of working things out on a more proper and a fairer basis, taking particularly into account the problems of the students who are here at the present time. That would cost them only £2 million— and not even that if they would agree to set up a fund to take care of those who are here at the present time. So one is asking for something which is very small but of tremendous importance to the students who are here, to the whose of the academic world, and to all of those countries overseas who look to this country for help in educational matters.
8.8 p.m.
LORD MITCHISON: My Lords, if anything could persuade me that this particular measure was right, it would be the general condemnation which it has received from every noble Lord who has spoken. I respect, I admire and I much like my noble Leader, and I like to see an Irishman not just facing the world as Athanasius did, but drawing out his shillelagh, and obviously drawing it out to face the House of Lords as it is at present. Let us take another metaphor. My noble Leader had a shillelagh in hand to cope with a whole hornets' nest of vanishing Vice Chancellors. There is not one left, I think.
LORD TAYLOR: Yes, there is: just one.
LORD MITCHISON: The noble Lord is the only one.
THE EARL OF LONGFORD: A Vice Chancellor-elect.
LORD MITCHISON: I do not know what a hornet-elect can be, but a hornet.

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This is a serious matter, and I am not going to talk about the detail of it in any way. It amounts at the moment to what a plain man, and particularly a plain overseas student, will certainly regard as discrimination. It may be that, to balance it, something or other is going to be done later which will affect other students, but for the moment there it is.
There is another trouble about it. This scheme will not prevent an influx of students from some prosperous part of America or from one of the old Dominions. It may change the character of the influx, but there will be enough people from those places able to afford to come and anxious to afford to come. The people it is going to hit are the poor people from poor countries, especially from poor countries. In other cases the country itself may be able to help, but some of these countries are miserably and wretchedly poor. I stood up here some time ago to say to your Lordships that I thought we had never enfranchised a poorer country than Botswana. We left it, in a five-year drought, without a water supply, after decades of occupation. I am not on anything but its poverty to-day. When you are dealing with that kind of country, you just will not get students from it. You will, of course, get those who can be supported within the very limited resources of the country itself, or those who manage to get support in some other way; but there will be those shut out, and they will be the very poorest.
My Lords, I am Socialist enough to say that quite often the very poorest are the very wisest. They learn out of suffering. From the ranks of the humbler people in this country we have had some very distinguished men indeed. The Ernie Bevins, it may be, or the others from overseas countries (the many others; the Keir Hardies, in fact) will be the people who will be shut out from coming here. What is going to happen? There will be fewer of them from the very poor countries, but they will naturally seek to go elsewhere. One noble Lord mentioned going to Russia. I always keep a few Communists hidden under the desk here just to bring them out and show them to your Lordships—very frightening people! But taking the matter seriously, as one must, I ask; Is it altogether wise to drive so many people
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to other countries purely on the grounds that they can afford, somehow or another, to go there but cannot afford to come here? I believe in this country, and so, with the usual and proper reservations of any Irishman, does, I am sure, my noble Leader. We have something to offer—a very great deal to offer—in our educational system. I think it badly needs looking at from time to time, and it has had it lately, but I should be sorry to see any general reduction in the education expenses which we ask the taxpayer to carry. I think they are, to use an old-fashioned phrase, the best investment that one can make.
That being the position, what would one ask the Government to do? It is possible to think up ingenious ways of making the same sort of financial gain in another way without, for instance, introducing the element of discrimination. It is too late for this. This particular measure has been introduced. It has had great publicity, not only in this country but in other countries. I humbly suggest to my noble friend that at this moment, public opinion being what it is, the sensible thing to do—I am not going to say "the brave thing to do": I do not believe in this nonsense about political bravery—and the right thing to do, is simply to withdraw this particular measure. What follows after it is another matter. It is in the form of advice to the universities. Let it be just withdrawn. It is sometimes wise and sometimes right to admit a mistake. It is not an enormous mistake. It is a very serious one; but, if the reasons behind it are financial, the amounts involved are comparatively small. I earnestly hope, therefore, that it is going to be withdrawn.
I make my last appeal—because it is an appeal—to the Government from a slightly different angle. I have been a loyal, perhaps an over-loyal, member of the Labour Party for very many years. I am getting on in age. So are many other noble Lords here. I simply say this: I cannot believe that we are fulfilling our duty to the world at large if we let this comparatively small thing go through in its present form. I cannot believe that. It seems to me that we have a responsibility towards the emergent countries, a responsibility towards other

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countries which one cannot describe, perhaps, either as emergent or as emerged, and a general responsibility to the world. I do not want to see the channels of learning and teaching clogged by financial difficulties. I think we must open them and keep them open at all costs.
What we are considering to-day is, in another form, the same sort of problem that arises out of what is sometimes called the brain-drain. I entirely agreed with my noble friend Lord Taylor when, in a discussion on the brain-drain the other day, he said he did not mind it a bit; he wanted learning and teaching to flow freely over the world. That, I believe, is the real and fundamental answer to the question we are asking ourselves to-day, and it is for that reason that I would reject alternatives which say, "We will raise the money out of education in some other form".
The right thing to do is to drop this measure and leave it at that; and if, afterwards, the Government find they have got to do something else, then they should do it. We are told that we cannot afford it. One is always told this. We are told that it is a question of money, and that money is not real. It is. It is a medium of exchange; and what we are dealing with to-day is a certain amount of goods and services which we ought to make available to other countries in the world. Do not let us get mesmerised about this. We are asked, in fact, to lower our own standards by an infinitesimal amount in order to help to bring up the standards of other parts of the world. I simply say: what is wrong with that? Look around in this city; look at some of the poor countries in the world. Surely it is our duty not to do anything that will make that gap, already too wide, already widening, even wider? I hope that the Government will reconsider this measure, and will drop it.
8.19 p.m.
LORD FERRIER: My Lords, I rise to support the noble Lord, Lord Gladwyn, in his appeal to the Government in this matter, and I do so as Chairman of the Edinburgh Christian Council for Overseas Students. I have been able to put aside two speeches this evening, one before the last three speeches and another one now, because so many of the points
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that have been made are points which at this stage I wish only to reinforce.
First of all, I agree very strongly with the noble Lord, Lord Murray of Newhaven—the vanishing Vice Chancellor—in what he said. I am not so disposed to set such enormous store by the fear of discrimination being felt by these overseas students, though what the noble Lord, Lord Ritchie-Calder, said was certainly very moving. But I believe that great importance must be laid, as the noble Lord, Lord Murray of Newhaven, said, on the idealism of the student and on the frightful blow this has meant to him, not only in terms of his financial anxieties—and many of the poor students, such as those to whom the noble Lord, Lord Mitchison, referred, have suffered a grievous blow in this matter—but also to his amour propre, especially the student who comes from one of the emerging nations.
The right reverend Prelate the Bishop of Chichester touched on this most poignantly. He begged the Government to introduce at least some postponement of this measure. I should like to go as far as the noble Lord, Lord Mitchison, has gone and to say, "Withdraw it altogether"—although that may not be so popular advice to the Government, coming from this side of the House, as it may have been, if popular at all, coming from behind them. But surely, as the noble Earl, Lord Perth, has said, the students already here should be allowed to finish their studies to the end. And when I say "to the end" I turn to the famous Statement of December 21 and draw attention to one particular phrase at the end of section 4:
"…which extended to the next academic year will be limited to £50 a year till the end of their present course."
What is meant by "course"? Here I want to reinforce what the noble Earl, Lord Perth said: that if this means that a student studying for his "Highers" is going to be deemed to have reached the end of his course when he comes to take up a place available to him in the university, it is not £50 but £250 that goes on. If that is what is meant, surely at least the students already here, whether they be in universities or preparing for the university, should be allowed to finish their course on its present terms, on the terms on which they came, if only because any other solution on the basis of

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subsidising the poor people who are paying their own fees, or are having their fees paid for them by their families, means the introduction of a small measure of means test which is, of course, anathema to the Socialists.
My Lords, I make no reference to the question of postgraduate studies to which other noble Lords have referred. I have some figures here—with most of which I will not weary your Lordships, because the noble Lord, Lord Ritchie-Calder has given them—for the University of Edinburgh. The noble Lord said that there are some 900 students, of whom some 600 are affected in this way, being privately financed students, who are going to suffer and who are already suffering this bitter blow to their amour propre and to their future, both financial and otherwise. Noble Lords will realise that it is not a question of sacrificing another year or two of studies; it is a question of sacrificing the whole of youth, the whole period of development for which great sacrifice has been made and which might well have been spent in another country.
I have a letter from our Secretary in Edinburgh. He gave me some figures from the Napier Technical College and he said that there are students affected in that way there
"who intend completing at Advanced Higher Levels at either the end of this or of next academic year. The number is 46. There are a further 9 students at Skerry's College."
He went on to say:
"The Vice-Principal of Skerry's tells me that one of his students has calculated that it would have been cheaper for him to go to the United States for his student career than to have begun here, under these new circumstances."
I give these details only to reinforce what was said by so many noble Lords.
I would urge the Government to study what was said last week in the debate on world population in terms of the spreading of knowledge and understanding in more ways than one. I said then:
"Today's students will be the leaders of the 'eighties, and the best possible ambassadors of a doctrine of modern life and of planned parenthood."—[OFFICIAL REPORT. 9/2/67, col. 1511.]
I see that the noble Lord, Lord Murray of Newhaven, has resumed his seat. I must apologise for hinting that he might have set off for another place. I am glad
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to see him, because I agree with what he said.
The noble Lord, Lord Taylor, made the interesting suggestion that what is happening now is evidence that the Government are on their way out. Much as I hope that this is the case, I must say that, knowing what Socialists imagine Tories to be—and I am not sure that the noble Lord, Lord Mitchison, is not rather of this opinion—they must think this measure might well have come from a Tory Government, which, of course, it never would.
LORD MITCHISON: The prevalent sin of the Tories is doing nothing; writing no letters; doing nothing!
LORD FERRIER: As I said when I began, I agree with the noble Lord, Lord Mitchison, that the right thing to do is to withdraw the whole of this. But if that is not possible (though I hope it may be), I urge that the proposals should not apply, in any circumstances, to any students being financed by their own families or their own means who have already started their courses in this country, no matter what stage in those courses they may have reached.
8.27 p.m.
LORD REAY: My Lords, if I may, I should like to have a closer look at the financial considerations which the Government claim have imposed the necessity of this decision upon them. The Government claim, in the first place, that this measure will effect a full-year net saving of £5 million. There is no question here of foreign exchange; this is purely a matter of additional revenue which will be raised on the internal current account. This is based on an assumption that the number of students will not decline from the present level; and I would support those speakers who have urged the extreme unlikelihood of this.
There is a stronger point to raise in argument against the assumption of the Government. This is that it ignores the fact that foreign students, except in cases where they are in receipt of British Government grants, are very much cheaper to educate than British students. The reason is that foreign students, except in as mall number of cases where they are sponsored by the British Government, receive no grants at the universities.

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British students, in virtually all cases, receive local authority grants. The figure must be about 90 per cent. in the case of the universities. In other words, for each foreign student deterred from coming to this country as a result of this decision—and the Government are assuming (at least, they look as though they are assuming) that some will be deterred in so far as the assumption of the saving is based on a belief that there will be no further net increase in the income of foreign students—if the place of that foreign student be taken by a British student, the result will be an additional charge on public funds of an amount equal to the grants which the students will receive. It needs only a deterrence of some 5,000 foreign students who might otherwise have come here, and their replacement by British students, to offset more or less (assuming a grant of some £500 per head) half of the supposed saving of £5 million. What it clearly cannot be in the long term is a saving, unless it results in the replacement of those who do not come with a class that pays a higher fee.
I turn to the question of foreign exchange, where it seems to me the thinking has been even odder. Each foreign student actually brings foreign exchange here. In each case he figures as on the credit side of our balance-of-payments sheet. It follows, therefore, that this is a form of aid which I think must be unique, in that it is a form which actually earns us foreign exchange. In other words, the effect of this decision of the Government will result in the debit of our balance-of-payments account. It is not a cut in foreign expenditure at all; it is precisely the reverse. One might ask, is it cheaper to send out to foreign countries teachers and technicians with their families, who must be supported and who are direct charge on the balance of payments account—as the Ministry of Overseas Development are currently doing—or to bring the peoples from these foreign countries here to be trained, who will return as teachers and experts themselves at no cost to us in terms of foreign exchange?
Finally, there is, the argument which has already been referred to, of the longer-term commercial use that the education of foreign students in this country un-
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doubtedly is to us. Quite apart from the fact that a great number of students will leave this country with a greater knowledge of our institutions, many will have developed more precise affinities with the institutions of this country. They will have a knowledge of our industries, our technical products and our technical language, and a familiarity with the range of our more important skills. They will return home to become diplomats, or to be in charge of Government contracts; or they may be directors in private firms which place contracts abroad. Or they may become Ministers in foreign Governments.
I submit that it is not for sentimental reasons alone that the French have placed such emphasis on disseminating their culture abroad, and it is in this narrow field of financial considerations, and simple commercial effectiveness, that I think we are far behind the United States, Germany, France or Russia. Yet undoubtedly the consequence of this measure will be that we shall fall yet further behind. I think, therefore, that, from whatever angle we look at it, the financial justification for this measure is nonsense. I leave it to your Lordships to say whether you believe that the Government do not see this, or whether you tend to question the integrity of the claim that they put forward to justify this measure.
Some emphasis has been put on the increase that has occurred in recent years in the foreign student population. This increase, of course, has been very much smaller than that of British students, with the result that the proportion of foreign students to British students has dropped. I would accept the point made by the noble Lord, Lord Annan, that this is not something in itself to which to object. Secondly, however, the rate of increase of foreign students into this country has been declining. If we take the average of the last two years, for university students and technical college students it will be found that, compared with the average of the previous two years, the reduction is roughly half.
It has been claimed that the rich from abroad are being subsidised. Apart from the fact, to which my noble friend Lord Gladwyn referred, that foreign students who come from rich countries are not

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necessarily rich themselves (if they were, I wonder why we should bother to provide our own local authority grants), three times as many come from countries which have been classified by the O.E.C.D. as developing countries as come from countries classified as developed. Here we should look at some of the figures. If you look at the figures of those from the Commonwealth who are studying in British universities, you find that in 1965–66 there were some 9,000. Of these, 4,400 came from five countries—India, Pakistan, Nigeria, Kenya and Ghana. From Australia and Canada there were only 1,100.
If one takes the technical colleges the picture is even more revealing. From the Commonwealth there came to this country 11,000. Of these, 5,900 came from those same five developing countries. From Australia and Canada there came only 110. It is on the poor countries, obviously, that this extra cost will impose the harshest burden, for it is on people from those countries that the margins for being able to afford an extra amount of money are bound to be smaller. This applies principally in countries like Nigeria, where it is traditional for a family to save together in order to send the brightest boy to be educated in this country. For those people this extra burden may well be insupportable; and, as I think the noble Lord, Lord Murray of Newhaven, said, it is just this class of student, the foreign, unsponsored student, that our universities would be most loth to lose. But they will certainly be the hardest hit.
My Lords, there is another reason why they may be discouraged which is worth mentioning, in so far as it applies to foreign Government-sponsored students as much as to the privately financed students. It is the question of foreign exchange. All students coming to this country from abroad will have to get permission from their Governments to spend, or to receive, the additional amount of foreign exchange required to be spent on education. In all cases the Governments will have to provide it, in the case of sponsored students, or give permission for it, in the case of un-sponsored students. Many of these countries have far more difficult and exacting foreign exchange problems than we have, and I think it would be extremely un-
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likely, if there were a substantial number of cases, that this foreign exchange would be made available by the Governments of the countries concerned. One thing is clear: that a sure way to increase the proportion of rich students from abroad studying in this country is to adopt this measure. It has been suggested that the universities might remit this charge. I wonder. I should like to ask the Government, how many universities they consider will do this.
I think that possibly the worse claim that has been made, or hinted at, is that this country is particularly generous in its treatment of foreign students. In absolute terms this is factually untrue. At the present moment £70 is charged per annum for a foreign student in this country. Germany charges a maximum of £60 per annum for each foreign student. The Netherlands, and the State Universities of Japan charge a maximum of £25; Italy charges a maximum of £17; France charges a maximum of £10. The U.S.S.R., the U.A.R., Denmark and Norway charge nothing at all. It is the reverse of the truth, also, that we educate a great many more of the students from other countries than they educate of ours. The French Embassy say that the figure for British students studying in France (they say that if it is incorrect, it is on the low side) is 2,800. The figure of French students studying here at universities and technical colleges is only 300.
It might be thought that, at a time when we are stretching for the Common Market, and when Europe, and France in particular, is doubtful whether our hearts are actually in the project of joining Europe, we could do better than positively to discourage this interchange. It is not surprising that the French and the Italian Press, as I know to be the case, have commented on this decision and have speculated on the possibility of their countries' retaliating. This decision will make education in this country a relatively less attractive financial proposition to foreign students. Other things being equal, they will tend to choose education which is cheaper in the other countries that I have mentioned. Already in a number of these countries the proportionate increase in foreign students has been much larger than in this country. In Italy, for example over

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the three years 1961 to 1964 there has been a 64 per cent. increase.
It is overtly discriminatory, as destructive as much for its evident intent of being discriminatory as for its effect in being so. As the noble Lord, Lord Murray of Newhaven, said, unquestionably it is an "implication that we are less welcome than we were." Do we want to be virtually alone in the world, developed and developing, as a country that discriminates between foreign students and our own students? I maintain that this is a decision against all international academic principles of equality. It is a decision that has run into almost "universal opprobrium", to use the phrase of the noble Lord, Lord Robbins, and not insignificantly into a great deal of protest from British students. I consider that this is a measure which is outrageous on the part of a Government that claims to be the Government of a country that is liberal and civilised, that claims to have an interest in improving the poor and unstable countries of the world, that claims to see our future as European and that claims to have an interest in other countries' interest in us.
8.42 p.m.
LORD BALERNO: My Lords, we must all be grateful to the noble Lord, Lord Gladwyn, for initiating this debate and for making such a close analysis of the problem. There is one point he put forward which was further brought out by the noble Lords, Lord Murray of Newhaven, and Lord Robbins, and which I want to emphasise, because I think it is the root cause of the whole present trouble. The cost of living and inflation have been operating in recent years, but the increase in university fees has been relatively insubstantial. This goes back over a series of Governments and the academics themselves cannot be free from blame for not appreciating it. We are as much to blame as Governments and civil servants are. Excuses can be made, but the time at which action should have been taken was at the time of the report of Sir Colin Anderson on grants to students. At that time university fees should have been raised to a realistic level.
The universities then would have reduced their dependence somewhat upon
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direct university grants. The figure given by the noble Lord, Lord Robbins, is significant and I venture to repeat it. In 1939, 30 per cent. of university income came from fees. This has been reduced to 7 per cent. This is a significant comparison indeed. I would direct your Lordships' attention to a Paper which has recently been written by the Master of Pembroke, Oxford, upon the universities and the State. I am not going to quote at length, but in one part where he pleads for the consideration of loans to students, either in addition to or instead of grants, Mr. MacCallum says:
"The rewards of a university education are now so great, other sources of power and esteem being so much less, it is social justice that they pay for it, if not now, then by some long-term repayment, such as some other countries impose."
I think this is the time for the consideration of this proposition, and I am slightly surprised that the point was not made by either the noble Lord, Lord Gladwyn, or the noble Lord, Lord Reay.
The country which has perhaps done more than any other in loans for university students is the United States of America. A great part of the assistance given to students is in the form of loans. I have here the United States Budget which has just been sent to Congress and which shows that the total Federal aid for college and graduate students, both in direct grant and in servicing of loans, is being trebled in three years, going up from 418 million dollars to 1,127 million dollars in 1968. Individual grants are going up from the equivalent of £150 a year per student to something like £180. It is significant that at this time the United States should be extending aid given to students. At the same time as the Federal Government is doing this, so are certain of the State Governments.
I should like to support what my colleague—I was going to say "my noble friend", and though sitting on the opposite side I think that I could say that—Lord Ritchie-Calder has said of the Edinburgh students, 40 per cent. of whom come from overseas, 600 being unsponsored—a point which was made also by my noble friend Lord Ferrier. To that batch, I should like to add an interesting batch of 100 to 150 overseas students who come, and have been coming for many years, from Norway to what is now

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the Heriot Watt University. This has been a long-standing academic connection. It is more than 1,000 years since the Kingdom of Scotland was at war with Norway and over those 1,000 years we have maintained these ties. This action is just going to insert a bit of unnecessary friction. Of these Norwegian students who come to study in Edinburgh, a large proportion do not return to Norway for their future life. They seek employment elsewhere, and a number of them are supplementing the technological work which has to be done in industry in this country. To a certain extent they are balancing the brain drain which is going out.
It seems to me a great pity that it is on this point of fees that the clash is coming between the State and the universities. A lot of people have said that as the universities became more and more dependent upon the State there would eventually be a clash between the State and the universities. It seems to me that this is not a point on which we should be clashing, and there ought not to be a major dispute here. I should like to say to the Government that they should be extremely careful on this.
The biggest university in the world, the University of California, has just been thrown into considerable confusion through the State imposing certain edicts, certain dicta, regarding fees: so much so that it was found necessary to remove the head of the University at exceedingly short notice. The repercussions of that will be going on for some time and will be much greater than appeared at the time that the State interfered. I think that the noble Lord, Lord Annan, hit the nail on the head when he described the action of the Government as hitting a very sensitive nerve.
8.51 p.m.
LORD BROCKWAY: My Lords, my name does not appear on the list of speakers circulated to-day, although I did give notice of my desire to take part in the debate. Perhaps the House will permit me to speak, as I had the good fortune three weeks ago to be the first of your Lordships who raised this issue here. I propose to make only one point, and to make one plea. There has been some dispute as to whether the increased charges for overseas students will lead
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to a limitation of their number. I think that undoubtedly it will, in the first instance; but whether it will in the long run is a matter of doubt. However, I would put this argument to the Leader of the House: whether it reduces the number of students or not, it will change the composition and character of the students who come to this country.
One recognises at once that there are overseas students whose parents can well afford to pay for their university education here. One finds, particularly at Oxford and Cambridge, sons of princely houses, of sheiks, of chiefs in Africa and of native businessmen; those sons from privileged houses will still be able to come to our universities. But the House will forgive me if I have much more in mind the kind of family of which the noble Lord, Lord Reay, spoke a few minutes ago. I am thinking at this moment of a family in Nigeria. Its members are living in a condition which is just above subsistence level, but the parents save and pool their resources to enable at least one of the children—obviously they would like more to do so—to come to a university in this country. I am distressed that a Government which calls itself Socialist should be introducing a measure under which those who will suffer most are the poorest. Those of us who know such families as I have described know that their passion for education is almost a religion. They desire nothing more in the world except the opportunity of education for their children. To be limiting the very small opportunities that they have now to give their children that chance is something which I am very sorry indeed to find a Government of my Party introducing.
I want to look at this problem from the other side of the picture. I have many friends who are students from Asian and African countries. I know of their struggle. I know how they have difficulty, particularly in London, of meeting the high rents which are charged for their often wretched lodgings. Again, I put it to the Leader of the House (and I hope he will listen to me on this point), that just as this measure will affect the homes of the people in Nigeria who are the poorest, so it will do most harm to the students in this country who are the poorest—they who have a struggle to

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meet, even at the present charges, the cost of living here. I appeal to the Socialist conscience of the Leader of the House to think of that consideration.
The plea that I make to the Leader of the House is this. He must have been deeply impressed by this debate to-day. I can imagine that there might have been a time when he would have said that he was not very deeply impressed by an overwhelming opinion expressed in this House. He cannot say that about the debate to-day. The extraordinary thing about this debate has been the absolute unanimity of expression of those from our universities, as it is the unanimous expression in the universities themselves. From all sides of this House Members have pleaded for the withdrawal of this measure, not in any partisan, sectarian, or Party spirit, but because in every part of the House we believe that it is something of which our country should be ashamed, and of which a Socialist Government particularly should be ashamed. My plea to the noble Earl is to take the message of this debate to his colleagues; to acknowledge the mistake that has been made—it is a big thing to acknowledge mistakes when they have been made, but it is not something of which one should be ashamed—and seek to solve this problem in a bigger and better way.
8.59 p.m.
THE EARL OF LONGFORD: My Lords, I am very glad that the noble Lord, Lord Brockway, intervened and struck a note which must certainly meet with a response in any humanitarian person, whether he be Socialist like myself, or whatever his political or, indeed, religious allegiance may be. I hope that before I close—and that will not be for a long, long time yet—I might, I say only "might", bring him a small scrap of consolation. I cannot say more. But I hope I would say just a little something that might ease some of his very understandable anxieties. But as I say, that will be a long time from now.
My Lords, I think we are all—I know we are all—deeply grateful to the noble Lord, Lord Gladwyn, for opening this debate. He strove hard to be dispassionate. When a noble Lord starts
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by saying that he intends to be dispassionate or objective, I usually fear the worst—I know that he is going to make a particularly nasty kind of Party speech. But that was not at all the case with the noble Lord. I felt that he had studied the Government point of view and looked at the facts, and I congratulate him on the total result—which does not mean I agree with him. I have a long statement, as the House will realise, setting out the Government's point of view, which I think is what would be expected, and showing the Government's case which has not yet been deployed fully in either House.
However, before coming to this statement, may I make just one or two general comments, if only for the benefit of noble Lords who fall by the wayside; in other words, for those who leave the House before I reach the end? To take up one attractive, but I think rather erroneous, point made by the noble Lord, Lord Ritchie-Calder, he announced that Edinburgh University had been open to all students for hundreds of years—I think he said 400 years. He probably has not studied the history—
LORD RITCHIE-CALDER: My Lords, I said "without financial discrimination".
THE EARL OF LONGFORD: Without financial discrimination—just religious discrimination? I do not honestly feel that Edinburgh comes off any better from the noble Lord's explanation, although I enjoyed his speech very greatly.
My Lords, there was this curious argument that the Treasury did not even know their own business; that, apart from being hard-hearted and unaware of the finer values, they did not even know whether they were liable to make or to lose money out of this decision. If the noble Lord cannot understand that they would save money, whether it is £5 million, or at any rate several million pounds, under this plan, I will not pursue the matter. I am afraid it is too late at night for me to set it out again. But I think it is obvious there would be some saving, whatever the exact figure.
I would say that the note struck most often, as it was struck in response to an intervention of mine by the noble Lord, Lord Aberdare, was this insistence that

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there must be no discrimination, and that the plan of the Government was discriminatory. He said himself (if I understood him aright), in speaking for the Opposition, that the Opposition were not averse to raising fees in principle. That has been said by various noble Lords, though not all. I think there might be said to be two schools of thought on that issue. I think there was a preponderance of those who dealt with the question in favour of raising fees, but they said it must be done in a non-discriminatory way. I will come to that in more detail later. But I would say what I ventured to place before the noble Lord, Lord Robbins, which point he anticipated when preparing his own remarks. I arrived at it without an undue amount of official assistance. It struck me that the point was there. I arrived at the point to some extent, at least, through the workings of my own mind—that is, that discrimination exists already. We have the reality of discrimination, and the question is whether we now add the appearance. That is really one of the main issues: Are we going to add the appearance of discrimination, so that anybody who has not gone into the question perhaps as closely as he should describes it as discriminatory, when he does not realise that it was discriminatory before? That was part of the argument addressed to us by the right reverend Prelate. He said that we were drawing back from a commitment. Then he slightly qualified that— I am speaking subject to his correction—and said that we appeared to be drawing back. I was wondering whether noble Lords were denouncing what we were doing, or what we seemed to be doing.
What we seem to be doing can become important. I do not want to turn it aside, but it is not the same thing as a discriminatory act. An act which is understood to be discriminatory is not the same as a new act of discrimination. Here I must say a word of protest. I do not say that I have been quiet all the afternoon and evening, but I must say a word of protest to my old chief and dear friend Lord Robbins. He used such violent language. I do not remember what he said last time about the Secretary of State, Mr. Crosland, but the last time we had a university debate I think he accused him of apartheid. I think the noble Lord denounced him very savagely that time, and now again he
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comes up with these very strong words like "spiritual apartheid."
LORD ROBBINS: My Lords, I said "financial apartheid". The adjective was "financial". I referred to "spiritual myopia".
THE EARL OF LONGFORD: My Lords, whenever I am talking about a spiritual issue someone introduces finance, and vice versa. But last time the noble Lord was very severe. I apologise for mishearing the word, but at any rate there was this reference to apartheid.
If we are really serious—and I am sure we are being serious—this will be widely misunderstood throughout Asia and Africa. By his sort of ecstasy of denunciation, though well understood and appreciated here and among his friends, the noble Lord does nothing to help in Asia and Africa. I would say, with great respect, that he has done a real disservice to the very cause he has at heart; and if it does go out all over the world that this is a policy of discrimination, quite a few of your Lordships will have contributed to that very end this evening. I hope that one or two noble Lords will wonder whether there might not be a grain of truth in what I am placing before them now.
Let us just see whether we are drawing in our skirts or drawing away from our commitments. Are we showing ourselves less ready to help our less fortunate brethren? Take the assistance given to the overseas students. This has gone up. It has gone up very rapidly in recent years. It has gone up during the last four years from £10 million to £18 million. If we go a little wider and take overseas aid, excluding the figures I have just given, excluding the subsidy to the education of overseas students, the figure has gone up from £170 million to £205 million, an increase of over 20 per cent. Within that figure—and I am speaking to the right reverend Prelate particularly but, of course, to the whole House—excluding all subsidy to overseas students, the figure for assistance given to education overseas has gone up from £10·3 million in 1961–62 to £17·6 million in 1965–66. That is an increase of over 70 per cent. So within the figure of overseas aid in the last four years—and this is not in any way a Party point because it is a process which has gone

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on throughout the period—the emphasis on education has been markedly increased. So when noble Lords speak as if we had suddenly turned our hearts and minds against educating our less well placed fellow men, they should look at the figures and they would recognise that their conclusion is quite false.
That is a general prelude. It would be absolutely wrong to assume that we are shutting the door to foreign students. I would say, clearly, so that it goes on record and possibly goes out along with other more violent remarks, that we welcome overseas students as warmly as ever, and in view of possible misunderstandings I hope they will realise that we welcome them still more warmly than ever. If it would do any good I would say that twice, and ring a bell, as our former Leader used to do when he had something he wanted to emphasise. So I hope there is no doubt about the welcome to students from overseas.
No one can say exactly what the effect on the numbers will be. I thought my noble friend Lord Brockway put it quite temperately, but the calculations, which at any rate I respect, suggest that there will not be any marked reduction, and we are not aiming to produce a marked reduction. That must be plain. If there were a slight reduction that would not be a part of the policy, as I understand it.
LORD ROBBINS: My Lords, may I ask the noble Earl a question? Supposing I were the proprietor of a theatre and I decided that all those noble Lords whose antecedents were on the opposite side of the Irish Sea were to pay an entrance fee twice or three times as high as they paid before, no difference being made to those noble Lords whose antecedents came from this side of the Irish Sea, and I coupled with that change of policy the assurance that I welcomed them just as much as before, would the noble Earl find that altogether convincing?
THE EARL OF LONGFORD: My Lords, if the noble Lord wants to know what happens to Irish Peers he will perhaps recall that they have been pointedly excluded from this House, in spite of repeated endeavours to be allowed into it. That is a matter of recent history. The noble Lord is implying that these overseas students will suffer in some way as com-
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pared with their brethren here. They will pay more, that is perfectly true, but whether we put up the fees of the students at home or do not put them up would make no difference at all, unless we were ready to place some special burden on the British taxpayer which we are not asking him to shoulder at the present time.
May I come to the noble Lord's own line of argument, because I deal with it in my remarks. I will not go into some of the background, because it was set out so clearly by the noble Lord, Lord Gladwyn. I will go along as fast as I can, but for the sake of the record, bearing in mind that some people may read this as a connected speech, I must remind the House that the fees for future higher education students from overseas should be taken as £250—that is, £180 more than the present university average of £70 but the impact of this proposal will be cushioned, as the noble Lord, Lord Gladwyn, reminded us (and he will forgive me, I am sure, if I put it on record again) in three ways: first, the increase for all students already embarked on a course should be limited to £50, at any rate for that course; secondly, students already on courses who are sponsored by the Governments of developing countries will be relieved, out of a special fund, of the £50 increase; thirdly, where the British Government sponsor a student, additional aid funds will be provided to meet all fee increases. This applies to future as well as present students. Those points were set out by the noble Lord, Lord Gladwyn.
The context in which this decision was reached is important, and I hope noble Lords will realise that we are talking now in the financial context. When one says that, one does not mean that one ignores all the humanitarian or social considerations, but one does explain why a trend is being modified. We were faced last autumn with the need to make economies in the financial year 1967 and it became necessary to examine the size and nature of the concealed subsidy to overseas students represented by the low fees which obtain both in universities and in further education institutions. The fees at present represent rather less than 10 per cent. of the cost of the higher education provided. All this is common ground, but if I seem to be misstating or blurring

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the facts there are experts all round to correct me.
I think no one would dispute my next statement, certainly not the noble Lord, Lord Robbins, who has examined it with unsurpassed or unequalled skill. The structure of higher education finance in this country is complex; I think we can agree about: that, and it certainly makes comparisons with other countries misleading. So far as the universities are concerned, their main income is derived direct from the Exchequer. Fees income averages at present about 8 per cent. of total university expenditure. So it is a very peculiar set up, whether one likes it or not. In the great majority of cases the full-time students have their fees paid from public funds, the main exception being those students from overseas who do not qualify for student grants in this country. In England and Wales the student grants come mainly from the local education authorities, and therefore are a charge on the rates, and from the research councils. In Scotland they come direct from the Exchequer.
In recent years suggestions have been made in influential circles for an increase in the proportion of universities' income to be derived from fees, say up to 20 per cent. The Robbins Committee made a recommendation of that kind, and the noble Lord has set out very clearly this afternoon how he would tackle these problems. He would like to see an all-round increase in fees coupled with the proposal that the impact of increased fees on necessitous foreign students should be reduced by a special fund to help with the higher fees they are called upon to pay. That was the Robbins Committee proposal, but it was a proposal, I venture to say to my noble friend Lord Taylor, sharply in contrast with the proposal of the Taylor Committee, in that respect at least.
In examining the financial implications of the concealed subsidy to overseas students, the Government had to take into a count this great, and, I think most of us would say, very welcome, expansion in higher education in recent years, fostered so brilliantly by the noble Lord, Lord Robbins, and this has been, broadly at least, reflected in the increasing numbers of overseas students. The increase in numbers in overseas students for this four-year period 1961–62 to 1965–66 has
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been about 25 per cent. The cost in money terms—in other words the concealed subsidy, after allowing for fees—of the higher education of these students rose from £10·1 million to £18 million in 1965–66, an increase of about 80 per cent. If this trend were to continue the Government estimate that the concealed subsidy would rise by a further £2 million in 1967–68 to £20 million, and at the beginning of the next decade it would rise to £25 million. These were the calculations available to the Government.
The Government have no desire to see a large reduction in this form of aid or in the undoubted value which the universities derive from the presence of overseas students. I think somebody, perhaps more than one speaker, pointed out that it is not just a benefit that we are conferring on these students; we benefit enormously from them. As one of the few speakers in this House, about the only one, who has belonged in his academic life to the "P.B.I."—in other words been a college tutor for many years and nothing better—standing among all these professors and Vice Chancellors, one who has belonged to the rank-and-file and done the donkey work. I quite agree. I hope one has always benefited, on that level at least—I do not know about the stratosphere—from the presence of these students.
This has confronted the Government with a decision, and they have taken that decision in a certain way and taken it with reluctance. No one can suppose that I come down to the House joyous and pleasantly excited. I could hardly remain in that condition all afternoon in the light of the discussion. I am sure that no one would suppose that this was a sort of proud day in my annals, when I was able to announce the increase in the fees of overseas students. But these decisions in Government, as we all know, are often unpleasant, and sometimes they have to be faced, as here. The effect of the Government proposals, including those for cushioning the impact on overseas students which I mentioned, the three forms of cushion, will be to hold down the concealed subsidy for the time being to its present level at £18 million. Indeed this figure of £250 was not arbitrarily chosen: it was fixed with this object in view. No one can tell exactly how it will work out in these financial calculations.

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That is the scheme behind it: that we would keep the subsidy at £18 million, bearing in mind that it had risen 80 per cent. in the last four years and that there is no intention of cutting this subsidy. That is not the plan at all.
LORD GLADWYN: My Lords, would the noble Earl permit one question? Did the Government, in their calculations, ever try to get out an estimate of the amount of saving that would result if Lord Robbins's plan had been adopted?
TILE EARL OF LONGFORD: Well, my Lords, I am coming to that kind of suggestion. If I am asked, "did they?", I honestly do not know. I should be surprised if they had not. But I do not know, because by the time this discussion reached Ministers outside the Department that was not an issue. I think it extremely likely that that kind of calculation was made, but I cannot give an assurance. I would point out that this increase of fees is not an unparalleled event. A review would in any case have taken place this year with the beginning of the new quinquennium. At the last review fees were increased by 25 per cent. So I hope that noble Lords will not talk as though this was the first time we have ever dared to lay our hands on these particular fees. Corresponding increases of about 75 per cent., raising the average fee to £125, would have been necessary in 1967 if the percentage of university expenditure covered by fees income in fact were to be restored to 10 per cent. I do not say that that would again have been a binding requirement, but obviously something quite substantial was bound to happen on this occasion.
I turn from the implications for Government and Government expenditure in the proposed increase to the impact on the students themselves. A number of important factors must be borne in mind. Most of them, I think, will be within the consciousness of the House by now, but I think I must set them out. First of all, we ask: Who are the students, and where do they come from? I did not follow everything the noble Lord, Lord Gladwyn, said as he went on his way, but he seemed to me to be analysing it quite accurately.
One major source of misunderstanding relates to the expression "overseas
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students", which gives rise to accusations of discrimination. But this expression in no way relates to racial, national, or foreign birth or origin. So that there is no racial discrimination; there is no question of colour coming in. I think one speaker implied that colour came in by some side route, but I must say that I could not follow that particular argument. This expression "overseas students" applies solely to those students who have come into higher education in this country after less than three years' residence here. Those university students with more than three years' residence before beginning their course are nearly all eligible for awards which extend to fees.
One of the main criticisms of the Government's decision, which has been reiterated by a number of noble Lords, is that we are deliberately discriminating against overseas students. Since that word has been used in more ways than one this afternoon, but always with a great deal of passion, I think it just worth clearing our minds of this before we part for the night. The fact is, as I ventured to lay before the noble Lord, Lord Robbins, that our existing system of financing higher education—with the fees of home-based students already met for the most part from public funds—in practice makes any form of fee, or increased fee, for higher education for overseas students a form of discrimination. It may not look like it, because the reality is concealed by the peculiar financial arrangement, but that is in fact the situation to-day.
I repeat my earlier point: discrimination already exists, and this, if you like, adds the appearance, or clarifies the actual fact. But when I say that it already exists, I do not mean that there is some immorality about the present situation. It is just a fact that we consider that we have a duty to pay for our own students, and we do not consider—I am sure this is true of almost every country in the world—that we have the same duty to pay for overseas students who have gained admittance to our universities. That is a form of discrimination. Charity begins at home but it is, I am afraid, something which one would find in every country in the world to-day.

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All the proposals for fee increases, such as those put forward by the Robbins Committee or the noble Lord to-day, are in practice discriminatory in the same way. If in fact one of our British students found his fees increased, but then by the same post received his grant, he would not be any the worse off. It would be simply a way, if you like, of bluffing the overseas student into feeling that he was still on the same footing as the home student, which he would not be any more than he is to-day. It would really be a fake; it would be a form of extreme window-dressing. It is a possible method, but on the whole our method is rather more candid and exposes the realities of the situation rather more clearly.
The formal appearance of discrimination could have been avoided by charging a fee in respect of home students which was then in almost every case reimbursed. This would be the Robbins plan, to which quite a number of noble Lords, including the noble Lord, Lord Aberdare, were strongly inclined. Then the noble Lord, Lord Annan—and although I cannot be said to have found a supporter in the House to-day, I think Lord Annan came nearer to filling that requirement than anybody else—pointed out that this would have thrown a severe burden on the rates and could even have interfered with the implementation of some vital points in the Plowden Report. The truth is that if you were to do it in that way, if you were going to place heavier burdens on the rates in order to finance the students in their higher fees, you would then either have seen a considerable increase in the rates, or the Government would have had to come forward with some fairly widespread reform of the finances of local government. The Government, weighing up all those issues, came to the conclusion that more harm would come to the community by procedures of that kind than by the method actually adopted.
LORD ROBBINS: My Lords, may I ask the noble Earl—
THE EARL OF LONGFORD: May I just finish this piece? The Government rejected this solution primarily because it would have thrown additional charges on local taxation at a moment when it is Government policy to avoid adding to
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the rate burden. That is the short and simple reason why the plan—if you like, the logical plan—of Lord Robbins has not been adopted.
LORD ROBBINS: I was going to ask whether what the noble Earl has said implies that it is now thought that the advice given by high Treasury officials to the Committee on Higher Education was erroneous?
THE EARL OF LONGFORD: I am not going to comment on that without being allowed to study the evidence of the high Treasury officials, which I can hardly do standing at this Box. It is not the invariable custom in this House—although we have not the noble Lord, Lord Booth by, with us at the moment—to accept the voice of Treasury officials as the voice of God, and I am not prepared to do so on this occasion. I should be glad to study any views they may have put forward.
LORD ROBBINS: With deep respect, I did not represent the voice of Sir Thomas Pad more and Sir Richard Clarke as having that particular origin.
THE EARL OF LONGFORD: I will make sure that the last comment of the noble Lord is laid before those eminent gentlemen with proper emphasis. It cannot be said that there is a general principle in higher education against differential fees for overseas students. Such fees have been applied for many years in the colleges of education, and they apply also in many American State universities. We were taken on a tour of the world—I think it was by the noble Lord, Lord Murray of Newhaven—who was rather scathing about countries where there were any differential fees. Finally we had one noble Lord—he shall be nameless, because I was very upset by it—who announced, in a tone of great contempt, that this was the kind of thing that was done in Ireland.
I will not pursue that line of controversy any further. It is certainly argued that the underdeveloped countries benefit from the educational aid offered by our low fees. We must accept that absolutely, and I am coming, I hope, at the end to offer a little bit of consolation to the noble Lord, Lord Brockway, and other noble Lords. But we do contend that even if that be true—as it is—the

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measure of this help should be regulated and identified, and I do not think the noble Lord, Lord Robbins, disagrees with that. I think he would be quite happy to see the amount of subsidy laid bare before the world, rather than concealed as at present. So I hope that noble Lords will feel that there is at least a strong argument for trying to regulate this subsidy, and for not allowing it to go on open-ended as has been the case up till now.
I am not going to spend long at this time of night on the procedure adopted, but I intervened to point out that there was consultation through the Government's own machinery with the British Council and the University Grants Committee. I gather that the Government would not have taken this decision (I am speaking now rather carefully and from what has been supplied to me) if the University Grants Committee, as their economic advisers, had dissented in principle from the proposition that the position of overseas students required attention from the point of view of fees. That, of course, was a fairly careful assurance from the U.G.C. I do not want to rest too much on it, but I should like noble Lords to realise that there was genuine consultation, and if there had not been this amount of acquiescence the Government, I am informed, would not have proceeded. Overseas Governments were informed at the earliest possible moment.
One is bound to ask then: What will be the impact on overseas students of the proposed increase? First, I should point out, as I think has been said elsewhere, that there is no question of the Government's insisting that the fees they intend to assume for planning purposes should be charged by institutions in every case. Waivers in cases of hardship are always possible, and the noble Lord, Lord Ritchie-Calder, and other academic leaders are, I am sure, aware that the universities, if they wish, can waive or reduce the fees.
But taking the proposals, which I mentioned at the beginning, for cushioning the increase, these will relieve nearly 30 per cent. of the students in universities at present of the fees increase. Of the remainder (that is to say, about 22,000: the ones who will not be cushioned),
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about 16,000 are estimated to be from developing countries and the Secretary of State has already made it clear that the Government are very willing to receive any evidence of hardship likely to arise as it affects this group. I am speaking here in the spirit of what was said by the noble Lord, Lord Brockway.
I am now in a position to-night to go a little further. I should not like noble Lords who have taken part in this memorable debate to feel that the Government were sending them away altogether empty. My right honourable friend the Secretary of State for Education and Science is answering a Written Question this afternoon, of which I would ask leave to pass on the gist to your Lordships:
"The Government have taken careful note of the representations made to them on this subject, but remain of the opinion that the amount of public subsidy for overseas students must be brought under control."
I am using words which will be used by the Secretary of State to-night He goes on:
"But as I have made clear on several occasions the Government appreciate that fee increases of this order may cause hardship in some cases, particularly where students already in this country are supported by their families."
My Lords, what I am saying now is new, and not part of the earlier remarks about cushioning. The Government therefore intend to set up a fund to enable grants to be made towards the increase in fees in cases where hardship can reasonably be claimed. This will be additional to the arrangements already announced for helping students financed by Her Majesty's Government and Governments of developing countries. It is too soon to give details of these arrangements which will be the subject of further consultations, but the aim will be to ensure that those overseas students already here will not be prevented from completing their courses because they are unable to pay the increased fees. The longer-term situation, especially as it affects developing countries, will be kept under review by the Departments concerned.
My Lords, that is the end of the substance of the reply by the Secretary of State to a Question elsewhere. I hope it will bring some small encouragement to those noble Lords who, in this House to-day, have shown such profound,

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genuine and well-informed anxiety about a vast number of our fellow human beings, now and in times to come, and also about our manifest duty to do all that we can to help to educate them. I am sure we are all most grateful to the noble Lord, Lord Gladwyn, for initiating this debate.
LORD FERRIER: My Lords, before the noble Earl sits down, I hesitate to question him but I was one of those inclined to play down this question of discrimination. In regard to the reply he has just read, there was a point I made when the noble Earl was not in the Chamber. At the end of Clause 4 of a Written Answer on December 21 it says:
"…the increase in the fee assumed for those already embarked on courses which extend to the next academic year will be limited to £50 a year to the end of their present course."—[OFFICIAL REPORT, Commons, Vol. 738 (No. 708) col. 377; 21/12/66.]
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Does that apply to students who have come to this country to sit for a Higher Certificate, and to take up a place which is then open to them at a university? Does the end of that preliminary course mean the end of a course, or not? If it does, that means the increase is not £50 but £250. Is that what is covered by this fund?
THE EARL OF LONGFORD: I would rather not add to this statement. It will no doubt be widely discussed, and clearly we are at the beginning of some fairly prolonged discussions as regards its precise scope. I would rather write to the noble Lord, or discuss it with him, and not attempt to answer him in detail this evening.
House adjourned at twenty-two minutes before ten o'clock.