Sitting of 28 February 1967

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  TEES VALLEY AND CLEVELAND WATER BILL
  Lords Amendments considered and agreed to.
ORAL ANSWERS TO QUESTIONS
  TECHNOLOGY

    Anglo-French Variable Geometry Aircraft
    Mr. Martenasked the Minister of Technology if he will make a statement about the timetable for the Anglo-French variable geometry project.
    Mr. Fortescueasked the Minister of Technology when he expects to place a firm contract for the development of a prototype of the Anglo-French variable geometry aircraft.
    The Minister of State, Ministry of Technology (Mr. John Stonehouse): Preliminary studies are near completion, and the detailed project definition stage is due to begin in April, lasting for about six months. Full development, including the manufacture of prototypes, is planned to start early in 1968 so that the aircraft can enter service with the R.A.F. in the middle 1970s.
    Mr. Marten: If at one of these stages agreement is not reached with the French, have the Government a plan for a successor to the Anglo-French variable geometry project?
    Mr. Stonehouse: We are not expecting that that point will arise. There is a cancellation clause, but in any case we are not expecting that the point which has been raised will arise.
    Mr. Fortescue: Would it not be advisable to have some kind of contingency plan in case this option is exercised by the French, especially since the French Minister emphasised recently that they are in a position to exercise it if they wish?
    Mr. Stonehouse: Of course there must be contingency plans for all contingencies, but, as I have already said, there is no doubt in our minds that this agreement is going through—we have had that assurance from the French—providing that all the preliminary tests are successful.
    Mr. Dalyell: Could the Minister shed any light on what is meant in the French Press by the phrase "breaking the financial barrier in November, 1967"?
    Mr. Stonehouse: It is not for me to comment on what appears in the United Kingdom Press, and it is certainly not for me to comment on what appears in the French Press.
    Mr. Robert Howarth: Can my hon. Friend confirm that the British Aircraft Corporation has the design leadership on the airframe side in this project?
    Mr. Stonehouse: There is another Question on the Paper about design leadership.
    Mr. R. Carr: Will the Minister realise that, on all sides of the House, we sincerely hope that this A-F VG project will go forward successfully? Will he also realise that some concern has been created by some of the statements from Paris, notably by the French Minister of Information, and that the existence of contingency planning would give great sureness, where there is a need of sureness, in the British industry?
    Mr. Stonehouse: I want to emphasise that the relations of my right hon. Friend the Secretary of State for Defence and myself with the French Ministers have been entirely good throughout the negotiations, and any thought of the kind suggested which comes from Paris is, I think, not to be regarded as a serious reflection of the French Ministers' approach to this development.
    Mr. Ridleyasked the Minister of Technology whether the responsibility for design leadership in the development of the Anglo-French variable-geometry aircraft will be given to one of the firms

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    participating in the development work of the airframe and engine, respectively, or whether it will be shared equally between the two firms concerned in each case.
    Mr. Stonehouse: The Ministry of Technology will be the Executive Agency for the airframe, letting the contract to a joint British Aircraft Corporation/ Dassault company registered in the United Kingdom, while the French Government will let the engine contract to a joint SNECMA /Bristol Siddeley Engines Ltd., company registered in France. Precise proposals from all four companies for the efficient management of the development programmes are expected shortly.
    Mr. Ridley: Is the hon. Gentleman aware that the most efficient way of doing this is to let one contract and require a certain amount of sub-contracting, and that hitherto we have got this totally wrong? Will he try to renegotiate a more sensible basis for allocating contracts in Anglo-French co-operation of this sort?
    Mr. Stonehouse: It is precisely the proposal that we should let one contract to a joint firm, so that the inefficiencies which are being referred to will not arise.
    Mr. Dalyell: What does my hon. Friend mean by "shortly" in this case?
    Mr. Stonehouse: We hope to have some results of the companies' consideration of this within the next few weeks.

    Atomic Energy (Contracting Consortia)
    Mr. Hastingsasked the Minister of Technology what plans he has for changing the relationship between the Atomic Energy Authority and the three contracting Consortia.
    Mr. J. H. Osbornasked the Minister of Technology if he will now make a statement about his plans for the unification of the design effort for atomic power stations.
    The Minister of Technology (Mr. Anthony Wedgwood Benn): Following the meeting between my right hon. Friend the Minister of Power and myself with the Consortia, talks are continuing, but I am not yet in a position to make a statement.
    Mr. Hastings: Did the Minister see the article on this subject in the Sunday Telegraph of 5th February, entitled "Wedgwood Benn's bombshell"? Has he any intention of giving the Atomic Energy Authority power to withhold the fruits of their research from the Consortia? If so, what is the purpose of this move?
    Mr. Benn: When I met the Consortia to discuss the problem with them, they particularly asked me not to make a statement until our discussions had gone further and, in deference to their suggestion, I decided not to make a statement. I must ask the hon. Member to await the conclusion of the talks.
    Mr. Osborn: Will the Minister preserve the element of competition in design, because it is competition which brought the break-through of the A.G.R. at Dungeness B, and not amalgamate it into one organisation?
    Mr. Benn: I will certainly bear in mind the point which the hon. Gentleman made.
    Sir H. Legge-Bourke: Does the Minister not agree that if there is to be a satisfactory arrangement between the A.E.A., on the one hand, and the Consortia, on the other hand, with the C.E.G.B., it is essential that we should have a strong replication policy? Will he seriously consider this point before reaching a final conclusion?
    Mr. Benn: May I congratulate the hon. and gallant Member on his appearance on the Front Bench for the Opposition on this subject? This consideration is very much in our minds. This is an issue in which the problems are a little clearer than the solution, and this inclines me not to speak about it until we have decided what to do.

    Advanced Battery Systems
    Mr. Lubbockasked the Minister of Technology what research he is conducting into the development of zinc/air and other types of battery with improved storage capacity and lower weight-to-energy ratios than existing designs; and if he will state the budgeted expenditure on this work in the year 1967–68.
    Mr. Stonehouse: The Department is sponsoring a number of research projects

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    both in industry and in universities on advanced battery systems. The National Research Development Corporation is also supporting work. The Departmentment's budgeted expenditure for 1967–68 is £170,000.
    Mr. Lubbock: Will the hon. Gentleman let me have a list of those research projects? Is he aware that in the United States Mr. Hoffman of the University of California predicts that in a very little time with zinc/air batteries an electric car can have a range of about 300 miles without recharging? Would not the development of such a vehicle in the United Kingdom lead to a fantastic improvement in the quality of environment in large cities in terms of reduced noise and the virtual elimination of air pollution?
    Mr. Stonehouse: I agree that there are tremendous advantages if we can have a break-through in this development. My information is that the range would be something like 200 miles, but it would still be extremely good. As to the list, I shall see that this is reported in the OFFICIAL REPORT.

    Short-Haul Civil Aircraft
    Mr. Onslowasked the Minister of Technology what studies he has made of the potential market for a 250-seat short-haul civil aircraft.
    Mr. Benn: Joint studies by my staff with French and German officials have established that there will be a substantial world market for aircraft of about this size during the 1970s.
    Mr. Onslow: Would the right hon. Gentleman agree that there will also be a substantial and possibly rather earlier market for aircraft of a smaller size, say 180-seaters, which would keep this country in the subsonic aircraft business? It would be a tragedy if his preoccupation with the airbus were to kill the BAC2-11.
    Mr. Benn: One of the considerations in the mind of the airlines, who are very much concerned with this, is the rôle of the intermediate aircraft to which the hon. Member has referred and the rôle of the airbus to which I have referred in my Answer.
    Sir J. Langford-Holt: Are we not in a danger of getting this wrong? To what
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    extent are the British companies and the Corporations brought into this? Surely they are the people who know what they want in future rather than being told what they ought to want?
    Mr. Benn: That is exactly the point. It is collaborative markets as much as collaborative research and development which matters in issues of this kind.

    Tanker Aircraft (VC10 Modifications)
    Mr. Onslowasked the Minister of Technology what study he has made of the suitability of a modification of the VC10 aircraft for tanker purposes.
    Mr. Stonehouse: A proposal from the British Aircraft Corporation for such a modification is at present being considered by the Department.
    Mr. Onslow: Will the hon. Gentleman give an undertaking that it will receive a most speedy consideration in consultation with the Services? Will he understand that if this goes ahead it will have an effect on lengthening the VC10 line?
    Mr. Stonehouse: I realise the importance of retaining the VC10 line, but we have to meet the R.A.F. requirements, and that is what we are now considering.

    Concord Project
    Mr. Hastingsasked the Minister of Technology what sums of money have been voted by the French and British Governments, respectively, for the forward purchase of materials for the Concord programme.
    Mr. Stonehouse: The British Government have authorised the placing of orders for certain long-dated materials for the Concord production programme up to a value of £500,000. French procedures differ, but enough finance to avoid any delay in the production programme has been made available.
    Mr. Hastings: Is it not the case that the equivalent of £14 million has been recently made available by the French Government to S.N.E.C.M.A. and SudAviation for the development programme and that no corresponding finance has been made available to British contractors? Is it not also true that unless additional moneys are made available by

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    the end of the month there is a real chance that the programme might slip? Will the hon. Gentleman take the occasion to give us an unqualified assurance of his determination that this project will succeed?
    Mr. Stonehouse: I cannot confirm or deny the figure the hon. Member quoted as being the French contribution to production financing. All I say is that there is no question of any lack of support on our side holding up the development of this aircraft. As to long-term financing of production items concerned, as my original Answer indicated, we have made a commitment already in regard to expenditure up to half a million pounds, and there is no question of delay in the development of these plans.
    Mr. R. Carr: Can the hon. Gentleman deny what I hope were inaccurate reports in a newspaper recently that at a private meeting of a group of hon. Members opposite he said the Government had doubts about Concord and were continuing the project only under pressure from the French?
    Mr. Stonehouse: There is no question of the Government holding back the development of Concord in any way. We are supporting the development of Concord and putting all possible help in the way of the firms concerned. My officials have been discussing with the French officials in the last few days, and there is no doubt that the programme is going extremely well. The constant carping by certain hon. Members opposite on this question is of no help at all.
    Mr. Rankin: Is not Government support for the Concord manifested by the fact that the second prototype is now well under way at Filton?
    Mr. Stonehonse: I am glad to confirm that the second prototype at Bristol is going very well indeed.
    Mr. Fortescueasked the Minister of Technology whether he will make a farther statement on the future of the Concord project.
    Mr. Benn: The development programme is still proceeding satisfactorily, and the first and second prototypes are scheduled to fly in the spring and autumn, respectively, of 1968.
    Mr. Fortescue: At a recent private meeting, did the Minister of State, or did he not, use words to the effect that if the Concord project had been left to the British Government it would have been scrapped, and it was only the insistence of the French Government that kept it in being?
    Mr. Benn: I was not at the private meeting, neither was the hon. Gentleman, and neither was the Press. I think that that more or less settles it.
    Mr. Brooks: Is my right hon. Friend aware that there is a considerable amount of well-founded apprehension about the sonic boom problem associated with this aircraft? Is it not time that the Government announced where and when they will carry out adequate tests over an English city which would indicate whether this aircraft will be tolerable when it does fly?
    Mr. Benn: This matter is under consideration. There was an Adjournment debate on the subject on 3rd February.
    Sir H. Legge-Bourke: Has the attention of the right hon. Gentleman been called to the "Panorama" programme on the B.B.C. last night, which seems to have been designed principally to damage any possible sales of this wonderful aircraft? While we would not ask him to censure the B.B.C. in any way, will he at least seek equal time to be given on that programme in order to put the whole matter in proper perspective?
    Mr. Benn: Quite a lot of what has been said about the Concord is not very helpful —I am not sure that I would exclude some points made in today's Question Time—but that B.B.C. programme, which, unfortunately, I was not able to see, did include other references. One I have in mind came from Mr. Dufour, who said that technical collaboration had been much better than could have been expected. I am sure that the hon. Gentleman would not expect any Government to interfere with what might be said on matters of this kind.

    Industrial and Chemical Plant (Orders)
    Mr. J. H. Osbornasked the Minister of Technology what discussions he has had with trade associations connected

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    with industrial and chemical plant, including the Tank and Industrial Plant Association, in connection with the declining state of their order book; and if he will now take steps to ensure that industries in the public sector buy British whenever possible.
    The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Edmund Dell): The Ministry has had recent discussions with trade associations, including the Tank and Industrial Plant Association. Industries in the public sector base their purchasing decisions on commercial grounds, and I understand they only buy from abroad when, taking account of all the relevant considerations, it is commercially advantageous to do so.
    Mr. Osborn: Is the Parliamentary Secretary aware that this industry is faced with contracting order books at home and overseas? Will he use his utmost pressure to ensure that the public sector, which is becoming a major customer, now buys British wherever possible?
    Mr. Dell: I am sure the public sector will continue to buy British wherever possible. We have been discussing with the Association any way in which it can be assisted, and the Process Plant Working Party is further considering the implications of its report for this part of the industry.
    Mr. Hector Hughes: Is the Minister aware that the drilling rigs in the North Sea, under Government licence, do not buy British and they do not send their repairs to Britain but send them to foreign countries, thereby imposing a loss upon Britain? Will he change that?
    Mr. Dell: I am not responsible for the purchases of those rigs, but I am aware, as I am sure my hon. and learned Friend is aware, that some are in fact being built in British shipyards.
    Mr. David Price: Would the Parliamentary Secretary feel inclined to revise the estimate given in the "Little Neddy" report on plant which said that it expected a rise of 20 per cent. to 30 per cent. in demand in 1967–68 over 1965–66? Would he be inclined to revise that downwards?
    Mr. Dell: No, I would not wish to revise the estimate downwards. The Pro-
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    cess Plant Working Party is considering the implications of its investigations for this section of the industry and this should throw light on its problems.

    Oil Pollution of the Sea
    Mr. Loveysasked the Minister of Technology what action he is taking to determine the most satisfactory method of dispersing oil discharged at sea to prevent the beaches from being polluted and to reduce the harmful effect on birds.
    The Joint Parliamentary Secretary to the Ministry of Technology (Dr. Jeremy Bray): A method of dealing with oil floating on inshore waters was developed by the Warren Spring Laboratory, in 1961. A joint working group of Local Authorities and the Institute of Petroleum has been set up to look into the whole problem of the discharging of oil at sea and the pollution of beaches.
    Mr. Loveys: When shall we have some definite result from these inquiries which have been going on for a very long time now?
    Dr. Bray: That is not the case. The inquiries and discussions between local authorities and the Institute of Petroleum have been in progress only recently. The technical methods are there waiting to be used.
    Sir Knox Cunningham: Can the hon. Gentleman say how many maritime countries have not ratified the Convention on the pollution of the sea by oil?
    Dr. Bray: Not without notice.

    Brain Drain
    Mr. Dobsonasked the Minister of Technology what are the latest figures available on the brain drain; and whether he will make a statement.
    Mr. W. Baxterasked the Minister of Technology what steps he is now proposing to take so as to halt the brain drain of graduates in technology who are at this time required in British industry.
    Mr. Benn: It was decided in 1963 to stop the collection of detailed statistics of the qualifications of migrants. In that year the net loss was 1,400. The Working Group on Migration under Dr. F. E. Jones is considering the brain drain problem. Meanwhile, as announced in

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    the recent debate, I am pressing forward with interim measures; and the question of statistics is being re-examined.
    Mr. Dobson: I thank my right hon. Friend for his reply. May I ask whether or not his Department has had an opportunity to examine figures recently supplied to him by S.B.A.C.? Can he confirm or deny their accuracy, and is he aware of the need for accurate figures in the industry so as not to upset people who remain loyal to the industry in this country?
    Mr. Benn: I think my hon. Friend will find that there is another Question on the Order Paper today on the S.B.A.C. figures to which he has referred. I agree that further statistics are required, but in 1965 17 million people moved into and out of the country, and to get accurate figures of qualifications is very difficult.
    Mr. W. Baxter: Are these graduates, who are educated at very considerable expense to the public over the years and who cost millions of £s, made aware of their obligations to the nation before their education is finished? Will my right hon. Friend consider the necessity of prohibiting the setting up by America of agencies in this country for the purpose of more or less poaching on the preserves of British industry?
    Mr. Benn: These issues were dealt with in the recent debate. We considered it but did not think it right to rule out advertising, because this really would not be effective. The discussion of this issue has guaranteed that it is brought home to all those who are at universities, but we must take into account the fact that a young man who goes and who returns probably contributes more to this country by his experience abroad than if he had not gone.
    Mr. Onslow: The right hon. Gentleman said that 17 million people moved in and out of this country in 1965. Surely he is not attempting to identify emigrating scientists by counting them at the Customs? Has he not more sophisticated methods than this?
    Mr. Benn: The more sophisticated methods were discontinued by the party opposite in 1963. One of the reasons why we are having to tackle this problem is that the statistics are not available. The
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    General Register Office is now conducting an inquiry into this. We shall have more accurate figures later.
    Sir E. Erringtonasked the Minister of Technology from how many companies in the aerospace industry he proposes to require information in connection with his inquiry into the extent of the brain drain.
    Mr. Benn: Questionnaires have been sent to 34 companies in the industry. These include all firms employing 50 or more qualified workpeople and a sample of smaller firms and cover 90 per cent. of all qualified staff in the industry.
    Sir E. Errington: That makes ridiculous the Minister's statement about the 17 million, does it not? It is not very difficult to obtain this information. Will some more positive action be taken to get complete information?
    Mr. Benn: The old Ministry of Aviation Central Statistical Branch has been doing an annual survey of this for some time. The survey for the current year will be published in April. That is a very different thing from providing comprehensive and accurate statistics covering the whole field.
    Mr. Rankin: Is my right hon. Friend aware that Comprehensive Designers Ltd., which is a branch of Lockheeds of America, is offering total wages of £50 a week? Does not he realise that that is the reason for the drain to comprehensive designs? What steps is he taking to meet that challenge?
    Mr. Benn: That is a different question and does not involve people emigrating from this country, which is the subject of the Question.
    Mr. R. Carr: Is the right hon. Gentleman aware that the S.B.A.C.'s inquiry covered ten times as many firms as the number he mentioned? Why, then, is he so sceptical about the S.B.A.C. results? Why does he not act upon them more quickly?
    Mr. Benn: The S.B.A.C. survey covered 436 firms and got a 70 per cent. response. It included 100 firms not classified by the Ministry of Labour as being in the aircraft industry. The definitions in that questionnaire were rather looser than those which had been used in the

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    annual Ministry of Aviation surveys. It is really that our own survey should be awaited before final decisions or thoughts about it are reached.

    Airbus Project
    Mr. Dobsonasked the Minister of Technology whether he has completed his study of the economic viability of the airbus project; and whether he will now make a statement.
    Sir E. Erringtonasked the Minister of Technology when he expects a final decision to be made on whether to go ahead with the European airbus project.
    Mr. Stonehouse: The study of the economic viability of the airbus project has not yet been completed. Officials from the countries concerned are meeting again today on this question. A further Ministerial meeting has been agreed for next month with a view to preparing a report on which Governments can reach decisions.
    Mr. Dobson: I thank my hon. Friend for that reply. Will he bear in mind the need for a decision on this project as soon as possible, because it is used as a balance in the industry for the military projects, most of which have now been agreed for a long time ahead? Will he give an indication, if he can, of when the final decision by his Ministry might be announced?
    Mr. Stonehouse: I agree that it is important to try to reach a decision quickly, because the sooner a decision can be reached and a project study gone into, the sooner we can build this aircraft and, we hope, sell it effectively. A number of very important points have to be clarified. I hope that a final decision can be made about the middle of next month.
    Sir E. Errington: Does not the hon. Gentleman realise that if greater delay occurs with this project we may very well miss the boat, in the sense that the Americans will seize the opportunity to build an aircraft of a similar character?
    Mr. Stonehouse: We are against delay. We want to reach a decision soon. We want to ensure that this project will be a worth-while one in the broad economic
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    sense to the economy of the United Kingdom.
    Mr. Robert Howarth: Will the Minister confirm that, for our part at least, we are determined that this particular aircraft, if it goes ahead, should have Rolls Royce engines?
    Mr. Stonehouse: There is another Question on this subject.
    Mr. Lubbockasked the Minister of Technology what discussions he has held with Ministers of European countries, concerning the engine for the proposed European airbus.
    Mr. Stonehouse: The choice of engine, which we regard as being of great importance, has been a central issue in the international discussions about a European airbus. I discussed the matter with the French and German Ministers at the meeting in Bonn on 27th January, and we shall be returning to the subject during our next discussion.
    Mr. Lubbock: Does the hon. Gentleman agree that the RB207 will be quieter, more economical and cheaper than the Pratt and Witney JT9D? On what contractual basis is the development of this engine proceeding at the moment? Will the hon. Gentleman give an assurance that it is not being held back because of delays in the decision on the airbus as a whole?
    Mr. Stonehouse: I confirm that the development of the RB207 is not being held back in any way. We are providing assistance to Rolls for it. I am glad to take this opportunity of saying that Rolls Royce development in jet engines has been absolutely superb and it must, therefore, be seriously considered for engining the European airbus if Europe is to remain in the forefront of this advanced technology.
    Mr. Robert Howarth: Reports coming from Europe indicate that some of the interested parties are insisting on the JT9 being used, which is at the end of its development life. Will my hon. Friend confirm that it is essential that we have the Rolls Royce engine in this project, with a long development life ahead?
    Mr. Stonehouse: I agree that the Rolls Royce engine has tremendous advantages. The snag is that the whole of the research

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    and development costs, unless they go into an American aircraft as well, would have to be born in Europe. But I believe that, despite that disadvantage, in view of the larger thrust of the RB207 and its future stretch in any airframe with which it is associated, it is important for it to be considered.
    Mr. R. Carr: Will the Minister assure the House that he will see that full attention is given not only to the tremendously important technological value of the engine but to the noise factor, which is becoming increasingly important, particularly on the European continent?
    Mr. Stonehouse: My right hon. Friend the President of the Board of Trade is very concerned about that. Rolls Royce have done a great deal of research to try to reduce the noise, and I believe that it has had some success.

    Machine Tools
    Mr. Biffenasked the Minister of Technology to what extent the recent increase in investment grants is estimated to result in a higher value of home orders and dispatches for machine tools during 1967 than in 1966.
    Dr. Bray: The effect on orders depends on the extent to which the firms involved take advantage of the new and increased grants. We are drawing their attention to the advantages to be gained from placing orders now.
    Mr. Biffen: Does not the Joint Parliamentary Secretary recall that there was a time when he and his hon. Friends were not so coy about making forward forecasts? Is it not now quite clear that home orders and dispatches for machine tools in 1967 are likely to fall below the level of 1966?
    Dr. Bray: We are still very much concerned with forward forecasts and are anxious to maintain the rate of expansion and the capacity of the machine tool industry. In fact, the order pattern is by no means clear, since the order books of some firms are increasing whilst others are still going down.
    Mr. David Price: Does the Joint Parliamentary Secretary still adhere to the National Plan forecast of an annual average increase from 1964 to 1970 of
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    7·8 per cent. a year; and, if so, how is it to be achieved?
    Dr. Bray: The rate of production has in the past two years exceeded that rate of increase.
    Mr. Edwin Wainwright: Has my hon. Friend taken into account the fact that there cannot be a viable machine tool industry unless private industry takes up new designs and new machinery as they are brought into being? What is being done to ensure that private industry takes up these machines from time to time?
    Dr. Bray: We have a pre-production order scheme; we have development contracts with firms for the production and use of machine tools, and we are considering what further steps we can take in this direction.
    Mr. Biffenasked the Minister of Technology if he is aware of the declining profitability of many machine tool companies; to what factors he attributes this decline; and if he will make a statement.
    Dr. Bray: I am aware that the profits of some machine tool firms have decreased. But the profits of other firms have increased and no clear trend has yet emerged.
    Mr. Biffen: Is the Joint Parliamentary Secretary aware that that is the most extraordinarily unsatisfactory Answer? If he will bother to acquaint himself with the announcements of all the major machine tool firms—for example, Coventry Gauge and Tool, Alfred Herbert, Newall Machine Tool, to mention only three—he will find that all indicate a decline in profitability. Is he aware that this results from the Government's economic policy having had a disastrous effect upon the level of private industrial investment? Will the hon. Gentleman be apprised of the fact that private investtrial investment is likely to recover only when the Government show a much more generous attitude towards industrial profits?
    Dr. Bray: The hon. Gentleman has been very selective in his quotations. He did not mention Kearney and Trecker, or Elliotts. Looking at the industry as a whole, I am sure that he will agree that the position is not yet what he describes.

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    We are taking steps to maintain the level of orders and we are convinced that those steps will be adequate.

    Millom Hematite Ore and Iron Co., Ltd.
    Mr. Ridleyasked the Minister of Technology when he will make a decision on the application of the Millom Hematite Ore and Iron Company Limited for financial assistance from him for making a spray steelmaking and continuous casting plant.
    Mr. Dell: My right hon. Friend hopes to be able to reach a decision in consultation with my right hon. Friend the Minister of Power quite soon.
    Mr. Ridley: Will the hon. Gentleman confirm that the decision will have to be made on the merits of the case in relation to the Millom company being situated in a development area, and will he allow no prejudice to enter into his decision-making because of the view of the National Steel Corporation that the project should not go ahead?
    Mr. Dell: This proposal has to be considered from many points of view, some of which the hon. Gentleman has mentioned. All will be taken into account.
    Mr. Patrick Jenkin: Will the Ministry of Technology make it a prime consideration to see that this exciting new advance in the manufacture of steel is not yet another invention invented in this country and developed overseas?
    Mr. Dell: We are very well aware of the exciting technological possibilities here.

    Hinkley B Generating Station
    Sir H. Legge-Bourkeasked the Minister of Technology what technical advice he has given to the Central Electricity Generating Board regarding the suitability of nuclear reactors for Hinkley B generating station.
    Mr. Benn: None, Sir. Decisions about reactor design for their nuclear power stations are a matter for the generating boards after consultation with the suppliers. The Atomic Energy Authority is always available to give advice.
    Sir H. Legge-Bourke: Will the right hon. Gentleman give an assurance that
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    we shall at least have the same sort of technical information in respect of Hinkley B as we had in the case of the Dungeness B reactor?
    Mr. Benn: I shall look at the information which was made available previously. On the face of it, I can see no reason why there should be any difference.

    Hovertrain
    Sir H. Legge-Bourkeasked the Minister of Technology what steps he is taking with a view to constructing a full-scale prototype of a hovertrain incorporating linear electric propulsion; and through which agencies these studies will be promoted.
    Dr. Bray: As the hon. Member knows, Hovercraft Development Ltd. has been conducting experimental work on the hovertrain and is in close touch with work abroad in this field.
    Sir H. Legge-Bourke: Does the hon. Gentleman agree that this is, perhaps, one of the most important potential technological developments in this country today? Bearing in mind the very big impact which, if its potentialities are realised, it could have on the investment programmes of rail, road and air, will he ensure that no time is wasted in deciding to go ahead with a full-scale prototype?
    Dr. Bray: Responsibility for the work will lie with the National Physical Laboratory when it takes over responsibility from Hovercraft Development Ltd. The people responsible are the Minister of Transport and British Railways directly, and all these are currently involved in discussions.
    Mr. David Price: That is not a satisfactory answer. Does the hon. Gentleman seriously suggest that the National Physical Laboratory has the resources or the authority to take this development through the pilot stage which is now extremely urgent? Will he undertake to report to the House within the next few months, or suffer severe censure?
    Dr. Bray: The hon. Gentleman and his hon. Friends will know that this development was under way many years before they left office and had been carried no distance at all while they were

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    responsible for it. We now have a single Ministry responsible for technological development in this field, and I assure them that the economic and technical appraisals are being carried out thoroughly.

    Technological Benefits (Information)
    Mr. Rankinasked the Minister of Technology what steps he is proposing to take to bring to public notice the indirect benefits deriving from technology, particularly in regard to medicine and management.
    Mr. Benn: Much of the information work of my Department is directed to this end. We are now co-operating in some current projects that relate technology to medicine and management.
    Mr. Rankin: Can the data derived from the monitoring of astronauts in manned space flights be applied to the monitoring of hospital patients, especially those in critical conditions? Is this being done, and to what extent?
    Mr. Benn: There is a certain amount of what is called spin-off from space research. For example, the development of the refrigerated suit which has been going on at Farnborough has some relevance to possible operating methods by surgeons in hospitals. A great deal of the work done by the research stations bears upon the question which my hon. Friend has put, and I shall send him any special details which he would like to have.

    Space Craft (Electronic Equipment)
    Mr. Rankinasked the Minister of Technology what steps he is taking to promote research aimed at improved reliability in electronic equipment in aircraft and space craft because of the need to ensure its safe functioning during a mission.
    Dr. Bray: Research on reliability is being carried out in our establishments and under contract in industry and at universities. Also, suitable design standards are laid down both for general use and in specific purchases.
    Mr. Rankin: Is not this research of the utmost importance, because during a mission no repair or adjustment can be carried out on electronic equipment?
    Dr. Bray: Yes, Sir; this is very well appreciated by the engineers responsible, and the ensuring of reliability is a large part of the total technological development effort in any project.

    Ceramics (Research and Development)
    Mr. David Priceasked the Minister of Technology what work is being carried out by the Atomic Energy Authority on ceramics research and development, as measured by current expenditure, capital expenditure and the employment of qualified scientists and engineers; how this work compares with work carried out in 1964, 1965 and 1966; and whether it is his intention to increase it in the current quinquennium.
    Dr. Bray: As the Answer contains a number of figures, I will, with permission, circulate a table in the OFFICIAL REPORT.
    Mr. Price: How closely is this work being co-ordinated with the activities of the British Ceramics Research Association?
    Dr. Bray: Very closely. The Association has been fully consulted throughout the setting up of the ceramics centre.
    Following is the table:

    Year

    Current Expenditure £m.

    Capital Expenditure £m.

    Qualified Scientists and Engineers

    1963–64

    …

    2·9

    0·2

    213

    1964–65

    …

    3·1

    0·2

    240

    1965–66

    …

    3·4

    0·3

    273

    1966–67

    …

    3·3

    0·25

    250

    The estimated effort over the period 1967–72 is expected to occupy 200 Qualified Scientists and Engineers a year at a total cost of £14m.

    Linear Motor
    Mr. David Priceasked the Minister of Technology what support his Department is giving to the development of the linear motor.
    Dr. Bray: Together with the National Research Development Corporation and other bodies, the Department is examining possible developments incorporating linear motors. Also, we are keeping in touch with the progress made by universities with the support of the Science Research Council. We would be glad to consider proposals leading to further applications of their results.
    Mr. Price: Is a full-scale working prototype suitable for propelling a train being developed, and, if so, will his Department give a suitable development contract to a university or a firm?
    Dr. Bray: No decision has been taken on a full-scale working prototype. However, there are many applications in other fields which are of great importance, ranging from the movement of cranes to textile machinery. These are under active consideration.

  NATIONAL FINANCE

    Tax Collection (Cost)
    Mr. John Hallasked the Chancellor of the Exchequer if, when introducing a new tax, an estimate is made of the cost of collection.
    The Chancellor of the Exchequer (Mr. James Callaghan): Yes, Sir, so far as this is practicable.
    Mr. Hall: In that case, can the right hon. Gentleman say, as he has not been able to say before, what is the cost of collecting Capital Gains Tax? Would he not agree that the cost of assessing and collecting the tax is a very high percentage of the total revenue?
    Mr. Callaghan: No, Sir. I cannot give a figure, because the officials who examine the Income Tax returns for the purposes of assessment examine at the same time the liability for Capital Gains Tax and it would not be easy to distinguish the two from each other.

    Overseas Property Purchases
    Mr. Cantasked the Chancellor of the Exchequer what steps he is taking to deal with the circumvention of exchange control regulations by persons purchasing property outside the sterling area; and whether he will give an estimate of the extent of the leakage from April, 1966 to January, 1967.
    Mr. Callaghan: All purchases by United Kingdom residents of property outside the sterling area require specific permission from the Bank of England. Infringements are liable to prosecution. Thirty-four cases were investigated in the period mentioned. The loss to the
    256
    reserves through illegal purchases is not thought to be of serious dimensions.
    Mr. Cant: Is my right hon. Friend not aware that the Stock Exchange Journal only this week found it necessary to include an article on dubious property deals abroad? Does he not think that there can be no smoke without some fire?
    Mr. Callaghan: Yes, Sir. I think that there is some evasion and two prosecutions have been made. The Director of Public Prosecutions will consider any information laid at his disposal. There are Treasury and Bank of England enforcement officers who look into these matters, but I repeat that the loss to the reserves is not serious through that particular channel.
    Mr. Goodhew: Is the Chancellor aware that hon. Members attending a N.A.T.O. Parliamentarians' conference and wishing to spend £2 a day of their own money must certify that they will not invest it in freehold or leasehold property? Would he assure the House, now that that large sum is to be increased to £5 a day, that they will be able so to do if they wish?
    Mr. Callaghan: No, Sir. I am afraid that the hon. Gentleman will still not be able to use his allowance for that purpose.

    National Savings
    Mr. Cantasked the Chancellor of the Exchequer whether he is aware of the fact that the total amount invested in national savings declined by £28 million in 1966; and what steps he proposes to take to increase the relative attractiveness of this form of small savings, in view of the fact that it presents an alternative form of revenue to taxation.
    Mr. Callaghan: The fall in national savings in 1966 was £29·5 million, and was almost entirely due to the heavy maturities of Defence Bonds during the year. The present range of national savings media stand up well in comparison with other forms of investment; the National Savings Certificate, in particular offers one of the best yields obtainable in the market.
    Mr. Cant: Would my right hon. Friend agree that there is strong opinion, now

    257
    that the sales of National Savings Certificates are tending to peter out, that he should raise the limit and perhaps agree to some form of contractual saving and increase the savings limit?
    Mr. Callaghan: Those are interesting proposals, but we are getting a little too near 11th April for me to make any real comment on them.

    Selective Employment Tax (Pensioners and Disabled Persons)
    Mr. Chichester-Clarkasked the Chancellor of the Exchequer what estimate he has formed of the effect on the employment of retirement pensioners of the Selective Employment Tax.
    The Chief Secretary to the Treasury (Mr. John Diamond): There is little evidence so far that the tax is having any serious effect.
    Mr. Chichester-Clark: Will the right hon. Gentleman bear in mind that unemployment undoubtedly arises in that category from the fact that it can cost 38s. 4d. a week to employ someone in it before one penny gets to the employee?
    Mr. Diamond: We shall bear in mind what the hon. Gentleman says, but he will realise that it is impossible to separate the effects of the general economic circumstances and the tax where there is unemployment.
    Mr. Barnett: Is there any evidence that manufacturers are taking on pensioners and part-timers to obtain the benefit of the premium?
    Mr. Diamond: I have no such evidence.
    Mr. Chichester-Clarkasked the Chancellor of the Exchequer what estimate he has formed of the effect on the employment of the disabled of the selective employment tax.
    Mr. Diamond: We are continuing to watch the effects of the tax on the disabled. There is little evidence so far of any adverse effects.
    Mr. Chichester-Clark: If the Minister will not throw out the tax altogether, which would be the best answer, will he bear in mind that 8·3 per cent. of the total number on the disabled register were unemployed at the end of the year, which is far too high a figure?
    Mr. Diamond: The statistics are interesting and not wholly unsatisfactory. For example, they show that in the service and contracting industries, where unemployment has doubled, it has gone up by less than one-third among the disabled.

    PAYMASTER-GENERAL (DUTIES)
    Sir Knox Cunninghamasked the Prime Minister if he will give additional duties to the Paymaster-General about which he will answer Questions in the House.
    The Prime Minister (Mr. Harold Wilson): I have no plans for this at this time, Sir.
    Sir Knox Cunningham: Will the Prime Minister be perfectly frank, honest and reasonable—[HON. MEMBERS: "Oh."]— and tell the House why he wants to shield the Paymaster-General from Questions? Surely he has not been served with a D notice?
    The Prime Minister: I always admire the hon. and learned Gentleman's sense of humour. I shall make a statement about D notices later. The hon. and learned Gentleman will be glad to know that no D notices have been issued by this Government. The last one was issued in June, 1964, but if they were necessary they would be issued. Returning to the hon. and learned Gentleman's Question, I have been considering, in view of the large number of representations made to me about various aspects of life in Northern Ireland, whether I should ask my right hon. Friend to take those Questions.
    Sir Knox Cunningham: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter at an early moment.

    OVERSEAS STUDENTS (MINISTERIAL RESPONSIBILITY)
    Mr. Kenneth Lewisasked the Prime Minister whether he will transfer responsibility for grants to overseas students being educated in the United Kingdom to the Minister of Overseas Development.
    The Prime Minister: My right hon. Friend the Minister of Overseas Development is already responsible for the majority of the grants from British Government funds in respect of overseas students in this country, and no change is necessary.
    Mr. Lewis: Is the Prime Minister aware that he is on the record with two promises in this sphere? The first was not to cut foreign aid, and if one takes out what has been given to Zambia it has been cut. The second was not to cut assistance to foreign students. Is this not a clear case of the Government's record being one of broken promises?
    The Prime Minister: No, Sir. Aid to Zambia is, of course, a very important part of our overseas aid, and the help that must be given there is relevant to what is available for aid elsewhere. The second question was fully debated in the House last week, and I thought that the House reached a conclusion about it.

    BRAIN DRAIN
    Mr. Sandysasked the Prime Minister which Minister is responsible for co-ordinating action to arrest the brain drain; and if he will make a statement on the Government's policy to deal with this problem.
    Mr. Mawbyasked the Prime Minister if he is satisfied with the co-ordination between the Chancellor of the Exchequer, the Secretary of State for Education and Science, the Minister of Technology and the Minister of Labour in keeping services of young engineers and scientists and technologists in this country.
    The Prime Minister: My right hon. Friend the Minister of Technology has a major responsibility in this matter but others of my right hon. Friends, particularly my right hon. Friend the Secretary of State for Education and Science, are also concerned. I am satisfied that they work closely together and would refer hon. Members to the recent debate for an account of the Government's attitude.
    Mr. Sandys: Will the Prime Minister consider the possibility of reducing the present punitive rates of taxation?
    The Prime Minister: Many explanations were given in the House as to why scientists and engineers go abroad. My own view, based on talks with many of those in America a year or two ago, was that lack of prospects in many British firms and lack of opportunities for younger men have caused it. With regard to the rates of taxation, I cannot anticipate my right hon. Friend's Budget statement.
    Mr. Mawby: Is the Prime Minister aware that in developing parts of the country future employment prospects of local people very much depend on a high standard of technician? Will he consider a suggestion that graduates should pay back part of the public expenditure incurred on their behalf if they leave the country within a period after graduation?
    The Prime Minister: I agree very much with the thought in the first part of the hon. Gentleman's question. The second part was raised in the debate, and my right hon. Friend the Secretary of State for Education and Science gave reasons why we felt that that would not be the right solution.
    Mr. Whitaker: Is not a more serious problem the loss to developing countries of skilled people, particularly doctors, coming to the developed countries?
    The Prime Minister: This is a problem. If one studies the recent figures of immigration into the United States since the easement of the immigration regulations, one realises that this has affected not only us but, even more, has affected the very large-scale movement of urgently needed technicians, including, of course, doctors, from developing countries to the United States.

    PRIME MINISTER AND FOREIGN SECRETARY (VISIT TO THE HAGUE)
    Mr. Martenasked the Prime Minister if he will make a statement about his visit to The Hague.
    Mr. Wallasked the Prime Minister if he will make a statement on his visit to the Netherlands.
    The Prime Minister: With permission, Mr. Speaker, I will answer these Questions at the end of Question Time.

    CHANCELLOR OF THE EXCHEQUER (SPEECH)
    Mr. Stratton Millsasked the Prime Minister if the public speech of the Chancellor of the Exchequer on reductions in Government overseas expenditure at Cardiff on 3rd February represents the policy of Her Majesty's Government.
    The Prime Minister: Yes, Sir.
    Mr. Mills: Does the right hon. Gentleman recall that, on 20th July, he promised a reduction of £100 million in Government overseas expenditure during 1967–68? Is it not clear from the figures published by the Chancellor of the Exchequer that this promise has not been fulfilled and that, even excluding the deficit on Zambia, the reduction will not be more than about £70 million, thus falling well short of his assurance?
    The Prime Minister: We have not yet reached the 1967–68 financial year. I assure the hon. Gentleman that all Ministers, including the Chancellor of the Exchequer and I, are fully determined to realise the savings announced on 20th July.

    FIRST SECRETARY OF STATE (SPEECH)
    Mr. Bruce-Gardyneasked the Prime Minister whether the public speech of the First Secretary of State to the Overseas Bankers Club on investment on 30th January represented Government policy.
    The Prime Minister: Yes, Sir.
    Mr. Bruce-Gardyne: In that case, can the Prime Minister explain the First Secretary of State's reference to the Government's work in improving the efficiency of British industry at the roots? What part has the 6 per cent. drop in manufacturing investment, estimated at constant prices, which has occurred since the Government came to power, played in this process?
    The Prime Minister: I have given some of the estimates that have been made for investment in 1967. The --general level of investment has been well maintained as compared with the position before we came to power.

    PRIME MINISTER (SPEECH)
    Mr. St. John-Stevasasked the Prime Minister whether he will place a copy of his speech on economic affairs at Swansea on 3rd February in the Library.
    The Prime Minister: I have already done so, Sir.
    Mr. St. John-Stevas: In his speech at Swansea, the Prime Minister said that the country would have a choice between the policy of stop-go and a prices and incomes policy related to productivity. Can he tell us what this latter policy is so that we can make the right choice?
    The Prime Minister: I think that the hon. Gentleman already knows the answer to his own supplementary question, but he will find details of this in the succession of White Papers published by the Government in relation to the Prices and Incomes Policy. It is surely axiomatic, and accepted by practically the whole House, that if incomes rise in a period above the level of productivity, this is bound to lead not only to inflation but to a difficult foreign exchange position, which was the main reason why stop-go occurred so often in the past.
    Mr. Iain Macleod: Would not the Prime Minister agree that it is inconvenient, to say the least, for the House of Commons to read detailed accounts in the newspapers of consultations—which have to be held, of course—on the incomes policy? Will he, therefore, arrange for a statement to be made to the House by the First Secretary of State as soon as possible?
    The Prime Minister: I agree that it is inconvenient for the House—indeed, if I may say so, not only for the House. The right hon. Gentleman himself will remember some of the difficulties in the past on these matters. Certainly, as soon as it is possible to make a statement one will be made.

    INDIA (PRIME MINISTER'S VISIT)
    Dr. Grayasked the Prime Minister how soon after the Indian general election he proposes to visit India.
    The Prime Minister: I have, as yet, nothing to add to the Answer I gave on 7th February to a Question by my hon. Friend the Member for Southall (Mr. Bidwell).—[Vol. 740, c. 281.]
    Dr. Gray: Is my right hon. Friend aware that many months have passed since he first postponed his visit to India and that a personal visit by him would do much to improve British-Indian relations?
    The Prime Minister: My visit was postponed from last October because of the earlier date of the sitting of the House on that occasion and it was intimated that it had better be postponed until after the Indian general election because of the possible impact of a visit by a Commonwealth Prime Minister while the election was going on. I remind my hon. Friend that the election has only just ended.

    KASHMIR DISPUTE
    Dr. Grayasked the Prime Minister what discussions he had with Mr. Kosygin regarding further mediation in the Kashmir dispute.
    The Prime Minister: None, Sir.
    Dr. Gray: Is my right hon. Friend aware that some months have passed since Tashkent? Does not he think that this would be a suitable occasion for some British-Soviet initiative at some helpful moment?
    The Prime Minister: Thirteen months have passed since Tashkent. I think that the view of the Soviet Government on this—although we did not discuss it in our recent talks—would be that they secured action at Tashkent on what was then the most urgent question, that of a cease-fire. The longer-term, more difficult problems make it extremely difficult for any Government to take the initiative, and my hon. Friend will realise the difficulties caused lately by the fact that the Indian general election was being held. It would not have been the best time in which to raise these issues.

    FOREIGN SECRETARY (SPEECH)
    Mr. Milneasked the Prime Minister if the public speech on Great Britain and the Common Market given
    264
    by the Foreign Secretary at the Albert Hall on Wednesday, 22nd February, represented Government policy.
    The Prime Minister: Yes, Sir. I would refer my hon. Friend to my reply of 23rd February to a supplementary question by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). —[Vol. 741, c. 1952.]
    Mr. Milne: Is the Prime Minister aware that we are both relieved and pleased with that reply? Will he also underline the fact that the decision in relation to Britain's entry will be taken by the Government and this House and not by outside bodies, no matter how exalted?
    The Prime Minister: Yes, Sir. I have made that clear on many occasions. The speech of my right hon. Friend the Foreign Secretary, which is available to hon. Members, was a clear statement of some of the difficulties which have to be overcome.
    Mr. Shinwell: Did I understand my right hon. Friend to say, in reply to the supplementary question of my hon. Friend the Member for Blyth (Mr. Milne), that the decision will be taken by the House? If so, when?
    The Prime Minister: I replied "Yes, Sir" to my hon. Friend and said that the decision would be taken by the Government and not by an outside organisation. Of course it will be taken by the Government and will be announced in the House, when the House will naturally wish to discuss it.

    EUROPEAN ECONOMIC COMMUNITY
    Mr. Alfred Morrisasked the Prime Minister whether, if it is decided to re-apply for membership of the European Economic Community, this will be done by reactivating the 1963 negotiations or by a new and formal application for accession to the Treaty of Rome; and if he will make a statement.
    The Prime Minister: My hon. Friend's Question is hypothetical and no decision has yet been taken upon it.
    Mr. Morris: Can my right hon. Friend at least indicate what progress has been made during his visits? Can he say

    265
    whether, after the visit to Luxembourg, we shall have a White Paper on the progress of the negotiations in the West European capitals and whether we shall be able to debate it?
    The Prime Minister: I made a statement two weeks ago after the visit to Bonn. My right hon. Friend and I have now been to The Hague and I shall answer Questions about that, by leave of the House, after Question Time. When the six visits are over, it will be for the Government to examine the situation in the light of what we have learnt, take a decision and announce it. Whether the publication of a White Paper will be appropriate is a matter for consideration at the time.

    RHODESIA
    Sir Knox Cunninghamasked the Prime Minister if he will place in the Library the minutes of the oral statement he made to the Commonwealth Conference about the cost of Her Majesty's Government's Rhodesian policy.
    The Prime Minister: No, Sir.
    Sir Knox Cunningham: Will not the Prime Minister reconsider his decision? By so doing he might allow hon. Members to have more light in this rather murky affair.
    The Prime Minister: The affair is not murky. Commonwealth Conferences have always been confidential, including during the period when the hon. and learned Gentleman was Parliamentary Private Secretary at No. 10 Downing Street. The mere fact that one statement has leaked out improperly and led to misunderstanding even as to its contents is no reason for breaking the general rule.
    Mr. Longden: Why does the Foreign Secretary refuse to give instructions to our permanent representative at the United Nations to raise in the Security Council the report of the expert committee on the fair sharing of the cost of sanctions?
    The Prime Minister: That is another question. I will discuss it with my right hon. Friend the Foreign Secretary, who is responsible for our relations with the United Nations.

    CONFIDENTIAL DOCUMENT (DISCLOSURE)
    Mr. Speaker: Mr. Sandys, Question No. Q20.
    Mr. Sandysasked the Prime Minister what evidence he has that the right hon. Member for Streatham has disclosed a confidential official document to the Press.
    The Prime Minister: I intended to ask leave to answer Question No. Q20 after Question Time, but as it has been reached I will answer it now.
    Mr. Tilney: On a point of order, Mr. Speaker. Is not my Question the next?
    Mr. Speaker: I do not see the hon. Gentleman's Question on the Order Paper.
    Mr. Tilney: It is No. 35 to the Chancellor of the Exchequer.
    Mr. Speaker: I beg the hon. Gentleman's pardon. Mr. Tilney—Question No. 35 to the Chancellor of the Exchequer.

  NATIONAL FINANCE

    Charities (Purchase Tax)
    Mr. Tilneyasked the Chancellor of the Exchequer whether he will reduce the Purchase Tax on Christmas cards sold by registered charities.
    Mr. Diamond: I would refer the hon. Member to the reply given to the hon. Member for Belfast, South (Mr. Pounder) on 21st February.—[Vol. 741, c. 241.]
    Mr. Tilney: Does not the right hon. Gentleman appreciate that the more money he takes away from charities, thus preventing them from helping themselves, the more likely it is that his colleagues in other Ministries will ask for money from the Treasury?
    Mr. Diamond: It is for that reason that the Government have been outstanding in their help to charities, both in removing them from the effects of the Selective Employment Tax and in being the first Government to establish the position of charities in relation to the Corporation Tax?
    Mr. Tilney: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

PRIME MINISTER AND FOREIGN SECRETARY (VISIT TO THE HAGUE)
The Prime Minister (Mr. Harold Wilson): With permission, I will now answer Question No. Q7 and Question No. Q11.
My right hon. Friend the Foreign Secretary and I visited The Hague on 26th and 27th February for talks with the Netherlands Prime Minister and Foreign Minister.
This was the fifth of the series of visits to Heads of Government of the Six in which my right hon. Friend and I have been exploring whether the conditions exist—or do not exist—for fruitful negotiations leading to British membership of the European Economic Community.
After my right hon. Friend the Foreign Secretary returned to London yesterday to attend the House, I was joined by my right hon. Friend the Minister of State for Foreign Affairs.
Our discussions revealed close agreement on the problems which arise in the context of eventual British entry to the Community. I found the visit encouraging and my right hon. Friends and I are most grateful to the Netherlands Ministers for the helpful and co-operative spirit they showed throughout. We covered a range of questions, economic and financial, with which the House will by now be familiar.
Mr. Marten: If and when at the end of the Prime Minister's round tour the Government decide to apply to join the Common Market, could the Prime Minister then tell the House the conditions upon which we shall enter, in the light of his speech at Bristol before the General Election?
The Prime Minister: That is an entirely hypothetical question at this point. It would be impossible for me to forecast a decision, but, whatever the decision is, it will, of course, be communicated to the House and the reasons given for it.
Mr. Wall: Can the Prime Minister confirm that our Dutch friends advised him to make an immediate application to join the Common Market based on the Treaty of Rome and, after that, to have further discussions about specific British problems?
The Prime Minister: I do not think that it would help if I gave details of what our Dutch friends advised. They were particularly concerned to knock down the stupid story which they had read yesterday morning saying that they had shut the door to us. They were very angry about that suggestion. We had some discussion with them about the next step when the six visits were over and that, of course, is one of the options open if we are satisfied that we can overcome the still very formidable difficulties which remain before us.
Mr. Dalyell: In view especially of the unique contribution to the Dutch economy which is made by Philips of Eindhoven, with their technical experience, did my right hon. Friend discuss the concept of a European technological community during his visit to The Hague?
The Prime Minister: Without necessarily taking part in my hon. Friend's commercial, we discussed the question of a technological community at considerable length and we were agreed about the very great importance of this concept and the contribution which both Britain and the Netherlands could make to it.
Mr. Bellenger: As the purpose of my right hon. Friend's visits to Europe have been to ascertain what sort of terms this country could get if we decided to enter the Common Market, he must by now have a fairly good idea of what those terms are, irrespective of what Luxembourg may say. Can he not take the House into his confidence?
The Prime Minister: I think that we should wait to consider all the results of all six discussions when they are completed, as they nearly are. There has been no negotiation. I do not think that our hosts have been saying that we could go in on this or that term, but we have been able to narrow down the difficulties and some which seemed formidable seem less in the light of current Community practice rather than Community law, as

269
it might be called, while others remain formidable. Our friends have been helpful in offering one method or another by which some of the difficulties could be overcome.
Lord Balniel: By now the Prime Minister must have reached a strategic decision about the timing of the announcement. Does he intend to make the announcement after his visit to Luxembourg and before the E.E.C. summit meeting?
The Prime Minister: The noble Lord is wrong to think that my right hon. Friend and I have reached a strategic decision. We have a great deal to consider in the light of our visits and a vast amount of information has been gleaned, not all of it completely consistent with things which have been said in different capitals. It will be necessary for the Government to examine all this very carefully indeed as soon as possible, and when we are able to make a decision, we shall, of course, tell the House.
Mr. Alfred Morris: Is my right hon. Friend aware that he has been reported in the international Press as saying in The Hague that the gap was now very narrow? Can he tell the House just how narrow the gap is?
The Prime Minister: What I said at the Press conference last night—and, as usual, I am prepared to make the full text available to the House and not an inevitably compressed report—is that there are still three or four formidable problems. It is still too early to say whether essential British and Commonwealth interests can be safeguarded, but on some of the problems which had looked difficult the gap is very narrow.
Mrs Ian Gilmour: As the Government's nuclear policy is utterly at variance with their policy of trying to get into the Common Market, and as their financial policy is utterly at variance with both, would not these visits have been more fruitful if before undertaking them the Prime Minister had concerted Government policy?
The Prime Minister: If the hon. Gentleman is saying that we ought not to push ahead with this vital treaty for nonproliferation because of his belief, which is not mine, that it affects the conditions
270
on which we can go into the Common Market, then that is one of the most dangerous suggestions which I have heard in the House. When he comes to consider it, the hon. Gentleman will recognise the vital importance of a treaty to stop the spread of nuclear weapons.
As I explained last week, these are two entirely different subjects. The anxieties are not about weapons, but about inspection and the civil development of nuclear energy. On this, there is a great deal that we can do to help, if we can get the Community on the right terms, because of what we can do to make a greater reality of Euratom.
Mr. Emrys Hughes: Among the range of subjects which my right hon. Friend discussed with the Netherlands Prime Minister, did they touch on the question whether the Netherlands was any worse off because it had given up all pretensions to being a great imperialist Power and did not have an east of Suez policy?
The Prime Minister: No, Sir. As a matter of fact, we did not touch upon that subject.
Mr. St. John-Stevas: May we hope that the Prime Minister's visit to The Hague has rendered him less vague? May we hope that he will take the advice of his Dutch hosts not to lose momentum and to make his application to join the Common Market at the earliest possible moment?
The Prime Minister: From the very outset of our talks in The Hague, both in the private discussions on Sunday and in the more formal discussions yesterday, our Dutch hosts agreed with us and with what I have said in the House, and put as the first prerequisite, that we must not lose the momentum which has been gained and that, equally, we must not get into a situation which could lead to a premature road block or anything interfering with our getting in, if we can get the right conditions for entry.
Mr. Woodburn: After his visit to The Hague, is it not possible for the Prime Minister to say something which would assuage the genuine apprehensions of my right hon. Friend the Member for Easing-ton (Mr. Shinwell) and others, apprehensions which are preventing them from giving their wholehearted enthusiasm to our joining the Common Market?
The Prime Minister: I did not think that there was any doubt about the wholehearted enthusiasm of my right hon. Friend and my hon. Friends as expressed in the Motion, which so many of them have signed, quoting the statement which I made on 10th November, including the phrase about the safeguarding of essential British and Commonwealth interests.
Mr. Lubbock: The Prime Minister has mentioned that there are several formidable difficulties which have still to be ironed out. Does he have in mind as two of them the right hon. Member for Easington (Mr. Shinwell) and his right hon. Friend the President of the Board of Trade?
The Prime Minister: No, Sir. The hon. Member normally treats this subject in a slightly less garish way. The difficulties as we see them were set out in the speech which I made in Strasbourg and by my right hon. Friends in the debate in the House and by the speech of my right hon. Friend at the Albert Hall. There are three or four formidable difficulties and we are trying to narrow them down to see whether there is a way of getting round them.

CONFIDENTIAL DOCUMENT (DISCLOSURE)
The following Question stood upon the Order Paper:
Q20. Mr. SANDYS: To ask the Prime Minister what evidence he has that the right hon. Member for Wandsworth, Streatham has disclosed a confidential official document to the Press.
The Prime Minister (Mr. Harold Wilson): With permission, I will now answer Question Q20.
The right hon. Gentleman's Question is misconceived. I did not say in the House on 21st February that he "has disclosed a confidential official document to the Press". What I did say—and it is all in the OFFICIAL REPORT—Was:
"I am well aware that the right hon. Gentleman was issuing to the Press references to a document which he has got hold of."
and I also said:
"…my impression would be that the document the right hon. Gentleman has been hawking about, being issued—[interruption.] I am referring to his Press statement last week."
272
—[OFFICIAL REPORT, 21st February, 1967; c. 1434–5.]
That the right hon. Gentleman has made public and made available to the Press confidential information taken from the document and has made available his version of the contents is shown by early day Motion No. 413 of 15th February and his statement to the Press published in a number of papers on 16th February.
I did not, as he will see if he studies HANSARD, say he had handed over the confidential document itself to the Press. What he did was to disclose publicly information contained in a confidential document.
Mr. Sandys: Is the Prime Minister aware that the only information which I made available to the Press was a copy of the Motion which I have tabled in this House—not one single word more than that? Does the Prime Minister not recognise that when the Government conceal the truth from the people it is the duty of Members of Parliament to make the facts known?
The Prime Minister: If the right hon. Gentleman wants to use phrases like that, as I made clear last week, he is entitled to say these things. He does not help to get the truth to the people if he gets hold of this document—however he got hold of it—and if he then, in the public presentation of its contents, completely slants the facts.
Both in his Motion and in his Question last week, and in the Press stories which he inspired, it was stated throughout that the cost of sanctions was —100 million. That was the fact that he gave out. There is a very big difference, and the right hon. Gentleman really does understand it, between the cost of sanctions and the total cost to Britain of action by others, including sanctions on Rhodesia.
Mr. Sandys: Is the Prime Minister really now claiming to censor, vet and amend Motions which are tabled in this House? Are we not free to table Motions in the form in which we think them right? It is open to the right hon. Gentleman to criticise them or to answer Questions, as he likes, but we are still free.
The Prime Minister: I would not presume to attempt to censor the right hon. Gentleman. When he does get it wrong,

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he always issues a statement to the Press at 6 o'clock at night. On this particular Motion, if he accuses me of concealing information from the House—
Mr. Sandys: I do.
The Prime Minister: I am entitled to say, having read his Motion, that he slanted the information and gave wrong information to the House and that the information he was slanting came from an official document. His first duty to the House is to tell the House who supplied him with it.
Hon. Members: Answer.
Mr. Speaker: Order. We cannot pursue this any further.
Sir F. Bennett: On a point of order. I should like your guidance. Mr. Speaker. Without wishing to interfere in your discretion, on the last Question taken after Question Time by the Prime Minister, you allowed, according to my recollection, about a dozen supplementary questions. Can you say why this Question should be treated so differently?
Mr. Speaker: I should not have thought that the hon. Gentleman should need any guidance as to why this Question should be treated differently. It is quite a different Question from most Questions.
Mr. Wall: On a point of order. As the dispute is over a document, would it not be in order for the document to be placed on the table of the House?
Mr. Speaker: I dealt with that point of order last week.
Sir J. Langford-Holt: Further to that point of order. As this argument appears to be about a Motion which is on the Order Paper, is there any method open to private Members, or the Prime Minister, to make sure that this Motion is discussed in the House?
Mr. Speaker: That is a question that the hon. Gentleman must raise during business questions on Thursday.
Mr. Paget: Further to that point of order. The Prime Minister is now saying that this document shows that he told the Commonwealth Prime Ministers that the cost to this country of the Rhodesian policy was over £100 million. That quo-
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tation from the document we ought to see.
Mr. Speaker: If the hon. and learned Gentleman refreshes his memory, he will find that I dealt with that point of order the last time that this issue was raised.
Mr. Kershaw: Further to that point of order. In my respectful submission it is clearly within the recollection of the House that the Prime Minister referred to the document circulated to the Commonwealth Governments. Is it not absolutely according to our tradition that if a document is referred to in specific terms it should be laid before the House especially in a matter such as this where the facts are so much in dispute?
Mr. Speaker: I would remind the hon. Gentleman that I dealt with that matter last time.

D NOTICE SYSTEM (COMMITTEE)
The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I wish to make a statement.
I regret that it was not possible to make this yesterday, the first Parliamentary opportunity for a formal announcement, but, as the House knows, I was in The Hague.
As hon. Members will be aware, I have appointed a Committee of Privy Councillors under the chairmanship of Lord Radcliffe with the following terms of reference:
To examine the circumstances surrounding the publication of an article in the Daily Express of 21st February entitled, "Cable Vetting Sensation" in relation to the D notice system; and to consider what improvements, if any, are required in that system in order to maintain it as a voluntary system based on mutual trust and confidence between the Government and Press in the interests alike of the freedom of the Press and of the security of the State.
The other members of the Committee will be my right hon. Friend the Member for Easington (Mr. Shinwell) and the right hon. and learned Gentleman the Member for Wirrall (Mr. Selwyn Lloyd), who was nominated by the Leader of the Opposition.
Mr. Heath: I am sure that the House would agree that the Prime Minister is right to appoint this Committee of In-

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quiry. Could the Prime Minister confirm that the phrase
"To examine the circumstances surrounding the publication of an article …"
means that the Committee can deal with the four points which I put to him in my letter, which I think is the case, and also the contents of the article to which he made reference in his own statement?
The Prime Minister: Yes. The construction of the terms of reference is now a matter for the Privy Councillor's Committee, but I would certainly assume—indeed they were drafted with this in mind —that they would be capable of that construction. That is one of the main things to which the Committee will presumably be addressing itself.
Mr. Thorpe: Since the Prime Minister has recognised that political judgments are involved, by the appointment of two distinguished politicians to serve on the Committee, would it not help to allay the concern of Members and the public alike in this very important constitutional matter if, instead of restricting it to membership of the two parties who have exclusively operated the D scheme, upon which they have now been asked to pass judgment, that the suggestion of, I think, the Leader of the Opposition, should be taken up, that it should be expanded to embrace Members of the three political parties in this House, by the appointment of one of the several Liberal Privy Councillors available?
May I finally express the hope that the Prime Minister will not fall back on the unfortunate and indefensible Conservative precedent of 1957 to justify the present action that he is taking?
The Prime Minister: There is that precedent and it is a useful one, but I would certainly be prepared to discuss with the hon. Gentleman whether a change should be made in this precedent for some future occasion, if one were to arise. The hon. Gentleman has misunderstood the situation when he says that this is a matter for political judgment, implying party political judgment. One of the Privy Councillors concerned said last weekend that this is not a party matter, nor is it. It is the experience of the two right hon. Gentlemen who have
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been nominated that the House wants to hear from, and not their political views.
As to responsibilities for the past, I am glad to be able to tell the hon. Gentleman that even a Liberal Prime Minister has been involved in the particular practice that will be the subject of this inquiry.
Mr. Michael Foot: Since it is the case that this is an entirely voluntary system, and, therefore, any question of publication that may follow is a matter of judgment, would the Prime Minister confirm that, if the Committee were to make any proposal for departing, in any degree whatever, from the voluntary nature of the system, then the House of Commons, as well as distinguished Privy Councillors, would have to be consulted?
The Prime Minister: That is a very fair point. As my hon. Friend knows, the Radcliffe Committee considered the operation of the D notice system and stressed its essentially voluntary nature and said that its working depended on good will—the early Radcliffe Committee, that is.
I do not think it is for us to give any kind of lead to the Privy Councillors. Obviously, their report will be published in full, if that is possible. If not, in accordance with the usual procedure the Leader of the Opposition will see anything that it is thought should be excised on security grounds, and then the House will have the normal opportunity of debating anything in it. It is our desire to keep this a voluntary system as it has been all along.
Mr. Thorpe: Is the Prime Minister aware that there is no suggestion that this is a party political matter, but merely that political considerations are involved, and that, therefore, the wider the canvas the more likely the value of the report is to be enhanced?
The Prime Minister: The hon. Gentleman does not like the references to the 1957 Committee, but it was a very valuable Committee and worked very well with its small membership.
What the Government are seeking to do, after consultation with the Leader of the Opposition, is to appoint a Committee, in addition to a distinguished judge, of two elder statesmen who claim the confidence of the whole House in

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these matters, and to rely on their judgment on all of these very difficult problems.
Sir L. Heald: Would the Prime Minister be good enough to say whether, under the terms of reference, Lord Radcliffe will be entitled to inquire into the question whether the alleged cable vetting has taken place and, if so, upon what legal authority, if any, it was done?
The Prime Minister: It will be for Lord Radcliffe to inquire into anything which he considers relevant in accordance with his terms of reference, and it could be that some inquiry into the system which the journalist in question purported to describe might be necessary for the purposes of identification. But we must leave this to the Committee. On the question of powers, the right hon. and learned Member has a Question down to me for answer later this week.
Mr. Winnick: Would not my right hon. Friend agree that this allegation of the vetting of overseas cables is far more important than the D notices? Would he agree, therefore, that there is an urgent need to review this apparently 40-year-old practice?
The Prime Minister: I do not think that one should go more into the merits of this case when we have appointed between us a Committee of Privy Councillors. It is for them to produce a report to the House. Any considerations such as that raised by my hon. Friend might be raised in the House after we have got the report.
Mr. Ronald Bell: Would the Prime Minister consider altering the terms of reference, if necessary, in two respects so that they might cover other matters which cause public anxiety: first, the attempts which were made by the Government to stop publication of this story by the Daily Express; and, secondly, the question whether there was an increase in the extent of scrutiny of cables within the recent past?
The Prime Minister: If the Committee considers that its terms of reference are
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unnecessarily restrictive, it must be for it to make representations to that effect.
I shall not comment on the tendentious way in which the hon. and learned Gentleman put his first question, but that view is one of the things which will have to be considered by the Committee; it is not for me to comment on it now. It is fully able to consider it within its terms of reference.
The question of the extent or method, as I have said, has not changed for 40 years, including the 13 years when the hon. and learned Gentleman sat on this side of the House. There has been no change, either, from the time when the right hon. and learned Member for Chertsey (Sir L. Heald) was Attorney-General.
Mr. Arthur Davidson: Would my right hon. Friend agree that it would be relevant for the Committee to consider the whole relationship between the Official Secrets Act and the Press in view of the fact that the very vague provisions of this Act lend themselves to the protection of Government Departments from embarrassing disclosures when national security is not affected rather than that they should be purely to protect national interests?
The Prime Minister: This question, which the Committee must be left to get on with in its own way, deals with the D notice system, or with certain circumstances which have arisen, and also with any changes considered desirable in the interests of the freedom of the Press and national security. It does not of itself raise the question of the Official Secrets Act. If the Committee feels that it should, it will, no doubt, so inform me so that the matter can be considered.
But certainly throughout the operation of the D notice system under successive Governments—as Lord Radcliffe reported, it worked very well—there has never been any question, to my knowledge, of any Government using the D notice system except when security was involved and a serious issue of security was raised. Whether that is the position in this case must be for the Committee to advise the House about.

OFFICIAL PAPERS (CHISLEHURST COMMON)
The Financial Secretary to the Treasury (Mr. Niall MacDermot): With permission, Mr. Speaker, I wish to make a statement.
In his Answer of 18th January to a Private Notice Question by the right hon. Member for Wolverhampton, South-West (Mr. Powell), my right hon. Friend the Secretary of State for Defence referred to some official papers which had been discovered on Chislehurst Common.
Investigations have shown that these charred pieces of official papers came from a consignment of security waste which had been incinerated under the supervision of inspectors from Her Majesty's Stationery Office. They had fallen from a lorry carrying residue to a tip from the particular local authority incinerator used on this occasion.
I have been asked by my right hon. Friend the Secretary of State for Defence to say that some of the papers discovered on the common were, subsequent to the Answer referred to earlier, found to be of a later date than 1958; but that none of them was any longer of security significance.
Local authority incinerators have been used successfully for many years to destroy classified waste. Over the past five years, for example, some 1,700 tons have been satisfactorily burned. But on this occasion a few documents were not completely burnt. A thorough investigation by the Security Service, assisted by the Stationery Office, has now shown that complete destruction can only be wholly certain if the responsible Department takes full control of the process, including cleaning out the incinerators. This has not always been possible when using local authority incinerators which are also required for other work.
The inquiry into this incident has been extended to include a comprehensive review of disposal methods, and this has led to a number of recommendations which are being urgently studied. These include such possibilities as the pro-
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vision of suitable Government-owned incinerators; enabling Departments to destroy more of their own waste by providing them with suitable machines or apparatus; and the increased use of pulping.
In the meantime, the waste which has to be burnt will be kept to a minimum; and incinerators not on Government premises will be used only where complete control of the process of destruction can be secured.
Mr. Powell: Is it not fortunate that this occurrence was brought to public attention? Could not the hon. and learned Gentleman, in so long a statement, have spared a word or two of recognition to the newspaper and its employee who performed this service? Is he aware that the House will wish to know later of the steps on which the Government eventually decide and to be assured that both expense and efficiency have been given weight in deciding upon them?
Mr. MacDermot: I think that the answer to all the right hon. Gentleman's questions is, "Yes".
Mr. Lubbock: Is the hon. and learned Gentleman aware that one of the possibilities which he should be exploring—it was not mentioned in his statement—is the classification of fewer documents and that most people will be amazed to hear of the vast quantities of classified papers which have been destroyed during the last five years?
Mr. MacDermot: This is a continuing and constant struggle in all Departments.
Mr. Emrys Hughes: How many previous Defence White Papers have been destroyed, and how long will it be before the Defence White Paper which we are discussing today finds its way to the incinerator?
Mr. Kershaw: Would the hon. and learned Gentleman give an assurance that the National Plan will be included in future documents to be incinerated since it has been so misleading to the public?
Mr. Speaker: Order. I dare not make any comment.

DEFENCE
Order read for resuming adjourned debate on Question [27th February]:
That this House welcomes the fact that the Government is conducting its Defence Review as a continuing exercise in reducing the burden of British commitments forces and expenditure overseas with due regard to the limits imposed by the national interest and security and approves the Statement on Defence (Command Paper No. 3203) as a further contribution to this end.—[Mr. Healey.]
Question again proposed.
The Secretary of State for Foreign Affairs (Mr. George Brown): First, may I say a word of sincere appreciation to the Opposition for offering me, of their own volition, the courtesy of being allowed to open this second day of the debate. I am very grateful to them.
Yesterday, as the House knows, I cut short my visit to The Hague partly to be in the House for Question Time and partly so that I could hear the opening of this two-day debate on defence. I looked forward to the speech which was to be made by the right hon. Member for Wolverhampton, South-West (Mr. Powell). I have seldom been so disappointed in all my life. It was the sort of speech that can collect a cheer in the House, but cuts absolutely no ice whatever outside. It contained not one single constructive remark.
But, as the right hon. Gentleman began with a compliment to my right hon. Friend, perhaps I should return the service. I thought that his speech put him firmly into the class which the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) used to head so well. I merely draw attention to the seat in the House which the right hon. Member for Kingston-upon-Thames now occupies when he is here.
No matter what the right hon. Gentleman tried to prove yesterday, we have brought home troops in large numbers from many areas of the world. My right hon. Friend the Secretary of State yesterday gave the House the detailed figures, but the important fact to remember is that, by April, 1968, 25,000 men and 6,000 Service families will have returned to this country from outside Europe on our present plans. We can be quite clear about this. We are now ahead of our
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target schedule in bringing men home and we are doing better than our target savings in defence expenditure.
These savings have been made and are being made within a complex equation of considerations of foreign policy. As the Defence Review of 1966 said so clearly:
"Defence must be the servant of foreign policy and not its master."
We regard the United Nations as the keystone of our policy and believe that the most effective method of peacekeeping would be through the United Nations. But today, the effectiveness of the United Nations in peace-keeping work is severely limited. Some major Powers will not pay their share of operations. The same Powers continue to refuse even the voluntary contributions which the United Nations has unanimously asked for. In the major task of deterring or repelling aggression, the United Nations is hampered by the need for virtual unanimity among the great Powers. Whatever our hopes and ambitions for the future, this is the situation with which we have to deal now.
Quite clearly, therefore, if we are to survive and be able to affect events, we need friends and we need allies. The three decisions of principle which were taken in the 1966 Defence Review demonstrate the realities of interdependence and the limitations of our strength today. May I remind the House of these three principles: first, that we could not and should not undertake major operations of war except collectively, either under or for the United Nations, or with our allies; second, that obligations to defend a country could only be accepted if that country were prepared to grant facilities to make assistance effective in time; third, that we would not attempt any longer to maintain bases in an independent country against the wishes of that country.
To these principles must be added the clear statement in this Defence White Paper, that our aim is that we should not again have to undertake operations on the scale of confrontation outside Europe. The plain fact is that we can only think in terms of partnership with our friends, and this is true both east and west of Suez.
However, friends and partners do not necessarily bring with them an automatic

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relief from the burden of our commitments. They are the key to survival, but not the secret of an easy life. The main purpose of the continuing process of reviewing our defence expenditure is to bring it into balance with our resources. It is no good taking the line—as some hon. Gentlemen seem to do—of insisting that the sun should never set on our defence forces, strung out across the globe in large numbers, and, at the very same time, calling for a strong and expanding economy at home. Behind that attitude lies a clear delusion.
At the same time, it is no good hoping for quick and simple solutions, a fast retreat to a "Little England", without regard to the consequences, with no concern for the responsibilities which we have inherited, particularly in the Commonwealth and with no heed for the appalling dangers.
By dangers, I mean not just the obvious temptations to others to exploit a power vacuum, not just the dangerous loss of confidence in those whose peaceful stability we need to see assured, but the danger to our reputation among our allies and in the world at large if we were tempted to break unilaterally our firm promises.
When we examine and re-examine the burden of our commitments, we have to consider our own interests and the consequences for our friends and allies. We have to consider, too, the economic consequences for people who have a claim upon us and we have to consider the effect of what we do in terms of military balance and strategy. All these considerations have themselves to be balanced against the paramount fact that we must lessen the defence burden on this country.
In many cases, the choice is not between staying in a place at our present strength or withdrawing completely. The problem is often finding a way in which we can stay in a reduced, but still effective, and less costly form. In other cases, the decision to withdraw completely can and must be taken. The problem of timing is fundamental, but timing is not just a matter for us alone to decide. We do not have a completely free hand. Others depend on us and count on us.
The difficulties in doing this are clearly formidable. One only needs to look at
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the case of Malta, into which I shall not go in detail, because discussions are going on. However, this is clearly an example which must show the House how sharp is the knife-edge on which all our calculations about these things are balanced.
The same considerations of economic consequences for the local Government, the local people, could apply just as forcibly to Singapore as to Malta. Lee Kuan Yew has shown that there is a place for a democratic progressive Chinese-majority State in South East Asia. He needs our support, and, in particular, he has a right to expect from us full consultation in good time about any reductions in the employment we now provide in Singapore.
The right hon. Gentleman chose yesterday to raise the case of Aden. There, when everything is taken into account, the view of the Government quite firmly is that the balance favours decisively the withdrawal of our garrison when Aden reaches independence. Right hon. Gentlemen opposite decided the date for independence. But what sort of independence had they in mind? Was it to have been an independence dominated by a British defence interest? Do they think that on this basis the United Nations and the Arab League, which the South Arabian Federation will wish to join, would ever have accepted that South Arabia was a truly independent State?
May I repeat that our departure from Aden does not break a treaty commitment or involve any bad faith. [HON. MEMBERS: "Oh."] Under the existing treaty with the Federation we are committed to defend it until its independence. We are doing that. And our troops are doing it under the hardest possible conditions. In the face of subversion, organised and equipped from Yemeni territory, we are carrying out our responsibilities for the external defence of the Federation and for the internal security of the Colony of Aden. Our forces are doing this difficult and testing job with moderation, good humour and humanity. They deserve our thanks and our encouragement.
The defence of South Arabia after independence will rest partly with its own forces, to whose expansion we are making a very substantial contribution. Perhaps the House would like to have the figures.

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On military aid alone we are paying to Aden £5½ million on capital account and £10¼ million for three years after independence. The level of civil aid has not yet been determined, but civil aid will also continue for three years after independence. The allegation that we are not helping and that we are breaking faith or that we are leaving them alone is without any foundation at all.
Mr. Sandys (Streatham): Would the right hon. Gentleman clear up three points which, I think, are very important? Would he read from the treaty, which I have here, any clause which supports his statement that we have an obligation to protect the Federation only until independence?
As to the question of our undertaking, is he not fully aware that this is a complete breach of the understanding which was given to the Federation in the conference of 1964, when we promised them independence at their request? They asked for independence and defence and we promised them the two. Will the right hon. Gentleman explain how he maintains that that is not a breach of faith going back on one-half of the undertaking?
Mr. Brown: As the right hon. Gentleman well knows, in paragraph 38 of the White Paper it was stipulated that there should be a conference to discuss these things. He well knows that that conference never took place because of the South Arabian inability even to agree on an agenda. That paragraph which he mentioned therefore lapsed. He knows that as well as I do.
Mr. Sandys: Read the treaty.
Mr. Brown: I know the fears of some hon. Members opposite. But in my view they are the fears of those who still seem to think that any lessening of the British presence anywhere in the Middle East must automatically be accompanied by appalling disasters to British interests.
We do not share these fears. I see the hon. Member for Banbury (Mr. Marten) leaning forward. May I say this, in passing? Last night, he chose to make what I thought was an outrageous and abusive attack, in the well-known technique of allusions, to my right hon. Friend the Member for Dundee, East (Mr. George Thomson). He failed,
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under great pressure from my colleague the Minister for Defence, to withdraw it. I understand that this morning he has sent my right hon. Friend a perfectly appropriate and very necessary private apology. Is he willing to make the same gesture in public?
Mr. Neil Marten (Banbury): If the right hon. Gentleman reads the OFFICIAL REPORT of the whole debate he will see that I said that I unreservedly withdrew any implications which were attributed to me by the Minister of Defence (Administration). It was the over-agile mind of the Minister of Defence (Administration) which jumped too rapidly into the gutter of suspicion, and that was done purely because he wished to distract the House from the argument which I had been advancing against the Government's policy in Aden. I withdrew that implication at the time.
Mr. Brown: I have read it. The hon. Member knows better than anybody else that the terms of his letter to my right hon. Friend in private this morning are not in accord with what he is prepared to say in public about these matters.
Mr. Peter Tapsell (Horncastle)rose—
Mr. Brown: I will not give way.
Mr. Tapsell rose—
Mr. Speaker: Order. If the right hon. Gentleman does not give way, merely continuing to stand will not make him give way.
Mr. Anthony Kershaw (Stroud): On a point of order. May we be allowed to know whether the Foreign Secretary, who has referred repeatedly to a private letter, has given my hon. Friend the Member for Banbury (Mr. Marten) notice that he intended to do so?
Mr. Brown: The hon. Member for Banbury gave my right hon. Friend the Member for Dundee, East no notice that he intended to make the attack.
Mr. Kershaw: Further to that point of order. In view of the fact that the Foreign Secretary has now admitted that he did not give my hon. Friend notice that he intended to refer in public to that private letter, ought he not now to apologise to the House?
Mr. Speaker: That is not a point of order. There are still 50 hon. and right hon. Gentlemen who wish to debate defence. I hope that we can get on with the debate.
Mr. Brown: The House will make its own assumption of what happened [HON. MEMBERS: "Hear, hear."] I mean the whole House and not just hon. Members opposite.
In the Persian Gulf we are doing a job which, for reasons of history, only we can do. And it is a worthwhile job to keep the peace in a small, but important corner of the world, while it uses its wealth to bring about progress and development and to create an indigenous balance of power that can manage without us.
It is true to say that we are building up from one battalion to two in the Persian Gulf, but that is only one point of an operation which is enabling us to cut down from six battalions to two in the whole Middle East theatre.
We are also bringing home our troops in large numbers from South-East Asia. They have done there, also, a superb job. They have helped to create conditions in which Malaysia and Singapore could get on friendly and honourable terms with their neighbours. I shall not at this moment relate the story of confrontation —it is told in Chapter II of the White Paper—but behind the rather dry official prose there is a story of much heroism, much devotion and much sacrifice by thousands of Service men to whom not only we in Britain, but millions in South-East Asia, have cause to be grateful.
There is also a story of careful and determined diplomacy. Never has our diplomacy been better employed to save lives and to protect our own interests, and those of the Commonwealth and of the area as a whole. Diplomacy and military skill, working within a single purpose and within a great Commonwealth alliance, have—this is not overstating it—transformed dramatically the possibilities and prospects for the peaceful development of that part of South-East Asia.
In genuine regional co-operation between the countries of South-East Asia there lies the great promise for the peaceful development of that area. But regional co-operation is at the moment tentative, fragile and, unhappily, not sufficiently
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comprehensive. Many countries do not yet feel safe enough to stand alone. They need us to help them build the stability which that area has not yet found. And we have said, and they know, that when they no longer want us, we shall be thankful to go.
The equation east of Suez is complex enough. But we certainly cannot solve that by trying to cut our commitments in Europe. The one thing that would make no sense at all would be to keep troops at the furthest and most expensive end of the line and not defend our own front door in Europe.
Our troops are on the mainland of Europe as an essential part of the defence of this country. They are there as part of the interrelated commitments of the Atlantic Alliance. And those commitments not only bind us to our allies, but they bind our allies to us—others are committed to us by virtue of these commitments.
It is worth remembering that these are commitments which have kept the peace in Europe since 1945, for a longer period than the peace we knew after the First World War. They bind the United States to the defence of Western Europe, which was, perhaps, the missing link between the two world wars, and they enable Germany, firmly embraced within a system of collective security, to play her part in the defence of Western Europe.
The consequence of any ill-considered withdrawal of our forces from the mainland of Europe would be disastrous. We cannot leave Central European countries to face by themselves the problems they have had to face before. So long as we and the United States are there in sufficient strength, some of the things which we all of us think dangerous—even disastrous—will not happen.
As the House knows, we are at the moment faced with a serious problem of foreign exchange costs arising from the stationing of our forces in Germany. I spoke about this during the foreign affairs debate on 6th December and the House has been kept fully informed of later developments. As it knows, my right hon. Friend the Minister of State is at this moment in the middle of the latest stages of these negotiations.
Our objective, as we have said repeatedly, is to cover these foreign exchange costs by one means or another.

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If they cannot be covered by financial means, we shall have to consider proposing a substantial redeployment of forces to this country in order to lighten the burden. This would mean that some forces would then be stationed here rather than on the European mainland. I want to make it quite clear that it would not mean that these forces would then cease to be available to N.A.T.O.
In any case, in the present situation, both politically and technologically, we believe that some redeployment of this kind is justified. We are not attached to the present level of forces in Europe if the size of the threat does not require it. It may be that the Alliance will be able to achieve a lower level of forces without disturbing the balance of power. This is what we are looking at in N.A.T.O. now. We must decide with our allies to what extent this could be done: and, of course, from such a reduction we ourselves would benefit.
But beyond that, if tension can be lowered between East and West, as the détente, which is already happening in its early beginnings, moves on, the whole question of mutual reduction of forces to lower levels in Central Europe becomes a practical possibility. In my view, it is there that all our hopes for a substantial lessening of the defence burden, not only in the West, but also for the countries of Eastern Europe, really lie.
The fundamentals of maintaining peace in the world have all too often been ignored in the past with disastrous consequences. We need to remind ourselves of them constantly if we are not to repeat the appalling mistakes of history.
With the quest for peace must go, paradoxically enough, the concern for one particular means by which it can be achieved, namely, defence. World peace, unhappily, today is in large measure the produce of military balance of power and, so far, has always been so. As I said earlier, however, our constant endeavours must be to change this situation. But meanwhile, whether we like it or not, power vacuums tempt military adventure and the weak cannot hope that their weakness will save them from attack. If we are to enjoy peace, we must provide adequately, but within our means, for our own defence: and since we know
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that world peace is indivisible, we must clearly be ready to shoulder our proper share of the responsibilities for peace in the world as a whole.
There is always a price to pay for peace, but the price is not constant. The international situation develops, and our ability to shoulder the defence burden also changes. In setting out the equation of defence there are no constant factors.
I recognise, too, as one of my hon. Friends pointed out, the dangers of policies building up a momentum of their own, of their continuing for want of adequate questioning and reassessment. It is precisely for these reasons that this government decided that we must review continuously Britain's defence rôle to ensure that it lies within our means, that it is effective, and that it conforms to the realities of the international situation.
In the final analysis, foreign and defence policies are pursued because they are in the interest of this country. Our troops are on the mainland of Europe and in Asia not because we suffer from delusions of grandeur, not because we want to impress this statesman or that, but precisely because whoever else may benefit we ourselves benefit from having them there.
These policies have brought peace to our country for over two decades. I do not argue that we have to go on spending in the future £2,000 million a year; nor that we can afford to. I could not have been Secretary of State for Economic Affairs for as long as I was without understanding fully the feelings, the views and the arguments which lie behind them, of many of my hon. Friends. We must seek for ways to do the job for less. I do not say that we have always got to have troops where we have got them now, or in the numbers we have them now. We must constantly search for other and better ways to do the job.
But do not let us delude ourselves that we can gel the kind of world we want—a world of peaceful change and development—without supporting the broad policies which this Government are pursuing today. The Motion upon which we ask the House to vote takes full account of all the complex and sometimes conflicting considerations involved in this matter.
4.32 p.m.
Sir Ian Orr-Ewing (Hendon, North): If I may say so to the right hon. Gentleman, he was much shorter and stuck more strictly to the script than perhaps he has on past occasions. There would be few hon. Members on this side of the House who would disagree with a large proportion of what he said.
Three points emerged, some of which are new. First, he laid it down that our defence forces should be in balance with our resources. It is significant that they are to be in balance with our resources and not with the threats or with our commitments, and that is why we quarrel with the Defence White Paper and why quite large numbers of hon. Gentlemen opposite disagree with it.
The second point was that there would be no unilateral breaking of our firm promises. I only wish that that policy had been in existence for the last two and a half years, and I wonder whether or not this section of his speech is a teach-in for the Labour Party and perhaps an indication of future action. Certainly it has not been an indication of past action, particularly in respect of Aden.
Yesterday, we had a devastating speech from my right hon. Friend the Member for Wolverhampton, West (Mr. Powell). It was probably the most effective speech that I have heard in my 13 years in this House. He exposed the degree to which the figures had been "fudged". Having read today's papers and having heard the whole of yesterday's debate and particularly my right hon. Friend's speech, I would say that the sooner we have television in the House, the better it will be for the image of our debates outside. I only wish it could be colour television, to show up the red faces of hon. Gentlemen opposite.
What my right hon. Friend showed with such devastating effect was that, year after year, during 13 years of Conservative rule the slice of the gross national product taken by defence went slowly but inexorably down—
Mr. James Dickens (Lewisham, West): Quite wrong.
Sir Ian Orr-Ewing: The hon. Member for Lewisham, West (Mr. Dickens) says "Quite wrong." Would he care to
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enlarge on that? He was not in the House, but, if he looks at the figures, he will find the facts are that they went down, except for the first two years. Mr. Attlee's Government had organised a big rearmament programme, and in our first year of office, 8·4 per cent of the gross national product was spent. It went up to 10 per cent. in 1953, after which it came inexorably down to 6·5 per cent.
Mr. Dickens: It is true that I was not in the House at the time, through no fault of my own, but it is quite untrue that there was any consistent pattern of a steady downward trend year by year to indicate a fall in the amount of the gross national product spent on defence. It varied from year to year. There was, in fact, no consistent downward trend.
Sir Ian Orr-Ewing: I will not take up the time of the House now, but I have the figures before me. They went down steadily from 10 to 6·5 per cent.
While I was at the Admiralty, I asked for a survey to be done and an extrapolation undertaken to see roughly what we spent of our gross national product in 1909, 50 years previously. The estimate given was that, even at that time, we spent between 6 and 7 per cent. of our gross national product. Those hon. Members below the Gangway and people in the country who say that we cannot afford to spend this slice of our national product are not arguing from history or from the facts. We can afford to go on spending about that portion of our national product and maintain our economic position in the world.
Mr. Woodrow Wyatt (Bosworth): Can the hon. Gentleman say what, in 1909, was the extent of our foreign exchange costs on our overseas military expenditure? That is what the argument is about, and not the internal spending. The important thing is what the foreign exchange expenditure was.
Sir Ian Orr-Ewing: The hon. Member for Bosworth (Mr. Wyatt) is wrong and has not got the core of the argument. We are saying that overseas expenditure as set out in the White Paper will not go down. Nor, as shown, will the cost of defence truly go down, and the figures are "fudged".
At a time when the Civil Vote has gone up markedly by £660 million, it is

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strange and perhaps typical of a Labour Government that the only item which should stay moderately stationary is defence, and the country will judge them sorely if they skimp and "fiddle" on defence and do not provide adequate equipment for our forces.
During their two and a half years of office, we have had all sorts of excuses for readjusting our defence programme. There was a tremendous build-up about the defence reappraisal. When it came out, there was bitter disappointment because it was not a true reappraisal.
The main reason given in last year's defence programme was that we were bringing people home because there was "over-stretch". A subsidiary reason given was foreign exchange. The following year we had more emphasis on the overseas exchange aspects, and an entirely new one which was raised yesterday by the Secretary of State for Defence when he said:
"… I must tell the House that the current manpower trends in British society as a whole suggest that this would be necessary even if there were no financial limitations."—[OFFICIAL REPORT, 27th February, 1967; Vol. 742, c. 110.]
He was referring to the overall reduction in the size of our Armed Forces.
Here is another reason given for reducing our Armed Forces. It seems strange that the manpower of our nation should be under strain when we have 600,000 people unemployed at the moment, and when Lord Shawcross made an assessment last year that something like 1 million people are grossly underemployed due to manning restrictions or restrictive practices in our trade unions.
It is hard to believe that we are woefully short of manpower at this stage, and I suggest that perhaps the right hon. Gentleman is being advised by people who believe that the gross national product and our production will go forward as it did in the last six years of Conservative rule, at the rate of 3·8 per cent. per annum. It is not going forward at that rate. It is horribly and desperately stagnant under the right hon. Gentlemen who sit there, and under those circumstances I cannot believe that our manpower will be under very great strain. This is just another excuse for cutting our numbers in our defence forces.
It is quite true to say that it is cheaper to employ defence people at home than
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it is overseas, although it is only true in the long term. In Aden we have the barracks, the schools, the hospitals, and the stores. If those people are brought home, these will all have to be recreated in this country. The same applies in Malta. We have very good modern barracks there. We have our stores and our training facilities. All those will have to be recreated in this country.
We were told yesterday that 20,000 married quarters will have to be built in this country over a period of three years. That appears in column 118 of the right hon. Gentleman's speech. I estimate that that will cost £60 million or £70 million. In addition, there is £20 million reserved in the Defence Estimates for mobile homes.
It this really true economy? It seems that we have overlooked the effect on recruiting, the efficiency of our forces, and on morale. All will be desperately affected if there is little overseas service. Apart from these effects, I claim that there will not be a net saving on the Defence Vote.
I notice in the Defence White Paper that over £10 million is tucked away in the Ministry of Public Building and Works which presumably does not come within the global total of £2,000 million which the right hon. Gentleman is so fond of quoting. We were told last night about the equivalent of a township of between 40,000 and 50,000 people. I should like to hear an estimate, because we were not told, of what it would cost to construct from the start a township of this size, to accommodate 10,000 men coming back from the Far East, 10,000 coming back from Aden, and 5,000 from South Africa and the Mediterranean area.
The right hon. Gentleman went on to say that another 5,000 or 10,000 might shortly be coming from the Far East. We then had him speaking in very different terms from those of the Foreign Secretary when speaking about pulling troops out of Germany. We heard estimates of 10,000 or even 20,000. All these extra troops from the Far East, and any who may come from Europe as a result of negotiation, will be added to the burden.
If I may summarise, the excuses have been that they set a defence ceiling of £2,000 million without attending to the

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commitments. It was an arbitrary, unthinking, defence ceiling. They then gave the excuse that our defence forces were overstretched. They then gave the excuse that overseas currency was in scarce supply. This had some validity until suddenly the Malta withdrawal came up, which blew that excuse right out of the water, as there is no foreign exchange in Malta.
The Secretary of State for Defence (Mr. Denis Healey): There is foreign exchange in Malta. I said the other day that we shall be saving £6 million a year on foreign exchange when our planned withdrawal from Malta is completed. I gave details to the House during the Malta debate, The hon. Gentleman was not there. He should have been, or he should at least have read HANSARD.
Sir Ian Orr-Ewing: I should like to have more details of how, if Malta is part of the sterling area, there is a saving of £6 million across the exchanges.
Mr. Healey: The hon. Gentleman must be aware that almost all defence expenditure abroad, except in Germany, is in the sterling area. It is also foreign exchange. Hong Kong is in the sterling area, as also is Singapore. This was explained to the House. The right hon. Gentleman should have been present during the Malta debate. Foreign exchange expenditure is expenditure overseas which counts as a claim on our exports. In other words, it is unrequited exports.
Sir Ian Orr-Ewing: I only hope that the right hon. Gentleman stays where he is at the Ministry of Defence and does not become Chancellor of the Exchequer. My right hon. Friend the Member for Barnet (Mr. Maudling) will deal with this point when he winds up this evening. The fact is that all these plans to bring people home will cost a large amount of money in bricks and mortar. That is why we on this side of the House agree with what the hon. Gentleman the Member for Woolwich, East (Mr. Mayhew) said. He quite rightly recognised that expenditure of this sort was at the expense of equipment for our troops. In his speech made at his resignation on 22nd February, 1966, at column 257, he said:
"The cuts apply to all three Services and amount to one-sixth of the total Budget"—
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that is, £350 million—
"Some of these reductions were to cut out waste. On the other hand, the cuts are overwhelmingly in the realm of equipment and weapons …"
He went on:
"It represents a very heavy cut indeed in military capabilities."—[OFFIcIAL REPORT, 22nd February, 1966; Vol. 725, c. 257.]
This is exactly our accusation, that they have not cut the commitments but that they had cut the military capabilities. That is why we will vote against the White Paper tonight.
Mr. Christopher Mayhew (Woolwich, East): Would the right hon. Gentleman put the House out of its misery? We hear constantly from the Opposition benches that the Government have too many commitments for their resources. Can we be told plainly if the policy of the Opposition is to cut commitments or to increase the defence budget?
Sir Ian Orr-Ewing: I have been at pains to explain that we would not find it necessary to bring people so rapidly away from our overseas bases, that this would represent an extra cost to our defence Votes. When the balance is done I am sure that it will be realised that we will spend more on bricks and mortar than we could have spent if we had left them there in situ.
I come to the question of West Germany, because on both sides of the House there was considerable anxiety about this matter. It struck me that there was a different tone—we all noticed this on this side of the House—between the terms used by the Minister of Defence when he opened the debate and the much more statesmanlike terms used by the Foreign Secretary in his speech today. Of course, we acknowledge that there is a considerable amount of foreign exchange spent in West Germany, and we said so in the 1958 White Paper—I am surprised that no one has quoted that yet.
I do not wish to weaken our negotiating position at this stage, but are we being realistic when we ask that all foreign exchange costs should be met by the West German Government?
It should be remembered, and it will be seen at Appendix H of the White Paper, that the United States N.A.T.O. forces spend each year between £30 million and £35 million in dollars in the

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United Kingdom. So perhaps one will consider this as an offset to the expenditure of our forces in Germany.
A second question I should like to ask is why has the cost of our defence forces in Germany swollen progressively over the years? In 1961, when our forces were approximately at the same level, it was costing us £60 million. In 1963 the figure was £76 million. In 1964 the figure was £83 million, and for the 1966–67 period it is variously estimated between £89 million and £94 million.
It appears, therefore, that despite the efforts of the right hon. Gentleman, the expenditure has gone up by £11 million in Germany, with roughly the same forces, in the last two years.
Mr. E. Shinwell (Easington): Does not the right hon. Gentleman know the reason for this? Does he know anything about defence matters? Is he not aware of the fact that the amenities, the married quarters, and all the improved conditions which have been provided for our forces on the Rhine, are far in excess of what they were seven years ago? That is why it is costing so much money.
Sir Ian Orr-Ewing: I have seen those quarters in Germany, and I must say that I agree with the right hon. Gentleman that they are absolutely first-class. That is another reason against bringing people back at this stage. They are going into second-rate accommodation here from first-class accommodation there. The right hon. Gentleman makes my point for me. There has been an increase of £11 million since 1964, but one wonders whether there is not some room for economy. Is it necessary to have 32,100 German civilians employed by 63,000 armed forces? Could not some economies be made here? Are we setting too lavish standards compared with the standards of equivalent people serving in this country?
Mr. Healey: As the White Paper points out, we are making savings totalling about £10 million in all in the cost of our forces in Germany on the basis of the present numbers. The figure which the hon. Gentleman gave showed an increase of £20 million in the cost of the forces during the last two years of Conservative rule. There has been an increase of
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only £6 million during the first two years of a Labour Government.
Sir Ian Orr-Ewing: Yes, and I remember the ridicule to which my right hon. Friend the Member for Kingston-upon Thames (Mr. Boyd Carpenter) was subjected when he got a £54 million offset from the Germans as a contribution. We were told that it was ridiculous. Now we are trying to negotiate £31½ million and this is not so ridiculous. We got much more by way of offset then than the right hon. Gentleman has so far succeeded in doing, but I wish him well for the future, and I hope that he will be more realistic.
Yesterday the Secretary of State spoke in glowing terms about the détente between the East and West in Europe across the Iron Curtain, and I had thought that the Foreign Secretary might touch on this today. He was much more realistic and much stronger. I think one should recognise that in a dictatorship very quick changes can be made in foreign policy. Those who recall what happened in August, 1939, will remember the years beforehand when Hitler's Germany had been shouting abuse at Stalin's Russia, and yet suddenly overnight there was an entente cordiale between the two. There was a pact of non-aggression between Germany and Russia, and that started World War II. One therefore has to look at the military strength—and this is very formidable—and at the combat divisions now available to Russia.
Mrs. Ann Kerr (Rochester and Chatham): Was not that because of the utter failure of the Conservative Government of that time, in conjunction with the French and the Russians, to stand together with regard to the agreement which then existed? Was not this the reason which really gave Stalin the green light? He was fearful of losing so many people as he did, 20 million during the Second World War.
Sir Ian Orr-Ewing: I am sure that the hon. Lady, who has a unique view on this matter, will have an opportunity of taking part in the debate. It is not for me to answer that extraordinary assertion. We on this side of the House would like to point out that in a dictatorship there can be a switch of policy very quickly, and when Russian combat divisions are

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on internal lines they can be moved, should it be in their interests. Therefore, if there is to be a lowering of tension, and a decrease in forces on both sides—which I think both sides of the House would support—I hope that it will be properly balanced and supervised so that there will not be the danger of this occurring.
Nearly every hon. Member who has spoken during this debate has mentioned Aden. Many hon. Members, on both sides, have spoken in the most moving terms, and are horrified at what has been going on there. I see that the Leader of the House, speaking at Thame, was reported in the Sunday Telegraph of the 19th February under the heading, "Defence cuts 'with honour'", as saying:
"Defence cuts in Aden and Singapore must be made without causing distress … I believe we shall have to make such cuts in Aden and Singapore, but we must do it in a way which is not shameful and does not let people down."
I am sure that everybody endorses that view, and even at this late hour I hope that the Secretary of State for Defence will consider whether we can do something to underwrite the independence of this nation which is so sorely threatened by 50,000 troops whom Nasser has deployed in the Yemen, and which has been undermined by Nasser propaganda which is giving great succour to the rebels, and no help to our troops or to the Adenese.
Is it not possible to leave the radar control equipment, the signals equipment, and perhaps one squadron of fighters there? Is it possible not to rely, as the right hon. Gentleman so shamefully did, on three United Nations organisations to look after the Constitution, but to rely on instructors from this country? It is no good just giving the exchange grants to which the Foreign Secretary referred, £5½ million and £10½ million. What they want is equipment, training, and instructors to help them build a viable Federal force which can stand up to threats from the north and from Nasser's troops, and this must be done quickly.
I turn now to the Far East. The White Paper takes considerable kudos, and I think correctly, for the success of confrontation in the Far East. The Foreign Secretary gave us one new piece of information today when he said that the
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Government did not envisage ever again having to undertake an operation on the scale of this confrontation in the Far East. I hope that the Government are right, but this is a bit of wishful thinking. We may be faced with a similar operation, one which, as the right hon. Gentleman rightly said, was conducted cheaply from the point of view of casualties, and yet the results were extremely effective.
There is nothing in the White Paper about what will happen when the aircraft carriers are phased out. It may not be a confrontation on quite the scale of the Malaysia one, but we might have minor operations all over the Indian Ocean where we have great and considerable interests. What will be done to protect our troops and ships? We may not have bases from which to deploy fighters. The aircraft carriers may be phased out. We were told that they would be defended by surface-to-surface missiles. We have all asked questions about this, but have been given no assurances. There must be some sort of ship which is capable of deploying vertical take-off aircraft if the eyes of the Fleet, and the strike of the Fleet, are to protect our ships, our commando carriers, and our commandos going on their duties. All these and our supply ships have to be protected, yet we have heard nothing of the future in this direction.
There are other very good reasons why we need forces east of Suez until such time as we can encourage other nations to build up their strength, to form alliances, and perhaps bear some of the responsibility which we have carried for nearly a hundred years. First, we need them to contain Communism. Is it morally right that we as a nation—and I am speaking to hon. Gentlemen below the Gangway—should opt out of containing Communism east of Suez? We have had great success so far. We may be faced with this problem again, and it would be wrong to leave it entirely to the United States.
Mr. Healey: Is the hon. Gentleman speaking for his right hon. Friend? He will recall that only a fortnight ago his right hon. Friend described young Conservatives who took this view as Rip van Winkles living in the nineteenth century.
Sir Ian Orr-Ewing: The right hon. Gentleman perhaps did not know that I

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preceded that paragraph by saying that we should stay there until such time as the strength of the local forces was built up. We have always taken this view. My right hon. Friend said so in his Brighton speech.
Mr. Healey: No.
Sir Ian Orr-Ewing: He did. I have studied my right hon. Friend's speech most carefully. The right hon. Gentleman cannot drive a wedge between us on this issue. Australia and New Zealand are both bearing their share, as are the United States, in helping to contain Communism in this area. This is why we should continue to accept this responsibility until others can help take the strain.
Mrs. Anne Kerr rose—
Sir Ian Orr-Ewing: I cannot give way again.
There is a third and valid reason, which is not often mentioned, why we should remain east of Suez. This is because of British investments in this part of the world. As a result of our investments in the Far East, we receive about £70 million a year in dividends in foreign exchange. From the Middle East, mainly from oil revenues, we receive about £200 million. We receive about £270 million from that part of the world, and we therefore have a considerable stake in maintaining stability in this area, and in the flow of international trade. Anything that we can do to maintain this stability must be to the good of Britain. Those figures show that our defence outgoings in foreign exchange expenditure are only a small portion of what we receive from investments made in that part of the world. This fact should be borne in mind before we too readily pull out.
Would it not be wise for us to take over the leadership in defence exercises with ex-Commonwealth nations? They look to us to do this, and they would follow us. If we do not take over the leadership in terms of training, exercising and equipping them, no one else will. In this way we can build up their defence capabilities until they can take some strain on their own shoulders.
Our accusation is that the Defence White Paper has been fudged and the figures have been arranged. The percentage of gross national product is about
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the same as it was in our last year, but there is one thing that has not been noticed; whereas we were paying for our aircraft as we went along—research and development, and progress payments before delivery—all those payments have been shifted to the right, and have been pushed off until the period between 1970 and 1977, generally speaking, which means that the Government are storing up wrath for themselves or their successors in the period from 1970 onwards. That is another reason why we say that these figures are fudged.
There have been deceptions and excuses. The right hon. Gentleman and his colleagues are determined to bring more and more of our defence forces home, with the saddest repercussions. They will do this, as they have in Aden, regardless of the wishes of the local people. Once they are home we feel pretty certain—as was confirmed by the right hon. Gentleman yesterday—that the Government will cut the overall strength of our defence forces. Is this right? Do the right hon. Gentleman and his Cabinet colleagues believe that the world is a much safer place today? Does not he remember that British forces have been involved in no less than 40 different types of action—some major and others minor—since the end of the Second World War?
This is the peace that we have succeeded in restoring as a result of prompt action, in parts of the world where our vital interests or those of our allies are threatened. The right hon. Gentleman may be able to economise temporarily, but in the long run, if he continues this policy the nation will find him guilty. That is why we shall go into the Lobbies against the White Paper tonight.
5.3 p.m.
Mr. E. Shinwell (Easington): The hon. Member for Hendon, North (Sir Ian Orr-Ewing) had one special virtue in his speech; he praised his right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). He regarded his right hon. Friend's speech as excellent. He need not have emphasised his view of his right hon. Friend's speech: his right hon. Friend always makes good speeches. That is not the problem. The problem lies in his right hon. Friend's curious ideas—his idiosyncrasies and peculiarities. His views are very odd. I suspect—it is no more than a suspicion—that his

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Opposition Front Bench colleagues find his views rather peculiar, to say the least. He has caused a bit of trouble on that side of the House—but we also have our troubles. For several days reports have appeared in reputable newspapers—The Times, for example, which is read only by the top people, the Daily Telegraph and the Daily Express—and also in the less reputable newspapers, about an impending revolt on the Government benches.
That is nothing new. Acute controversy and high tension on the subject of defence and foreign affairs has existed in the Labour movement ever since I can remember—and that goes a long way back. I can recall when, at about the turn of the century, I was blossoming forth into political life, being engaged in propaganda on street corners and in the market places—propaganda which helped to bring quite a number of my colleagues into the House.
I recall the controversy between the Independent Labour Party—of which I was a member—and the Social Democratic Federation. The Federation believed in a citizen army. When the First World War broke out, as no doubt many of my colleagues have read in the history books—if they have not, I can supply them with one of mine—the Independent Labour Party was essentially pacifist while the official Labour Party believed that the war was a just one.
This controversy is nothing new. There is every reason why those of my colleagues who hold pronounced views on the subject of defence costs should express their views and should use their powers accordingly. Nobody on this side of the House —not even my colleagues on the Front Bench—wants to incur excessive defence costs if they can be avoided. There is no difference of opinion on these benches about the need to reduce defence costs. There are certain reservations, however, which must be explained, and I shall have something to say about them.
First, I want to refer to the point raised by the hon. Member for Hendon, North, in supporting his right hon. Friend the Member for Wolverhampton, South-West, namely, that over a period of years while successive Tory Governments were in office there was a downward trend in
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defence costs. Several of my colleagues did not agree with that view, but I happen to know better.
Mr. Dickens: The assertion was made by the hon. Member for Hendon, North (Sir Ian Orr-Ewing) that there had been a continuous, year-by-year reduction in the proportion of the gross national product taken up on defence spending. I have here a statement made by the Minister of Defence in response to a Question by the right hon. Member for Wolverhampton, South-West (Mr. Powell) which shows that there was a fall between 1956 and 1959; an increase from 6·8 per cent. to 6·9 per cent. in 1959–60; thereafter stagnation for three years, and then a decline. There was not a year-by-year reduction.
Mr. Shinwell: If I may be permitted to interrupt my hon. Friend—why should he make such heavy weather of this? The facts are that in certain years, because of readjustments in manpower, costs were reduced. My hon. Friend must know that when I was Secretary of State for War and then Minister of Defence the number of men in the forces was far in excess of the present figure. My right hon. Friend the Member for Bassetlaw (Mr. Bellenger), who was Secretary of State for some time in the Attlee Government, also knows this. We had National Service, and all the consequences associated with it—vast numbers of Regular troops having to undertake the training of the National Service men. The costs were immense. Gradually, under pressure from us, successive Conservative Governments reduced the number of men in the forces. They never would have thought of it if it had not been for us.
I see that the right hon. Member for Streatham (Mr. Sandys) is here. He was the best goalkeeper that the Conservative Government had. We could not get past him. He held on to manpower with all the strength in his possession.
Mr. Sandys: I think that the right hon. Gentleman has his facts a little wrong. I was the Minister of Defence who ended National Service.
Mr. Shinwell: Of course—and my right hon. and hon. Friends and myself pushed him into it. I recall the speeches which we made from the Opposition benches. It is within the recollection of

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many hon. Members opposite that we forced him to terminate National Service. He now makes a virtue of necessity.
Sir Ian Orr-Ewing rose—
Mr. Shinwell: I must get on with the subject. I am making a speech about defence. To be quite plain with my hon. Friends on all sides of the House—and some hon. Gentlemen opposite are friends of mine, at any rate temporarily —I want to speak about defence, and not everybody has been speaking in this debate about defence. Anybody can pick holes in any Government White Paper. I have been doing that for years. There is nothing new about it.
But when we consider defence, let us be realistic about it. First of all, decisions are made through commitments entered into by the Foreign Secretary. Sometimes commitments are entered into without the knowledge of back bench Members—more often than not. Sometimes hon. Members discover that commitments have been entered into, and Questions are asked in the House. When they are asked we receive very unsatisfactory and evasive answers. All that is well known. Let us not go on deceiving ourselves like a lot of young children. That is no good any longer.
These commitments exist and they have to be met. In other words, if hon. Members do not want any defence, there should be no commitments. A significant feature of the debate is that not a single hon. Member so far has made the demand that we should abandon our defence—not even my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes), who is not present at the moment. All he did was to refer to the excessive cost of the Polaris submarines, and I do not entirety disagree with him about that. But every right hon. and hon. Member who has spoken on either side of the House has agreed that there must be some measure of defence. Let us make that our jumping off point. My hon. Friend the Member for Salford, West (Mr. Orme) is directing my attention to the Amendment, but not even in the Amendment is there a demand that we should abandon our defence entirely. What is being asked in the Amendment is that we should reduce the cost. My point has been accepted. Nobody demands that we should abandon all
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defence and have no defence at all. That was the kind of demand that we used to make in the past. We do not make it now.
The question, therefore, is—how much defence? I say, in parenthesis, if we are to have defence, we must consider whether it should be adequate or inadequate. We must not let our forces down. If we are to have defence it must be adequate and effective, otherwise our men will suffer, and we cannot have that.
The question, therefore, is not whether we shall have any defence but how much can we afford and how should we adjust it and use it in the interests of our security. That is the problem, and successive Governments over and over again have tried to deal with that baffling problem. Why do I say that? It is unusual for me to bring with me a mass of documents—I do not understand them anyway, I will put them back again. I have been doing a little study—what is called, in the new jargon "study in depth". What did I discover? What have we been asking over and over again in our Defence White Papers for several years? I challenge contradiction on this point. We have said that we cannot have a conventional war of any value in Europe in the hope that we can end with victory. Such a concept is completely ruled out. My right hon. Friend the Secretary of State for Defence argued eloquently yesterday—he cannot deny it, for it is all on the record—that our only hope in Europe if a conflict occurred would be to use nuclear weapons. But in the Defence White Paper of 1957, that is precisely what the right hon. Member for Streatham said. He said that there was no hope of achieving victory by conventional means in Europe if there was an act of aggression. Does he now agree with that?
Mr. Sandys: I well remember that those words, which are very similar to words in the present White Paper and in the speech of the Secretary of State for Defence, were violently criticised by the Labour Opposition.
Mr. Shinwell: That is not the point. The right hon. Gentleman must not try evasion with me. I am not as innocent as all that. He must admit that he is as guilty as anybody—and I mean that in no offensive way. He had discovered

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something. My right hon. Friend the Secretary of State for Defence has discovered it, too. We have all discovered it. It is that there is no use attempting conventional war in Europe, because it will not succeed. If we are attacked, then after a period of 24 hours or 48 hours, or maybe some other period, we must rely on nuclear weapons.
What does that mean? It means that we shall be wiped out. What a pleasant prospect! We do not like the thought of being wiped out. We therefore have to try to prevent wars from occurring, and that is being done, in a half-hearted way. I think that more could be done and should be done. I am not too happy about the United Nations Organisation, which I think should be more effective than it is. But it cannot be effective if member nations are not ready to encourage and support it. I will not now discuss that.
Let us look at the position in Europe. I have a suspicion that some of the speeches yesterday in support of retaining our forces in Europe were associated with entry into the Common Market. I heard the speech of my hon. Friend the Member for Bolton, East (Mr. Robert Howarth). I am sorry that he is not present. No doubt he did not know that I would be called to speak today. Indeed, one does not know oneself. He began his speech by saying that it was on the subject of defence and then he said that what we had to do was to enter Europe. He said that in one paragraph. Some people have the idea that we can solve all our problems simply by entering Europe. Having made that statement, in one paragraph, with no argument in support of it, and no attempt to sustain the argument, he proceeded to talk about aircraft. He knew something about that. He is an expert on that subject.
The same comment applies to other hon. Members. Even my right hon. Friend the Foreign Secretary tried it on this afternoon. He stated the case for retaining forces in Europe, so it is clear that the question of entering the Common Market arises, which shows conclusively how closely defence enters into this subject. I will put a question to the right hon. Member for Wolverhampton, South-West (Mr. Powell) to which I should like an answer. I hope that he will not leave
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until he has answered it. I put it to the right hon. Member for Barnet (Mr. Maudling), one of the most intelligent Members of the House, I put it to my right hon. Friend the Secretary of State for Defence and I put it to anybody else who cares to enter the lists.
Every one of the countries in the Six —someone will think that it is the whole of Europe but it is not; that is the way they talk, but never mind that—every one of the countries of the Six has conscription. The question I put is, if we are to enter the Common Market can we escape conscription? I put that to the Liberal Party who are against conscription. Can we escape conscription? [HON. MEMBERS: "Yes."] Oh no, we cannot. We cannot enter the Common Market and associate ourselves with the countries of the Six without accepting precisely the military technique which they believe to be inviolable and essential for their security.
Mr. Roy Roebuck (Harrow, East): My right hon. Friend will not have to wait long for an answer, because I have a Question to that effect on the Order Paper for tomorrow.
Mr. Shinwell: Whether my hon. Friend will get a satisfactory Answer is a different matter. I have given my view about Europe. I have never made the suggestion that we should take the whole of our troops out—not at all. Time and again I have asked my right hon. Friends to reduce the forces there, not only because of the exchange costs but because from a military point of view we do not require the number of forces we have there.
By the way, I think my hon. Friend the Member for Pembroke (Mr. Donnelly) said yesterday that we had committed ourselves several years ago to four divisions. It is perfectly true that it was a commitment which was entered into by Sir Winston Churchill and Lord Avon, who was then Sir Anthony Eden, but there are not four divisions there now in spite of the commitment. I remember the Lisbon Conference which was attended by Sir Anthony Eden, as he then was. I remember from the Opposition benches combating the proposition. I asked what they were demanding at Lisbon and what did they agree. It was that we must have 60 to 70 divisions in

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Europe. Nothing of the kind occurred. Now we have 50,000, as I pointed out in a speech at the Labour Party conference which lasted for only three or four minutes. We have 50,000 troops, 33,000 children, 19,000 wives and 36,000 German civilians. It is incredible and it is not needed. This is one of the reasons for higher costs through amenities and increased pay. I agree about that, but we could easily reduce the manpower without detriment to the security of this country. I ask my right hon. Friend to give that aspect of the subject his attention. Some men may want to leave the forces: let them go, so long as we retain a balanced force. In my view, a token force of 20,000 would be as much as we want.
I add this and I am vehement because I have been asking this for years—can we be told in this House, the place where it should be stated, how many troops are provided by the Dutch, and how many by the Belgians? I will leave Luxembourg out. How many are provided by France to N.A.T.O.? I think of the controversies I had on that subject in the past when I had to meet Pleven when he was Prime Minister and Minister of Defence. Jules Moch and Rene Mayer on this subject, and they presented 15 divisions to me—on paper, but they never left the paper. There was no such thing. Now they have left N.A.T.O. They were never really in it. We shall be told that the Germans are now providing 10 divisions.
Mr. F. J. Bellenger (Bassetlaw): Twelve.
Mr. Shinwell: My right hon. Friend says it is 12. They are a masquerade, meaning nothing at all. For us to bear the burden—
Mr. Stanley Henig (Lancaster)rose—
Mr. Shinwell: Wait a minute. No, not you.
I have the White Paper for which the right hon. Member for Streatham said he was responsible. I can quote White Papers of recent years to show that we are being overburdened and that our contribution is out of proportion compared with what is provided by the others, apart of course from the United States contribution.
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I suggest to my right hon. Friend the Minister of Defence and to the Foreign Secretary—as he is absent he might be told about my view and asked to read tomorrow morning what I am saying—what has this to do with exchange costs? It has to do with the military situation. I know that some people in this House despise the views of General Montgomery, but he does know something about military affairs, more than anyone in this House, and he has said—I agree with him—that 20,000 troops would be enough over there.
I turn to east of Suez. What concerns me is not the defence of Singapore for, after all, Singapore one of these days will be Chinese; it has gone Chinese already. Am I not right? It will go completely Chinese one day and it would be untenable from our point of view. What I am concerned about is Australia and New Zealand, and Malaysia to some extent. We have a commitment to Malaysia. Perhaps we were mistaken in entering on the commitment to Malaysia. I agree with every word that has been said in praise of our troops and what they did there. What a lot of jungle fighting it meant in Borneo and other places. I am concerned, not with Malaysia or Singapore, but with Australia and New Zealand.
Some years ago, when I was a member of the Attlee Cabinet, we were informed about a pact entered into by the United States, Australia and New Zealand known as the Anzus Pact, to provide security in that part of the globe. I thought we should be included because of our interest in that part of the world. For various reasons we were excluded. Would this mean vast forces? I do not think so. Would it mean another aircraft carrier or anything of that sort? In association with the United States, Australia and New Zealand we could fulfil a commitment to our kith and kin in those Commonwealth countries. I do not think we should throw that overboard as easily as some of my hon. Friends imagine.
I want to see a reorientation of defence strategy along those lines, in the European theatre as I have said; in the east of Suez theatre as I have suggested briefly and it could be argued at great length. I conclude with this comment to my right hon. Friend. I noticed that yesterday after

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his speech some of my hon. Friends praised him. What occurred to me was that:
"It is all very well to dissemble your love, but why did you kick me downstairs?"
I am going to praise him. I think he has done a good job particularly in trying to integrate the forces. It is not complete and much has yet to be done, but he is doing a good job.
I say this about the Government. I am worried about the Government. [An HON. MEMBER: "They are worried about you."] They are not worried about me. They know that I shall always express my opinion, but I shall not be so foolish as to vote against them and I never was an abstainer. I say what I please. I am worried about unemployment and the effect of the Selective Employment Tax. I am worried about these matters. Bits of news come to my ears and I am worried. I think it is about time the Government pulled up their socks and began to realise that they have to be a little more conciliatory on some items of public policy which are worrying many of our friends in the country. I shall not put it higher than that. I think I understand the situation and the temper of our friends in the country and I advise the Government to be careful—just be careful.
On this question of defence I think we should be reasonable. We want to reduce costs and I have indicated how that can be done. It will take a little time but eventually it will have to be done. But for heaven's sake do not throw the whole of defence overboard yet. One day the nations of the world will come together and decide that there will be no more war. Until that time comes let us be realistic.
5.30 p.m.
Mr. Sandys (Streatham): I would like to say a few words about the present situation and the future outlook in the Arabian Peninsula. The Government are pursuing a calamitous policy in that area. Their decision to evacuate Aden has produced precisely the results which we foretold when the announcement was made a year ago. They destroyed at one stroke the prospect of peace in the Yemen. The Egyptian attempt to consolidate the revolution, engineered from Cairo, had totally failed. It had become evident that the
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rebel régime was entirely dependent on the support of Egyptian troops. These had become increasingly unpopular, and outside the three main towns they had virtually lost control of the country. As a result, Nasser was on the point of pulling out and ending a cruel and costly adventure which had brought nothing but misery to the people of the Yemen.
But, with the announcement of the British withdrawl, all this was changed Nasser was able to claim the credit for pushing the British into the sea, and overnight defeat was turned into victory. He cancelled his decision to evacuate the Yemen and declared his intention to stay on until the British left.
From that moment—my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) referred to it yesterday—terrorism in Aden was stepped up, and the rate of casualties was doubled. Those who took this decision bear a heavy repsonsibility for this. As the British Government have themselves recognised, these acts of indiscriminate murder are being organised and financed from Cairo. This has been admitted from the Government Dispatch Box.
Nasser's objective is quite clear. It is to create conditions of violence and disturbance in Aden, in the hope that, after independence, law and order will break down and an excuse will be provided for Egyptian forces to come in and set up a stooge régime, as they did in the Yemen. Once Nasser has gained control of Aden, there is nothing to stop his forces from moving along the coast of the Arabian Peninsula and up the Persian Gulf, mopping up one British-protected State after another. In next to no time, our garrison at Bahrein, which the Government are foolishly enlarging, would find its position untenable.
The other day the Foreign Secretary denied that our departure from Aden would leave a power vacuum in that area. I really do not know how he can possibly deny that; for that is precisely what it will do. The right hon. Gentleman knows this quite well. Anxiety has been expressed to him from all quarters. The Governments of Saudi Arabia, Jordan, Ethiopia, Israel and the United States are among those who have shown their concern about the consequences of the British Government's decision.

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We on these benches have over and over again pointed out the irresponsibility and perfidy of the Government's policy. I say "perfidy", because the Government are unashamedly breaking faith.—[HON. MEMBERS: "0h."] Of course they are. There are solemn treaties which they cannot wriggle out of—solemn treaties, not only between the British Government and the Federation, but also with each of the States separately, under which we have pledged ourselves to protect their territory against attack. The treaties provide that they cannot be altered except by mutual consent.
The Foreign Secretary today implied that our obligation to protect South Arabia ends with independence. That is not true. I do not know how he can say that, and I hope that the Secretary of State for Defence, when he winds up, will show us which clause in the treaty supports this contention. Which clause in the treaty supports the contention that our obligations for the protection of this area end with independence? There is no mention of independence in the treaty.
Mr. George Brown: The right hon. Gentleman is flinging charges around rather wildly that could do a lot of harm. Which paragraph in the White Paper, for which he was largely responsible, commits us to now doing what he is saying we should do?
Mr. Sandys: There are two points. I have not got the White Paper here with me, but if anybody has it I should be glad if they would hand it to me.
Lord Balniel (Hertford): Let me—
Mr. Sandys: Please let me finish. I know it pretty well, because I wrote it myself.
There are two documents. One is the treaty. The other is the White Paper. Let me deal first with the treaty. The treaty, as I said, provides that we will protect South Arabia and that it shall not be amended except by mutual consent. That is perfectly clear. The Government are trying to make out that, because of independence, the treaty becomes null and void. There is nothing in the treaty—I am sure the right hon. Gentleman will agree with this—which says that these treaties end on independ-
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ence. There is no reference to independence.
I come now to the right hon. Gentleman's other point, which is the 1964 Conference. I have made my point on this over and over again and it is perfectly clear in the Report. The whole of the request from South Arabia is contained in one single sentence. It was devised and insisted upon by them for that very reason. They requested that we should give them independence not later than 1968 and conclude a defence agreement for the continued protection of South Arabia. They made it perfectly clear all along that, much as they wanted independence, they would sooner not have it if it involved the withdrawal of our protection, since, in their view, independence without the means of preserving it would be nothing but a farce.
Mr. Healey: I am trying to clear up a point on which the right hon. Gentleman has confused me. If, in fact, the treaties which existed before independence remain legally binding after independence, as the right hon. Gentleman claims, why was it necessary for the federal delegates to insist upon a new defence agreement being drafted to cover the period after independence?
Mr. Sandys: I think that there is a little confusion in the right hon. Gentleman's mind. What they said was that, if we considered that independence would abrogate the previous treaties, they would sooner not have independence.
Mr. Healey: Yes, but—
Mr. Sandys: That is a clear statement. They said that they had a firm undertaking from us that we would protect them. In addition they said that they would like independence. Everybody recognised that the treaty would have to be greatly modified on independence. Whether it is called a modification or a new treaty is neither here nor there. Everybody recognised that there would have to be a new piece of paper signed to continue protection after independence.
But the point is that they made it quite clear that their request for independence was coupled with a request for continued protection and that, if we were not prepared to give them a defence agreement or, alternatively, to amend the existing defence agreements so as to make them

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compatible with independence, they would sooner not have independence because they regarded independence without the means of preserving it—independence which might last only a few days or a few weeks—as less advantageous to them than the continuation of the existing position.
Mr. George Brown: That may well be so, but it is extremely important to get the matter cleared up. Flinging charges about between ourselves about lack of faith does not so much damage a party as damage Britain's image in that part of the world.
All that Parliament knows about this, not what is in the right hon. Gentleman's head or in his memory, is what appeared in the Conference Report White Paper, Cmnd. 2414. In paragraph 38 of that White Paper, we read:
"The delegates asked that Britain should agree to independence for the Federation, while continuing thereafter to assist in its defence. They requested that as soon as practicable the British Government should convene a conference for the purposes of fixing a date for independence not later than 1968, and of concluding a Defence Agreement under which Britain would retain her military base in Aden for the defence of the Federation and the fulfilment of her world-wide responsibilities. The Secretary of State announced the agreement of the British Government to this request".
The request was for a conference.
Mr. Sandys: No, no.
Mr. George Brown: The request was for a conference. All the records show that that was what the Secretary of State agreed to. The conference was never convened. The purpose of a conference is to discuss the circumstances or context in which one will do something. That is all that the Secretary of State pledged Britain's word to, and it never happened.
Mr. Sandys: The right hon. Gentleman cannot wriggle out on that.
Mr. George Brown: I am not wriggling out. It is what the right hon. Gentleman said. He was Secretary of State, and we know what he had in mind.
Mr. Sandys: The right hon. Gentleman cannot wriggle out on that. It is no good saying that he knows what the Secretary of State had in mind. I was the Secretary of State.
Mr. George Brown: These are the right hon. Gentleman's own records.
Mr. Sandys: No, that is not the point. The right hon. Gentleman has read out what appears on that piece of paper, and it shows perfectly clearly that they requested independence—
Mr. George Brown: I am quoting from the right hon. Gentleman's own documents.
Mr. Sandys: The right hon. Gentleman cannot get away with it like that. They requested independence not later than 1968 and, whatever the words are—I have not got the White Paper in front of me—the continuation of British protection. They did not request a conference.
Mr. George Brown: Yes, they did. That is what the right hon. Gentleman agreed to. I pass the White Paper to him. Let him read it himself. All he agreed to was the conference.
Mr. Sandys: All right. There were two requests. They requested independence, with Britain
"continuing thereafter to assist in its defence"
and they requested a conference to fix the date of independence.
Mr. George Brown: May I have my copy of the White Paper back?
Mr. Sandys: I cannot go backwards and forwards across the Floor.
Mr. George Brown: That is what the right hon. Gentleman is doing.
Mr. Sandys: No. This is a very serious matter. It is a question of the good faith of Britain in this matter.
It is perfectly clear that the conference to fix the date for independence and to conclude a defence agreement, was all part of the same proposal. But even supposing one read it the other way, can it be imagined that we could get out of the commitment by saying that we were unable to convene a conference? Let us be clear about this, too, if the Government wish to take their stand on a niggling point. What was the purpose of the conference? The delegates
"requested that as soon as practicable the British Government should convene a conference for the purpose of fixing a date for

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independence not later than 1968, and of concluding a Defence Agreement …"
How can the Government say, "We cannot have a defence agreement because we could not convene a conference, but we can ourselves arbitrarily fix a date for independence"? How can they fix a date for independence without the conference?
Mr. George Brown: If the right hon. Gentleman had agreed—let us remember the charges of breach of faith—to independence and a continuing defence arrangement, what was the conference to be about? I put it to him that the reason he agreed to call a conference, or agreed to the request for a conference, was that he had never at that point had authority from his colleagues to agree to defence going on after independence.
Mr. Sandys: The right hon. Gentleman had better leave the previous Conservative Government to be responsible for their own decisions and not try to argue that I committed my Government to something for which I had no authority. The question is very simple. If the present Government want to take their stand on what I call this niggling point, they must answer it. Apparently, they say, "We cannot have a defence agreement because we were not able to convene a conference, and we are therefore absolved from the commitment to have a defence agreement". That is the argument. It was the argument put forward by the Foreign Secretary a moment ago.
I therefore put the question to them: why pick out one half of that sentence? The conference was to do two things—to fix a date for independence and to conclude a defence agreement. The Federation made it clear that they would prefer not to have independence if it was to be a complete farce, if it would disappear overnight owing to the absence of any proper protection.
It is, therefore, a complete breach of faith to pick out one half of the undertaking without implementing the other half of the bargain, and to say, "We will not give you a defence agreement, but we will force independence upon you". I hope that the Secretary of State for Defence will pursue this matter a little further tonight. It is not my wish to throw charges about, but these charges are being thrown about and have been
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thrown about now for a year in the Middle East. I believe that there is solid foundation for them.
Mr. Healey: May I intervene on this matter again now, as I have so many things to deal with later tonight? The request referred to in the White Paper, which the right hon. Gentleman published, was a request to call a conference for certain purposes. Among the purposes were independence, the possible provision of a base, and a defence agreement to cover our presence in the base.
I do not see how the right hon. Gentleman can possibly claim that a commitment on the part of the British Government to convene such a conference is a commitment, for example, to retain a base whether we wanted it or not. The base is just as much one of the items on the agenda as anything else, and the Government have always made clear—it has never been contested—that we were free on this matter as on either of the others to take our decision in the light of the facts.
Mr. Sandys: I have not said that we should retain the base if by base the right hon. Gentleman means a very large garrison.
Mr. J. B. Symonds (Whitehaven): On a point of Order, Mr. Deputy Speaker. is it not about time that this—shall I call it—argument between two right hon. Gentlemen came to an end? I do not want to speak, but there are other back benchers who wish to do so. Will the right on. Gentleman get ahead with what he has to say and let us have time for other hon. Members to take part in the debate?
Mr. Sandys: I did say that I would confine myself to little more than 10 minutes, but this argument has arisen. [HON. MEMBERS: "Get on with it."] This is a very important point, one of the most important points in the whole debate.
The Government deny that they are leaving the Federation defenceless. Only yesterday, the Secretary of State for Defence said—the Foreign Secretary repeated it again today—that the Federal Government were receiving £5½ million towards the capital cost of expanding their armed forces, including the provision of an air force component. What sort of defence is that? We are discussing

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all these enormous figures in the White Paper. What sort of defence can the Federation obtain for all three Services for £5½ million? I believe that the air component consists of only a few trainer planes. I quite understand the problem. It would be ridiculous to suggest that in one year, even if money were no object, we could put the Federation in a position to defend itself against Egypt, which has over 60,000 troops in the Yemen and a modern Russian-built jet air force.
Nobody questions the desirability of reducing our military expenditure in Aden. When the Federal Government take over responsibility for internal security a big reduction in the number of British troops will at once become possible. To avert the dangers to which I have referred, what is needed is not a great base, but the conclusion of a temporary defence agreement, and the continued presence of a small element of the Royal Air Force to demonstrate to Nasser that we really mean business. It need not be an open-ended commitment. It could be stipulated that the agreement would lapse when the Egyptian forces are withdrawn from the Arabian Peninsula, and the Federal Government have already said that to the Government.
In the meantime, I believe that it is essential to transfer responsibility for law and order to the Federal Government as soon as possible. It is no good transferring those problems to them on the very eve of independence, nor is it fair to bequeath them a situation which has been allowed to get completely out of hand. Internal security is deteriorating rapidly all the time. Only yesterday we heard that rival groups of terrorists are beginning to fight one another. There will be civil war there soon. The British authorities are giving the impression of weakness and indecision, but it is not their fault. They are being closely controlled by the Government in Whitehall.
The other day the security forces arrested one of the ring-leaders of the terrorist organisation, Mohammed Bassendwa, who had boasted over the Taiz Radio that he had sent a bomb in a parcel to Mr. Thorne, the Assistant High Commissioner, which had blown off several of his fingers. But he was not kept very long in detention. After a few days, he
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was released on orders from London. That kind of thing dispirits the security forces, who are risking their lives every day. It boosts the morale of the terrorists and undermines the resistance to intimidation of law-abiding citizens.
Speaking in Glamorgan last Saturday, the Chancellor of the Exchequer said, in a moment of frankness:
"We cannot clear out of Aden and leave the situation in a mess."
But that is exactly what the Government are in the process of doing. Both internally and externally they are pursuing a policy which will bring disaster to Aden, disaster to the Federation and disaster to the rest of the Arabian Peninsula.
It will save us very little money, and if we have to mount a rescue operation, which is not improbable, it could cost us a great deal more, not to mention the fact that Britain's name has been blackened throughout the Arab world, where broken promises are not easily forgiven.
The Government's only solution seems to be to dump the whole problem on the plate of the United Nations. The visit of a United Nations mission will solve nothing; it will merely be a focus for more disorder. One of the leading terrorist organisations has already announced that it will organise strikes and demonstrations when the mission arrives.
However one looks at it, the Government's policy in South Arabia makes no sense. Even at this late stage, they should think again and draw back from the path of folly and betrayal.
5.55 p.m.
Mr. F. J. Bellenger (Bassetlaw): I hope that the right hon. Member for Streatham (Mr. Sandys) will forgive me if I do not follow him in his arguments, for I did not come prepared for what is really a foreign affairs debate. I do not deny that some aspects of foreign affairs should be involved in the debate, but strictly speaking they are not relevant to the speeches made from the Government Front Bench, particularly by my right hon. Friend the Secretary of State for Defence. If he deals with that subject in his reply tonight I hope that he will do so only in passing; it is more for my right hon. Friend the Foreign Secretary.
Having listened to defence debates since 1935, when Mr. Ramsay MacDonald

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issued the first Defence White Paper, I have observed a certain pattern in all defence debates and maintain that if we are to consider strategic matters we should preface our defence debates with a foreign affairs debate. I am grateful to my right hon. Friend the Foreign Secretary for sketching today—it was only a sketch—a background against which we could discuss the possibilities of defence and reducing its cost. He told us something of the commitments and also made what I thought was a very pregnant remark that seemed to suggest that some aspects of the strategic picture might result in the achievement of some of the things sought by my hon. Friends who put down an Amendment.
My right hon. Friend said that so long as we were able not to disturb the balance of power we might maintain defence with smaller forces. If I understood him aright, he was trying to say that if it is possible to get a détente between East and West it might be possible to reduce our forces in B.A.O.R., reduce the cost of defence and at the same time maintain a pose of realistic defence.
Memories are short, especially in the House, which is only natural, for we are constantly being refreshed with new and younger Members. I hope that they will permit me to make one or two remarks about how N.A.T.O., which was the progenitor of European defence, was brought about. The enemy was specified, and every hon. Member who has been connected with military affairs knows that it is most important to define one's objective. That means that one must define one's enemy. The enemy at that time was undoubtedly Russia, with her satellites, and N.A.T.O. was set up to prevent what everybody in those days thought would be aggression from the East and a further spread of Communist territory like the take-over of Czechoslovakia, by military means.
Indeed, I believe that it was in 1948 that Russia showed her hand, when she attempted to starve out Berlin. It was only by the introduction of air forces from outside Europe that her effort was defeated. I mention this as a possible illustration of part of what my right hon. Friend the Defence Secretary has set out in the White Paper—how defence may be conducted from a distance, as it were,
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through remote control and not necessarily through the imposition of large ground forces on the spot.
Before the war, Defence White Papers were pulled to pieces by a right hon. Gentleman whom the right hon. Member for Streatham (Mr. Sandys) knew very well. How did the late right hon. Member for Woodford do it? He did not lose a lot of time discussing whether one form of aircraft was effective or not. He discussed the strategic picture and went on to show, most powerfully, that we were not prepared to meet the dangers which confronted us.
My criticism of the Defence Secretary today is that he spent too long in his speech on weapons and matters like that, which appeal to only a very few Members who are technically qualified and are, therefore, capable of dealing with these points. It is in the nature of a camouflage of what we really are discussing and has led to some of my hon. Friends putting down Amendments which really do not attack the main point. I am not here referring to the first Amendment on the Order Paper, standing in the names of my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) and others of my hon. Friends, for he himself dealt with that last night.
The second Amendment, standing in the names of my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) and others of my hon. Friends, merely lists like a shopping list various things that they think will achieve what they want—which is, they claim, to reduce the cost of defence to £1,750 million from the £2,000 million which my right hon. Friend has placed as his target at 1964 prices. Both of these Amendments are wrong, but so is my right hon. Friend.
Mr. Sydney Silverman (Nelson and Colne): I am obliged to my right hon. Friend. I do not want to divert him from what is obviously a planned line in his speech, but I hope that he has not forgotten the third Amendment on the Order Paper, which does exactly what he thinks should be done. It challenges the defence policy in relation to foreign policy and not the other way round.
Mr. Bellenger: I agree with my hon. Friend the Member for Nelson and Colne (Mr. Sydney Silverman) and if I had to vote tonight on any of these

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Amendments, the third Amendment, which stands in his name and the names of several other of my hon. Friends, is the one that I would choose because it deals with the strategic picture, although, of course, it does not go into details on how that picture is to be drawn. If we are to discuss defence, we must be realistic.
I am bound to say to the right hon. Member for Wolverhampton, South-West (Mr. Powell) that I can compliment him on his speech yesterday only in one respect. It was a first-class debating speech which might have been made at a university debate. He attempted to demolish the whole of the White Paper by figures which bore no real relation to defence. What does it matter if the Conservative Government were able to reduce defence costs by a decimal fraction year after year or that my right hon. Friend can boast, as he does in the White Paper, that he has been able to reduce the costs by a decimal fraction?
My main point was enunciated by Clausewitz—defence policy follows foreign policy and when diplomatic means fail defence comes into its own and war takes over. That was the thinking of that clever man and it is as true today as it was then. That is why I asked that my right hon. Friend the Foreign Secretary should come into this picture before my right hon. Friend the Defence Secretary.
N.A.T.O. is in the course of disintegration. My right hon. Friend the Member for Easington (Mr. Shinwell) referred to the opting out of N.A.T.O. by France. Why do we mislead ourselves in talking about our own duties? N.A.T.O. included a number of countries. Throughout the Algerian trouble, France removed her troops physically from the N.A.T.O. area. Indeed, there is provision in the N.A.T.O. Treaty for a nation to remove troops in order to deal with a matter affecting her own security. Today, we have listened to the right hon. Member for Streatham talking about obligations under the Aden Treaty. The N.A.T.O. Treaty was just as sacrosanct as the Aden Treaty, about which, I must confess, I do not know a lot.
Now France has opted out of N.A.T.O. and where are we now? She has with-
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drawn her troops from the integrated command of SACEUR, which is tantamount to saying that she will suit herself when trouble arises and will dispose her forces as she thinks fit. In other words, France has completely broken the essential part of the N.A.T.O. Treaty.
But, as my right hon. Friend the Member for Easington has truly said, N.A.T.O. has never lived up to the target of 60 divisions, reached at the time of the Lisbon Conference. Britain has never lived up to the undertakings she gave even at the time of the Paris Treaty. What, therefore, does it all boil down to? It is true that we have been able to maintain peace. We have done so partly because of our deterrent force, partly by a bit of luck, and partly, perhaps, because Russia never really intended to do what we thought she might do, certainly not after the Berlin crisis—that is, physically to try and occupy the rest of Europe, although we knew very well that, if she had wanted to, she could have swept through Europe, including B.A.O.R. and the Americans, and got to the coast in no time.
The main point now is whether we are not perhaps over-insured with the forces that we have in B.A.O.R. Are we not paying too heavy a premium, as some of my hon. Friends seem to suggest, by keeping these large forces there despite the fact that, militarily, they are not really necessary? We know how France has dealt with the matter. To all intents and purposes she has torn up the treaty.
But the matter is not so simple as my right hon. Friend the Member for Easington suggested yesterday, in an intervention. When my right hon. Friend the Defence Secretary said that 7,000 nuclear weapons were in Germany, ready to be used and would be used from the word "go", my right hon. Friend the Member for Easington suggested that we should take all our forces out of Germany. I believe that to do this, for whatever reason, would be next to madness.
I advocate a reduction in our forces in Germany, but not on the same grounds as my right hon. Friend the Chancellor of the Exchequer, issuing an ultimatum to Germany that if she does not pay in cash we will remove our troops. What do we expect from a man like Mr. Strauss, who says, "Then remove them. We

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shall not pay."? He is a blunt man with a good deal of common sense. When N.A.T.O. was started, Germany was under no obligation to pay for the forces who were stationed there to protect Germany. It was the British and Americans who insisted that Germany should have armed forces, after saying just after the war that she should never have them again. In the debates in those days, I supported the proposition, which came from a Conservative Government and which was supported by a majority of the Labour Party, that Germany should again have armed forces.
But since then, whatever my right hon. Friend the Member for Easington may say about its efficiency, Germany has created an army of 12 divisions, largely with American support. Having seen some of them, I think that they are by no means negligible forces in the defence of Europe. Why should not the Germans defend their own country? Germany would be the first to come under attack if war started. Why should she not pay for, train and organise her own defence? I add only one condition, which is that it should be as part of an integrated force under N.A.T.O. I would not agree to Germany having her own isolated defence, although that would be militarily impossible today when all the logistics and so on are arranged under SACEUR. Germany alone could not defend herself against attack from the Russians, or any of her satellites.
However—and here I divert into foreign policy for a moment—is there not some alternative to the pistol which my right hon. Friend the Chancellor of the Exchequer and others are pointing at the head of Germany? For instance, what has become of the Rapacki Plan, which, hon. Members will remember, was a plan, no doubt under Russian auspices and for Russian purposes, for disengagement? I believe that that is the sort of arrangement which we are
beginning to reach. My right hon. Friend the Foreign Secretary today seemed to be talking about a balance of forces, but of smaller forces. I believe that diplomacy will achieve that end, no matter how it comes about.
It may come about because Russia is now confronted with the problem with which Germany has always been confronted, that of the possibility of war on
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two fronts if she becomes involved in war, on the Chinese-Russian front as well as on the European-Russian front. Russia has some able military men and I am sure that they have assessed all these factors. It does not matter to me whether Russia is fearful of China or not, and I do not want to discuss those problems, but it is a bit of luck for the West and we should follow it up.
If we could get smaller forces in B.A.O.R. by withdrawing some of the men now there, we would achieve three things. First, the cost in foreign exchange would be reduced, which is something which we all seem to want. Secondly, my hon. Friends who want to reduce the defence budget would be satisfied. Thirdly, we would get nearer to what we all want to achieve—peace.
It might be an uneasy peace, as we had between the wars. I remember very well that after the First World War the War Office assessment of the time—and this is why our military forces were run down so much and I suppose that the appreciation came from the Foreign Office—was that there would not be a major war for 10 years. That is how it worked out, although in the process we did not realise that living in Germany at the time was a man called Hitler who was to rise in Germany as Stalin rose in Russia.
What I have to say with all the force at my command is that there is nothing certain in military defence, neither in cost nor in numbers. I go so far as to say that my right hon. Friend's target of £2,000 million at 1964 prices could easily be upset by the much more sophisticated weapons which are now being invented. The more we rely on our 7,000 nuclear weapons in Germany, the number of which will probably be increased, certainly be increased if the Americans have any say in it, the more the cost will rise if we are to make our contribution.
There are two significant passages in the White Paper to which I want to call attention. Perhaps my right hon. Friend will explain them tonight. On page 13, it is stated:
"A Programme Evaluation Group has been set up to assist the Secretary of State and his senior advisers of the Ministry to assure themselves that, in any major area of policy, the right questions are being asked …"
Is it my right hon. Friend's military advisers who are to be assured? I have been in charge of a military Department

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and I know how difficult it is—especially during the time when I held office and when my job was to demobilise the Army rather than to build it up—particularly for a layman to know what the right questions are. How can he get the right answers if he does not know the right questions?
This also applies to hon. Members. It is probably the reason why the right hon. Member for Wolverhampton, South-West played safe yesterday. All of his speech was documented and it consisted almost entirely of quotations from Ministers. It was no wonder that many of my hon. Friends challenged him to say what his policy would be. I sympathised with him. He could not answer the question, for it was not the right question and he could not give the right answer. No right hon. or hon. Member in opposition has the facts to which the Government have access. Apparently, my right hon. Friend will know the right questions and be able to get the right answers.
However, I have been an hon. Member for a long time and it is my view that hon. Members do not know the right questions and cannot get the right answers. Before the war, only Sir Winston Churchill knew what questions to put, and he caused a good deal of trouble when he put them. But there was no other hon. Member, certainly not in opposition, who could do so, although many had studied the subject as my right hon. Friend the Secretary of State for Defence has done in his time. Churchill was the only one who could prick the bubble to which the right hon. Member for Streatham referred when he was nearly court-martialled for giving the House evidence of what he knew as a Territorial officer. Hon. Members will know to what I am referring.
On page 3 of the White Paper my right hon. Friend speaks of the revision of N.A.T.O. strategy. This is a very big subject, but the White Paper says very little about it. There is only a paragraph of a very few lines. The paragraph begins:
"Ever since October, 1964, the British Government has argued inside N.A.T.O. that allied strategy must be designed to fit the forces which the national governments are prepared to make available".
My right hon. Friend goes on to say that discussions are taking place. They
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are not likely to conclude in the North Atlantic Council, as I see it, for some months yet. All that we are saying today must be shots in the dark. We have very few facts to go on. We can express our wishful thinking as some of my hon. Friends did. I do not say that by way of criticism; I do not blame them. They are quite right to want our swollen defence budgets reduced. All that I say is that they do not give the right reasons. How do they propose to do this? They talk about a need for a defence policy, about reducing our rôle on the Continent. What is our rôle? Let us define it first and then we can tell how many forces we need there.
I shall not be one of those who abstain from voting tonight, because although I have been a little critical of my right hon. Friend, and of his White Paper, I think that he is on the right road. He may take longer than some of us want, and he is subject to forces and pressures which many of my hon. Friends do not understand, because we are not told about them.
In conclusion, I congratulate my right hon. Friend the Foreign Secretary for lifting the curtain aside for a moment today so that we can look, in conjunction with the excellent map which has been provided for many years in the White Paper, at what our rôle might be, where our forces are, and whether they can be reduced. I hope that they can, but it all depends upon events, and not even my right hon. Friends are completely in control of world events.
6.30 p.m.
Mr. Dennis Walters (Westbury): When one comes to speak towards the end of a two-day debate it is perhaps inevitable that a great many of the points which one would have made, speaking earlier on the first day, have already been made by preceding speakers. Therefore, hon. Members on both sides of the House will be relieved to hear that I intend jettisoning a great deal of what I would have said, which will give more time for other Members who wish to speak.
I make no apology, however, for returning to and concentrating upon one subject which has been dealt with at length, but which I consider to be of enormous importance. It concerns an area in which I believe it is still possible for the Government to change their policy, a policy

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which would be wrong, dangerous and misguided, and it is their policy towards Aden and towards the South Arabian Federation. The worst way of economising on overseas defence spending, and in the long run the most expensive way, is to withdraw from a position, leaving behind conditions of chaos and instability. Yet this is precisely what seems likely to happen in Aden.
Last year, the Government announced increases in military aid to the Federation. These increases, together with the buildup in the Persian Gulf, will eat away much of the theoretical saving earned from abandoning the base. Even so, do the Government really claim that this aid will enable the Federal forces to reach a standard of training and equipment by the date of independence sufficient to enable them to resist any external attack?
Are the Federal Government satisfied on this score? For our part, as has already been said, we believe that, as a matter of good faith and good sense, we must guarantee the security of South Arabia until the South Arabians are clearly able to look after themselves. The Government have refused to do this. Are they really saying that if the Federation was attacked after independence, possibly even before it became a member of the United Nations, they would allow it to be overrun without doing anything to save it?
The Government must also reckon with the possibility of subversion. This is more likely than direct invasion. The pattern of the Yemen might repeat itself. A group of revolutionaries might gain control of the town of Aden and call for Egyptian intervention. The result would be a civil war of the kind from which the Yemen is suffering. This means that there must be a political understanding before independence, to make sure that the country does not fall apart immediately afterwards.
Yet on this front no progress seems to have been made in the year which has passed since Sir Robert Hone drafted a constitution. After many delays the composition of the United Nations mission which is to help South Arabia with these problems has been announced. We do not know how it is to function or to whom it is to report. Do the United Nations accept the authority of the Federal Government? Have the British Government
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abdicated responsibility for seeing that a political settlement is reached?
There is next the question of terrorism. Last year, 19 British people were killed and 336 were injured. The number of Arab casualties was several times as high. If the Government allow the situation to drift, as it is at the moment, attacks are likely to multiply as the different political groups manoeuvre for position. As British troops are withdrawn in the course of this year, the wives and children of those remaining will be in the greatest danger.
I understand, from the statement of the Secretary of State for Defence yesterday, that the withdrawal of Service families is time-tabled for July. What advice is being given to the many British civilians who will have to remain in Aden up to and after independence, if South Arabia's economy is not to be dislocated?
The Government have persistently refused to see any connection between what happens in South Arabia and what happens in the Yemen. The connection is surely obvious. A total of 60 per cent. of the labour force in Aden is of Yemeni origin. The Republican Government in the Yemen claims that the whole of South Arabia is part of the Yemen. Last July Egyptian bombers bombed a village within the Federation. We have warned the Government time and again that as long as an Egyptian Army of more than 50,000 is fighting a war in the Yemen the security of South Arabia must be at risk. The Government have invited the United Nations to help solve the political problems of Aden. Surely they must also get the United Nations to make a new effort to bring the horrific fighting in the Yemen to an end and obtain the withdrawal of the Egyptian Army of occupation?
The action that the Government are to take about Aden and the South Arabian Federation will indicate whether there is really any logical thinking at all in their east of Suez position. One must assume that the Government's reason for holding a position east of Suez is to try to exert a stabilising influence in the area. In other words, a military presence is considered necessary and worth while because it stabilises unstable situations. The Government have certainly not remained east of Suez in order to support the United States actively in its Far East involvements. They have repeated that

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they do not intend to become involved in Vietnam and have said that they will not even become involved if there should be trouble in Thailand.
I entirely concede that the object of staying to stabilise unstable situations is a valid one, but the proposed withdrawal from Aden, in circumstances which would cause a major disruption in the area, without giving adequate safeguards to the South Arabian Federation and in circumstances which might compel us to return later in even greater numbers, strikes at the very basic thinking of the Government's policy east of Suez.
In their dealings with Aden and the South Arabian Federation in the immediate future, the Government still have an opportunity to show that in this area at least they are not just muddling along in their foreign policy but are trying to pursue a coherent policy. There has been no indication from what has been said that they intend to do so. However, I hope that before the debate concludes they will be able to give some satisfaction to right hon. and hon. Members on this side of the House who have spoken on a matter of crucial importance to the security of the Middle East and the reputation of this country.
6.31 p.m.
Mr. Stanley Orme (Salford, West): I wish to deal with the Amendment in the name of my hon. Friends and myself on the resolution passed at last year's Labour Party conference. However, before doing so, I should like to say a few words about the speech of the right hon. Member for Wolverhampton, South-West (Mr. Powell).
I should have thought that those of us who were critical of the Government's east of Suez policy would have had his support. In his speech at the Tory Party conference two or three years ago, in his speech at the Young Conservatives' conference this year at Brighton, and in the speeches which he has been making at universities, and so on, he has pooh-poohed the Government's east of Suez policy. In this House, however, he does not say the same things as he says outside. He is supposed to be a man of undisputed character who follows his words right through. He cannot do that, because it is not the official policy of the party
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for which he is defence spokesman. However, he should be truthful and say what his personal views are about the Government's Far East policy, which is on record and is well known.
I should like to refer to the launching of the latest Polaris submarine, last Saturday. It was not a very edifying sight to me to see the wife of the Secretary of State for Defence of this Government launching such a weapon. I hope that when she reflects on the matter she will think that she could have done rather better things. I should have much preferred seeing her opening new blocks of flats and houses in my constituency with the money which could have been saved from such a venture as this.
That brings me to the issue of Britain's nuclear policy. We in the Labour Party fought the 1964 General Election on the basis of ending the independent nuclear deterrent. We are on record on that matter. Immediately after the 1964 election, the Prime Minister railed at the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) in relation to the independent nuclear deterrent and his policy of maintaining such a deterrent. But, unfortunately, the Labour Government are maintaining independent nuclear weapons and are building and launching nuclear submarines so that they can carry that policy forward.
This is in complete contradiction of what was said by those of us who fought the election. We spent a great deal of time prior to 1964 trying to get within the Labour Party an acceptable policy on nuclear weapons and to get rid of the independent nuclear deterrent. Yet here we are in 1967 launching submarines with weaponry to be supplied by the United States which are to cost this country about £80 to £90 million each when fully equipped.
In The Times of Monday this week David Wood quoted the Prime Minister's words about getting rid of the "expensive delusion of national grandeur" of the independent deterrent. It is very sad that we should be going ahead with this policy, since we were told by the Secretary of State yesterday that there are 7,000 nuclear weapons in Western Europe at present. What part can four Polaris submarines play in this issue? This does not make sense. The Foreign

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Secretary said today that the time when Britain fought wars independently is over. We all agree with him. Then what do we want an independent nuclear deterrent for? The British people will question this issue, because in 1964 they voted for the ending of this deterrent. It is about time that it went.
I come now to the question of Germany and support costs. I agree with much of what my right hon. Friend the Member for Easington (Mr. Shinwell) said. The Secretary of State for Defence said yesterday that a war in Europe was highly unlikely and that nobody thinks that it probable. We are, therefore, keeping up a façade in Germany and by maintaining the N.A.T.O. Alliance, which is long out-dated. It is a fluidity in Europe which should be exploited both in the West and in the East in order to get a genuine détente in Europe.
The Secretary of State said yesterday that if anything happened because of the nature of the weapons we should be in a nuclear situation possibly in a matter of days, if not hours. Therefore, to keep 55,000 British troops on the Rhine is an expense which this country cannot afford and which we can drastically reduce. I do not think that this has anything to do with European commitments. Whether one is for or against the Common Market, it should have nothing to do with Europe. If it has anything to do with it, it means that defence is at the bottom of the Treaty of Rome. Consequently, we should act completely independently.
I turn now to the question of South-East Asia. My right hon. Friend the Member for Bassetlaw (Mr. Bellenger) asked what those of us who oppose the policy have to offer. He said that this was a matter of foreign policy. The fact that the Foreign Secretary has spoken in the debate is an indication of how closely aligned defence and foreign policies are. They are indivisible. Therefore, those of us who tabled the Amendment say that it is not a question of getting cost-effectiveness, however important that is—it is important and I think that the present Minister has done more than anybody else in that respect—or of reducing our forces and commitments as much as possible in each area; it is a question of getting rid of the commitments. That is the basic political issue.It is the
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commitments that must be tackled. While we maintain commitments, we will overstretch our resources in trying to provide facilities and logistic support which is not feasible and suitable in any case. In consequence, we will still run down our resources at home.
It is interesting to note that in the Defence White Paper it is impossible to find the total of our foreign exchange costs of military expenditure. The total is not available because we have to await the outcome of the discussions with the United States Government and the Federal Republic of Germany. We know, however, that the figure is over £300 million. We know that the total of our foreign exchange problem is in the region of £470 million, including all our commitments. Our military foreign exchange cost is possibly about £330 million to £350 million. That is the issue with which we are concerned.
Britain is in an economic crisis. She is in pawn to international bankers. She has to take from the United States and the International Monetary Fund a loan of £1,000 million because over the last 10 years our balance of payments has been, on average, approximately £125 million "in the red". We say that if we are to reduce that, if we want to do something about unemployment at home and about providing social services and housing, we have got to cut the defence expenditure. By "cutting" I do not meant getting cost-effectiveness, but cutting the commitments so that we can reduce the cost overall.
How long can Britain go on pretending that she can police two-thirds of the world? How many other Western nations still have the illusion that they are responsible for peace in the world, whether in the Middle East, Aden, West Germany, the Gulf or the Far East? How much longer can we have this delusion that we are so important and that we must maintain a nineteenth century attitude in the twentieth century?
Holland had overseas commitments. Belgium has cut her overseas commitments. What about France, of all countries? She was in South-East Asia, in Vietnam—Indo-China as it was then called. She was heavily defeated at Dien Bien Phu, in 1954. She was heavily committed in Algeria with, I

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think, the largest settler population that any country had ever had. Faced with the possibilities of a Fascist coup at home, France overthrew those commitments and recognised that she has an important part to play in the world, but a part which is not military or a military world rôle.
In consequence, France has the best balance of payments of all Western nations. She does not have the strain of the foreign bankers on her back. It is all very well for my hon. Friend the Member for Pembroke (Mr. Donnelly) to laugh about this, but facts are facts and my hon. Friend should face them. I listened to his arguments yesterday. His defence budget would cost more than the present defence budget.
The Defence White Paper is a delusion. It goes to great lengths at the beginning to say how much we have cut off the defence expenditure. But it has gone up this year by £33 million. Since 1960, under Conservative and Labour Governments, defence expenditure has gone up by approximately £100 million a year. I have the figures with me. So we are not cutting the Defence Estimates or defence.
I am glad that my right hon. Friend the Member for Easington has arrived, because in an entertaining and very witty speech he took some of us genuinely to task about where we stand in relation to defence cuts. I remind him of two important points. He asked why we have such concern and why we carry it to such lengths. At least, that was the inference of what he said.
I remind my right hon. Friend that at the 1965 Labour Party conference he went to the rostrum and said to my hon. Friend the Member for Bilston (Mr. Robert Edwards), who moved a motion on arms reduction, "Do not push at an open door. The Parliamentary Labour Party has unanimously agreed that defence expenditure should be drastically cut, more so than in the programme. You have nothing to worry about. In consequence, the Government will tackle this issue." The Government have not tackled it. The defence budget is still escalating.
That motion was published and is common knowledge. The inference of it was that to keep the defence budget at £2,000 million at 1964 prices was not
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acceptable to the Parliamentary Labour Party, who wanted to go further and faster. My right hon. Friend the Member for Easington assured that Labour Party conference that that was exactly what the Government would do. Unfortunately, we have not done it, because the defence budget went up by £135 million last year and it is another £33 million higher this year. It continues to escalate.
That is the issue which my right hon. and hon. Friends who object to the defence budget are putting to the Government year after year. The Government are trying to maintain our commitments. We have not got rid of one basic commiment since we came into office in 1964. We are to get rid of Aden in 1967–68. We were to have run down our Malta commitment, but, unfortunately, I see that there is a possibility that even this might be extended.
As the editorial in the Daily Telegraph, on Monday, said:
"It is, in theory, ridiculous to dispense large sums of money under the heading of defence for the sole purpose of enabling the inhabitants of distant lands to remain profitably employed during the off-tourist season."
I recognise that there is a problem when one has been for many years, perhaps centuries, in these territories. Everybody says how difficult it is. My right hon. Friend the Foreign Secretary today made the case for Singapore as a Socialist democratic Government. We know how difficult it is, but we are asking for positive steps to be taken to end those commitments.
The Government are not ending those commitments. That was why we said in the Labour Party conference motion that these commitments should and must be ended by 1969–70. If people know that these commitments are then to be ended, we can start making genuine attempts to help to get their economy on a firm footing. It would be far cheaper to have the troops out and give them money than to maintain the escalation of the cost of forces, families and logistic weapons overseas continuously.
Why are we maintaining this Far East rôle? Is it because the Americans want us there? Is it because we have made definite arrangements with them? Is it because we are giving the Americans tacit support, in effect, for their war in

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Vietnam? This is the question which we must ask.
My right hon. Friend the Member for Easington mentioned Australia and New Zealand as being two Commonwealth countries with whom we have close ties. I agree, but I do not think that Britain's moving from the Far East will jeopardise them. We cannot stay in these areas for the rest of our lives on the assumption that they might be attacked by A, B, or C, or come under threat. It is much better to strengthen the United Nations and to see some form of security pact. It was a great pity that the Maphilindo concept was not developed in relation to South-East Asia.
Mr. Christopher Rowland (Meriden): Whatever my hon. Friend's views on this matter, would he not agree that the views of the United States, Australia and New Zealand are factors which any British Government must take into account?
Mr. Orme: Certainly I would but, in my view, the British Government must make up their own minds what to do with their resources and what is Britain's rôle.
Without wishing to develop the issue too far, I want to come to the central point, which is Britain's world rôle. The Defence White Paper lays the basis for Britain maintaining a world rôle for the rest of this century, if it is not basically altered. It does not go only to 1970 or 1980, but beyond. At this period in history, what right have we to decide that we have still a world rôle?
We are an important nation in terms of commerce and in terms of our opinions. However, for us to maintain a world rôle, particularly in special relationship with the United States, is outmoded. We are moving into a world where the African, Asian and South American countries are beginning to assert themselves. They are becoming independent. The neutral nations are not necessarily going into the Soviet camp, or the American camp. They are acting independently. They have their own policies, and they disagree with one another, but the basis of the whole concept is an independent outlook, and I do not believe that maintaining white forces in an area such as South-East Asia will help the situation. In fact, it may be very explosive in character.
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We have to allow these people to decide for themselves eventually the type of Government and the type of country that they want. Sometimes they will satisfy us and sometimes they will not, but we have to face that fact, just as right hon. and hon. Gentlemen opposite will have to face the fact about the Middle East that President Nasser is there to stay, and they might as well recognise it. When right hon. and hon. Gentlemen opposite were in office, it could be said that they fired the first shots in Suez to set the Middle East situation off on the wrong track. It is no good arguing about the Middle East and trying to support outdated oil sheikhdoms—
Mr. Walters: Will the hon. Gentleman accept that King Feisal is still there, and that his presence is a factor which must be recognised?
Mr. Orme: He is there, but how long he will remain, we do not know. As the years go by, we will see which is the dominant factor in the Middle East.
What some of my hon. Friends and I are saying is that we have this millstone of defence expenditure round our necks. Its saving would result in our balancing our payments at home, our independence and being able to stay independent. That is the issue which is facing us. At this time in history, with unemployment running at the level it is and with the economic problems as they exist, we feel that the Government have to make drastic changes in their policy. It is because of that that many of my hon. Friends and I will abstain tonight, to show the Government and impress upon them the urgent need for change.
This morning's Gallup Poll figures show clearly that 55 per cent. of the people of the country feel that we are spending far too much on defence. Only 5 per cent. feel that we are not spending enough. In my opinion, the people will support a drastic reduction in our commitments and a rephasing of our economy to assist people in this country who need it. Let us fetch the troops home. Let us cut our commitments. Let us alter our foreign policy to suit the present situation. It is on that basis that I support the Amendments on the Order Paper.
6.56 p.m.
Mr. Nigel Birch (Flint, West): I agree entirely with some parts of the speech of the hon. Member for Salford, West (Mr. Orme). What worries me about the Government's defence policy is the increasing stress which is laid upon atomic weapons. The balance between atomic and conventional weapons is a subject about which I have often spoken before. I am always a cool supporter of atomic weapons. It would be a mistake to throw them away. However, I am a strong supporter of conventional weapons. If we are faced with an act of aggression and we are lamentably weak in conventional weapons but have atomic weapons, we can do one of two things. Either we can blow up the world, or we can capitulate. There is no other choice, and the whole course pursued by the Government makes that situation more dangerous.
Take, for example, the proposal not only to pull our troops out of Germany but to deprive them of their reserves of ammunition and stores. That is the exact opposite of what the Labour Party said between 1960 and 1964. Speech after speech was made by the Prime Minister, the Minister of Defence, the Foreign Secretary and the Minister without Portfolio saying that it was wrong not to fulfil our full obligations in N.A.T.O. and that we must build up our conventional forces there to such an extent that atomic weapons would not have to be used, at any rate for a very long period. We are now putting ourselves deliberately in a position where they would have to be used at once if the Government carried out their threat.
The same thing has happened in the Far East. In the troubles which we have had in the Far East, in East Africa, in the blockade of Beira, in the Gulf and in confrontation, carriers have played a dominant rôle. Now we are to scrap them and, as a partial substitute, we shall have 50 F111s.
What could they have done in any of those situations? If we buy 50, we have to have 10 or 15 of them in an operational conversion unit in this country for training purposes. Some are bound to be destroyed or damaged in training, and it is a complex aeroplane which is difficult to maintain. At the most, we should never have more than 24 in the air at
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the same time. What would be the good of 24 bombers dropping conventional bombs in the vast area of the Indian Ocean? How many thousand sorties a week do the Americans fly in Vietnam, and with what results?
The only point of them is that they are intended to be nuclear bombers, and the only good that would be got out of them would be a MiG a day. They are no good for anything else. There is no technical fall-out and we are being put in danger at a vast expense. I cannot believe that this could have happened had not the whole system of the organisation of defence been destroyed.
There is a very interesting book by the hon. Member for Woolwich, East (Mr. Mayhew) which some hon. Members may have read. In it, he makes the interesting point about carriers that. by any standards, the carrier issue was an important one. It meant that we destroyed the power of the Navy for ever to operate in the open sea, and that meant that we were going nuclear in the Far East. The hon. Gentleman wrote to the Minister of Defence and said that he wanted to put that case to the meeting of Ministers which was to decide this, and the Secretary of State for Defence replied, "You can come to the meeting, but you must not speak." In other words, those who took these decisions in the Government did not know what they were deciding or why they were deciding it.
Right hon. and hon. Members opposite have condoned various acts. As the hon. Member for Salford, West said, they were pledged to abandon nuclear weapons before the 1964 election. They have condoned that. They have condoned the greater risk of the use of atomic weapons in Europe. They have condoned the risk of atomic weapons in the Far East. One thing I beg them not to condone is something which was hardly noticed, and it is a passage in the speech of the Secretary of State for Defence yesterday when he said:
"… there is no country on the Continent which does not believe that a prolonged conventional war would inflict damage on it quite as difficult to bear as … a strategic nuclear exchange."—[OFFICIAL REPORT, 27th February, 1967; Vol. 742, c. 112.]
Surely if there is anything that everyone is agreed upon, whatever their views on defence, it is that atomic or nuclear

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warfare is something different in kind if not in degree from anything we have had before, particularly in the amount of suffering that would be involved. Goodness knows, this generation has suffered its horrors. We have seen the terrible destruction that was caused in the last war and the concentration camps in Russia and Germany where things were done which would make Gengis Khan turn in his grave. We have all seen or heard of such horrible things, but we have not yet seen the final horror of an atomic war. When people with computers work out that on the first strike there may be 30 million deaths on both sides, one realises that that is a great deal more difficult to bear thinking about than even a conventional war, ghastly as it is.
I hope that the hon. Gentlemen opposite, having condoned so much, will not allow the Secretary of State to get away with a sentiment of such obscene wickedness.
7.2 p.m.
Mr. Christopher Mayhew (Woolwich, East): The right hon. Gentleman the Member for Flint, West (Mr. Birch) will forgive me if I do not comment on the particular aspect of defence which he discussed. His speech led us a little away from the main theme of this debate which is a criticism of the attempt of the Government to maintain a world peacekeeping rôle with totally inadequate resources.
This policy of cutting our resources, of bringing troops home, while keeping our commitments, has been the theme of an attack from all quarters of the House, and the disadvantages of such a policy have been fairly well spelled out.
By withdrawing our troops and bringing them home, while we keep our commitments, we will throw an extra strain on the troops who stay overseas. It will mean increasing the risk of military challenge to them and decreasing their capacity to meet that challenge if it occurs. That policy will also mean increasing our dependence upon our allies, especially upon the United States, in Asia.
As the right hon. Gentleman the Member for Wolverhampton, South-West (Mr. Powell) pointed out—and he was one of many speakers from both sides of the House who pointed this out—the policy of reshuffling men from a hard currency
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area to a soft currency area really makes no effective economies in expenditure.
The fact is plain, that if we want to make big economies in defence, it is no good shuffling men from one part of the world to another. We have to demobilise them. If we want to make big economies in defence, it is no good our trying to prolong our aircraft carrier fleet on the cheap. We have to take the necessary foreign policy decision to remove the need for any aircraft carrier fleet whether on the cheap or with the new carrier CVAO I. If we want to make big economies, it is no good our closing down a part of the Singapore base. We must leave Singapore, and then we can make the big economies.
All these big economies involve cuts in our commitments. The only real hope of a drastic reduction in our expenditure is to make these commitment cuts. Once we have made up our minds to make these commitment cuts; once, as in the terms of our Amendment, the Government have decided that by 1970 they would be clear of Singapore, Malaysia and the Persian Gulf, then substantial economies become possible immediately, working up, as our Amendment says, to a total of well over £300 million a year by 1970.
This figure has never been challenged by the Government. In my view, we have under-estimated it. According to my latest calculations, the saving on the policy which we have outlined in our Amendment would be nearer £400 million. It would also make possible—and this has never been challenged by the Government—immediate substantial cuts in those items of expenditure which will not bear fruit, in any case, for several years, and which are only needed for the east of Suez rôle in the 1970s.
I was asked yesterday by the Secretary of State for Defence to explain my point of view on troop withdrawals in Germany. I would say that our Amendment asks for a reduced rôle in Western Germany. The Amendment neither rules out unilateral withdrawal of troops nor does it demand unilateral withdrawal of troops. My view is that the position in Europe is greatly improved, and I, like my right hon. Friend and supporters of our Amendment, am looking forward to a reduced rôle for our forces in West Germany. I hope that is clear.
Mr. Bellenger: Would my hon. Friend say precisely what he means by "reduced rô"?
Mr. Mayhew: A reduced rôle in exactly the terms which my right hon. Friend has stated. He stated that it is no longer appropriate for us to maintain a large number of troops in West Germany. He said so plainly yesterday. He said that we should withdraw those troops, that we should negotiate with the Warsaw Pact and the N.A.T.O. Pact and make very drastic re-arrangements of our defence capacity there.
The main point of this debate has been the attack made on the Government from all quarters of the House for extending their commitments beyond their resources. On this I am sure that the official Opposition and the unofficial opposition agree. Where we part company with them is that we have an alternative policy and they do not. The Opposition have got themselves into quite an absurd position. Speaker after speaker on the Opposition Front Bench has attacked the Government for giving the troops commitments beyond their resources and Members on this side of the House have, one after another, asked them whether their solution is to cut the commitment or to have a bigger defence budget—and not one hon. Member on the Opposition Front Bench has answered.
The speech of the right hon. Gentleman the Member for Wolverhampton, South-West was particularly disappointing. How well we remember those stirring questions that he put about east of Suez at the Conservative Party conference at Brighton. What a good place is Brighton for reviewing defence. What a falling-off to see the right hon. Gentleman bowed over the official Dispatch Box, weighed down by the white man's burden. Why does he not come clean? Why does he not stand up and say the things about a Suez rôle which he really believes?
His hon. Friend the Member for Merton and Morden (Mr. Humphrey Atkins) went much further, and said:
"Our criticism is that the Government are inviting us to approve their action in reducing commitments when in fact they have not reduced any at all …".
Later, he said:
"Our complaint is that the Government have not withdrawn by agreement from any of their
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defence commitments."—[OFFICIAL REPORT, 27th February, 1967; Vol. 742, c. 21 –2.]
Surely the right hon. Gentleman the Member for Wolverhampton, South-West could pluck up his courage and at least keep abreast of his hon. Friend the Member for Merton and Morden. In the meantime, what are we to think about an Opposition in this position? I think that the best contribution I can make to the debate is to try to answer what I believe to be the two major objections raised to the policy outlined in our Amendment, the policy of the British Labour Party. The two major objections are, first, that in leaving as we suggest, we would leave behind a dangerous power vacuum in the Middle East and South East Asia, and, secondly, whether or not it is right to leave, we are proposing to leave too soon. I think I can fairly say that these are the two major objections to our policy, and I shall try to face them frankly.
No one can deny that if and when we withdraw from these places the whole pattern of power will change. The question is not whether the power pattern will change, but how it will change, and whether the resulting pattern of power will be unacceptably worse than the existing one. This is the question which we have to ask ourselves.
I concede that we cannot forecast exactly how the pieces will readjust themselves on the board when we leave. Will the Persian Gulf sheikhdoms at long last start to co-operate with each other? Will they form some kind of alliance or federation with Saudi Arabia? Will Bahrain, and Muscat and Oman seek independence, and, like Kuwait, join the United Nations? Will the United Nations play an important rôle in the security of the Persian Gulf in these circumstances? None of these possibilities can be ruled out. Not one of them would necessarily be contrary to the interests of the Persian Gulf sheikhdoms, nor contrary to the interests of this country.
But the fact that it is impossible to forecast precisely what new order would result is no objection to our stating clearly now our intention to leave the Persian Gulf. On the contrary, unless and until we state our intention to leave, no consideration at all will be given to any alternative means of security in the Persian Gulf. The States there which lean on Britain will continue to do so.

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They will continue quarrelling with each other in their ancient, sterile, traditional way under the umbrella of our jet fighters. Nothing will happen.
It was the same in India. Until we named a date to leave India, it seemed impossible to leave, but once a date was named all the pieces on the board reshuffled themselves, and it not only became possible to leave, it became impossible to stay.
It is argued—and a number of hon. Gentlemen opposite will argue, and I want to face this frankly—that the Egyptians will move in. This is primarily an argument against the Government's decision to leave Aden, not against their critics' suggestion that two years later we should leave the Persian Gulf. It is not an argument which the Government can use against their critics. That is obvious.
Though the precise timing and methods of the Government can be criticised, I would defend the Government's decision to leave Aden. No one denies President Nasser's ambition to unify the Arab world under Egyptian leadership, but that is not the end of the story. There are a number of questions which I have to ask. First, why has President Nasser not yet mastered the Arab countries a great deal nearer home—Syria, Iraq, Jordan and the Yemen? It is not for want of trying. He has had Egyptian troops in more than one of these countries. Why has he not mastered these countries nearer Egypt? There are no British troops in them.
Secondly, how could Nasser control the Gulf without first controlling all those countries, and in addition Saudi Arabia? Thirdly, granted that many Arabs in many Arab countries accept this Nasserite concept, how far and for how long is Britain morally obliged to oppose this concept by force? And if Britain is morally obliged to oppose this concept by force, have we the resources to do so in the long run?
I do not deny that there are dangers either way. There is a danger that in disengaging we might open the way for Egyptian aggression. But there is another danger, that of getting involved, with inadequate resources, in a major war in the Middle East, a war in which we get
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no support from other major Powers or from the United Nations. This is a road which we have walked along before, and listening to one or two hon. Gentlemen opposite I get the feeling that they are thirsting to repeat the Suez adventure. I ask them to reflect on the fact that militarily they put up a very poor show in 1956, and I ask whether they have studied the changes in the military balance of power between ourselves and Egypt in the 11 years since?
It seems obvious that our general policy in the Middle East must be not to get further in, but to disengage. This must be our policy, and the Government's decision to build up in the Persian Gulf after leaving Aden seems to me sheer lunacy, showing a total inability to understand the realities of politics in the Middle East at the present time.
The Government are in danger of making similar mistakes in South-East Asia. May I again try to face frankly the power vacuum argument against our leaving there. It is argued—and I think that this was argued by my hon. Friend the Member for Pembroke (Mr. Donnelly)—that there is a great danger of Chinese aggression, and those who argue this can point to India attacked by China, to Chinese intervention in Korea, and to her militaristic ideology. They can point to the confusion in Peking at the moment and suggest that the leaders are almost on the border-line of insanity. That can all be argued, yet if we take a calm and cool view we see that there are more reassuring factors on the other side.
There is the fact that Burma and Cambodia are totally defenceless—they have no Western troops—and yet they have not been interfered with by the Chinese Government. Indeed, it is notable that the Chinese are most militant where the Western Powers are most obtrusive. This is something that we should bear in mind.
Mr. Kershaw: What about Tibet?
Mr. Mayhew: Tibet has long been accepted as being within the boundaries of China, including by the British Government. I do not for a moment support the atrocious suppression of the Tibetans by the Chinese. I am only saying that in international law, according to the British Government among others, Tibet has always been regarded as part of China.
Mr. Tam Dalyell (West Lothian)rose—
Mr. Mayhew: I cannot give way. The point is irrelevant anyway.
It is not easy to make a judgment about China's future intentions, but if one looks at Burma and Cambodia, at the limitation on the aggression against India, the withdrawal at a pre-planned stage, at her conventional order of battle which is not designed for military aggression, one sees that there are factors on the other side, and it is not necessarily naive to suppose that if the countries of South-East Asia were genuinely nonaligned, as are Burma and Cambodia, it might not be felt by the Chinese to be worth attacking them.
If that is not so, I ask those who oppose our point of view to say what size of military deterrent they would need to deter the Chinese. Let them work it out. Already there are 450,000 American troops in Vietnam. There are all those planes, all those ships, and all that determination and courage to contain not China, but the Vietcong, and, frankly, not yet succeeding in mastering the Vietcong. I ask those who oppose our policy how many more ships, more planes, and more troops, they would need to contain the Red Army of China, and where these forces are to come from? They say that we shall not be able to produce a genuine deterrent, but what could be worse than half-measures in a matter like this. Enough Western troops to create tension, enough to provoke without enough to deter, still less enough to win victory in the event of the deterrent failing—this seems to me to be getting the worst of every possible point of view.
Mr. Healey: I follow my hon. Friend's argument and agree with a great deal of it. [HON. MEMBERS: "0h."] Oh, yes —I said so in the debate last year. But what makes him think that the possession of one more aircraft carrier would allow us to perform the rôle, as he has defined it, of containing China?
Mr. Mayhew: I invite my right hon. Friend to read the book just recommended to the House by the right hon. Member for Flint, West.
There are dangers either way, as in the Middle East. There is the danger that if we do not build up some great Western
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conventional military force in South-East Asia we may open the door to unopposed Chinese aggression; but there is also the danger, on the other side, of going in and creating tension and doubts, and perhaps even precipitating Chinese military action which might not otherwise have happened.
If I were in South-East Asia I would be inclined, weighing up the balance of danger, to think that there might be less danger in adopting the posture of Burma and Cambodia, unaligned with the West, rather than that of Thailand and South Vietnam, with their Western military alliances. I believe that this view is increasingly accepted.
My right hon. Friend says that he agrees with much of what I have said, but he says, "It is too soon. You are asking for us to leave too soon." As I explained yesterday, the Government have no right to attack us for suggesting leaving too soon; it was not we who decided on the year 1968 for leaving Aden. We suggested that by 1970 we might leave places not as directly threatened as Aden. Nevertheless, it is true that the date of 1970 was selected a year ago, and that it is now only three years instead of four years ahead. I might be speaking for a number of supporters of the Amendment when I say that if the Government had named some other date, not too far ahead, they would have gone a long way to meeting our general point of view on this issue.
But they have not named a date. They are not going to name a date. They are not even going to say plainly that they are ever going to leave. There is confusion among Ministers in their opposition to the Amendment. Some say that it is wrong to leave; some say that it is wrong to leave so soon, and some say, "We shall leave, but it is wrong to say so." We have heard all those arguments. Some Ministers have put forward all three in the same speech. We would like my right hon. Friend to sort this out.
The Government Motion hints at a policy of cuts in commitments, and the word goes round that we need not worry too much, that it will be all right; the Government are on our side. I treat this with some scepticism. We notice that the Government are going on spending as though they were going to stay there

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for ever. They are going to have between 100 and 150 VG aircraft and 50 F111Ks. We do not need these if we are not going to be east of Suez. It is a nice calculation, and I will not venture my arm, but if we are going to reduce our commitments seriously east of Suez the number of VGs required would be so small as to make the whole project non-cost-effective.
Mr. Rowland: Is my hon. Friend still in favour of the establishment of a British base in Australia, as he said he was after his resignation? If so, what would it cost and what would it represent?
Mr. Mayhew: I have made a rough costing. I am assuming that we would still be in Hong Kong. In those circumstances, a small military presence in Australia would cost between £30 million and £40 million a year, which would give us a saving of over £300 million a year when we carry it out. My hon. Friends may not agree with me about our presence in Australia, but that is my personal view.
If the Government are serious in their hints that they propose to leave, why are they going on spending money on the F111A and on the VG, and on Phantoms for the carriers? On my basis they could at last safely phase out the carriers, and cancel the orders for naval Phantoms. If they are going to leave their bases east of Suez and have spent all this money in the meantime, it will be a waste of public money to make the TSR2 affair look like a fleabite. Let the Government make up their mind whether they will go or not. If they are going, they must start now to make provision for the consequences, economic, defence, and political.
We remember last year the very clear statement on Government policy. We remember my right hon. Friend's statement:
"We intend to remain and shall remain fully capable of carrying out all the commitments that we have at the present time, including those in the Far East, the Middle East, and in Africa and other parts of the world."
We remember the statement of the Prime Minister in June of last year, which is very firmly on the record. After confirming what my right hon. Friend had said he went on to add:
"What about India? Does anyone think India wants us to leave her to become a
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cockpit, forced to choose between Russia and America to protect her against China? … Africa? Is it really argued that we have no rôle there? If we abdicate responsibilities who will exercise that rôle? Asia? Perhaps there are some Members who would like to contract out, and leave it to the Americans and Chinese, eyeball to eyeball, to face this thing out. The world is too small for that kind of attitude today. It is the surest prescription for nuclear holocaust I could think of."
Is this still the policy of the British Government? If it is not the Prime Minister should say so clearly. If it is not the policy of the British Government he should clear up the position with his allies. This would be a vital change in British policy, and he should start planning now the economic and security consequences of withdrawal from some of these places. He should not wait until the last moment.
But if this is still the policy of the Government today—the adoption of this huge, ambitious world military rôle—then the Government must stop boasting about their cuts in defence expenditure. They must go to the nation and demand from it a far bigger military budget than that which they have now got. They must give the troops the weapons they need. They must give the Navy a proper, up-to-date carrier fleet, to carry out the huge task placed upon it by the Prime Minister.
But it is clear that for this country, with its limited military and economic resources, to attempt to fulfil the rôle laid down by the Prime Minister in a world which is becoming increasingly armed, throughout the 'seventies and into the 'eighties, would be sheer lunacy. Not only is the rôle too big for our defence budget; not only is the defence budget too big, anyhow, for our economy, but the whole conception of white Western peace-keeping in Asia is an anachronism. The whole rôle is becoming strangled by obvious historical changes east of Suez.
Some supporters of the Amendment normally tramp loyally through the Lobbies with the Whips—not all the supporters, but some of them. But it is right, now and again, that we should assert ourselves. It is right that we should show that the growth of party discipline—the increased power of the Executive—has not yet made us automata. It is quite plain—the debate has confirmed it—that in this vital field of

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defence the Government are showing a dangerous lack of principle and direction. This belief is widely held in the House, and increasingly widely held outside it. We should warn the Government tonight in the Division that although they may persist in these mistaken policies for the time being, in the long run it is the Members of this House and their electors who are the masters.
7.30 p.m.
Captain Walter Elliot (Carshalton): We have had the sort of skilful, energetic speech from the hon. Member for Woolwich, East (Mr. Mayhew) that we could have expected. He twitted us by asking what was our defence policy, but, while asking in what way we would reduce our commitments, he did not say where he thought this country should operate.
I was most impressed when the Foreign Secretary this afternoon paid tribute to Britain for her actions in South-East Asia and remarked that they had led to great promise for the peaceful development in those areas. I believe that is so. Obviously, we cannot do everything with our limited powers, but we can do something. I was rather surprised that the hon. Member for Woolwich, East did not refer to what is known as a "fire brigade" rôle. He was in office, was he not, when we gave help to East Africa? I think that a typical example of what we can do. In those days, and I believe still, the putting out of those small wars was and is probably a vital way of avoiding escalation into a major war. [An HON. MEMBER: "In Rhodesia?") So far as I know, there is no war going on in Rhodesia at the moment.
I want to deal with another aspect of this White Paper on Defence. I do not think that by nature I am a fearful man so far as the future is concerned. I think that I am as bad as the average Briton when, seeing another country overrun or overthrown, I take the view that it cannot happen here. But there was one paragraph in the White Paper which set the alarm bells ringing in my system and the speech by the Minister of Defence did nothing to quieten them. I thought that he was much too dogmatic in his assessment of the political situation in the world and in Europe and his assessment
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of the sort of way in which a war might develop. I should like to take those points in turn and then quote the paragraph in the White Paper which has so upset me.
First, on the general situation. Paragraph 6 refers to relaxation of tension, particularly in Europe, and the Minister of Defence referred to this in his speech. Of course, that is not the case in the Far East. The situation there is anything but relaxed. The terrible events—and they are terrible—in China make that country most unpredictable, but we recognise that Europe is still of prime importance. My hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing) sounded a note of caution.
I think that the signs there are disquieting. We sometimes think that the quarrel between China and Russia at present is driving Russia into the arms of the West. That might well happen, but I do not agree with the statement of the Minister of Defence yesterday:
"I find it difficult to conceive that overnight, in a flash, it could change so fundamentally as to allow Russia to contemplate a war in Europe."—[OFFICIAL REPORT, 27th February, 1967; Vol. 742, c. 111.]
I believe that that is exactly what can happen with dictatorships. I think that the situation can change in a flash, as did the situation between Germany and Russia before the war. I am told that Germany is turning more and more to the East. I find that worrying. Some of the election results in that country are also worrying.
I am not in the inside confidence of N.A.T.O., but it appears to me that N.A.T.O. is slowly disintegrating. In paragraph 7 of the White Paper it is stated that none of the major Governments has made a full contribution. France has gone and the headquarters are being moved to Brussels. Britain is threatening to withdraw large numbers of her troops. I am told that the United States, during the next three or four years, might well do the same. I saw in The Guardian yesterday that Turkey and Norway, both members of N.A.T.O. and on the borders of the Iron Curtain, are dissatisfied. Now Britain is disarming. I do not think that anyone should have any doubt about that.
If we turn to page 8 of the White Paper we find that, quite apart from the

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cuts already made, for example, the carriers to go from the Navy, there is
"The first stage of the reduction in Cyprus…There is no longer a military need to retain any substantial forces in Malta … In Libya the Royal Air Force staging base at Idris has been closed down …the withdrawal of the squadron from Gibraltar … In the course of the next few months we shall withdraw the Commander-in-Chief, South Atlantic and the frigate on station in the area."
The Aden station is to be closed. If it is suggested that when this chain of bases should be closed, or greatly reduced, that we can maintain 50,000 men in Singapore, I cannot agree.
My first point is that the political situation is not half so stable as the Minister appeared to think it was. My second point is about nuclear war. For many years the assumption has been that the West would not accept defeat in conventional war without it escalating to a nuclear war. Yesterday, the Minister took this view. In a remark which has been already quoted by my right hon. Friend the Member for Flint, West (Mr. Birch), he referred to the damage of a prolonged conventional war and the fact that no European country would accept it. That would not be the case in a war at sea.
It is curious that the Minister barely mentioned a maritime war. He mentioned, or seemed to imply, that if the Russians by accident or design—which he said was most unlikely—threatened the land frontiers the possibility was that 7,000 nuclear weapons might be released with enormous devastation. If 200 submarines started operating on the trade routes, does he think that those 7,000 nuclear weapons would be fired? I do not think that they would. This assumption about the inevitability of nuclear war is partly due to the fact that the last two great wars ended with the demand for unconditional surrender. That was not so in earlier times. I do not believe that it is necessarily so in the future.
I agree with the assumption that nuclear war would be unleashed if there was a possibility of the defeat of the West as a whole, but the loss of a battle is not the loss of a war. The loss of one country is not a defeat of the West. In spite of what the right hon. Member for Easington (Mr. Shinwell) said—if he had been here, I should have posed a question to him—I
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have come to the view that it is increasingly likely that a conventional war could be fought without it escalating into a nuclear war. This is particularly so of a war at sea.
I go even further. If a nuclear weapon —for instance, a nuclear depth charge—was exploded at sea, is it reasonable to think that Washington, New York, Leningrad and Moscow might be incinerated? I do not think that it is. Russia probably agrees with me. Why, if she does not agree, does she feel it necessary to have a submarine fleet of between 500 and 1,000, according to estimates which have been made? Russia is a realistic country. Russians are realistic people. Anyone with the slightest knowledge of a force of that sort knows the extraordinary industrial and naval effort which is necessary to maintain it.
If a conventional war is a possibility, I believe that it raises most serious considerations for Britain, particularly because of a statement in the Defence White Paper. For many years, all Governments, both Conservative and Socialist, have assessed our defence needs on the basis that this country would never fight a major war by itself. The Foreign Secretary repeated this this afternoon. It is logical. There is N.A.T.O. Attack on one country is attack on all. As a result, our forces, particularly our naval and anti-submarine forces, have been looked on as part of a pool. This is perfectly reasonable.
As a result, over the years large portions of our strength have melted away. Under this nuclear doctrine our reserve ships, too, have been gradually reduced in numbers, particularly A.S. ships. Again, this was perfectly logical. There is no time under the nuclear threat to bring them forward out of reserve, so there was no point in having them. There was disquiet as a result of this policy, but we were told by successive Governments that there was no need for us to have a large number of ships, that we had the allied ships in the pool, and that that was quite enough.
I admit, of course, that alliances are an integral part of our security. What now do we read in this White Paper? This is the first time I have ever seen a statement of this sort:
"N.A.T.O. must be ready at sea, as well as on land, to demonstrate its will and its ability

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to respond appropriately to any act of aggression. But it is no longer realistic for the Alliance to attempt to provide maritime forces for conducting a prolonged war at sea after a strategic nuclear exchange."
That statement has very grave and far-reaching implications. We are first told that we will never fight a war alone, that the pool of allied ships is big enough to provide for our security. Now we are told that the Alliance will not provide the pool, that it is not necessary. It is assumed that there will be a nuclear war, so that pool is to go.
I believe that if there is a prolonged war—it is a possibility—the only prolonged war there can be is a submarine war at sea. That is why Russia has 500 to 1,000 submarines. What would happen if an attack was launched by 200, 300, 400, or 500 submarines? To give the House a comparison, at the outbreak of the last war the Nazis could put 24 submarines at sea. At the height of the submarine war, when we were in desperate straits, they had something over 100 submarines at sea. Now we are faced with a far greater threat to our sea lanes.
I do not think that the Minister would contradict my assertion that Britain certainly has not the forces to combat this threat. It relied on the pool. We are now told that it is unrealistic for the Alliance to provide that pool. All our bases are going and we needed them before to combat the threat. These islands would starve. We are the only country that I know of that would be so affected.
In these circumstances—this is what I would have liked to ask hon. Members opposite, particularly the right hon. Member for Easington, but he is not here—would the rest of the world incinerate itself to rescue us? Would that be a rescue? Is it realistic to expect that they would attempt it? I do not believe that it is. We are the only country that could be put into that state. Paragraph 15 of the White Paper throws our defence strategy as a whole into the melting pot. The Government will be guilty of a terrible mistake if, to obtain a pretext to cut our forces, particularly our maritime anti-submarine forces, they delude the country into believing that conventional forces are of little value because a massive nuclear war is inevitable.
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This is not an argument about east of Suez or an argument about buttressing faded imperial glory. It is a matter of national survival. The doctorine that it is not realistic to provide maritime forces for conducting a prolonged anti-submarine war is not tenable. If there is no allied pool, Britain must strengthen her anti-submarine force. This means aircraft as well as ships. If we do not, the country will be a hostage to fortune. The Secretary of State said that the size and shape of forces in the future depend upon the revised shape of N.A.T.O. strategy in the future.
Sir Ian Orr-Ewing: I wonder whether my hon. and gallant Friend has considered whether, in the sentence he has read from paragraph 15, the word "after" should be "before". Then it would read:
"… it is no longer realistic for the Alliance to attempt to provide maritime forces for conducting a prolonged war at sea"—
before—
"a strategic nuclear exchange."
This would surely make sense. The broken-back concept, as printed here with the word "after", does not seem to us to make sense. Perhaps the Secretary of State might like to deal with this in his winding-up speech.
Captain Elliot: I am not sure that my hon. Friend is right. The Secretary of State left me clearly with the impression that he did not think that it was possible for a minor war to escalate to a major conventional war without unleashing the nuclear deterrent.
Mr. Healey indicated assent.
Captain Elliot: I see that the right hon. Gentleman nods.
In conclusion, I ask the Minister, when he is considering our future forces, to take a searching look at the shape of Britain's maritime forces in the light of paragraph 15 in the White Paper. If the pool is not there, where are our forces which will save this country if a massive submarine attack is launched on us?
7.50 p.m.
Mr. Roland Moyle (Lewisham, North): The hon. and gallant Member for Carshalton (Captain Elliot) showed great mastery of the details of naval warfare. If I may say so, the impression he left

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upon me was that, if my right hon. Friend the Secretary of State for Defence endeavoured to produce a defence policy to take care of all the hon. and gallant Gentleman's worries, a major part, a very substantial part, of Britain's economic activity would be devoted to maintaining land, sea and air forces in a state of military readiness, and we should be so over-insured that the policy would be quite impracticable.
I shall not follow the hon. and gallant Gentleman further. I have been sitting here now for the better part of two days, and I have found it fascinating to watch the development of the trends in the debate. First of all, we had my right hon. Friends the Secretary of State for Defence and the Secretary of State for Foreign Affairs, and they committed themselves to the positive policy which is set out in the series of Defence Reviews which have been published since the Labour Party was first elected to office in October, 1964.
Then, yesterday, we had the spokesman for the Liberal Party, the hon. and learned Gentleman the Member for Montgomery (Mr. Hooson). I must say that I admire his moral courage, because, even at the distance from Government which the Liberals are, the hon. and learned Gentleman took a firm stand and declared exactly what the defence policy of the Liberal Party is. He stated unequivocally that he wished to be out of all positions east of Suez by 1970, and that he would not in any circumstances withdraw any of our forces from the Rhine Army without the agreement of our N.A.T.O. allies. He said that although this latter point must put us almost completely at the mercy of any initiative taken by the West German Government in negotiations should they wish to do so. It is clear that anybody who votes for the Liberal Party in the future will be voting for that policy.
I admired the eagerness, almost the dogma, with which the hon. and learned Gentleman was able to have quite clear in his own mind that our whole defence policy should be committed to a defence of our position in Europe. I do not say that he may be wholly or necessarily wrong, but it is not beyond the bounds of being arguable that the whole of our military experience in this country casts
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doubt on that principle. It is arguable that our military experience has taught us that we could lose Western Europe and not suffer fatal damage. It could be argued that on the only occasion when we managed to hold Western Europe—I refer to the 1914–18 war—we suffered pretty well irreparable injury.
I would have thought, too, that the same principle could be argued in respect of the last war, that apart from the general debility of warfare which always sets in, none of the defeats we suffered at the hands of the Germans did us any fundamental strategic damage. On the other hand, it could be argued from one point of view that the defeats which we suffered at the hands of the Japanese inflicted serious damage upon us as a Commonwealth of Nations.
Although I should be the last person to be dogmatic about what one can learn from history, as a war in Europe will either not happen or it will lead to obliteration, it is still possible to argue the same thesis even in the modern age, in spite of the fact that we are now no longer the imperial Power we were. I believe that our commitment outside this country, although it may have been affected very deeply by our imperial commitments, was, in fact, based more on trade rather than on our imperial situation.
However, if these faults are apparent in the Liberal Party's position, it is very difficult to pick out any faults in the Opposition's position for the simple reason that we do not know what it is. I listened with great enjoyment to the speech of the right hon. Member for Wolverhampton, South-West (Mr. Powell). I always enjoy listening to him, but, with all respect, I thought the crunch came when my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) asked him what he would do as an alternative. He was unable to satisfy anybody, I thought, as to what the Opposition would do if they were in power.
It is my considered view that, if the Opposition were the Government—I do not think it likely—they would be prepared to accept almost any humiliation from the West German Government in order to maintain our Rhine Army as a ticket for admission to the European Economic Community.
Sir Ian Orr-Ewing: I am sure that, as a relatively new Member and one who is greatly respected, the hon. Gentleman will not mind my pointing out that, when the Labour Party were in opposition, we were constantly asking where they stood on defence. On one occasion, in March, 1963, the right hon. Gentleman the Member for Sheffield, Park (Mr. Mulley), speaking on behalf of the Army in a defence debate, said:
"It is not our function in a debate of this sort to explain the Opposition's defence policy. This is, essentially, a time when we want to have from the Government a statement of their defence policy."—[OFFICIAL REPORT, 4th March, 1963; Vol. 673, c. 146.]
I have lots of other quotations in similar vein. This is not an unusual position for an Opposition to take.
Mr. Moyle: I thank the right hon. Gentleman for his intervention, but, if I may say so, he knows what the Government's defence policy is. We have issued a series of White Papers. What we are anxious to have is the Conservative Party's defence policy to set against it. That is what the Opposition have not given us.
Whatever my right hon. Friend the Member for Sheffield, Park (Mr. Mulley) may have said on this topic, my point is that, if the Conservative Opposition wish to criticise the Government's defence policy, they have the moral duty to put forward the alternative which they advocate. This they have not done in the debate, and anyone who votes for them will be voting for a pig in a poke. If the Liberal Party, with its small resources, can afford to do that sort of thing, right hon. Gentlemen opposite ought to be able to do it. But, of course they do not know what they would do, or at least, they would not admit it if they intended to do it.
Mr. Henry Clark (Antrim, North): Could we sum up the hon. Member's argument by saying that he wants to know what the defence policy of the next Government is?
Mr. Moyle: Before right hon. and hon. Members opposite have any chance of becoming the next Government, they must tell the people in the Galleries and the nation generally what they would do if they were in our place. They have not done so.
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To turn to the Defence Review, after that lengthy diversion last year's Defence Review caused a certain amount of controversy, which was dramatised by the resignation of my hon. Friend the Member for Woolwich, East (Mr. Mayhew). This year, the controversy has not been dramatised, but it has, possibly, been a little more widespread. Some of the optimism about possible figures for national growth which was evident last year is not apparent this year. Some of the problems are more readily discernable. East of Suez is the subject of the most keen controversy in the problems which face us as a nation when we are considering our defence policy.
However, I am glad to see—this is one of the encouraging features of this year's defence debate—a growing desire to question the size, the shape and the cost of our British Army of the Rhine. It has been set in immobility, from the point of view of military strategy, for many years, and now, for the first time, we are having a major debate about what it should be in the future and what it should do. This debate should be encouraged. Whatever arguments there are for the Rhine Army, they are not military. We want it there either because we want to buy a ticket into the European Economic Community, or perhaps because we want to reassure the Russians that the Germans will not have a finger on the nuclear trigger, and we think that we shall have a better chance of influencing the West Germans in this respect if we have the Rhine Army there. But those are not military arguments. They are diplomatic arguments, and are not necessarily related to a magic figure of 55,000. I am, therefore, glad to see that there has been a keen debate on the size of the Rhine Army.
Nevertheless, the phrase "east of Suez" looms largest in our controversies on defence policy. It is a great pity that the phrase has come to such prominence in the past year or two, because when the nation as a whole wants to be rid of as many quasi-imperial commitments as possible it has come to the fore and rather obscured the fact that it was the Governments of Elizabeth I rather than of Elizabeth II that committed us east of Suez, when they founded the East India Company many years ago.

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When the present Government came to power we were east of Suez, and we must start our consideration of the problem from that point. I am sure that in historical terms it is the job of this Government and its successors to preside over further phases of withdrawals from that area. I therefore think that any controversy on the subject of east of Suez is one of emphasis rather than principle. I understand from many hon. Members who have spoken that the commitment to Australia and New Zealand is not at issue. Therefore, if there is a desire to reduce the defence budget to £1,750 million a year over a period one is only committed to doing somewhat more quickly what the Government will do in the long run anyway.
"East of Suez" is a fairly emotive phrase. It is also a huge global problem area of the world which is much larger than Europe, and to try to deal with it in one global phrase is impossible. The more one talks in terms of the whole area, the easier it is to get away with the idea that the action of the defence forces of this country in it is an anachrostic waste of time. It is easy to make claims to that effect.
However, if one gets down to specific instances it becomes much easier to see why we have a force east of Suez. For example, let us take what I think is—at least on this side of the House—our most unpopular military commitment, our commitment in the Persian Gulf area. I listened with keen interest to what my hon. Friend the Member for Woolwich, East said about that and I did not altogether disagree with him on the facts he put forward.
But I drew slight conclusions and emphases from those facts. In talking of the consequences of our withdrawal from the Persian Gulf, he asked so many questions about so many options that he established that we cannot tell at present what would happen in the Persian Gulf if we withdraw our fairly modest forces from that area.
Why is the commitment so unpopular? There is a number of small, backward States in the area. Being as charitable as I can, I will say that the rulers may have great personal charm, but I have a considerable degree of lack of sympathy with them as political figures. I am sure that most of my hon. Friends find the
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same thing. I suppose that the most constructive job our forces there could be said to be doing is protecting the oil flow. That argument may appeal to some, but it is not likely to warm the cockles of the heart of many hon. Members on this side of the House if it stands alone.
The climate in the area is unpleasant, the tour of duty will be unaccompanied, the amenities will be minimal and even from the point of view of the serving man life in the Persian Gulf will not be very attractive. It is easy to ask why we should be there at all, and no doubt many hon. Members ask themselves that. If we turn the question round, and ask how we shall get out, the problem is totally different.
It must be admitted that we are there now and very few hon. Members would deny that at present our troops are a source of stability in the area. What would happen if they went? The short answer is that we do not know. But we know that a lot of very backward and unattractive little States would be left to fend for themselves, and it is not just a question of considering Egypt in those circumstances. One would have to have regard to what Iraq, Iran and Saudi Arabia would do. It may well be that to protect themselves, if not to acquire further oil resources, one or the other or all three would try to move in. One does not know, but that is a possibility.
If they do, what would be the great Powers' reactions? It is impossible to calculate China's reaction at this moment, but what about Russia's reaction? All we know is that relations between Russia and China are not good, and that the area we are considering is within a few miles, relatively speaking, of the Russian southern frontier. Therefore, if China started to dabble in that area, which was rendered unstable by our departure—and the chances are that it would be rendered unstable by our departure—would not Russia also move to try to protect herself? If Russia moved in, what would be the United States' attitude?
One does not want to over-dramatise the situation and talk about the necessity of world war, but a Congo situation could easily be created there, with a cockpit of the great Powers struggling for advantage against one another. That would be a highly inflammatory situation,

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resulting directly from our withdrawing our troops, and we cannot contemplate that situation in view of the relatively minimal expenditure on our forces there at that time.
In the long run, there will come a point when the main rôle of British troops, if we are not careful, will be to provide jobs for anti-colonialists who would otherwise be unemployed. We must watch that situation carefully and try to find some sort of successor who will maintain stability in the area and to whom we can hand over.
Who will it be? Hon. Members on this side of the House who support the Government would be much happier if we had greater confidence that the Government were working for a successor in the area. One would obviously hope that it would be the United Nations. But, let us face it, nobody can plan for the United Nations succeeding us in a power vacuum if we moved out, in view of the reluctance of some of the great Powers who are nominal members of the United Nations to support its peace-keeping rôle.
We must, therefore, also take into consideration the local powers. Can we build one of them up to take over our position? Looking forward at this time, one can only say that the position is not altogether hopeful. But at this moment our forces contribute to the area's stability and we cannot withdraw.
We are being urged to pull out by 1970, a fairly firm date that has been written into the alternative policy as a result of the debate. Would it not be silly for us to pull out in 1970 in accordance with a hard line in Government policy if we thought that by staying in the Persian Gulf until, say, 1972 we could tie up all those matters and leave a stable situation behind us? That is one of the fallacies of the argument against the White Paper.
I have dwelt at length on that one example because I think that it is a highly unpopular example in the minds of many people in this country. It is not the sort of commitment that will warm the cockles of British people's hearts and arouse a national will to maintain ourselves in the area. Yet, given the situation we inherited, the responsibilities are almost inescapable.
One could go on giving example after example east of Suez. But I do not think
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one would gain more by doing so because, with variations, many of the arguments which apply to the Persian Gulf can be applied to other areas. Therefore, I think that the difference on the question of east of Suez is mainly one of emphasis.
I believe that the Government have made a very good attempt to resolve the practical difficulties. They have to act in the situation. It is their responsibility and it is a responsibility that many of us have not. They have made a very good attempt to resolve the various conflicting issues and I shall vote for the White Paper.
8.10 p.m.
Mr. John Peel (Leicester, South-East): The hon. Member for Lewisham, North (Mr. Moyle) has got the question of tonight's vote slightly wrong. He said that anyone who goes into the Opposition Lobby will be voting for a pig in a poke. But that is not the Motion before us. The Motion before us is tabled by the Government in support of their White Paper and the Opposition are going to vote against that White Paper for the good reason that it does not put forward a defence policy at all. That is far from voting for the Opposition.
The peace, security, and freedom of the West very largely depend on N.A.T.O. strategy. But it is obviously completely in the melting pot. We are told that we shall hear what the negotiations have come to at the end of June, but I wonder whether we shall know what the new policies for N.A.T.O. are by then. I hope so.
I very much disagree with the right hon. Member for Bassetlaw (Mr. Bellenger), who said that N.A.T.O. is disintegrating. I do not believe this to be so. Although France has dealt N.A.T.O. a severe blow and has made the position extremely inconvenient, she is still a loyal member of the Atlantic Alliance on which N.A.T.O. is based and I am convinced that the new arrangements which are being made for N.A.T.O. will make it a continuing, viable and powerful deterrent to war and an instrument for peace in the world.
The White Paper mentions political guidance to the military advisers of N.A.T.O. in relation to the revision of N.A.T.O.'s strategy. I am interested in this passage because I remember that, from 1962 to 1964, there was constant

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pressure from the Labour Opposition to bring the strength of our conventional forces in Europe up to the agreed level. Nothing was said then by the Labour Opposition about the foreign exchange costs or the balance of payments. It never took these things into consideration and never mentioned them.
The only thing the then Opposition suggested was that, if we found it difficult to afford to bring our conventional forces in Europe up to the agreed strength, we should throw away our nuclear deterrent. But what is the attitude of the Government today? These very same people have stood that policy on its head. The deterrent is kept. We hear no more about the denegotiation or renegotiation of the Nassau Agreement. We hear a threat to withdraw considerable forces from Europe if Germany does not meet our exchange costs.
It would appear from the White Paper that the Government's strategy is turning nuclear and that the conventional forces are taking a back seat. What has induced the change? Naively, the Government say that the Alliance has deterred attack despite the non-fulfilment of the agreed force levels. That is nothing new. The Alliance was deterring attack very effectively between 1962 and 1964 when they were demanding that we should increase our conventional forces in Europe.
The fact is that the Government, although they have not come out clearly and said so, are turning nuclear, based very much upon the nuclear strength of the United States, because they think that it will be cheaper for Britain. But any serious and large-scale withdrawal of conventional forces from Europe at the present time would be bound to have a bad effect on our position in Europe and on the N.A.T.O. Alliance, which at present is suffering from the French withdrawal.
Another suggestion, contained in the speeches of the Defence Secretary and the Foreign Secretary, was that quite a number of the N.A.T.O. forces might be held in their home bases and not within the area of deployment itself. Again, this is presumably an attempt to save foreign exchange. They say that this could be done because of the greater air transport ability now available to the Western allies. This may be true of America but I wonder how much better our air transport
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ability is. In any case, I believe that such a move would be dangerous and thoroughly discouraging to our Continental allies and that, if we did it, a very strong lobby in the United States Congress would want America to do it as well. That would very much depress our N.A.T.O. allies on the Continent.
Furthermore, I wonder whether this proposal really takes into account the speed at which a dictator country like Russia can turn on the heat when she wants to. It is said that she is now concerned with facing east and the threat of China. Russia is spending considerably increased sums on her defence forces. I believe that she could turn and move her military forces with great speed towards the west if she wanted to and I wonder whether air transport could meet any threat that might come.
I should like to know what the American view is on the question of moving troops out of Europe to home bases. How would the Germans react to this proposal? By agreement within N.A.T.O., they already have large forces committed to N.A.T.O. Would not the Germans say that they would have to strengthen their own contribution? How, in such circumstances, would Russia react and what would the other members of N.A.T.O. think about that?
The question of nuclear weapon planning and consultation has been very difficult and has exercised the Atlantic Alliance for a long time. The Americans first put up the suggestion of a multilateral nuclear force to meet what they considered to be the legitimate wish of Germany that she should have an adequate say in the control and use and deployment of nuclear weapons. I have always thought that this was unnecessary because Germany had solemnly declared that she did not intend at any time or wish to have a finger on the trigger or physical control of nuclear weapons. It produced unnecessary difficulties for the Alliance.
When the Labour Party came to power, we had the Atlantic Nuclear Force suggestion. Personally, I never thought that that was serious. It seemed to be just one of the spin-offs which the Prime Minister was constantly popping away in order to show that he was full of initiative and ideas. I do not believe

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that it ever got off the ground. If it did, it is now certainly sunk without trace.
Now we have the McNamara Committee, and in the White Paper the Government claim that they have played a leading rôle in the work of this Committee, enabling it to make more progress in 12 months than had been made in the preceding 17 years. That is a very sweeping claim. The implication is that the problem of the nuclear deterrent within N.A.T.O. is virtually solved, or at least on the very threshold of a solution. If that is the case, I wonder whether the Government would tell us whether our non-nuclear allies are satisfied, especially Germany, to whom we have given a great deal of consideration in this matter. The House has a right to know something about it.
The Government also make a very big claim in the paragraph on disarmament and arms control. They say that the 18-Nation Disarmament Conference has increased prospects of success towards general and complete disarmament. We have heard less about the activities of the Minister for Disarmament than about almost any other Minister, with the possible exception of the Paymaster-General. In view of that paragraph, we deserve to be told a little about it. We have heard that the non-proliferation agreement, which presumably has come mainly out of the initiative of America and Russia, is well along the road and that the British Government have had a good deal to do with it. We ought to be told a little more about that. What is the reaction of the other nuclear and non-nuclear Powers to this non-proliferation agreement which we appear to have on the stocks and, in particular, how is it viewed by the French? We should be told more about what other progress in disarmament is being made. Those are some of the many questions which the White Paper leaves unanswered.
Mr. Philip Noel-Baker (Derby, South): If the hon. Gentleman cares to consult them, he will find the minutes of the Committee of 18 in the Library. He will not find them very exhilarating reading, but they are there.
Mr. Peel: I am very grateful to the right hon. Gentleman for that interven-
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tion. That is precisely what I thought, and it seems to give the lie to this paragraph in the White Paper.
Once again we return to the fact that this White Paper is totally inadequate, does not put forward a viable policy for defence and leaves us, as last year's did, waiting to know what the Government propose to do to defend Britain.
8.23 p.m.
Mr. R. B. Cant (Stoke-on-Trent, Central): I realise that if I throw away my brilliant introduction and my equally brilliant peroration, one other hon. Member might have the opportunity to say something at the end of this two-day debate. However, I will preface my brief remarks by saying that I am not as expert as many hon. Members who have spoken, in the sense that I know very little about foreign policy and even less about the technological aspects of defence. One of the things which worries me is the esoteric language which is creeping into much of this debate about uses and types of weapons.
My main interest is in the economic aspects of our discussions. Although these have been mentioned from time to time during the debate, a certain amount of confusion has been evident. I say as a first propositon that I entirely agree with those who want the burden of our defence expenditure to be reduced. However, I agree with those who say that it is very much a question of timing, and I am on the side of those who would take rather more time than less. I am not prepared to talk in terms of 1970 and would much prefer to talk in terms of the late 1970s.
I see this matter as being very much a question of short-term considerations with something quite separate in the nature of longer-term considerations. I want to make some comments on the short-term aspects which have not been given enough emphasis in the sense that once they are considered together, they may be regarded as the main considerations.
We have to accept that the economies of overseas countries and our defence expenditure are intimately interwoven and that there is no question of rapid withdrawals—whatever the moral or political implications might be—on economic grounds. We have had an

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example of that already with Malta, but it is quite obvious that one of the great issues which facets the Americans in Vietnam is the fact that when peace comes to this tormented land, not only has the United States to rebuild the economy of Vietnam, but she has also to be carefully concerned about the economy of all the countries of South-East Asia which are now very much dependent on her. Practically the whole of the Japanese balance of payments surplus of about £2,000 million dollars is represented by American off-shore procurements in Japan. This is obviously a major consideration.
But for our own country, economically the short-term arguments appear to be decisive. It is all right to talk about rapid withdrawal and bringing troops to this country. We have been told that we have to pay them and provide food and shelter for them and provide land for various military exercises, but I do not think that the Secretary of State for Defence has clearly worked out the budgetary implications, quite apart from the real resource implications, of this exercise.
I agree with those who say that we cannot merely say that we are economising in foreign expenditure. By too sudden adjustments, too sudden economies in our foreign exchange expenditure, we may impose a burden on our Budget which would upset us far more than the minor economies which we are to make might help us.
If we go to our balance of payments position quite obviously we have to accept that of the hundreds of millions of pounds about which we talk in terms of foreign exchange, even that which is spent in the sterling area, is foreign exchange because alas, people who hold sterling are changing it into foreign currency. We must accept all this as a total loss. Have we worked out clearly what will be the impact on our balance of payments, in the short term, of the addition to our import bill, because we have all of these troops stationed in this country? How much is our residual policy expected to cost?
The hon. Member for Woolwich, East (Mr. Mayhew) was a bit vague here. It may be that when we have made certain economies we find that they represent, as someone once worked out, our expenditure on tobacco abroad, or half of our total
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expenditure on tea, coffee and cocoa. Looked at in this context, we need to be a little cautious. Exactly how much will we add to our aid bill once we have made reductions in foreign currency expenditure in Malta and all the other places from which we might withdraw?
As a short-term problem, what about the countries which, unfortunately, hold these very large, or relatively small sterling balances? It is all right saying that we will come out of country X, if suddenly, as Malta has done, officially or unofficially, we are told that country X will withdraw its sterling balances. If we try to retreat too rapidly from our world obligations the short-term economic repercussions for us and for the countries concerned might not be disastrous, but extremely uncomfortable.
I want to refer to what I will call an assessment of the so-called burden of defence expenditure. I know that I will get myself into very hot water with my hon. Friends below the Gangway about this; and perhaps it is as well that one of them has not spoken, otherwise I should have replied at some length. Without being too reactionary we can overdo even the long-term effects of defence expenditure on the economy if we are to argue that they are, on every occasion, adverse effects.
I know that the National Plan, at page 182, gives immense authority to this doctrine and thesis, that defence expenditure is the nigger in the woodpile—it is the cause of all of our economic troubles etcetera, etcetera. This is supported by Mr. Catherwood, who again adds his authority to this argument, throwing in the disaster of overseas foreign investment for good measure. I do not believe that this is something that one can swallow hook, line and sinker. One cannot use a simple opportunity-cost doctrine and say, "Ah, well if we do not devote all our resources to this expenditure on defence we can transfer them to other uses" which some of my hon. Friends have mentioned. It could he argued that we might build schools and other such things.
I do not believe that for a number of reasons, but mainly because we have to accept that defence expenditure has not only a quantitive impact on the economy, but has also a qualitative impact. There was a time when we used to say, as good old Keynesians, that we should have some

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defence expenditure because this helped to maintain the level of aggregate demand in the country, and prevented too much unemployment.
Nowadays, we have reached the point when we have to accept that so much of our defence expenditure is connected with industrial development which taps the frontiers of knowledge that a country which does not indulge in this activity is losing something. I am sure that the Germans want to develop various areas of military technology because they want the sort of technological fall-out which comes with it. When we say that this imposes too great a burden on taxation and thereby destroys incentives we are equally suffering from something of a misapprehension. I am sure that as our economic equation begins to take a different shape as miiltary expenditure falls, we shall have just the same amount of taxation to finance different public objectives.
I refer now to the external strain of defence expenditure on the economy, not in the short term, but in the long term. It can be argued, and it has been argued either directly or by implication, that defence expenditure abroad places an intolerable burden on our balance of payments. It is true to say, as my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) said, that if we look to the Common Market countries and then if we look to our balance of payments net of Government transactions, we are the only country which in the last six years has had a current credit balance and the only net capital exporter. But I should doubt very much whether all our balance of payment problems would be solved if we got rid of this overseas expenditure.
There are only two small suggestions which I would make to the Secretary of State. First, he might mitigate the problem slightly by asking countries which are the recipients of sterling to place it in a blocked sterling account so that it is not immediately transferable into other foreign currencies. I would ask him to do what his obvious example, Mr. McNamara, in America, has done and that is to say to his defence spending Departments, "You can have a two dollar to the pound foreign exchange rate, which automatically makes all your imported equipment more expensive than
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that produced at home." That has had quite a useful effect in America.
If we think of the problem of defence expenditure, not in terms of the absolute strain on the economy, but in terms of whether it contributes in a decisive way to the crises which we have—that is, if it is an explanation of the cyclical character of our balance of payments problems—then I would argue even more that this is not the cause of our troubles. If we had no military expenditure over the next five years, I would hazard a guess that we should still have our balance of payments crises because the nub of the problem is, first, that we have too great a propensity to import and, secondly, that we have too low a propensity to innovate, which is producing an unsatisfactory state of affairs in exporting.
I support phased withdrawal, but at a much slower rate than that proposed by many of my hon. Friends. The Secretary of State is quite right in saying that, because the options in terms of foreign policy must be open this year, he cannot specifically state what he will do in future. We should not as a party argue that defence spending is the root of all our troubles and that if we reduced or eliminated it we should have no troubles.
8.39 p.m.
Mr. Philip Goodhart (Beckenham): When the Government's White Paper was published, it never occurred to me that I should listen to a speech by an hon. Member opposite with every word of which I would agree. However, it seemed to me that every word of the hon. Member for Stoke-on-Trent, Central (Mr. Cant) was admirably sensible—and I regret the effect that my commendation may have on some of his colleagues.
Having praised one Government back bencher, I should also welcome at least one decision that the Government have made—their decision to set up a Joint Services Defence College. I was, however, rather alarmed by the remark made last night by the Minister of Defence (Administration) that only half of the students there would go forward to take a full degree course.
The Government contemplate reductions in the size of our Armed Forces and we are steadily slipping back in the comparative power league. It is difficult today to remember that when the

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Conservative Party left office in October, 1964, our forces in the Far East constituted the most important and most powerful non-Asian force on the mainland of Asia. Now, I estimate, the Americans deploy about 15 times our power on the mainland of Asia.
Last autumn I landed at a Thai airfield which is also a comparatively minor air base of the Americans in Thailand—Ubon. On one side of the runway were parked as many Phantoms as our Government plan to buy from the United States. On the other side of the runway were parked as many C130s as we plan to purchase from America. And yet this was only one of eight major American air bases.
A little later I had the privilege of visiting the American First Air Cavalry division in Vietnam, a magnificent fighting machine which has integrated within the divisional structure some 500 helicopters. The cost of raising that division and equipping and maintaining it in combat for one year is the equivalent of nearly half of our Army Estimates for one year. I do not believe that we can compete in this league or that we should try to compete. When it comes to the quality of our training, and particularly the quality of our officer training, however, it seems to me that we ought to try to compete.
At West Point, at Annapolis and at the American Air Force Academy, America's Regular officer corps are given four years of first-class academic education. Anyone who doubts the quality of that education has only to look at the record of West Point men who come to Oxford University for postgraduate study. In our cutdown forces, I doubt whether we can afford to offer a permanent career through to the age of 55 to many officers who do not have the intellectual quality to obtain a degree course.
We should also note that the new Defence Academy will have to cope with a number of rather unusual subjects. The first of these new subjects is what I would call Healeymaths. I would put this in the department of camouflage, because Healeymaths, or Healey-mathematics, consists of an attempt to obscure the true position by the discharge of a large number of figures which may or may not be related to anything at all. Students of Healeymaths will be required to spend
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a great deal of time studying Annex H to this year's Statement on the Defence Estimates, and particularly the Secretary of State's brief speech in the Malta debate.
Language students at the Defence Academy will have to add to their studies Healeywords, which consist of taking an old procedure and dressing it up with a flashy new name to make everyone think that something revolutionary has happened. A prime example of Healeywording can be found on page 30 of this year's Defence Statement under the heading "Value Engineering", which is defined in these words:
"…the technique of examining components and identifying the least expensive that will satisfy a given specification."
That sounds like another startling development by our gritty Government. However, if one looks at what is involved in it, one discovers that it is what purchasing officers attached to the Roman legions which accompanied Julius Caesar 2,000 years ago were doing, yet it is dressed up as some new marvellous technique.
I hope that students at the Defence Academy will spend a certain amount of time studying various relevant aspects of our recent military history, because they will then see how difficult it is to withdraw from existing commitments and how disastrous can be the result of botching our withdrawals. No doubt students will spend a considerable time looking at the method and manner of our withdrawal from India and, in particular, from Kashmir, where the way in which we withdrew precipitated calamitous friction between India and Pakistan. The friction which was created by our botched withdrawal has more than vitiated all the aid which we have given to both India and Pakistan in the last 20 years.
Then there is Cyprus, where some of us warned that independence would likely bring about a bloody clash between the Greek and Turkish communities after independence. When that happened, because a great deal of care and effort had been taken to draw up the agreement before we withdrew from the area, it was possible to restore the situation. When the communities flew at each other's throats, we had the sovereign base areas, we had the right of access, and we

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could provide logistic backing for the United Nations Force which eventually took our place in Cyprus. Care having been taken, we were able to retrieve a potentially dangerous situation.
Although the present Government often preach withdrawal, unfortunately they never seem to learn how to do it. Their handling of Malta could hardly have been more calamitous. As my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) has said, it is an object lesson of how a great Power should not treat a friendy small Power.
Fortunately, the Government have been made to realise the extent and depth of Britain's affection for Malta. When our present Prime Minister studied the Healeymathematics and looked at the figures, plainly he realised that the estimated saving was not worth the political damage which would be done. I would not be at all surprised if, as a result of this fracas, we end up by spending a good deal more money to a good deal less effect than we might have done before these economy cuts were proposed. Perhaps the only good thing to emerge from this conflict is the better realisation, as the hon. Member for Stoke-on-Trent, Central pointed out, that military spending can be just as important a prop for fragile foreign economies as aid of an entirely economic variety.
The same is true of Singapore, where our defence spending is the main prop of the economy. It is also true in Aden, where the unemployment figure will increase to no less than 25 per cent. by the time we depart on 1st January, 1968. There will be economic collapse in Aden when we depart, but this fact has been somewhat obscured by the uproar over, as my right hon. Friend the Member for Streatham (Mr. Sandys) so rightly pointed out earlier this afternoon, our unilateral defaulting on an existing defence agreement with the Federal Government.
Our attempt to get out of Aden has not ended the awkward questions that we face. When, for example, are we going to hand over responsibility for internal security of the town of Aden to the Federal Government and to the Federal Army? The way in which the hand-over is carried out, and the time at which it takes place, may strengthen the last remaining chance of peace in
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South Arabia or it may shatter it for ever.
The Government have also to face the fact that our forces in Aden are becoming increasingly frustrated. Naturally, Service men with families are upset about the prospect of their families returning to totally inadequate accommodation. Sometimes there is laughter in the House when we try to see whether there is any difference between a caravan and a mobile house, but it is certainly not a laughing matter for Service men in Aden whose families may have to come back to sub-standard accommodation.
Then there is the question of security. Many of our Service men believe that if they manage to catch a terrorist, he will never be punished. They know that our main source of information in Aden was the interrogation centre. Of course, the Government have to take allegations of torture and maltreatment very seriously indeed, but the effect of Amnesty's recent charges about the interrogation centre has meant the neutralisation of the centre, which was really our sole source of reliable intelligence, because if every allegation has to be investigated seriously, it does not require very much intelligence on the part of anyone to see that a flood of wild allegations can bring business to a halt. At the moment there are so many allegations being flung around that the interrogators have to spend most of their time investigating each other.
Then there is the frustration for our forces of seeing expensive buildings and installations, such as the enormously costly new Falaise Camp, being handed over for nothing, and to be used for nothing. In a matter of months the camp will be uninhabited.
Then there is the frustration of believing that terrorism will increase as the final withdrawal date grows near so that Nasser can be seen to be pushing us out. Our soldiers can play a constructive and adventurous rôle there, as they did in Malaysia in the days of confrontation. One can see what one must do, but the belief, indeed the knowledge, that what they are doing in Aden is merely going to end in a bloodbath must be an immensely depressing factor on morale.
In South Arabia today our friends and our forces need more than a kind word and an occasional gesture of support. If

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they are to think that their work at the moment is worth while, and is going to lead to something at the end of the day, they have to know that the area is not going to be allowed to run into chaos, and I join those of my right hon. and hon. Friends who have asked the Secretary of State for Defence to think again about the possibility of giving some form of guarantee to the independent Government when it takes over on 1st January, 1968.
I do not believe that right hon. Gentlemen on the Front Bench opposite can really be happy about what is happening in South Arabia. I am sure that they want to do well by our forces. I do not question their motives. I only wish that on occasions they were just a little more successful.
8.58 p.m.
Mr. Alan Lee Williams (Hornchurch): I am faced with the problem of having to telescope a speech of about a quarter of an hour into five minutes, but I should like, nevertheless, to raise one point which has not been raised during this two-day debate.
It is my view that the fragile East-West détente which we have at the moment rests very much on the central power balance in the world today. I think that when we talk about a withdrawal east of Suez, or a withdrawal of troops from Germany, we have to look carefully at how this will be affected. The East-West détente is very fragile indeed, and I think one could argue a case, though perhaps not in three minutes, to prove that Britain's rôle east of Suez very much underpins this détente.
Briefly, the ingredients of my argument are that if Britain withdraws from certain strategic places in the Far East the Americans may be tempted to underpin that power vacuum. If they do, they may further be tempted to withdraw troops in large numbers from Europe. If this were to happen, I think it would be possible to argue the case that the European détente would be weakened, and we could be back to where we were during the 1948–49 period.
Nobody is yet sure precisely what are the intentions of the Chinese. We can only speculate. I do not take an over-gloomy view in believing that China is necessarily embarking on a policy of
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worldwide domination under Chinese leadership and inspiration. This is an absurd proposition. Nevertheless, we do not know what she intends to do, and it would be extremely unwise to allow the Americans alone to offset Chinese influence because, from the situation in Vietnam, we have seen that the Americans, having got themselves into a military situation, are not always so skilful in being able to contain it.
I would have thought that the case one could make—hardly in 30 seconds—for Britain's rôle in the Far East being beneficial for peace was a good one, and on another occasion I hope to be able to argue it.
9.0 p.m.
Mr. Reginald Maudling (Barnet): We have had a long and wide-ranging debate, but we all regret that more time was not available. I know that many hon. Members wanted to speak and I would have liked to hear the hon. Member for Horn-church (Mr. Alan Lee Williams) develop at more length his interesting argument, to which he had to speak so briefly. Also, if we had had more speeches we might have heard a few more in support of the Government. As it was, they were very few and far between. I have been here for a good deal of the time and have heard very few speeches in support of the Government.
The speeches that I have heard praised have been those of the hon. Member for Salford, West (Mr. Orme) and the speech that commanded full-throated support from the benches opposite, the speech of the hon. Member for Woolwich, East (Mr. Mayhew). He ended his speech to the applause of all those hon. Members opposite who are poised to abstain in an hour's time. It is not my business to speak for them. They can speak, and have spoken, very eloquently for themselves, and I understand that they will act eloquently when the Division comes at 10 o'clock.
My purpose is to sum up the arguments that have been put forward from this side of the House against the Government Motion. If, in doing so, I repeat a number of the criticisms made so vigorously yesterday by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), backed up today so vigorously by my hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing), it is

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because no answer has been given to any of those criticisms during the debate so far.
The Minister of Defence (Administration) spoke briefly but rapidly last night and dealt with a number of interesting points, some of which were of a minor character, but he answered none of our criticisms. As for the Foreign Secretary, his speech, once again, was an interesting speech on foreign affairs, but dealt not at all with the criticisms made of the defence policy of the Government, or the reasons why my hon. Friends and I intend to divide against the Motion.
The Motion suggests that the House should welcome
"the fact that the Government is conducting its Defence Review as a continuing exercise in reducing the burden of British commitments, forces and expenditure overseas …".
The reference to reducing the burden of overseas commitments must either mean reducing commitments or meeting them at less expense. In neither case are the Government sustaining the argument for the Motion. As my hon. Friend the Member for Merton and Morden (Mr. Humphrey Atkins) pointed out last night, the commitments abandoned by the Government overseas are very few indeed. They amount in Guyana and Aden —and the abandonment of Aden is a major error of Government policy.
To the extent that the reductions in expenditure are real—and that is in some doubt—they have been achieved solely by impairing the ability of our Armed Forces to meet our remaining commitments, as the hon. Member for Woolwich, East pointed out very forcibly this afternoon. The right hon. Gentleman made some grandiose claims about them, but they carried no conviction with the hon. Member for Bosworth (Mr. Wyatt), or the hon. Member for Salford, West, who said that it is difficult for the Government to argue that increasing their defence estimates means spending less on defence. As for their claims of reducing overseas expenditure, the famous Appendix H, as my right hon. Friend the Member for Wolverhampton, South-West so clearly pointed out, is totally bogus in the absence of any figures for 1967–68, which the Government admit cannot be produced at present.
The economies so far as the Budget is concerned are, once again, in many ways
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bogus. For example, there is the simple fact, which was pointed out by my hon. Friend the Member for Hendon, North this afternoon that they are rolling forward a great deal of defence expenditure and claiming as an economy the fact that they are not making progress payments, but merely reserving increased expenditure for a future year. This is bogus economy.
As to building costs, we have heard a great deal about bringing troops home but rather less about building barracks for them here, a point which was made by the hon. Member for Stoke-on-Trent, Central (Mr. Cant), in a thoughtful speech. We were told by the Minister last night that the accommodation required for the first 25,000 will be the equivalent of a new town of 50,000 people. We have not had a figure showing how much a town of that size would cost. The Chancellor of the Exchequer is looking rather gloomy.
This new town for 40,000 or 50,000 people would be irrespective of the additional withdrawals from the Far East and the massive withdrawals from Germany which the Chancellor says he may be contemplating in certain circumstances. So the total additional expenditure for providing accommodation in this country will be larger than that suggested in the White Paper and may go a long way to cancel such real economies as the Government have been able to effect.
The real cost can best be measured in the percentage of the gross national product spent on defence, which, as my right hon. Friend pointed out, was falling in the years of Conservative administration, but is not falling at present. While the Chancellor is here, I will talk about the gross national product, because the figures in the White Paper clearly anticipate a substantial fall in the gross national product for 1967–68, a fall of something over £200 million. If one does the simple arithmetic one finds that the effect of the opening paragraph is to predict that not only industrial production, which is bad enough, but the whole gross national product will fall in the coming year. If that is the case, I hope that the Chancellor will go home and think again.
The great mistake which the Government have made is to try to fit our defence expenditure into a rigid financial ceiling.

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It is not a matter of black and white and saying that we can afford this and no more. It is always a question of margins and saying that this additional expenditure will cause us to give up something else no doubt, but we must balance the requirements of defence against other requirements in the economy. We cannot say that it is black and white and that we can afford or cannot afford it. We cannot fit the defence expenditure into a totally rigid financial ceiling. The House must realise, as we on this side certainly do, that what is needed for the defence of this country's interests must be provided.
The results of the Government's policy can be seen in the Far East, in Aden, in Malta and in Europe. In the Far East confrontation has been very successful, as the right hon. Gentleman said, as a result of the policies which this Government inherited from the previous Administration, but now the Government say they do not intend to be able to do the same again. They say that it is not their aim. I think that the phrase is:
"Our aim is that Britain should not again have to undertake operations on this scale outside Europe."
Of course, it is our aim not to undertake an operation like that outside Europe. Of course, anyone's aim is not to have any military operations at all. What the Government mean is that they do not intend to be in a position to do the same again. They do not intend to be in a position to do the sort of operation which a few years ago, was so valuable in helping our friends in East Africa, because they will not have the forces to do it.
What forces will they have available east of Suez under their policy, which, in the view of many hon. Members opposite, is still too extravagant a policy? They are phasing out the carriers. What will the Navy have instead? What will it be possible to do without carriers in the sort of operation which has been so valuable in recent years. What about the surface-to-surface guided missile for the Navy, referred to by many hon. Members on this side in the debate?
What about the very cogent criticism made by my right hon. Friend the Member for Flint, West about the rôle of the F111 east of Suez? How many of these 50 aircraft at any given time are likely to be available for operational purposes
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east of Suez? What operational non-nuclear purpose could they in practice carry out in these States? It is quite clear that as to the Far East the Government's search for economies has produced little in the way of economy but much in the way of impairment of the British ability to carry out the sort of task we have found it so valuable to carry out in recent years.
I come next to Aden. Here, there is a clear case of a breach of agreement, of a threat to our communications with the Far East, and of undermining the stability of the Middle East, which is of vital importance to this country. I deal, first, with the question argued across the Floor earlier this afternoon about what we undertook to do. I refer again to the words quoted from the 1964 White Paper. Then we undertook to
"convene a conference for the purposes of fixing a date for independence not later than 1968, and of concluding a Defence Agreement under which Britain would retain her military base in Aden for the defence of the Federation and the fulfilment of her worldwide responsibilities."
Surely it is absolutely clear in the ordinary meaning of language that the purpose of that was to say, "We intend to go ahead and arrange a date for independence and arrange for a defence agreement", and the two things were completely tied together. The language cannot mean anything else. When the right hon. Gentleman says that all we were promising to do was to call a conference, he must know that that was disingenuous. The Government should be ashamed to use a wriggle of that kind to get out of a clear commitment.
Mr. George Brown: The right hon. Gentleman should be ashamed. The right hon. Member for Streatham (Mr. Sandys) knows very well that he did not accept the commitment to enter into a defence agreement. The right hon. Member for Barnet (Mr. Maudling) knows that his right hon. Friend the Member for Streatham was authorised only to enter into a conference. The right hon. Gentleman knows it and he should be ashamed to wriggle as he is now wriggling.
Mr. Maudling: That is totally untrue.
Hon. Members: Withdraw.
Mr. Maudling: The commitment was given on behalf of the Government and the commitment in the ordinary understanding of the English language can mean nothing else. The consequences of the Government's action in Aden are becoming more serious all the time. This afternoon the Foreign Secretary said that power vacuums attract military adventurers. Is not that precisely what is happening now in the Middle East? My right hon. Friend the Member for Stafford and Stone (Mr. Hugh Fraser), my hon. Friend the Member for Banbury (Mr. Marten), the hon. Member for Lewisham, North (Mr. Moyle), and many other hon. Members have spoken of this, and spoken rightly, because this example of the Government's economy in commitments overseas is an example of how dangerous their policies are going to be to Britain's interests and, indeed, to Western interests as a whole.
Consider the situation which has developed in the Middle East. There has always been the explosive situation of Israel and the Arab countries. Added to that recently has been the explosive problem of the tension between Nasser's Egypt and the other Arab countries. We have a deep interest in this area. We have treaties with Kuwait, with Bahrein, and with the Trucial States. These are countries that look to us and which are important to us, not only because of the oil there, not only because of the sterling balances, which are immensely important to our financial stability. They are countries which are important to us because we have an obligation to fulfil to them which we should be determined to fulfil.
There are many countries, little countries—for instance, Abu-Dhabi or Dubai —getting oil in large quantities, countries clearly very much open to attack, either overt or covert. A little while ago Nasser had been brought to a halt in the Yemen. He was completely bogged down in the Yemen. His finances were under strain. He was deterred by being bogged down in the Yemen from a possible strike in the direction of Libya, another country to which we have a continuing obligation. There was a real prospect of stability in the Middle East, with the growing friendship of Saudi Arabia and Jordan, and the position of Iran north of the Arab countries provided a balance to the North.
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There was then a real prospect of stability growing in this area. Into this situation the Government threw a stone which has destroyed almost all those prospects.
I was in the Middle East when the announcement was made. I know very well that it caused dismay to our friends and joy to our enemies. It caused Nasser to decide straight away to remain in the Yemen, whence, as he knows well, he can turn the flank of Saudi Arabia, he can move through South Arabia, Muscat and the Trucial States. He can turn the flank of the Saudia Arabian position. More than that, more than undermining the strategic position, we undermine the will of our friends to resist aggression if it appears that Britain no longer intends to stand by her friends.
What are we doing for the South Arabian Federation? We are providing financial aid. The Foreign Secretary stressed this—£5 million capital and £10 million current—but this will not provide the Federation with an air defence against the Egyptian air force. We must all recognise that. It is nonsense to suggest that a sum of that size can, in the next year or two, provide the South Arabian Federation with any defence against the Egyptian air forces. To pretend otherwise is futile, and I am sure that the Secretary of State for Defence, who understands these things, will not try to do so.
As a result of the Government's foolish action in Aden, not only is there a sharp upward curve in the number of casualties, not only the increase in bombings and terrorism which followed so rapidly after the Government's announcement, but the whole future of Arabia and of peace in that part of the world is gravely undermined.
Now, Malta. Here, also, the Government have taken extraordinarily ham-handed action in the search for economy. Again, the economies are largely, or to a considerable extent, illusory. I take, for example, the question of accommodation. As many of my hon. Friends have said, there is excellent accommodation available in Malta, but not in this country. We know how pressed the Government will be to provide accommodation, even at great expense, for the forces coming home. This must weigh heavily in the balance against any economy in defence

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expenditure which can be claimed from removing our forces from Malta.
What about the effect on the balance of payments? The Secretary of State entered into an argument on finance today with my hon. Friend the Member for Hendon, North. I suggest that he should think again, perhaps, in the intervals in his defence pre-occupations, because the only improvement to the sterling area balance of payments can come if the external expenditure of the sterling area is reduced. For the United Kingdom balance, what matters is the extent to which additional United Kingdom expenditure automatically generates further British exports to the particular country.
In the case of Malta, there is no doubt that further British expenditure there would generate pretty well in entirety further British exports, which means, in practical terms, whatever the theoretical argument may be, that the saving to the balance of payments would be very little.
There was an appalling lack of proper consultation on Malta. The Secretary of State appeared at the airport waving an ultimatum, which put backs up in Malta to a deplorable extent. Now, the Government has been forced to withdraw. I am glad that they have withdrawn. It is right that they should, and I very much hope that an agreement can be reached. But what a sorry chapter the present Government have written in relations between this country and the Island of Malta.
Now, the question of Germany and the cost of our troops there. This has hardly been handled with outstanding tact. In the past, the Prime Minister has been wont to abuse my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) for the agreement which he made. The right hon. Gentleman would be glad to have that agreement now. We were getting £54 million a year under it, and. what is more, we maintained relations with our N.A.T.O. allies substantially better than we seem to be enjoying now under the technique of open threat, which does not seem exactly consonant with many of the things rightly said by the Foreign Secretary this afternoon. There is certainly in that dispute and the way it has grown
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up a threat to our negotiations with the European Economic Community. Whatever the Foreign Secretary may have protested in a previous speech, one cannot really distinguish those two things. One is bound to influence the other.
The second point is that the Government are now in the posture of appearing to demand a withdrawal of British forces from Germany irrespective of strategic requirements, which, once again, seems to me totally contrary to what the Foreign Secretary said this afternoon about the consequences of ill-considered withdrawal from Europe being disastrous. I do not know whether the Chancellor of the Exchequer saw the Foreign Secretary's brief for this afternoon's speech. I think that he would find it difficult to reconcile in places with some of the more exuberant threats he has issued in the past few weeks.
It may be true that there is a military case for reducing our forces in Germany. If so, it has not been made. It is difficult to maintain that we should withdraw our forces irrespective of strategic requirements purely because of the United Kingdom's financial requirements. The Foreign Secretary said this afternoon, "Oh, well, we are bringing the forces back to Britain, but they will still remain committed to N.A.T.O. and available to N.A.T.O. when they are here."
Do our N.A.T.O. allies accept that argument? To judge from newspaper reports that is far from being the case. As the Foreign Secretary rightly stressed this afternoon the enormous importance of maintaining the N.A.T.O. Alliance and the enormous importance to this country of working closely all the time with our American and continental European allies in N.A.T.O., I hope that he will take fully into acount their views on whether they accept the proposition that the availability to N.A.T.O. of troops in this country is the same as their availability on the Continent of Europe.
The truth is that the White Paper is long on statistics, but singularly short on policy. Seldom has there been a Defence White Paper which produced so little information about future defence policy. In a way that is not surprising, for the Secretary of State for Defence himself said:
"The main policy problems on which we must decide in the immediate future are the size and shape of the Services in the 1970s."

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What has the Defence Review been about? What have the last White Papers been about if the Government has still not begun to take decisions about the size and shape of the forces in the 1970s?
There is a certain amount of suspicion that what lies behind this is an intention during the course of the next few months to make substantial reductions in the total number of our Armed Forces by disbanding many units coming home. That may or may not be a fact, but it is an impression that has been given. It would also probably command the support of the majority of the right hon. Gentleman's party, but that is another matter.
I want now to come to nuclear policy, because the White Paper says very little about it. The Secretary of State for Defence said quite a bit in his speech, and he said one extraordinary thing to which my right hon. Friend the Member for Flint, West rightly called attention this afternoon. The Secretary of State for Defence said:
"…there is no country on the Continent which does not believe that a prolonged conventional war would inflict damage on it quite as difficult to bear as the damage resulting from a strategic nuclear exchange."—[OFFICIAL REPORT, 27th February, 1967; Vol. 742, c. 109–12.]
Does the right hon. Gentleman really believe that? Does he really think that he can compare a prolonged conventional war with the effect of unleashing upon Europe thousands of nuclear weapons of kiloton and megaton size, which are now available to the nuclear powers? If he thinks that those two things are comparable I doubt whether he is qualified to be Secretary of State for Defence. [An HON. MEMBER: "Childish."] If the hon. Gentleman thinks that that observation is childish perhaps he will look again at what the Secretary of State for Defence said and see whether he agrees with him. I doubt whether he will.
The reason why so little is said about nuclear policy is obvious, because the Government's nuclear policy is totally at variance with what they have said in the past and what most of them believe now. The hon. Member for Salford, West said that he and most of his hon. Friends fought the 1964 General Election on abolishing this country's nuclear forces,
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and he asked what will happen about that.
Nothing is to happen about it. The Government are to continue in the same way—after all the things that the Prime Minister said in the past when deriding our nuclear armament. He called it a dried pea on the top of a mountain. That was a graphic phrase. Our latest nuclear submarine has now been charmingly launched and we hope that it will be an addition to the fleet. But it will cost over £50 million, which is a high price for a dried pea, or possibly even a split dried pea, because it is only a small proportion of the deterrent.
How can Ministers go ahead with the nuclear programme—as indeed, they should be—while at the same time eating all the words they said so boldly in the past at so many elections? What about their various devices for getting out of it? What about the Atlantic Nuclear Force? Yesterday, the Minister of State for Foreign Affairs said that there is not much active interest in it now. He can say that aagin!
The Prime Minister has spoken about internationalisation of the nuclear force, but we have never yet had an answer to the question whether and in what way the Government intend to internationalise our nuclear deterrent east of Suez. Who do we internationalise it with? The Americans? There is no one else. It is clearly the policy of the Government to maintain the independent nuclear Deterrent East of Suez and it would be better for all concerned if they came clean and admitted it.
Then there is the astonishing statement in paragraph 17 of the White Paper that there has been
"…more progress on the nuclear problems of the Alliance in 12 months than in the preceding 17 years."
Has the Defence Secretary never heard of the problems of the non-proliferation agreement? Would he say that nonproliferation was irrelevant to nuclear policy? I doubt it. The fact is that this agreement and the proposals recently put forward are causing very great difficulties indeed for the Alliance. I agree with what the Prime Minister said today about the immense importance—it is probably one of the most important things we are handling at the moment—of securing agreement on this matter if it can be achieved.

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Two things must be borne in mind, however. First, an agreement of this character is valuable only if it is effective. A semi-effective agreement may, indeed, be positively dangerous. Secondly, what is clear is that the Government have totally misunderstod the reactions of our European friends and allies and our allies in other countries throughout the world to these proposals. It illustrates the Government's total misreading of the situation in nuclear matters that they could possibly come forward with such an absurdly complacent statement in the White Paper.
It is true that all Governments of this country face the basic dilemma of how to maintain forces on an adequate scale east of Suez, to maintain an adequate presence in Europe and to avoid an excessive burden on the economy. It is a very difficult problem to solve and no Government have yet found the answer. If anyone does find the answer, it will be a blessing.
But the present Government, so far from improving the situation and moving in the direction of a solution, have made matters infinitely worse. They have impaired our ability to carry out our obligations east of Suez—and these are serious obligations to which we are committed as a country. They have impaired our ability to maintain our interests east of Suez.
When hon. Members opposite talk about the folly of trying to maintain a presence of east of Suez, I ask them, first, whether they really want to leave everything in that part of the world to the United States. Secondly, do they really believe that we in Europe can shut the door on the rest of the world? All history tells us that this cannot be done. The United States has not been able to do it. The Soviet Union cannot do it. Least of all can we in Europe, with all our connections, history, tradition, trade and commerce, believe that we can shut the door on the rest of the world and let them get on with it.
We must maintain a moral and physical presence east of Suez and maintain our position in Europe. In trying to meet these two objectives and trying, above all, to produce economies for the sake of his own party, the Defence Secretary has undermined our total defence position. His problem is clear. He is a man of great energy and vigour, but he is suffer-
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ing from a total lack of clarity in his Foreign Office brief and from excessive clarity in his Treasury brief. That is why his policy is a total failure.
9.30 p.m.
The Secretary of State for Defence (Mr. Denis Healey): The right hon. Member for Barnet (Mr. Maudling) has repeated, in his usual good-humoured way, almost word for word the criticisms which were made of the Government's policy by his right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and his hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing). I do not complain about that, but it is a pity that the right hon. Member for Barnet was not here for most of the evening, because, if he had been, he would have heard three excellent speeches in a row from hon. Members behind me supporting the Government. [HON. MEMBERS: "Hear, hear."] He would have heard many others if he had been here earlier this afternoon and yesterday, notably the excellent speech of my right hon. Friend the Member for Easington (Mr. Shinwell), who has apologised for not being able to be here this evening.
I shall deal later with the major criticisms of the Government's defence policy, but I want first to take up some questions which were raised in the debate and which I was specifically asked to answer. A number of questions were asked about the Anglo-French variable geometry aircraft, notably by the right hon. Member for Wolverhampton, South-West and also by some of my hon. Friends in the course of their speeches. In an excellent speech, my hon. Friend the Member for Bolton, East (Mr. Robert Howarth) went a long way yesterday to answering some of the questions which were worrying some of my hon. Friends.
The right hon. Member for Wolverhampton, South-West made a lot of fun of the fact that the A.F.V.G. is the core of our long-term programme, both industrially and operationally. It will take six or seven years to design and develop before production begins and delivery to the British and French Services starts. Of course, we shall review this programme at regular intervals, like any other long-term project. But the point which I want to make—and I know that there are many hon. Gentlemen opposite with an interest in the aircraft

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industry who will bear me out—is that without this project there would be no design work for the British aircraft industry after work on the Concord finishes, and without that design work there would be no future for the aircraft industry not only in Britain, but in Europe. That is the sense in which this is the core of our long-term aircraft programme.
The right hon. Gentleman asked some questions about its rôle. He should know, because it has been clearly stated in successive White Papers, that the rôle of the Anglo-French variable geometry aircraft is to succeed the Canberras and the V-bombers, complementary to the F111K, in the middle 1970s. The rôle of this aircraft, as we envisage it, is very much the same as the rôle of the TSR2 which the previous Government planned, and I will give some details of what it is and how it fits into various types of military commitment in various parts of the world. Probably the most important rôle is reconnaissance. The hon. Member for Merton and Morden (Mr. Humphrey Atkins) pointed out yesterday that, if forces contracted and problems increased, adequate intelligence was probably the most important single requirement and the central role of the variable geometry aircraft and the F111K—because in this sense they overlap in rôles and complement each other—is to provide this type of intelligence by aerial reconnaissance.
The other rrôle of this aircraft isr—
Sir Arthur Vere Harvey (Maccles-field)rose—
Mr. Healey: If I can finish this point, I will then give way to the hon. Gentleman. The other rôle is as a tactical conventional strike aircraft. Its purpose in this rôle is essentially to deter the escalation of the local conflict, to deter intervention by other powers in a peace-keeping operation by our own forces, as we successfully deterred, with the Canberras, such an escalation and intervention during the three years of confrontation, by convincing a potential escalator or intervener that we had the capacity to strike his forces by land or sea.
A lot of questions have been asked from the benches opposite about our plans for replacing the capability of the strike
392
carrier in the maritime air strike rôle. The Anglo-French variable geometry aircraft will do this. To some extent so will the F111K. It will have the capability of finding and striking enemy ships menacing our own fleetr—from land bases.
Radius of action is enormous and may often be required particularly in the maritime rôle when it is working from land bases which may be distant from a possible centre of operations. The right hon. Gentleman should recognise that one advantage of radius of action is that one can use it very often in order to have great flexibility in one's approach routes to a possible target, which may well be short of the total radius of action of the aircraft. Any hon. or right hon. Member opposite who has served in the Air Force will know the capital importance of this, even if the problem is not that of striking a target at the extreme radius of action of the aircraft concerned.
This aircraft and the F111K were not intended only for east of Suez commitments. The French want the A.F.V.G. for Europe, they have no east of Suez commitments of any sort; and the last Government planned the TSR2, which the F111K and the A.F.V.G. will replace, essentially for a rrôle in Europe and not outside it, to give Rhine Army some of the support which it lacked as a result of some of the cancellations of Army weapons under the previous Government.
Sir A. V. Harvey: The right hon. Gentleman said that the A.F.V.G. aircraft would be phased in in the mid-1970s. Is he really saying that the Canberras, which are 12 to 15 years old and virtually on their last legs, and the V-bombers have to continue until then?
Mr. Healey: As I made clear last year, the F111K will begin to come into service in two years, and we shall have 50 of them. We believe, and I am not allowed to refer to the advice of the Air Staff, but it is generally believed in my Department that the V-bombers will be perfectly adequate to cope with less well defended targets up till about 1975r—[HON. MEMBERS: "0h."] With respect to the hon. Member, who follows these matters carefully, this was all said very clearly in last year's Defence White Paper, and never contested.
I would like to deal with a point about mobile homes raised last night. Mobile

393
homes are not caravans, they are prefabricated houses on hard standings, fitted with electricity and water. The number of mobile homes which we expect to require is about 20, and the number of caravans we expect to require for our forces returning under the Defence Review decisions will be about 120. We shall be producing many thousands of permanent married quarters and many thousands of new private houses to accommodate those families at the same time.
One question raised during the debate was: where will our aircraft operate from in the absence of carriers, and are we doing anything about the British Indian Ocean territory? We have surveyed Aldabra to see whether we required it in order to increase the flexibility of our air transport forces and the rest of our Air Force. We have found that it will be suitable and the cost of developing it will be very small, although there are certain problems which arise; for example, the learned societies are very concerned to preserve the wild population which consists of boobies, frigate birds and giant tortoises, rather like the Front Bench opposite.
I turn to the major criticisms which have been made of the Government, on the one hand, by the official Conservative Opposition and, on the other hand, by unofficial Members, both Liberal and Labour. In my opinion, the unofficial criticisms had one great merit which was totally lacking in the criticism of the official Conservative Opposition, and that is that our critics said, not only what they thought was wrong, but what they would do instead. This was totally lacking from the Opposition Front Bench.
The only complaint which I make about the unofficial critics is that they disagreed very widely with one another about what should be done instead. [HON.MEMBERS: "No)."] Yes. I will give an example. My hon. Friend the Member for Pembroke (Mr. Donnelly) said that we should spend more both east and west of Suez. My hon. Friend the Member for Bosworth (Mr. Wyatt) said that we should spend less both east and west of Suez. Some of my hon. Friends said that we should spend less east, but more west; or at any rate the same west. The most extraordinary criticism came from the spokesman for the Liberal Party, who has
394
apologised that he could not be here. He said that we should get out of east of Suez entirely in the next two years but should keep our present forces in Europe even if the military threat entirely disappeared because—and I quote his words —it would make the Russians feel happier.
I do not complain that all the unofficial critics of the Government were not totally united on precisely what they would wish us to do instead of what we are doing. After all, my hon. Friends the Members for Pembroke and Bosworth do not claim public support as a potential Government.
Mr. Raymond Fletcher (Ilkeston): Thank God.
Mr. Healey: I think that many hon. and right hon. Members will privately echo that intervention. The actual Government—I am speaking for the actual Government—must decide between all this conflicting advice about what to do and how to do it, and we cannot avoid that responsibility.
We have shown that we believe that we must have a substantial reduction in our commitments and forces east of Suez. In the White Paper this year we describe firm plans for bringing 25,000 men home during the next 12 months and achieving a rate of saving of £75 million by the end of the period. I know that many of my hon. Friends want us to go even further and faster, but even this achievement is considerably better than we expected or planned a year ago. In particular, some of my hon. Friends would like to fix a date, and they say 1969–70 for complete withdrawal from the Persian Gulf, Malaysia and Singapore.
I wish to say a few words about this side of the problem. I agree with a great deal of what my hon. Friend the Member for Woolwich, East (Mr. Mayhew) said, particularly about South Arabia. Incidentally, the date of our withdrawal—of independence there, from which our withdrawal date came—was fixed by the previous Administration. [HON. MEMBERS: "No."] The date of independence was fixed.
Mr. Sandys: We did not fix the date for independence. What we fixed was that before the end of 1968 there would be independence coupled with a defence agreement—quite a different thing.
Mr. Healey: The right hon. Gentleman is confirming what I have just said. Incidentally, it was not before the end of 1968; it was by 1968.
I agree with very much, although not with everything, which my hon. Friend the Member for Woolwich, East said about China and the Far East. Indeed, hon. Members will recall that I said very much the same things myself during a foreign affairs debate in the House after the election last spring. Where I disagree with him is on the necessity for fixing a date for our withdrawal from the Persian Gulf and fixing a date for our withdrawal from Malaysia and Singapore.
My hon. Friends the Members for Lewisham, North (Mr. Moyle), Stoke-on-Trent, Central (Mr. Cant) and Horn-church (Mr. Alan Lee Williams) made extremely powerful contributions supporting the Government's view. Before we fix a date in this way, we must have an idea of what will happen when we go. We must give our diplomacy a chance to construct a different basis for the security of the countries which we are leaving.
I readily confess that these are not questions of principle. They are difficult questions of judgment and timing. My hon. Friend the Member for Woolwich, East, who made a very powerful speech, has himself during the last five months changed his view radically on the timing of our withdrawal from the Far East. Only last October my hon. Friend spoke eloquently for total withdrawal from Malaysia, Singapore and the Gulf by 1969–70, in two and a half years' time from then. Only the other day, when we were discussing this matter on television, he said that he thought four or five years would be adequate.
I do not complain about my hon. Friend changing his view. He made it plain tonight that subsequent events have made him think about the problems of withdrawal. I ask him, however, to recognise that the Government must think these things out before they take a decision, and that they are not always easy to decide. We face here not only limitations imposed by the problems of foreign Governments. We are also dealing with limitations imposed by housing problems. and by accommodation and training problems, in our own country.
Mr. Mayhew: What my right hon. Friend is saying is of great importance. Can he then assure us that the difference between the critics and the Government is one of timing: that the Government have decided to leave Singapore, the Persian Gulf and Malaysia, and that the difference between us is one of timing? Will my right hon. Friend make that clear?
Mr. Healey: I cannot do that. [Interruption.] I ask my hon. Friends to read the White Paper, in which we say that our aim is to produce a situation in which the local Powers can reach agreement on a framework of stability for themselves without the presence of external forces. When we are satisfied that that aim is achieved, we shall certainly leave; but we believe that, until it is achieved, it may be possible for British forces to contribute to the military conditions in which that type of stability becomes possible without a continued foreign presence.
That is exactly the sort of problem which we find in the Gulf and in the Far East. In the long run, we hope that we shall be able to leave, but we are not in a position to be able to say at this moment when that long run will be.
Mr. Wyatt: Will my right hon. Friend give way?
Mr. Healey: No.
Hon. Members: Give way.
Mr. Speaker: Order. The right hon. Gentleman is obviously not giving way. Mr. Healey.
Mr. Wyatt rose—
Mr. Speaker: Order. The hon. Member must resume his seat.
Mr. Wyatt rose—
Mr. Speaker: If the hon. Member cannot resume his seat, I must ask him to leave the Chamber.
Mr. Healey: I want to turn to the criticisms made by the official Conservative Opposition. I start with something which is, I hope, entirely non-controversial and non-partisan. I want to quote the words of the right hon. Member for Barnet in The Times about a fortnight

397
ago, in a letter to his constituents. This is what he wrote:
"The negative side of opposition will not carry conviction unless it is based on evidence of solid purpose in the service of the nation. It is no good trying to pretend that problems with which we grappled as a Government no longer exist when we become the Opposition. The public are not taken in and they will respond only when we give evidence of tackling the problems that persist with new vigour but with maintained realism."
That was good advice. Why did he not take it, and why did his right hon Friend not take it? I suppose that they were working on the old motto "Have you ever heard of a signpost walking the way it is pointing?" The fact is that everything said by the Front Bench opposite was totally negative. They did not even dare to table an Amendment to the Motion, because they would not be able to agree on its terms.
The right hon. Member for Wolverhampton, South-West gave one of his best Parliamentary performances, and I applaud it as such. It was strongly applauded by his supporters. It followed a different line from his speech last year. Last year, he said that the offset agreement was deceit, that the assumption that confrontation would end was spoof, and that the F111K aircraft had no military reasoning. This year, he argued that there is no such thing as an east of Suez role, anyway; that no defence review had taken place; that there were no savings, and no runaway train. Apparently all the debates forced last year by the Opposition were about nothing. There was no carrier cancellation, and no TSR2. It was all a dream.
His hon. Friend the Member for Hendon, North was a great deal more candid with the House. He attacked the Government and gave his grounds. He said, first of all, that the Government were making cuts in defence expenditure, that we were bringing the troops home, and that we were planning to review the size of our forces. The fact is that all we had from the right hon. Gentleman yesterday—and it was repeated by his right hon. Friend the Member for Barnet this evening—was a brilliant exercise in sleight of hand. However, it was based on a total misrepresentation of all the basic facts.
398
I will puncture the bladder presented by the right hon. Member for Wolverhampton, South-West with one simple set of statistics. He said that there was no runaway train, and that defence expenditure had not been going up under the Conservative Government. Let me give the facts, at current prices and not constant prices. In 1961–62, Conservative Estimates went up 2·35 per cent. The next year, they went up 3·93 per cent. The next year, they went up 6·8 per cent., and in 1964–65, the year of the General Election, they went up 8·76 per cent. Those are the facts of the Conservative Estimates which cannot be denied. It was a runaway train and it took some getting under control.
The Labour Estimates in 1965–66 went up 6·03 per cent. In 1966–67, they went up only 2·43 per cent. This year, they went up only 1·52 per cent.
Let me put it into cash terms. Over the last two years of Conservative rule, the Estimates rose £278 million in cash. Over the first two years of Labour rule, they rose only £85 million in cash. That is a difference of well over £200 million, whether it is calculated on constant prices or current prices, between the last two years under the Tories and the first two under the Labour Government.
Mr. J. Enoch Powell (Wolverhampton, South-West): Since the right hon. Gentleman's Motion talks about the burden of defence expenditure, is he not interested in the relationship of defence expenditure to the national income?
Mr. Healey: Yes, Sir, I am very interested in that, and, although the national income has not risen as much as we hoped, this year our Estimates are 6·5 per cent. of the national income. Mr. Thorneycroft, as Minister of Defence, speaking in the House three years ago, said that he planned to maintain a steady 7 per cent. of the national income on the assumption that it would rise 4 per cent. a year for the next five years. I want to ask the Opposition what is their solid purpose in the service of the nation, to use the right hon. Gentleman's words. What would they do if they were in my position?
We had no hint whatever from the Front Bench opposite of what they would do about commitments. They did not

399
even make it clear whether they would plan to stay in Aden or not, although they criticised us very heartily for leaving.
We had only one clear statement from the benches opposite on what should be done. That was from the hon. and gallant Gentleman the Member for Winchester (Rear-Admiral Morgan Giles) who said that we should send forces to Vietnam.
All we do know about the policies of right hon. and hon. Members opposite is their policy on forces and expenditure. We know nothing about their policy on the commitments they would support. We know that they would keep the carrier. We know that they would have kept the TSR 2, the 1154 and the 681. We know that they would not have reorganised the Territorial Army, and we know what that would have cost, because the party opposite costed the proposals when it was in office, and the costs were checked by the right hon. Gentleman the Member for Barnet when he was Chancellor. It was no good, he said, trying to pretend that the problems with which they grappled as a Government no longer exist when they become the Opposition.
That is what he said in his advice to his constituents in Barnet the other day. The fact is that he knows, because he checked the figures, that the cost of the defence policy which he approved as Chancellor would have been £366 million more than that of the Labour Government this year—on his own figures.
That is not the end of it, because in fact the party opposite has committed itself to a great deal more than what it committed itself to in office. It says that it wants a fully viable carrier force,
Which means five or six carriers instead of three. It says that it would spend a good deal more on the Territorial Army in its old form to re-equip it. The right hon. Gentleman and some of his hon. Friends today said that they would prepare for a prolonged conventional war in Germany.
The plain fact is that if the proposal, to which they committed themselves in Opposition, were added to those which they supported in Government, the defence budget would be right through the roof and we would be facing an increase this year of more like £500 million over the present Government's estimates instead of the increase of £366 million of the last estimate they formed as a Government.
This is the issue—and I ask my right hon. and hon. Friends to recognise this—on which the Opposition propose to divide the House. On the one hand, we have a Government fighting to bring commitments, forces, and economic needs into line, moving faster and further in this task, and determined to continue on with it. [Interruption.] On the other hand, we have an Opposition deeply divided—[Interruption.]—on what policy our forces should support, united only in their desire to bankrupt the economy by a runaway defence expenditure. [Interruption.]
I know that some of my hon. Friends are wondering what to do tonight. [Interruption.] I ask them to search their consciences. Can they really maintain neutrality in the face of that?
Question put:—
The House divided: Ayes 270, Noes 231.

Division No. 281.]

AYES

[10.0 p.m.

Albu, Austen

Braddock, Mrs. E. M.

Crawshaw, Richard

Alldritt, Walter

Bradley, Tom

Cronin, John

Allen, Scholefield

Bray, Dr. Jeremy

Crosland, Rt. Hn. Anthony

Anderson, Donald

Brooks, Edwin

Crossman, Rt. H. Richard

Archer, Peter

Broughton, Dr. A. D. D.

Cullen, Mrs. Alice

Armstrong, Ernest

Brown, Rt. Hn. George (Belper)

Darling, Rt. Hn. George

Ashley, Jack

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

Davidson, Arthur (Accrington)

Bacon, Rt. Hn. Alice

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

Davies, Dr. Ernest (Stretford)

Bagier, Gordon A. T.

Brown, R. W. (Shoreditch & F'bury)

Davies, G. Elfed (Rhondda, E.)

Barnes, Michael

Buchan, Norman

Davies, Ednyfed Hudson (Conway)

Bellenger, Rt. Hn. F. J.

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

Davies, Harold (Leek)

Bence, Cyril

Callaghan, Rt. Hn. James

Davies, Ifor (Gower)

Benn, Rt. Hn. Anthony Wedgwood

Cant, R. B.

Delargy, Hugh

Bennett, James (G'gow, Bridgeton)

Carter-Jones, Lewis

Dell, Edmund

Binns, John

Castle, Rt. Hn. Barbara

Dempsey, James

Bishop, E. S.

Chapman, Donald

Dewar, Donald

Blackburn, F.

Coe, Denis

Diamond, Rt. Hon. John

Blenkinsop, Arthur

Coleman, Donald

Dobson, Ray

Boardman, H.

Concannon, J. D.

Doig, Peter

Boston, Terence

Conlan, Bernard

Donnelly, Desmond

Boyden, James

Corbet, Mrs. Freda

Dunn, James A.

Dunnett, Jack

Jones,Rt.Hn.SirElwyn(W.Ham,S.)

Price, William (Rugby)

Dunwoody, Mrs. Gwyneth (Exeter)

Jones, J. Idwal (Wrexham)

Probert, Arthur

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

Judd, Frank

Pursey, Cmdr. Harry

Eadie, Alex

Kelley, Richard

Randall, Harry

Edelman, Maurice

Leadbitter, Ted

Redhead, Edward

Edwards, Rt. Hn. Ness (Caerphilly)

Ledger, Ron

Rees, Merlyn

Edwards, Robert (Bilston)

Lee, Rt. Hn. Frederick (Newton)

Reynolds, G. W.

Edwards, William (Merioneth)

Lever, Harold (Cheetham)

Rhodes, Geoffrey

Ellis, John

Lever, L. M. (Ardwick)

Richard, Ivor

English, Michael

Lewis, Ron (Carlisle)

Roberts, Albert (Normanton)

Ennals, David

Lipton, Marcus

Roberts, Goronwy (Caernarvon)

Ensor, David

Lomas, Kenneth

Robertson, John (Paisley)

Evans, Albert (Islington, S.W.)

Loughlin, Charles

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

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

Luard, Evan

Robinson, W. 0. J. (Walth'stow, E.)

Faulds, Andrew

Lyon, Alexander W. (York)

Rodgers, William (Stockton)

Fernyhough, E.

Lyons, Edward (Bradford, E.)

Roebuck, Roy

Finch, Harold

Mabon, Dr. J. Dickson

Rogers, George (Kensington, N.)

Fitch, Alan (Wigan)

McBride, Neil

Ross, Rt. Hn. William

Fletcher, Raymond (Ilkeston)

McCann, John

Rowland, Christopher (Meriden)

Floud, Bernard

MacColl, James

Shaw, Arnold (Ilford, S.)

Foley, Maurice

MacDermot, Niall

Shinwell, Rt. Hn. E.

Foot, Sir Dingle (Ipswich)

Macdonald, A. H.

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

Ford, Ben

McGuire, Michael

Silkin, Rt. Hn. John (Deptford)

Forrester, John

Mackenzie, Gregor (Rutherglen)

Silkin, Hn. S. C. (Dulwich)

Fowler, Gerry

Mackie, John

Skeffington, Arthur

Fraser, John (Norwood)

Mackintosh, John P.

Slater, Joseph

Fraser, Rt. Hn. Tom (Hamilton)

Maclennan, Robert

Small, William

Freeson, Reginald

McMillan, Tom (Glasgow, C.)

Snow, Julian

Gardner, Tony

McNamara, J. Kevin

Spriggs, Leslie

Garrett, W. E.

MacPherson, Malcolm

Stewart, Rt. Hn. Michael

Ginsburg, David

Mahon, Peter (Preston, S.)

Stonehouse, John

Gordon Walker, Rt. Hn. P. C.

Mahon, Simon, (Bootle)

Strauss, Rt. Hn. G. R.

Gourlay, Harry

Mallalieu, E. L. (Brigg)

Summerskill, Hn. Dr. Shirley

Gray, Dr. Hugh (Yarmouth)

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

Swingler, Stephen

Greenwood, Rt. Hn. Anthony

Mapp, Charles

Symonds, J. B.

Griffiths, David (Rother Valley)

Marquand, David

Taverne, Dick

Griffiths, Rt. Hn. James (Llanelly)

Marsh, Rt. Hn. Richard

Thomas, George (Cardiff, W.)

Gunter, Rt. Hn. R. J.

Mason, Roy

Thomson, Rt. Hn. George

Hamilton, James (Bothwell)

Maxwell, Robert

Thornton, Ernest

Hamling, William

Mellish, Robert

Tinn, James

Hannan, William

Milian, Bruce

Urwin, T. W.

Harper, Joseph

Miller, Dr. M. S.

Varley, Eric G.

Harrison, Walter (Wakefield)

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

Wainwright, Edwin (Dearne Valley)

Hart, Mrs. Judith

Moonman, Eric

Walker, Harold (Doncaster)

Haseldine, Norman

Morgan, Elystan (Cardiganshire)

Wallace, George

Hattersley, Roy

Morris, Alfred (Wythenshawe)

Watkins, David (Consett)

Hazell, Bert

Morris, Charles R. (Openshaw)

Watkins, Tudor (Brecon & Radnor)

Healey, Rt. Hn. Denis

Morris, John (Aberavon)

Weitzman, David

Henig, Stanley

Moyle, Roland

Wellbeloved, James

Herbison, Rt. Hn. Margaret

Mulley, Rt. Hn. Frederick

Wells, William (Walsall, N.)

Hooley, Frank

Murray, Albert

White, Mrs. Eirene

Houghton, Rt. Hn. Douglas

Neal, Harold

Whitlock, William

Howarth, Harry (Wellingborough)

Noel-Baker,Rt.Hn.Philip(Derby,S.)

Wigg, Rt. Hn. George

Howarth, Robert (Bolton, E.)

Oakes, Gordon

Wilkins, W. A.

Howell, Denis (Small Heath)

Ogden, Eric

Willey, Rt. Hn. Frederick

Howie, W.

O'Malley, Brian

Williams, Alan (Swansea, W.)

Hoy, James

Oram, Albert E.

Williams, Alan Lee (Hornchurch)

Hughes, Rt. Hn. Cledwyn (Anglesey)

Oswald, Thomas

Williams, Clifford (Abertilery)

Hughes, Hector (Aberdeen, N.)

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

Williams, Mrs. Shirley (Hitchin)

Hunter, Adam

Padley, Walter

Williams, W. T. (Warrington)

Hynd, John

Page, Derek (King's Lynn)

Willis, George (Edinburgh, E.)

Irvine, A. J. (Edge Hill)

Pannell, Rt. Hn. Charles

Wilson, Rt. Hn. Harold (Huyton)

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

Parker, John (Dagenham)

Wilson, William (Coventry, S.)

Janner, Sir Barnett

Pearson, Arthur (Pontypridd)

Winnick, David

Jay, Rt. Hn. Douglas

Peart, Rt. Hn. Fred

Winterbottom, R. E.

Jeger, George (Goole)

Pentland, Norman

Woodburn, Rt. Hn. A.

Jenkins, Rt. Hn. Roy (Stechford)

Perry, Ernest G. (Battersea, S.)

Yates, Victor

Johnson, Carol (Lewisham, S.)

Prentice, Rt. Hn.R. E.

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

Price, Christopher (Perry Barr)

TELLERS FOR THE AYES:

Jones, Dan (Burnley)

Price, Thomas (Westhoughton)

Mr. Grey and Mr. Lawson.

NOES

Alison, Michael (Barkston Ash)

Berry, Hn. Anthony

Brinton, Sir Tatton

Allason, James (Hemel Hempstead)

Biffen, John

Bromley-Davenport,Lt.-COI.SirWalter

Astor, John

Biggs-Davison, John

Brown, Sir Edward (Bath)

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

Birch, Rt. Hn. Nigel

Bruce-Gardyne, J.

Awdry, Daniel

Black, Sir Cyril

Bryan, Paul

Baker, W. H. K.

Blaker, Peter

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

Bainiel, Lord

Body, Richard

Buck, Antony (Colchester)

Batsford, Brian

Bossom, Sir Clive

Bullus, Sir Eric

Beamish, Col. Sir Tufton

Boyd-Carpenter, Rt. Hn. John

Burden, F. A.

Bell, Ronald

Boyle, Rt. Hn. Sir Edward

Campbell, Gordon

Bennett, Sir Frederic (Torquay)

Braine, Bernard

Carlisle, Mark

Bennett, Dr. Reginald (Gos. & Fhm)

Brewis, John

Carr, Rt. Hn. Robert

402

403

Cary, Sir Robert

Hobson, Rt. Hn. Sir John

Orr-Ewing, Sir Ian

Channon, H. P. G.

Hogg, Rt. Hn. Quintin

Osborn, John (Hallam)

Chichester-Clark, R.

Holland, Philip

Page, Graham (Crosby)

Clark, Henry

Hooson, Emlyn

Page, John (Harrow, W.)

Clegg, Walter

Hordern, Peter

Pearson, Sir Frank (Clitheroe)

Cooke, Robert

Hornby, Richard

Peel, John

Cordle, John

Howell, David (Guildford)

Percival, Ian

Corfield, F. V.

Hunt, John

Peyton, John

Craddock, Sir Beresford (Spelthorne)

Hutchison, Michael Clark

Pike, Miss Mervyn

Crawley, Aidan

Iremonger, T. L.

Pink, R. Bonner

Crosthwaite-Eyre, Sir Oliver

Irvine, Bryant Godman (Rye)

Pounder, Rafton

Crouch, David

Jenkin, Patrick (Woodford)

Powell, Rt. Hn. Enoch

Crowder, F. P.

Jennings, J. C. (Burton)

Price, David (Eastleigh)

Cunningham, Sir Knox

Johnson Smith, G. (E. Grinstead)

Prior, J. M. L.

Currie, G. B. H.

Johnston, Russell (Inverness)

Pym, Francis

Dalkeith, Earl of

Jones, Arthur (Northants, S.)

Quennell, Miss J. M.

Dance, James

Jopling, Michael

Ramsden, Rt. Hn. James

d'Avigdor-Goldsmid, Sir Henry

Kaberry, Sir Donald

Rawlinson, Rt. Hn. Sir Peter

Dean, Paul (Somerset, N.)

Kerby, Capt. Henry

Rees-Davies, W. R.

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

Kershaw, Anthony

Renton, Rt. Hn. Sir David

Digby, Simon Wingfield

Kimball, Marcus

Ridley, Hn.Nicholas

Dodds-Parker, Douglas

King, Evelyn (Dorset, S.)

Ridsdale, Julian

Doughty, Charles

Kirk, Peter

Rippon, Rt. Hn. Geoffrey

Drayson, G. B.

Kitson, Timothy

Rodgers, Sir John (Sevenoaks)

du Cann, Rt. Hn. Edward

Knight, Mrs. Jill

Roots, William

Eden, Sir John

Lancaster, Col. C. G.

Rossi, Hugh (Hornsey)

Elliot, Capt. Walter (Carshalton)

Langford-Holt, Sir John

Russell, Sir Ronald

Errington, Sir Eric

Legge-Bourke, Sir Harry

St. John-Stevas, Norman

Farr, John

Lewis, Kenneth (Rutland)

Sandys, Rt. Hn. D.

Fisher, Nigel

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

Scott, Nicholas

Forrest, George

Lloyd, Rt. Hn. Selwyn (Wirral)

Sharples, Richard

Fortescue, Tim

Longden, Gilbert

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

Foster, Sir John

Loveys, W. H.

Sinclair, Sir George

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

Lubbock, Eric

Smith, John

Galbraith, Hn. T. G.

McAdden, Sir Stephen

Stainton, Keith

Giles, Rear-Adm. Morgan

MacArthur, Ian

Stodart, Anthony

Gilmour, Ian (Norfolk, C.)

Mackenzie,Alasdair(Ross&Crom'ty)

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

Glover, Sir Douglas

Maclean, Sir Fitzroy

Summers, Sir Spencer

Glyn, Sir Richard

Macleod, Rt. Hn. Iain

Tapsell, Peter

Godber, Rt. Hn. J. B.

McMaster, Stanley

Taylor, Sir Charles (Eastbourne)

Goodhart, Philip

Macmillan, Maurice (Farnham)

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

Goodhew, Victor

Maddan, Martin

Taylor, Frank (Moss Side)

Gower, Raymond

Maginnis, John E.

Teeling, Sir William

Grant, Anthony

Marples, Rt. Hn. Ernest

Temple, John M.

Grant-Ferris, R.

Marten, Nell

Thorpe, Jeremy

Grieve, Percy

Maude, Angus

Tilney, John

Gurden, Harold

Maudling, Rt. Hn. Reginald

Turton, Rt. Hn, R. H.

Hall, John (Wycombe)

Mawby, Ray

Van Strauhenzee, W. R.

Hall-Davis, A. C. F.

Maxwell-Hyslop, R. J.

Vaughan-Morgan, Rt. Hn. Sir John

Hamilton, Marquess of (Fermanagh)

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

Vickers, Dame Joan

Hamilton, Michael (Salisbury)

Mills, Peter (Torrington)

Walker, Peter (Worcester)

Harris, Frederic (Croydon, N.W.)

Mills, Stratton (Belfast, N.)

Wall, Patrick

Harris, Reader (Heston)

Miscampbell, Norman

Walters, Dennis

Harrison, Col. Sir Harwood (Eye)

Mitchell, David (Basingstoke)

Ward, Dame Irene

Harvey, Sir Arthur Vere

Monro, Hector

Weatherill, Bernard

Harvie Anderson, Miss

Morgan, Geraint (Denbigh)

Webster, David

Hastings, Stephen

Morrison, Charles (Devizes)

Wells, John (Maidstone)

Hawkins, Paul

Mott-Radclyfie, Sir Charles

Whitelaw, Rt. Hn. William

Hay, John

Munro-Lucas-Tooth, Sir Hugh

Wills, Sir Gerald (Bridgwater)

Heald, Rt. Hn. Sir Lionel

Murton, Oscar

Winstanley, Dr. M. P.

Heath, Rt. Hn. Edward

Nabarro, Sir Gerald

Wood, Rt. Hn. Richard

Heseltine, Michael

Neave, Airey

Woodnutt, Mark

Higgins, Terence L.

Nicholls, Sir Harmar

Worsley, Marcus

Hiley, Joseph

Noble, Rt. Hn. Michael

Hill, J. E. B.

Nott, John

TELLERS FOR THE NOES:

Hirst, Geoffrey

Onslow, Cranley

Mr. R. W. Elliott and Mr. More.

Resolved,
That this House welcomes the fact that the Government is conducting its Defence Review as a continuing exercise in reducing the burden of British commitments, forces and expenditure overseas with due regard to the limits imposed by the national interest and security and approves the Statement on Defence (Command Paper No. 3203) as a further contribution to this end.

DEFENCE

  BUSINESS OF THE HOUSE
  Ordered,
  That the Proceedings on the General Rate Bill [Lords] may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. John Silkin.]

GENERAL RATE BILL [Lords]
Considered in Committee.
[Sir ERIC FLETCHER in the Chair]
10.15 p.m.
The Chairman: With the consent of the Committee, I propose to put Clauses 1 to 119 en bloc.
Mr. Graham Page (Crosby): Sir Eric, I want to refer to Clauses 1, 40, 55, 110 and 117.

Clause 1.—(RATING AREAS AND RATING AUTHORITIES.)
Question proposed, That the Clause stand part of the Bill.
Mr. Graham Page: This is a Bill to consolidate certain enactments. It is not a Bill to consolidate with corrections and improvements. In this connection I think that I am in order in referring to a matter in the Clause which does not clearly state the existing law. The Joint Select Committee did not have the benefit in this case of a memorandum from the Lord Chancellor which would have stated Amendments which ought to be consolidated and embodied in a consolidation Measure. The Joint Select Committee had only the memorandum from the Government Department.
I apprehend that, when a Bill is only to consolidate the law on a particular subject, three types of Amendment are permitted and, if such types of Amendments are permitted, the removal of a whole Clause on the same basis must also be permitted. Therefore, in a debate on the Question, "That the Clause stand part of the Bill", one must be at liberty to oppose the Clause upon the same grounds as one could oppose an Amendment.
Those grounds are stated at page 553 of Erskine Mav as follows. First:
"An amendment to change the date on which the Bill is to come into operation…"
Secondly:
"An Amendment which would make the words of the bill express more clearly the law as it stands."
Thirdly:
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"An Amendment which seeks to bring the Bill into conformity with the existing law, if the chairman is satisfied that the Bill, as drafted, would effect an alteration in the law."
I want to question subsection (2) on the grounds that it could more clearly have expressed the law as it stands and also that it is not in conformity with the present law. The subsection purports to express the law as it is at present with regard to the power of the rating authority to levy rates but, as was admitted before the Select Committee, there is no such existing law stating that power. It was said in evidence by the Parliamentary draftsman—this is page 4 of the Minutes of Evidence before the Joint Committee—
"…there is no one single reasonably complete description of exactly what a rating authority's power to levy a rate means. Quite a bit of the meat of this subsection is at the moment tucked away in the definition of rate in the 1925 Act. in a context which was dealing not so much with what the rating authority has power to do as with what people other than rating authorities cannot do."
He went on to explain the point in these words:
"I thought that this proposition really required stating in positive form and in a substantive provision rather than being tucked away in a definition. That is one illustration of what I mean by re-stating the law."
In my submission, the words of the Clause as drafted do not express the law as it stands. It refers to the power to "make and levy rates". I refer in particular to the word "make". The expression "to make rates" seems to me to fail to express the function of the rating authority. To "assess" rates, perhaps, but not to "make" rates.
Moreover, there seems to be no justification in existing law for the last words of the subsection,
"applying the proceeds thereof to local purposes of a public nature."
The words "of a public nature" are questionable as a statement of existing law when placed in juxtaposition with the word "local" in the earlier part of the phrase. In my submission, the existing law does not require the local purposes to be of a public nature, and it would have been better expressed as being of a "local nature" and left at that.
According to the rules of order, I am permitted to argue this point only on a narrow issue as to the expression of the

407
existing law. This is not a pedantic exercise in legal phraseology. It goes to the root of the matter of consolidation Bills. It is many times argued, in reference to consolidation Measures, that Parliament as recently as 1960, or whatever the year may be, has confirmed the existing law and that, so soon after such confirmation, we ought not to alter the law. But that argument frequently omits that the confirmation of the existing law has been by a consolidation Measure, and it is incumbent upon the House, therefore, to ensure that it is not falsely bound by some erroneous statement of the existing law.
The Chairman: I am sorry to interrupt the hon. Gentleman, but I must remind him—he has referred to the permitted scope of debate—that it has been ruled on several occasions that the scope of debate on consolidation Bills is extremely limited. The only argument permitted is on whether the law on the subject should be consolidated or not, and on the Question, "That the Clause stand part of the Bill," on each Clause all that is relevant is whether the law as stated in the Clause should be so consolidated.
The Committee has before it the Report of the Joint Committee, which has stated that the Bill
"as amended is pure consolidation and represents the existing law and there is no point to which the attention of Parliament should be drawn."
Mr. Page: With great respect, Sir Eric, it is clearly stated on page 553 of Erskine May that in the case of Bills which seek only to consolidate the law the House is at liberty at the Committee stage to propose Amendments which
"…would make the words of the bill express more clearly the law as it stands."
The Chairman: Order. There are no Amendments on the Notice Paper.
Mr. Page: Indeed, Sir Eric, but it was my submission when I opened that if one is permitted to amend a Bill the omission of a Clause must come under the same rules.
The Chairman: I do not think that that follows. It would have been open to the hon. Gentleman to have proposed an Amendment to
408
"make the words of the Bill express more clearly the law as it stands."
But there is no Amendment on the Notice Paper and, therefore, the only question is whether the Clause as drafted should stand part of the Bill.
Mr. Page: I am sorry to labour the point, but surely it is an Amendment to the Bill to argue that the Clause should not stand part, which is my argument at present? If I had put that Amendment on the Notice Paper it would no doubt not have been called because you, Sir Eric, put the Question, "That the Clause stand part of the Bill." I am addressing my remarks to the question whether the Clause, particularly in a subsection, expresses the law as it stand. I would have hoped that I was in order in dealing with it in that form rather than in putting a specific Amendment on the Notice Paper.
The Chairman: I think not. I think that it would be open to the hon. Gentleman to put down an Amendment designed to change the words of the Clause with a view to making
"the words of the Bill express more clearly the law as it stands."
But in the absence of any such Amendment the only question before the Committee is whether the Clause should stand part of the Bill.
Mr. Page: I am in great difficulty here, Sir Eric, and I should like your guidance on how one argues whether a Clause should stand part of a Bill without questioning whether it is a statement of the existing law. I take it from the wording of Erskine May that on an Amendment one can examine whether the Bill states the existing law, and I would have thought that in arguing that a Clause should not stand part of the Bill one could argue on the same principle.
The Chairman: I am afraid not. It has been moved over and over again that on Second Reading debates all that can be argued is whether the law should be consolidated. It seems to me to follow from that that on the question whether each Clause should stand part of the Bill the only relevant debate in the absence of an Amendment is whether the law on the subject should be consolidated in that particular Clause.
Mr. Page: Having put the argument as far as this, I am left merely to say that Clause 1 should not stand part of the Bill. I am left in the position of not being able to explain why I say that it should not stand part, but that must necessarily be so according to your ruling, Sir Eric.
Question put and agreed to.
Clause ordered to stand part of the Bill.
Clauses 2 to 39 ordered to stand part of the Bill.

Clause 40.—(RELIEF FOR CHARITABLE AND OTHER ORGANISATIONS.)
Question proposed, That the Clause stand part of the Bill.
10.30 p.m.
Mr. Graham Page: I shall endeavour to keep in order in connection with Clause 40. In particular, I refer to subsection (2), which embodies Statutory Instruments. We have on many previous occasions discussed the effect of including in a consolidation Measure a Statutory Instrument which, until it is so included, is open to challenge by an individual in the courts.
Clause 40(2) has to be combined with Clause 117(1) and Schedule 8, which refers to the Statutory Instruments which are embodied within Clause 40, and in addition paragraphs (5) and (6) of Schedule 8. Without referring in any way to the merits of this Clause or even to the subject matter, I submit that I am in order in saying that that Clause embodies Statutory Instruments and to that extent alters the law in that, in future, if the Bill becomes law, no one will be entitled to challenge the validity of these Statutory Instruments.
The Bill includes in Clause 117(3) the preservation of existing Statutory Instruments under Acts which may be repealed by this consolidation Measure and I would have submitted that this would be the proper way to deal with the Statutory Instruments which are embodied in Clause 40(2) and that we should not deprive the individual of the right to challenge these in the courts. It would have been quite simple to leave them to take effect under Clause 117(3) rather than to embody them within the consolidation Measure and thereby deprive
410
the individual of the right of challenging them in the courts.
Question put and agreed to.
Clause ordered to stand part of the Bill.
Clauses 41 to 54 ordered to stand part of the Bill.
Clause 55.—(RATING OF OWNERS INSTEAD OF OCCUPIERS.)
Question proposed, That the Clause stand part of the Bill.
Mr. Graham Page: Exactly the same argument arises on Clause 55(1). I would have hoped that, at some stage in these proceedings, I would not have been left to make all the running myself, but that the Solicitor-General might have had the courtesy to reply to these points, which are points of substance and not merely pedantic points of some legal phraseology. They affect individual people, particularly in this case, which concerns every owner of property in his liability to rates.
This is an embodiment of a Statutory Instrument within a consolidation Measure which will deprive the owner of the right to question a resolution of a local authority in charging him with rates. I am sure that I must be in order in this case in quoting what the Solicitor-General said on Second Reading, when he dealt with this question of Statutory Instruments being embodied in this Bill. Referring to a point which I had made, the hon. and learned Gentleman said:
"He made a somewhat separate point about Statutory Instruments being embodied in legislation. I take the point and appreciate what he says about challengeability of Statutory Instruments in courts, but Statutory Instruments have formed part of the law for a considerable period, which no one has challenged up to now.
We are not depriving the citizen of a right of any value when we consolidate the whole of the law."
When I raised a question about Part 2 of Schedule 14 which had two references to 1965 and 1966, the hon. and learned Gentleman said:
"But even in those cases, there would have been ample time for anyone to challenge them, and no one has done SO."—[OFFICIAL REPORT, 22nd February, 1967; Vol. 741, c. 1650–1.]

411
Of course, in the example of Clause 55 there would have been no case to challenge until a local authority had passed a resolution adopting the provisions of the Statutory Instrument, so that argument falls on that ground.
I object to Clause 55 standing part of the Bill when it deprives an individual of the right to challenge a Statutory Instrument.
The Solicitor-General (Sir Dingle Foot): I hope that the hon. Member for Crosby (Mr. Graham Page) will acquit me of any discourtesy, but I suggest that what he is trying to do on this, as on earlier consolidation Measures, is to persuade the Committee to do over again the work which has been done by the Joint Committee.
The hon. Member has raised an issue which he raised on Second Reading. He has pointed out, perfectly correctly, that Statutory Instruments can be challenged in the courts, but that if they are embodied in a Statute, then they are beyond challenge. Of course, I take the point that if a Statutory Instrument is embodied in a Statute then to that extent the right of challenge in the courts is lost, but the hon. Gentleman will find that the Order with which we are here concerned, the Rating of Owners Order, 1962—and this applies to all the Statutory Instruments which are mentioned in Part 2 of Schedule 14—does not make any substantive change in the law except as regards figures and categories.
For example, there are three Statutory Instruments dealing with the rating of charitable institutions and they deal with the exclusion from certain exemptions of particular institutions, mainly universities, and by them the Minister may add to the list by adding names of particular colleges or universities. In this case we are dealing merely with a change which was made by an Order in Council, a Statutory Instrument which substituted £56 for the sum of £18 or £25 as a limit for the rating of owners instead of occupiers. That is all that is done and that is all that can be done under the powers which are preserved in the Bill.
Mr. Graham Page: The hon. and learned Gentleman says that that is all that is done, but that is to change the whole liability of an owner for rates as
412
against the occupier's liability. That is a substantial alteration in the law.
The Solicitor-General: All that is done is to substitute one figure for another. I am not saying that it does not matter to the persons concerned; of course it does, but it is not an alteration in the whole text of the Order or of the Statute, but simply says that the Minister may in certain cases substitute one figure for another. I cannot conceive that that could be the subject matter of a challenge in the courts and I will make the same observation of all these other Statutory Instruments which are mentioned in Part 2 of the Schedule.
If we regard this as a matter of substance, there is no right of challenge which is being lost, because one cannot imagine that any of these Instruments could be successfully challenged in a court. Therefore, it really makes no difference. What we are doing here is simply a consolidation Measure. We are dealing with Statutory Instruments which were already part of the law, and we are embodying them for general convenience in a consolidation Measure. This has been very carefully considered by the Joint Committee, and it has come to the conclusion that this is part of the law which should be consolidated, and I suggest that there is no special reason why we should disagree with those conclusions.
Mr. Graham Page: The right hon. and learned Gentleman has said that in his opinion, and it must only be his opinion, although I respect it very much, there would be no challenge to a Statutory Instrument such as this which is No. 3 in Schedule 14 to this Measure. Nevertheless, the law allows this challenge and my point was that the occasion to challenge would not arise until a local authority had passed a resolution bringing this into operation, so that the challenge might occur at any time, and it is no argument that this was passed in 1962, and that there has been no challenge since then. Resolutions by the local authorities bringing this into operation are still occurring and there might be a challenge at any time.
Question put and agreed to.
Clause ordered to stand part of the Bill.
The Chairman: With the consent of the Committee I will put Clauses 56 to 109 together.
Clauses 56 to 109 ordered to stand part of the Bill.

Clause 110.—(INQUIRIES.)
Question proposed, That the Clause stand part of the Bill.
Mr. Graham Page: This Clause states that the Minister may direct any inquiry to be held by his inspectors, which he might have directed to be held under Section 61(1) of the Rating and Valuation Act 1925, as if this consolidation Measure had not been passed. I am sure that I am not alone in being biased against obliging the reader of a Consolidation Act to refer back to a Statute repealed by that Act.
Clause 110 refers us to a Section in the Rating and Valuation Act, 1925, which, when we turn to Schedule 14 of the consolidation Measure, we find is to be repealed by this Measure. The Clause deals with the Minister's powers to direct inquiries—such inquiries as might have been held under a repealed Statute. Under those circumstances, I would have thought that this Clause would have been best left out of the Bill altogether.
I am not pleading even for an Amendment, I am pleading that the Clause be left out, as being a wrong statement of the law. According to your Ruling, Sir Eric, I can go no further than to say that. The Clause is asking the reader of a consolidation Measure to refer back, perhaps many years hence to a repealed Statute which will not be printed in the Statute Book, which will not be printed by Her Majesty's Stationery Office and which it will be most difficult for anyone to rind in future years. This Clause should be left out of the Bill altogether.
Question put and agreed to.
Clause ordered to stand part of the Bill.
The Chairman: With the consent of the Committee I propose that Clauses 111 to 116 be taken together.
Clauses 111 to 116 ordered to stand part of the Bill.

Clause 117.—(REPEALS AND SAVINGS.)
Question proposed, That the Clause stand part of the Bill.
Mr. Graham Page: On this Clause, I have already deployed the arguments. In subsection (1) of Clause 117 the Statutory Instruments contained in Part 11 of Schedule 14 are embodied in the Bill. I protest to these being embodied in this form and I say that they should have been left with their natural effect as Statutory Instruments under subsection (3) of Clause 17.
Question put and agreed to.
Clause ordered to stand part of the Bill.
Clauses 118 and 119 ordered to stand part of the Bill.
Schedules 1 to 14 agreed to.
Bill reported, without Amendment.
Motion made, and Question proposed, That the Bill be now read the Third time.
10.46 p.m.
Mr. Graham Page: Although I have put criticisms of the Bill in Committee, I repeat, as I said on Second Reading, that this is an admirable consolidation Measure apart from the blemishes which I have mentioned. The draftsman has done a splendid job of work in consolidation of the law relating to general rates. No effort has previously been made to do this, and it will be of great value. I only wish that the Clauses to which I have referred in Committee were not still in the Bill as they are. I hope that the words which I have said on this occasion may be studied when further consolidation measures are brought before the House.
The Solicitor-General: As the hon. Member for Crosby (Mr. Graham Page) knows, I always study with great care all the observations he makes on consolidation Bills. On this occasion, I would like, as on Second Reading, to join the hon. Member in his congratulations to the draftsman of this very complicated Measure.
Question put and agreed to.
Bill accordingly read the Third time and passed, without Amendment.

UNIFORM LAWS ON INTERNATIONAL SALES BILL
Order for Second Reading read.
Motion made, and Question put pursuant to Order [25th April], That the Bill be now read a Second time.
Question agreed to.
Bill accordingly read a Second time.
Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

NATIONAL HEALTH SERVICE (FAMILY PLANNING) [MONEY]
Queen's Recommendation having been signified—
Resolved,
That, for the purposes of any Act of this Session to secure the provision, as part of the National Health Service, by local health authorities of services in connection with family planning (hereinafter referred to as the "new Act"), it is expedient to authorise—
(1) the payment out of moneys provided by Parliament of—

(a) any increase attributable to the provisions of the new Act in the sums which, under section 52 of the National Health Service Act 1946 or section 61 of the Local Government Act 1958, are payable out of moneys so provided;

(b) any increase in the sums payable out of moneys so provided in respect of rate support grants to local authorities in England and Wales which may arise from
416
the inclusion, in the expenditure relevant to the fixing of the aggregate amount of those grants, of expenditure under the new Act;

(2) the payment into the Exchequer of all sums received, by virtue of the new Act, by the Minister of Health.—[Mr. Snow.]

NATIONALISED INDUSTRIES
Sir Fitzroy Maclean discharged from the Select Committee; Mr. David Crouch added.—[Mr. Lawson.]
HOUSE OF COMMONS (SERVICES)
Mr. Harold Lever discharged from the Select Committee; Mr. Robert Maxwell added.—[Mr. Lawson.]

AGRICULTURE
Select Committee to consist of Sixteen Members:
Mr. Alick Buchanan-Smith and Mr. John P. Mackintosh added.—[Mr. Lawson.]

ADJOURNMENT
Resolved, That this House do now adjourn.—[Mr. Armstrong.]
Adjourned accordingly at ten minutes to Eleven o'clock.

TECHNOLOGY
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MINISTRY OF LABOUR
  Unemployment (Blackpool)
  Unemployment (Blackpool)
  Installation and Rental Costs (Parliamentary Candidates)
  Installation and Rental Costs (Parliamentary Candidates)
POST OFFICE
  Tasmania (Concessionary Parcel Rates)
  Tasmania (Concessionary Parcel Rates)
  Services (Prospects)
  Services (Prospects)
SCOTLAND
  Student Nurses (Training in England)
  Student Nurses (Training in England)
  Loch Lomond Water Board Order (Legal Representation)
  Loch Lomond Water Board Order (Legal Representation)
  HOUSE OF COMMONS REFRESHMENT DEPARTMENT (EGGS AND MEAT)
  HOUSE OF COMMONS REFRESHMENT DEPARTMENT (EGGS AND MEAT)
  Population (Statistics)
  Population (Statistics)
RAILWAYS
  Closures (Alternative Transport)
  Closures (Alternative Transport)
  Local Authority Houses (Tenders)
  Local Authority Houses (Tenders)
  Drug Trafficking (Prosecutions)
  Drug Trafficking (Prosecutions)
  Railway Officers
  Railway Officers
ROADS
  Double White Lines (Experiment)
  Double White Lines (Experiment)
WALES
  Cardiff-Merthyr Trunk Road (Acquisition of Houses)
  Cardiff-Merthyr Trunk Road (Acquisition of Houses)

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

OVERSEAS STUDENTS' FEES
2.36 p.m.
LORD FERRIER: 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, with reference to paragraph 4 of the Ministerial Statement about overseas students' fees of December 21, whether they will state whether the last words "present course" apply to a course of "higher" studies, preparatory to taking a place in a university, as distinct from a university course, or whether the words cover the whole process to graduation.]
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, the exact definition of the qualification for the transitional increase of £50 a year is a matter on which my right honourable friend the Secretary of State for Education and Science will wish to consult the appropriate authorities. But, as he made clear in another place last Thursday, the intention is that students already embarked on a sequence of courses should not have to curtail their studies by being faced with a large increase in fee when they move from one course to another.
LORD FERRIER: My Lords, I thank the noble Earl for his reply.
LORD GLADWYN: My Lords, would the noble Earl tell the House whether the Government agree that perhaps the recently announced reduction in Fulbright scholarships is the result of the recent heavy increase in students' fees?
THE EARL OF LONGFORD: Well, my Lords, I suppose I am here to answer any question on any related topic, but that question does not arise directly from
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the original Question. I do not know whether I feel called upon to offer an opinion, but I would submit very respectfully to the noble Lord that if fees had been increased generally, which was the alternative course recommended by noble Lords, the effect on the finances of the Fulbright Commission would have been very much the same.

HOUSING GRANTS IN SCOTLAND
2.38 p.m.
THE DUKE OF ATHOLL: 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 for how many houses in Scotland applications were received for a standard grant under Sections 19 to 21 of the House Purchase and Housing Act 1959 between the passing of that Act in May, 1959, and the coming into operation of the Building Standards (Scotland) Regulations 1963 on 15th June, 1964; and of these applications how many were approved; how many such applications were received between 15th June, 1964, and 31st December, 1966 (or the latest convenient date), and of these how many have been approved.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): My Lords, in the five years to June, 1964, 7,480 applications for standard grants were approved. The corresponding figure for the two and a half years from July, 1964, to December, 1966, was 3,533. I regret that comprehensive information is not available about the number of applications made to local authorities. The noble Duke will, of course, be aware that a standard grant must be given if the conditions prescribed in the Act are complied with.
THE DUKE OF ATHOLL: My Lords, I should like to thank the noble Lord for that information, and at the same time ask him this question. Does he not think that these figures make rather disappointing reading, and could this not in part be due to the fact that the 1963 Regulations are unduly restrictive, particularly so far as rural areas are concerned?
LORD HUGHES: I do not think so, my Lords. If we look at these figures we see that the rate at which they have been running is fairly steady. There was a peak of applications in 1962, but since then they have been running at a fairly steady rate, about 1,400 a year.
THE DUKE OF ATHOLL: My Lords, but would not the noble Lord agree that there are many houses that would still have a very useful life if they had these standard amenities added, and that due to the building Regulations they cannot be added without causing undue expense?
LORD HUGHES: My Lords, there are perhaps many reasons why more applications for grants have not been made, but I am not certain that the noble Duke is right in attributing what he does to the building Regulations.

THE SOCIAL SERVICES
2.40 p.m.
LORD ST. HELENS: 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 when legislation will be brought forward to embody the results of the Review of the Social Services initiated in 1964; what those results have been; and when the economic growth necessary to pay for them will be achieved.]
THE EARL OF LONGFORD: My Lords, items of legislation arising from the Government's review of social security have been brought forward as they have become ready, and this process will continue. The growth of the economy is one of the factors taken into account in determining when particular measures are submitted to Parliament.
LORD ST. HELENS: My Lords, while thanking the noble Earl for his Answer, may I ask him this further question? Since during the last two Elections Government spokesmen have emphatically denied that they would increase taxation and have promised that improvements in social benefits would be paid out of economic expansion, and since now both these promises have proven to be broken—taxation having risen substantially, and
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economic advancement having lapsed into stagnation—what are the Government going to do in relation to changing their plans?
THE EARL OF LONGFORD: My Lords, the noble Lord has told us that the Government said at both the last Elections that there would not be an increase in taxation. I am afraid that I should need chapter and verse before accepting that statement.
SEVERAL NOBLE LORDS: Oh!
THE EARL OF LONGFORD: The noble Lord just announces this, but I should need chapter and verse. I am not going to accept it from the noble Lord or from anybody else without chapter and verse, so that that part of the question hardly arises. The noble Lord, I am sure, shares with us our desire to see these social services extended further. There have been many large improvements since 1964, and as we overcome the crisis, which is, after all, the ultimate outcome of the thirteen years of Tory Government, we shall be able to expand the social services.
LORD ST. HELENS: My Lords, does the Leader of the House realise that I do not accept any of the insinuations he has made against the excellent thirteen years of Tory rule; and, furthermore, that the Government are now stewing in their own juice—
A NOBLE LORD: Question!
LORD ST. HELENS:—that they have cooked themselves? And I should like to know how they propose to pay for these increases in social benefit, since the "economic expansion" is, in fact, stagnant.
THE EARL OF LONGFORD: My Lords, if I may say so, the noble Lord is wrong in thinking that no economic expansion is taking place, and as we recover from the effects of all these wasted years, so the economic expansion will gather force.
BARONESS SUMMERSKILL: My Lords, would my noble friend agree that the noble Lord who put down this Question can have no idea of the work or the provisions of the Social Security Ministry; otherwise he would never have put the Question on the Order Paper?
THE EARL OF LONGFORD: My Lords, I had not thought of that point, but now that it has been mentioned by the noble Lady, I entirely agree.
LORD BALFOUR OF INCHRYE: My Lords, is it not a fact that during these alleged "thirteen wasted years" a higher standard of living was enjoyed by a greater number of people than ever before in this country?
THE EARL OF LONGFORD: My Lords, it would have been almost impossible, even for the late Government, to prevent that happening, when we think of what was happening all over the world.
LORD HAWKE: My Lords, when the noble Lord the Leader of the House is talking about there being no stagnation, is he talking about 1964 prices or 1967 prices?
THE EARL OF LONGFORD: My Lords, I was talking about the thirteen wasted years.
LORD ST. HELENS: My Lords, may I further ask the noble Lord, since he claims that there is economic expansion, how he accounts for the Answer given to a Question in this House, I think on Thursday last, that industrial investment had decreased by 10 per cent.?
THE EARL OF LONGFORD: My Lords, one must choose one's dates carefully.
LORD CONESFORD: My Lords, I wonder whether the noble Lord could explain to the House precisely what he means by "crisis"? It used to mean a climax, but he now uses it to describe a permanent state of affairs. Am I right?
THE EARL OF LONGFORD: My Lords, if the noble Lord is anxious to know my reply; and if he wants to know whether he is right or wrong, and is really going to accept my opinion, the answer is that he is wrong.

OVERSEAS STUDENTS' FEES: HARDSHIP GRANTS
2.46 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether further details can now be given of the fund to enable grants to be made in cases of hardship as a result of the increased university fees for overseas students.]
THE EARL OF LONGFORD: My Lords, the details of the proposed fund and its administration are being worked out, in preparation for consultation with the authorities concerned.
LORD BROCKWAY: My Lords, may I ask my noble friend whether, when these details are being worked out, two considerations will be borne in mind: first, that the nomination of the students should be by the local authorities or, in developing countries, by missionary societies concerned in education; and, secondly, that the acceptance of applications should be in the hands of the universities?
THE EARL OF LONGFORD: My Lords, I will certainly lay those points before my right honourable friend.
LORD ALPORT: My Lords, may I ask the noble Lord to which authorities he is referring?
THE EARL OF LONGFORD: My Lords, I am referring to the local authorities, the universities and others.

"D" NOTICES INQUIRY
LORD SHEPHERD: My Lords, at a suitable moment after 3.30 p.m. my noble friend the Leader of the House will be making a Statement on the setting up of an Inquiry into "D" notices.

IRON AND STEEL BILL
2.47 p.m.
Order of the Day for the House to be again in Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Shackleton.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD JESSEL in the Chair.]
Clause 24:
Accounts of the Corporation and audit thereof
24.—
(4) So soon as the accounts of the Corporation have been audited, the Corporation shall send to the Minister—
THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM)THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM) moved, in subsection (2)(a), to leave out "or stock". The noble Lord said: It may be for the convenience of the Committee that Amendments 32, 33, 34, 35, 36, 37 and 38, all standing in the name of my noble friend Lord Shackleton, be considered together. These are all minor Amendments, some of a drafting nature. They fall into three groups. The excision of the words "or stock" is required simply because in this case the word "stock" is redundant, since stock forming part of the share capital of a company is included in "share" as defined by Section 59 of the 1949 Act. It is not necessary to say the same thing twice. The substitution of the term "bodies corporate" for "companies" is an improvement since bodies corporate would include friendly societies or comregistered abroad, which are excluded as the Bill is at present drafted.
Amendments Nos. 37 and 38 are simply improvements in drafting. If taken together Clause 24(2)(d) would read:
"shares in or amounts owing from a body corporate are to be treated as being held by or owing to the Corporation."
I hope that, with this explanation, noble Lords opposite will accept these Amendments. I beg to move.
Amendment moved—
Page 22, line 32, leave out ("or stock").—(Lord Winterbottom.)
LORD ERROLL OF HALE: In regard to this group of Amendments, which has been briefly and clearly moved by the noble Lord, Lord Winterbottom, I would suggest that we are correct in assuming that the deletion of the word "stock" is in fact merely a drafting matter; and "share" is defined in Section 59(1) of the 1949 Act as:
"including stock resulting from the conversion of any share into stock".
We assume also that it is likely that all the subsidiaries herein referred to have only shares, as such, or, where they have stock, that this is the result of a conversion and it was not originally issued as such. This is a point on which we should be grateful for a little clarification. With regard to the other points referred to by the noble Lord, we are in agreement with what he proposes.
LORD WINTERBOTTOM: I am able to give the noble Lord confirmation that such is the position with regard to the meaning of the word "shares". The definition provides that
"'share' includes stock resulting from the conversion of shares into stock".
But this is the only way in which stock forming part of a company's share capital can come into existence.
On Question, Amendment agreed to.
LORD WINTERBOTTOM: With the permission of the Committee I will move Amendments No. 33 to 38 together. I beg to move.
Amendments moved—
Page 22, line 36, leave out ("companies") and insert ("bodies corporate")
Page 22, line 38, leave out ("or stock")
Page 22, line 40, leave out ("or stock")
Page 22, line 42, leave out ("companies") and insert ("bodies corporate")
Page 23, line 9, leave out ("or stock in a company") and insert ("in, or amounts owing from, a body corporate")
Page 23, line 10, after ("by") insert ("or owing to").—(Lord Winterbottom.)
On Question, Amendments agreed to.
LORD WINDLESHAM LORD WINDLESHAM moved, in subsection (4) after paragraph (b), to insert:
"() an estimate of the cost of any services provided by the Corporation or any subsidiary

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thereof to or for any publicly-owned company according to the extent to which it shall have made use of the same;".
The noble Lord said: With the leave of the Committee, it may be convenient if I speak also to Amendments Nos. 40 and 43. The purpose of these three Amendments is to ensure that when the publicly-owned companies have the benefit of common services supplied to them by the National Steel Corporation or by any subsidiary of the Corporation a fair charge should be made for the cost of the services. The cost, I submit, should he shown as between different classes of business in which the publicly-owned companies may be engaged. As noble Lords will know, there are already a number of common services—for example, BISRA for research, arrangements for dealing with scrap, and so on—and these may well be extended in the future. The common use of computers is probably an obvious example.
Clause 2(3) of the Bill already empowers the Corporation to provide common services for the publicly-owned companies, and it is understood that the private sector can, by negotiation, have access to these common services as well, and that is to the good. But the private sector legitimately fear that the publicly-owned companies could receive a hidden subsidy in the form of these central services. These are services which they will have to make use of anyway, as they do now, but normally they would have to be paid for by the companies commissioning or making use of the services. Therefore, unless an appropriate charge is made in the accounts of the publicly-owned companies, a false impression of the profitability and efficiency of those companies could be given. It is for those reasons I beg to move this Amendment.
Amendment moved—
Page 24, line 5, at end insert the said paragraph.—(Lord Windlesham.)
LORD WINTERBOTTOM: One understands the intention behind this particular Amendment or series of Amendments, but I find it very difficult at this stage to recommend to the Committee that we should legislate on this subject, because the services are many and various and one cannot at this stage in the proceedings tie down the future Corporation to an exact allocation of services.
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I thought that when the noble Lord moved these Amendments he might link them to an Amendment to Clause 37, which I interpreted as designed to secure a separate figure of the estimated costs of services provided by the Corporation and any of their subsidiaries to each and every publicly-owned company. But it strikes me as extremely difficult to fall in with the assumption behind the Amendment, which is that each publicly-owned company or group of publicly-owned companies should seek to balance its accounts separately.
The Bill imposes this general financial duty on the Corporation and publicly-owned companies as a whole, and the form of organisation below the Corporation has been left to be decided after vesting date. If the Corporation decided to operate as a unitary organisation, they might come to a decision, for instance, to run down certain companies in order to enable other units or group to expand. If the Corporation were to operate in this way, I maintain that no purpose would be served by requiring them to show the cost of services provided to publicly-owned companies by the Corporation or other subsidiaries. The meaningful figure of profits and return on capital would be the consolidated figures for the nationalised sector.
Alternatively, the Corporation might decide to set up separate divisions in competition with each other; but they might still retain the publicly-owned companies, though stripping them of their assets and trading activities—for instance, in order to retain the goodwill associated with their names. In this case, too, the Amendment, I suggest, would impose a meaningless statutory obligation on the Corporation. The Corporation will be required to produce full accounts in a form directed by the Minister with the approval of the Treasury, who will ensure that all costs are brought into charge in the form most suitable to the organisation adopted by the Corporation and the nature of their activities. I think noble Lords will agree that no indication can be given at present of the precise form in which the accounts will be required. There is no doubt that the allocation of common services will be shown in the same way as the overhead figures of, for instance, the gas industry as shown in each area gas boards' accounts. But I

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think we cannot at this stage tie down the future Corporation as to the way in which they show the allocation of common services in their accounts.
LORD WINDLESHAM: The noble Lord was not able to be with the Committee yesterday and therefore he would not know that we had spoken to all the Amendments on Clause 37 in the course of the discussion yesterday. However, in replying to this Amendment he has given the Committee, to my mind, a rather unexpectedly explicit assurance that the allocation of the services will be shown—not just the cost but the allocation—between the publicly-owned companies or whatever groups there may be. This is the information required, not just that the National Steel Corporation have spent on research £1 million, but the allocation of that expenditure in a little more detail. This is the sort of information we think should be given by the Corporation, and, that being so, I beg leave to withdraw the Amendment.
LORD WINTERBOTTOM: I can assure the noble Lord that careful note will be taken of his views; but I can give the assurance that it is the intention of the Corporation that the accounts shall be illuminating, and where research has taken place is, of course, of the first importance.
Amendment, by leave, withdrawn.
Clause 24, as amended, agreed to.
Clause 25:
Information respecting certain classes of business of corporation and publicly-owned companies to be contained in Corporation's report to Minister
25.—(1) If a body in the group consisting of the Corporation and the publicly-owned companies has, in the course, of a financial year of the body ending after such date at the the Minister may determine for the purposes of this subsection, carried on business of a kind to which this section applies, or business of that kind of two or more classes that differ substantially from each other, the Corporation shall determine the amount of the turnover of the body for that financial year in respect of business of that kind or, as the case may be, of each of those classes; and if the amount of turnover in respect of that business, or, as the case may be, of any of those classes, is determined by the Corporation to have exceeded £250,000, there shall he contained, if the body is the Corporation, in the report which, by section 4(6) of the 1949 Act, they
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are required to make next after the end of that financial year or, if the body is a publicly-owned company, in the report which the Corporation are by that section required to make next after the end of the financial year of the Corporation with or within which the first-mentioned financial year ends, a statement of—

(a) that amount;

(7) The Minister may from time time to time direct that this section or a provision thereof shall not apply to business of a class or description specified in the direction; and if the Minister gives a direction under this subsection, that fact, and the class or description of business to which the direction relates, shall be stated in each report made under the said section 4(6) so long as that direction is in force.
(8) The Minister may from time to time vary the amount by reference to which it is to be determined, under subsection (1) or (2) above, whether a statement is to be contained in a report made under the said section 4(6), and may fix different amounts under this subsection for different purposes.
2.58 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved, after subsection (1)(c), to insert as a new paragraph:
"() the interest rates charged to publicly-owned companies for loans made to them by the Corporation or by the Minister, and the amounts of such loans;"
The noble Lord said: I beg to move Amendment No. 41. The purpose of this Amendment is to ensure that the Report which the National Steel Corporation must make should include a specific statement of the information referred to in the Amendment—namely, a specific statement of the interest rates charged and the amounts of loans made by the N.S.C. or the Minister to the publicly-owned companies—so that the private sectors in industries engaged in activities other than iron and steel activities can see clearly and publicly that the public sectors are not receiving more favourable terms for financing than are available to the private sectors. I hope the Government will be able to accept this Amendment, because I am quite sure their intention is that there should be no favourable treatment for those receiving loans from the N.S.C. If that is their intention, I hope they will will write it into the Bill so that we can see, as the years go by, that there has been no such favourable treatment. I beg to move.
Amendment moved—
Page 25, line 16, at end insert the said new paragraph.—(Lord Erroll of Hale.)
LORD MITCHISON: Without necessarily accepting this particular Amendment, one sees the point about equality of treatment. But what I should like to know is, what is the treatment on the other side? Are the companies in the private sector in the habit of disclosing, or are they bound to disclose, the rate of interest they pay on loans made to them? If the object is to find out whether the public sector is getting an undue advantage, there might be a wish to know what the public sector paid. But the shareholders on the public sector might also like to know what the position is on the private sector. I wonder whether, either now or at some later stage, the noble Lord who moved this Amendment would tell us how he means to ensure, or whether he has already ensured equality of treatment in that respect.
VISCOUNT MASSEREENE AND FERRARD: Surely there is a great difference here. The public sector will be getting the money from the taxpayer. One cannot make the same comparison between the public and the private sectors in regard to the financial sources from which they draw their funds.
LORD WINTERBOTTOM: One sees the objective of the Amendment moved by the noble Lord opposite, but I wonder whether he is not confusing the aims of this particular clause, which are to give the maximum measure of comparability of the various operations governed by the clause. We believe that the clause as drafted almost indicates whether or not a full commercial rate is being charged on capital. The point is that, when this clause is in operation, we shall be able to see the return on capital invested in the various activities, other than steel manufacture, being carried out by the Corporation.
What we want to be able to do, when this information is published, is to compare the measure of profitability of each of these various activities. For this reason, one excludes interest charges because, since almost certainly they would vary, because capital would come from various parts, they might in fact distort the comparability of the pictures which we are trying to achieve. For this reason, we think that, as we shall be showing the profits and the capital employed, it will be possible to calculate
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the return on the activity before interest is charged. It will therefore be easy to find out whether a reasonable return is being earned on each separate business or activity, and there will be true comparability between one activity and the other, because the possible variations in the proportions of loan to equity capital are excluded. If the noble Lord wishes to show interest rates in each case he will be distorting the clear picture which we are trying to see is presented in the Corporation's accounts.
LORD ERROLL OF HALE: I must say that I am far from satisfied with that explanation. If the intentions are as honourable as we have been led to believe, I think it would be much better to accept the Amendment, and then we could see the matter clearly laid out. As regards Lord Mitchison's point, surely the noble Lord realises by now that nationalised industries always get their money on more favourable terms than private companies: it is a sine qua non. There is no need for private companies to reveal their bank charges, rates of interest and other charges, because they are always in a worse position than the pampered public sectors of this or any other industry. I hope that the noble Lord will look at this matter again more fully, because I think we may have to divide the Committee if he cannot be more forthcoming.
LORD MITCHISON: Before we go any further let us get this quite clear. What we were told originally was that the object of this Amendment was to ensure absolutely equal treatment between the public and the private sectors. I have never supposed that a company in the course of its ordinary accounts shows the rate of interest at which it has borrowed money. It is not only a question of the steel companies' borrowing from private sources: as we all know, in the past they have also borrowed from public sources.
If there is any substance in this point, which for myself I cannot yet see, then the position will be that the Amendment seeks to make the public companies disclose in full the rate of interest on any loan, in any circumstances. I entirely agree with my noble friend that, quite obviously, there will be different circumstances and, consequently, different rates of interest, just as there are with the

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private companies. The object is to do that, on the one hand, but not, on the other, to put on companies in the private sector any full duty of disclosure. But if equality is desirable, or if, as the noble Lord himself just said, the publicly-owned bodies always get their money much more cheaply—a statement which I beg leave to doubt—how does that support the argument for this Amendment? I cannot see what the Amendment is needed for. We have not yet been told what the Amendment is needed for. What is the point of it?
LORD SALTOUN: Is not the rate of interest paid on loans by a private company a matter for the shareholders; and is not the interest paid on loans from the public a matter for the public? I am trying to understand the arguments on both sides. That is how I see the matter at the moment.
LORD WINTERBOTTOM: I will pay attention to what the noble Lord, Lord Erroll of Hale has said. But I should like to draw his attention to the fact that, as the. Bill now stands, the information to be provided is:
"Turnover, profit or loss, capital employed, and such further information as the Minister may from time to time direct."
It may be that at some future date the Minister may direct the Corporation to publish interest rates. If noble Lords at some future time feel strongly about the subject, then doubtless pressure will be brought to bear on the Minister of the day to get it published. But I should have thought it would be a pity to press the point at the moment, since what we are trying to achieve is comparability of results, so that we can all understand what is happening in the various related activities of the Corporation, and the varying rates of interest on capital, which would come from varying sources. To change this might distort the picture. But I will bear in mind what the noble Lord has said, and see whether it is possible later to clarify the picture a little.
LORD ERROLL OF HALE: I am grateful for what the noble Lord says; but noble Lords on this side feel strongly about this, and we would rather the Minister put it in now. We think it would probably be better to demonstrate our feelings on this matter by putting it to the vote.
THE MINISTER WITHOUT PORTFOLIO (LORD SHACKLETON): If the noble Lord is capable of doing sums he can find out all this information without putting this Amendment into the Bill. I must say that, for an Amendment on a point of principle upon which to divide, this seems to me to be a singularly undistinguished and unuseful one.
LORD MITCHISON: Might I respectfully agree? I make no apology for again taking up the time of the Committee. This seems to me complete nonsense. I cannot imagine any clause, in providing for the accounts of a nationalised industry, or for that matter the accounts of any comparable body, going into detail of this sort on one point and no others. So far as my recollection goes, there is no provision of this sort in any of the nationalising Statutes. They are always in general terms; they always lay down a form of accounts which has to be approved by the Minister or the Treasury or whatever the body may be, and they leave the detail to the common sense of the accounting authorities.
Why impute this absurd and incongruous malevolence to a body which we all want to succeed?—at least, I hope we want it to succeed. I am beginning to wonder whether noble Lords opposite do want it to succeed, or whether they would prefer it to fail. Why put in this particular matter? Why not put in the rents they pay, or the provision of private motor cars for any of the people who work for them, or Heaven knows what? One could go on down the whole line putting in things of this sort. Why choose this particular matter? What is the point of it?
LORD WOLVERTON: I hope the Government may have second thoughts on this matter, because a large amount of this money will no doubt come out of the taxpayers' pockets through the Budget. There can be a quite large hidden subsidy in the rate that they grant, because they get it from the taxpayers, and it is not easy to-day, having regard to the enormous extent of the National Debt, for Her Majesty's Government to raise large sums of money for these nationalised industries. The ones which are solvent can raise their own money in the market; the others which are not solvent have to come to the

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Treasury and are given taxpayers' money. Therefore I think Parliament has a right to know at what rate the publicly-owned steel industry is going to be lent this money. It is quite different from private industry, in which shareholders could get this information if they wanted it. I strongly support the Amendment.
LORD SHACKLETON: I do not know whether the noble Lord is going to divide on this Amendment. I do not want to spoil the excellent record of the Opposition so far on this Bill. The noble Lord will appreciate that the rate at which the Corporation will borrow from the Exchequer will be disclosed. I would urge the noble Lord to think again because, whatever happens, this proposal is unworkable and will have to be taken out, and I would rather your Lordships did not put an Amendment into the Bill that is unworkable. There may be an opportunity to discuss this subject again on Report stage. If the noble Lord particularly wants a Division at this moment, if he has sat here a little too long, I am sure the Committee will be happy to go its various ways. But I think that one can go some way to satisfy him on this matter in practice. The Amendment, as drafted, is—and I will moderate my language—not a very good one.
LORD HAWKE: May I ask the noble Lord a question? Of course, the rate at which the Treasury lends to the Corporation will be known. But will it be possible to ascertain from the Corporation's accounts at what rates it is passing on money to its subsidiaries? If that is readily ascertainable in the Corporation's accounts, I am certain that my noble friend's point would be met; but if it is not it is a rather different matter.
LORD SHACKLETON: Is the noble Lord suggesting that they are likely to lend the money at a lower rate than they themselves have borrowed it? The Corporation can be expected to disclose this in their accounts. I feel that the difference between the two sides is not in fact very great. It is in the hands of the noble Lords opposite. Some interesting points have been raised which we might be able to pursue at a later stage.
LORD HAWKE: Could the noble Lord give me a specific statement that it will be possible to discover from the Cor-
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poration's accounts whether they are lending out money at cheaper rates than those at which they are borrowing it?
LORD SHACKLETON: I cannot myself give a specific answer, but I certainly would have said that it was to be expected that the Corporation would do so, and I should certainly be willing at a later stage, possibly on a later Amendment, to take an opportunity to say something on this point when I have confirmed my information. I do not know whether they would have power—and this is why I should like advice on this matter—to lend money at a rate lower than they themselves have borrowed it. I can see that there could be some Treasury reaction. Some of my colleagues with more financial experience might be able to answer this point more specifically. I am trying to be as helpful as I can, without actually misleading the noble Lord.
LORD MITCHISON: I am most reluctant to annoy anybody, but I wonder if noble Lords opposite could tell me one thing?—whether they decide upon a Division on an Amendment according to its merits, or according to the time of day at which it is taken.
LORD ERROLL OF HALE: I am very glad to answer that point. We divide only on merits and not according to the time of the day—there is no question of that at all. As this is only the Committee stage we have another opportunity on Report, and it would be a powerful stimulus to the various Departments which have been invoked by the noble Lord who has replied to study the matter if we were to put this Amendment in, imperfect though it may be. This will enable the Government to draft a better Amendment for our consideration on Report; whereas if we just leave it, perhaps we shall hear nothing more about it. This is a serious matter of principle; namely, that the Corporation may choose to provide hidden subsidies to individual publicly-owned companies competing with those in the private sector by provision of money at less than the going rates of interest. I suggest to noble Lords that we put this Amendment, even if it is not perfect, into the Bill, preferably with the agreement of noble Lords opposite, but, if not, on our own.
3.21 p.m.
On Question, Whether the said Amendment (No. 41) shall be agreed to?
Their Lordships divided: Contents, 59; Not-Contents, 55.

CONTENTS

Aberdeen and Temair, M.

Derwent, L.

MacAndrew, L.

Ailwyn, L.

Drumalbyn, L.

Mancroft, L.

Albemarle, E.

Effingham, E.

Margadale, L.

Allerton, L.

Elliot of Harwood, Bs.

Massereene and Ferrard, V

Alport, L.

Erroll of Hale, L.

Newton, L.

Ampthill, L.

Falkland, V.

Nugent of Guildford, L.

Atholl, D.

Ferrier, L.

Oakshott, L.

Auckland, L.

Fortescue, E.

Rathcavan, L.

Balerno, L.

Glendevon, L.

Russell of Liverpool, L.

Balfour of Inchrye, L.

Goschen, V. [Teller.]

Salisbury, M.

Boston, L.

Hacking, L.

Sandford, L. [Teller.]

Bridgeman, V.

Hankey, L.

Sinclair of Cleeve, L.

Brooke of Cumnor, L.

Hawke, L.

Somers, L.

Brooke of Ystradfellte, Bs.

Horsbrugh, Bs.

Soulbury, V.

Carrington, L.

Howard of Glossop, L.

Strange, L.

Conesford, L.

Ilford, L.

Strange of Knokin, Bs.

Cottesloe, L.

Inglewood, L.

Thurlow, L.

Craigavon, V.

Jellicoe, E.

Windlesham, L.

Daventry, V.

Jessel, L.

Wolverton, L.

Kilmarnock, L.

Ypres, E.

NOT-CONTENTS

Addison, V.

Hilton of Upton, L. [Teller.]

Rusholme, L.

Airedale, L.

Hughes, L.

St. Davids, V.

Amulree, L.

Hurcombe, L.

Shackleton, L.

Archibald, L.

Iddesleigh, E.

Shannon, E.

Arwyn, L.

Kahn, L.

Shepherd, L.

Blyton, L.

Latham, L.

Snow, L.

Bowles, L.

Lindgren, L.

Soper, L.

Boyd-Orr, L.

Longford, E. (L. Privy Seal.)

Stocks, Bs.

Brockway, L.

Mitchison, L.

Stow Hill, L.

Burden, L.

Moynihan, L.

Strabolgi, L.

Burton of Coventry, Bs.

Ogmore, L.

Strang, L.

Champion, L.

Phillips, Bs. [Teller.]

Summerskill, Bs.

Citrine, L.

Plummer, Bs.

Swaythling, L.

Faringdon, L.

Popplewell, L.

Taylor of Mansfield, L.

Gaitskell, Bs.

Raglan, L.

Wade, L.

Gardiner, L. (L. Chancellor.)

Rea, L.

Wells-Pestell, L.

Greenway, L.

Ritchie-Calder, L.

Willis, L.

Harvey of Tasburgh, L.

Royle, L.

Winterbottom, L.

Wise, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
3.27 p.m.
LORD WINTERBOTTOM: It may be the wish of the Committee that we take Amendments Nos. 42, 44, 47 and 49 together. These Amendments stand in the name of my noble friend Lord Shackleton. Again, they make no difference whatever to the substance of the clause, and are purely drafting Amendments designed to make it read more easily. For this reason, I beg to move.
Amendment moved—
Page 25, line 35, after ("make") insert ("next").—(Lord Winterbottom.)
LORD HAWKE: I am glad that the noble Lord finds that it makes the Bill read more easily to insert "next" after
1014
"make". I am afraid that to me it makes it much more difficult to read. I wonder whether the noble Lord would examine whether the word "next" should not be in line 33, making it read "the next report", because the way he is putting it at the moment—
"required to make next after the end of that financial year"—
does not read at all well.
LORD WINTERBOTTOM: I presume that when my brief says "read more easily", it means to read more easily for legal experts. All this strikes me as extremely difficult for normal human beings, but I am assured that this Amendment in fact improves the wording of this clause.
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment No. 44.
Amendment moved—
Page 26, line 7, leave out ("the said section 4(6)") and insert ("section 4(6) of the 1949 Act").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment No. 45.
Amendment moved—
Page 26, line 25, leave out from ("in") to ("respectively") in line 26 and insert ("those cases").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved, in subsection (7), after "The Minister may" to insert:
",but only after reference to and approval by the Consumers' Council,".
The noble Lord said: It might be for the convenience of the Committee if we took Amendments Nos. 46 and 48 together. They are concerned with the provision of the information covered in this clause, which could be of value in allaying the fears of the private sector of these industries regarding the financial affairs of their competitors in the public sectors. But unfortunately, in my opinion, subsections (7) and (8) give the Minister far too wide a discretion, which would have the effect of nullifying the clause altogether. For example, if the Minister exercised his discretion by altering the class or description of business, or if he varied the amounts given in subsections (1) and (2), this could seriously affect the trading position of the private sectors.
I should therefore like to suggest, as is conveyed by the Amendments, that the Minister should be required to obtain the sanction of those representatives of the industries concerned—i.e. the Consumers'Council—before he takes action in the way provided. This is the purpose behind the two Amendments, which I hope the Government will be able to accept. I beg to move Amendment No. 46.
Amendment moved—
Page 26, line 38, after ("may") insert (",but only after reference to and approval by the Consumers'Council,").—(Lord Erroll of Hale.)
LORD WINTERBOTTOM: We differ from the noble Lord, Lord Erroll of Hale, who thinks that these particular
1016
matters are appropriate for decision by the Consumers' Council. The Minister's power to exempt certain activities from the operation of the clause is meant to enable him to exempt non-commercial activities—for example, housing and welfare activities—and activities overseas where publication of information might be seriously prejudicial to the Corporation's business. I think noble Lords on both sides of the Committee would agree that in neither case would it be appropriate for the Consumers' Council to instruct the Minister. The Consumers' Council has no concern with the Corporation's welfare and housing activities, or with their overseas activities. As to the second point, Amendment No. 48, the power to vary the limit of turnover above, which information must be published, was inserted to ensure that the limit is always so fixed that full disclosure of all significant information is achieved. At the moment there is very little information available about the turnover of companies, although they will be required to publish figures of turnover when the present Companies Bill becomes law. When that information becomes available, it might be desirable to consider changing the limits so that the Corporation would not be required to publish useless detail or that, alternatively, all significant activities would be caught. The opinion of myself and my colleagues is that this is properly a decision for the Minister to take; and, of course, he is answerable to Parliament for it. We do not believe that it would be appropriate for the Consumers' Council to decide on these two important issues, since the Council are not answerable to Parliament, and we therefore cannot ask them to take the decision on what information shall in fact be laid before Parliament. It is for this reason that we are resisting these two Amendments.
Having said that, I should point out that the Consumers' Council already have ample opportunity, of course, to make their views known on these questions when they think it desirable. Section 6, subsection (4), of the 1949 Act as revived empowers them to consider and make representations to the Minister on any matter concerning the interests of consumers, and this provision would certainly empower them, if they so wished, to make representation about the

1017
Minister's use of his powers under Clauses 25(7) and 25(8) where it affected consumers' interests. The private sector will not be left defenceless before the Minister, but we do not believe that the Consumers' Council is the best body to protect their interests in these two particular cases.
LORD ERROLL OF HALE: I am grateful to the noble Lord for his explanation. I realise that this Amendment is perhaps rather more technically defective than the last one, that it does not raise the same important issues of principle and therefore does not merit a Division to enforce our views. I am grateful to the noble Lord for his explanation, and beg leave to withdraw the Amendment.
LORD HAWKE: I do not know whether the noble Lord appreciates the somewhat ironic statement he made—that is, "in order to stop them from publishing useless detail". We spent many an evening here not very long ago trying to stop Her Majesty's Government from making small companies publish useless detail.
LORD INGLEWOOD: I should like to support my noble friend, because the same idea came into my head. I was going to ask the noble Lord whether the words we have just heard mean that the Government have had a change of heart, because the tone of the speech we have just heard from the Front Bench of the Government is the exact opposite to the tone of the speeches we heard over and over again during the Committee stage of the Companies Bill. Can we read into what the noble Lord has just said a statement of Government intention to amend the Companies Bill in the same way, having found that what they are now asking companies to provide is no more than useless detail?
Amendment, by leave, withdrawn.
LORD WINTERBOTTOM: I beg to move the next Amendment.
Amendment moved—
Page 26, line 43, leave out ("the said section 4(6)") and insert ("section 4(6) of the 1949 Act").—(Lord Winterbottom.)
On Question, Amendment agreed to.
LORD WINTERBOTTOM: I beg to move Amendment No. 49.
Amendment moved—
Page 27, line 2, leave out ("the said section 4(6)") and insert ("section 4(6) of the 1949 Act").—(Lord Winterbottom.)
On Question, Amendment agreed to.
Clause 25, as amended, agreed to.
Clauses 26 and 27 agreed to.
3.37 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved, after Clause 27, to insert the following new clause:
Duty to inform private sector about E.C.S.C.
".—(1) It shall be the duty of the Minister to keep iron and steel producers, other than the Corporation and the publicly-owned companies, and such organisations as appear to him to be appropriate and to be representative of the interests of iron and steel producers informed—

(a) of the proceedings of the institutions of the European Coal and Steel Community so far as such proceedings arc within his knowledge and appear to him to be relevant to such iron and steel producers, and

(b) of such other matters concerning the relationship between the United Kingdom and the said Community as in the opinion of the Minister are relevant to the iron and steel industry generally.

(2) Nothing in this section shall be taken as requiring the Minister to disclose to such iron and steel producers or any such organisation as aforesaid any matter which in his opinion it is not in the national interest to disclose to them.
(3) In this section the expression the Institutions of the European Coal and Steel Community' means the Institutions mentioned in Article 7 of the Treaty constituting the said Community signed in Paris on 18th April, 1951."
The noble Lord said: This new clause after Clause 27 brings the Committee back to the subject of Europe, which was discussed yesterday afternoon on a much more wide-ranging Amendment. The purpose of this Amendment is to restore to the private sector of the British steel industry the right to information that they had under the 1953 Act—which they have to-day, in fact. Under the 1953 Act, Section 4, the Minister had an obligation placed on him to keep the Iron and Steel Board informed on matters concerning the European Coal and Steel Community. When an Amendment which sought to impose a similar obligation on the Minister was moved in Committee in another place, the Minister made the point in reply that this was not necessary with the National Steel Corporation because,

1019
since Britain is an associate member of the Coal and Steel Community, the National Steel Corporation itself would be a member of the Council of Association, and therefore would be receiving all the information that was needed and would itself be aware of the proceedings of the Coal and Steel Community. This Amendment is therefore much more narrowly drafted. It does not include the public sector at all, for the reasons given by the Minister; namely, that they will have access to information and there will be no need to place an obligation on the Minister to inform them since they will already know.
However, the private sector is in a different position here, and what we seek to do in this Amendment is to make it a duty of the Minister to keep iron and steel producers which are not nationalised, and organisations representative of the interests of these iron and steel producers, informed about the relationship between the United Kingdom and the European Coal and Steel Community, and of the proceedings of the institutions of the Community. Unless some provision of this sort is put into the Bill, there will be no statutory requirements upon the Minister to consult with or inform the future private sector about these matters. It is for that reason that we seek to add this new clause, thus ensuring that the private sector do not have removed from them the rights they already have under the 1953 Act. I beg to move.
Amendment moved—
After Clause 27, insert the said new clause.—(Lord Windlesham.)
THE EARL OF LONGFORD: May I say straight away that the Government fully accept the objective of the Amendment? My right honourable friend the Minister of Power has every intention of keeping both the Corporation and the private sector of the iron and steel industry as fully informed as possible of the proceedings of the European Coal and Steel Community, and of matters concerning the relationship between the United Kingdom and that Community. He will welcome the advice of both the Corporation and the representative organisation of the private sector on matters referred by him to them and, in addition, on matters they themselves
1020
raise. We consider that this consultation will be of great help to the Government, particularly in the matter of keeping a close relationship with the Community.
I would add—although I do not think there is much need to mention this again—that the Government are entirely serious and sincere in the moves they are making to join the European Community; and if we do not accept this clause—and I am afraid we are going to ask the noble Lord to withdraw it or, if he is disinclined to do that, to ask the Committee to reject it—it is due to technical considerations. But I would respectfully submit to the noble Lord and his colleagues that these technical considerations are strong.
First, there was no reason, in our view at any rate, why there should be a special statutory provision about consultation on these matters with the private sector of the steel industry when there is no statutory obligation of the Government to consult other and more important sectors of industry on these matters. To include this provision would highlight consultation with the private sector steel companies, and would therefore carry the implication that there is less need for similar consultation and co-operation with industry generally. I am sure that the noble Lord and the Committee would not wish to stress any suggestion of that kind. There is another aspect of the same point. This new clause brought forward by the noble Lord provides for consultation with the private sector, but not with the Corporation. I hope the noble Lord will forgive me if I say it really would be a little strong to introduce a statutory requirement for consultation with 10 per cent. of the steel industry and not with 90 per cent.
The second strong technical argument is that the Six are now considering a plan for the fusion of the three Communities, the E.E.C., the E.C.S.C., and EURATOM. If this fusion took place the new clause would become meaningless. Third, and perhaps the most important, as the noble Lord said, this new clause is largely modelled on Section 4 of the Iron and Steel Act. That was drafted at a time when it was envisaged that the United Kingdom would co-operate closely with the Community but would remain outside it. Its wording is clearly related to this particular situation and it is quite

1021
unsuitable to a situation in which the Government are actively and determinedly probing to find out whether United Kingdom membership of the Community is possible. It is indeed doubtful—I will not say more than that—on my advice, that the provision in a Statute of this kind would be consistent in spirit with membership of the Community, the countries of which in many respects operate on industry directly and not through national Governments.
I repeat that we intend to keep both the Corporation and the private sector very closely informed. I hope the noble Lord will accept that, as I feel he will, as a genuine and strong purpose. We intend to keep the Corporation and private sector closely informed on matters concerning our relationship with the European Coal and Steel Community. I hope, in view of the arguments I have ventured to submit to the noble Lord and to the Committee, that this clause will not be pressed.
LORD WINDLESHAM: The noble Earl has given the Committee an outright assurance, which he has repeated more than once, that the purpose of this Amendment will be achieved by the Minister. One of his reasons for resisting it—with respect, it seemed a thin one—was that it would be curious if the private sector, the 10 per cent., had a statutory right to information which the 90 per cent. in public ownership did not have. The Minister has said in another place that it is his intention to propose that, as from vesting day, the Corporation shall become an actual member of the Council of Association, which the Iron and Steel Board is at the moment. So that argument takes care of the position of the National Steel Corporation. However, we have had an assurance from the noble Earl, and I do not wish to press this Amendment this afternoon.
We are making good progress—I think the Government would agree—with the Bill. The question of the relationship between the British Steel Industry after nationalisation and the European Communities—whether it be the Coal and Steel Community separately or E.E.C., E.C.S.C. and EURATOM, does not alter this—is one of fundamental importance. We discussed this yesterday, when I put some detailed points to noble Lords opposite. If the noble Earl the Leader
1022
of the House is willing to give some information now on those points I raised, it might be a good opportunity to hear the Government's considered views on this rather wider issue.
THE EARL OF LONGFORD: I am in the hands of the Committee, and in particular I am in the hands of the noble Lord. If the Committee will there forebear with me, in view of the excellent rate of progress, I will detain them for a few minutes while I try to answer some of the points raised in the general European debate initiated by the noble Lord yesterday and, indeed, on Second Reading. One point we were able to clear up yesterday was that the Bill is not incompatible with the Treaty of Paris. I am sure that on reflection the noble Lord will not regard that as a minor matter; it is one of great importance. It seems, if our negotiations to enter the European Communities are successful, that we shall be able to sign the Treaty of Paris without any inhibitions about this Bill, which will by then be on the Statute Book. Such issues as arise will arise on the practical arrangements made by the Minister and the National Steel Corporation within the framework of the Act and by the High Authority within the framework of the Treaty. These will be matters for negotiation and discussion. It is on that plane that we shall be talking.
I turn now to the three specific questions which the noble Lord put to me yesterday. First, will the Corporation's activities on prices be compatible with Articles 60 and 63 of the Paris Treaty? Of course, if we join the Community the Corporation will be bound by the provisions of the Treaty and their activities will have to be compatible with them. But Articles 60 and 63 are in very general terms and, in particular, refer to enterprises. I think the noble Lord yesterday talked about steel-making units. The definition of an enterprise in Article 30 is such that the Corporation will, in certain circumstances, be itself an enterprise for the purposes of the Treaty. Again, these highly technical matters will be dealt with by negotiation and discussion at the appropriate time.
The noble Lord's second question was, what powers would be retained at the centre and what will be delegated to groups in accordance with the current

1023
interpretaton of the Treaty of Paris? I was asked whether the Corporation and the Minister will be conscious of the needs of Europe here. My noble friend Lord Shackleton explained very fully and clearly the present thinking of the Government and of the Organising Committee in relation to the retention of the functions at the centre and the delegation to groups. We will certainly have the question of Europe in mind in deciding on this division of functions, but I must make it quite clear on behalf of Her Majesty's Government that this will be only one factor, and that while we remain outside the Community the main factor in our decisions will be the efficiency of the British steel industry. In any case, so far as I know, there is nothing in the Treaty of Paris which says in relation to a holding company with a number of subsidiaries, what functions should be performed at the centre and what should be delegated to the subsidiaries.
The noble Lord's third question was: How will the possibility of any Government subsidy to assist payment of compensation debt interest be handled? Will this be compatible with the Treaty? The answer is that we do not intend that there should be a subsidy for payment of the compensation debt interest. We believe the compensation to be paid under the Bill is on the generous side of what is fair and just. Under Clause 19 the Corporation will assume a capital debt which will include the full amount of the compensation. In fixing the terms of this commencing capital debt, the Government will naturally have regard to the cost to the Exchequer. Thus, we do not think the question posed by the noble Lord arises. But, in any case, as the arrangements now being made by the French Government have shown, there is a good deal of flexibility in practice in interpreting these subsidiary rules of the Paris Treaty.
In addition to the three questions, the noble Lord referred to the proposed reorganisation of the German steel industry. May I interject to say that we have been following these proposals very closely, and that an official of the Ministry of
1024
Power has visited Germany for discussions with the German authorities. As the noble Lord said yesterday, it is obvious that I cannot comment in detail on the High Authority's decision, but, of course, there is distinction between a reorganisation which is being carried out in a country already in the Community and by privately-owned steel companies, and the issues which will face the High Authority in assisting the absorption of a steel industry already nationalised in a country which is yet to join the Community. I am afraid that I have read that out rather fast, but at any rate it is on the record, and I hope that the noble Lord will be satisfied that I have at least tried to answer the questions he raised.
3.50 p.m.
LORD WINDLESHAM: I am grateful to the noble Earl for the detailed and speedy answer he has obtained since the questions were put yesterday. As he said in reply, I think, to the first question—these were significant words—if we sign the Treaty of Rome, if we join the European Community, the National Steel Corporation's activities will have to be compatible with the Treaty. The whole point of the Amendment moved yesterday and this Amendment, and to a certain extent this discussion to-day, is that the question of Europe should be kept in mind when the entire British steel industry is being reorganised, so that it is not set up in such a way as would make it extremely difficult and would require very substantial relocation and basic changes if and when Britain joined the Community. I am grateful to the noble Earl for the detailed explanation which he has given us. It is useful to have got it on the record. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD SHACKLETON: It may be for the convenience of the Committee if my noble friend now makes the Statement, and therefore I beg to move that the House be resumed.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

THE "D" NOTICE SYSTEM: COMMITTEE OF INQUIRY
3.52 p.m.
THE EARL OF LONGFORD: My Lords, with permission I should like to repeat a Statement which my right honourable friend the Prime Minister is making in another place. I will use his own words:
"I regret that it was not possible to make this yesterday, the first Parliamentary opportunity for a formal announcement, but, as the House knows, I was in The Hague.
"As honourable Members will be aware, I have appointed a Committee of Privy Councillors, under the chairmanship of Lord Radcliffe, with the following terms of reference:
'To examine the circumstances surrounding the publication of an article in the Daily Express of the 21st of February entitled "Cable Vetting Sensation" in relation to the "D" Notice system; and to consider what improvements, if any, are required in that system in order to maintain it as a voluntary system based on mutual trust and confidence between the Government and Press in the interests alike of the freedom of the Press and of the security of the State'.
"The other members of the Committee will be my right honourable friend the Member for Easington (Mr. Shin-well) and the right honourable and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd), who was nominated by the Leader of the Opposition."
My Lords, that concludes the Prime Minister's Statement.
LORD CARRINGTON: My Lords, I thank the noble Earl the Leader of the House for repeating that Statement. I am sure that all your Lordships will be pleased that the Prime Minister found it possible to accept the suggestion made by Mr. Heath, I think on two occasions, that a Committee of this kind, of three Privy Counsellors, should be set up. In my view, it is a very good thing because there is no doubt that there is uneasiness about the events of the last ten days or so. May I ask the noble Earl the Leader of the House whether the Committee's terms of reference make it possible for them to inquire into whether cable vetting should or should not be the subject to a "D" notice?
THE EARL OF LONGFORD: My Lords, I certainly take it from the terms of reference that that matter must be within the terms.

IRON AND STEEL BILL
3.54 p.m.
House again in Committee.
Clauses 28 and 29 agreed to.
LORD SHACKLETON LORD SHACKLETON moved, after Clause 29, to insert the following new clause:
Right of objection of certain iron and steel producers to trade practices of Corporation and publicly-owned companies appearing to be unfair
"—(1) Subject to subsection (6) below, the three next following subsections shall have effect where an iron and steel producer, being neither one of a description mentioned in subsection (5) below, nor the Corporation nora publicly-owned company, makes to the Minister written complaint about a practice employed by the Corporation or a publicly-owned company in selling iron and steel products, being products of an activity specified neither in paragraph 4 nor in paragraph6 of Schedule 3 to the 1953 Act, and the complaint is expressed to be made on the ground that the practice is unfair to the complainant and specifies the respects in which he considers that it is so unfair.
(2) The Minister shall forthwith after receiving the complaint send a copy thereof to the Corporation and, after such period for consideration of, and comment upon, the complaint by the Corporation as the Minister thinks reasonable has elapsed, shall send to the complainant a statement of the comments, if any, made by the Corporation on the complaint and shall, if he is of opinion that the complaint raises a question of substance and that the complainant has a reasonable case to make in support of the complaint, afford the complainant and the Corporation an opportunity of appearing, either personally or by a representative, before a person appointed by the Minister.
(3) The Minister shall consider the report of the person appointed under the last foregoing subsection and may, if it appears to him that the practice complained of is unfair to the complainant, give to the Corporation such directions as appear to him to be requisite to secure the removal of the grounds on which it is so unfair; and the Minister shall furnish the complainant with a statement to any such directions and the Corporation shall give effect thereto.
(4) Where a complainant avails himself of the right conferred by subsection (2) above to appear before a person appointed by the Minister, the Minister shall furnish the complainant and the Corporation each with a copy of the report of the person so appointed, and a statement of the conclusions reached by the Minister on considering the report.
(5) The description of iron and steel producer referred to in subsection (1) above is an iron and steel producer who carries on business comprising one or more of the activities specified in paragraphs 4 and 6 of Schedule 3 to the 1953 Act, but no other iron and steel activity.
(6) The Minister may by order give either or both of the following directions—

(a) a direction that subsection (1) of this section shall have effect as if the reference to an iron and steel producer of a description mentioned in the last foregoing subsection did not include a reference to an iron and steel producer of a specified description or that that subsection shall have effect as if the first-mentioned reference were omitted;

(b) a direction that that subsection shall have effect as if the reference to products of an activity specified neither in paragraph 4 nor in paragraph 6 of Schedule 3 to the 1953 Act did not include a reference to products of a specified description or that that subsection shall have effect as if the first-mentioned reference were omitted."

The noble Lord said: This clause has been put in to fulfil an undertaking given by my right honourable friend the Minister of Power in another place at Report stage to introduce a provision establishing a formal procedure for complaint by iron and steel producers about alleged unfair trading practices by the Corporation. It provides for iron and steel producers—these are private iron and steel producers—to complain to the Minister where they think that the Corporation or a publicly-owned company is engaging in unfair trading practices in the sale of iron and steel products. If the Minister thinks the complainant has raised a question of substance and has a reasonable case, he can refer the complaint to a person appointed by him who can hear both sides and make a report; and after considering the report the Minister can, if he decides the practice is unfair, give the Corporation such directions as he thinks necessary to remove the grounds on which it is unfair.
Iron and steel producers who produce only castings and forgings cannot make use of this procedure, for reasons which I am sure are obvious to noble Lords opposite. No complaint by anyone can lie in respect of sales by the Corporation or publicly-owned companies of castings or forgings, but the Minister has power under subsection (6) of the new clause to make an order bringing castings and forgings and their producers into the
1028
scope of the new procedure, and by virtue of later Amendments to Clause 44 such an order would be subject to Negative Resolution procedure and it would be possible also for it to be amended or revoked. This relates to later Amendments Nos. 63 and 66.
This new clause gives a right of appeal to the Minister on matters which are normally left to the commercial discretion of a nationalised industry. It is justified only by the very special circumstances of the private sector of the iron and steel industry, which over many products is in competition with the dominant nationalised sector and at the same time largely dependent on it for supplies of semi-finished materials. These special circumstances, as I said, do not apply in the case of castings and forgings where the Corporation will control only 9 per cent. of the United Kingdom output of steel castings; 24 per cent. of the output of iron castings and 45 per cent. of the output of forgings, tyres, wheels and axles. They also do not apply to the diversified activities which will come under the control of the Corporation.
The new clause applies only to unfair trading practices by the Corporation and the publicly-owned companies. This is in accordance with the general principle that those companies which are subsidiaries of the Corporation, but in which there is a minority private shareholding, should be treated as belonging to the private rather than to the nationalised sector. Any departure from this principle could limit the commercial freedom of the companies and thus prejudice the position of the minority shareholders; but I am sure in this context the noble Lord will agree that the matter is not of significance. The new clause demonstrates the desire of the Government to allay the fears of the private sector, even though on this point we believe that they are exaggerated. I hope that its introduction will reinforce the assurances given several times by my right honourable friend the Minister of Power that he will be concerned with the steel industry as a whole and with the legitimate interests of the private as well as of the public sector. I beg to move.
Amendment moved—
After Clause 29, insert the said new clause.—(Lord Shackleton.)
LORD ERROLL OF HALE: I should like to thank the noble Lord for his explanation of this new clause and to say that the Opposition appreciate the careful attention which the Minister has given to the case made by the Opposition in another place, and which has resulted in this clause being tabled in your Lordships' House. The Amendment is good so far as it goes, though I have one criticism to make—that is, that the complaints procedure to be followed is somewhat complicated. Possibly one reason for that is to make sure that only those who have a strong sense of grievance will take the trouble of going through the procedure. It would have been an advantage to have a simpler procedure, because it is unlikely that frivolous complaints will be made.
I cannot see why the complaints procedure should be limited to iron and steel producers in the private sector. The noble Lord made it plain that the Minister could, by order, extend it to casters and forgers, but I would point out that there are many other groups who may be adversely affected by unfair trading practices carried out by groups of wholly-owned companies of the Corporation. I have particularly in mind those companies engaged in the steel construction industry which remain in private hands and which will have to compete against the wholly-owned steel construction groups or subsidiaries of the main companies which are taken over. Here there is certainly every whit as good a case as for the iron and steel companies which still remain in the private sector.
There is another important group in the industry who perhaps do not get into the limelight very much—the steel export merchants, who by their activities help to sell steel products abroad and contribute to our balance of payments. I can well see how an export merchant with a good export business to a particular country may find that the publicly-owned company which has been in the habit of supplying him may get into that market by quoting an uneconomic price, or by other methods whereby it can secure the job for itself. That would be unfair trading practice. It is important that the export merchant should have the same right of appeal (if I may so put it) as the private iron and steel producer. Perhaps these two important matters could be looked at before we come to
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the next stage. Naturally these people would be delighted if the Government were to enable their complaints to be included. May I say, on behalf of the Opposition, that we appreciate the intention and care that the Government have given to the representations made and that we appreciate the tabling of this Amendment, which goes some way towards meeting our case.
LORD MITCHISON: I always try to help the noble Lord, Lord Erroll of Hale. He is sometimes a pathetic and always an attractive figure. I wonder whether he has looked at the reasons the Minister gave for what is now this clause. On January 23, on Report, the Minister set out in some detail what is now in the clause. I cannot see any material omission. My right honourable friend said:
"Leaving aside the actual drafting"—
of the Opposition Amendment he was considering—
"it has emerged from the debate so far that the Amendment is prompted by those iron and steel companies which will remain in the private sector. Here this is a very special situation, which does not arise elsewhere in the nationalised industries, and in which the private sector iron and steel companies will not only be in competition with the dominant public sector, but in general will be dependent on the nationalised sector for supplies of raw materials and semi-finished products. I have said a number of times that I think the Minister of Power of whatever Party in future will find himself as much concerned with the private sector as with the public sector because he will be the sponsoring Minister of the industry."—[OFFICIAL REPORT, Commons, 23/1/67, col. 1149.]
He then said that there were some advantages in the procedure which is now embodied in the clause and went on like this—and I hope that this will show the noble Lord that in this matter the Opposition were pushing an open door:
"I have for a long time recognised that the fears for the future private sector, which I still believe are completely unjustified, are very real. I do not think that a provision of this type poses any problem or imposes any added difficulty upon the Corporation. I think that a provision on these lines should meet the genuine misgivings of the private sector companies."[col. 1150.]
My right honourable friend then promised to put down an Amendment for consideration here. I should not like to feel that the noble Lord was still seriously worried, because this was put in to help him and others. One always wants to help the noble Lord if at all possible,

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and I hope he will say, "Thank you", in the charming manner in which he has already indicated he was going to say it.
LORD SHACKLETON: I am impressed by the thoroughness of my noble friend's research and by the eloquence and clarity with which he reads reports from another place. I had intended to answer in my own words the point made by the noble Lord, but the Minister's words are even more convincing. However, I share my noble friend's slight anxiety that there has been a growing tendency to suspicion, though not quite a persecution complex. An Opposition who believe that the Corporation are going to lend money to their subsidiaries at such a low rate of interest that they will effectively damage the competitive side of the private sector are capable of any flights of fancy, but I assure the noble Lord that we have gone a long way to meet him. I appreciate his expression of thanks. I think it would not be practical to go further into an area where the iron and steel industry do not have a dominant position but are in competition. I think that the Government have done fairly well and that the noble Lord is really quite pleased.
VISCOUNT MASSEREENE AND FERRARD: May I ask the noble Lord whether the person to be appointed by the Minister under subsection (2) is to be a professional man—a chartered accountant, lawyer or solicitor—or is he to be a civil servant or politician? Has the noble Lord any idea what sort of person is to be appointed as referee?
LORD SHACKLETON: I think he is unlikely to be a politician from either House of Parliament. Ministers of all Parties are accustomed to appointing suitable people to fill these posts. I may mention another point which may be of interest to noble Lords opposite. The Minister's action in this matter of choosing a suitable man brings him, and to that extent brings the subject, within the field of the Parliamentary Commissioner, and if maladministration has taken place he can be subject to report.
On Question, Amendment agreed to.
Clause 30 [Conditions of employment, pension rights, etc.]:
On Question, Whether Clause 30 shall stand Part of the Bill?
LORD CITRINE: I should like to make a few brief observations before this clause is passed. Clause 30 seeks to amend the 1949 Act by the insertion of particular words, as shown in subsection (2). That subsection states:
Section 39 of the 1949 Act shall be amended as follows:—
and then it proposes to substitute for paragraph (b) of Section 39(1) of the 1949 Act the following new paragraph (b):
"the promotion and encouragement of measures affecting efficiency, in any respect, in the carrying on by the Corporation and by publicly-owned companies of their activities, and the promotion and encouragement of measures affecting the safety, health and welfare of persons employed by the Corporation and by publicly-owned companies."
Those words are, to a considerable extent, a repetition of language used in other nationalisation Acts. However, there are omissions, which may be unintentional, and may be covered by the words "in any respect", to which I referred. These omissions, as I see them, are that there is no reference to education or to training. Both these questions, so far as my recollection goes, are separately dealt with in certain other of the nationalisation Acts, and I am sure it would be the intention of the Government that they should not be regarded as of less importance in this legislation. Consequently, I wonder whether the noble Lord, Lord Shackleton, might feel that on the Report stage they could be specifically mentioned in this paragraph.
LORD SHACKLETON: Naturally, I listen with the greatest attention to what the noble Lord, Lord Citrine, has to say, because no-one has been more actively and, if I may say so, successfully concerned with this subject. The noble Lord will recall that the Industrial Training Act has been passed, and although I am speaking without prior knowledge, I rather think that the matters which previously fell to a different responsibility are now dealt with under that Act. However, I will certainly consider what the noble Lord has said, and shall be happy to provide what personal assurances he may wish, or take an opportunity to restate the position at a later stage.
LORD CITRINE: I am grateful to the noble Lord.
Clause 30 agreed to.
Clause 31 agreed to.
Clause 32 [Consequential amendment of, and power of the Minister to repeal, section 7(1) of Restrictive Trade Practices Act 1956]:
4.14 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved to add to the clause:
"() the publicly-owned companies shall not be deemed to he inter-connected bodies corporate for purposes of the Restrictive Trade Practices Act 1956."
The noble Lord said: This new subsection concerns the effect of the Restrictive Trade Practices Act on the non iron and steel activities of the Corporation. Its aim is to prevent the National Steel Corporation from evading the provisions of the Restrictive Trade Practices Act, which they might otherwise do by claiming that all their steel consuming companies are inter-connected companies forming a single group. The Restrictive Trade Practices Act prevents collusion between steel consuming companies, for example, in operating any form of price-fixing agreement. The British Constructional Steelwork Association has given an undertaking to the court, on behalf of their members, that they will not so collude.
As there will he several steel consuming companies in the public sector, it would obviously be commercially to the advantage of the Corporation if those companies could escape the restrictions of the Act. This could be done by claiming that these companies—there are nine of them—should be treated as inter-connected companies and part of a single group. The purpose of this Amendment is to nullify any action on these lines by the Corporation and so preserve the status quo. This is a relatively important point, concerning fair trading in the area of non iron and steel activities, particularly the constructional steelwork and bridgework industries, which remains 75 per cent. in private hands and 25 per cent. in public hands. I beg to move.
Amendment moved—
Page 33, line 31, at end insert the said subsection.—(Lord Windlesham.)
LORD SHEPHERD: The noble Lord will be aware that under Section 7(1) of the Restrictive Trade Practices Act 1956, as amended by the Transfer of Functions
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(Iron and Steel) Order 1957, it is provided that in determining whether an agreement to which iron and steel producers are parties is an agreement which is registrable under the Act no account will be taken of any term of the agreement which has been approved by the Iron and Steel Board and by the Minister, and by which the producers agree to acquire raw materials or other iron and steel products exclusively from a person who undertakes their importation or distribution as a common service for the steel industry, or by which such a person agrees to supply the materials or products exclusively to the producers. The provision—and it was a provision introduced by noble Lords opposite when they were in Government—was intended to permit exemption from the 1956 Act of the agreements which form a basis of the central arrangements operated by the British Iron and Steel Federation for the import of raw materials and steel products.
The noble Lord, Lord Windlesham, will be aware that in Clause 2(3) we have extended to the private sector the opportunities to enjoy the common services which were there under the old Iron and Steel Board, and which will continue under the publicly-owned companies. I agree that the Amendment does not in itself affect Section 7(1) of the Restrictive Trade Practices Act, but I am led to believe—and I have had advice on this—that if this Amendment were passed it might affect the operation which has been so successful for the joint service of purchases, not only of iron ore but of bricks and the like. It could well place this particular factor in jeopardy.
I would also say to the noble Lord that what he is seeking is that the public sector should be treated in a different way from the private sector—and we have in this country a large number of companies which are in a dominant position in their trade. Under the 1956 Act there have been excluded agreements as to sale and prices—agreements that is, between the holding company and their subsidiaries. The private sector under the Restrictive Trade Practices Act has been excluded. If the noble Lord wishes, I can give him the section under which this exclusion comes. It is Section 6(8), and it exempts agreements between interconnected bodies corporate, which are

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defined by Section 36(1), as "groups consisting of a body corporate and its subsidiaries".
LORD WINDLESHAM: May I ask the noble Lord whether he is speaking of companies concerned in iron and steel activities or in non-iron and steel activities?
LORD SHEPHERD: In this particular case I am referring to the 1956 Act, which excludes from the obligation to register an agreement between those companies which are inter-connected. Thus the Corporation and the wholly-owned subsidiaries are excluded from having to register agreements. The Government take the view that the Iron and Steel Corporation and its wholly-owned subsidiaries should be treated in this manner. We take the view that we should treat the private and the public sector, as far as the Restrictive Trade Practices Act is concerned, in the same way. But are we in fact treating them the same?
In the private sector these agreements are excluded from the provisions of the Restrictive Trade Practices Act and there is no sense of injury, so far as I know; but clearly in the case of the Corporation and the wholly-owned subsidiaries, whether they are producing iron and steel or are in any other field, if they were acting against the public interest, and certainly if they came to the notice of iron and steel producers in the private sector, there would be opportunities under the new clause that we have just passed. Through that clause inquiries could be made and information laid before the Minister, and he would be bound to act. The same applies in the field of the consumer. Under the clause dealing with the Consumers' Council, if there were complaints as to the activities of the Corporation or the wholly-owned companies, here again the Minister would be bound to act on the report of a Consumers' Council (assuming, of course, that the report was adverse) and he would be answerable to Parliament.
So if these companies act deliberately against the interest of the private sector there are many ways in which this matter can be brought to the attention of the Minister and the Minister will be answerable. I would say to the noble Lord, Lord Windlesham—and he is very fair
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and I am quite sure he would agree—that if we are expecting the Corporation and their publicly-owned companies to operate on a commercial basis we should not put them in any different category from that which we have demanded for the private sector, except with the proviso that, recognising the special position of the public authorities, there should be some opportunity for complaints to be made to Parliament. That opportunity is provided in the Bill, and I suggest to the noble Lord that in many ways his Amendment is unnecessary. But it would be quite wrong to treat this publicly-owned Corporation and their wholly-owned subsidiaries in any way different from the way in which we believe it is right and proper to treat the private sector. I hope that with those words of assurance and explanation the noble Lord will agree to withdraw his Amendment.
LORD WINDLESHAM: I am grateful to the noble Lord, Lord Shepherd, for his explanation. I follow his line of reasoning, but if we examine only the non-iron and steel activities we find there is an unfortunate consequence of the reasoning that he has advanced. Here there will be 9 companies, totalling about 25 per cent. of the constructional steelwork industry, which will come into public ownership—such as Dorman Long, and so on. The remaining companies in that industry are under an instruction from the Restrictive Practices Court not to collude on prices. What the noble Lord has said is: "Oh yes, but the subsidiaries of the N.S.C. must be in the same position as if they were all in private ownership and had been bought by I.C.I. for example." Therefore what he means is that these nine companies can be regarded as inter-connected companies. Although in the area of iron and steel activities I think the argument might be reasonable, in the area I have mentioned it is an unfortunate situation, particularly if we are to exempt from the due processes of law 25 per cent. of the total number of companies operating in the constructional field—
LORD SHEPHERD: May I intervene before the noble Lord sits down? I have really been speaking to the Amendment and opposing its inclusion in the Bill. I recognise the force of the argument, and if the noble Lord, Lord Erroll of Hale, remembers, we had something of a similar

1037
debate yesterday and I indicated that what he was then discussing, and in some respects what the noble Lord, Lord Windlesham, is now discussing, falls within the Amendment in the name of the noble Lord, Lord Erroll of Hale, of what we call "arm's length trading", and I indicated then that I might have some useful noises to make. I think the general fear expressed by the noble Lord, Lord Windlesham, may be set at rest when we come to Amendment No. 62. The line I have taken is merely in regard to the inclusion of this specific Amendment in the Bill.
LORD WINDLESHAM: With those encouraging words I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 32 agreed to.
Clauses 33 to 36 agreed to.
4.27 p.m.
LORD SHACKLETON LORD SHACKLETON moved, after Clause 36, to insert the following new clause:
Power of Minister to change the Corporation's name
".The Minister may by order change the name of the authority established by section 1(1) of this Act, and an order under this section may make such provision as appears to the Minister to be requisite or expedient in consequence of the change of name effected thereby, including (without prejudice to the generality of the foregoing words) provision for amending enactments (whether contained in this or in any other Act)."
The noble Lord said: This Amendment relates to the name of the Corporation. In another place an Amendment was moved on Report stage to empower the Minister to change the name of the Corporation by Order, and the Parliamentary Secretary to the Ministry of Power said that the Government regarded the Amendment as being acceptable in principle and gave an undertaking to introduce, or to ensure there was introduced, in your Lordships' House a Government Amendment to achieve this intention. The new clause gives effect to that undertaking. May we also consider briefly at the same time Amendment No. 64, which provides that any Order changing the name of the Corporation will be subject to the full Affirmative Resolution procedure.
We think the initiative of the Opposition in suggesting this is useful. Indeed, as was pointed out by the Parliamentary
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Secretary in another place, there is much to be said for using the word "British" in the title of the Corporation, but the obvious alternative, and the ones now in front of us—the British Steel Corporation and the British Iron and Steel Corporation—are already pre-empted by subsidiaries of the British Iron and Steel Federation. This difficulty should disappear when the Federation's central trading services which are now run by these subsidiaries are, after nationalisation, transferred, as we hope they will be by agreement, to the Corporation. Clearly, it would be premature to "jump the gun" in this matter, but if this does take place in due course the way will then be open to give the Corporation one of these names, and the Amendment would permit this without having an amending Bill.
As your Lordships know, there is a large American company called the National Steel Corporation, and although the Government do not expect any difficulties to arise because this company has the same name as our new Corporation, they are, of course, quite ready to take the necessary steps to avoid any danger of confusion. If, contrary to expectations, difficulties should arise, the name of our Corporation could then be changed as a result of this Amendment. I beg to move.
Amendment moved—
After Clause 36, insert the said new clause.—(Lord Shackleton.)
LORD WINDLESHAM: As the noble Lord, Lord Shackleton, has said this matter was raised in another place on the initiative of the Opposition because of the possible confusion that might arise with the American National Steel Corporation. I appreciate that the Government cannot tell us at this stage whether there is any intention to make use of the two names at present held by the British Iron and Steel Federation, that is the British Iron and Steel Corporation and the British Steel Corporation, both of which have the advantage of including the adjective "British" within the name of the Corporation itself. However, the whole question of the names under which the component parts of the steel industry after nationalisation are to trade comes up in the next Amendment, No. 54, to be moved by my noble friend, Lord Erroll

1039
of Hale. Therefore I would just say on this Amendment that it has our support and we are grateful to the Government for following up the initiative taken by the Opposition in another place.
On Question, Amendment agreed to.
4.32 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved, after Clause 36, to insert the following new clause:
Duty of Minister and Corporation relating to names and trademarks of publicly-owned companies
".It shall be the duty of the Minister, in giving any general authority to the Corporation under this Act or any direction of a general character to the Corporation under section 4 of the 1949 Act as revived by this Act and in approving any general programme settled by the Corporation under the said section 4 of the 1949 Act and of the Corporation, in formulating any recommendations to the Minister relating to the activities that have fallen to be carried on under their ultimate control (whether by conclusions reported to the Minister under section 4 of this Act or in settling any general programme under the said section 4 of the 1949 Act or otherwise) and in carrying on those activities, to have regard to the need to preserve the goodwill attached to the names and trademarks of the companies specified in Schedule 1 to this Act and of other publicly-owned companies."
The noble Lord said: This Amendment deals with the question of names and trade marks of publicly-owned companies, and the purpose of the Amendment is to place a duty on the Minister to give a general direction or authority to the Corporation in order to approve of certain names being maintained. This clause lays the onus on the Minister to give directions or a general authority to the Corporation to have regard to the need to preserve the good will attached to the names and trade marks of the companies specified in Schedule I, the companies which are going to be taken over.
The retention of company names and particularly of their trade marks is particularly important in obtaining export orders. Overseas buyers want to know that the quality of a well-known product is being maintained; the trade mark ensures this. They also want to know they can immediately get in touch with the company concerned in case of difficulties, and to be sure that the personal relationship built up over a period of time is not lost. This is achieved in ordinary commercial practice
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by the well known company names being known and of considerable repute, and reinforced in many cases by their trade marks of world-wide reputation, which are in themselves a guarantee of maintenance of quality and the standard of the product.
We on this side are very anxious that this valuable asset, particularly in export markets, is not going to be lost by the enthusiasm of the Corporation for reorganising and perhaps bringing together a number of large and well-establishd companies which would thereby lose their identity. Company names like Dorman Long and Stewarts and Lloyds are well known and respected internationally, whereas new ones such as "North-east A" or "Glasgow B", the sort of names commonly given to power stations or other groupings, would have very little meaning for buyers overseas.
While it may be pointed out that there are going to be certain new groupings, there is no need for the old names to be lost sight of. The proposed grouping of Dorman Long, Stewarts and Lloyds and South Durham, intend to trade under their existing names and continue to use their own trade marks. This is a practice constantly employed in private industry when companies continue to trade in their own names even after takeover by larger groups. The purpose of this Amendment is to ensure that the practice continues with the National Steel Corporation, and that we shall not needlessly throw away a valuable asset in export markets. I beg to move.
Amendment moved—
After Clause 36, insert the said new clause.—(Lord Erroll of Hale.)
LORD WOLVERTON: I beg to support this Amendment, and I am very glad that my noble friend Lord Erroll of Hale has moved it. We on this side attach tremendous importance to this Amendment. I do not want to go over the ground he has so ably covered. On Second Reading, the noble Lord, Lord Clydesmuir, who has very much more experience than I have and is a director of Colville's—I am very sorry he is not here to-day to support us—said this:
"I would also express the strong hope that it will be possible for company names to be retained under the new State ownership.
SEVERAL NOBLE LORDS: Hear, hear!"—
[OFFICIAL REPORT, 13/2/67, col. 61]

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I referred to it also, and said how important I thought it was to try to keep the names and trade marks of these great steel companies, these 14 companies to be taken over under Schedule 1 into public ownership.
I earnestly hope Her Majesty's Government will see fit to accept that it shall be the duty of the Minister to consider this and give general authority to the Corporation to have regard to the need to preserve the good will attached to the names and trade marks. All over the world these great companies are known. It is most important for us in future years to keep these markets for export. I am sure that Her Majesty's Government would be well advised to try to keep at at any rate some, if not all, of the great names in their proposed regrouping under the rationalisation programme. I earnestly hope that Her Majesty's Government and the whole Committee will give this Amendment very serious consideration, because we think it is of great importance. It does not cut across Party lines at all; it is keeping the names for the benefit of this country.
THE MARQUESS OF ABERDEEN AND TEMAIR: I would take this opportunity to support what has been said. I quite briefly referred yesterday to the fact that I myself for many years had very direct experience of what the name of a great firm meant. Travelling abroad on the sales side, one found that the name of a firm which had progressed and was responsible for new inventions, and so on, met with a very great welcome, particularly by overseas buyers. They took it almost as a privilege to be allowed to be in contact with a firm whose excellence was known throughout the world, and they wanted only one name. I am speaking from experience of a company which is not on the scheduled list, but the same thing occurs whether the company concerned is very large or is comparatively small but with certain specialities which cannot be obtained from anybody else. That will be the same position with the scheduled companies; all of them are so well known, and are great names which are known throughout the world.
On Second Reading I referred to the fact that Mr. Khrushchev, the head of the Soviet Government at that time, made a special point, with regard to an exhibi-
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tion, of saying how he knew what had been done by the various companies and why they took pride in their names, and he referred to the very important effect of keeping these names alive.
LORD MITCHISON: I think one has to be properly careful about old names in this place, and I see the point of what is proposed in this Amendment. It is, no doubt, quite true that in many places, many fields, some of the names of these companies have a real value. I do not think anyone would dispute that. But I really rise to say two things. The first is this. These companies are now, to put the matter rather inaccurately, selling themselves, and it is necessary to puff themselves up a bit for the purpose. I am most anxious, in the best interests of the iron and steel industry and of this country, that we should not have an exaggerated idea of its success at the moment, or of the value of particular names in it. I do not deny that the value exists. I am not going to repeat what I said yesterday, but when we have a considerable and increasing volume of iron and steel imports into this industrial country, and at the same time a real shortage in use of capacity, it cannot be the case that everywhere these names carry all the significance that one is tempted to attach to them. I think it would be a great pity if this public corporation, acting on behalf of the public, were to start with the impression raised in the public mind that iron and steel, latterly under private enterprise, had been singularly successful. The facts are not in support of that; nor is it the case that its prospects at the moment are particularly bright.
The next question, it seems to me, is this. Obviously, there is a real commercial value, in some cases at any rate, in keeping these names, and I appreciate that when Dorman Long and Stewarts and Lloyds, in some form or another, come together, they desire to keep their respective names. If it means that they are making exactly the same thing in exactly the same way, that is simple enough. If it is anything else, one wonders a little what, in detail, is going to happen. That is an interesting inquiry, but perhaps we will not go into it to-day. But what I think is clear is that one must trust the National Steel Corporation, upon whom, after all, we are putting a

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grave responsibility of management, to do what is sensible and wise in this matter, and to conserve this asset, for what it is worth, just as they would conserve any other asset.
I should have thought that what was being recommended here, in the form recommended in the Amendment, was an injunction which was somewhat unnecessary and inappropriate. It is not quite what the noble Lord who moved the Amendment said it was. He made it clear that it was an injunction to them to keep these names in all cases and at all costs, or something like it. In fact, it is simply an injunction to "have regard to" them. That, I should have thought, the Minister, the Corporation themselves, and those who are engaged in running these respective companies—it would be an important part of the picture—are certain to do, and must be trusted to do. With great respect, I do not think that it is a good plan, when one is putting responsible and skilled people to do a technical public job of some considerable seriousness, the results of which are going to be most important for the country at large, to tell them that a point of this sort is something they must "have regard to". If I may proceed from iron and steel to farming, I would say that it is like "telling your grandmother to suck an egg".
LORD HAWKE: I am not quite sure whether the noble Lord, Lord Mitchison, is replying for the Government on this Amendment or not. I think when he gets to—
LORD MITCHISON: May I assure the noble Lord that I never speak for the Government nowadays? I was "sacked" some time ago for being too old, and, as I explained at that time, that is a difficulty one cannot overcome. So the noble Lord can take it as quite certain that not only am I not speaking for the Government now, but on no occasion on which he hears me shall I ever again be speaking for this Government, or any Government.
LORD HAWKE: We shall anticipate with great interest the speech that is going to be made for the Government, in the hope that it will be somewhat more favourable to the Amendment than the speech of the Government scrum-half,
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the noble Lord, Lord Mitchison, who, incidentally, so far as I can make out, has not got the ball back to any of his three-quarters for the whole of this Session. When he strays into the field of engineering then, quite frankly, I do not think he knows quite so much about it as he does about the law. I think he grossly underestimates the strong call, or pull shall we say, which the names of the great producers of this country have upon overseas engineers all over the world. In many cases it is the engineer in charge of a particular enterprise or job who ultimately indicates where the material will be bought. If he has been in the habit of getting satisfaction from Stewarts and Lloyds, he will say that he wants Stewarts and Lloyds stuff again. When it comes to contracts for bridging. I am perfectly certain that a contract put in in the name of Dorman Long is going to have a much better chance of success than one put in in the name of the National Steel Corporation, or what-have-you. Of course, the new clause is not mandatory: it merely tells the Minister "to have regard to". I am sure that that is not a bad thing.
But there are two other factors which have not been mentioned here so far. First of all, there is the allegiance of the workpeople in these steelworks. Many of them have worked there for many years, and they like to see the name of the old firm going on. They have a great loyalty and allegiance to it. Then at times there is the question of convenience. There is no producer of anything in the world who does not occasionally make a mess of an order. If any one of these producers happens to make a mess of an order the National Steel Corporation can at all events offer an alternative named product next time, otherwise the customer will certainly go to a foreign country. I should have thought that this was a good clause, and one that might be put in the Bill.
4.48 p.m.
LORD POPPLEWELL: One appreciates the desire of the Opposition in trying to keep alive these old names. Having some experience of working in industry from time to time, one knows the value of a particular name. One appreciates much more the desire of those who are concerned in an industry of which we are naturally proud to keep their name. But

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one must appreciate also how extremely difficult it would be to achieve this. We visualise much more specialisation taking place within the iron and steel industry. It may be that we shall have some sections of Dorman Long, Consett, and Stewarts and Lloyds all working for better efficiency in a group. If so, how is a trade name to be tied to that particular product? It is a natural conclusion that if the Minister accepts this Amendment he will be in great difficulty.
From another point of view, I think it will not be possible to represent exactly the desire of the Opposition. I think it is much better to leave the matter as it was, to the Corporation themselves. As they devolve their operations they have a certain latitude so far as trade marks and changes of name are concerned. Therefore, I think that, having regard to the difficulties which would be involved and the danger of misrepresentation as the undertaking gets into its full swing on the specialised type of product, it would be extremely dangerous to follow what is proposed in this Amendment. It is much better that it should be left in the hands of the Ministry and of the Corporation.
LORD WINTERBOTTOM: My noble friends on this side of the House have every sympathy with the intentions lying behind the new clause introduced by the noble Lord, Lord Erroll of Hale, but I, for one, find it very difficult to understand why it has been thought necessary to propose such a clause. After all, I would say that the industry will for some years continue to be run by the able men who are at the head of the great units listed in Schedule I. It will hardly be necessary to impose on the Minister the duty
"to have regard to the need to preserve the goodwill attached to the names and trademarks of the companies specified…"
because I think that the men in charge of those companies will demand it. While they are responsible for running these companies they will want to use every asset which they possess.
But, as my noble friend Lord Popplewell has pointed out, the general structure of the industry will change, and in due course new formations or units may be created, new groupings may take place, which the National Steel Corporation may
1046
wish to publicise in their own right under their own trade names. As a matter of commercial judgment, the Corporation may decide that a new trade name may have greater value than one of the older ones. Since, in my opinion, the clause does not add anything to the powers of the Corporation and does not help the existing companies in any way beyond their own natural self-interest and determination to do the best with what they have, I cannot understand why it is necessary to put this particular clause on the Statute Book. We are in full agreement that the goodwill which exists must be preserved. I cannot conceive of the new Corporation trying to destroy it. Therefore, I cannot see the necessity for a new clause of this type.
LORD ERROLL OF HALE: I find the noble Lord's answer very disappointing. If he was sincere about the importance of retaining the names and the trademarks, I should have thought he would gladly meet the Opposition's request that this should be enshrined in the Bill, which is the best place for it. I fear the worst, because in the case of one famous name, Stewarts and Lloyds, when the chairman of that company a few weeks ago said that he hoped Stewarts and Lloyds would rise phoenix-like from the ashes, he got a very sharp rap over the knuckles from a number of Labour politicians, if not from the Government themselves. There is no guarantee at all at the moment that these well-known names will be retained. Indeed, it is very much in the thinking of large nationalised corporations to reduce everything to districts and numbers. I think it is quite on the cards that the famous steel works in South Wales will be known as "South Wales A" and "South Wales B", and other steel works grouped together by some generic title; and it will take many years before their real merits will become known by their new titles.
Or it may be that this forward-looking, energetic, capable National Steel Corporation will try to emulate the examples of Central and Eastern Europe where it is fashionable to call the steel complexes after the names of leading politicians. Dorman Long will no longer be known as Dorman Long, but as the "Harold Wilson Friendship Works". And, in view of Lord Mitchison's interest in the

1047
Bill and his many, and at times somewhat long-winded, contributions to it, it is quite clear that Stewarts and Lloyds will be known in future as the "Mitchison Steel Works". There are many opportunities for making changes. We want to ensure that these changes will not be made. This particular Amendment has aroused widespread interest in all parts of the Committee and I hope that I can count on noble Lords to support it with such degree of severity as may be necessary.
LORD SHACKLETON: I must say that I find it almost inconceivable that the noble Lord is going to divide on this Amendment. He has given us a bit of fun, but it would appear that the other side are choosing the Amendments which are almost the most futile. They have put down some rather good Amendments which could be argued about seriously. There is no difference between us as to the desirability of preserving goodwill, we leave this to the Corporation. I should certainly be sorry to see the name of Dorman Long changed even to the "Erroll Lighthearted Works" or whatever it may be, if only because my great uncle was the founder of Dorman Long—a confession, I admit. But anyone with experience of trading and business seeks to preserve the goodwill that goes with names. As mergers take place those concerned have to consider whether the name can be preserved as a nominal company name. I cannot believe that the noble Lord is going to divide on this Amendment, after the rather dangerous experience he had on the last Division. It may be he has been busy and has been counting up and thinks that his majority may go up a little above the four he had on the last occasion. But if he really wants to play games of this sort and it is good for the morale of the Opposition, who are we to prevent him?
On Question, Amendment negatived.
Clause 37 agreed to.
Clauses 38 to 40 agreed to.
Clause 41:
Restriction of disclosure of information obtained under Iron and Steel Acts.
41.—(1) No information obtained under this Act, the 1953 Act or the 1949 Act shall be disclosed except—
1048

(c) for the purpose of enabling the Corporation or the Minister to discharge their or his functions under this Act or the provisions of the 1949 Act thereby revived or of enabling the Iron and Steel Board to discharge their functions under the 1953 Act or this Act; or

4.57 p.m.
LORD WINDLESHAMmoved, in subsection (1)(c), to leave out "the Corporation or". The noble Lord said: With the leave of the Committee, in moving Amendment No. 58 I should like to speak also to Amendments Nos. 59 and 60. Under the Bill, as it is at present drawn, no information obtained under this Act or the 1949 Act, or the 1953 Act, shall be disclosed unless certain conditions are met. These are that the information has to carry the consent of the person by whom it was furnished; or to be in the form of a summary so as not to enable particulars relating to the business of individual persons to be ascertained; or for the purpose of enabling the Corporation or the Minister to discharge their functions under this Act; or of enabling the Iron and Steel Board to discharge their functions until it is dissolved; or, finally, with a view to the institution of legal proceedings.
These provisions, so far as I can see, are not cumulative. It is therefore possible for information to be disclosed if it satisfies only one of these criteria. Information could be disclosed for the purpose, for example, of enabling the Corporation or the Minister to discharge their functions under the Act, but without the consent of the person from whom the information was obtained, or without its being in the form of a summary. The Amendment seeks to make it obligatory in the case of subsection (1)(c) that no information should be disclosed to the Corporation in order to enable it to discharge its functions unless it is with the consent of the person by whom it was furnished, or unless it is in the form of a summary.
In the debate in Standing Committee D in another place on December 14 last, the then Parliamentary Secretary, Dr. Bray, said in column 2329:
"I certainly give a categorical and unqualified assurance that no commercially valuable information obtained under Clause 34(2)"

1049
(as it was in the House of Commons; it is now Clause 39(2) in the Bill before us)
"…about individual companies will be disclosed to the Corporation, even when it is necessary to enable the Corporation to discharge its function."
On general information not concerned with forecasts, this provision which the Amendment seeks to put into the Bill seems necessary. It would make it impossible for any information under Clause 41 to be given to the Corporation about a private sector company, unless some safeguards are obtained. The Corporation already have considerable powers to obtain the information they need. Clause 39(3) and (4), Schedule 2, paragraph 4, sub-paragraphs (2) and (3), and the revived parts of the 1949 Act, Section 22(3), 23(1)(b) and 25(2), all give the Corporation power to elicit information.
I submit that if the Corporation are really to act commercially they should be in the position of other commercial companies—some of which, it may be added, will be the Corporation's competitors—and although it is recognised that the duties imposed upon the Corporation by the Bill require them to receive certain preferential treatment, this should be restricted to the summaries. Obviously summaries are not nearly so dangerous from a commercial point of view, because they can be prepared in such a way as not to disclose individual items of confidential information. But where this is not feasible the permission of the informant should be obtained. In many cases, no doubt, it will already have been obtained.
As I say, these provisions of the Bill, as it is drawn at the moment, are not cumulative. So far as I can make out, if you satisfy one you are all right under the Bill. There are about six alternatives, and any one of them will do. It is for this reason that we have tabled this Amendment. The disclosure of commercially valuable information is a matter, as I think noble Lords opposite will agree, of legitimate concern to the private sector. There are problems which arise from the special position of the Minister who has responsibility for the whole industry, which is divided up into the National Steel Corporation and the private sector, and we feel that the private
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sector has here a point of understandable concern on which we should like to hear the Government's reply. I beg to move.
Amendment moved—
Page 37, line 23, leave out ("the Corporation or").—(Lord Windlesham.)
5.4 p.m.
LORD WINTERBOTTOM: Noble Lords opposite have very properly set out to make certain that the private sector is treated justly and correctly by the very large public sector which it is proposed shall be created. But I hope that I shall be able to show that there is no need for an Amendment to the Bill in order to provide the private sector with the special protection which I presume these Amendments are intended to provide. I understand from the technical experts that this particular group of Amendments is an example of skilled drafting. Somewhere the noble Lord must have available to him Parliamentary draftsmen who are denied to us.
LORD WINDLESHAM: I should hope that the Bill was drafted by skilled Parliamentary draftsmen, since it is to nationalise an enormous industry for some years in the future.
LORD WINTERBOTTOM: It is the noble Lord's drafting to which I was referring, unless he has his own draftsmen. I was trying to pay him a gracious compliment. It is considered by experts that this is a skilful Amendment. It recognises that the Minister's powers to collect information under Clause 39(1), which is what we are discussing, are intended to be used to support the vesting, compensation and safeguarding provisions of the Bill, but that the enforcement of some of the safeguarding provisions rests in part with the Corporation to whom information collected under Clause 39(1) might therefore have to be made available. The Amendment gets over this difficulty by allowing the Minister to make available to the Corporation information which relates to matters that took place before the vesting date; for it is, of course, only in the case of these matters that the question of applying the safeguarding provision might arise. The noble Lord is to be congratulated on spotting this point, and on spotting also an even subtler point: that it is conceivable that in certain cases the vesting

1051
of a company might, under the Bill, take place not on the general vesting date but on a subsequent date of transfer. This might create special difficulties.
It follows from all this, however, that the Amendment is effective not in relation to Clause 39(1), the powers under which in any case cease to have effect one year after vesting date, but only in relation to the powers created by Clause 39(2). That subsection empowers the Minister to obtain from the private sector iron and steel companies' forecasts of their future production and capacity to produce iron and steel products. And I submit that in relation to Clause 39(2) the Amendment goes too far. It would prevent the disclosure to the Corporation of information about the plans of individual companies even when that disclosure could do no conceivable commercial damage to the company concerned. This might not only impede the Corporation in the performance of their duties and in making their own plans; it might also inhibit the Minister—for example, in discussing with the Corporation the programme of capital development which they will be required to submit to him under Section 4 of the 1949 Act revived.
These are important matters, and I am certain that noble Lords opposite, in their proper determination to protect the private sector of the industry, would not hamstring the Minister or the Corporation in this way. We are all sensitive to the rights of the private individual and the private sector, and the noble Lord, Lord Windlesham, quoted a statement by the then Parliamentary Secretary to the Ministry of Power in another place. All I think I can do for the noble Lord is to repeat that assurance without qualification, and on that basis I hope that these three Amendments will be withdrawn. As we have already said on earlier occasions during the progress of this Bill, Ministers will always be open to questioning if the powers are abused here.
LORD WINDLESHAM: The noble Lord who has replied for the Government has given, in the first part of his reply, a complex answer concerned mostly with drafting considerations. I should have hoped that if he saw no harm in this Amendment, and the other two which go with it, he would have been able to
1052
accept them, particularly in view of the compliments which he paid to the drafting of our Amendments. None the less, we must study carefully what he said in the first part of his reply when it is printed in Hansard, so that we can, if necessary, come back again at the next stage. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 41 shall stand part of the Bill?
LORD MITCHISON: I am sorry I intervened unduly or at the wrong moment.
LORD SHEPHERD: Unduly, yes.
LORD MITCHISON: All I want to ask the Government to consider—because they are obviously going to look at this again—is this. Is there here supposed to be a direct liability on the Corporation itself as "a person"? There is a penalty provided at the end, and that penalty, whether on indictment or not, takes the alternative form of either imprisonment or a fine. There are obvious difficulties in imprisoning any Corporation, public or private, and I think it ought to be considered whether something or other should not be put in to make it clear what the intention of the Government is in regard to the Corporation itself.
LORD WINTERBOTTOM: All I can do is to assure my noble friend that attention will be given to this point. If I can give him an answer at a later date, I will.
LORD MITCHISON: I thank my noble friend.
Clause 41 agreed to.
Clauses 42 and 43 agreed to.
5.11 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved, after Clause 43, to insert the following new clause:
Review of uneconomic activities
".—(1) If it appears from the reports prepared under section 25 of this Act that over a period of five consecutive years any principal activity (other than an iron and steel activity) carried on under the ultimate control of the Corporation has been carried on at a loss or without making a profit in each of such five years, it shall he the duty of the Corporation forthwith to undertake a review of such activity

1053
for the purpose of determining whether such activity should continue to be carried on and to report their conclusions to the Minister.
(2) The Minister shall lay before each House of Parliament a copy of any report prepared under subsection (1) above, together with his observations thereon, unless it appears to him that to so do would be harmful to the competitive position of the said activity in the United Kingdom or elsewhere; in which case a statement to this effect shall be laid before each House of Parliament."
The noble Lord said: I beg to move Amendment No. 61. The purpose of this Amendment is simply to provide for a review to be made of any non-iron and steel activity which persistently makes a loss. I should like to submit to your Lordships that non-iron and steel activities will probably be subject to less public scrutiny than iron and steel-making itself. Since, under Clause 2 of the Bill, the Corporation is empowered to diversify into almost any field of activity, I submit that it is of the utmost concern to the private sector that unfair competition from nationalised activities which consistently make losses should be prevented. This Amendment enables a review of uneconomic activities to be carried out, and would thus bring out into the open any such situation. I hope the Government will be able to accept this Amendment, which I beg to move.
Amendment moved—
After Clause 43, insert the said new clause.—(Lord Erroll of Hale.)
LORD SHEPHERD: Last evening we were discussing Clause 16, which deals with the financial duties of the Corporation, and I think the noble Lord, Lord Windlesham, will agree with me that we were in full agreement that the Corporation and the public companies which come within the Corporation should not only be run as commercial undertakings but certainly balance their accounts one year with another, the aim being within the first five years. The noble Lord, Lord Erroll of Hale, is now seeking a special review of any of the uneconomic activities that may come within the Corporation's responsibility. I should like to suggest to the noble Lord that, while we are with him to the full as to the intentions behind it, his Amendment is really unnecessary.
It is the Government's view that no additional sanction is required. The Corportion are already subject, under the Bill
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to the unique discipline of having to publish in their Annual Report a statement of turnover, profit and loss, and capital employed in respect of practically every one of its separate activities. There will therefore be full disclosure of any unprofitable activities, with all the possibilities for pressures upon the Minister of Power and the Corporation, both inside and outside Parliament, that such publicity creates. Under the revived subsection (4) of Section 4 of the 1949 Act (as it is amended by this Bill) the Minister already has power to direct the Corporation and any publicly-owned company to discontinue or restrict any of their non-iron and steel activities; or to dispose of the whole or part of their assets employed in such activities; or, in the case of a publicly-owned company, to wind up the company if it is considered necessary. If, therefore, the Corporation decide to keep an unprofitable activity going and the Minister does not challenge it, Parliament, with all the procedures about which we know, and particularly the Committee on Nationalised Industries, would have full opportunity of bringing pressure to bear on the Minister and, through the Minister, on the Corporation.
I do not believe there is any danger that loss-making activities by the Corporation would go unnoticed, either by Parliament or by the Minister, or by the Corporation itself. Nor is there any danger that the Corporation or the Minister will be disposed to allow loss-making activities to continue without good reason. There may be occasions when it is right and proper that it should be done in the interest of the country. I hope that the noble Lord will accept the view that there are clear duties laid upon the Corporation and upon the Minister to review the activities of the Corporation and of the publicly-owned companies; and the fact, too, that Parliament itself, through its Committees, has the means of seeking information and bringing pressure to bear upon the Minister.
I would say to the noble Lord, Lord Erroll of Hale, that I agree with the purpose of this Amendment. I believe that we should seek to reduce the unprofitable activities of the Corporation and the publicly-owned companies, particularly if they do not contribute to the well being of the Corporation through means other than financial, or to the nation. But I believe

1055
the power to do this exists in the Bill; and, although I agree with the noble Lord, Lord Erroll of Hale, as to the purpose of the Amendment, I would not recommend the Committee to accept the inclusion of this new clause into the Bill. I would hope that, with those words, the noble Lord will kindly agree to withdraw his Amendment.
LORD ERROLL OF HALE: I think I will agree to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.18 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved, after Clause 43, to insert the following new clause:
Arm's length trading
".—(1) In the event of the Corporation or any publicly-owned company or any subsidiary thereof or any company in which the Corporation has acquired or holds any interest or any company in respect of which the Minister or Corporation has given directions or exercised control pursuant to the powers given by this Act entering into contracts or legal relationships of any kind with public statutory bodies or government departments whether for the purposes of production, sale, purchase or research or any activity or class of business whether concerned with iron and steel or otherwise, each and every party thereto shall conduct itself upon the assumption that the relationship which exists between them is solely that of offer or and offeree and so that neither party shall gain any advantage from the fact that each party is a public body in any matter relating to the transfer, exchange, purchase or sale of equipment or raw materials or of any matters relating to production or the management of their respective concerns.
(2) Insofar as the Corporation enters into such relationships as are mentioned in the above subsection with the companies under its control or in which it holds an interest the parties thereto shall conduct themselves upon the same principles as stated in the above subsection but so that any saving or economy which arises solely by virtue of the common administration and financial control inherent in the administrative structure of the Corporation pursuant to this Act shall be permissible insofar as such saving or economy is in the public interest."
The noble Lord said: I have to inflict on your Lordships yet another Amendment, but I hope that this time the Government will be able to accept it. It is Amendment No. 62, which deals with the vexed problem of what one can only describe as arm's length trading. It is a matter to which the private sector attaches very great importance. It is,
1056
indeed, of central importance for fair competition between the private sector and the nationalised industry that the nationalised industry should neither obtain craven advantage by reason of its relationship to other corporations nor subsidise any of its own activities by what I can only describe as non-arm's length trading transactions.
This matter has been debated in another place, where the submissions by the Opposition were rejected. However, the Minister gave an assurance that it was his intention that the Corporation should normally trade on a commercial basis. While assurances are, of course, always welcome, it is very much better to see them translated into something more concrete; namely, a clause in the Bill. This is what we have attempted to do, and I hope the Government will be able to accept this Amendment, which I beg to move.
Amendment moved—
After Clause 43, insert the said new clause.—(Lord Erroll of Hale.)
LORD SHEPHERD: I have referred to this particular Amendment on two occasions in the course of this Committee stage. This new clause is very similar to one that was recommended to the Minister by the Confederation of British Industry, and it is designed to ensure, as the noble Lord, Lord Erroll of Hale, has said, that trading is conducted on an arm's length basis between, first, on the one hand, the Corporation, the publicly-owned companies and other companies under the control of the Corporation, and, on the other hand, Government Departments and other public corporations and statutory bodies; and, secondly, different sectors and companies under the control of the Corporation.
Under the second part there is a provision which permits any savings to be realised which arise solely by virtue of the common administration and financial control inherent in the administrative structure of the Corporation. On the first point, I would repeat what the Parliamentary Secretary to the Ministry of Power said in another place. Trading between the nationalised steel industry and other public bodies will normally be at arm's length, and any departure from this might well be contrary to Clause 3 which seeks to avoid undue preference

1057
or unfair discrimination between customers.
The Parliamentary Secretary also said in another place that there is much to be said for the view that the diversified activities of the nationalised steel industry should be organised into separate concerns from the iron and steel interests and that trading between these concerns and between them and the Corporation should normally be on an arm's length basis. The Minister has already brought the point about organisation into separate concerns to the notice of the Organising Committee, and he will have the advantages both of this possibility and of arm's length trading very much in mind when the time comes for him to take decisions on the Corporation's report on organisation submitted under Clause 4 of the Bill.
To try and deal with this subject by provisions on the lines of the new clause would however be contrary to the general principle of not trying to lay down the Corporation's organisation in detail in statutory provisions and would introduce an element of rigidity which could have disadvantages. A number of major steel companies including those with large diversified interests, such as Dorman Long, Lancashire Steel and United Steel, have organised their diversified activities into separate companies. Others, like Consett and South Durham, have kept them in the steel producing company. Moreover, even where there are separate companies some trade at arm's length from the rest of the group to which they belong and others do not. It will be necessary when the time comes to take decisions on the organisation of the nationalised industry to weigh the undoubted advantages of separation against these practical disadvantages.
Moreover, there may be circumstances in which it would be in the national interest for trading between different sectors of the Corporation's business to take place other than on an arm's length basis. For example, in order to promote exports the Corporation might wish to supply steel to steel-using companies under their control at prices which while being justifiable on economic grounds are below those normally charged—a practice which is already followed by at least one group controlling both steel-producing and steel-using companies. It would not be
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possible in a statutory provision to cover all the circumstances in which it would not be in the national interest to insist on trading on an arm's length basis.
The new clause—and I do not criticise it on these grounds—also contains technical defects. First, it would apply not only to the Corporation and publicly-owned companies but also to partly-owned companies under the control of the Corporation. It would be wrong in principle and might prejudice the position of minority shareholders to apply to these latter companies provisions which go beyond the general companies legislation. For example, the minority shareholders in a partially-owned subsidiary of one of the scheduled companies which has been supplying steel products to it at reduced prices, could suffer substantially by the operation of the new clause. Second, it might be very difficult in practice to determine whether savings or economy had arisen from the
"common administration and financial control inherent in the administrative structure of the Corporation"
or was due to an improper departure from arm's length trading.
I am authorised to say three things which I hope will help the noble Lord. First, Clause 25 requires the Corporation to publish much information about each of their main diversified activities, and subsection (3) requires them to include with the published information a statement of the way in which the figures have been calculated. It seems to us inevitable that under this provision the Corporation will have to explain a good deal of the basis on which trading takes place between different sectors of their activities. Second, my right honourable friend the Minister of Power will discuss with the Corporation the possibility of including in their first report on organisation under Clause 4 a discussion of the principles on which trading between different sectors of the Corporation's business will be based. Under Clause 4(4) this report will have to be laid before Parliament so a section in it would correspond to the publication of a White Paper while leaving the primary responsibility with the Corporation where it properly belongs. Third—and I think this will meet the noble Lord's point—the final responsibility in this matter will rest with the Minister as a result of Clause 7(2) which enables

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him to give the Corporation specific directions on organisation. Moreover, my right honourable friend when he receives the Corporation's report on organisation will be prepared to discuss this issue further with interested organisations such as the Confederation of British Industry.
As I have spoken at greater length than I have so far in Committee, I hope that this may emphasise the serious view that the Government, and particularly my right honourable friend, have taken in this matter. The Minister is most anxious to see that the relationship between the Corporation, the publicly-owned companies, the private sector and the consumers is a fair and proper one which will meet with the satisfaction of all the parties concerned in industry as a whole. I share the view of the Government—
SEVERAL NOBLE LORDS: Oh!
LORD SHEPHERD: Noble Lords must not be too quick. It is getting late. When I sat on the other side, I pressed the previous Administration to put this and that into a Bill. I must say there were occasions when I thought they were obstinate. When you are sitting on the Opposition Benches everything seems very clear; but as the noble Lords, Lord Erroll of Hale and Lord Drumalbyn, know, when you see the consequences of Statutes you realise the limitations of what can be put into a Statute. I hope the noble Lord, Lord Erroll of Hale, will believe me when I say that we are with him in spirit in this matter—I believe my right honourable friend will wish to achieve what the noble Lord has in mind—but that we should not put it in a Statute. I hope the noble Lord, as on the previous occasion, will withdraw his Amendment.
LORD ERROLL OF HALE: I am sure the Committee will much appreciate the important statement that the noble Lord, Lord Shepherd, has just made. This is a matter of some detail. He gave important undertakings on behalf of the Government, which I am sure the industry and those affected by the nationalised industry will wish to study in detail before making further comment. As a first impression, we certainly consider the Government have really gone a long way to meet a point of view which is a matter of real seriousness to those affected, and
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I am sure that the Minister's statement will be extremely welcome.
I am delighted to learn that the noble Lord, who is a member of the Government, shares the Government's views. They are getting on fine. We know that the Government are monolithic. They have never pulled together more than at the present time, and already, after such a short time, it is necessary for the Minister to admit he shares the views of the Government.
5.30 p.m.
LORD SHEPHERD: The noble Lord must not be allowed to get away with that. He really is mischievous. There are times when he is more mischievous than others and I am not quite sure where he is to-night. The noble Lord, Lord Erroll of Hale, must not jump to conclusions. I have always supported the Government. I doubt very much whether I shall change. I am not like the noble Lord, Lord Champion, who, having left the Government Front Bench, said he felt free to agree or disagree with the Government. But I do thank the noble Lord for his generous appreciation of the line that the Government have taken. Perhaps those few words may ease a little of the rancour he felt over some of the criticism, as I thought, which came from the noble Lord, Lord Mitchison, who has now left the Committee. I thank the noble Lord for his acceptance of the view of the Government on this Amendment.
LORD ERROLL or HALE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 44:
Regulations, orders and rules
44.—
(3) No order shall he made under section 32(2) or 46(1) of this Act unless a draft thereof has been laid before Parliament and has been approved by resolution of each House of Parliament.
LORD SHACKLETON: I beg to move Amendment No. 63.
Amendment moved—
Page 38, line 32, leave out ("and section 28") and insert ("section 28 and section (Right of objection of certain iron and steel producers to trade practices of Corporation and publicly-owned companies appearing to be unfair)").— (Lord Shackleton.)
On Question, Amendment agreed to.
LORD SHACKLETON: I beg to move Amendment No. 64.
Amendment moved—
Page 38, line 36, after ("32(2)") insert ("section (Power of Minister to change the Corporation's name).").—(Lord Shackleton.)
On Question, Amendment agreed to.
LORD WINDLESHAM LORD WINDLESHAM moved in subsection (3), after "Act" to insert:
"and no notice under section 15(2) of this Act shall be published".
The noble Lord said: This Amendment concerns the powers the Minister has concerning the provision of extra production facilities. Under Clause 15 of the Bill the Minister has wide delegated powers. He sets the level above which he will not allow a privately-owned steel company to increase its iron and steel-making facilities without his consent. Under subsection (2) he is to publish a notice, but this notice is not subject to any Parliamentary scrutiny.
On Report stage in another place Sir John Hobson, for the Opposition, moved a new clause to safeguard the private sector against adverse decisions by the Minister in respect of his powers under Clause 15. Speaking about the Minister's powers, Sir John Hobson said:
"In other words, he is given complete control down to the tiniest detail over any change in the plant and machinery or premises of the private sector.…This power is exercisable by the Minister by a notice, incapable of correction at the instance of anybody, which will create obligations even on those who have never seen the notice or had it served on them or drawn to their attention."…[OFFICIAL REPORT, Commons, 19/1/67; col. 714.]
Sir John Hobson went on to state that the Select Committee on Delegated Legislation dealt with various classes of delegated legislation orders, and said that the type of power in this clause is plainly one which the Select Committee deemed to be an Order of special importance. The Select Committee said that any powers within that category should be subject to an Affirmative Resolution of both Houses of Parliament before they come into operation. Yet here, under Clause 13, orders are not laid before Parliament for the information of either House, or subject even to the Negative Resolution procedure or a Prayer. This is some way away from what the Select Committee on Delegated Legislation suggested for this type of power. Their
1062
recommendation was that it should be made subject to the Affirmative Resolution of both Houses. That is what this Amendment seeks to provide.
This is not the first time the Affirmative Resolution procedure arises in the Bill. Clause 44 already lays down that this procedure should be used in certain respects. The first is Clause 32(2) concerning the effect of Section 7(1) of the Restrictive Trade Practices Act, which we debated on an earlier Amendment and which requires an Affirmative Resolution under this Bill. The second is Clause 46(1) concerning new iron and steel-making processes which are not yet known and which can later be brought within the scope of the Bill. So we on these Benches would argue that this very wide power, which has been attacked on constitutional grounds from the Opposition Benches in another place, should be made the subject of Parliamentary approval in the way indicated in the Amendment. I beg to move.
Amendment moved—
Page 38, line 37, after ("Act") insert the said words.—(Lord Windlesham.)
LORD HUGHES: For a variety of reasons it does not appear to the Government that it would be appropriate to make an Order containing the substance of a notice under Clause 15(2) subject to the Affirmative Resolution procedure. For example: first, the Order would do no more than define those projects which must be submitted to the Minister for his approval. Its importance, therefore, should not be exaggerated. Applicants will be more concerned with whether their applications are approved or rejected.
Secondly, Clause 15(3) requires the Minister, before issuing a notice under Clause 15(2), to make a wide range of consultation. This should ensure that all interests affected are able to put their view before an Order is made. In the third place, there is no question here of the Minister's being able to amend an Act of Parliament, as he will do in the Orders under the Bill which are made subject to Affirmative Resolution procedure. These are the sections to which the noble Lord, Lord Windlesham, referred. Under Clause 32 he can direct by Order that a provision of the Restrictive Trade Practices Act shall cease to

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have effect—he is altering that Act. Under Clause 46 he can extend the definition of the iron and steel activities for the purposes of this Bill and there he will be altering what will then be an Act. The new name under Clause 36 again has the effect of altering legislation. Because of that it is important that the Affirmative Resolution procedure should be followed in that case.
I recognise, however, that there is a case for making a notice subject to Parliamentary procedure, and its seems to me that a case can be made out for having the Negative Resolution procedure brought in. If the noble Lord, Lord Windlesham, agrees to withdraw the Amendment, I will undertake to consider the introduction of an Amendment on Report stage to provide that an Order under Clause 15(2) which will take the place of a notice shall be subject to Negative Resolution procedure.
LORD WINDLESHAM: I am grateful to the noble Lord, Lord Hughes, for what he has said. He does not go quite all the way with us, but he has accepted the point of principle, namely that this wide power of the Minister should be made subject to some form of Parliamentary restraint. I appreciate the offer he has made, and with that encouragement to look forward to at Report stage, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD SHACKLETON: I beg to move Amendment No. 66.
Amendment moved—
Page 38, line 41, leave out ("section 5") and insert ("sections 5 and (Right of objection of certain iron and steel producers to trade practices of Corporation and publicly-owned companies appearing to be unfair)").—(Lord Shackleton.)
On Question, Amendment agreed to.
Clause 44, as amended, agreed to.
Clause 45 agreed to.
Clause 46 [Power of Minister to extend definition of iron and steel activities]:
5.40 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved to add to the clause:
"() for the avoidance of doubt nothing in this section shall apply to any activity other than iron and steel producing activities."
The noble Lord said: I would be the first to admit that it may well be desirable that the Minister ought not to be restricted too much in regard to the iron and steel making processing which exists at the time of the passing of the Act, but I submit that the phrase "processing of iron and steel" is too loose a phrase to enshrine in the Bill. It could be claimed some time in the future that the processing of iron and steel could cover the fabrication of rolled steel sections and plates, the drilling of steel plates by some new process, the making of some new sort of beam of the Costello type out of a plain beam, or any new fabrication process, or could apply to any new method that might be developed for preparing steel surfaces, by painting or preservation. The phrase is too wide and too loose and, therefore, for the purpose of avoiding any doubt the whole clause should be specifically limited to steel making or to steel producing activities, as suggested in the Amendment. I beg to move.
Amendment moved—
Page 40, line 29, at end insert the said new subsection.—(Lord Erroll of Hale.)
LORD HUGHES: It seems to me that the fears expressed by the noble Lord are groundless. I am in general agreement with the motives which led him to put this Amendment forward, but Clause 46 is in the Bill to ensure that, if there are technological advances which make possible new processes for the production of iron and steel, they can be included within the definition of iron and steel activities. It would be contrary to the purposes of the clause to use it to bring activities unconnected with the production of iron or steel into the definition of "iron and steel activities". To this extent I am in agreement with the noble Lord who moved this Amendment. But there is no need for an Amendment to provide that Clause 46 shall only apply to processes for the production of iron or steel. This object is already attained by the clause as drafted. The first two lines, with their reference to "the processing of iron or steel" put it beyond doubt that the only activities which the Minister can bring within the definition of "iron and steel activities" are these which take the form of "the processing of iron or steel".

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But we have an even better reason than that for thinking that the noble Lord's fears are groundless. We have in fact chosen the words used in Section 3(4) of the Conservative Iron and Steel Act, 1953. If they served the purpose which we intended them to serve in 1953, they ought to serve the same purpose in 1967, unless noble Lords were seeking to convey the impression that when they used these words in 1953 they were more to be relied upon than when we use them in 1967. Despite the "chit-chat" that has taken place between my noble friend Lord Mitchison and the noble Lord, I doubt very much whether he is suggesting that we are going that length. I hope he will accept my assurances that we are putting the words in to have exactly the same meaning as they had in 1953.
LORD MITCHISON: May I say this to the noble Lord, Lord Erroll of Hale, because I know how much he always likes hearing anything I have to say? I do not think he would wreck anything on purpose—he is a benevolent person—but it would wreck the Bill, by accident, if this Amendment went in. It fails to distinguish between producing and processing. If we take, for instance, Stewarts and Lloyds tube works, they are not producing tubes but processing them. I think that the language is perfectly clear and would allay even the most extravagant nocturnal apprehensions.
LORD ERROLL OF HALE: I was about to withdraw the Amendment when the noble Lord got to his feet, and I could not resist his magnetic attraction. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 46 agreed to.
Remaining Clauses agreed to.
Schedule 1 agreed to.
Schedule 2 [Transitional provisions in connection with dissolution of Iron and Steel Board]:
LORD SHACK LETON LORD SHACK LETON moved to insert after sub-paragraph (3) of paragraph 4:
"() The foregoing provisions of this paragraph shall not apply to a document which appears to the Board to he relevant for the purposes of any legal proceedings pending immediately before the vesting date by or against the Board."
The noble Lord said: Perhaps we could take this Amendment and No. 69 together. Under Clause 27(1)(a) the Iron and Steel Board's property will on vesting date become the property of the Corporation. There is, however, an important exception to this provision. Paragraph 4 of Schedule 2 provides for the exclusion from the property of the Board which vests in the Corporation of certain documents which the Board is required to set aside before vesting date. The documents the Board are required to set aside are those which appear to it to relate to the affairs of any company not coming into public ownership or to belong to any other class of documents which the Minister has directed them to set aside. The purpose of these provisions is to prevent the Corporation from acquiring documents which it would be inappropriate for them to inherit, because, for example, they contain information about their competitors in the private sector. For the same reason, although sub-paragraph (2) empowers the Minister to direct that the Corporation may see or copy set-aside documents which he thinks they require to know about, sub-paragraph (3) provides that they cannot see or copy any document relating only to the affairs of private sector companies.
These Amendments make a further provision. The first Amendment makes special provision for a class of documents to which the Corporation will need to have access, even where they relate to private sector companies. Under paragraph 7 of Schedule 2 they will take the Board's place in legal proceedings pending by or against the Board immediately before vesting date. They may, for example, need to continue proceedings against persons who failed to pay the levies which the Board raise to finance research in the cast iron industry. Plainly, however, they will not be able to continue such proceedings effectively unless they acquire all the relevant documents from the Board. This Amendment, by excluding such documents from paragraph 4 of Schedule 2 will have the effect of bringing them under Clause 27(1)(a) and so providing for them to vest in the Corporation. It thus achieves the result we want. There is no danger of any abuse of this provision, because the Corporation will only inherit in this way papers relating to cases where the Board themselves

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found it necessary to undertake proceedings before vesting date; and because it is entirely for the Board to judge which papers are relevant to any particular case.
The second Amendment makes clear that for the purpose of these provisions a document includes modern means of storing information, like punch cards and punched tapes, which the Board have acquired in connection with their statistical work. Without this Amendment, such records would not come within the scope of paragraph 4(4) of Schedule 2, and so would vest in the Corporation under Clause 27, even though they contained information, for example, in the private sector companies which it would be wrong for the Corporation to acquire. I hope that these Amendments will be acceptable to your Lordships. They arose out of a helpful suggestion—indeed, an Amendment was put down on Report in another place—by a Member of the Opposition, and the Government have now given effect to it in the Amendments which I now move.
Amendment moved—
Page 43, line 35, at end insert the said subparagraph.—(Lord Shackleton.)
On Question, Amendment agreed to.
LORD SHACKLETON: I beg to move.
Amendment moved—
Page 43, line 35, at end insert—
("() In this paragraph, 'document' includes any device by means of which information is recorded or stored, and, in relation to information recorded or stored by means of a device, the reference in sub-paragraph (2) of this paragraph to the Corporation's being entitled to see it shall be construed as a reference to their being entitled to have it made available to them and sub-paragraph (3) of this paragraph shall have effect accordingly.")—(Lord Shackleton.)
On Question, Amendment agreed to.
Schedule 2, as amended, agreed to.
Schedule 3 [Amendments of Revived Provisions of 1949 Act]:
5.51 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved to add to the proposed Amendment of Section 4 of the 1949 Act:
"In subsection (6), after the word 'Corporation' where secondly occurring there shall be inserted the words 'and in any event within four months thereof' and after 'companies'
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there shall be inserted the words 'and of the subsidiary companies of the Corporation and of the publicly-owned companies'."
The noble Lord said: It may be for the convenience of the Committee if we take Amendments Nos. 70, 76 and 77 together. The purpose of these three Amendments is to improve the accountability to Parliament of this new nationalised industry by setting a time limit on the period within which the annual report must be produced, and by increasing the amount of information about the subsidiaries of publicly-owned companies that it must contain.
The first aim of these Amendments, contained in Amendments Nos. 70 and 76, is to impose on the Corporation a duty to produce the annual report within not more than four months of the end of the Corporation's financial year. As this report would be laid before Parliament, if the Amendment were accepted, a debate could then be held at a regular time each year. In the same way as with the Defence Review, there would be a steel debate in which this important industry's affairs would be discussed by Parliament. The principle at stake is that Parliament has the right to look at and discuss the National Steel Corporation's state of trading—the entire group, and the subsidiaries inside and outside the iron and steel field—over a twelve-month period and on a regular basis.
The second aim of these three Amendments, contained in Amendments Nos. 70 and 77, is to require more information about the activities of subsidiary companies to be included in the annual report to the Minister than might otherwise be the case. After all, shareholders in large companies have an opportunity to question the directors at an annual general meeting, even though in a very large group there may well be little information about the activities of subsidiary companies. That being so in the private sector, why should it not apply in the case of a nationalised industry? Why should there not be an opportunity in Parliament to question the Minister about the way in which the steel industry has been run?
I want to be quite frank about the purpose of these Amendments, so that the noble Lord who is to reply does not spend too much time looking at the wording of them. These are intended as

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probing Amendments, and we hope to get on record, either now or on the Report stage, a statement from the Government as to the extent to which the Minister will be accountable to Parliament for the National Steel Corporation. This will be a large and important industry. The Minister has responsibility for the whole industry, and we on this side of the Committee would like to know how he intends to exercise that responsibility in relation to Parliament. I beg to move.
Amendment moved—
Page 45, line 36, at end insert the said words.—(Lord Windlesham.)
LORD SFIACKLETON: I fully agree with the noble Lord, Lord Windlesham, as to the importance of this report, although I am not sure whether Parliament would look forward to an annual debate at a set time rather like the debate on the White Paper on Defence which is very much part of the system of Supply. None the less, I think we all agree with the importance of the object that the noble Lord has in view. The Government attach great importance to this matter. The report, for instance, will contain important information, and the amount of this has been increased and strengthened by the insertion in another place of Clause 25, which requires the Corporation to include in the annual report extensive information about their diversified activities.
But I think it would be unreasonable to require them to publish the report within four months of the end of the year to which it relates. The annual reports of the Coal Board, the Electricity Council and Boards, and the Gas Council and Boards are not published until five or six months of the end of the year to which they relate; and, from what I am told, these reports are got out as quickly as possible. The task of producing the Corporation's report will probably be greater, because there is an even wider range of activities to cover, and especially these new requirements in Clause 25. Therefore, I think it would be unreasonable to put on them an obligation to produce annual reports more quickly than other nationalised industries.
I can assure the noble Lord that my right honourable friend is well aware of the importance of the information published in the annual report, and will bring to the attention of the Corporation the
1070
views he has expressed. We have considered this Amendment fully, because I do not think there is any disagreement as to the desirability of achieving this end. We even thought about putting in a different time limit of, say, six months. But it is not possible to foresee all the complications involved in getting reports ready. There might be a fire, or a strike at the printing works—and strikes have held up reports before now. I think the Corporation can be trusted to act reasonably in such matters, and to impose upon them an obligation which is imposed on none of the other nationalised industries would really imply a reflection on their ability and willingness to get the report out as quickly as possible. Certainly the Party opposite, when they were in government, did not impose any such obligation on the Transport Boards in their 1962 Transport Act. This, I hope, will satisfy the noble Lord.
The second half of the Amendment concerns a rather different point, but it is one of some importance; namely, the proposal that the Corporation should include in their annual report a general account of the activities of all their subsidiaries, and not only those of the publicly-owned ones. The Government originally excluded the partly-owned subsidiaries because they think there are objections to treating companies in which there are private shareholders any differently from private companies in general. That is why there has been this clear distinction throughout the Bill between the Corporation and the publicly-owned companies—which is the nationalised industry, and to which the provisions appropriate to a nationalised industry apply—and the partly-owned subsidiaries. But the publication of information is, surely, hardly prejudicial in itself to the interests of the partly-owned subsidiaries. Indeed, the Government have accepted this point by providing, in Clause 24, for the publication of the accounts of the partly-owned subsidiaries.
Therefore, I am prepared to accept in principle the second half of the Amendment. We cannot accept the Amendment as it stands, but I am willing to consider with noble Lords opposite how we can give effect to their wishes, which are set out in the second part of Amendment No. 70 and also in Amendment No. 77 As I think there are practical objections

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to putting in a date for the publication of the annual report, I hope that the noble Lord will not press that point, and that, as I have met him on the second point, and we are prepared to achieve his objective, he will now consider withdrawing his Amendment.
LORD HAWKE: Before the noble Lord sits down may I ask him a question? It might make a certain amount of difference if one knew when the financial year of the Corporation was to end. It may be in the Bill and I have not seen it, but it is rather important. I have always thought that there should be a debate on the nationalised industries before Parliament goes into the Summer Recess. I cannot quote chapter and verse, but my impression is that it is not always possible because some of the reports are not available at that time. On the other hand, if the Corporation's financial year is to be a calendar year, that will provide for much wider latitude, making certain that there is a debate. If the financial year is going to end on April 5, it is a rather narrow margin for the Corporation to get out their accounts in time for the debate, and I think that they probably would not do it.
LORD MITCHISON: I rise only to say, on the second point, that I think it would be extremely unwise to attempt to put in a time limit for this purpose, because it is so hard to foresee exactly how long the preparation of these accounts is likely to take. If one looks at the 1953 Act, introduced by a Tory Government, one sees that in Clause 16 all that was said about the report was this:
"The Board shall, as soon as may be after the end of each financial year of the Board, make a report to the Minister".
So far as I can discover, there was in fact no time limit in that Act. One need not go through all the instances of such matters as the New Towns Report, which we shall probably discuss tomorrow, and certainly some of the Comptroller-General and Auditor's investigations take a good deal longer. I see no point in this suggestion, and a good deal of risk.
LORD WOLVERTON: I rise to support this Amendment, because in the past nationalised industries have taken a long time to introduce reports. I think
1072
I am right in saying that the Gas Boards' and Electricity Boards' years end in December and the reports do not come through until July. Parliament then goes into Recess, and the reports are not debated until the autumn. By that time the information contained in them is out of date.
I should have thought that four or five months would be an adequate time. The noble Lord, Lord Shackleton, suggested six months and expressed the opinion that four months was a bit tight, but I think one could cover it in five months. He mentioned printing strikes, fires, and so on, but these are not usual occurrences and I think it is important that Parliament should discuss a report of this nature while it is in the minds of everybody, not months afterwards when it is rather stale news.
LORD SHACKLETON: I do not know whether the noble Lord is content with the reply I gave him. I really think I must defend the nationalised industries against the charge of the length of time they take. Their reports are immensely long and thorough. The noble Lord, Lord Hawke, asked about the date for the accounting year. This has not yet been fixed. I can see a certain virtue in timing it so that the report comes out at a convenient Parliamentary time, but I agree this is not the only factor to betaken into account.
LORD WINDLESHAM: I am grateful for the offer made by the noble Lord about the amount and form of information that should be given on subsidiary companies. I should like to underline what my noble friend Lord Wolverton and others have said on the question of the period of time. I can well understand the problems connected with getting out the reports. That is true of any large organisation, but it is possible to be a little too complacent about these things. If there is an actual statutory duty to publish a report at a certain time, then one must take into account all possible delays, such as the fires at the printing works conjured up by the noble Lord, Lord Shackleton. It is generally the case that these reports are about nine months out of date, if they are printed in the summer when Parliament is in Recess. I should have thought a determined effort could be made by this streamlined, modern

1073
Government to give us more up-to-date information. Such a step would be welcome.
In moving the Amendment I said—and I would like to repeat it in case the noble Lord can help us on Report stage —that to a certain degree these are probing Amendments to the extent to which the Minister will accept responsibility for the Corporation in Parliament. It may be that it will be entirely on all fours with his responsibility for the National Coal Board or other public corporations. I think it would be helpful to have on record a statement of the position.
LORD MITCHISON: Can the noble Lord tell us why his Party put no time limit in the 1953 Act?
LORD WINDLESHAM: I do not want to prolong this discussion. I have made all the points that are relevant to the Amendment under discussion, and I beg to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.8 p.m.
LORD ERROLL OF HALE: This Amendment is concerned with the words "principal activities", because it is clear that with an organisation as vast as the National Steel Corporation group the principal activities must also be very large. However, there are many small products of the group that are completely vital, such as aircraft turbine blades, springs, and so on, which cannot be described as principal activities, nor would the Consumers' Council cover such byproducts as slag or chemicals. This Amendment is an attempt to define "principal activities" more closely and to seek some information on the Government's intentions in the matter. I beg to move.
Amendment moved—
Page 45, line 40, at end insert ("and after the words 'principal activities' there shall be inserted being activities resulting in sales of a particular product or group of products and by-products to consumers of an amount exceeding £100,000 in any year'.").—(Lord Erroll of Hale.)
LORD HUGHES: If we were to accept this Amendment practically everything but the very smallest of the activities in the public sector would be covered by the definition contained in this Amendment. At present, in the companies legislation there is no obligation on companies to
1074
publish figures of turnover, although there is in the Companies Bill now before Parliament. Because of this there is no detailed information about the levels of different activities of business in industry as a whole, but it is plain that a turnover of £100,000 a year is very small indeed. The National Steel Corporation as a whole will have a turnover of about £1,000 million a year.
The turnovers of the Schedule I companies are not known in all cases. In eight where it is known it ranged in 1965–66 from about £33 millions to £173 millions. Even the catering establishment in the Palace of Westminster had in 1965 a turnover of £257,000. In an industry of which I have some close knowledge, the building industry, a turnover of £100,000 is reflected by a building concern employing as few as 40 employees. So the effect of this Amendment would have the result of defining the national steel industry's principal activities as practically the whole range of its efforts.
This would extend the interests of the Consumers' Council in a way both unnecessary and dangerous. It would be unnecessary because, except in regard to their major activities, the National Steel Corporation will not be in such a dominant position that a special body to represent the interests of consumers is necessary. It would be dangerous for the Corporation because they would be subject to the procedures of the Consumers' Council in activities in which they were, without having a dominant position, in competition with commercial rivals not subject to those procedures. This would unnecessarily restrict the Corporation's commercial practice. It is, I would suggest, inconsistent with the Opposition's general desire that the Corporation should act commercially. The Amendment also would be dangerous for the Consumers' Council itself. If, as we all want, the Consumers' Council is to be a vigorous and effective body, it must be able to concentrate on matters which are of real importance and where its intervention would be especially appropriate. For these reasons, I cannot advise the House that this is a suitable Amendment to accept.
LORD ERROLL OF HALE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD W1NDLESHAM LORD W1NDLESHAM moved to add to the proposed Amendments of the 1949 Act:

"Section 6(6)

At the end, there shall be added the words 'but, if he decides not to give directions on any such matter, he shall lay before each House of Parliament a statement of that matter and of his reason for not giving directions there on' ".

The noble Lord said: With the leave of the Committee, I think we might take Amendments Nos. 73 and 80 together. They would require the Minister to report to Parliament if he decides not to act on a representation from the Consumers' Council. The consumers' councils in general have not been particularly effective bodies. Here we have the position that if a dispute develops between the consumers of iron and steel and the Corporation, and if the Minister decides not to implement the recommendation of the Consumers' Council there is at present no need for Parliament to be informed. The power rests with the Minister himself.
This leads back to the point we were discussing earlier on Amendment 70, concerning Parliamentary accountability. It is important, since market pressures generally speaking will not apply here, that if a consumer is dissatisfied he can make representations through the Consumers' Council. But if the Consumers' Council as a whole are not satisfied, and make representations to the Minister, and the Minister decides not to support the point of view of the consumers as against the Corporation, the consumer will probably not be able to take his business elsewhere. The Corporation itself will cover about 90 per cent. of steel production, and therefore the normal market forces will not apply. For those reasons, it would seem there is a case for making the Minister in this respect accountable, by requiring him to report to Parliament if he decides not to act on any representation from the Consumers' Council. I beg to move.
Amendment moved—
Page 45, line 41, at end insert the said words.—(Lord Windlesham.)
LORD SHACKLETON: There is no provision in the Bill corresponding to the Amendment, for the simple reason that the Council will, under Section 6(15) (this
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is the revived provision), make an annual report to the Minister which he must lay before each House of Parliament, and the Council will, of course, have complete discretion as to the contents of this report and will be able to describe in it any representations made to the Minister and his reactions to them where they consider this to be important or that Parliament's attention should be drawn to them.
In the happy state we have now reached on this Bill, and in the interests of adding to the gaiety or the satisfaction of the noble Lord, Lord Erroll of Hale, and indeed to give confidence—and this is, I accept, the purpose behind the Amendment—that the council should be as effective as possible (incidentally. I do not accept his strictures on consultative councils generally), and if the noble Lord thinks these Amendments will help, the Government will be very glad to accept them.
On Question, Amendment agreed to.
Schedule 3, as amended, agreed to.
Schedule 4 [Form in which Provisions of 1949 Act have Effect by Virtue of this A ct]:
6.18 p.m.
LORD ERROLL OF HALE: I beg to move Amendment No. 80.
Amendment moved—
Page 60, line at end insert (";but, if he decides not to give directions on any such matter, he shall lay before each Houset of Parliament a statement of that matter and of his reason for not giving directions thereon").—(Lord Erroll of Hale.)
On Question, Amendment agreed to.
Schedule 4, as amended, agreed to.
Schedule 5 [Provisions of 1953 Act repealed]:
On Question, Whether Schedule 5 shall be agreed to?
LORD SHACKLETON: Perhaps this would be the moment to thank noble Lords opposite for the assistance they have given. I do not know whether to thank my noble friend Lord Mitchison. He is now clearly occupying a position of total independence. But we are not prepared to trade him for the other side at the moment. I am not sure whether this

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is the first major Bill in which the noble Lord, Lord Windlesham, has played a big part in Opposition, but I should like to congratulate him and say that I hope he will have many such opportunities in Opposition. If by chance there should be a change, I am sure the courtesy he has shown, mixed with the frivolity and practical knowledge of the noble Lord, Lord Erroll of Hale, will ensure that our proceedings in this House will continue to be as enjoyable as I believe they have been on the Committee stage of this Bill.
LORD ERROLL OF HALE: I should like, on behalf of my noble friend Lord Windlesham, and all noble Lords on this side, to express to Her Majesty's Government our appreciation of the courteous way in which they have studied our Amendments, and of the number of occasions they have been able to see their way either to accepting them or to subjecting them to further scrutiny. We hope to have an agreeable Report stage.
I hope also that those who have followed the long-drawn-out and somewhat acrimonious proceedings in the Committee stage in another place will not think that, because our proceedings are perhaps calmer, we do not get as much out of the Government as those in another place. Indeed, we are often more successful than they. On that note, I would thank the members of the Government for their help in making this an agreeable Com-
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mittee stage, and I only hope that they may be able to keep their independent deterrent in order a bit more.
Schedule 5 agreed to.
House resumed: Bill reported with Amendments.

TELEVISING THE PROCEEDINGS OF THE HOUSE
First Report from the Select Committee: made, and to be printed.
  THE M4 MOTORWAY
  THE M4 MOTORWAY