Sitting of 27 July 1967

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  STANDING ORDERS (PRIVATE BUSINESS)
  Adjourned Debate on Question [20th July] further adjourned till Tuesday 24th October.
ORAL ANSWERS TO QUESTIONS
  EDUCATION

    Swindon (Application for Special Schooling)
    Mr. Francis Noel-Bakerasked the Secretary of State for Education and Science what action he has taken in connection with the application for special schooling of a constituent about which the hon. Member for Swindon has been in correspondence with his Department.
    The Minister of State, Department of Education and Science (Mrs. Shirley Williams): I am unable to add to the full explanation given to my hon. Friend in my letters of 15th March, 6th April and 4th July, 1967. The local authority, whose responsibility it is to deal with this case, should be in a better position to do so when it has the results of the medical examination which the boy is at present undergoing.
    Mr. Noel-Baker: I thank my hon. Friend for the sympathetic interest which he has taken in the matter. Would not she agree that the long-suffering parents have been subjected to a very sad situation, and not kept entirely informed about what was going on? Will she continue to use her influence to get this child properly assessed, and then provided with the school that he needs?
    Mrs. Williams: I sympathise with the child's parents. It has been a difficult position, but I assure my hon. Friend that as soon as the psychiatric investigation is completed, which we understand will be next month, we will do everything possible to get the child placed in a school which can assist him as much as possible.

    Teachers' General Council
    Mr. John Wellsasked the Secretary of State for Education and Science what plans he has for the establishment of a teachers' general council.
    The Secretary of State for Education and Science (Mr. Anthony Crosland): None, Sir.
    Mr. Wells: Is not the right hon. Gentleman aware that the establishment of such a council would go a long way to assisting teachers in their aims for professional status, and would do a great deal to help the profession in its personal well-being and therefore enable it to give a better service to education and to the State at the same time?
    Mr. Crosland: The difficulty about this proposal is that the council, as it has been put forward by the teachers' organisations, would control such fundamental matters as standards of entry into the profession. With respect to the hon. Gentleman, I think that the House would agree with me that at this moment, when we still have a shortage of teachers, it would not be appropriate to hand over to an independent teachers' council powers which are so crucial in terms of teacher supply policy.

    Girls (Engineering and Scientific Training)
    Mr. Winnickasked the Secretary of State for Education and Science what plans are being made to increase the total numbers of girls training to become engineers and scientists.
    The Minister of State, Department of Education and Science (Mr. Goronwy Roberts): All the work in hand applies to girls equally with boys. This includes studies of the flow of students of science and technology into higher education; a new schools council project to cost £180,000; and general publicity measures.
    Mr. Winnick: I am grateful to my hon. Friend for that reply. Does not there still exist a feeling in the country that science and engineering are not for girls, and is not there a good deal of wasted ability and talent as a result? Did my hon. Friend see the informative article in The Times a few weeks ago?
    Mr. Roberts: I agree that a good deal needs to be done to prove, among others to employers, that girls have a capacity for engineering and technology. The measures which we are taking through the organisation of exhibitions and the publication of long lists of informative material will, we hope, help to make good this deficit. I am aware of the article to which my hon. Friend referred. I agree that it was most informative and helpful.

    Overseas Students (Fees)
    Mr. Molloyasked the Secretary of State for Education and Science what estimate he has made of the savings in administrative and other costs which have been achieved by the increase in fees for overseas students; and if he will make a statement.
    Mr. Goronwy Roberts: I would refer my hon. Friend to the Answer given on 13th July to my hon. Friend the Member for Glasgow, Woodside (Mr. Carmichael).—[Vol. 750 c. 125.]
    Mr. Molloy: Has the whole operation been worth the candle? Has my hon. Friend devised any new ideas to help those students who have been placed in difficulty and hardship?
    Mr. Roberts: The initial estimate of savings has, on further detailed examination, been confirmed. With regard to the possibility of hardship, we are fully satisfied that the fund which we have set up, serviced by the British Council and the Advisory Board, will meet all deserving cases.
    Mr. van Straubenzee: Is not the principal lesson to be learnt from the whole episode referred to in the Question that matters of this sort ought not to be instituted without proper consultation with the universities?
    Mr. Roberts: I cannot accept that there was not consultation with the interests concerned, but I take full note of what the hon. Gentleman has said.
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    Our Department has a very good record of consultation with the universities and everybody concerned with higher education.

    School Building Programme (Surrey)
    Mr. Onslowasked the Secretary of State for Education and Science when he expects to approve a major building programme for secondary school purposes for the years 1968–69 and 1969–70 for the county of Surrey.
    Mr. David Howellasked the Secretary of State for Education and Science by what date he intends to give approval to the county of Surrey's secondary school building programmes for 1968–69 and 1969–70.
    Mr. Maurice Macmillanasked the Secretary of State for Education and Science what proportion of the Surrey County Council's secondary school building proposals for 1968–69 and 1969–70, respectively, he has refused to sanction; and how many of these refusals stem from his rejection of the county council's proposals under Circular 10 of 12th July, 1965.
    Sir G. Sinclairasked the Secretary of State for Education and Science what projects in the programme of secondary school building for the years 1968 to 1970 put forward last October by Surrey County Council he has approved; what projects he has deferred approving; and when he intends to reach a decision on these.
    Mr. Crosland: I have approved four projects for the 1968–69 programme but have deferred my decision on the remaining 17 proposals until I have received further information from the authority about its proposals for secondary reorganisation. I have not yet announced my decisions on the proposals of any authority for 1969–70.
    Mr. Onslow: Can the right hon. Gentleman tell the House what legal power he thinks he has to withhold funds from Surrey schools as a means of blackmailing Surrey County Council—[Interruption.]—blackmailing Surrey Council into destroying a system which it believes is best suited to local needs?
    Mr. Crosland: There is no question of blackmail—
    Mr. Onslow: Not much!
    Mr. Crosland: It is a matter of ordinary prudence and common sense. It is quite clear from statements made by Opposition leaders that, whatever Government are in power, 11-plus selection will not continue. It would therefore be, for anybody in my position, wasteful and frivolous to approve school buildings based on 11-plus selection without seeing how they fitted into the reorganisation scheme. As for the powers to which the hon. Member referred, I am acting under the general powers conferred on me by the 1944 Act and the Regulations of Parliament—exactly the same powers that enabled Conservative Ministers, much more brutally than I am doing, to turn down reorganisation schemes put up by Labour authorities.
    Mr. Macmillan: Does not the right hon. Gentleman realise that the Surrey scheme meets most of his criteria? Secondly, does not he realise that it envisages the abolition of 11-plus selection and, thirdly, that the number of schools that he has approved are not even enough for the bare minimum which will be required no matter how Surrey education is developed? Does not the Minister think that this is a gross abuse of his powers?
    Mr. Crosland: It is in no way a gross abuse of my powers. As for the Surrey scheme, I do not think that any objective reader of the scheme could maintain that it met the objectives of Circular 10/65. On the other hand, I want to emphasise that Surrey is particularly well placed to produce an excellent reorganisation scheme, and to do so would be in many ways regarded as a further continuation of the existing Surrey plan. I do not want to go into details because, as the hon. Member may know, I have invited the Chairman of the Surrey County Council to see me next week. I insist that what I want is not blackmail; I want an agreement of a sort which will reflect both the educational needs of the county and the national consensus, which is now strongly opposed to selection at 11.
    Mr. Doughty: Is the right hon. Gentleman aware that his actions are holding up progress in education both in Surrey and Croydon, and that by threatening to refuse education for children there and destroying the grammar schools in these
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    two counties he is not fulfilling his duties as Minister of Education?
    Mr. Crosland: I am not responsible for this delay. The responsibility for any delay that is occurring must lie on authorities which cannot make it clear how their school building programmes will fit into the kind of non-selective system that we all know will exist, whatever party is in power. We must be clear where the responsibility lies. I am as anxious as Surrey to enable it to get on with its school building programme a quickly as it can.
    Mr. Winnick: Why did Surrey County Council Education Committee turn down the proper plan submitted by an all-party sub-committee of the Education Committee? Does my right hon. Friend feel that the Surrey County Council will see common sense at long last and end its 11-plus, which penalises children not only in Surrey but in other parts of the country where this form of selection is continued?
    Mr. Crosland: On the first part of my hon. Friend's supplementary question, I have no detailed information. I understand that the education committee has sent back to the working group the plan which the working group has produced. That is how the matter now rests, except that I have said that I propose to meet the chairman of the county council next week. On the second part of the supplementary question, I have no doubt that Surrey, which is an exceptionally progressive education authority, will, at the end of the day, produce one of the best reorganisation plans that we could see.
    Sir E. Boyle: Irrespective for the moment of the educational merits of this question, does not Section 8 of the 1944 Act lay a specific duty upon a local authority to provide a sufficient number of school places for its area? Will the right hon. Gentleman acknowledge that there is an obligation upon him to ensure that the Surrey local education authority is in a position to provide the 15,000 extra school places that it will urgently need by the 1970s?
    Mr. Crosland: I also have an obligation to carry out the wishes of Parliament, which were clearly expressed in this matter two and a half years ago. I do not want to get involved in an argument about this. The last thing I want—

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    and I hope that one or two hon. Members opposite share this desire—is a confrontation with Surrey. What I want and what it wants, at the end of the day, is an agreement that will enable me to enable it to get on with its school building programme as rapidly as it can.

    Primary Schools
    Mr. Onslowasked the Secretary of State for Education and Science what estimates he has obtained from local education authorities of the cost of bringing existing primary schools in England and Wales up to the standards envisaged in the Plowden Report.
    Mr. Crosland: None, Sir. But the Plowden Council itself estimated the cost for England at between £50 million and £70 million.
    Mr. Onslow: Does the Minister reject that figure? Has he taken any steps to correct it? Is he aware that in Surrey alone this amounts to £10 million? What priority, if any, does he give to implementing this Report?
    Mr. Crosland: What priority, if any, can be demonstrated by the fact that under this Government a substantially higher proportion of major school building will be spent on primary schools than was the case with the previous Government; that this Government has spent more on primary school building replacements and improvements than the previous Government, and that only a few days ago my right hon. Friend the Minister without Portfolio announced that another £16 million would be devoted to the Plowden educational priority areas.

    Teachers' Salaries (Primary Differential)
    Mr. Longdenasked the Secretary of State for Education and Science whether he intends to abolish the primary differential; and if he will make a statement.
    Mr. Roy Hughesasked the Secretary of State for Education and Science if he is aware that the points system is inequitable to primary school teachers; and if he will take steps to secure a review of the present arrangements.
    Mr. Crosland: As I announced in my Answer to my hon. Friend the Member
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    for Stoke-on-Trent, North (Mr. Forrester) yesterday, action is now in hand to implement the recommendations of the Arbitral Body on this as on other aspects of teachers' pay.—[Vol. 751, c. 171.]
    Mr. Longden: Does that mean that the Minister is, on the whole, against primary differentials? Does he agree that the profession considers that these points differentials can cause injustices and anomalies among various groups?
    Mr. Crosland: I am well aware of the strong feelings that are held in the profession on the primary-secondary differential. On the other hand, both the Teachers' Panel and the Management Panel submitted, in the recent dispute, different versions of the kind of unit total system they would like to see. In the end the arbitral body rejected both the Management Panel and the Teachers' Panel versions, and as this will go to Burnham tomorrow I would prefer not to make any comments on the merits of the issue.

    Teachers (Status)
    Mr. Longdenasked the Secretary of State for Education and Science if he has considered the draft recommendation on the status of teachers, made by the United Nations Educational, Scientific and Cultural Organisation; and what action Her Majesty's Government propose to take on that recommendation.
    Mr. Goronwy Roberts: My right hon. Friend has studied the recommendation and is now considering with the other United Kingdom Education Ministers an invitation from U.N.E.S.C.O. to submit it to those concerned.
    Mr. Longden: I am grateful to the hon. Member for that Answer, but is it not the case that we were represented at this conference last October and that our representative agreed that the results of the conference should be recommended for acceptance by the Government?
    Mr. Roberts: Her Majesty's Government were party to the adoption of the recommendations, as approved by the general conference of U.N.E.S.C.O. last autumn. We broadly accept the recommendation. It is true that the value of

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    the document is that it now enables us to help teachers in developing countries to attain the conditions of service and academic freedoms which our own teachers undoubtedly enjoy.

    Children (School Transport)
    Mr. Emeryasked the Secretary of State for Education and Science whether he will review the position of transport for children between home and school.
    Mrs. Shirley Williams: No, Sir.
    Mr. Emery: Does the Minister not realise that the problem for young children of getting to school becomes much more acute with traffic problems, especially in country areas, where there are no pavements? Does she believe that it can be right, in such conditions, that children of six and seven years of age should have to walk along such roads for up to four miles a day?
    Mrs. Williams: I agree with the hon. Member. I would draw his attention to the fact that on 12th February, 1965, my right hon. Friend issued a letter to local authorities drawing their attention specifically to road hazards, and making it clear once again that they should adopt a generous attitude towards children travelling for less than the statutory distances where there were road hazards.

    Disabled Students (Equipment)
    Mr. Emeryasked the Secretary of State for Education and Science what steps he is taking to ensure that money is available to universities and colleges of further education to pay for extra equipment required by disabled students.
    Mr. Goronwy Roberts: The allocation of funds for this purpose is a matter for the authorities concerned with the educational institutions. I know that both universities and local education authorities have the needs of the disabled student very much in mind.
    Mr. Emery: Has not a number of cases been drawn to the hon. Gentleman's attention of disabled people, particularly in wheel chairs, being unable to use certain universities? Would he consider allocating specially a sum for distribution either by the University Grants Committee or by another body, which might be
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    applied for specifically by disabled students?
    Mr. Roberts: I certainly take note of what the hon. Gentleman says. I have seen one or two examples of difficulty for disabled pupils and students, but I think that, in almost every case, their requirements have been succesfully met. I will certainly take cognisance of his second point.

    Pre-Teacher Training Courses (Awards)
    Mr. Leslie Huckfieldasked the Secretary of State for Education and Science whether he is satisfied with the present arrangements for the provision and award of grants for pre-teacher training courses, particularly in view of the present shortage of teachers and the future shortages arising from the raising of the school-leaving age; and if he will make a statement.
    Mr. Goronwy Roberts: Local education authorities are providing increasing numbers of such courses. But I believe that there is still more scope for this kind of provision and this point was made in a letter which was sent last week to colleges of education and L.E.A.s suggesting measures to increase still further the recruitment of older students into teacher training.
    Awards for these courses, whether part-time or full-time, are made under Section 2 of the Education Act, 1962, at the discretion of local education authorities who are, of course, well aware of the teacher supply problem.
    Mr. Huckfield: As several of my constituents have had to give up their jobs to attend these pre-teacher training courses—I also know of several other cases in Warwickshire—would my hon. Friend consider making the grants by local authorities for such courses compulsory instead of discretionary?
    Mr. Roberts: My right hon. Friend and I would have to consider that question very carefully.

    School Leaving Age
    Mr. Leslie Huckfieldasked the Secretary of State for Education and Science what measures and detail of consultations have been held with the trade

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    union movement and with industry in connection with the raising of the school leaving age; and whether he will make a statement.
    Mr. Goronwy Roberts: Both sides of industry approved of the raising of the school leaving age, which was first announced in January, 1964, and they so informed the Government of the day. Both the T.U.C. and the C.B.I. are associated with studies relating to the curriculum for the extra year at school.
    Mr. Huckfield: As the school leaving age is to be raised very soon, as promised, and will involve several excursions into industrial premises, is it not about time that further consultations were held?
    Mr. Roberts: Both sides of industry are now being consulted and I should be glad to hear any further suggestions which my hon. Friend might have. I have a long list of those consultations which are now proceeding and, if he would like further information, I would be glad to send it to him.

    Social Science Research Council (Post-Graduate Students)
    Mr. Dewarasked the Secretary of State for Education and Science whether he will hold an inquiry into the criteria on which Social Science Research Council awards for post-graduate study are made, in view of the small number available last year to students at Scottish universities as compared to the high proportion of the total of students in the United Kingdom in faculties eligible for such awards at Scottish universities.
    Mr. Goronwy Roberts: No, Sir.
    Mr. Dewar: Would my hon. Friend not agree that there is at least a prima facie case for further consultation, bearing in mind that, for 1966–67, Scottish universities, with almost 25 per cent. of the British total of eligible students got under 5 per cent. of the awards—a grand total of 19, as compared, for example, with 133 for the University of London alone?
    Mr. Roberts: I am satisfied that the distribution of these awards is not affected by the location of universities, in England, Scotland or Wales, and I am not prepared to suggest the introduction
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    into the system of discrimination on these grounds. The allocation of awards for post-graduate studies is one of the principle functions entrusted to the Council and I do not propose to intervene as my hon. Friend suggests.
    Mr. MacArthur: Why is the number of awards in Scotland so low?
    Mr. Roberts: It may improve, go up for instance, by the end of September, when a certain number of awards are made available under the Council's arrangements. It may go up next year, or the following year, but the disposition of these awards relates to individual quality and has no geographical basis.

    Primary and Secondary Education (Expenditure)
    Sir J. Langford-Holtasked the Secretary of State for Education and Science what has been spent as a percentage of the gross national product in the last three years on primary and secondary education; and what he expects that percentage to be in the current year.
    Mr. Crosland: In England and Wales, 2·6 and 2·7 per cent. in 1964–65 and 1965–66 respectively, and an estimated 2·8 and 2·9 per cent. in 1966–67 and 1967–68.
    Sir J. Langford-Holt: Does the right hon. Gentleman expect this trend to be followed in future? At what ultimate level is he aiming? How does this compare with that of our industrial competitors overseas?
    Mr. Crosland: I certainly expect that a rising trend will continue, not only for demographic reasons, but, I would hope, for other reasons as well. One cannot properly set some limit on the proportion of the national income spent either on schools or on education generally. I would say that the proportion which we spend on education compares favourably with that spent by our industrial competitors.
    Sir E. Boyle: Do the figures for the improvement element in primary and secondary education, as forecast in the National Plan, remain Government policy?
    Mr. Crosland: I should like notice of that question, because I cannot recall offhand precisely what they were. There is certainly still an improvement element, but I should like notice before giving a dogmatic answer.

    St. Aldhelm's Roman Catholic Primary School, Turton
    Mr. Fletcher-Cookeasked the Secretary of State for Education and Science if he will reconsider his decision not to assist the promoters of the St. Aldhelm's Roman Catholic primary school at Turton, Lancashire.
    Mrs. Shirley Williams: The promoters have already been told that we shall keep the project under review, but I cannot hold out much hope for its approval while spare places exist in nearby schools.
    Mr. Fletcher-Cooke: Does the hon. Lady realise that Catholic parents are leaving this growing residential area because they see no hope of places for their children in a Catholic school anywhere nearby? Does he think that it is a proper alternative to offer Catholic children that they should go to the local undenominational county school?
    Mrs. Williams: The hon. Gentleman will appreciate that one of the difficulties is to provide extra denominational places where a surplus of places is available, but because there is expected to be an increase in population in this area, we hope before long to be able to consider further accommodation for a school, and we will certainly bear in mind the particular denominational need to which the Question referred.

    Local Education Authority Awards (Students Union Subscriptions)
    Mr. Martenasked the Secretary of State for Education and Science what limits are placed upon expenditure by local education authorities for the amount they pay towards the compulsory membership of the Students Union for students at universities on local authority awards; and if he will make a statement.
    Mr. Goronwy Roberts: Local education authority awards for first degree and designated comparable courses cover the full cost of subscriptions to student unions
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    where membership is obligatory. Student union subscriptions are subject to the Government's prices and incomes policy.
    Mr. Marten: Yes, but surely, if these students unions are a closed shop—as they often are in some universities—and if they decide, once the prices and incomes policy permits, to double the subscription, why should ratepayers be forced to pay what the union demands? Can the hon. Gentleman give an assurance that these are payable only to unions with no political affiliation?
    Mr. Roberts: I can certainly give an assurance on the second point. I have considerable sympathy with what the hon. Gentleman says about how high such subscriptions should go. Discussions are now going on among the Department, the universities, the University Grants Committee and the local authority associations about students' fees generally. They might look at this, as it is so often part of the tuition fee, and might possibly make a recommendation.

    Wales (Veterinary College)
    Mr. Gwynfor Evansasked the Secretary of State for Education and Science what plans he has for the establishment in Wales of a veterinary college.
    Mr. Goronwy Roberts: I would refer the hon. Member to my reply to my hon. Friend the Member for Cardigan (Mr. Elystan Morgan) on 27th June.—[Vol. 749, c. 73–4.]
    Mr. Evans: Is the hon. Gentleman aware that the establishment of a veterinary college in Wales has been urged for at least 20 years by those who best know the need, and that the need is now increasing and the situation becoming acute because of the increasing number of veterinary graduates who are taking posts overseas?
    Mr. Roberts: There are two or three points to bear in mind here. As I informed my hon. Friend the Member for Cardigan (Mr. Elystan Morgan) the other day, existing facilities for veterinary studies in Great Britain are at present expected to meet the demand for places and the need for qualified veterinarians. However, if the position in Wales is such

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    as to require the setting up of a department in veterinary medicine and surgery, it should be by representation by the university to the University Grants Committee, which, I am sure, would examine any such proposal with all due care and sympathy.

    Nursery Schools (Northern Region)
    Mr. Bob Brownasked the Secretary of State for Education and Science if he will to increase the numbers of nursery schools and classes in the Northern Region, particularly for the children of women teachers and mature women students, in order to encourage more married women to return to or take up teaching.
    Mrs. Shirley Williams: My right hon. Friend issued a circular in December, 1965, encouraging local education authorities to extend their nursery facilities where this will increase the return to service of married women teachers, and I would welcome further proposals from authorities in the north within its terms.
    Mr. Brown: Does my hon. Friend not agree that many more married women teachers would be encouraged to return to the profession if we had more purpose-built nursery schools?
    Mrs. Williams: Under the addendum the number of nursery schools opened in the North-East Region has been fewer than most other regions, which suggests that there is reason for greater expansion there. We are aware of the possibility arising from opening purpose-built nursery schools, but we do not feel that the existing capacity of schools has yet been fully exploited.
    Mr. Hornby: Will the Minister indicate the number of teachers coming into the profession arising out of the opportunities given in this circular?
    Mrs. Williams: I cannot answer the question in detail without notice, but about 7,000 married women returned to the schools last year, which was the largest figure so far recorded. There is reason to believe that this has been stepping up quite fast since the addenda were brought in to relax the circumstances in which nursery schools may be opened.
    Mrs. Renée Short: Is my hon. Friend now prepared to withdraw the Circular
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    on nursery education in order to give L.E.A.s the completely free hand in setting up nursery schools which many of them want? How much of the £16 million that my right hon. Friend mentioned is to be allocated to the educationally deprived areas for the purpose of setting up nursery schools on the lines suggested by the Plowden Report?
    Mrs. Williams: I ask my hon. Friend to await a further statement to the House about the first part of her question, because we have said on a number of occasions that we wish to have full consultation with associations of teachers and local authority organisations about the Plowden Report and my right hon. Friend has only just received the last of these representations. A further statement will be made on the point which my hon. Friend raised. The amount which was indicated by my right hon. Friend was for school buildings and it does not affect the position with regard to nursery classes.

    Teacher Supply (Northern Region)
    Mr. Bob Brownasked the Secretary of State for Education and Science what steps he is taking to improve the supply of teachers in the Northern Region.
    Mrs. Shirley Williams: My right hon. Friend has taken steps to improve the supply of teachers in the whole country by the means described in his 14-point Programme. We are also trying by means of the quota to ensure that the available teachers are fairly distributed between authorities.
    Mr. Brown: If the present methods of improving teacher supply are not rapidly accelerated, then, short of an emergency training scheme such as we had after the war, how does my hon. Friend intend to raise the school leaving age in 1970?
    Mrs. Williams: The pupil-teacher ratio is steadily improving. The increase in the number of teachers going to training colleges has been phenomenal in the last few years. In the Northern Region, among the authorities which have indicated that they are under quota, the position has improved in all cases with the exception only of the North Riding.

    Secondary Reorganisation (Beverley)
    Mr. Wallasked the Secretary of State for Education and Science, what arrangements are being made for the reorganisation of secondary education in Beverley.
    Mrs. Shirley Williams: I have written to the hon. Member.
    Mr. Wall: Is the question of setting up a sixth form college entirely for the decision of the local authority?
    Mrs. Williams: The local authority has suggested that there should be an all-through comprehensive school in Beverley. The Department of Education has indicated that it has agreed to receive further information from the governors of Beverley School with regard to the question whether the numbers would be such that a sixth form college would be viable. Until Section 13 notices have been both applied for and approved by my right hon. Friend, no final decision can be made about the Beverley scheme.

    Secondary Reorganisation (Bromley)
    Mr. Huntasked the Secretary for Education and Science when he expects to be able to give a decision on the scheme for the reorganisation of secondary education submitted to him by the London Borough of Bromley.
    Mrs. Shirley Williams: There have been informal consultations between officials of the authority and of the Department but my right hon. Friend has not yet received any formal proposals from the authority calling for his decision.
    Mr. Hunt: I understood that these proposals had been submitted four months ago. I should like the hon. Lady to reconsider that Answer. In any case, will she please realise that the continuing delay in this matter is causing a great deal of local concern and difficulty and, in particular, is frustrating the development of one urgently needed educational project within my constituency, details of which I shall send her later today?
    Mrs. Williams: Perhaps I could clarify the position by giving a few more details. The scheme was approved in principle in June, 1966, by the local education autho-
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    rity, but the detailed scheme, which has been discussed informally between the chief education officer and the Department, has not yet been submitted to the education committee. We hope that that will be possible this autumn, whereupon a formal decision can be made about the authority's scheme.

    School Meals
    Mr. Huntasked the Secretary of State for Education and Science whether he has reached a decision on increasing the price of school meals.
    Mr. Crosland: Yes, Sir, I would refer the hon. Member to the statement made on Monday by my right hon. Friend the Minister without Portfolio.
    Mr. Hunt: Is the right hon. Gentleman aware that the decision to increase the price of school meals, which I support, can make sense only if a major part of the £20 million a year which is being raised is devoted to improving outdated primary schools and the expansion of universities and technical colleges? What guarantee can he give that this will in fact happen and that the money will not merely be absorbed in general Government extravagance in other spheres?
    Mr. Crosland: Ignoring the last phrase in the hon. Member's question—[HON. MEMBERS: "Why."]--he was, first of all, incorrect in a figure. The saving on school meals will not be £20 million but £16 million. The hon. Member may not have noticed that within the same statement my right hon. Friend made a rather striking announcement about Plowden educational priority areas.
    Dr. David Owenasked the Secretary of State for Education and Science (1) what action he intends to take over the findings relating to school meals disclosed in the official Report on Circumstances of Families;
    (2) in view of the fact that only one in every four children of full-time wage earners entitled to free school dinners are obtaining them, whether he will now take action to remedy this situation.
    Mr. Crosland: We shall arrange for publicity campaigns to ensure that parents are aware of their entitlement. We are now reviewing the arrangements for free-

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    meals to make sure that children can receive them without embarrassment either to themselves or to their parents. I have set up a working group jointly with the local education authorities to study these and related matters; it is having its first meeting today.
    Dr. Owen: Would my right hon. Friend consider putting on that working group some outside sociologists to advise on increasing the uptake of school meals? Does he not agree that the figures of low uptake are an indication that means testing, as at present exists, is very unsatisfactory and that this does not arise from out-dated dogma or memories of the 1930s but is a reflection of present-day practice?
    Mr. Crosland: Quite apart from the working group, we have asked for an inquiry to be made by social scientists in Professor Titmuss's department of the London School of Economics to examine the causes which lead to the low take-up of free school meals. That point, I think, is covered. What the low uptake figure reveals, I think, is that not only in school meals but also in many other fields we have still not discovered satisfactory methods by which we can make it clear to people who are entitled to free benefits that they are so entitled and how best they may claim them.
    Mr. Pardoe: Is the Minister aware that many hon. Members on both sides of the House welcome the statement that a committee has been set up? Will he say whether this committee is prepared to accept suggestions from individuals and organisations on this point?
    Mr. Crosland: I should be grateful if any hon. Member or any organisation would submit suggestions to us. We have an open mind. It is not a simple question because ultimately it is a matter for the local education authorities. There is an enormous variety of different arrangements for the free meals part of the service. I am very ready to receive suggestions from any quarter.
    Mr. Biffenasked the Secretary of State for Education and Science if he is satisfied that the school meals service will be adequately supervised during the forthcoming school autumn term; and if he will make a statement.
    Mr. Crosland: Responsibility in this matter rests with the local education authorities, and I have nothing to add to the reply given to the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) on 13th July.
    Mr. Biffen: Is not the ability of the right hon. Gentleman to answer this Question really determined by the outcome of the dispute over teachers' pay? Will he, therefore, use this opportunity to inform the House of the views of his Department on the Honeyman arbitration proposals and the machinery whereby his Department—
    Mr. Speaker: Order. The Question is about the school meals service.
    Mr. Crosland: I have already made my views clear on this point. I did so in answer to Questions yesterday. To answer the school meals part of the hon. Gentleman's supplementary question, this is a matter of opinion, on which anybody can have a view. I should be surprised if, in the light of the announcement I made yesterday, the threat to carry out sanctions in respect of the school meals service looks as likely to be carried out today as it did 24 hours ago.

    C.E.R.N. (Large-scale Atom Smashing Machine)
    Mr. Moonmanasked the Secretary of State for Education and Science what efforts have been made by his Department to encourage the Council of C.E.R.N. to site in Great Britain the proposed large-scale atom-smashing machine; and if he will make a preliminary statement on the arrangements for the project.
    Mr. Goronwy Roberts: In 1965 Her Majesty's Government, without commitment to the project, offered a site at Mundford in Norfolk. We have provided C.E.R.N. with full information about this site, which is now under consideration, together with eight sites in other countries.
    Mr. Moonman: Is the Minister satisfied that all possible information has been given to C.E.R.N. in support of our application? When is a decision on the choice of site likely to be reached?
    Mr. Roberts: I can give that assurance. Two years ago, in answer to a

    961
    C.E.R.N. questionnaire, the Science Research Council produced an illustrated brochure describing the site and its amenities. Since then, following interdepartmental consultation, we have provided C.E.R.N. with geotechnical information and there have been discussions with officers of C.E.R.N. about certain issues arising from this information. The present intention of the Council of C.E.R.N. is to consider, at its meeting in December of this year, a detailed report on all the nine sites which are now being considered.
    Mr. Sheldon: Is my hon. Friend aware that in the whole matter of centres for many international organisations, we as a country are particularly ill-served? Will he draw this to the attention of any international organisation, like C.E.R.N., which is considering the establishment of a new centre?
    Mr. Roberts: As I said, all the information—and, indeed, the arguments for this site—has been offered to C.E.R.N.

    International Education
    Mr. Juddasked the Secretary of State for Education and Science what is the total expenditure by his Department on practical programmes for international education; and what official advice he has given to local education authorities in this respect.
    Mrs. Shirley Williams: Local education authorities finance the education service with the help of rate support grant, and practical programmes for international education are within their discretion. The Department makes grants to the Council for Education in World Citizenship, to the International Bureau of Education and to the Central Bureau for Educational Visits and Exchanges.
    Mr. Judd: In view of the Government's express commitment to the United Nations, the Commonwealth and now to entry into the Common Market, would not my hon. Friend agree that it is sad that in the past 15 years we have fallen so badly behind the rest of Western Europe in this respect? Will her Department give every possible encouragement to increasing these programmes in every possible way?
    Mrs. Williams: While not entirely accepting my hon. Friend's comment
    962
    about the difference between this and other countries, I share his desire to widen the syllabus to make it as internationally-minded as possible; and some steps to this end are being taken by the Schools Council. Before the Department at present is an application for an increased grant for the Council for Education in World Citizenship, and a decision about this will be made shortly.

    Coloured Teachers
    Mr. Juddasked the Secretary of State for Education and Science what is the estimated number of coloured teachers at present serving in schools throughout England and Wales.
    Mr. Goronwy Roberts: I do not have this information.
    Mr. Judd: Would not my hon. Friend agree that the employment of these people is one of the best ways of promoting interracial understanding and that the opportunities should be increased in every possible way? Will the Department do everything possible to encourage recruitment in this respect?
    Mr. Roberts: Certainly, but certain difficulties arise. In particular, immigrant teachers sometimes do not have a sufficient command of English or are not familiar with modern teaching methods. We have sponsored four four-term courses which are intended to help these teachers to overcome these difficulties.

    Local Authorities (Educational Maintenance Allowances)
    Mr. Archerasked the Secretary of State for Education and Science how many local education authorities are paying educational maintenance allowances at the rates of at least £107, £130, and £142 for ages 15, 16 and 17 years, respectively.
    Mrs. Shirley Williams: This information is not available.
    Mr. Archer: Does my hon. Friend recollect that these are the figures which she quoted on 15th June as being the equivalent of the Weaver Recommendations? Should not we know if they are being paid?
    Mrs. Williams: My hon. Friend may be aware that, since the introduction of

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    the general grant in 1959, this has been entirely a matter for the discretion of local education authorities. My previous figures were given in the light of the change in the value of money since the Weaver Report originally made its recommendations known.
    Sir E. Boyle: Is the Minister aware that, despite what she said about the general grant, it is the overwhelming feeling in this House that these figures should be available? Would she kindly discuss the matter with the local education authorities?
    Mrs. Williams: I will certainly bear the right hon. Gentleman's suggestion in mind, but I would point out that the overall figure shows an increase from £1·25 million in 1964 to £1·3 million in 1965–66. We therefore have reason to believe that the total cost is increasing.

    Young People (Voluntary Service)
    Sir R. Russellasked the Secretary of State for Education and Science if he will take steps to encourage more volunteers, particularly students and other young people, to help overcome poverty by taking over community work in the welfare and education services.
    Mr. Goronwy Roberts: My right hon. Friend hopes soon to make an announcement about the Government's plan for developing voluntary service by young people.
    Sir R. Russell: When is that announcement likely to be made?
    Mr. Roberts: I think, shortly. We are at present engaged in discussions with various organisations about the best possible scheme. These are proceeding expeditiously and encouragingly.

    CYPRUS
    Mr. Winnickasked the Prime Minister what recent consultations he has had with the President of Cyprus over matters of common concern.
    The Prime Minister (Mr. Harold Wilson): We are in constant touch with the Government of Cyprus, as with other Commonwealth Governments, on matters of common concern.
    Mr. Winnick: Is my right hon. Friend aware that there is some concern that the Greek military junta will try to stage a coup in Cyprus? Can he say whether the so-called Greek Government have been clearly warned not to interfere in the internal affairs of this Commonwealth country?
    The Prime Minister: I have heard these rumours about an Enosis coup, but I am glad to say—as, no doubt, my hon. Friend is glad to know—that the Greek Minister of Foreign Affairs has categorically and emphatically denied that there is any truth in these rumours.
    Mr. Longden: Has the right hon. Gentleman noticed the recent statement of the Secretary-General recommending that the emergency force for which we and a few other nations pay, should remain in Cyprus for another six months and reminding the countries concerned that during all these years no effort has been made by the two communities concerned to resolve their problems by negotiation?
    The Prime Minister: I agree that this is disappointing. In the circumstances, it is necessary to continue to contribute to the peace-keeping force; but it is disappointing that more progress is not being made.

    EGGS (PRODUCTION AND IMPORT)
    Mr. Bakerasked the Prime Minister if he will make arrangements to coordinate the activities of the Minister of Agriculture, Fisheries and Food and of the President of the Board of Trade in relation to the production and import of eggs; and if he will make a statement.
    The Prime Minister: My right hon. Friends already work closely together on matters of common concern and no new arrangements are needed.
    Mr. Baker: Will the right hon. Gentleman take steps to exclude the import of foreign eggs during peak periods of British production? Does he realise that the small egg producers of north-east Scotland and elsewhere face ruin unless these steps are taken?
    The Prime Minister: I am aware of the problem, though imports in the first

    965
    half of this year, about which concern has been expressed, are hardly any higher, on average, than in the past six years. The hon. Gentleman will have seen the announcement made by my right hon. Friend yesterday about the stablishment of a Reorganisation Commission to go into the whole question of egg marketing Of course, questions about imports and other relevant matters will be the sort of things that it can discuss.
    Sir Frank Pearson: Will the right hon. Gentleman take it from me that his right hon. Friend the President of the Board of Trade has very strange ideas as to what constitutes dumping? Will he take steps to assure himself that British egg producers are getting the protection for which they can legitimately ask?
    The Prime Minister: While starting off with the utmost willingness, I am afraid that that is something I cannot take from the hon. Gentleman. My right hon. Friend is very realistic about this and he has certain statutory duties in the matter of dumping which must be fulfilled. The right thing here is, as I say, that the Reorganisation Commission will be able to consider this as well as other matters affecting the prosperity of egg producers in this country; and, of course, there will be continuous discussions between the Departments concerned and the representatives of the farmers' unions.
    Mr. Godber: Can the Prime Minister say that those Ministers are co-ordinating their activities? Is he aware that while the Minister of Agriculture, Fisheries and Food is trying to curtail over-production, the President of the Board of Trade is at the same time actively considering a 45 per cent. grant for 1 million-bird units in development areas? Surely they are working contrary to each other?
    The Prime Minister: No, Sir. I do not think there is any conflict between their policies. The right hon. Member for Grantham (Mr. Godber), who is, I think, concerned with the import situation, will know that whereas the figure this year, as a percentage of total United Kingdom supplies, was 2–6 per cent., it was 3–3 per cent. in 1963, when he had some responsibility for it.

    RHODESIA
    Mr. Molloyasked the Prime Minister if he will make a further statement concerning developments in Rhodesia.
    Sir Knox Cunninghamasked the Prime Minister if he will make a statement, before the House rises for the long Recess, setting out the steps which the United Kingdom Government have taken to reach a solution for constitutional independence for Rhodesia; and what further action he is taking to reach a settlement with Mr. Ian Smith.
    The Prime Minister: I would refer hon. Members to the statement I made to the House last Tuesday.—[Vol. 751, c. 325.]
    Mr. Molloy: Can my right hon. Friend say whether any representations have been made to those countries, particularly West Germany, who are not playing the game and acknowledging the Resolution of the United Nations? Further, does he intend to make quite clear to those people who might be personally affected by the implementation of sanctions that the real cause is not the sanctions themselves but the illegal régime which caused them to be brought into force?
    The Prime Minister: I think that my hon. Friend's second point is well understood. My right hon. Friend the Foreign Secretary is in touch with any countries which are known, whether deliberately or inadvertently, to be bringing in imports outside the terms of the United Nations sanction. West Germany has acted pretty decisively about this. The figures that have been published both for West Germany and other countries referred mainly to orders placed before mandatory sanctions were imposed.
    Sir Knox Cunningham: How long will the negotiations last? Does the Prime Minister expect a settlement before we come back in October?
    The Prime Minister: After long experience of negotiations and other dealings with the gentleman in question, I would find it very difficult to make any forecast about how long they would last. We still have no clear view, of course, of whether, even if there were any settlement that this House could regard as

    967
    meaningful, it would not be thrown over as soon as certain members of Mr. Smith's so-called Government got at it.
    Mr. Faulds: Has the Prime Minister considered the effect of this continued hobnobbing with the rebel regime—and, indeed, the very fact of its existence—on the political life and prospects of President Kaunda of Zambia?
    The Prime Minister: We have been deeply concerned about the problem of Zambia throughout, not only the internal situation there, because U.D.I. did lead to many internal difficulties, but also her economic difficulties. We have given considerable help to Zambia, but I do not think that my statement on Tuesday in any way affects that.
    Mr. Thorpe: Would the Prime Minister confirm that there could be no settlement with Rhodesia unless and until it had been debated and approved by this House?
    The Prime Minister: Any settlement would certainly have to be approved by this House. I feel, as my right hon. Friend has said, that if there were any major change in the situation, involving some of the things to which I have referred as possibilities, we would have to consider whether the House should not be called back during the Summer Recess. But I doubt whether progress might be made that quickly.
    Sir C. Osborne: In searching for an honourable settlement, will the Prime Minister not be discouraged by the extremists either in Rhodesia or in this House?
    The Prime Minister: I am sorry that the hon. Gentleman should use such a form of words to describe some of his hon. Friends, though, at any rate, I agree with what I am sure is in his mind, which is that some of those who have been supporting extreme opinions of that kind in this House are, fact, the worst friends of Rhodesia, and even of Mr. Smith himself.
    Mr. Gardner: Will my right hon. Friend make it very clear that, despite some comments in the British Press and in the Press overseas, these talks of preliminary discussions are not the result of any weakening of resolve on the part of the Government in relation to the six principles?
    The Prime Minister: I think that was made very clear on Tuesday. We have made it very clear many times that we stand firmly by the six principles. I believe that to be the position of right hon. and hon. Members in all parts of the House, because this has been the continuing policy of all Governments. We stand firmly by these principles.

    BRITISH-ADMINISTERED TERRITORIES (ARAB TERRORIST ORGANISATIONS)
    Sir F. Bennettasked the Prime Minister if he will make a statement on his policy towards efforts which are being made by United Arab Republic controlled terrorist organisations to infiltrate and influence organisations which function in British-administered territories for purposes of subversion of law and order.
    The Prime Minister: Our policy is to resist such efforts wherever they may be made.
    Sir F. Bennett: Would not the Prime Minister agree that one of the major causes of unrest throughout the whole of the Middle East, and even further afield to other British dependencies, is the unending efforts of President Nasser and the United Arab Republic to interfere in the internal affairs of other countries? In this context, does he think that the occasional dispatch by his right hon. Friend the Foreign Secretary of billets-doux to President Nasser is adequate to meet the challenge.
    The Prime Minister: The matter has been very fully discussed in our debates about Aden and about the South Arabian situation. But I thought that the Question related to U.A.R. controlled terrorist organisations in British administered territories. If it is Aden, that has been fully dealt with in debate, but if the hon. Member has other territories in mind, perhaps he will let me know about them.
    Mr. Dodds-Parker: As this affects Aden, what does the Prime Minister intend to do about the use of gas in the Yemen, in view of the fact that both Egypt and ourselves are signatories to the Geneva Convention of 1925?
    The Prime Minister: I answered a question on the subject of the second part

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    of that supplementary question last week. I do not think that the first part arises from a Question about events in British administered territory. The Yemen is not a British-administered territory.

    PRIME MINISTER AND PRESIDENT JOHNSON (COMMUNICATIONS)
    Mr. Martenasked the Prime Minister how often he has used the hot line to President Johnson.
    The Prime Minister: President Johnson and I are in frequent touch by a number of methods, but it would not be in the public interest to give details.
    Mr. Marten: I am sure that it would be of very great interest to the public to know of some examples of the political intimacy that exists between the President and the Prime Minister. Has the hot line ever been used operationally by the Prime Minister?
    The Prime Minister: I can certainly say that, of course, it has been used operationally, but as to the number of times it has been used and for what purpose it was used, it has never been the practice of either myself or my predecessors to give details. The hon. Gentleman, with his well known interest in and knowledge of electronic matters, will recognise that this is not the only hot means of communication I have with the President. Others are very frequently used, too.

    NUCLEAR WEAPONS
    Mr. Hamlingasked the Prime Minister what representations have been made to him about the future policy of Her Majesty's Government in relation to the development of atomic weapons; and whether he will make a statement.
    The Prime Minister: The Government receive many approaches from all shades of opinion on this subject. As I made clear on 13th June in reply to a Question by my hon. Friend the Member for Croydon, South (Mr. Winnick), we are not intending to embark on a new generation of nuclear weapons.—[Vol. 748, c. 299.]
    Mr. Hamling: I thank my right hon. Friend for the latter part of his reply, but has his attention been drawn to the Amendment on the Order Paper? Will
    970
    he take it from me—[HON. MEMBERS: "Oh."]—that there are some on this side who, while not wholly supporting it—[Interruption.]
    Mr. Speaker: Order. It is not out of Order for the Prime Minister to take something from a back bencher. Mr. Hamling.
    Mr. Hamling: I have finished, Sir.
    The Prime Minister: There are, I understand, two Amendments on the Order Paper. My hon. Friend did not make it quite clear which of them he did not wholly support. In either case, it is probable that we shall be debating this whole question of defence, and possibly at least one of the Amendments. I am hoping to catch your eye, Mr. Speaker, later in the day, and will hope to deal with any points raised.
    Mr. Speaker: No promises.

    NUCLEAR ENERGY (PEACEFUL USES)
    Mr. Hamlingasked the Prime Minister what changes he will now propose with regard to departmental responsibility for the peaceful uses of nuclear energy.
    The Prime Minister: I see no reason to make any further changes in departmental responsibilities in this field.
    Mr. Hamling: Will my right hon. Friend make sure that the Minister of Power gets more influence in this field than he has so far?
    The Prime Minister: My right hon. Friend has a very great deal of influence, because the siting and general planning of electricity generation by nuclear clingy is a matter for the Central Electricity Generating Board as well as for the nuclear authorities. But the old argument as to whether the whole responsibility should be for the one or the other is a very difficult one. It is under constant review, and at the moment I see no reason for changing responsibility.
    Mr. Emrys Hughes: Can the Prime Minister tell us who is responsible for the non-peaceful use of nuclear energy?
    The Prime Minister: That supplementary question does not arise out of this

    971
    Question, but my hon. Friend will know that I have certain responsibilities in this field, together with my right hon. Friend the Secretary of State for Defence.
    Sir H. Legge-Bourke: As the Select Committee on Science and Technology has been looking at our nuclear reactor programme, will the Prime Minister give an assurance that before any changes are made on this front he will, at least, allow publication and discussion of the Select Committee's Report, which may, I think, be expected before the end of the year?
    The Prime Minister: I am sure that we are all looking forward to the Report of the first session of the Select Committee. I know with what thoroughness the matter is being investigated, but, as I say, I do not see any present reason for making a change in the present arrangements.

    EUROPEAN ECONOMIC COMMUNITY
    Mr. Elystan Morganasked the Prime Minister if he will give an assurance that the Secretary of State for Wales or another Minister from the Welsh Office will attend any negotiations which are conducted with a view to the admission of Great Britain into the European Economic Community.
    The Prime Minister: I would refer my hon. Friend to the Answer I gave on 6th June to a Question by my right hon. Friend the Member for Easington (Mr. Shinwell).—[Vol. 747, c. 189.]
    Mr. Morgan: Would not the Prime Minister concede that the problems and conditions of Northern Ireland, Scotland and Wales are so distinctive in character that they can be properly articulated only by separate representation at such talks, if the talks occur?
    The Prime Minister: It will be clear from my previous Answer that it is too early to say which of my right hon. Friends will be actually engaged in negotiations when negotiations start, but my hon. Friend can be assured that, in all the preparation of our briefs on these questions and all the work we have done before and since making the application, my right hon. Friend the Secretary of State has played a very full part; and that the special needs of Wales, as of
    972
    certain parts of England—including Yorkshire, which someone mentioned—have been fully taken into account.

SUEZ CANAL
Sir Alec Douglas-Home Sir Alec Douglas-Home (by Private Notice) asked the Secretary of State for Foreign Affairs if he will make a statement about the opening of the Suez Canal to international shipping.
The Secretary of State for Foreign Affairs (Mr. George Brown): As the House is aware, the canal is blocked between Port Said and Ismailia, as well as to the south of Ismailia, and it is also obstructed between the Great Bitter Lakes and Suez. There has been no change in this situation since I last reported to the House.
I deplore the fact that no steps have yet been taken by the United Arab Republic authorities, either alone or in conjunction with others who are willing to help, to start work on clearing the obstructions. The continued failure to take these steps is clearly contrary to the Constantinople Convention of 1888.
This is not a matter which affects this country alone. I am in close touch with the Governments of other countries affected and am considering with them how we can create conditions to get the canal opened as soon as possible to the shipping of all nations. I discussed this matter with Dr. Fawzi and with the Israeli Foreign Minister, Mr. Eban when he passed through London last weekend.
I have also made it clear in the United Nations General Assembly that in our view any settlement of the problems of the Middle East must cover the right of free and innocent passage through the canal.
As the House knows, the United Nations is urgently tackling these problems; and in this connection the stationing of United Nations Observers in the canal area is a useful first step.
Sir Alec Douglas-Home: The House will be glad, I am sure, to hear from the right hon. Gentleman that he is in touch with the other maritime nations concerned in trying to find ways and means of opening the canal. Is it not a fact that Egypt recognises the jurisdiction of

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the International Court in this matter? Is there not therefore something to be said for taking out an injunction against Egypt to require her to open the canal?
Mr. Brown: No, as I said earlier, there are difficulties in taking that course—[HON. MEMBERS: "Oh."] I remind the right hon. Gentleman that when he was in my job he did not himself accept the responsibilities and agree to accept the authority of the International Court in matters affecting this kind of situation. I am a little inhibited by the decisions made by a predecessor Government in this; in any case, apart from that, I do not think that this would be a very good course to pursue. I think that we are probably doing better the way we are currently doing.
Sir Alec Douglas-Home: May I release the right hon. Gentleman from any feeling of inhibition which he may have? Will he give one more thought to this matter, which seems to me a proper way in which to proceed?
Mr. Brown: Of course, in opposition it is very easy to release the Government of the day from the inhibitions which previous Ministers placed on it. In fact, the British Government in the past, I regret to say, put the very inhibition on the use of the International Court which would allow the Egyptians to claim that these inhibitions were used by us.
But, that apart, I assure the right hon. Gentleman that we are much more likely to achieve the purpose which he and I both have in this matter by pursuing the political steps I am now currently pursuing.
Mr. Raphael Tuck: How does my right hon. Friend reconcile his idea of free and innnocent passage through the canal with President Nasser's avowed intention of never allowing Israeli ships to pass through the canal?
Mr. Brown: One of the things we all have to work out is a settlement in that area. Everyone, of course, is making propaganda statements at the moment and taking up a position from which they would want to move. Our business, as I said in my original Answer, is to try to get to the situation where we can provide the climate in which a settlement can be arranged. That we are doing and I do not think that it will be any use taking up
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a position of supporting one propaganda statement or the other.
Mr. Thorpe: Is the Foreign Secretary aware that some of us hope that he will not excuse inactivity by reliance on Conservative precedent? How many British nationals are still in the Bitter Lakes area, are the southern approaches blocked structurally or politically, and is it not time that more was done about it than consideration and talk?
Mr. Brown: Inactivity is something for which I do not think I have to blame anybody at all. I am very busy indeed on this matter. While I am very happy to rely on Conservative precedents for other things, I do not need to do so on this. On the other hand, the way of doing it and how one might get it arranged is a complicated matter, as I am sure the right hon. Gentleman understands.
On the question of the number of people on ships in the Great Bitter Lake, I do not carry that in my head, but it is not all that many. During the last three days a Canadian diplomat visited the ships, saw the masters and saw the crews and satisfied himself about the conditions. I have had a very full report about the situation there. We are in touch with the owners about replacing those members of the crews who want to come home, and this will be done.
On the last point, of physical obstruction, no I do not think that it is physical in the south.
Mr. Leadbitter: Is the Foreign Secretary aware that there is widespread opinion in this country that the policy of trying to be all things to all men in the Middle East is not bringing this country any great credit? Is he further aware that there is much concern about the political manœuvrings, particularly by Russia, in Egypt? Would it not be wise to state quite clearly that any access at some point in the Suez Canal is acceptable only if it carries with it the access for Israeli ships?
Mr. Brown: I am not quite sure that that would be a sensible declaration for me to make. What we want to do is to get the canal open to ships of all nations and to ensure that we are able to use it. This is what we are trying to do.
Mr. Tapsell: The right hon. Gentleman has now confirmed reports that there is no physical blockage of the canal between the Great Bitter Lakes and Port Tewfik. Is it not a fact that our ships are being held in the Great Bitter Lake as political hostages of the United Arab Republic? What is he going to do about it?
Mr. Brown: I hope that the hon. Member will accept my assurance that, in company with those other maritime Powers who are as much concerned as we are in this matter, we are trying to arrange the conditions in which the canal could be opened. If he will give himself a moment to think about this, he will realise that this is much more a political than a physical matter. Let us go on with the political policies we are pursuing.
Mr. Paget: Does not my right hon. Friend feel that the time is rapidly approaching when one should say to the Egyptians that if they continue to refuse to perform their international obligations to open the canal we shall ask the Israelis to do it?
Mr. Brown: I regard that as the kind of remark which, made here, goes down all right, but which creates very many additional difficulties elsewhere. I still say that what we have to do is to create a climate in which we can not only open the canal, but enable some other changes to take place in that area. This is a political matter to be conducted with great care and not by statements made in this House which give us a certain amount of enjoyment when we make them, but which are of absolutely no use afterwards.
Mr. Ian Lloyd: As the right hon. Gentleman has completely confirmed that the canal is not blocked to the South, will he say whether or not the United Arab Republic has specifically threatened to obstruct the departure of our ships or any other ships southwards?
Mr. Brown: I repeat that there are physical obstacles in the canal, but actual movement of these obstacles would not be a very great engineering problem. The great problem about opening the canal, let us face it, is a political one[Interruption.]—on which many nations and the United Nations itself are now engaged. I urge the House, both sides of
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it, to let us concentrate on the political difficulties to opening the canal.
Mr. Mendelson: Will my right hon. Friend accept that the difficulties that he is facing in this matter are well understood, that it is also clearly understood that he must act in concert with other maritime Powers concerned, and that as long as he continues to work for a solution which will safeguard the equitable rights of all nations in the Middle East he will have the support of this side of the House?
Mr. Hastings: Has the right hon. Gentleman yet requested permission from the Israelis for access to the ships for the supplies that are needed for them? Can he summon up his courage to that extent?
Mr. Brown: I do not quite understand what the reference to summoning up my courage means. We have access to the ships; they have supplies. We are in contact with them, they are in contact with each other, and they are in contact with their owners and so are we. There is no problem so far as this is concerned.
Mr. Alfred Morris: Is my right hon. Friend aware that many hon. Members on both sides of the House warmly appreciate the work that he has done in the matter—[HON. MEMBERS: "What work?"]—but can he say any more about the plight of the "Scottish Star" and, in particular, about the health and welfare of members of its crew? Is he aware of the reports about an outbreak of dysentery among the members of the crew?
Mr. Brown: When our Canadian colleague visited them on 23rd July the report that I then had was that there was no difficulty of the kind that my hon. Friend mentions and that the crew, as far as one can be in these circumstances, were reasonably happy and reasonably well looked after. But I repeat that we are arranging with the owners for their replacement. We are doing our utmost to get the canal opened and get the ships out in concert with the other countries that are affected like we are.
I do not know quite know what it is that hon. Members opposite who are jeering expect us to do. This is, and must be, a political operation and can be dealt with only in a political way.
Mr. Heath Mr. Heath rose—
Mr. Woodburn: On a point of order, Mr. Speaker. Is it not an unwritten tradition of the House that parties will not use for party political propaganda the interests of this nation in foreign affairs and that it is more important to protect the nation's interest than to score a victory for a party—
Hon. Members: Oh.
Mr. Speaker: Order. That is a wonderful statement of political philosophy. I wish it were true.
Mr. Heath: We understand the political difficulties involved in these problems. What is more, I think that the whole House realises that it may take some time, indeed a considerable time, to resolve these political problems.
The Foreign Secretary appeared to confirm in his answer to a supplementary question what has already been said in this House, that there is no physical obstacle in the canal to the south of the Great Bitter Lakes. We believe this to be true. First of all, will he confirm this?
Secondly, if this is the case, there can be no justification in international law for these ships being detained by the United Arab Republic in the Great Bitter Lakes. Therefore, can he not take action through the Secretary-General of the United Nations to ensure that the ships shall be allowed to proceed about their peaceful business through a canal in which there is no obstruction?
Mr. Brown: I am much obliged to the right hon. Gentleman for giving me a chance to put right something that I said earlier which, I understand, was misleading. There are, physical obstructions south of the Great Bitter Lakes. If I said something during the course of an answer to a supplementary question which made that sound differently, I am sorry. There are, to our certain knowledge, physical obstructions—[An HON. MEMBER: "In the main channel?"]—south of the Great Bitter Lakes. So the canal is physically obstructed there as well as in the North.
The point that I was trying to make—I am sorry if I confused it—was that clearing the physical obstructions will be a fairly short-run and simple arrangement; it is clearing the political diffi-
978
culties that will take time. Hon. Members opposite, having got the canal obstructed once themselves, might like to remember how long it took them to get it open then.

ALGERIA (BRITISH PILOTS)
Mr. Ronald Bell Mr. Ronald Bell (by Private Notice) asked the Secretary of State for Foreign Affairs what further information he has about the British pilots held in Algeria and what action Her Majesty's Government have in mind to procure their release unless some specific charge is preferred against them.
The Secretary of State for Foreign Affairs (Mr. George Brown): As the House will be aware, in response to our requests for consular access Her Majesty's Consul-General was allowed to see the two pilots on 17th July. They were then both cheerful and confirmed that they were in good health and that all their essential needs had been met. The Consul-General has asked for further access, but this has not yet been granted.
Her Majesty's Government are continuing to make repeated efforts to obtain the early release of the pilots. I regret that no reply has yet been received to the representations made by the Swiss Ambassador, who protects our interests in Algeria, or by Her Majesty's Consul-General, nor to the messages which I sent to the Algerian Foreign Minister, M. Bouteflika.
The Swiss Ambassador submitted on 25th July an urgent request for an audience with the Algerian Foreign Minister. He is repeating his request daily, but he has not yet had any positive answer.
As I have said before, the Algerians, in this matter, are acting contrary to international custom, but I am still hoping that they will respond to our representations.
Mr. Bell: Have not these men been held now for four weeks without any charges being made against them and with only one visit having been allowed on behalf of the British Government? Does not the Foreign Secretary feel that the representations which he has been making have not been effectual and that it is now time to consider what other

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action may usefully be taken by the British Government to exercise pressure upon the Government of Algeria?
Mr. Brown: I agree with all the first part of that supplementary question certainly, and am very concerned about it. However, I do not believe that the hon. and learned Gentleman, if he will allow me to say so with respect, is doing his constituents' interests any good with the second half of his question.
Mr. Ridley: Since the two pilots have now been detained for 27 days without trial, has the right hon. Gentleman gone to the United Nations to ask it what it can do? Further, has he asked the United Nations whether there might be erected some form of international habeas corpus to deal with cases of this sort in future?
Mr. Brown: It would take a very long time to get an arrangement for an international habeas corpus to be erected, and I should not like the pilots to be there all that time. I am using every channel open to us, direct and indirect. I am, just as in the case of the Suez Canal, more concerned with getting results than with making propaganda remarks in the House.
Mr. Molloy: Would my right hon. Friend not agree that the attitude of the Algerian Government has been an offensive affront to the principles of international law? Here are two innocent men being held without trial. Will my right hon. Friend not agree that further action must be required? These two individuals have committed no crime, so far as anyone knows, and, therefore, they are not being held for the purpose of being brought to justice. Surely, the interests of those two people are as important as if 2 million people were involved.
Mr. Brown: My hon. Friend is absolutely right. They are as important to me as if they were many millions. But I ask my hon. Friend to bear in mind that the making of denunciatory statements about the Government concerned does not necessarily help in getting the men out.
Sir W. Teeling: Has the right hon. Gentleman yet consulted the Spanish Government about the two Spanish
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policemen who have been got back already? Will that help in any way?
Is the right hon. Gentleman further aware, with regard to Tshombe and this matter as a whole, that many of us have applied to various Heads of State and that today I have had a reply from the President of France that he does not consider that France should interfere in foreign countries?
Mr. Brown: He must have been drawing a distinction between foreign and Commonwealth countries.
On the question of Spain, when I said just now, in answer to an hon. Member, that I have been using and am using every channel open to me, direct or indirect, I think that he may assume that I have the point in mind.
Mr. Rankin: Has my right hon. Friend any idea whatsoever of the nature of any difficulties which may be preventing the release of the pilots?
Mr. Brown: No, I would not like to speculate on that. The fact that the Algerian Head of State and the Foreign Minister have both been out of the country for quite a time may have had something to do with this. The fact that the decision about Mr. Tshombe has not yet been taken may have something to do with this; but I am not speculating on that. My business is to use every channel I can to get these men, who have not been charged, released as soon as I can, and that I am doing.
Lord Balniel: Does the right hon. Gentleman appreciate that we regard this as being a very serious matter, that two British nationals have now been detained without trial for approaching a month? What action has he taken to call to the attention of the United Nations that this is a direct breach of Article 9 of the Declaration of Human Rights? If the diplomatic endeavours are not successful, what further steps is the right hon. Gentleman thinking of taking during the Recess?
Mr. Brown: It is a very serious matter. That is the view I take and on which I have been acting. Article 9 of the Declaration of Human Rights really does not help us in this matter, because the provisions there laid down do not deal with an individual case of this kind. Anyhow, even if they did, the time scale

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involved is very considerable and one that I am not really prepared to entertain.
I have invited the Secretary-General of the United Nations to use his endeavours to reinforce ours. That is being done. All these channels, every single one of them—and there would have been no other channels open to right hon. Gentlemen opposite if they had been in my place—are being used, and we will get these men released as soon as we can. Talking about retaliatory or other action, in my view, would be a mistake and I do not propose to get drawn into it.
Mr. Selwyn Lloyd: Is the right hon. Gentleman aware that the whole House is very anxious about this matter, particularly those of us who have constituents related to one or other of these men? Is he also aware that some of us think that the diplomatic method is probably the best one and that we wish him well in that?

BUSINESS OF THE HOUSE
Mr. Heath: May I ask the Leader of the House to state the business of the House for the first week after the Recess?
The Lord President of the Council and Leader of the House of Commons (Mr. Richard Crossman): It is proposed that the House should resume after the Summer Adjournment on Monday, 23rd October, when the business will be as follows:
MONDAY, 23RD OCTOBER—In the morning—
Debate on a topic to be selected by the Liberals.
In the afternoon—
Concideration of Lords Amendments to the Dangerous Drugs Bill.
TUESDAY, 24TH OCTOBER—Second Reading of the Sea Fisheries (Shellfish) Bill [Lords] and of the Sea Fish (Conservation) Bill [Lords], which are consolidation Measures.
Consideration of Lords Amendments to the Leasehold Reform Bill.
WEDNESDAY, 25TH OCTOBER—In the morning—
Remaining stages of the Sea Fisheries (Shellfish) Bill [Lords] and of the Sea Fish (Conservation) Bill [Lords].
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Consideration of Lords Amendments to the Countryside (Scotland) Bill.
Debate on Northern Ireland Affairs. In the afternoon—
Consideration of Lords Amendments to the Medical Termination of Pregnancy Bill.
THURSDAY, 26TH OCTOBER—
Debate on the Report of the Tribunal of Inquiry on the Aberfan Disaster.
Motions on the Farm Amalgamations and Boundary Adjustment Scheme and on the Farm Structure (Payments to Out-goers') Scheme.
It is expected that the House will prorogue on Friday, 27th October, and that the new Session will be opened on Tuesday, 31st October.
Mr. Speaker Mr. Speaker rose—
Mr. Shinwell: Mr. Speaker, I understand that it is in order to ask a question at this stage.
Mr. Speaker: It is quite in order for the right hon. Gentleman to ask questions. All I was going to observe was that we have an important debate ahead of us, and I hope therefore, that right hon. and hon. Members will forgo the luxury of business questions as far as they can.
Mr. Shinwell: I want to put a very important question to my right hon. Friend. He has announced to the House that when we resume in the morning of 23rd October there is to be an innovation, and that one of the political parties in the House is to initiate a debate on a subject about which we have not yet been informed. This will be a great attraction and I want to know whether there will be a charge for admission.
Mr. Crossman: In view of the success that we had on the first occasion, which my right hon. Friend does not seem to have noticed, I will certainly consider his suggestion very seriously.
Mr. Gibson-Watt: May I ask an important question? There are now three outstanding matters of Welsh importance—the economic White Paper, the Local Government White Paper and the Aberfan Inquiry which we are to discuss on Thursday, 26th October. Can the right hon. Gentleman say when we shall discuss the two other important matters?
Mr. Crossman: I think that is a very reasonable question. We had one day on Welsh affairs. Of course, I do not count this as a Welsh affairs day. This is a matter of national importance and it means postponing the Welsh affairs debate. We shall have it as soon as possible.
Mr. Tapsell: Is the fact that the Government have given the first free kick after the Recess to the Liberal Party a sign of their anxieties of the disasters which may overtake them during the Recess?
Mr. Crossman Mr. Crossman rose—
Mr. Speaker: Order. I did ask hon. Members to forgo the luxury of questions. If they do not forgo them, I hope that questions will be real ones.
Mr. Tapsell: On a point of order, Mr. Speaker. With great respect, I would suggest that although my question may have been somewhat frivolously phrased it contained within it a most serious political point. I suggest, Sir, that this decision has been taken by the Government after the most careful consideration for very serious political reasons.
Mr. Speaker: This is wasting further time.
Mr. Crossman: I thank the hon. Gentleman for his keen interest in this matter. I simply say that the problem of the position of the third party and its right to select subjects for debate is a serious question which we are considering through the usual channels. Meanwhile, the Government decided to give some Government time for this purpose.

DEFENCE
Mr. Speaker: We come now to the debate on defence. May I announce to the House that I have selected the Amendment in the name of the right hon. Gentleman the Leader of the Opposition, but not the Amendment in the name of the hon. Member for Salford, East (Mr. Frank Allaun).
Mr. James Wellbeloved: While not dissenting from your Ruling on selection, Mr. Speaker, may I ask your advice on two matters? The House knows your great care to protect the rights of individual Members and minorities and your great efforts to maintain the reputation of Parliament.
First, it appears that the exclusion of minority Amendments put down by hon. Members on this side denies hon. Members the opportunity of demonstrating their views by voting in support of their Amendment.
Second, concerning Parliament's reputation, there is a small but growing minority in the House who feel that the near-certainty that this type of Amendment will not be called may be leading some hon. Members to add their names without serious intent.
I am sure that you will agree that, if true, this is very damaging to Parliament's reputation and might expose hon. Members to the growing opinion outside the House that all we are concerned with is paper procedure rather than serious matters. Would you take these two matters into consideration, Mr. Speaker, and give me your advice?
Mr. Speaker: The second half of what the hon. Member says is political comment and Mr. Speaker is not interested in the politics of anyone in the House.
The answer to the first half is that the selection of Amendments is left absolutely in the hands of Mr. Speaker and cannot be challenged or questioned. One of the difficulties of the procedure of the House may be that it has not yet devised methods by which members of the Government can vote against the Government easily.
If I may advise the House, supporters of the Amendment which is not selected may, if they catch my eye, traverse all the arguments which they would have

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put if the Amendment had been selected. When it comes to the vote at the end of the evening, all of them are experienced enough Parliamentarians to know exactly how to vote if they wish to express disapproval of the Government or of the Opposition.
4.3 p.m.
The Secretary of State for Defence (Mr. Denis Healey): I beg to move,
That this House approves the Supplementary Statement on Defence Policy 1967, Command Paper No. 3357.
The Supplementary Statement on Defence Policy marks the end of a process which has taken three years continuous hard work. It does not mark the end of the Government's review of defence. On the contrary, the machinery which we have set up and developed over the last three years will enable the present Government and future Governments to keep every aspect of our defence policy permanently under review in order to ensure that the commitments which we undertake are still relevant to our political needs; that we have the weapons and forces needed to carry out these commitments; and that we are getting the best possible value for every £1 we spend for military purposes.
The process whose completion is marked by the present White Paper is a unique exercise, which, I hope, will not be repeated for many years. It is the first serious attempt by any British Government to bring our defence, foreign and economic policies into balance with one another not only in the current year or the years immediately ahead, but, so far as can be foreseen, over the next decade.
The programme which we inherited from the previous Administration involved spending 7 per cent. of our national product on defence for the following 10 years. It took no account of the impact of this rate of spending on our economy over a period when none of our European allies envisaged expenditure on anything like this scale. It was not related to any view of the way in which our foreign policy and the military commitments springing from it would develop over the years in question. Evidently, the previous Government did not believe these aspects of defence policy even worth considering.
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The major exercise undertaken by the present Government has fallen into two phases. The first phase looked only to the end of this decade. We were concerned to lop £400 million off the Conservative Government's defence plans for the financial year 1969–70. The consequences of our work during this phase of the review were set out in the 1966 White Paper. We then showed how we planned to save over £300 million by getting better value for money, with no reduction in our ability to fulfil our commitments.
The savings here were real ones and were painful. They meant cancelling projects on which metal was being cut and men employed. They meant redundancies, for example, in the Territorial Army. The House will recall that thousands of aircraft workers marched in the streets to protest on one issue; a Minister and a Chief of Staff resigned on another; and on one occasion the Government came within a hair's breadth of losing their majority in Parliament.
They were real cuts and painful ones, but, as a result, the nation has had £750 million more to spend on on other purposes over the last three years than it would have had under the plans which the Conservatives had announced in office and continued to support in opposition.
Nevertheless, it was not possible, in February last year, to decide finally on how the remaining gap would be closed and the full £400 million saved on the 1969–70 defence budget. I told the House on 8th March, 1966:
"… we plan, when confrontation is brought to an end … that it must be a major objective to reduce the level of our forces in the Far East to that once planned by the previous Government before confrontation began; when we are able to reduce our deployment in the Far East to that level—we shall make further reductions in equipment and manpower which will save the additional £100 million".—[OFFICIAL REPORT, 8th March, 1966; Vol. 725, c. 2045–6.]
The right hon. Member for Wolverhampton, South-West (Mr. Powell) poured scorn on this statement, saying that the ending of confrontation was mere speculation, and that we could not rely on it ending before 1969. Of course, he was wrong, as in most of his predictions in the House in the last three years, as he was wrong in predicting, in the same speech, that the carrier force

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would collapse through a fall-off in recruiting to the Fleet Air Arm. As I hope he now knows, recruiting to the Fleet Air Arm is almost embarrassingly high; and confrontation came to an end only three months after he was suggesting that we could not count on it ending in the following three years.
The ending of confrontation last summer, and the progress which we have made towards revising N.A.T.O. strategy in the last 12 months, have made it possible for us to complete the first phase of the defence review by achieving our full target of £400 million saving in 1969–70. They have also made it possible for us to carry out the second phase of our defence review by looking well into the 1970s, so as to make even greater savings on the basis of commitments which will be reduced following major modifications in our foreign policy. As a result, we have been able to define the role of the Armed Services in the 1970s in a way which will ensure that, although reduced in size, they are able to carry out all their essential tasks in protecting the security of the nation and supporting our foreign policy.
I was glad to see from the foreign affairs debate last week that the Opposition Front Bench supports the Government in giving first priority to our defence policy in Europe. Here, the review of N.A.T.O. strategy is now well under way and the Alliance as a whole has gone far towards accepting the major principles which the present Government have been preaching for the last three years. We have often debated those principles and I will not repeat them now.
The most important outcome of the discussions in N.A.T.O. so far is a general agreement that the level of forces now maintained by N.A.T.O. is sufficient to make war in Europe highly improbable, and that it is neither necessory nor possible to plan on any substantial increase in those forces—though there is still work to be done in improving their efficiency and strengthening co-operation between their national components.
On the other hand, it is not possible to envisage a substantial reduction in N.A.T.O.'s present forces without either a major change in N.A.T.O.'s strategy
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or some progress towards agreement for reciprocal reductions on both sides of the Iron Curtain. This remains a major objective of our policy, but we cannot base our actions now on the assumption that it will be achieved by any given date. So we must assume that our contribution to N.A.T.O. will remain broadly of its present size.
At the same time, the N.A.T.O. countries now agree that the stability of the military situation in Europe is now such that any major change in Soviet policy is likely to be preceded by weeks or months of political warning. For this reason, it may be possible for N.A.T.O. countries which lose excessive foreign exchange through stationing their troops in Germany to hold some of them at home in normal circumstances, provided that they remain under N.A.T.O.'s command and are capable of returning rapidly in a crisis.
We are, therefore, proposing to withdraw one of the six brigades in B.A.O.R. to Britain in the New Year so as to save the foreign exchange costs involved in keeping it in Germany. As a result, and thanks to our success in negotiating the payment of £69 million in offset, seven-eighths of our stationing costs in Germany will be covered in the current year.
The House will remember that a few months ago the right hon. Member for Wolverhampton, South-West was lecturing us to the effect that we should be very lucky to obtain at the utmost one-half of our present stationing costs in offset. I do not blame him for his pessimism. His own Government got well under one-third in their last year of office—only £24 million. We have got seven-eighths—£69 million.
Mr. J. Enoch Powell: Will the right hon. Gentleman do me the kindness to refer to the occasion when I said that?
Mr. Healey: Yes. The occasion on which the right hon. Gentleman said that was during the debate on the White Paper in March this year. I will give him the precise column reference later in the debate, before I sit down.
We shall aim to do at least as well in future years as we have this year and

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thus to avoid the need for further redeployment. But, as the White Paper makes clear, there is little budgetary saving to be achieved from this type of redeployment. As I told the House over a year ago, the major budgetary savings must follow a reduction in our forces in the Far East. And this we were not able to begin negotiating until the end of confrontation last summer.
Our first step was to get our forces out of Borneo. By Easter this year we had reduced our overall manpower in the Far East by nearly 10,000. By next April we shall have reduced by 20,000, and in terms of British uniformed personnel and Gurkhas will be back to the pre-confrontation level. Considering the immense problems involved in moving and housing about 18,000 men and their families, this is not bad going for 18 months.
But, as the dust settled in South-East Asia following the end of confrontation, we found it possible and necessary to look further ahead. We have now agreed, after consultation with our allies in the area, that by some time in 1970–71 we should reduce those working in and for the Services in Malaysia and Singapore by a further 30,000—a total cut of 50 per cent. compared with the current level. The bulk of this reduction will fall on the Army.
We accept the view expressed a year ago by the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) that
"our military contribution in this theatre of operations should be a balanced naval task force and air power, with the bias … tipped towards the sea and the naval task force".—[OFFICIAL REPORT, 26th April, 1966; Vol. 727, c. 550.]
Of course, as the right hon. Gentleman must have been well aware, when he said those words, this will create some problems for Australia and New Zealand in relation to the Commonwealth Brigade, and these are problems on which consultations are now proceeding. But our view is fully shared by the Governments of Malaysia and Singapore themselves, and, after all, it is the Malaysian Defence Agreement which is the main reason for our presence.
Both Malaysia and Singapore are building up their own land forces. The
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Malaysian Army has already taken over the old British positions in Borneo with admirable smoothness and efficiency. The only threat which our Commonwealth partners do not feel confident of dealing with themselves by 1970 is the potential threat by air and sea. This we shall be fully capable of meeting with the forces that remain, and the House will probably have seen that the Deputy Prime Minister of Malaysia has publicly stated his satisfaction that this is so.
At the same time, we shall have progressively to alter our force declarations to S.E.A.T.O. contingency plans and in some cases increase the notice at which forces could be provided. I am glad to see that the right hon. Member for Kinross and West Perthshire agrees with us also on this. He pointed out on 4th March, 1965, that in S.E.A.T.O.
"each member has complete judgment about his own contribution … we should keep the necessary flexibility so that we can decide whether our contribution should be by sea or air or a combination of both."—[OFFICIAL REPORT, 4th March, 1965; Vol. 707, c. 1545.]
I only wish that the Daily Telegraph had taken note of that before it wrote its leading article this morning.
When we looked beyond 1970, it emerged that, once our presence in the Far East is reduced by one-half, once our commitments, particularly in S.E.A.T.O. are reduced, the sort of base facilities we maintain at present on the Asian mainland become very bad value for money indeed.
On the one hand, vast stockpiles of equipment require men to guard and maintain them and men to guard the men who guard them—plus houses, hospitals, schools, and so on, for their families—what the economists call a multiplier effect. In the second place, the equipment in the stockpiles needs duplicating at home so that the units which might use it can train efficiently, and the men who guard and maintain the base must also be duplicated at home so that they can be relieved after their tour of duty abroad.
A large fixed base just does not make sense, unless a large-scale war is in prospect in the area, particularly when the capability of air transport is growing and more and more equipment can be carried by air.

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These were the practical factors of which we had to take account. There were no less important political factors, too. The United States has publicly announced that, once the Vietnam war is over, it wants no bases in Asia and is prepared to leave Vietnam. As we said in this year's Defence White Paper, we, too, must aim at a situation in which the local peoples can live at peace without the presence of external forces.
On a careful calculation of the likely trend of events, and after the most thorough consultation with our allies, we came to the conclusion that we should plan on winding up our bases in Malaysia and Singapore altogether in the middle 1970s. But we do plan to maintain thereafter a capability for military action in the area, and this has been welcomed by Australia and New Zealand, which have come to our aid in two world wars.
It is a capability which may be required not only by our political obligations, but also for peace-keeping under United Nations auspices.
Mr. Victor Goodhew: Will the Secretary of State give way?
Mr. Healey: Yes.
Mr. E. Shinwell: Will my right hon. Friend give us some indication of the nature of the capability—
Mr. Goodhew: Mr. Speaker—
Mr. Speaker: Order. I am bipartisan. We cannot have two interventions at once. Which one is it to be?
Mr. Shinwell: May I follow up the point, because it seems to be a very important one, of the capability to which my right hon. Friend refers and which is to be capable after we come out of Singapore and Malaysia? Can my right hon. Friend tell us what is its nature?
Mr. Healey: Yes. It will consist mainly of on the spot amphibious forces, to which I shall refer later in my speech, but it will also be capable of being reinforced from the reserve forces in the United Kingdom, to which I shall also refer later in my speech. I now give way to the hon. Member for St. Albans (Mr. Goodhew).
Mr. Goodhew: I am grateful to the right hon. Gentleman. How does he
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reconcile what he has just said with the statement written into the United States Congressional Record of 8th April, 1963, Col. 5513, by the Prime Minister when, at the National Press Club Luncheon in New York, he said:
"I believe it to be a mistake to evacuate key bases where we have the chance to remain. It is a hundred times easier for Britain to remain there even with a token force, than for us, still less the United States, to seek to enter if trouble breaks out".
How can the Secretary of State reconcile that statement with what he has just said?
Mr. Healey: When the Prime Minister said that he did not mean that we should stay in a base that we do not need. We do not believe in staying in Aden, or in Singapore, or Malaysia once we have reduced our commitments and presence to the level we shall reduce them to by 1970, for the same reasons. I would have thought that that was obvious.
I think that the House will agree that this decision to wind up our bases in Singapore and Malaysia is without doubt the most important single decision in the White Paper, and it is a historic one. It was not possible to reach it earlier in view of the fact that confrontation ended less than 12 months ago, and we have needed to carry out the most prolonged and detailed consultations about our policy with our allies and partners in the Commonwealth.
As a result of this consultation, the Governments of Malaysia and Singapore—who are most directly concerned here—have accepted our decision and fully appreciate the reasons for it. I will not deny it faces them and us with some real problems of adjustment, but their reaction, to quote the Straits Times, on the spot, has been "realistic, sober and confident".
I believe that the overwhelming majority of opinion in Britain believes that it is the right decision, too. Even the Conservative Opposition have not chosen to contest it in principle. How could they, since their spokesman in another place set it as the right objective for Britain in his speech on the Defence White Paper last May?
I hope that the right hon. Member for Wolverhampton, South-West, who usually prefers to skulk behind his own verbal ambiguities and pedantic logic—chopping about the words that we use to describe

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our policies—will come out honestly and clearly this afternoon and tell us whether the Conservative Opposition think our decisions right or not.
If his only criticism, as he said on television last week, is that having taken our decision we should have tried to keep it dark from the House, from our allies, and from the rest of the world, my right hon. Friend will deal with that criticism when he winds up the debate.
Mr. Powell: Is the right hon. Gentleman purporting to quote what I said, or is he, as usual, making up words and attributing them to me? If not, will he quote the context?
Mr. Healey: I regret that, again, I cannot at this moment quote the context, but I shall do so before I sit down.
As far as I can quote it from memory, when he was asked by Mr. George Ffitch whether he agreed that we should withdraw he replied, as he usually does, "That is not the real question. The question is whether we should have announced our intentions so long in advance", but I will do the right hon. Gentleman the courtesy of quoting his exact words before I sit down. I hope that the right hon. Gentleman will continue interrupting me in that way, because I have here other quotations which I am going to use. They are from versions produced by the Conservative Central Office.
I am certain that on Singapore and Malaysia the Government are right in announcing their intentions in the terms they have. I am equally certain that we are right not to attempt to fix, still less to announce, a date for a withdrawal from our positions in the Persian Gulf. At the moment, we are making a vital contribution towards stability in the Gulf, a contribution welcomed by the local States who are not yet in agreement on how to handle the situation if and when we should withdraw.
Perhaps I might tell the House a story. I remember President Nasser remarking to me in a conversation when I was still in opposition that our presence in the Gulf is like that of the Arab caretaker in the Church of the Holy Sepulchre in Jerusalem. As the House may know,
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the three Christian denominations which share the church in Jerusalem have never been able to agree with one another on which of them should be physically responsible for the building's security.
About 1,000 years ago they appointed an Arab family as caretaker, and its descendants are still performing that function. My only comment to President Nasser, when he drew that analogy, was that we had no intention of staying so long in the Gulf. But it would be equally wrong at this time to fix or announce a date for leaving.
By eliminating the wasteful duplication of men and equipment required for large fixed base facilities, by changing the size and composition of our forces in the Far East and reducing our commitments in parallel, we have been able to plan a substantial reduction in the size of all three Services and in the number of civilians who support them.
By the middle 'seventies, when our withdrawal from Singapore and Malaysia is complete, the Armed Forces will contain about 75,000 fewer men and women than today, and there will be 80,000 fewer civilians serving the forces. We shall achieve roughly half of this reduction by April, 1971.
The Opposition Amendment claims that these cuts will make it impossible for the Services to do their job. I suppose they are judging from their own experience, because the only time they made a big cut in the forces was when the hon. Member for Streatham (Mr. Sandys) hacked blindly at our military capability without any attempt to think the problem through—relying on Blue Streak instead of aircraft, for example. In his 1957 White Paper he envisaged Armed Services of 375,000 men—a cut of 47 per cent. on the level obtaining at the time.
But at that time our commitments were far bigger than they are today. We had the Baghdad Pact, the defence of Aden, and garrisons for British Colonies and Protectorates all over the word. The Conservative Government were still fighting to prevent Cyprus from gaining its independence, and they also had a major emergency to cope with in Malaya.
Then, when the right hon. Gentleman passed to the Commonwealth Office, he dumped a great load of new commitments on the forces he had cut—the South

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Arabian Federation and confrontation in the Far East—so that 1964 our forces were over-stretched almost to breaking point.
The present Government have brought confrontation to a successful end; our last defence commitments in South Arabia will soon be over; and nearly all the colonial commitments we had when the Conservatives planned their massive cut in our forces are now ended. As I said, we are going to make substantial reductions in the force declarations to S.E.A.T.O. which were made by the Conservative Government, and our commitment to Malaysia will be carried out mainly with air and naval forces, as the Opposition recommend.
Yet we shall still have 350,000 British based adult males in the Services in April, 1971, only a fraction fewer than the previous Government planned against a background of far greater and still increasing commitments. The fact is that the policy I have outlined, and the reductions in our military commitments which have taken place or have been decided on, will relax the over-stretch from which our forces have suffered for so many years, and leave a larger reserve in Britain for dealing with the unforeseen contingencies.
The forces will be infinitely better able to carry out their tasks than when the Conservatives left power.
Sir Alec Douglas-Home: The right hon. Gentleman said that these defence reductions were the result of major alterations in foreign policy. I have not heard him name any major alterations in foreign policy. Indeed, the S.E.A.T.O. commitment is there, although he may not be able to fulfil it.
Mr. Healey: I hope that the right hon. Gentleman will reflect on what he said in 1965, and then withdraw that last remark. He made the point that we had the perfect right, and must exercise it, to reduce our force declarations to S.E.A.T.O., or change them whenever we wished to do so. Such a reduction or change constitutes a major change in foreign policy. The decision to leave Singapore and Malaysia has many important impacts on our foreign policy in that area, as I am sure the right hon. Gentleman would agree.
Sir Alec Douglas-Home: The right hon. Gentleman said that these reductions resulted from major changes in foreign policy. What he is now saying is that he has made reductions in the forces, and, therefore, the foreign policy has to be changed.
Mr. Healey: With respect to the right hon. Gentleman, we have not made these reductions. They will be made over the next five to 10 years. The change in foreign policy has been made already, but the change in our commitments will be made progressively as our forces are reduced.
I will now explain how our plans will affect the individual Services. The Royal Navy will provide, through its Polaris submarines, Britain's contribution to N.A.T.O's strategic deterrent and will make a bigger contribution than any other European navy to N.A.T.O.'s shield forces in the Atlantic. Outside Europe, the Navy, in the 1970s, will have the main responsibility for maintaining Britain's military influence and her contribution towards keeping the peace.
Mr. Emrys Hughes: Will the right hon. Gentleman confirm that we shall spend £370 million for four Polaris submarines, which is a much bigger sum than the Tory Government spent? How does he explain this?
Mr. Healey: That figure is completely false. We have already spent the bulk of the capital expenditure involved in creating the Polaris force. The capital expenditure is substantially reduced, partly because we are cutting the force by one boat and partly for other reasons with which I will not bother the House, connected with the cost of the missiles in the United States. The cost of the four boats, which will be completed in about a year's time, will be under 1 per cent. of the defence budget and 0·001 per cent.—I may have this wrong—of the gross national product.
Mr. Emrys Hughes: Those figures are wrong.
Mr. Healey: My hon. Friend is mixing up the total cost of the programme since it began with the amount that still remains to be spent. The programme has been running now since 1963—for four years—and the bulk of the capital expenditure has already been committed.

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We will keep our powerful amphibious forces, with the Royal Marine Commandos, in the Far East and they will be supported by destroyers, frigates and submarines. Our two largest aircraft carriers, "Eagle" and "Ark Royal", modernised and equipped with Phantom aircraft, will continue in service until the middle 'seventies. Such naval forces have special advantages in peace-keeping overseas through their flexibility. They can remain poised for long periods visible or invisible at will, and are a powerful deterrent to aggression.
As the carriers phase out in the middle 1970s three new classes of ship will be introduced—the new cruisers, Sea Dart destroyers and frigates, all equipped with missiles and helicopters. The functions now carried out by our aircraft carriers in protecting the Fleet at short range will continue to be mainly carried out by the Fleet itself; its helicopters will give it its own means of reconnaissance and attack against a surface as well as a submarine threat.
The longer range functions of the carrier will be carried out partly by the Fleet submarines and partly by aircraft of the Royal Air Force controlled by the new cruisers. If the right hon. Gentleman the Member for Wolverhampton, South-West is not satisfied with this, perhaps he will come clean and tell us whether the Conservative Opposition are now firmly committed to keep the carrier force going after the middle 1970s at a cost of up to £200 million a year and operating solely east of Suez.
I hope that the right hon. Gentleman, who has shilly-shallied and dodged this question repeatedly for the last two years, will tell us what he intends. If not, perhaps the right hon. Member for Barnet (Mr. Maudling) will do so. Otherwise, let the right 'hon. Member for Wolverhampton, South-West "belt up" on this issue.
Sir Harry Legge-Bourke: Will the right hon. Gentleman tell us where the aircraft which are supposed to be replacing the aircraft which hitherto would be flying off the decks of aircraft carriers will be based?
Mr. Healey: Yes. Up to 1975 the aircraft will be based at Bahrein, Masirah, Gan, the Cocos Islands—and Australia if she is involved—and Singapore. After
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1975 they will no longer be based on Singapore, but, as the White Paper makes clear, we are discussing the possibility of using facilities provided by the Australians in Northern Australia, and there is no reason why, should a particular emergency arise, we should not operate from bases in any allied country to whose help we come. We made it clear in the Defence Review two years ago that we depended on the readiness of our allies to provide the bases that we needed in such cases.
In the 1970s the main rôle of the Army will be in Europe, but with the withdrawal from Aden an additional brigade will be added to the Strategic Reserve for operations anywhere in the world. This force will be airportable with specialised training for a wide variety of rôles. Training overseas will be even more important than it is today, since more of the Army will be permanently stationed in Britain.
With the cuts in its commitments outside Europe, the Army will be reduced by 15,000 all ranks by April, 1971. As we say in the White Paper, this involves the disappearance of 17 major units. Many of these are regiments with long and distinguished histories. The necessity for their disappearance is particularly painful, but I am glad to say that we shall be able, like the Conservative Government in similar circumstances, to preserve time-honoured traditions and probably some famous regimental names through the merging of regimental identities in many cases.
The reorganisation of the infantry, about which I informed the House in May, will preserve the best features of the regimental tradition while ensuring that the Army is able to make the best and most economical use of its limited and expensive manpower.
Mr. Oscar Murton: How can the right hon. Gentleman preserve the best regimental traditions if some regiments disappear completely and are not amalgamated?
Mr. Healey: In those cases it will not be possible to preserve regimental traditions. The Conservative Government faced this problem sensibly after the cut which the right hon. Member for Streatham (Mr. Sandys) imposed, and

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there are now a large number of battalions in the British Army formed by merging famous regiments which continue to maintain the traditions of their regiments. I am glad to say that my contacts with such battalions during the last three years all over the world suggest that the mergers have been a complete success.
Some Members, I know, are concerned how the Gurkha Brigade will be affected by these new plans. The Times published a wise leader on this subject the other day, and I fully agree with what it said. Some further reductions in the Gurkha Brigade may be necessary when those already announced have been completed in 1969, but we must see how we go on this issue.
It would be a great mistake to take a final decision now, before we are clearer about the way in which our plans develop in detail. And of course, we should have to consult the Government of Nepal before deciding on any further reduction.
So far as the Royal Air Force is concerned, our new plans will be reflected in reductions in size rather than changes in shape. The Royal Air Force will continue to play its essential role in guarding the nation's security by long-range tactical strike and reconnaissance, and by the provision of air support and air defence for the Army and Navy at home and overseas. With a higher proportion of our forces in the United Kingdom, the Royal Air Force will provide the necessary strategic mobility, and flexibility with its transport aircraft always at a high level of operational readiness.
The Service is now engaged in a large-scale process of re-equipment with modern high-performance aircraft arising mainly from decisions taken by the Government two years ago. Twenty of the new Hercules transport aircraft are already in this country and the Phantoms are coming in next year.
The year 1969 will be a most important one. The Royal Air Force will then begin to receive P1127s and the F111. The maritime Comet—now known as Nimrod—and the Chinook heavy-lift helicopter are already coming into service. The only major unresolved equipment problem lies far ahead—it is that part of the tactical strike reconnaissance role which the V-bombers will cease to carry out after the middle 'seventies.
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The main impact of our new plans here is that we can afford to give a higher priority to the requirements of the European theatre. This should make it easier to reach agreement with customers or collaborators among our other N.A.T.O. allies now that France has withdrawn from the A.F.V.G. project.
All three Services in the 1970s will require a degree of professional skill unsurpassed in any other profession, as well as the courage, enterprise and endurance which have been the hallmark of the fighting man throughout the ages. I would like to take this opportunity of paying a tribute to the fine way in which the Services have displayed these qualities under the pressures of recent years.
As the hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) wrote in a letter in today's Daily Telegraph—and I thank him for writing the letter:
"The services will remain a stable and exciting career for any young man with these qualities in future."
Rear-Admiral Morgan Giles: I thank the right hon. Gentleman, but it was The Times.
Mr. Healey: If I may say so, even better.
Mr. Stanley R. McMaster: What proportion of our defence will depend on various types of nuclear weapons by the mid-'seventies?
Mr. Healey: I do not quite know what the hon. Gentleman means by that question in that form, but the proportion of our defence expenditure which will go on nuclear weapons at that time will be below 1 per cent.
Mr. McMaster: I was not referring so much to expenditure as to the extent to which we will depend on nuclear weapons.
Mr. Healey: That is a totally different question which it is difficult to answer in a moment. In Europe, which is the only theatre in which we have any expectation of using nuclear weapons, provided that our allies do as we do, our dependence on nuclear weapons will be very much as it is today; no greater and no less.
Perhaps I can take advantage of this natural break, so to speak, to remind

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the right hon. Member for Wolverhampton, South-West of the words he asked me to quote. [HON. MEMBERS: "Come on."] I assure the House that I have this information, but I will answer the other question first. In doing so, I apologise to the House for having to refer to the right hon. Gentleman by name. I must do so if I am to quote him accurately.
George Ffitch asked:
"Mr. Powell. Do you agree with the main theme of the White Paper that Britain should pull out of the Far East by the mid 1970s?"
Then:
"Mr. Enoch Powell. 'I don't think it's so much a question of whether by the mid 1970s we have ceased to be present in force ashore on the mainland of Asia; I think it's a question of what you say about it now …'"
I will refresh the right hon. Gentleman's defective memory in respect of the other speech to which I referred. In the debate on 27th February last the right hon. Gentleman estimated that the total that we would get from Germany this year would be £12½ million, plus £31½ million. He said:
"These two sums together, taking them at their utmost"—
whatever he meant by that—
"add up to £44 million—approximately half of the year's cost of the present strength of our forces in Germany."
That was exactly what I had said the right hon. Gentleman said.
Mr. Powell Mr. Powell rose—
Mr. Healey: Delighted to give way.
Mr. Powell: The right hon. Gentleman alleged—and I am within the recollection of the House—that I said that we would be lucky if half the costs were recovered. The paragraph which he just quoted begins with the words:
"So far as is known what has been achieved is as follows".
I ended that paragraph by saying:
"If that is still the situation at the end of June, does that mean that half our forces will then be withdraw from B.A.O.R.?"[OFFICIAL REPORT, 27th February, 1967; Vol. 742, c. 125.]
In other words, the right hon. Gentleman has, as usual, utterly falsified what I said.
Mr. Healey: That is precisely the type of pedantic nit-picking about words for which the right hon. Gentleman has become famous throughout the world, during the last three years in defence debates. I have plenty more quotations with me and I will certainly quote the right hon. Gentleman.
As the White Paper makes clear, the great majority of the 75,000 reduction in our Services by the middle 'seventies will be achieved through normal wastage as men complete their engagements. Redundancies as such will average 2,500 to 3,000 a year, though they will not be evenly spread from year to year.
We aim to organise the rundown in such a way as to maintain or restore, where necessary, the career prospects for those who stay in the forces and to ensure that the forces have a proper balance of ranks, seniorities, ages and specialists. Applications will be invited from the appropriate categories to leave the Service early when redundancy is expected. There will have to be some compulsory redundancies and we aim to give at least six months' notice to all those affected. Compensation terms for those made redundant have already been circulated in detail within the Services.
I will give two examples. An R.A.F. squadron leader retired at the age of 40 with 19½ years' reckonable service will receive a lump sum of £3,417 in addition to his retired pay and terminal grant. An army warrant officer Class I (Technician) with 17 years' reckonable service will receive a lump sum of £1,364 in addition to his pension and terminal grant; he will also receive a credit of service for pension purposes which will give him additional pension and terminal grant to a capitalised value nearly equal to his lump sum. I think that the House will agree that this is fair and reasonable compensation.
We are also increasing resettlement facilities to meet the increased requirement and shall make greater use of the arrangements which already exist for attachment to civilian firms and organisations for resettlement training.
The immediate impact of redundancy will be small. During the next 12 months, the Army will lose about 350 officers and 600 soldiers, the R.A.F. about 500

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officers—mainly in the general duties flying branch, and about 500 airmen aircrew. Because it-has been short of manpower for some time, the Royal Navy is unlikely to have any redundancies until about 1970, and then not in all branches.
There is one point I should stress here. Surprising as it may appear at first sight, the requirement for new recruits will be only marginally affected by the rundown. About 40,000 Servicemen leave the Services every year in normal circumstances and have to be replaced. Thus, the annual redundancies we foresee will have only a marginal impact on the need for new recruits. In the case of a Service now short of men, like the Royal Navy, we shall continue to need the same number of recruits as we are getting today.
Moreover, recruiting staffs are having to operate in a hardening market. As the post-war bulge dies away the pool of young men in the relevant age groups is becoming smaller. Boys are tending to stay longer at school and, particularly in the technical arms, competition with industry grows fiercer year by year and the standard required by the Services rises year by year. Indeed, work we have been doing over the last 12 months suggests that manpower difficulties might well have compelled us to reduce Service ceilings even if there had not been sound political and economic reasons for doing so.
The reductions in Service manpower will be matched by corresponding reductions among civilians working for the Services. Of the 80,000 reductions we expect by the mid 'seventies, about 30,000 will be United Kingdom employees and 50,000 local entrants employed by the Ministry of Defence overseas. We shall, of course, have full consultations with the staff associations and trade unions as the rundown develops.
Mr. J. D. Concannon: I have already received two letters from constituents on this vital point. For members of the Army who are now ready for release or whose time has nearly expired, if they wish—or, perhaps, have already applied—to sign on for another stretch, perhaps of seven years, what is their position?
Mr. Healey: Those who wish to stay on will be given advice about whether they are running any risk of redundancy.
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This will be dealt with on an individual basis in the unit concerned. If my hon. Friend has any specific cases, I hope that he will write to me, whereupon I will do my best to advise him.
I turn to the economic consequences of this major reshaping of our military commitments and capabilities. We expect to remain at all times below the original Defence Review ceiling of £2,000 million a year, at 1964 prices. This means a reduction of more than £400 million in the Conservative programme for 1969–70.
In 1970–71 we expect our defence budget to be £1,900 million at constant prices, despite the high incidence of expenditure on new equipment in that year. In the middle 1970s, when withdrawal from Singapore and Malaysia is complete, we expect to be down to £1,800 million a year, although the equipment of our forces will then be far more efficient, sophisticated and expensive than it is today.
Mr. Christopher Mayhew: Will my right hon. Friend give way? This is quite a straightforward question. Does the 1975 budget of £1,800 million include provision for the continuance of our presence in the Persian Gulf and for the continuance of our obligations under the Anglo-Malaysia Treaty?
Mr. Healey: Yes. In both cases it includes it. I shall have a word to say in a moment about the foreign exchange effect of that. I wonder what guilt or embarrassment led my right hon. Friend to preface his remarks with that exordium.
Assuming a 3 per cent. annual rate of economic growth, this should represent under 5 per cent. of our G.N.P. compared with the 7 per cent. the Conservatives envisaged—putting us well in line with our major European allies. This is a massive contribution to strengthening our national economy and making valuable resources available for other purposes.
The achievement in reducing the strain of defence on our balance of payments will be even more dramatic. Our stationing costs in areas other than Germany will be reduced from £173 million this year to £120 million in 1970–71, and to £60 million or less by the mid-1970s—a total reduction of about two-thirds on the level today.

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Under the Conservative Administration the impact of defence on our balance of payments was completely ignored. Hon. Members will search in vain in the Defence White Papers published during the lifetime of the previous Government for any statistics of overseas stationing costs. Yet, in fact, between 1957 and 1964 military expenditure overseas more than doubled. It increased from about £120 million to about £250 million.
But there is no sign that the long succession of right hon. Gentlemen opposite who were responsible for defence policy at that time ever noticed that increase. Perhaps the right hon. Member for Barnet (Mr. Maudling), will tell us whether he noticed it when, as Chancellor of the Exchequer, he gave us an £800 million deficit on the balance of payments, and if so, what he did about it. It would be interesting to have an answer to that question tonight.
We on this side of the House have done far better than even we originally planned. Our original target in the Defence Review was to cut our stationing costs by a quarter by the end of the decade. In fact, we have achieved more than that already. In round figures the stationing cost in 1964 was running at £275 million a year. From this had to be deducted the proceeds of the German offset agreement—only £24 million in 1964–65—giving a net cost of £250 million. In the current year our total stationing costs outside Germany are estimated at £173 million.
To this we have to add the £11 million net costs of our forces in Germany after the offset agreement of £69 million negotiated by my right hon. Friend the Minister of State at the Foreign Office. Thus, our total stationing costs on defence this year are only £184 million compared with about £250 million in the last year of the previous Government—a reduction of more than one quarter. And we shall have reduced this net total by two-thirds in the middle 1970s. Our foreign stationing costs will then be only a quarter of what they were when we assumed office.
Mr. Woodrow Wyatt Mr. Woodrow Wyatt (Bosworth) rose—>—
Mr. Healey: With respect to my hon. Friend, I must get on.
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We are asking the House to approve this White Paper because for the first time since the Second World War it brings Britain's foreign policy and defence policy into balance with one another, and with the nation's economic and social objectives at home. It builds a stable, longterm relationship between cost, commitments, and capabilities of defence. There is no evidence that the party opposite, whose Amendment we are also debating, ever attempted this when it was in office. It certainly never succeeded.
In opposition, the Conservatives have not even tried. They have shown a blind indifference to the economic cost of defence and are totally divided on the commitments which our defence forces should be capable of meeting. That is why, over the last three years, they have confined themselves to a dreary and pedantic nagging, and have steadfastly refused every invitation to tell us what they would do in our place.
Mr. McMaster: Resign.
Mr. Healey: Even in Europe, although most of the Front Bench opposite seems to be in full agreement with the Government, the right hon. Member for Wolverhampton, South-West is still ploughing his lonely furrow. He is the only leading politician in the Western world who believes that we should be preparing ourselves to fight and win a large-scale conventional war in Europe. And he keeps insisting that Britain's defence policy must recognise the fact that Britain is insular as well as European.
On Saturday, 8th July, the right hon. Member told the faithful on Ripon racecourse—a well chosen location—that
"we must have the maritime capability appropriate to a nation which is not only European, but insular."
He added:
"and oceanic",
for he likes to cover all his bets. He seems to be sliding back to the extraordinary view he held some time ago, when he said:
"The two great objects of British foreign policy ought to be to facilitate the defence by air/sea power alone of the British territories and to secure a stable balance of power in Europe without Britain".
If the right hon. Gentleman is not going back to that view which he once held, will he tell us precisely what he

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means by using the word "insular" in respect of our defence policy as he has been doing regularly in recent times?
Mr. Powell Mr. Powell rose—
Mr. Healey: The right hon. Gentleman will have his chance to speak in a moment.
Mr. Powell: Will the right hon. Gentleman give the date of the article which he just quoted?
Mr. Healey: The article, which also said that we should support France in Vietnam so that France could reduce our burden in Europe, was in 1954. But if the right hon. Gentleman does not now mean by "insular" what he meant then, will he tell us, when he speaks, precisely what he means?
In the Middle East the split in the Conservative Party is a yawning chasm. Only the other day the right hon. Member for Wolverhampton, South-West seemed to be arguing that we should clear out altogether. He poured scorn on what he termed the co-called British presence in the Mediterranean and the Persian Gulf. Perhaps he will tell us what he meant by "so-called". He suggested
"It was just because we were physically present in the area that our oil and our reserves were in danger when other peoples were not".
This brought out the right hon. Member for Kinross and West Perthshire with a well-merited public rebuke. He told the House only last week:
"Because the Arabs momentarily cut off oil supplies, I cannot follow the argument that there are no political or economic advantages which a British presence can gain anywhere and that, therefore, we should go and go now."—[OFFICIAL REPORT, 20th July 1967; Vol. 750, c. 2487.]
Will the Opposition please tell us tonight—they have repeatedly failed to tell us over the last three years—do they think that we should keep the Aden base, as they promised to do in 1964? Would they stay in the Gulf and, if so, for how long? What is their policy?
On the Far East the split on the Conservative Front Bench is even starker. The high peak of contradiction in the Conservative Party was scaled in this year's defence debates, when the right hon. Member for Wolverhampton, South West sat white and rigid on the Front
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Bench opposite while at his side the hon. and gallant Member for Winchester argued that Britain should send ships and troops to fight in Vietnam. Is that Conservative Party policy or not? May we have an answer to that question later tonight?
Last week the right hon. Member for Kinross and West Perthshire reminded the House that he was constantly urging the Foreign Secretary to get S.E.A.T.O. reorganised, but what does the right hon. Member for Wolverhampton, South-West say about that? To urge
"that Britain in 1967 can take a leading role in reinvigorating the military alliance in South East Asia … seems to me not to be an act of imagination but … a symptom of hallucination. Rather like listening to Rip van Winkle talking. One might … not be startled to hear that sort of phraseology … from Indian Army colonels who retired years ago … the reality which is relevant … is that we have and can exert virtually no military power in South East Asia."
That is the Opposition spokesman on defence, the self-appointed champion of the Services, the forces' friend, speaking just after the successful end of confrontation.
"… we have and can exert virtually no military power in South East Asia",
he said. Is that the official view of the Opposition on the three years of fighting in Borneo? This was one of the most successful politico-military campaigns in our national history, and I am not surprised that the right hon. Member for Barnet launched a massive attack against his right hon. Friend in the Sunday Times the other day, on the theme,
"We must not indulge in the fashionable sport of belittling our own role in the world."
I agree with the right hon. Member for Barnet. It is about time that the official Opposition spokesman on defence stopped it or that the Opposition got another spokesman.
Holding the views he does, how can the right hon. Member for Barnet speak in support of the right hon. Member for Wolverhampton, South-West today? And how on earth can the right hon. Member for Wolverhampton, South-West continue to sit side by side with all these Rip van Winkles and retired Indian Army colonels on the Opposition Front Bench? I suppose the answer is that adversity makes strange bedfellows.
Other than adversity, there is only one factor which unites the right hon.

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Member for Wolverhampton, South-West with his colleagues on the Front Bench opposite. That is a terrifying, titanic and total indifference to the cost of defence. The hon. Member for St. Albans, in a recent debate, told us that it was the job of the Defence Secretary to give the Services anything they asked for and to resign if he failed to get it from the Cabinet. Perhaps that is why the party opposite had eight separate Ministers of Defence during the thirteen years they were in power.
Mr. Goodhew: If the right hon. Gentleman will refresh his memory by reading the report of that debate, he will see that I said that his duty was to provide the Services with the weapons they needed to carry out the task given to them, and not to give them all they wanted. He need not misquote me as well as my right hon. Friend the Member for Wolverhampton, South-West.
Hon. Members: Withdraw.
Mr. Healey: At a natural break in a moment, I will quote the hon. Member's words. He made it clear that I should always take the advice of the Services on the equipment they needed. The fact is that even a Conservative Government cannot ignore the cost of defence forever. What the Conservatives did with dogged regularity was to ignore the cost of defence during the planning and development stages of every project and then cancel the project when the expenditure became too high.
That is why in the aerospace field alone they cancelled 30 separate projects on which£200 million had already been spent and left the Royal Air Force worse equipped with supersonic aircraft than Egypt and Indonesia.
Sir Cyril Osborne: Get on with your own programme.
Mr. Healey: The changes we have made in the programme we inherited from the Conservative Government have already saved the British taxpayer over £750 million during the last three years alone. The further savings announced in this White Paper will raise the rate of saving on Tory plans to £500 million a year in 1971 and something like £800 million a year in the middle 1970s. It is no good the Conservatives arguing that
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they did not have these plans or that they would not have cost so much.
Sir C. Osborne: Get on with it.
Mr. Healey: I know that the hon. Member for Louth (Sir C. Osborne) does not enjoy this, but many hon. Members are enjoying it.
The figures I have quoted come straight from the long-term costings I found in the Ministry of Defence when I took office in 1964, just after the right hon. Member for Barnet gave up such languid control of the nation's financial plans as he ever attempted. But, of course, his motto as Chancellor of the Exchequer, as he made clear again the other day, was, "Don't worry, it may never happen."
The right hon. Gentleman may say that the Conservatives would have cut these plans in any case. But they have divided the House against every single cut we have made and have never given a hint of whether they would have made other cuts instead. If they would have made other cuts, let them tell us now what cuts. We have been trying to find out for three years.
But right hon. Members opposite cannot answer, for the right hon. Member for Wolverhampton, South-West, speaking with all the responsibility which he rightly says should invest a Shadow Minister of Defence, has committed his party to a mountain of new expenditure on top even of the plans of the previous Administration. He wants
"… 'an army in being' … equal in armament, training and philosophy to any other in Europe …"
capable of fighting and winning a conventional war against the whole might of the Red Army. He wants us to be able to achieve command of the sea and command of the air on our own. Has he ever thought what this would cost? He always says that he has not the necessary facilities to do this sort of calculation.
Mr. Powell: The right hon. Gentleman has given us a bit of fiction about our fighting and winning a war against the whole might of the Red Army. I happen to have the passage he refers to with me, and I will supply the House, if I may, with what I actually said, and not what he imagines and attributes to me. I said:
"… 'an army in being' … equal in armament, training and philosophy to any

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other in Europe, and of such dimensions and structure, and supported by such reserves, as to be able, and to be seen to be able, to play an important and continuing part in Continental warfare"—[OFFICIAL REPORT, 6th March, 1967; Vol. 742, c. 1201.]
That is what I said.
Mr. Healey Mr. Healey rose—
Hon. Members: Withdraw.
Mr. Healey Mr. Healey rose—
Mr. Stephen Hastings: On a point of order, Mr. Deputy Speaker. It is now clear, at least to this side of the House, that the Defence Secretary has grossly misquoted my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) on three occasions. Would it not be consistent with the ordinary courtesy of the House for the right hon. Gentleman to withdraw?
Mr. Deputy Speaker (Mr. Sydney Irving): Order. That is not a point of order. I think that the purpose of the House would be best served if this matter were dealt with in debate.
Mr. Healey: On that point, I was not quoting the passage the right hon. Member for Wolverhampton, South-West (Mr. Powell) has just quoted. I referred to fighting and winning a conventional war in Europe because the right hon. Gentleman put that view in an earlier speech when he argued with great force that it was obscene and immoral for us to cut the Territorial Army because we must be capable of winning a war in Europe without resort to nuclear weapons. He has recently written a review of a book by General Beaufre in the Sunday Times—
Hon. Members: Withdraw.
Mr. Deputy Speaker: Order. This is a very important debate. The Defence Secretary is responsible for the statements he makes. I hope that hon. Members will remember that a large number of hon. Members wish to take part in the debate. I hope that we shall not lose any more time.
Mr. Healey: I hope that the House will recall that I have given way on at least 17 occasions to interruptions. I hope they will now allow me to conclude without further interruption.
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Does the right hon. Gentleman ever think of what all this programme of his would cost? He may say that he has not the facilities to do this sort of work. He often has said it. So I have asked my officials to take his speeches, assume that they are mine, and let me know what would be required on the most restrictive interpretation of his words. The answer, in very rough orders of magnitude, is as follows. The right hon. Gentleman's Army would cost £900 million more than our present Army; his Navy would cost £1,000 million more; his Air Force would cost about £800 million more if it were to provide a defence system against the Soviet manned bombers alone. That is a figure of £2,700 million over the next ten years. But it does not take into account two clear implications of the right hon. Gentleman's statement. If in fact, we were to prepare, as the right hon. Gentleman has repeatedly asked, to fight a long drawn out conventional war, the very much larger war reserves, training facilities and other infrastructure would cost at least another £2,000 million—nearly £5,000 million extra altogether.
The right hon. Gentleman does not seem prepared to accept the fact that the Soviet Union has missiles as well as aircraft. I regret to tell the House that my officials broke down and wept when they were asked to cost an effective antiballistic missile system for the United Kingdom. All I can say is that the United States, which has already developed most of the sort of hardware which would be required, has estimated the cost at nearly £15,000 million. The defence policy of the official Conservative spokesman would cost us at least another £2,000 million a year—over twice the cost of the policy of the present Government.
The fascinating thing is that this is the defence policy of a party which pledged itself only on Monday to reduce Government expenditure and cut taxation. I hope that the right hon. Member for Barnet (Mr. Maudling), who knows something of economics, will tell us how these objectives are to be reconciled with the defence policy he supports. To use the words of the right hon. Member for Wolverhampton, South-West, either his defence policy or his leader's fiscal policy is a colossal structure of spoof. Perhaps

1013
the Leader of the Opposition will tell us which twin is the phoney? The answer, of course, is both. The policy of Conservative Opposition is phoney through and through. It is bogus to the bootstraps.
We are all waiting to hear from the high priest of humbug, the bishop of bogus, the Savanarola of spoof himself. In asking the House to support the Government's Motion, I ask it to reject his Amendment with a majority which is overwhelming, final and complete.
Mr. Goodhew: On a point of order. The right hon. Gentleman misquoted something which I said. He said that he would read it to the House before he finished his speech. As he failed to do so, may I read it to him?
Mr. Deputy Speaker: I am afraid that the hon. Gentleman will have to endeavour to catch my eye and make a correction in due course.
5.13 p.m.
Mr. J. Enoch Powell: I beg to move to leave out from "House" to the end of the Question and to add instead thereof
'regrets that the proposals in the Supplementary Statement on Defence Policy 1967, Command Paper No. 3357, gravely impair the capability of the Royal Navy, the Army and the Royal Air Force to meet all the demands that may be made on them'.
It will not have escaped the notice of the House that the words in the Amendment are taken from the White Paper itself and that they are a reference to that extraordinary sentence in the last paragraph:
"The Royal Navy, the Army and the Royal Air Force, though reduced in size, will be capable of meeting all the demands that may be made on them"—
words of such over-weening self-confidence and presumption that anyone but the Secretary of State would have hesitated to pen them, fearing the nemesis which attends upon the empty boast.
It is a great inconvenience that the House should at this time of year be having to debate for the first time a major and substantive statement of the Government's defence policy. In our Parliamentary year we have six days available for debating the Government's defence policy and the Service Estimates, and it is a severe infringement of the ability of the
1014
House to examine the Government's policy that we should have been presented with this statement right at the end of the Session when the House is about to rise for the Recess. It is, however, one of the inconveniences of having a planning Government that we now have budgets in July, November and February as well as in the normal season. Therefore, I suppose that it was only to have been expected that we should have the Defence Estimates on the verge of August.
When the original Defence Review—the so-called Defence Review—was published nearly 18 months ago, in February, 1966, I said that
"the nature of some of the decisions and the timing of others has been forced upon the Government by their own absurd preoccupation with fudging a figure of £2,000 million in 1969–70 regardless of the consequences for the morale of the Services or the defence of the country"—[OFFICIAL REPORT, 22nd February, 1966; Vol. 725. c. 241–2.]
That is already proving to have been correct. But the proof has been overtaken by a repetition on a much greater scale of the same fundamental mistake.
Eighteen months ago the Government picked with a pin the percentage of 6 per cent. of the gross national product which they said would be the right figure for defence expenditure three to four years ahead, in 1969–70, and upon the basis of their late National Plan they translated this into £2,000 million at 1964 prices. They have now in this Statement produced further arbitrary figures of £1,900 million in 1970–71 and £1,800 million in 1975–76—eight or nine years ahead. What percentage of the gross national product that will be no one knows, least of all the Government. But, at the favourite growth rate of the Chancellor of the Exchequer of 3 per cent. per annum, that would bring the fraction down to 4·8 per cent. of the gross national product, to which, I presume, therefore, some special significance and superstitious reverence must attach.
It is from these budgetary figures eight or nine years ahead that the Government's plans in this Defence White Paper are deduced; for the effect on overseas expenditure is comparatively slight, seen in the context of the time factor. As the White Paper points out on page 11, the effect in the first phrase of the proposals now before the House will be a reduction

1015
only from £152 million to £120 million a year—that is, just over £10 million a year of overseas expenditure, an almost inexpressibly small proportion of our total overseas earnings—and a similar figure, about £10 to £12 million per annum, in the following five years.
This is absolutely topsy-turvy—the notion of beginning with a figure years ahead and seeking to work backwards from that to the composition, size and commitments of the defence forces. As Professor Martin put it in the Spectator a few days ago,
"there is no reason to believe that figures which are budgetarily convenient are strategically sound".
It is no good the Secretary of State producing, as he did again today, those alleged figures of Conservative expenditure which would have taken place in the years which he is surveying—his bogy of the "runaway train" of Conservative defence expenditure.
Mr. Joel Barnett: Will the right hon. Gentleman give way?
Mr. Powell: No.
Mr. Barnett Mr. Barnett rose—
Mr. Deputy Speaker (Mr. Sydney Irving): Order. The right hon. Gentleman has indicated that he is not giving way.
Mr. Powell: The hon. Member will find that I am dealing with exactly the point which he was going to put.
Mr. Barnett: The right hon. Gentleman cannot know what I was going to put until he hears it. Is he arguing that it is not important to make even what he calls comparatively tiny savings in foreign exchange costs? Perhaps he will enlighten us whether he feels that it is not necessary for the Government to make those foreign exchange savings.
Mr. Powell: I said that those savings were trivial in relation to the interests and considerations involved and that not they but budgetary figures have been the guiding consideration in the Government's calculations.
I come to what is the permanent and enduring answer to all these gibes and charges of the Secretary of State. I remind
1016
the House again that during the years of Conservative administration there was a fall in the percentage of a rising gross national product that was spent upon defence, a fall between 1957–58 and the last year of our administration—1964–65—from 7·3 to 6·5 of, I repeat, a rapidly rising gross national product.
At the end of that period the right hon. Gentleman inherited defence forces which were the best weapon that any Defence Minister in this country has ever had. [Interruption.] Do not hon. Members opposite agree with that? [HON. MEMBERS: "No."] I am surprised at that, because those words are not mine. They are the words of the Secretary of State, who, when he came into office and had had time, as the Foreign Secretary was so fond of saying in those years, to look at the books, said:
"I agree with the right hon. Member for for Monmouth"—
that was, Mr. Peter Thorneycroft—
"that he has handed over to me the best weapon that any Defence Minister in this country has yet had".—[OFFICIAL REPORT, 23rd November, 1964; Vol. 702, c. 1026.]
Mr. Healey: The right hon. Gentleman may recall that this was dragged up sometime earlier. I was referring to the organisation inside the Ministry of Defence and not the equipment of our forces.
Mr. Powell: Anyone is free to look up the whole passage, as I have done repeatedly before I called the right hon. Gentleman into the witness box on so important a point.
It will be forces not deserving anything like that commendation which the right hon. Gentleman and his friends will hand on to a future Conservative Minister of Defence.
The crazy process of picking a distant budgetary figure and arguing everything backwards from it has, in the first place, involved the Government in the premature decision and announcement of dates for the reduction and withdrawal of our forces from the Far East. I warned the right hon. Gentleman against this some months ago.
Mr. Healey: Perhaps I may help the House and the right hon. Gentleman on both issues by quoting from the 1962 White Paper of the Conservative Government, which said that the defence budget

1017
would be 7 per cent. for the following years up to 1970 and that it was their aim to see that the percentage of the gross national product should not rise significantly, although some increase in cost in absolute terms was to be expected.
Mr. Powell: There is the record of Conservative administration; there is the result; and there is the estimate which the Secretary of State himself made of it.
I warned the right hon. Gentleman to
"bear in mind, in the light of the lessons of Aden, the inadvisability of making long-range dated forecasts of withdrawals without knowledge of the circumstances."—[OFFICIAL REPORT, 1st May, 1967; Vol. 746, c. 91.]
If he would not listen to me, at least he might have listened to his right hon. Friend who is now Secretary of State for Economic Affairs, who was then Foreign Secretary, who said in the debate a year ago:
"it is difficult to prophesy in advance what the situation in the Far East in the 1970s will be. What I am sure would be wrong would be for us to take a decision now which would make it certain that whatever was happening in the Far East then, we could in no way influence it".—[OFFICIAL REPORT, 8th March. 1966; Vol. 725, c. 1957.]
What has happened in the last 17 months to change that advice of the right hon. Gentleman? What has happened, of course, is that the Government have adopted new and still lower budgetary figures. And so they have repeated the error of Aden, but on a larger scale. By announcing, in advance, in clear, against the advice of all our friends and allies in the area, specific long-term dates for withdrawal, the Government have risked setting in train a competitive movement among all the hostile elements to get us out sooner.
That sort of thing brings into action a kind of Gresham's law whereby the bad drives out the good, or a Dutch auction where the prize always goes to those forces and elements which underbid and undertake to see that the period of our presence there shall be shorter still.
The Government have done this at the worst conceivable moment, at a tragically dangerous moment, in the light of the delicate situation in Hong Kong. Nothing could be calculated to influence
1018
the difficult and dangerous management of our position in Hong Kong more unfavourably than to have taken this decision and made this announcement here and now.
By doing this—and this will be a replay on a much larger scale of what we have seen already—
Mr. Wyatt: Will the right hon. Gentleman give way?
Mr. Powell: I will finish the sentence—by doing this, the Government have wantonly endangered all the large interests, financial and economic, which this country has in that area.
In that connection, we find that the Government constantly refer to reduction of their commitments. There is a passage in the White Paper about it. If the House will look at page 5 of the White Paper, it is remarkable and significant that the reduction in the forces is referred to first and that we then come to the reduction—or "change", as it is expressed—in our Far East commitments.
After setting out the reductions, the White Paper goes on to say in paragraph 7:
"In parallel with these reductions, we intend to change our Far East commitments."
Then follows the remarkable statement that
"We shall continue to honour our obligations under S.E.A.T.O., but the forces assigned to specific S.E.A.T.O. plans will be progressively altered in nature and size."
Mr. Wyatt: Will the right hon. Gentleman give way?
Mr. Powell: I am in the middle of an argument. I will certainly give way to the hon. Member before I leave it.
There is, obviously, a significant difference in the minds of the Government between commitments and obligations. As Lord Longford is recorded as having said in another place two days ago,
"distinction is drawn between commitments and obligations. 'Commitments' in the modern phraseology"—
I rather like that—
"refers to the method of carrying out obligations."—[OFFICIAL REPORT, House of Lords, 25th July, 1967; Vol. 285. c. 795.]
The same distinction was made by the right hon. Gentleman in a television interview. He said:
"From the defence point of view a commitment is the declaration of forces to a plan,

1019
and we are planning to cut very drastically our commitments to S.E.A.T.O. in this sense. That does not mean we shall have to abandon the Treaty any more than France and Pakistan, which have cut their military commitments very much more drastically but not decided to leave the Treaty."
On being questioned further he said:
"We are retaining our commitment to defend Malaysia which we think is very important".
So presumably the forces are the same: presumably as the word "commitment" is here used, the declaration of forces is the same: there is no change there, but
"We are revising very substantially our S.E.A.T.O. commitments in the way I have just mentioned."
I listened very carefully to the right hon. Gentleman. I did not find that he clarified the position to the House as to what this change was in the forces which we had declared to S.E.A.T.O., this change upon which, apparently, the whole of the alteration in our dispositions and the subsequent scaling down of our forces is supposed to hinge.
Perhaps the matter was rather well put for the Government by the noble Lord, Lord Chalfont, in another place in this passage:
"If defence policy is to be the handmaiden of foreign policy, then it is possible to ensure that the commitments go away."—[OFFICIAL REPORT, House of Lords, 25th July, 1967; Vol. 285, c. 781.]
I think that puts it very well.
Mr. Wyatt: Earlier, the right hon. Gentleman said that we were wrong to have announced the date for leaving Singapore because of the situation in Hong Kong. Is he seriously suggesting that the only reason the Chinese do not take over Hong Kong, which they could easily do at any moment, is that we have a base at Singapore? Does he not realise there are economic considerations?
Mr. Powell: That is not at all what I think. What I am saying it this, that in a situation in which both the Government of China and the Government of this country are handling a difficult and potentially explosive situation, which could get out of the control of either, the disturbing factor of this decision and announcement about our long-term presence deliberately made now can do nothing but harm, and cannot but increase the difficulties which already exist.
1020
But the effect in the Far East is not the only havoc which the Government have wrought by their long-range budgetary manoeuvres. They have been stampeded by the necessity of working backwards from these figures into a series of severe cuts in all the forces without any other explanation and justification. These cuts amount in all to 20 per cent. over eight years. After the so-called review of 1965–66 the right hon. Gentleman boasted in the House that
"The major decisions are now taken …"—[OFFICIAL REPORT, 7th March, 1966; Vol. 725, c. 1797.]
Well, if these decisions in this White Paper are not major decisions about the future of our forces, then I do not know what are. As the hon. Gentleman the Member for Woolwich, East (Mr. Mayhew) warned the House in his resignation speech, the White Paper of 1966 did not
"specify the full range of the cuts either in the Navy or in the other Services."—[OFFICIAL REPORT, 22nd February, 1966; Vol. 725, c. 260.]
Only in the last few minutes of the defence debate, on 8th March, 1966, under pressure from my right hon. Friend the Member for Barnet (Mr. Maudling), did the Secretary of State refer, casually, to further reductions in equipment and manpower, which would save an additional £100 million. Now, 18 months later, these far-reaching cuts are announced. Can anyone be expected to believe the right hon. Gentleman when he now says that "this Statement marks the end of that process"? It is ironic to read on the first page of this Defence White Paper that the Statement is intended "to provide a period of stability". The estimate that the forces and the country are likely to make of that "period of stability", looking at this Government's record, will be a very short one indeed.
Perhaps I may at this point refer to the redundancy and compensation terms announced in the White Paper, of which the right hon. Gentleman has given further details both in answer to Questions and also in his speech today. These, I am sure the whole House would agree, require further and detailed study. On the face of it, it appears that they are less satisfactory upon the whole than the terms which were offered in 1967–68. But that is obviously a matter to which, in

1021
the interests of those concerned, this House may well wish to recur.
Now I come to the individual Services, and first to the Royal Navy.
At the present time, as the 1966 White Paper, in its second part, said, our carrier force is
"the most important element of the Fleet for offensive action against an enemy at sea or ashore."
Not the least charge which we on this side of the House brought against the Government was that their decision not to proceed with the new carrier envisaged the end of one Naval philosophy and strategy without any idea of what would replace it. The comparison of the naval section of this White Paper with that of 18 months ago shows that the Government are still without a settled policy or philosophy for the Royal Navy.
Two weapons on which great stress was laid 18 months ago have been sunk virtually without trace. The
"new class of guided missile ships"—
those were the 1966 words—the T82—is to have one sole exemplar, a one-off. That idea has fizzled out. The
"surface to surface guided weapon for use against missile firing ships"
is not even mentioned. Instead we have a new class of cruisers and a new class of destroyers, and a perfect mania of reliance for all conceivable purposes upon the helicopter.
Then there is that astonishing sentence that
"the main striking power of the Navy … will be provided by the growing force of Fleet submarines".
Our submarines, which only 18 months ago were a
"formidable part of our anti-submarine defences"
are thus now elevated into "the main striking power" of the Royal Navy. It is a statement which envisages, if it envisages anything at all, a type and conditions of warfare remote from any which the Government have hitherto adumbrated. The conclusion which forces itself on anyone who compares the two White Papers is that in another 18 months we shall have another statement as different again from this as this was from the last.
1022
Meanwhile, however, amid all these uncertainties, the Government, astonishingly enough, know exactly what the size of the Royal Navy will be eight years hence. It will be 18 per cent. smaller than its present size. It will have exactly 18 per cent. fewer men than today. So they know neither what ships nor how many the Navy will have in the mid-1970s but they know exactly how many men. How? Why? Because it is the figure which fits their budgetary calculations.
Then let us look at the Royal Air Force. That section of the White Paper is strewn with the wreckage of the collapse of the Government gamble on the Anglo-French variable geometry aircraft. They are, they say, "examining all aspects of the situation". They have not decided what will be the operational gap, what rôles will have to be filled, what they will be filled with. At this end of the spectrum of the Royal Air Force's capability all is complete uncertainty. We still do not even know the price at which we shall get the F111K.
But the Government know that in eight years' time the Royal Air Force will be 22 per cent. smaller than it is today. They know that for certain. How? They give no reasons, no explanation and no argument, but just the bleak nine words:
… the size of the front line will be reduced".
Why? How? And why by 22 per cent. precisely, which is a much larger reduction than in the other two Services? The answer, again, is that the figure fits their predetermined budgetary calculation.
In a recent debate, the right hon. Gentleman drew attention to a definition of the word "core". He said:
"… a core is a central part normally to be cut out."—[OFFICIAL REPORT, 13th July, 1967; Vol. 750, c. 1062.]
Therefore, it may reasonably be assumed that these 27,000 men whom the Royal Air Force is to lose are the core of the Government's long-term programme for the air force. At any rate, they will be cut out.
I pass over the astonishing announcement of a cut of one-eight in research and development—and that from a Government forged in the white heat of the technological revolution. I pass over the

1023
Gurkha Brigade, which is given the cold comfort of being told that
"… by the 1970s … there will still be some Gurkhas in Malaysia."
I come to the British Army. The first phase of reduction in terms of teeth units is set out in paragraph 7 on page 8. It is for a reduction from 60 to 52 battalions in three or four years. But, unless the reduction of the teeth units has been concentrated into the first phase, the second phase must also involve a similar reduction, which would bring the Army to the region of 44 battalions, and the equivalent in the other teeth arms. The sole explanation of this reduction in the fighting units of the British Army by 25 per cent. over the next eight years, is contained in the words,
"… as a result of the cuts in commitments outside Europe."
I have already looked at the mass of ambiguities and contradictions which that expression "cuts in commitments" covers. But the basic error into which the Government have stumbled is that of supposing that an army is the sum total of the troops stationed in various theatres at a particular time and automatically falls to be reduced when a station is no longer occupied.
A great part of the Government's own case is that the forces will, if needed, be able to be flown out from this country. In another place, the noble Lord, Lord Shackleton, placed great emphasis on this. He said:
"I do not think that it is sufficiently recognised even now that the advent of the very long-range transport aircraft has put an entirely new complexion on the question of whether it makes better sense to keep troops on the ground far from home, or whether it is not preferable … to keep them, or some of them, at a high state of alert in their own country." …[OFFICIAL REPORT, House of Lords, 25th July, 1967; Vol. 285, c. 707.]
The Prime Minister recently stressed
'… our ability to get to places where we were needed rather than reliance on …. bases."—[OFFICIAL REPORT, 20th July, 1967; Vol. 750, c. 2473.]
The White Paper itself says over and over again on page 4:
… it will be more economical to rely mainly on sending forces from Britain in a crisis."
There is no reason and no argumentation in this for reduction or for any particular reduction.
1024
I will not deny the House the enjoyment of what the right hon. Gentleman the Secretary of State said on television, when he was asked about the Far East:
"Are we actually going to station troops there from the mid-1970s onwards?"
Sir C. Osborne: Was that in 1954?
Mr. Powell: No, it was not in 1954 but on 18th July of this year. The right hon. Gentleman's reply was:
"We shall not station troops there. We shall probably have our amphibious force—that is, Commando carriers and assault ships with Marine Commandos aboard—sailing round in the area."
The interrogator said:
"So the main plan is to use this strategic reserve in Britain?"
The hon. Gentleman replied:
"In so far as we require to deploy forces in the Far East other than those sailing round, they will be flown out or sailed out from England according to circumstances to meet with every requirement that arises."
That will be very difficult if the forces no longer exist or do not exist in sufficient strength.
But there is a more profound misconception still. I pointed out in a previous debate this year that, before the war, the British troops stationed in India were a vital part of the British Army itself—indeed, it would be no exaggeration to say that they were basic to it. It would be grotesque to suppose that, had the transfer of power in India taken place ten years earlier, therefore the British Army should or could simply have been cut by the number of troops that were in India. An army is not a kind of addition sum arrived at by totting up the garrisons here and there at a given moment. It is a living organism which must have the size, flexibility, and power of growth to respond to the wide range of unforeseeable demands. Above all, a professional army like ours is the indispensable basis and cadre of the nation's military effort in any future emergency.
Such matters are not in the Government's mind. All that they can envisage is cuts and further cuts without definition or justification of the size and structure of the Army to be aimed at.
There is already widespread dismay in the British Army at the first revealed phase of the 25 per cent. reduction in the

1025
fighting units of the Army. My own regiment happens not to be one of those which are to disappear in this phase. However, it is right that a voice should be raised in this House, in the name of the House as a whole, of praise and gratitude to the history, the traditions and the service of the units which in this first phase are already to disappear in one sense or another.
Mr. E. Shinwell: It has happened before under the right hon. Gentleman's own administration.
Mr. Powell: However, I am speaking not only for those units, and not only for the Army, when I say to the Government, to the House and to the country that the hour will come in circumstances which no man can foresee today, just as the circumstances in the past in which this country has had to fight for its life were never foreseen—indeed, were treated with scorn, as absurd and as situations which could never arise—when this nation will need to increase her Army urgently in time of dire emergency or peril. When that time comes, this country will mourn the lost battalions. It will curse a Government which, not content with halving our citizen reserve, now intend to cut the fighting units of our Regular Army by a quarter.
Mr. Shinwell: Does not the right hon. Gentleman recall that, in 1957, under the supervision of his right hon. Friend the. Member for Streatham (Mr. Sandys), who was Minister of Defence, the whole organisation of our Forces was based on a White Paper which no longer provided reliance on conventional weapons and forces but on the nuclear weapon? Moreover, may I remind him that there was an occasion under a previous Tory Administration when a vast number of regiments were disbanded, and yet we have been quite capable since then of meeting our obligations.
Mr. Powell: If the White Paper made the slightest attempt to argue why the size of the Army, shorn of 18 per cent. of its manpower, and 25 per cent. of its teeth units, was adequate, and how it could be adequate, and what its organisation would be, and what the thinking and philosophy behind that Army would be, I would have more sympathy with the right hon. Gentleman.
1026
There is one part of our defence preparations where there are to be no cuts. The hon. Member for South Ayreshire (Mr. Emrys Hughes) is on to that. It is the nuclear potential, and no wonder. With each successive reduction in our forces the Government become inexorably more and more dependent on, the prisoners of, the nuclear weapon, and the more closely the right hon. Gentleman approaches the situation which was so powerfully described by the present Foreign Secretary ten years ago, the situation where
"every single major move becomes a decision to surrender, or suicide …."—[OFFICIAL REPORT. 13th February, 1957; Vol. 564, c. 1293.]
That is not what the party opposite has urged over the years. That is not the proposition on which hon. Gentlemen opposite were elected. That is not the policy which enjoys the support of dozens of their own Members on those benches. Their 1964 election address said:
"Our stress will be on the strengthening of our conventional regular forces."
This is how they have carried out the pledge.
In 1962, the right hon. Gentleman the Prime Minister spoke similarly about the "strengthening of our conventional forces"—[OFFICIAL REPORT, 6th March, 1962; Vol. 655, c. 227.] When, in 1964, he went to Washington we were told that
"he spoke out for a larger Navy and the strengthening of the conventional forces." "Summarising what he had said in Washington, Mr. Wilson outlined the policy of a future Labour Government. On ceasing the vast expense of maintaining the nuclear pretence, it would use some of the savings in strengthening Britain's conventional forces by way of more troops, better equipped, and improved mobility."
Finally, on the eve of the election—at Plymouth as it happened—the Prime Minister said:
"We believe that in the present condition of the world"—
perhaps he will say that it has become more peaceful and safe since then—
"we need a stronger and more effective Navy. … I wish the world were such that I did not have to say this, but I believe that we shall need an expanded naval shipbuilding programme and a greater Navy."
In a recent debate on the fiasco of the Anglo-French variable geometry aircraft, I had to tell the Secretary of State for Defence that he had lost all credit by his

1027
gamble with the future of the Royal Air Force. I cannot say the same about the Prime Minister. His credit reached absolute zero some time ago. But it would be a light matter if the Government's somersaults, their contradictions, their breaches of what they have stood for, their chopping and changing, their enslavement of defence policy to a distant imaginary figure, were damaging only to them.
It is because these courses are profoundly perilous for the safety and the future of the nation that we censure them today.
5.56 p.m.
Mr. Frank Allaun: There are many who should know better who think that this White Paper will mean drastic cuts in arms expenditure, and will make great savings. Unfortunately, this is not so. It is a great delusion to think so, as I intend to show.
If the four major criticisms mentioned in the second Amendment are valid, as I propose to show they are, how can anyone say that the White Paper is a great step forward? The Amendment says that if the Government are to carry out their promises they must drastically, and without delay, cut the £2,200 million a year, the expenditure "which the White Paper proposes to continue." I repeat that statement. The White Paper proposes to continue the spending of £2,200 million a year. The evidence is on page 11.
The White Paper admits that at current prices the Government intend to spend in 1970 exactly as much as they are spending today, the fantastic sum of £2,200 million, and by the mid-seventies, at current prices, to spend £2,100 million. To quote lower figures is an accountancy trick. It is using out-of-date figures. It is like an unemployed man who goes home to his wife and says, "We will have to cut down on something to safeguard more important things, like the children's welfare, clothes, and food". So they decide that they will cut down on the expenses of their small motor car.
The husband says to his wife, "Three years hence we will cut our motoring expenses to £3 a week ".The wife says," But, Denis "—his name may be Denis—" £3 is exactly what we are spending
1028
today".The husband replies, "Ah, but in three years' time the cost of motoring will have gone up". We can imagine the wife's reaction. To use a Lancashire expression, she would give him the rounds of the kitchen.
That is what we are going to do. We are to spend as much money three years' hence as we are spending now, but we are to get less value for it.
Mr. Emlyn Hooson: As the Government have established the precedent of relating everything to the 1964 level, ought not they in honesty to relate social benefits and everything else to that level, so that people know where they are?
Mr. Allaun: There is a good deal of sense in that interjection. I wish that my right hon. Friend could deny this, but we are to go on spending as much money on arms as we are spending today. It is not a drastic cut. It is not what the public want, as the public opinion polls show. They want much more drastic cuts. It is not what many hon. Members on these benches are seeking.
The Minister says in his conclusions, on page 12:
"This statement marks the end of that process"—
the process of reviewing commitments and expenditure. If he had said that this was the beginning of the process his White Paper would have been greeted with enthusiasm, but unless I misunderstood him, today he said that this process would not be repeated for many years. That makes it worse.
Let us consider the action of the West German Government. I have no particular love for them, but they are cutting their military expenditure by £200 million a year without delay—next year—in cash terms. When West Germany gets into economic difficulties it does not hesitate. Why should we?
The morning on which the White Paper was issued the newspaper headlines read:
"The £ Again Under Pressure"
There is no doubt that this is what is discouraging the Government from relaxing the deflationary measures which will keep 500,000 men on the dole and probably increase their number to 700,000 this winter. It is the Government's overseas military spending—this constant

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drain on the balance of payments—which causes them to maintain and not to relax the deflationary pressure. This is the cause of unemployment, which is the most serious evil in our life today.
Getting out of Singapore and Malaysia is scheduled for eight years hence. That is far too long. We all want to alleviate and prevent unemployment in Singapore, but that is no reason for keeping military bases there for another eight years. If we want to help the people of Malaysia and Singapore, let us provide them with alternative work. I am all in favour of that. Surely this is no excuse for having a military base there eight years hence. When this problem was discussed at the Labour Party conference last year the talk was not about eight years hence, but about two years hence. That was when the Government were asked to get our forces out of Singapore and Malaysia. These rank and file delegates have more sense than some of the generals and "top brass" who have been advising the Government.
There has been a remarkable silence about the other half of the problem. Most of the discussion today has been about the Far East, and most of the White Paper, too, is concerned with the Far East. What about the other half of our military overseas spending—West Germany? I know that on this question right hon. Gentlemen opposite will not agree with me. I am weeping no tears over that fact. We are spending in West Germany £195 million a year. This will remain relatively untouched. We shall cut it by £5½ million. That is about 2 per cent. Only one brigade is to be brought home.
Yet, again in the White Paper, the Minister repeats what he has said previously, that "a Soviet attack in Europe is unlikely in present circumstances". He knows, as we all do, that N.A.T.O. ends its 20 years of life in 1969. In view of his statement about present circumstances, with which most hon. Members will agree, why is he not making unilateral reductions, as the Germans are? Failing that, why, at least, is he not pressing vigorously for troop reductions by N.A.T.O. as a whole—there is no suggestion about that in the White Paper—which would lead to reciprocal reductions by the Warsaw Pact countries, as several of their spokesmen have officially indicated.
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Newspaper reports this morning have referred to a meeting which took place not far from where we are gathered. According to those reports the controversy concerned the question of which sphere of our social service expansion we were to halt. Many Labour Members will resist any watering down of our plans for the social services as long as this enormous expenditure on armaments takes place. We would say, "Not a penny off the social services or off industrial growth; not a penny off the help we give to hungry nations abroad, as long as we are wasting our manpower, money and materials in this way."
If we reduced our proportion of the gross national product devoted to arms to the same level as does the rest of Western Europe we would be sitting pretty. If we cut the proportion of our gross national product spent on arms from 6·5 per cent. to 4 per cent.—it does not sound a lot—we should have an extra £700 million a year to play with. What could we not do with that? We could do all the things that we so much want to see—the superannuation scheme; the 500,000 houses a year; the raising of the school leaving age, and the health scheme improvements which are very much needed.
All these things could be done. We could start to build Jerusalem in England's green and pleasant land—
Mr. John Rankin: And Scotland's.
Mrs. Anne Kerr: My hon. Friend may agree that to build Jerusalem in England's green and pleasant land we would have to lay plans for the absorption of the work force into other kinds of work. The Government should play the leading rôle in laying down alternative jobs for the men and women now employed in our defence industries.
Mr. Allaun: I entirely agree. That was done, and on a much bigger scale, in 1945, when a Labour Government, in about six months, turned over 9 million men and women from the Armed Forces and the war factories to peaceful work, without unemployment. It is possible to do what my hon. Friend says, and it would be done in a phased way, because it would be on a much smaller scale

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than in 1945. 1he public are ready for sweeping cuts in arms expenditure, so that other and better things can go ahead.
This morning many hon. Members attended a meeting in honour of Konni Zilliacus, who died a fortnight ago. Ever since he entered the House of Commons, in 1945, he proclaimed one essential point—that if any British Government attempted to carry out a foreign policy which involved colossal defence expenditure it would eventually and inevitably interfere with social progress at home. That is what "Zillie" would be saying if he were here today. He was right. Recent events have proved it to the hilt.
I cannot do no other than oppose the Conservative Amendment, which opposes any saving in this field. But if a second vote takes place to approve the White Paper, I could not conscientiously vote in favour of it and propose to abstain.
I intend to be much briefer than one or two other speakers this afternoon. I understand that the right hon. Member for Barnet (Mr. Maudling) is to wind up for the Opposition and I have told him that I propose to refer to his views, which are, presumably, the official views of the Opposition. Although he has not yet spoken in this debate, we may know what his line will be, because he stated it publicly on return from his recent visit to the United States. Many of us are lost in admiration for the suavity with which he makes dangerous, warlike policies look respectable.
The right hon. Gentleman admitted in a recent article that the British troops in the Far East are of only marginal strategic value to the Americans. Then why, we may ask, did Mr. McNamara, the U.S. Secretary of Defence, say not long ago:
"You British are doing a first-class job in the Far East and it is essential that you go right on doing it."
The right hon. Member has given the game away. Unfortunately, I cannot send any urgent messages on the "hot" telephone line to check the references, but there is no mistake about this.
To quote his actual words, he said:
"Politically, the continuing presence is an essential to them (the American Government). If we were to withdraw, leaving them"—
America—
"alone of the Western Powers in the east of Suez area, then they feel that politically their position would soon become intolerable.
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American opinion would not allow the American Government to continue alone the role of world policeman".
Precisely. In other words, Washington, with the right hon. Member's approval, wants us to keep thousands of troops in Malaysia and other parts of the Far East, despite the ending of confrontation with Indonesia, and wants the Australians to keep a token force in Vietnam so that the war already waging there and the United States military preparations in five other Asian countries should look more like a crusade for freedom by an alliance and less like aggression by a single Power.
"World policeman", indeed. If China had 400,000 soldiers fighting in Mexico and approaching the United States frontier, the Deputy Leader of the Conservative Party would not be describing China in such terms as a world policeman. The American purpose is to stop social change and national independence among the peoples of Asia and Latin America. When the Conservatives talk about the armed forces being gravely impaired in their capability to defend Britain, what they really mean is their capability to defend U.S. foreign policy.
6.15 p.m.
Mr. Hugh Fraser: I will not follow the hon. Member for Salford, East (Mr. Allaun) very far, except to say that his contribution to the debate is in many ways more important than that of the Secretary of State, since it is precisely this point of view which is influencing right hon. and hon. Gentlemen on the Front Bench. I agree with him, however, on this point—I regard the present Administration's economic policy as disastrous, and it is significant that the burden is thrown on the unemployed and the Armed Services, a process which we saw in the 1930s.
I will not dwell on the need for the exchange rate to take some of the burdens which fall in these areas, but it is becoming more true every day. I will not follow the White Paper in what is called a system of higher criticism, which, as my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) pointed out, shows up the extraordinary anomalies and contradictions in it. Only one fact emerges with absolute and total clarity and that is that, over the next decade, this Government are resolved to

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reduce defence expenditure from 61 per cent. to under 5 per cent. of the gross national product. Of that, there can be no doubt—
Mr. J. J. Mendelson: And a good thing, too.
Mr. Fraser: I will come to the hon. Gentleman's point.
—and that it will leave the country, after the more or less total destruction of the Territorial Army, with inadequate reserves of trained manpower or cadres for expansion.
If one takes the point of view of the hon. Member for Penistone (Mr. Mendelson), this is perfectly justifiable, but it has to be based on two things—no nuclear weapons and no obligations outside the United Nations. This is precisely what this Goverment still reject. As my right hon. Friend said in his admirable speech, they are relying even more today on the nuclear weapon than they ever proposed to do or than the late Conservative Government proposed. The power of one's nuclear arms must be relative to one's conventional ones and that is falling. Therefore, the Labour Government's increasing reliance on nuclear weapons inevitably follows.
My dear father-in-law and Lord Chalfont and others have got into a very interesting semantic discussion about the difference between commitments and obligations, but the obligations of this Government remain precisely as before: there has been absolutely no change. All they are doing is making it impossible for the obligations to be discharged.
One instance of the sort of obligation which we may suddenly have thrown upon us is the terrible moral dilemma which could have faced the House if Israel had been overrun and we had seen the genocide of a people. If the threat of the Arabs had been carried out and the people of Israel massacred and exterminated, many people in the House would have felt under an immense moral obligation to do something about it—and this applies to many on the Front Bench as well.
Therefore, to say, as Lord Chalfont does, that these obligations can fly away like the commitments is nonsense. Providing that the Government believe that they have these obligations, they must
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have the means to fulfil them. It is clear that they have now, by this White Paper, kept the obligations but are endeavouring to escape from the commitments.
That is precisely the sort of thing which is destroying the morale and will of the people of the country. It leads to endless posing, such as we have had from the Prime Minister. Again and again, we have heard the phrase, "This country cannot stand idly by". It could not "stand idly by "about the bombing in North Vietnam, or about Rhodesia, or about the Straits of Tiran. And what happened? Nothing. Perhaps the appropriate phrase for the Prime Minister the next time he looks for one would not be "standing idly by" but a phrase using some more prone position which he cannot idly abandon.
Frankly, the White Paper is disastrous. The promise is still there, but it will be totally impossible to fulfil it over the next decade. I do not want to go into details about the White Paper except for a point concerning the Royal Air Force which is being asked to carry out duties which were previously to be carried out by the Royal Navy. The R.A.F. is being asked to carry out duties which would have been carried out by aircraft from carriers.
Although the commitment has gone, the obligations in the Far East are just as great as ever they have been. The other evening the right hon. Gentleman discussed the merry theme of ships circling around the Far East, but being supported by aircraft. It is clear from the White Paper that there will not be sufficient aircraft to carry out those duties.
But the White Paper raises a much more serious question even than that of power. It raises a question on which the Labour Party have a special difficulty because, honourably or dishonourably—it is a matter of fact—they have had a pacifist element. It may be that there has been a jingoist element in the Conservative Party. But today a special danger faces democracy when it deals with defence. It was rightly said in the old days that democracy was always slow to be prepared and slow to take the necessary steps for defence. That is becoming an exceptionally dangerous

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characteristic, because the time between an operational aircraft requirement being decided and the aircraft coming into squadron service is seven or eight years.
We must decide priorities. We are in a world generally becoming more and more dangerous. A few weeks ago we were on the brink of war and could have been involved in war in the Middle East. To cut back on defence in such a massive way—the biggest cut in proportion which has been made since 1935—is dangerous.
I know that we politicians live in a rather strange world of what is called the permissive society and that we are subject to what is called consensus politics and politicians. But I warn right hon. Gentlemen opposite and on this side, too, that the consensus for which politicans often search leads to the lowest common denominator—a common denominator which is bad.
Mr. Mendelson Mr. Mendelson rose—
Mr. Fraser: I will not give way, because I am about to conclude.
When people are unprepared on these matters, the first Gallup Poll is always in favour of a Munich. That is a point which we must face. The White Paper is ill-thought-out and contains areas of great danger for the country. In producing it, the Government have fallen below the level of events and deserve to be condemned.
6.25 p.m.
Mr. Evan Luard: In opening an earlier White Paper the Secretary of State for Defence congratulated the Government on the fact that, by it, defence policy had been made the servant of foreign policy. I confess that I felt some doubt about the use of that phrase at that time, and I feel it still in relation to the present White Paper. It is surely always the case that both defence policy and foreign policy at any one time will be conditioned, above all, by the believed potential threats to international security which may arise in the course of the next few years. It is the assessment of this threat rather than any preconceived idea of foreign policy which will always be the fundamental factor in de-
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ciding which kind of defence policy will be pursued.
In assessing the present Defence White Paper, this is surely the kind of consideration which we must first have in mind. We must look at the world scene and consider which are the areas in which instability is most likely to arise in the next few years, which are the kinds of response that we could reasonably be expected to make, which kinds of action by our forces are most likely to reduce or increase stability. Finally, we have to relate these possible considerations to the resources which we can be expected to be able to provide.
If one surveys the world scene, one cannot doubt that the area of greatest stability is Europe. It is perhaps slightly paradoxical that during the last 20 years Europe has probably been more highly armed than at any other time. But it is equally undeniable that there has been no period of a similar length of years in the past 2,000 years of European history in which peace has existed on the same scale as in the past 22 years. There has not been a single war, or a single outbreak of international violence in Europe during that period. In considering our defence commitment it would, therefore, be logical to feel that this is perhaps where it is easiest for us to make reductions in our defence establishment.
I well understand the purely political considerations which have not made it possible for us to achieve any significant reduction in our defence commitment in Europe at the moment. Those are important considerations. Our application for membership of the Common Market, even more important the undesirability of allowing the West German Government to feel that they are being deserted by their allies and that they must find other means, perhaps less desirable to us, of providing for their defence, these are strong arguments against large changes now. I do not question the Government's judgment therefore in making no further reductions in our defence establishments in Europe at the present stage.
May I, however, address a warning to the Secretary of State for Defence in this connection. He spoke of his success—which I entirely applaud—in reducing expenditure in foreign exchange on defence during the three years that he has

1037
been in office. He quoted substantial figures already saved, and gave the savings over the next few years as a result of the White Paper policy. But much of this was based on agreements which have been arrived at this year with great difficulty for offsetting our foreign exchange costs in Germany.
It would be an optimistic person—I do not believe that my right hon. Friend would be so optimistic—who would believe that we shall be as successful in acquiring such considerable offset arrangements in any future year. Many special factors arose this year. It would be wise to remember that if we are to achieve the sort of savings in foreign exchange expenditure outlined by my right hon. Friend, more extensive reductions in our force levels in Germany may be necessary later.
Most people would agree that the main areas of the world in which threats to security and stability can be expected in the coming years are not in Europe but mainly in the developing Continents—in Latin-America, where even today two or three small guerilla actions are taking place; in Africa, where wars of one sort or another are going on in Nigeria, the Sudan and the Congo, and where more trouble is likely in Southern Africa; in the Middle East, which is only now recovering from a sudden and violent outbreak of war; perhaps, above all, in South-East Asia, where, in the past 20 years, there has been a protracted struggle between the French and nationalist forces in Indo-China, between 1946 and 1954; the emergency in Malaysia; the renewed fighting in Vietnam and civil conflict in the Philippines and Thailand. This certainly is one of the most unstable areas of the world.
I will not comment on Latin-America and Africa, because we have no land forces in either. Nor will I say much about the Middle East, because I regard the policy outlined in the White Paper for that area as the right one; here we are already making a substantial reduction in our forces by our withdrawal from Aden, leaving a very limited level of forces in the area for the indefinite future, only the sort of level that may be required in certain emergency situations—and even this will probably not be a long-term commitment.
1038
The area with which the White Paper is primarily concerned is South-East Asia, and the Far East. In considering the likely threats to stability in this area one must consider, first, the intentions and motives of China, by far the most powerful and important nation in the area. A great deal is said, often in loose terms, about the "containment" of China and the possible "expansionist" intentions of that country. I believe both terms need careful definition.
If we are referring to possible expansion by China, to what sort of expansion are we referring? If what is meant is expansion by direct military attack on China's neighbours, I would consider this highly improbable. China has deliberately and voluntarily entered into frontier agreements with virtually all its neighbours, except with India, where it has established what I believe to be the frontiers it wants, and with the Soviet Union. [An HON. MEMBER: "What about Tibet?"] Tibet has always been regarded as a part of China: that has been the view of successive British and foreign Governments. This, therefore, is not the sort of action one expects from a country which is planning direct aggression.
Rear-Admiral Morgan Giles: Would not the hon. Gentleman agree that the point is not so much whether we and any other advanced Western nation considers that China is unlikely to be militarily aggressive to its neighbours, but that China's neighbours fear the future? Would not he agree that the fear of physical violence is much nearer the surface in these oriental countries than it is in any part of the Western civilisation?
Mr. Luard: I accept that the legitimate apprehensions of the countries in the area, must obviously be borne in mind when formulating our defence policy. However, it would not be reasonable to expect us to maintain a level of forces not related to a threat which we consider to be probable, but related to a threat which is thought probable by other nations.
Let us go on to consider possible expansion by means of the deliberate encouragement or spreading of violence in civil conflicts. If one means by this that China can be expected to exploit every opportunity that arises in civil conflicts

1039
in the area, I agree one must expect that. But if one is talking about the deliberate starting by China of these activities, then this is more difficult to judge. If one examines Chinese foreign policy in the last 15 years—since the Communist Government came to power—one must admit that China has been remarkably cautious in its policy in the area, even in countries where civil disturbances have taken place.
For example, in Laos, an area of vital strategic importance to China, a border territory, China has behaved with considerable moderation and restraint. One could say the same about Vietnam, another country of vital strategic importance to China. From the point of view of the physical supply of arms, Russia, a country far more distant, has been more active than China. I do not deny the importance of the moral encouragement and verbal incitement to violence which China has given, but that is not the same as physical participation or assistance to violence.
If, by "expansion", one means simply an expansion of Chinese influence in the area, this is certainly something which one can anticipate, although it is something which one must agree cannot legitimately be denied to China. There will certainly be an expansion of Chinese influence in the area, which is right on its doorstep. What we must ensure is that these activities must not inhibit the freedom and independence of these neighbour countries or seriously endanger the legitimate interests of other countries in the region.
If we accept—and most people do—that the main threat to the stability of the area is that of civil disorder and possible small-scale, guerrilla conflicts, we must adjust both defence policy and the sort of assistance we think it right to provide for the countries of the region. The best asistance we can give against disorders or threats of this sort is not necessarily military. It is becoming increasingly recognised nowadays that perhaps the most effective deterrence to guerilla activity in areas like, say, Viet-name, Laos, Thailand, Malaysia and this whole part of the world is other nonmilitary assistance.
Economic assistance may be of vital importance in preventing the conditions
1040
in which conflicts of this sort emerge. Assistance in establishing efficient and, above all, honest political administrations, especially in remote areas, is of crucial importance in preventing disturbances of this kind reaching a large scale and becoming seriously dangerous. Assistance for police forces can be as important, from the purely military point of view, as military assistance proper, became.
Often, especially in the early stages of such conflicts, it is the police forces that bear the greatest responsibility in containing the trouble. Without efficient police forces, as British advisers have often said to the Americans in Vietnam, all the military assistance in the world may not be of great value.
If we accept that the threats in this area are of the kind I have described, I believe that the policy in the White Paper is basically correct. Here, I must dissent from some of my hon. Friends, who are critical of the policy, first, because they think that we should be leaving the area very much more quickly than is at present intended. If one believes that we have any responsibility at all for the countries in the area—and I do not see how that can be denied, as we are involved in direct treaty obligations to at least two of the territories—one must be prepared to give those countries reasonable time to make alternative arrangements before we leave the area altogether.
Secondly, it is frequently said that what we have to do in this situation—and my hon. Friend the Member for Woolwich, East (Mr. Mayhew) frequently says this—is simply to cut our commitments. I do not think it is a reasonable proposition, when one has entered into formal obligations, just to cut commitments according to the whim of the moment. A commitment is a commitment. One can encourage those countries to make alternative arrangements that will enable them to provide as effectively, if not more effectively, for their own defence. But one cannot unilaterally withdraw from such obligations and provide nothing in return.
Mr. Mayhew: I am sure that my hon. Friend does not mean to suggest that I want suddenly and unilaterally to dishonour treaties, but he will agree that some ancient treaties—some of them were made in the 18th century—cannot be

1041
binding on us for ever. We are surely entitled to ask our treaty partners to release us from treaty obligations at some time.
Mr. Luard: I accept that. But we are not here talking of 18th century treaties, but of treaties about 10 years old. It is not only a question of treaty commitments, but agreements with former members of the Commonwealth which we ourselves have recently brought to independence. We have some responsibility for the security and stability of the area as a whole—a responsibility that we retain for the moment, though we cannot retain it indefinitely and from which we should try eventually to withdraw.
Nonetheless, many of us for a long time have thought that, while we may have such commitments, we are not necessarily bound to meet them in the same way as we have done in the past. What is important to these countries is not that we should have available large numbers of troops on the spot but that we should be in a position to provide assistance at short notice in a crisis situation. This is particularly so if we accept my earlier premise that the kind of dangers likely to arise are not of overt large-scale aggression of frontiers of the sort that at one time was thought of in Europe, but of fairly limited guerilla activities.
I do not believe that deterrence in the shape of large forces on the spot is of great importance. It could be argued, indeed, that large forces of a foreign country, especially of what might be termed an imperialist country, on the ground, far from being a deterrent against guerrilla activity are a provocation—
Mrs. Anne Kerr: Is my hon. Friend suggesting that if a brush fire broke out in, say, Thailand, where there is no democracy at all, we would be willing to send British troops to put it out? I cannot believe it to be possible.
Mr. Luard: If such a situation arose, we would have to consider our position. As my hon. Friend knows, we have refused to become involved in any way in the war in Vietnam, and we might make the same decision over Thailand. But we have an interest in trying to prevent such a thing happening in Thailand and in other countries in the region, so that anything we can do, particularly by means of political and economic assist-
1042
ance, that may make such a happening much less likely is not only in their interests but in ours.
What is most important for those countries is to know that they have at least an interim period during which we would be able to bring them assistance of some kind against aggression in a fairly short space of time. I approve of the White Paper because it is designed to bring that about. It would be a rational policy for any outside Power to pursue that wishes to give assistance in an area like this but, above all, it is a rational policy for a country like Britain which is suffering from very serious defence problems.
It is all very well for the right hon. Gentleman the Member for Wolverhampton, South-West (Mr. Powell) to say that the Government are simply cutting their coat according to their cloth; thinking of a figure and then evolving their defence policy accordingly. The fact is that any Government must to a very considerable extent take account of their resources, and of the economic situation generally, in devising a defence policy as a whole.
For any Government that has any serious balance of payments problem, the balance of payments situation must always be one factor to be taken very seriously into account in evolving defence strategy. That is why I think the defence White Paper, which will make it possible for us to provide effective assistance in such a situation without the heavy drain on our balance of payments resulting from having large numbers of ground troops on the spot, is our only rational course. My only regret is that the Government did not move towards this policy a year or two earlier than they have done.
The Defence White Paper has one or two other implications. There is even further need for strengthening our air transport facilities. In particular, the Government should consider the possibility of the purchase of the C5 United States air transport, in addition to those transports that we are already acquiring. The C5 is by far the most effective air transport yet being built. It will, of course, be expensive—
Mr. Healey: I must tell my hon. Friend that the C5 does not yet exist, and it will not exist for several years, nor shall we

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require it until the Britannias phase out in mid-'75. Of course, we are considering whether when the Britannias do phase out, we should replace them with C5s.
Mr. Luard: I am very happy to hear that, because it does meet the very point I was making.
Another important implication of the policy outlined in the White Paper is that if over a period we are to remove our forces from this region it is not unreasonable for us to expect the countries there to take more active steps to combine to improve their own defence facilities. I accept the Government's past argument that it is not for them to bully those countries into any particular defence organisation. It is not necessary, perhaps, to have any overt defence organisation, but some kind of regional organisation, perhaps, mainly for the purpose of greater economic co-operation or more political consultation, is important.
That policy has two main purposes. First, it improves the self-confidence of the countries in the region to feel that they can rely on each other for support, in addition to any external support for which they may still hope. Second, it provides a slightly greater amount of deterrent power to any kind of external threat that might still exist. I do not think that this is a major threat, but it may still be some kind of threat, and there might be some kind of deterrent even against guerilla activity.
Already a considerable number of small-scale organisations are overlapping in this part of the world. It should not be too difficult to find some kind of unifying factor among them. There could be a grouping of Thailand, Malaysia, the Philippines and Singapore. One might consider some kind of realigned support for co-operation between Australia, New Zealand, Japan, and probably India and Pakistan. I do not think these countries would wish us, or that it would be desirable for them, to enter into a formal defence organisation, but, if they were to consult regularly on defence matters it would improve and strengthen the security of the region and make it easier for us to disengage from that part of the world without any loss of honour or breach of undertakings to countries of the region.
6.51 p.m.
Mr. Emlyn Hooson: The hon. Member for Oxford (Mr. Luard) referred to defence policy as an extension of foreign policy. Accepting that premise for the moment, I entirely disagree with him that this country cannot now get rid of much of its foreign obligations. This would be the first requirement for a country in "the twilight of empire" which basically has to reassess her rôle in the world.
From this bench we have been pressing for a long time that the country's first requirement is to get rid of the obligations and then to cut down on the forces. What the Government are in the process of doing is to cut down the commitment or the ability to carry out the obligation while still retaining the obligation. This is a highly dangerous policy.
Mr. Luard: I did not say that we should never make any alteration in commitments, but that it should only be over a period, and provided that we obtained assurances that those to whom we are committed could obtain facilities by other means. I do not agree that one can take or get rid of an obligation at a moment's notice.
Mr. Hooson: I accept that an obligation is an obligation, but it does not continue for ever. The Government and their predecessor have taken very few steps indeed to rid this country of its foreign obligations. We are, therefore, in a very dangerous exposed state. This is about the fifth defence debate in which I have spoken in this vein. The Minister of Defence knows that I basically disagree with him on many issues. However, I greatly respect his technical and general ability. Few Defence Ministers have had such a grasp of their subject as he has. Nevertheless, I think that we are in a very dangerous state.
We are proposing that we should retain our obligations, but, nevertheless, rid ourselves of the capacity for carrying them out. What will happen, for example, in the Far East, is that we shall have an important obligation to Malaysia—but greatly reduce our capacity to carry it out. What happens if there is pressure in that area? We shall have acclimatised people at home to the idea that we are getting rid of our obligations in the East. Whether we like it or not, that is what

1045
people think the Government is doing. Then, if there is pressure in that area, and we increase our defence forces there, there will be increased hostility at home. We could get trapped into a war in an area in which people at home have very little interest indeed.
Once we have made up our minds that we have to cut down our forces and that we are no longer for any length of time in a position to carry out foreign obligations, the sooner the process is completed the better. It is very dangerous to persist in the obligation and yet not to have the forces to carry it out. That is why there is an element of unreality about this debate between the two Front Benches. I do not believe that there is any difference of philosophy between them. I have always regarded the Secretary of State for Defence as holding the view, often eloquently expressed in this House, that Britain has still a world rôle to play. I do not think that he resiles from that view now. I understand that the opposition Front Bench—certainly the majority on the Front Bench—also hold that view.
The views of the right hon. Member for Wolverhampton, South-West (Mr. Powell) are a mystery to the House as much as they are to him on this subject. If we accept that the view of the Secretary of State on Britain's rôle in the world has not changed, what has forced this change in Government defence policy is events. It would have been exactly the same if there had been a Conservative Government. The Minister has been chided for cutting his coat according to his cloth, but inevitably that is what is forcing him to change his policy. I believe that whatever Government were in power they would now have to be withdrawing or planning withdrawal from these distant bases.
What is the future rôle of Britain in the world? I have taken the view for many years that we have two possible rôles in the future. The first and preferable one is as an integral part of Europe. The defence of Europe is the defence of Britain. We must aim to play a full part in Europe in the future. If events prevent us from doing this in the forseeable future—and here I take a pessimistic view of our getting into the Common Market—I do not see the chances of developing a new European defence
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community as high. Either we go in to Europe fully and take a full part or we may be driven into a Japanese-like rôle in the Atlantic area. Then we should become an insular Power in a true sense and have to trade where we can. This, whether we like it or not, might drive us eventually into a policy of military neutrality.
These are among the pressures affecting us in the assessment of our rôle in the world. I have always worked for and believed in a united Europe and that we should play a complete part in it. But we may have to consider seriously the alternative road, which may be forced upon us by events.
Mr. Shinwell: Is the hon. and learned Member speaking in terms of defence when he speaks about association with Europe? Is that what he means?
Mr. Hooson: Yes, a full rôle.
Mr. Shinwell: If that is so, will he notice that in the White Paper my right hon. Friend regards any aggression in Europe as most unlikely. What is the point about defence?
Mr. Hooson: I shall come to that point in a moment.
I am developing the idea that defence policy must be an extension of foreign policy and that policy depends upon one's view of the rôle of one's country in the world of the future. The danger about the Government's policy is that they cannot make up their minds on what the rôle of Britain is. The Defence Minister takes the view that Britain has a world rôle to play, but events are forcing him again and again to curtail his forces so that he is less able to fulfil this world rôle.
One great danger of a policy of protracted withdrawal, with a time-table and so on, is that we have a serious burden on our balance of payments which prevents us from being regarded as a truly effective candidate for European status. The very fact that we have these obligations makes it more, not less, difficult to get into Europe. Another reason why the rôle should not be protracted is that it always invites the cry of "neo-colonialism" in these unsettled areas when that charge is

1047
unjustified. We have all the odium although we have no bad intent. This is a situation of great difficulty.
I have always advocated in these debates that the first step we should take is to review all our obligations and to cut out all we possibly can. Once that is done, foreign policy falls into perspective and we can decide what kind of forces we need to fulfil our more limited rôle in the world.
I turn to the Defence White Paper and the part which deals with the European aspect. I have little to quarrel about with the White Paper in respect of what it says about Europe. The point was made by the hon. Member for Oxford that Europe has probably been the most secure part of the world over the past 22 years and yet has never been so heavily armed. This is a valid point. We have reached a basis in Europe between, on the one hand, the Russians and, on the other, the Americans and ourselves where there has been mutual respect for each other's forces, and this has created a military stability which has in time led to more political stability.
But should we continue with Europe in this frozen state? The right hon. Member for Easington (Mr. Shinwell) is right in suggesting that there is greater scope for arms reduction in Europe than anywhere else. But how is it to be achieved without in the process creating a state of insecurity? It is difficult to evolve from a state of established security without in the process of the movement creating some insecurity.
I think that a new form of security is best achieved by direct negotiations between the Warsaw Pact and N.A.T.O. This is a course of action which I advocated at a conference of N.A.T.O. Parliamentarians. The conference refused to accept this form of words because the Americans and the West Germans would not accept that there should be negotiations between the two pacts because it would mean indirectly recognising East Germany—which seemed a poor reason to me. Nevertheless, the N.A.T.O. Parliamentarians on an amended formula took the initiative and wrote letters to the Speakers of each of the representative Houses in the Eastern European countries suggesting that there should be an informal meeting
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of Parliamentarians from N.A.T.O. countries and Eastern European countries to see whether there did not exist a climate of opinion which would permit more formal talks later with a view to achieving a détente in Europe. I think that this is the right approach. But I regret to say that there was a favourable response from only two of the countries written to and so the idea has fallen through temporarily. However, this is the kind of contact that is necessary to create a climate for change, because there is greater scope for reduction of armed forces in Europe than anywhere else.
With regard to our overseas obligations, as I have said, there are great disadvantages in protracting our world rôle well into the 1970s. At the moment we still have long-term obligations in the Persian Gulf. Why are we planning to stay there almost indefinitely? I do not believe that in this age we derive economic and political advantages from a military presence. It would be far better for us to get out and let the natural political forces that would operate balance themselves out. Our very presence there prevents forces and countervailing forces from coming into operation.
I illustrate that by reference to the Far East. I was impressed by the spirit of the people when I visited Singapore. Nevertheless, I do not believe that Singapore is or was a viable independent unit. The main reason why it came into existence was because of our presence there. We make a great deal of difference to the economy while we are there. The astute leaders of Singapore would not have thought it wise to come out of the Malaysia Federation had it not been for the large British presence in Singapore. But independence having happened, it now makes it more difficult for us to withdraw.
Why do we need a new staging post in the Indian Ocean? Is it suggested that in the 1970s we shall need a new one there? How shall we carry out our obligations in the Far East after 1975? What is the purpose of having forces in, say, Australia in the late 1970s? It might provide moral support for the Australians—I am all for giving all the economic support necessary to friendly countries—but it is misleading to the Australians, the New Zealanders and our other friends

1049
in the Far East to think that in the 1970s we shall be in a position to give substantial military help if they are in difficulties. They must form their own defence organisations, and, indeed, they have done so through the A.N.Z.U.S. Pact.
We have yet as a country to come face to face with the reality of our present situation. We cannot afford a defence policy which takes such a proportion of our gross national product—
Mr. Emrys Hughes: The hon. and learned Gentleman referred earlier to militant neutrality and the neutrality of Japan. Is not Japan doing well out of it and capturing the markets of the world?
Mr. Hooson: It is an attractive rôle and should not be underestimated.
Mr. Julian Ridsdale: But is not the basis of the Japanese rôle an alliance with America?
Mr. Hooson: Japan certainly has alliances with many countries and trades a great deal with Red China. I am not suggesting that we should get rid of N.A.T.O. My argument is that this is a rôle to which Britain may be driven if she is not allowed by France into Europe.
One of the glaring omissions from the White Paper is the nuclear arm of Britain. What has happened to the Labour Party's policy to get rid of nuclear arms? This is an area where there is great scope for economy. I think that the argument is right that the more one reduces one's conventional forces the more one is necessarily driven to rely on nuclear power as an element in defence. The Conservative Party attack is right on this point.
The Labour Party has an unenviable record here. The Labour Party conference came out substantially in favour of getting rid of the nuclear deterrent, and that was one of the Prime Minister's main points in his election programme. Yet the Labour Government are developing Britain's nuclear power today, following the Conservative programme save that they have got rid of one submarine. Why are the Labour Government following this policy? What is it that has changed in the meantime? We know that the Prime Minister is retaining the nuclear arms with all the determination at its disposal, but he has not yet told us why. What is the difference between the situa-
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tion of Britain in the world today and the situation in 1964 when the Prime Minister came to power?
The truth is that by now no one takes very seriously what the Prime Minister says about defence. Plymouth has a very heady atmosphere. I was stationed there for a time during the war. It must be a very difficult place on election night or the eve of the poll. However, what the Prime Minister said about the development of the Navy when he was in Plymouth shows his complete lack of reliability on such occasions. It is time that the Government "came clean" on defence. What is their view—collectively—of the future rôle of Britain in the world? Do they think that we have the economic and military resources to carry out a world rôle? If we have not, the sooner we get rid of it the better.
There is much lacking in this White Paper, though it is nearer Liberal policy at last than any Defence White Paper that I have yet seen; I would certainly vote for it in preference to the Conservative Amendment. We are getting the worst of all worlds, there I agree with some of the critics on the Conservative benches. The policy of the Conservative Party is to have Britain fulfilling a world rôle and to provide Britain with the means of doing so. But the Conservatives are dishonest in that they never tell the electors that it would cost a great deal—a very great deal—more in taxation. I do not believe that our people are now prepared to spend the money to fulfil military obligations in remote parts of the world.
What I am most concerned with at the moment is the defence of Britain. I even think that if there were now a conventional attack on Britain—it is unlikely—it might succeed. I opposed the dismemberment of the Territorial Army. I was chided by the Government because I had been pressing for cuts in defence, and yet I objected to the break-up of the Territorial Army. I will say why. I believed that if we were to get into difficulty, if we were to move into a period of insecurity in Europe, it might be necessary for us to have forces on which we could rely in each part of this country for conventional defence. Therefore, I thought it was a great mistake to break up the Territorial Army.
My view of the future rôle of Britain as a European Power is that we need a

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citizen Army to sustain the regulars and that we should not rely entirely on a regular Army for home defence.
The Minister of Defence for Administration (Mr. G. W. Reynolds): The hon. and learned Member says that he would like to have a civilian army. Is he not aware how much it would cost to equip and train a Territorial Army of the size that he is talking about up to the standard that he wants?
Mr. Hooson: It would cost far less than the cost of retaining the nuclear deterrent, and it would be a far better investment for this country.
The Under-Secretary of State for Defence for the Royal Air Force (Mr. Merlyn Rees): That is not true on the hon. and learned Gentleman's own figures.
Mr. Hooson: If we could cut out our obligations in different parts of the world and cut down on the necessity for a large regular force, we could spend more money on a Territorial Army. This would be the best investment that Britain could make in its own defence interests.
Mr. R. T. Paget: Is the hon. and learned Gentleman aware that Israel produced rather an effective Army at about one-sixteenth of the cost of ours?
Mr. Hooson: I am grateful to the hon. and learned Gentleman for that intervention. The Swiss have an effective Army, although it has not been called into action. So have the Swedes. The Israeli example shows what can be done.
I am very concerned with an attitude of mind in this country which the hon. Member for Bosworth (Mr. Wyatt) pointed out in a newspaper article—we can always in theory sort out what should happen in other parts of the world—as in the Middle East but show little interest in the defence of our own country. Whether we have an effective defence for our own country, in alliance with other N.A.T.O. countries including the United States is vital to us, but the time has passed when we can also sort out the difficulties in the Far East and the Middle East. Our future rôle is very much in Europe.
7.13 p.m.
Mr. E. Shinwell: I have just made a discovery I have learned that some hon. Members, in particular, the
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hon. and learned Member for Montgomery (Mr. Hooson), gained their knowledge of defence and military strategy from attending the N.A.T.O. Parliamentarians Conference, where they were indoctrinated after having been brainwashed, where they conceived the notion peculiar to themselves—by the way, I have never been a delegate to that conference—that all we are required to do is to build up the forces of Europe, irrespective of the facts of the situation and the realities that confront them, and all will be well.
We had an example of that in the final words of the hon. and learned Gentleman, when he said that we should be concerned about the defence of Britain. Of course we are, but it is nothing to do with all this jargon about a world rôle. Of course we are concerned about our security. But what does the hon. and learned Gentleman provide as a specific for protecting and safeguarding ourselves and promoting our security?—a citizen army, a national guard, to fortify the police if there is any difficulty. What nonsense is this? Abandon the nuclear deterrent and nuclear defence. That concept runs right in the teeth of all the developments in military strategy during the last 10 or 15 years.
Take, for example, the White Paper that was issued in 1957 on behalf of the Conservative Government by the right hon. Member for Streatham (Mr. Sandys), when he was Minister of Defence. It abandoned the conventional weapon. There was to be a pause. Why? The sort of jargon we have heard tonight is a repetition of what we heard in our defence debates on that White Paper. It was the nuclear deterrent that was to safeguard us, and, so far as Europe is concerned, that remains the position.
The hon. and learned Member talks about an attack on Britain. By whom? How? By an invasion? How are we to be attacked? By air? If so, do we respond by using the citizen army envisaged by the hon. and learned Gentleman? Of course not. What is this nonsense?
Mr. Hooson: My view of the nuclear weapon is this. If we use a nuclear weapon we are committing suicide. Everybody knows this. This is not a matter of defence. The only attack to which we have any defence is a conventional attack.
Mr. Shinwell: The hon. and learned Gentleman says that if we allow these weapons to be triggered off, that is suicide. That is the concept which was at the basis of the 1957 White Paper.
Let us look at the situation as it might have developed. Some conflict might arise out of a difference of opinion between East and West Germany or about the Oder-Neisse line. A possible conflict could emerge. The N.A.T.O. forces would seek to defend West Germany against East Germany, and defend us against East Germany as well as the oncoming of the Soviet conventional forces. Does the hon. and learned Gentleman know what the military chiefs thought about that? In my time as Minister of Defence, and ever since, our conventional forces would be completely liquidated in the course of a few days.
What is the N.A.T.O. situation? Has any hon. Member analysed the forces at the disposal of N.A.T.O.? What are they? There are the Dutch. I will not say much about them. They are almost negligible. Then there are the Belgians. What are they?—a division or two, not up to strength. Then the Luxembourgers. Really, Mr. Speaker, I ask you! Then there are the West Germans. They have promised 12 divisions. They have probably got 10 divisions—not up to strength and hardly fit to engage in a conventional conflict with the forces of Soviet Russia, or even East Germany. I challenge contradiction on that point. As for France, she has contracted out of the whole business. This is the situation in N.A.T.O.
Why do we pin our faith on N.A.T.O.? It is a symbol. Symbols are very useful sometimes, but N.A.T.O. is no more than that. We have known that for many years. So the right hon. Member for Streatham was wise in his generation, and we have remained to a certain extent wise ever since by understanding that the only means of protecting ourselves against a conventional attack on a large scale, which could not be contained for long, and then against an attack by atomic weapons, is the nuclear deterrent. That is the situation. We ought to have no more of this jargon about the rôle of Britain in the world.
Mr. Jeremy Thorpe: Could the right hon. Gentleman help the House? Am I to take it that he is maintaining that we have an independent nuclear deterrent? If so, would he be prepared independently to use it?
Mr. Shinwell: I am not in the confidence of my right hon. Friend the Prime Minister, who knows all about the nuclear deterrent, whether independent or otherwise. But I know that we have the Polaris submarines and missiles and I believe that we have a large number of nuclear bombs at our disposal which would be devastating in their effects. But, of course, our nuclear deterrent is limited in its effect when compared with the nuclear forces of Russia and the United States.
Mr. Emrys Hughes: Is my right hon. Friend aware that the Americans say that our Polaris is already obsolete?
Mr. Shinwell: I should not be surprised. Vast changes take place in military strategy. They took place in my time, even among military strategists, over and over again. Of course they change their minds, as do Governments.
I want to deal with the real point of the debate, which has been raised often by my hon. Friend the Member for Woolwich, East (Mr. Mayhew), my hon. Friend the Member for Bosworth (Mr. Wyatt) and others. It is whether Britain has a rôle in the world. I am concerned about that. We cannot look too far ahead—certainly, I cannot. How can we promote security for ourselves, for our friends and for those with whom we have certain obligations—and I emphasise the word "obligations"? It is a question of security.
I support the Government in their efforts to reduce defence expenditure, not because I agree with the terms of the Amendment which was not selected, or the ill-founded assumption that, if we ceased to spend money on defence, we could spend ad nauseam on hospitals and other social services. I do not believe this to be possible. Nevertheless, of course, it is right to try to reduce defence expenditure wherever we can.
In stating my reservation, it may seem that I am almost in accord with the right hon. Member for Wolverhampton, South-West (Mr. Powell)—the last thing that I ever expected to happen. But I ask

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whether it is possible for the Government and the military chiefs and strategists associated with them to envisage, with the world as it is—in chaos, full of conflict—what will happen east of Suez or in South-East Asia in the mid-1970s.
One cannot look so far ahead—not nowadays with the world as it is. It is all too easy to indulge in a pipe dream and reduce expenditure as and when one can. But let us not forget our obligations. What are those obligations in that area?
As I have mentioned before, in the Attlee Cabinet we discussed the proposition that Britain should be associated with the proposed A.N.Z.U.S. pact. It was decided, largely on the advice of those associated with foreign affairs, that we should have nothing to do with it. I opposed that view. I thought that it would be better to be associated with the pact. What has happened since? Although we were not associated with the pact, we were faced with confrontation between Malaysia and Indonesia which involved us in enormous expense and use of manpower and will do so for some considerable time to come.
We have obligations to Australia and New Zealand, which are Commonwealth countries. We cannot sweep them under the carpet. We dare not. It would be morally wrong and reprehensible to do so, not because it affects our security but because these were obligations entered into a long time ago and implicit in the Commonwealth itself.
My hon. Friend the Member for Woolwich, East, surprisingly—although not to me, because I have read what he has said, and not to him, because he will recall what he said on a particular occasion—thinks that a military presence in Australia is desirable, with limited expenditure. If we agree in principle that a military presence in Australia is desirable, then surely the question of expenditure need not be considered at this moment because once one starts thinking only in terms of millions of pounds expenditure, it will escalate. It is the principle that matters now and I am all in favour of it. I hope that this will not be ignored by the Government at any time.
I want to say something about Europe that I have wished to say for some time.
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I have read the White Paper with great care. Having done so, and having listened to the hon. and learned Member for Montgomery, I am even more convinced that my understanding was correct and that this is a dispute between those who want to retain forces east of Suez and those who want to concentrate on Europe. It is implicit in the White Paper. I assume that hon. Members have read it, but perhaps it can do no harm and might illuminate the minds of some hon. Members, and even of right hon. Gentlemen, if I read a quotation which I have marked in the White Paper:
"The security of Britain still depends above all on the prevention of war in Europe … it is essential to maintain both the military efficiency and the political solidarity of the North Atlantic Treaty Organisation … we must continue to make a substantial contribution to N.A.T.O.'s forces in order to play our part in the defence of Europe and to maintain the necessary balance within the Western Alliance. This contribution will become even more important as we develop closer political and economic ties between Britain and her European neighbours."
That is not all. There is a much better quotation. I subscribe to the view expressed by the hon. and learned Member for Montgomery that my right hon. Friend has done an excellent job as Defence Secretary. I applaud his virtues while sometimes directing attention, with reservation, to his defects. My right hon. Friend said last October that N.A.T.O. was the core to the security and survival of the United Kingdom. He has mentioned it again in the White Paper. But he went on to say that aggression in Europe was unlikely. I may be wrong, but is there not a contradiction there?
Mr. Healey: No.
Mr. Shinwell: There is no contradiction? There is no fear of aggression in Europe?
Mr. Healey: That is so because of N.A.T.O. and our contribution to it.
Mr. Shinwell: Is that danger now unlikely?
Mr. Healey: What we have said repeatedly since I became Secretary of State is that we think that there is no danger of aggression in Europe so long as N.A.T.O. retains its military efficiency and political solidarity, and that we would not wish to do anything which would

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remove either its military efficiency or political solidarity because that might create the risk of war in Europe, and the risk of war there would be a major threat to our survival.
Mr. Shinwell: This is surprising. I wanted to support my right hon. Friend, but he is not giving me an opportunity to do so in saying that. Are the limited forces available in Europe to the countries associated with N.A.T.O. likely to prevent aggression? If Russia really meant trouble, there would be trouble. We should have to retaliate by using tactical atomic weapons, if we have them—I am doubtful about that; I think that Germany has some—and eventually the nuclear weapon. I therefore suggest that the limited forces will become even more limited.
I believe that there is a quarrel in the Cabinet. No doubt my right hon. Friend will say that one can never have a quarrel in the Cabinet. I know better. The conflict in the Cabinet is between those who believe that we should concentrate on Europe and those who believe that we should concentrate on the area east of Suez. The Government have concentrated on Europe. This has nothing to do with trying to get into the Common Market—or has it?
I have certain reservations about what is to happen east of Euez, in South-East Asia, the Indian Ocean and the Persian Gulf in the mid-1970s. My view is that it is unpredictable. We must be extremely careful. Secondly, we should withdraw more of our forces from Europe now that there is no fear of aggression. That is the place to save money.
I had hoped to hear more speeches by my hon. Friends who have sponsored the Amendment which Mr. Speaker saw fit, in his wisdom, not to select. I know that my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) will probably make a speech. But he goes far beyond the terms of the White Paper. There are many political permutations in the House on the subject of defence. My hon. Friend the Member for South Ayrshire is entirely against defence. He believes that we should have no more defence and that it is useless, anyway. This is a genuine con-
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viction. He is the only logical person among us.
Then there are those who say, "Let us reduce expenditure on defence either east of Suez or in Europe". There are those who say, "Let us reduce defence expenditure to provide more financial accommodation so that we can have the hospitals, family allowances, health services and other social services which hon. Members rightly demand". The Government say that we should reduce our defence expenditure largely because a section of the Labour Party demands it. I sometimes wonder whether the Government sit on the Front Bench or the back benches.
I ask my right hon. Friend the Secretary of State to resist those blandishments. They are based on false assumptions. They are not related to the realities of the situation. For that reason, he should have nothing to do with them.
I think that that is all that it is necessary to say, except this. I was surprised that we should have had a speech of the character of that of the hon. and learned Member for Montgomery. He demanded more expenditure on defence.
Mr. Thorpe: No.
Mr. Shinwell: The hon. and learned Gentleman wanted a citizen army.
Mr. Hooson: I am sure that the right hon. Gentleman would not wish deliberately to misrepresent me. I was advocating that we should save money by cutting out the nuclear deterrent and our foreign obligations and provide a citizen army by way of the Territorial Army.
Mr. Shinwell: The hon. and learned Gentleman suggests that we should have an army to protect ourselves. That is childish. I am sure that his right hon. Friend the Member for Devon, North (Mr. Thorpe) is not very happy about what he has just said.
Mr. Thorpe: What about the right hon. Gentleman's colleagues?
Mr. Shinwell: I do not suppose that mine are very happy, either.
I am not altogether happy about what the Government are doing. I am not too

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happy about the terms of the Amendment which Mr. Speaker did not see fit to select. I am not happy about those who say that we should get out of the area east of Suez and everywhere else—in fact, have a universal scuttle—so that we have plenty of money to enjoy ourselves. I do not believe a word of it. We must be realists.
I do not want money to be spent on defence unnecessarily, but I believe that this country must have an adequate measure of defence. Some hon. Members want defence expenditure to be reduced by several hundreds of millions of pounds and then expect us to be adequately and effectively defended. If we must have defence, it must be well balanced. The forces must be properly balanced and they must be properly equipped; and we cannot ensure that without spending money. I deplore it, but, in the state of the world today and as it is likely to be for many years to come, defence is necessary.
7.35 p.m.
Sir Fitzroy Maclean: I am a prudent character and, therefore, I will not venture to join in the three-cornered battle between the right hon. Member for Easington (Mr. Shin-well), his own Front Bench and the Liberal Party. However, I was glad to hear what he said on two or three points—first, about obligations being obligations. This may seem obvious to him and to some of us. It does not seem quite so obvious to some of his hon. and right hon. Friends. I am glad, too, that, with his great authority, he has reservations about the Government's policy east of Suez and in the Far East. Finally, I was entertained, as I am sure we all were, by his query as to whether the Government sat on the Front Bench or on the back.
The most charitable thing one can say about the White Paper is that it is an incredibly muddled document, and nothing which the Secretary of State said did anything to change my opinion. Neither, I must say, did the comment of the hon. and learned Member for Montgomery (Mr. Hooson) that it more nearly agreed with Liberal policy than any previous White Paper.
I say that the White Paper is muddled because it pretends on page 1 to keep options open and to allow "room for manœuvre". But it does nothing of
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the kind. Equally, it announces a whole series of devastating reductions and withdrawals and then goes on to say quite airily:
"We remain responsible for the security of our dependencies; we have obligations to our friends and allies; and we have a political and economic interest in the stability of the world outside Europe, which makes it desirable to retain a capacity for contributing to the maintenance of peace where we can usefully do so."
But that is exactly what the Government are not doing. They have, in fact, abandoned any pretence of doing it.
Naturally, the proposed withdrawals and reductions are to be phased. The White Paper states—and this is another meaningless sentence:
"The Government's plans must be firm enough to ensure that we have the forces we need to match our remaining commitments in the Far East and elsewhere and flexible enough to enable us to respond to changes in local circumstances."
But what the Government do not take into account in the White Paper is its inevitable psychological impact, the effect which they will have on potential friends and potential enemies alike—the same sort of impact as the recent premature announcement of our withdrawal from Men is having.
I am glad to hear my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) mention Hong Kong, because psychology does play a rôle in these matters. If it becomes clear to those who do not wish us well that we have lost interest and that we do not mean business, they are far more likely to try things on than if they believe that we do mean business. And whatever the White Paper may say or does not say, it will inevitably be interpreted as foreshadowing a wholesale abdication of our obligations, undertakings and commitments outside Europe.
Both our friends and our foes will make their dispositions accordingly; our foes to ensure that our withdrawal is accelerated and exploited to the utmost and made as uncomfortable and as undignified as possible, and our friends to reinsure elsewhere as best they can.
Mr. John Lee: Accepting that premise for the sake of the argument, does it not follow that the hon. Member is advocating open-ended expenditure on defence, if it should prove necessary, to satisfy needs east of Suez? The sky must be the limit. Is not that so?
Sir F. Maclean: Not at all. That is not what I am advocating. I am advocating maintenance of an adequate level of conventional forces, which is exactly what the hon. Member's leader advocated when in opposition and continued to advocate until quite recently even when he was in government, which is a quite different matter.
What I contemplate happening is that we shall find the whole structure of our defence—because these cuts cannot be made with impunity—crumbling about our ears with no options and none of the "room to manoeuvre", of which the White Paper makes such a point.
But, in spite of that, this ridiculous document goes on talking of continuing commitments and obligations. And in doing so, it is only echoing what Ministers have been saying in public, not only when they were in opposition, but since they have been in power. What this means, if it means anything at all, is that we shall have to face unforeseen and, to a great extent, self-inflicted emergencies and commitments with inadequate and overstretched forces. Which is very hard, among other things, on the forces concerned, as we have seen in Aden and Southern Arabia.
Some hon. Members opposite will say, "What of it? We have no business there anyhow." That, rather over-simplified, is the view of the hon. Member for Woolwich, East (Mr. Mayhew), who, if there were any justice in the world, should at once be reinstated in the Ministry of Defence. The White Paper entirely justifies his views. But, of course, there is no justice, least of all in the Labour Party.
Now that, although I do not agree with it, is a perfectly logical and tenable view. What does not make sense is the halfhearted, halfway position adopted by the Government in going on talking of commitments and, at the same time, drastically reducing our defences, which is bound to end in their having the worst of both worlds.
Clearly, despite all their talk of flexibility and room to manœuvre, such an attitude is bound to lead in the end to outbreaks of disorder and violence and to our troops, and the Army in particular—because it is the Army and the infantry—incidentally, not a very expensive arm—who will always bear the brunt
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of these affairs—being placed in the sort of position in which our troops have been placed in Aden and forced to withdraw in the most deplorable circumstances from places where, in the past, we have exercised a beneficent and stabilising influence.
To my mind, there is only one good point about the White Paper and that is a purely personal and also a purely negative one. It does not lay hands on the Highland Brigade. The Highland Brigade is a resolute body of men. They have many friends in high places and they have managed to survive. It is a lesson from which we can all learn. Unfortunately, that does not apply to the Lowland Brigade. The Secretary of State has chosen to wipe out a regiment with an old and distinguished tradition of service, the Cameronians. They have not been amalgamated; they have been wiped out. I am sure that anybody who ever knew them during the war or at any other time will be very sorry to see them go.
The Times, in a recent leader, talked pityingly of "the dwindling minority for whom east of Suez evokes nostalgia for a past empire"—a typical turn of phrase. One can take various views of the British Empire and the rôle which it has played in the past 100 or 200 years. I take a good one. Nostalgia, however, is not a basis for a policy and the past is not what we are concerned with today. We are concerned with the world situation at the present time, the present world balance of power, the present threats to world peace and stability and the effect which a precipitate withdrawal from east of Suez by us is likely to provide. It is in that context, and not in any old-fashioned imperial context, that I believe the withdrawal will prove calamitous.
First, we shall be letting, down our friends and allies and encouraging our enemies Let us think for a moment of the effect that that is likely to have on the position of the Americans, and also of the Australians and the New Zealanders now fighting in Vietnam. Opinion in this House about the rights and wrongs of Vietnam is divided. I believe, and at times the Government seem to believe, that we should give the Americans and the Dominion countries which are fighting there at least moral, if not actual physical, support. But the Government

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could not have done them a worse turn than by producing this White Paper. I wonder whether they or any of our other allies will ever trust us again after what has happened.
Secondly, we shall be creating, arbitrarily and suddenly, a vast power vacuum, an area of chaos and stability of which our enemies will take immediate advantage and which none of our allies will be able to fill. It is all very well to talk about possibly having troops in Australia or floating about in ships. That does not replace troops on the ground, the actual presence which matters so much.
Mr. John Fraser: Will the hon. Member specify who are the enemies?
Sir F. Maclean: If the hon. Member does not know that, he does not know which side he is on, which I have always found it most important to know in almost any set of circumstances. The hon. Member also cannot read the newspapers very much. If he were to read them, he would see that certain countries constantly attack us and all we stand for in the most unrestrained manner. I will not give way to him again, but I will leave him to work that out for himself.
What I complain of is that the withdrawal will put an intolerable burden on what will be left of our forces. It is all too easy to imagine the effect of what is being done on morale, and, therefore, also on recruiting. And here I am reminded of the eloquent speeches made by the Paymaster-General about what happens when units are undermanned and over-stretched. I remember agreeing with almost everything he said about that.
I am also reminded of what we both used to say about the dangers of over-dependence on nuclear weapons and not having adequate conventional forces—once again, about the importance in an emergency of having more than one option, so as not to be faced with what I think President Kennedy called a choice between humiliation and all-out nuclear action. But it was not just the Paymaster-General who said this. He was then a back bencher and rather on his own. It was also said by far more influential Members of the Labour Front Bench, including the present Prime Minister.
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It is indeed ironical, after everything which has been said on this subject from both sides of the House and from political platforms all over the country, that under a Labour Government the independent British nuclear deterrent—if that is the right word for it—should not only survive but have become the mainstay of what is left of our defences. All that seems a long time ago, but in the light of what is happening now, the arguments in question seem to me to be far more pertinent today than ever they were then.
Worst of all, when the extent that this mistake—this "historic decision", as the Secretary of State called it—becomes obvious to all, the danger is that it will be too late for this or some future Government to undo the harm which will have been done. As my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) so eloquently said, an army or navy or air force is something which misguided politicians may find it very easy to destroy, but it is something which it is immensely slow and difficult to build up again. And, by then, in all probability, the harm will have been done, and it will be too late.
7.52 p.m.
Mr. Christopher Mayhew: Obviously, I must begin by thanking the hon. Gentleman the Member for Bute and North Ayrshire (Sir F. Maclean) for reinstating me in the Ministry of Defence. At the risk of sounding churlish, however, I must say that the Government have not entirely worked their passage back into my favour. There are parts of their Defence White Paper which I feel very strongly critical about, and I know that this view is shared by a number of my hon. Friends.
May I draw the attention of the House to the fact that, unconsciously, we are beginning to accept the Government's new definition of the word "commitment". I noticed that particularly from the hon. and learned Gentleman the Member for Montgomery (Mr. Hooson), who spoke for the Liberal Party. I think that we need to be on our guard about this. It is perfectly clear what the word "commitment" means. It means and has always meant an obligation in certain circumstances to fight. That is what it means. It is an obligation to fight

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in certain circumstances. That is what it has always meant.
Of course, the Government have been under heavy attack for years now, certainly for 18 months, for cutting military resources without cutting commitments. What do they do? They redefine the word "commitments" to mean the resources which are needed to fulfil the commitments. They come to the House and say, "Of course, we are cutting commitments. We are cutting 17 major Army units." These are not commitments at all, and the House must make this plain. A commitment is an obligation to fight in certain circumstances, and that is the way in which I propose to use the word.
Of course, the central question here is, as it has been for some time now: are the cuts in resources proposed by the Government matched by the cuts in commitments? An old and familiar question.
I am bound to say that when the White Paper was published I felt that it should be warmly welcomed. I hope that the House approves the White Paper tonight, but I must say that some of the doubts I have felt at first have been very much increased by speeches by Government spokesmen, in the House of Lords on Wednesday, and by some of the statements of the Secretary of State this afternoon.
The Secretary of State spoke of cuts in commitments. He spoke of big foreign policy changes, but the more one probes, the more that is revealed by the Government, the more vague, and ambiguous, and unsatisfactory these so-called cuts in commitments appear. Take the Singapore base. The Government keep on suggesting that the withdrawal from the Singapore base is a cut in commitments. It is a misuse of terms. The commitment is to defend Malaysia. The base is a means of fulfilling our commitment. So far from reducing our commitment, by taking the base away, we to that extent make it more difficult to fulfil the commitment. Indeed, when I asked the Secretary of State this afternoon about the Anglo-Malaysian Treaty, which is a commitment, he said that the costings for the defence budget in 1975 made provision for continuing our commitment under the Anglo-Malaysian Treaty. So do not let us be deceived on that point.
Mr. Healey: May I help my hon. Friend here? There is no obligation either under S.E.A.T.O. or under the Malaysian Treaty as such for this country to fight in any circumstances. The commitment arises from the plan agreed with the other Governments who are party to the Treaty to provide certain types of forces in certain circumstances. These commitments are being revised, as the right hon. Gentleman the Member for Kinross and West Perthshire (Sir Alec Douglas-Home) pointed out in a speech from which I quoted this afternoon.
Mr. Mayhew: If the Secretary of State is now saying that in 1975 we shall not be obliged to fight in defence of Malaysia if attacked, it is a very important statement.
Mr. Healey: No. We are not obliged under the Treaty as drafted to fight now, but we have accepted certain commitments in the context of the Treaty by agreement with the Malaysian Government which we are revising with their agreement, as the right hon. Gentleman the Member for Kinross and West Perthshire recommended us to do earlier this year.
Precisely the same is the case with the S.E.A.T.O. Treaty, which imposes no obligation under the Treaty for any of its members to fight in any circumstances. The question is: what further arrangements within the context of the Treaty are made by the parties to it, in particular, what force declarations are made, to fulfil contingency plans?
As the right hon. Gentleman the Member for Kinross and West Perthshire made very plain in his speech in 1965, from which I quoted, it is open to the British Government at any time in the case of S.E.A.T.O. to change their force declarations even without consultation, though we would not wish to.
In the case of the Malaysian Treaty, we have an obligation to consult on changes. We have so consulted, and we have got agreement with the other parties to the Treaty to the steps which we propose to take.
Mr. Mayhew: Well that is still not altogether clear to me—[HON. MEMBERS: "Hear, hear."] It is a profoundly important subject—
Mr. Healey: Yes, it is, I agree.
Mr. Mayhew:—but, from what the Secretary of State has said, he is now revising our commitments under the Anglo-Malaysian Treaty, and, from the definitions he has given, it would be possible for us so to revise those commitments that even though the Treaty continued we would not be obliged to fight on Malaysia's behalf. That, I think, is important.
Mr. Healey: It is important to get this clear, because many hon. Members, including my hon. Friend, do not understand the facts. In the case of that Treaty, we are obligated to get the agreement of Malaysia to any change in the nature of the commitments which we accepted under the Treaty. In the case of the S.E.A.T.O. Treaty, that is not so.
Mr. Mayhew: Yes. However, I am glad to have made that important point clearer. The fact remains that the Anglo-Malaysian Treaty continues to have validity after 1975, according to the Government's policy.
Mr. Goodhew: I sought to put down a Question to the right hon. Gentleman on 5th July on the subject, but it was transferred to the Commonwealth Secretary. I asked what proposals he had for renegotiating the agreement to defend Malaysia and Singapore. I was told that the Government have no proposals at this time. So there are not proposals to renegotiate the treaty to defend them.
Mr. Mayhew: I hope that I shall be permitted to say a few words during my speech.
A second commitment after 1975, according to my right hon. Friend's statement this afternoon, is that we shall still have our military presence in the Gulf. He stated that the costings of £1,800 million in the 1975 defence budget would include provision for our continued presence in the Gulf.
A third commitment which still remains is that to S.E.A.T.O. We understand that the forces allocated to S.E.A.T.O. are to be lessened. However, the level of forces which we have allocated to S.E.A.T.O. has never been a significant factor in our defence planning. We have never held forces in the Far East because of our S.E.A.T.O. obligations. The forces which we have
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assigned to S.E.A.T.O. have always been the forces which we had there, anyhow, because of our other obligations, in particular, those under the Anglo-Malaysian Treaty. Frankly, the whole S.E.A.T.O. set-up is largely meaningless.
S.E.A.T.O. can only act with unanimity, and one of its members is France and another is Pakistan. It has never acted. All military action taken in South-East Asia has been by bilateral agreement between one country and another, including the United States. The reduction of our forces under S.E.A.T.O. cannot be considered as a cut in commitments.
Another commitment which remains is the one to participate in United Nations peace-keeping east of Suez, if such a force is established. I assume that this will be one of the functions of a residual military presence in Australia. If that is so, there will be wide agreement that there is a proper function for such a force to fulfil.
Another commitment is that we ought to be ready if the territories of Australia and New Zealand are threatened, which they are not now and are not likely to be. In such an event, there would be a wide feeling in Britain that we ought to be prepared to make our contribution, and this will be a second function of the residual military presence east of Suez, based on Australia.
However, the commitments go further. Page 6 of the White Paper says:
"… we cannot assume that, once we have left Singapore and Malaysia, we shall never again have to use our forces in the Far East, since we shall have dependencies and other obligations there for the foreseeable future."
Those "other obligations" are not only the United Nations obligation and the obligation to come to the assistance of Australia if required. They are much wider. It means that, after 1975, the Government still envisage military operations outside the United Nations on the mainland of Asia.
I was disturbed by the statement of the Government spokesman in another place on Tuesday. The noble Lord, Lord Shackleton, quoted the remarks of the Opposition Leader in another place, the noble Lord, Lord Carrington, that
"We should still retain … the ability to reinforce with air power and an amphibious

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force capable of showing a British presence in that part of the world, and useful not only for the support of the Asian S.E.A.T.O. but for international disorders and keeping the peace, and showing the flag in those areas of the Pacific for which we still have responsibility."
Lord Shackleton quoted that statement and said:
"That, I think, reasonably represents the views of Her Majesty's Government"—[OFFICIAL REPORT, House of Lords, 25th July. 1967; Vol. 285, c. 720.]
What, then, are our commitments under the White Paper? Summed up, they are the Anglo-Malaysian Treaty, the commitment in the Gulf, the diminished commitment to S.E.A.T.O., the United Nations commitment, the Australia and New Zealand commitment, and now this wide-ranging Asian peace-keeping commitment as described by Lord Shackleton. If that is the policy of the Government, some of the criticisms of the right hon. Member for Wolverhampton, South-West (Mr. Powell) to the effect that we were cutting our forces below what was needed to fulfil these commitments have some validity. There can be no doubt about that, and I want some reassurance from the Government on the point.
There is an element of vagueness in the White Paper—ambiguity about these commitments and the dates when we are doing this or that. When I read the White Paper, I thought that the ambiguity was due to the fact that we wished to lessen the shock of this decision on the Governments affected east of Suez. I recalled conversations with high-ranking and responsible people in those countries. Their attitude was, "If you must go, go. But for heaven's sake wrap up your decision to go. Do not make it too stark." I can understand that argument very well.
When I read the ambiguities in the White Paper, I gave the Government the benefit of the doubt and assumed that the ambiguity concealed an intention to wind up east of Suez coupled with a determination to embarrass our friends and allies as little as possible. Is my assumption right? I am a little shaken by the other facts which I have given about our continuing commitments east of Suez, and I hope that the position will be made clear by the Government.
Vagueness about our commitments is most dangerous. Where we have mili-
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tary commitments, it is essential that they should be precise, clearly understood by ourselves, by our friends and by our adversaries, and backed with sufficient military power to fulfil them effectively. Where we have military commitments, that must be so.
Take Berlin, for example. There, we have a firm commitment bound by a tightly worded treaty, with forces on the spot and with a vital strategic interest. The fact that Berlin is independent today is largely due to the clearness and firmness of the commitments to it of ourselves and our allies.
That is one kind of commitment. We also have very weak commitments of a different kind. They are weak for two reasons, one of which is because no one is quite sure whether we would regard ourselves as bound by them and would take military action. The other is because, even if we took military action, no one is sure that we have the military power to carry it out effectively.
Take the case of Agaba. Were we or were we not committed to clearing Egyptian territorial waters for the passage of essential supplies to Israel? We had no treaty commitment, no forces on the snot, and no vital strategic interest. Yet a vague sense of obligation, plus an aircraft carrier within a journey of a day or two involved us in a situation full of danger in which we might have had to take military action for which we were not prepared and which we did not have the power to fulfil. Our action disappointed the Israelis, and enraged the Arabs. The White Paner is laying down for the future, if it is not cleared up, similarly weak, vague, and ambiguous commitments in the Far East, just as we had in the Middle East only a few weeks ago. I sometimes get the impression that the Government are seeking to dispose of their commitments not by negotiation and diplomacy, but simply by making ourselves incapable of carrying them out. This is a very dangerous and dishonourable way of going about it.
Vagueness in commitments can easily lead to disastrous misunderstanding. Our friends expect us to weigh in with military action on their behalf, when, in fact, we are not powerful enough to do so, or are

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not intending such action. Our adversaries, on the other hand, may think that we will stand aside and not go in, when, in fact, we are going in. A lack of precision in commitments of the kind set out in the White Paper can be disastrous, and a cause of instability instead of stability.
It is the period from 1971 to 1975 which seems to me to be the most dangerous. Before 1971 it is fairly clear that we are committed, and, what is more, before 1971 we will still have some troops. After 1975, at least we will be clear of the ground in Singapore. Our commitments will be much less binding upon us, and we shall obviously not have the necessary military power to intervene. But under the Government's defence plans there will be a period between 1971 and 1975 when our commitments will reach their maximum ambiguity, and our troops their maximum weakness.
This is the great danger. We shall have cut by then to 17 major Army units. We shall have cut our supply and repair facilities. We shall have only one aircraft carrier available, and that a very old one.
Mr. Healey: Two.
Mr. Mayhew: Only one will be operationally available between 1971 and 1975.
Mr. Healey: Two.
Mr. Mayhew: Two will be afloat, but—
Mr. Healey: There is only one availabe now.
Mr. Mayhew: As my right hon. Friend must know, the fact that there are two carriers in commission does not mean that they are operationally available at the same time. There is the question of refitting, and going to the area of operations. During this period we shall have one carrier, and one only, available for operational purposes, and it will be a very old one. Experience, unfortunately, confirms that even with the most dedicated and skilful servicing and maintenance an old carrier can go wrong when it is on operational duty.
The Government will say, "It is true that we will be militarily weak at this period, but we will fly out the troops". This is no solution at all. For the last 10 years the Ministry of Defence has
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had the slogan, "Station the men in Britain, and fly them out". There is, first, the problem of over-flying rights which makes this a very uncertain business. Secondly, it is extremely expensive. We should need more transport planes. Thirdly, troops in Scotland cannot deter aggression in South-East Asia, nor can troops inured and acclimatised to the Scottish winter fight efficiently a day later in the jungles of Borneo. Nor can they carry out a hearts-and-minds project of peace-keeping, which was an essential contribution to the success of confrontation.
Where will they land, anyway? If there is real trouble in Singapore, they will not be able to land on the airfields there. All these things add up to the fact that one cannot bail oneself out suddenly by flying troops from England to the Far East.
My conclusion is that this dangerous period between 1971 and 1975 should be made as short as it can be. What are the political and military reasons for not winding up the bases in 1972, rather than 1975? Is it only the economic argument that we need the later date? If it is, we should leave these bases in 1972 and give our economic help to Singapore in the form of purely civil economic aid.
I recall the campaign which my hon. Friends and I have been running. We said that we should be clear of Malaysia, Singapore, and the Persian Gulf by 1970. We chose that date about 18 months ago. I think that today we would say we should be clear by 1972, but it is my conclusion that by then, while we maintain a residual capacity in Australia for the purposes which I have mentioned, we should have no military commitments either in the Middle East or in Asia, otherwise than as members of the United Nations.
I want, now, to make a few comments on the Opposition's east of Suez policy. It would be an exaggeration to say that floods of light were thrown on this by the speech this afternoon of the right hon. Member for Wolverhampton, South-West. Indeed, to some of my hon. Friends and myself who are sceptical about the Opposition's east of Suez rôle, the right hon. Gentleman is a constant disappointment. At one time we regarded him as one of our most promising pupils. He still advocates withdrawal from east of

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Suez at weekends. What he has not mastered is the problem of withdrawing from the Far East, without withdrawing from the Front Bench. This is the problem.
However, by looking back last week to the speeches of the right hon. Member for Kinross and West Perthshire, and the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) we can get a fair picture of what the Opposition intend east of Suez. They say that they are worried about the threat to South-East Asian countries from China. They think that we should not withdraw our protection from those countries until they can protect themselves. That, broadly speaking, is the Opposition's view, and it sounds reasonable and responsible enough until we ask what kind of threat precisely do they mean?
Do they mean the threat of external aggression by China? If they do, their policy is based on two totally false assumptions. First, that our military presence there now protects those countries against Chinese military aggression. The Chinese have 105 infantry, four armoured, three cavalry, and two airborne divisions. Against this, a Conservative Government, with a special effort, and with extra expenditure, could muster perhaps two divisions. The Opposition complain that the Government's east of Suez policy over-stretches the forces. Their east of Suez policy would give our men an opportunity of heroism unequalled since the Charge of the Light Brigade.
The Opposition may say that they do not intend to fight on ground, but in the air and on the sea. But who will fight on the ground against Chinese aggression—the Americans? At the moment, 500,000 Americans are in that area, not containing China, but trying to contain North Vietnam. The idea that our east of Suez rôle can deter or defeat Chinese military aggression is a dangerous delusion.
The Opposition may say, "But are you not leaving our friends and allies wide open to Chinese aggression?". We have discussed this before, and I shall not go into it at length. All non-Communist neighbours of Communist countries are at risk, but it is not necessarily true that if they are not protected by a Western Alliance they will be over-run. Nor is it necessarily true that the risks to them of a neutral policy are any greater than
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the risks of a military alliance with the West.
Let us look at some of the non-Communist neighbours of the Communist world. Let us consider the risks facing Finland, or Burma, or Austria, compared with those facing countries allied with the West, such at Vietnam and Thailand. Would Finland's independence have been more secure since the war if she had had N.A.T.O. bases there? Would Burma's independence have been more secure if she had been a member of S.E.A.T.O.? Of course, there are bound to be risks either way for South-East Asia in the 1970s. But in my view, there are strong reasons for believing that the risks will be less for a strict policy of non-alignment than for a policy of military alliance with the Western countries.
Finally, they may say that it is a threat of subversion and not aggression. This question has often been discussed and I will not go into it again in detail, but if their conception of the maintenance of a military presence east of Suez is to counter internal Communist subversion it makes even less sense than the other alternative. Malaya and Singapore are not helpless against internal Communist subversion; they have enormous advantages over any Communist rebel group.
They have a trained and experienced Army, police force, security service and intelligence service. They are internationally recognised and politically advanced. Why should we suppose that they cannot cope with this internal problem of Communist subversion? Indeed, would not the introduction of Western military power weaken rather than strengthen them in what is essentially the political battle against Communism?
Rear-Admiral Morgan Giles: What happened last time?
Mr. Mayhew: Last time, as the colonial Power, we were there and had to take action. Today, Malaya is a different country, and a much stronger one.
The Conservatives say that we must have an east of Suez presence. They believe in it. At least I can agree with them that if we stay east of Suez we must strengthen our seaborne air power. Everything that has happened in the last 18 months, from the blockade of Rhodesia to the Government's plan for South Arabia

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next year, proves that to stay east of Suez while phasing out the aircraft carriers is utter folly.
What do the Opposition propose in respect of this seaborne air power? I will not go into the question in detail, but they have not said how they would get round this problem. They do not propose to build CVAO1. It is too late. It would not be operational till 1975 at the earliest. I doubt whether the shipbuilding industry would tender for it in view of all the uncertainty. They will probably find that they will have to buy American carriers to carry their strategy through, and then more American Phantoms, and to protect the carriers they will have to build more Type 82s. They will have to abandon all these cuts. They will have to put back the 17 major Army units and put back the research cuts. They will have to find an alternative to the Anglo-French variable geometry aircraft. We must have a long-range strike-reconnaissance aircraft for our east of Suez strategy.
Like my right hon. Friend the Secretary of State, I have costed the Conservative Party's defence budget. I am sorry to disappoint my hon. Friend, but my conclusion is that it will be a much lower figure than the Secretary of State's. According to my calculations, the cost of a defence budget under the Conservative Party's policy would, at 1964 prices, total £2,250 million in 1975. That is £450 million more than the Government budget. That is excluding anything we have heard about the right hon. Gentleman's European policy.
Let us be generous and add another £50 million for the right hon. Gentleman's European policy. That would make it £500 million more. [Interruption.] I cannot explain the discrepancy between my figures and those of my right hon. Friend's except on one assumption—that the Service Chiefs, asked to estimate for a Conservative defence budget, slipped back into their old extravagant way. Do we seriously expect the Conservative Party to find the money? It is easy enough to finance a defence policy like theirs out of the shadow budget of a shadow Chancellor, but it is much more difficult to do the thing on the ground.
I do not believe that they would find the money. They would merely repeat,
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on a grander scale, the crime that the Government committed in the Defence Review, of giving the troops tasks far beyond the resources given them to carry out those tasks.
I feel that I have not conveyed to the House my overall feeling that in spite of these serious defects this White Paper is a move in the right direction. It is a move out of the area east of Suez and towards Europe and that, in my view, is the right direction for British policy to go. I urge my hon. Friends—some of whom I know, from their Amendment if nothing else, have the strongest reservation about the White Paper—to recognise that this is a move in the right direction.
Let us join forces with the Government tonight and give a resounding defeat to the Opposition.
8.26 p.m.
Mr. Patrick Wall: I agree with the point made at the beginning of the speech of the right hon. Member for Woolwich, East (Mr. Mayhew), namely, that the main charge against the Government's defence policy is that they have cut forces rather than commitments and have thus placed a further and perhaps almost intolerable strain upon our forces. He can make out a lucid and logical case for cutting commitments ill order to save money. I would, however, rather spend a little more in order to maintain essential commitments.
Then we must face the question, what are our essential commitments? All I say on that at the moment is that I believe that we still have some East of Suez, although these may not include static bases on the continent of Asia.
I intend to attack the Government's defence policy. Therefore, it is only fair to say that I have found much to criticise in the past in Conservative defence policy. I believe that the rapid succession of Conservative Ministers of Defence was resented by the Armed Forces. I believe that certain planning mistakes were made. For example, I believe that we should never have cancelled Blue Water. But the Conservative Government made a historic decision, which the present Government is now recognising as vital to our future, in negotiating the Nassau Agreement, that

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gave us Polaris, which is still to be maintained as the main weapon in our armoury.
Like my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), I attack the Government's defence policy not for party political purposes, but because I sincerely believe that it will lead this country to disaster. The fundamental mistake made by the party opposite was made before it assumed office, when it decided to peg defence costs at £2,000 million a year at 1964 prices.
When the Labour Party came to office it found that it was impossible to cut commitments. Therefore, the Government had to start cutting forces to reach their financial target. They decided, in this cutting of forces, to start with the key weapons rather than the men and now we have to face the result of this policy. After five years of Socialist Government the Navy will have Polaris, but it will have no new carrier, no new class of Type 82 destroyer, no base at Malta, Aden or, later, at Singapore, and, above all, it will be deprived of air cover and support.
The Royal Air Force will have only two new British-built aircraft, the Harrier—and, incidentally, I hear that that may be under threat; I hope that the Prime Minister will say whether the production order for the Harrier has been made and how big it is to be, so as to stop the rumour, if it is untrue—
Mr. Reynolds: The hon. Gentleman will be aware that the actual numbers ordered have never been given by any Government.
Mr. Wall: The orders for F. 111Ks and the Phantom have been exchanged frequently in this House. Apparently, details can be given when ordering American aircraft. but not when we order from our own factories.
Too few aircraft have been purchased at great cost to make sense of the R.A.F.'s future rôle. The Army will be confined now to B.A.O.R., which provides the only training area for its armour and also, of course, to Britain, and it is to be deprived of its reserves. All this for what? To save £500 million over ten years from 1965. I am quoting from the speech of the noble Lord who
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led for the Government last Tuesday in another place. Because we can no longer afford an adequate defence policy, the Government are cutting the Forces by 37,000 and at the same time negativing their economic argument by increasing the Civil Service by no less than 40,000.
Why can we not afford adequate defence forces—because production in this country, which was increasing by 3 to 5 per cent. a year under the Conservatives is now virtually static. The Government argue that they must cut expenditure, not on the social services—not yet—because that would lose votes, so they decide to cut the Services. They take risks with the country's future. After all, they know very well that they are unlikely to be in charge in 1975, when the consequences of their present policy must be faced.
What are the world-wide repercussions of five years of Socialist defence policy? In Europe, cuts in B.A.O.R. which will make them more dependent on tactical nuclear weapons which in turn will make nuclear war inevitable in the event of a major Soviet attack. Malta has contracted out, as she recently did in the Middle East crisis. How long will it be before Gibraltar is sold to Spain to save money or to preserve profitable trade—although we refuse to build Spanish warships? We have virtually contracted out of the Middle East and appear to be in Cyprus only to support the U.N. peace-keeping force. What about the Middle East? In Aden, it is now clear that we will destroy our friends in the Federal Government and hand over to our enemies in F.L.O.S.Y. and S.A.L. and then we will talk of an honourable settlement. I am prepared to wager that we will be out of the Persian Gulf one year after leaving Aden, unless economic circumstances topple President Nasser before then. In the Far East, by telling Singapore that we intend to quit ten years before leaving, we ensure that the local people will make their peace with our successors and the best way of doing that is to be beastly to the British while they are still there. We are likely to see an Aden on an even larger scale. As for Hong Kong, can anyone now put his trust in the British Government?
I believe that the Forces cuts will be followed by an axe and compensation

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is to be half as generous as under previous schemes. Conscription may be only around the corner. There is unlikely, under a Socialist regime, to be sufficient volunteers for the three Services, particularly the Army, and we may have to resort to conscription even to produce the small Army that is envisaged in ten years' time.
Another consideration which seems to have been forgotten by hon. Gentlemen opposite is the armaments industry. It is pilloried when it makes a profit, and, for purely party political purposes, is prevented from selling arms to countries which the Government do not like. It may not even supply arms to our allies in America or our Commonwealth cousins in Australia and New Zealand, if those arms are to be used in Vietnam. It is small wonder that our armament firms are turning to other fields, but this means that we will never again be able to equip our forces in a hurry should this become necessary.
I turn now to our Navy in the 1970s. We will still have Polaris, thank heavens, but, because of the cancellation of one boat, we will be unable to guarantee that the nuclear deterrent will always be effective. We will have no carriers. I would commend to the House Lord Watkinson's speech in another place last Tuesday, when he pointed out that our conception of the carrier was not as the capital ship of the future but as a floating airfield.
The key problem is that we must have air cover not only for our warships but, even more so, for convoys of merchant ships. The hon. Gentleman looks surprised. He may think that convoys became out of date after the last war, but he is always talking of the possibility of conventional rather than nuclear war. Does he, therefore, think that it will not be necessary, in a conventional war, to have a convoy system in the Indian Ocean area? I hope that he is right, but what happens if we do need a convoy system? Where will it get air protection? The R.A.F. is unlikely to have enough aircraft or island airfields in the right places and at the right time.
We are told that the main striking power of the Fleet is to be the Fleet submarine. How will the Fleet submarine protect convoys of merchant ships? Our trade and our troops will
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have to pass over the surface of the sea, not underneath it. The concept which has been described as the Healey carrier, with vertical take-off aircraft, was rejected only last week in another place by the noble Lord, Lord Shackleton, who said that it was too expensive. Instead of the Healey aircraft carrier with vertical take-off aircraft we are to have new cruisers operating Sea King helicopters which is made credible we are told by the use of a stand-off weapon. This is to be the weapon of the future on which the Navy will depend—the helicopter.
Helicopters will be armed with a new surface-to-surface weapon, possibly the Martell, possibly some other weapon, operating against surface craft, and with the Mark 31 anti-submarine torpedo operating against submarines. Yet it is clear that in many circumstances helicopters are sitting ducks. Any fixed-wing aircraft operating in the area can shoot helicopters out of the sky. Moreover there is a recent development in a certain part of the world of a weapon which can be discharged from a submerged submarine and which can shoot down a helicopter without the helicopter even knowing that the submarine is in the vicinity. Yet the Navy must now rely on the helicopter for protection and strike capability.
This folly will have to be reversed and eventually the Government will have to produce these small, cheaper and less sophisticated aircraft carriers operating vertical take-off aircraft. In the meantime, I would ask the right hon. Gentleman, will the new cruisers, of which we have heard for the first time in the White Paper, be capable of operating vertical take-off aircraft? They are to carry the Sea King, which will be a large helicopter when it is finally produced, so I take it that if necessary they could operate vertical take-off aircraft. I should like confirmation of that.
Next I come to the surface-to-surface missiles. As my right hon. Friend said, this point was mentioned in previous White Papers. This was to be the weapon which supplanted the aircraft carrier. It now becomes apparent that it is a mythical weapon which will be some weapon to be discharged from a submarine's torpedo tube which will then become airborne so as to attack ships

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on the surface. I quote what was said about it in another place in last Friday's debate:
"We are also studying new submarine-launched anti-surface ship weapons in order to develop still further the potential of our Fleet submarines. It is too early to say what form this will take".—[OFFICIAL REPORT. House of Lords, 25th July, 1967: Vol. 285, c 712.]
Yet this is to be the striking power of the Navy, in the 1970's—this and the helicopter. But it is too early to say what form either would take or how they will operate! What can now be done? Even faced with the disastrous decisions which have been taken by the Government, much can still be saved. I believe that the key area of the world, in terms of both population and of threat, is the Indian Ocean and the South Pacific. We need amphibious forces operating on each flank of the Indian Ocean, operating from support areas in South Africa on one side and Australia on the other. I believe that a commando could be embarked on commando carriers operating from these areas. One commando must remain ashore while the other is embarked.
I warn right hon. Gentlemen opposite that they cannot keep a commando at sea for more than three weeks without ruining its efficiency. We have heard all about their "floating around" South East Asia, but we shall never have useful commandoes if we keep them "floating around" South-East Asia or anywhere else for over a month at sea without landing and without exercise. I believe that if the Government adopted this idea even now we could obtain the maximum effect in the Indian Ocean and the maximum influence at a minimum cost.
I agree with the decision, but not the method, of leaving expensive land bases on the mainland of Asia. But if we do so, it makes absolutely essential the continuance of the Fleet Air Arm based on floating airfields—unsophisticated aircraft carriers—and on other ships operating vertical take-off aircraft.
When the Conservative Party left power it left behind three balanced Services equipped with powerful British-built weapons. It was expensive, but, with growing industrial production as we then had, it should and could have been afforded. We now face a policy which
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could lead to the virtual dismemberment of the Forces and which has already, I believe, led to a decline in morale and recruitment. We are told that economies are essential to save money, yet the Government are enlarging our expensive bureaucracy and Civil Service. Once again it has been proved that the pen is mightier than the sword. Our only hope of maintaining any British influence is to withdraw gradually from static bases, and concentrate on mobile amphibious forces east of Suez. To do so, those forces must have their own air cover.
I make this suggestion with all sincerity. If the policy I have suggested is followed, our forces east of Suez could be operated by one Service. In the White Paper the right hon. Gentleman says that the requirements east of Suez will be considerably reduced. Could not this requirement be fulfilled in peacetime—and I emphasise "peacetime"—by the Royal Navy, the Royal Marines and the Fleet Air Arm, leaving the Army and the R.A.F. to concentrate on its primary peace-time rôle; namely, continental warfare in Europe?
If the Government are not imposing cuts because they have always traditionally been opposed to the Armed Services and if they are genuinely trying to provide the best forces with the money available, I hope that this suggestion will receive their fullest consideration, for I say again that, in my view, the vital area of the world in the next generation will be the Indian Ocean and the South Pacific. We still have a rôle to play for our future as well as for the future of the free world.
8.43 p.m.
Mr. Emrys Hughes: Older hon. Members know that I have taken up critical attitudes towards Defence White Papers and Defence Ministers for the last 20 years. Each time a new White Paper comes along I become more critical. I cannot say that any of my speeches have had the slightest influence on the Government. They have been pearls thrown before empty benches, often in the early hours of the morning.
When in opposition I always maintained that no Labour Government could fulfil their pledges to the people—their

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promises of great social advances, of more schools, better education and a rising standard of living—unless they made drastic reductions in defence expenditure. I cannot say that my exhortations have had the slightest effect, but the economic facts and reality of the situation have. Now it has dawned on the people of Britain, if not on the Government, that the time has come when the Labour Party cannot fulfil its pledges unless it takes a far more drastic attitude to what are politely called Defence Estimates.
The situation tonight reminds me of the economic crisis and the defence argument of 1951. The Labour Government of that time went in for a great rearmament programme and, to pay for it, they cut the social services. We had the resignation of the present Prime Minister and of Mr. Aneurin Bevan. There followed a very prolonged argument within the Labour Party.
It looks as though this argument will go on through 1967, because we have now had the resignation of the Minister of Social Security. I shall not go into the reasons for that except to say that the right hon. Lady wanted more money for pensions, family endowments and other social services than the Government were Prepared to give. So the right hon. Lady, for whom I have a great admiration, symptomises the argument going on throughout the Labour movement: can we give to the people those things we promised if we continue to spend on defence as Conservative Governments have done in the past?
In this argument the Government may appear to have a great majority in the House, but that will not be reflected in the opinion of the country. I do not think that it is reflected now. The Government, in carrying on their expenditure at this rate, are getting into economic difficulties and, ultimately, if they do not fulfil their pledges, they will go down to overwhelming disaster, as they did in 1951.
That is the note of warning that I and my hon. Friends who have signed one of the Amendments are sounding. We demand further cuts in expenditure, and an entirely new orientation of thinking on what is politely called "defence". The
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background to this is, as nearly everyone will agree—it is agreed in the United States of America and in Russia—that the days of Britain as a great military Power are over; that she cannot continue with the kind of policy she has followed for the last two centuries, and that she has to realise that, and adopt a new policy.
These facts have revolutionary implications. Disarmament is in some ways like a political revolution—one cannot stop it halfway. Yet that is what the Government are trying to do. They are playing about with one improvisation after another and putting pragmatism in the place of principle. My hon. Friends and I who disagree with this policy believe that the Government deserve criticism from a different angle; not from the angle of the Conservative Party—whose Amendment we will, of course, oppose—but from the angle of the Labour Party when it was in opposition.
At Question Time today, the Prime Minister talked about atomic weapons. He said—I think that these were his words—that the Government were not going to embark on a new generation of nuclear weapons. We certainly do not want a new generation of nuclear weapons: what we want is more a effective birth control of these weapons.
When Members opposite were in office our criticism of their Government was that they were spending so much on Blue Streak, Thunderbolt and all the other things with fancy names. We put down a Motion saying that in 13 years of Tory Government they had wasted £20,000 million and had very little to show for it. There have been cuts, and I give the Government credit for that, but when Ministers talk about the 1970s and 1980s I wonder what they think the cost of so-called nuclear defence is likely to be if it continues at the present rate.
The hon. Member for Haltemprice said: thank God we are to have the Polaris in the 1970s.
Mr. Wall: Hear, hear.
Mr. Hughes: He is far more enthusiastic about Polaris than are some of the military correspondents. He is far more enthusiastic than the military correspondent of The Times and, at the other end of the scale, the defence correspondent of the Sun. The defence correspondent of the Sun. after a study of military

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developments, came to the same conclusion as I have come to—that Polaris should be scrapped.
Polaris was begun at the time of the Conservative Government, and what a furious attack was made on that Government when those now on the Government Front Bench were in Opposition. I remember the present Secretary of State for Defence jumping in anger to his feet and attacking Mr. Macmillan. He said that it was a life and death matter for the British people and that the then Prime Minister was taking great risks with new weapons. Even the more orthodox members of the Labour Party, who were in agreement with Mr. Macmillan, said that the Polaris might be useful but it should not be where it is, near to a centre of population. That was the argument about the American Polaris. Today we are having the great new expensive base on the West Coast of Scotland which has cost a considerable amount of money.
My right hon. Friend the Member for Easington (Mr. Shinwell) said that we could not take all this money and spend it on hospitals, schools and that kind of thing. At the Polaris base for the last three years there has been a small army of men with bulldozers, concrete mixers and all kinds of building equipment, all destined to bring the base into existence next year. They have taken away labour from the building of schools, advance factories, hospitals and housing in one of the worst-housed districts in the world and put it to work on a base which will cost £45 million by the time it is completed.
I challenge the Minister of State for Defence Administration to deny that the present Bill for Polaris is greater than the Conservative Government estimated. The Conservative Government were to spend £350 million on five submarines. We are to spend £370 million on four. The average expenditure on each of the four submarines amounts to about £90 million a year. When they are completed, are they going to be the wonderful deterrent we talked about? The Americans are no longer building these submarines. They say that the Russian defences have been so much improved that an ordinary Polaris missile could not get through them. They are going in the for the Poseidon, which they think will. At the same time Russian defences, technique
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and technical "know-how" have improved to such an extent that for anyone to talk about these four submarines being effective in the 70s is simply to ignore the advance of modern scientific research. Therefore, by the time this programme is over we shall have thrown away £370 million which could have been devoted to improving the economic life of the country.
Reference has been made to the Royal Navy. One of the great difficulties of the shipyards at present is that they have not enough skilled labour and cannot deliver ships in time. One of the difficulties in the Clyde is that so much labour, skill and raw material is locked up in naval vessels. So we are coming to a shipbuilding crisis. Therefore, I contend that when the Minister utters only one short sentence about the Polaris submarine, which in the pamphlet issued by the Admiralty is described as of major importance, he does not realise the extent to which our money has been wasted on this project. There is to be a submarine school costing more than £8 million, and the cost of its staff will be £69,000 a year. It will absorb mathematicians and other technical people. Yet at the same time we cannot get mathematics teachers for our schools. This is, consequently, a burden on the economy, and those of us who live in the area feel that we should protest about it at every possible opportunity.
The Labour Party used to be against nuclear weapons. Nobody knows what these submarines will be used for. We knew what they were going to be used for when the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) was Prime Minister. He stood for the independent nuclear deterrent and argued it, and in the election we defeated him—but we adopted his policy. It is no longer called the independent nuclear deterrent. It was said that it was to be handed over to the West. But no country in the West wanted it handed over. No country in the Western world wanted to embark on the Polaris submarine. So we are adapting the independent nuclear deterrent and adopting the theory and strategy of nuclear warfare.
How does that fit in with our attempts to obtain friendship with the Soviet Union. We had Mr. Kosygin here, and there was great enthusiasim about him.

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We talked about a peace treaty with the Soviet Union, and yet at the same time we were proceeding with the arms race. The time has come for a protest. We hear that the inevitable enemy is the Soviet Union. Have we forgotten what the right hon. Member for Kinross and West Perthshire said when he went to the Soviet Union in connection with the nuclear treaty: "We must not only coexist with the Soviet Union; we must co-operate with it." Instead of that we have a foreign policy opposed to friendship with the Soviet Union and are continuing the arms race.
I am glad to see the Prime Minister here, because I want to put a certain question to him. I remember listening to the Prime Minister when he came to a conference in Glasgow—he will, I am sure, recall it very well—to explain the defence and foreign policies of the Labour Party at that time. He made a very good dialetical job of it. He satisfied everybody, until there rose a little woman from the Shettlestone Co-operative Guild who asked him, "If you were the Prime Minister, Mr. Wilson, would you press the button for an atomic war?" The Prime Minister said, "No". But now we have got weapons which apparently are not going to be used. We heard the Prime Minister say that we will never be the first to drop the atomic bomb. I wish he would repeat that, because if we are never going to be the first, how are we going to be the second? There was much sense in the question put by that lady.
What is going to be our attitude to nuclear weapons? We cannot say that they add to the deterrent effect of the West. We have heard about the Nassau Agreement. That has still to be renegotiated. So we are embarking, with these few cuts, on continuing the policy of the Conservative Government. The great majority of the people in this country want a clean break away from the armament philosophy of the previous Government. They are not getting it. If this goes on, if in 1970 when the General Election comes we have not improved our housing and our social services, the Government will go down as the Government went down in 1951. The Prime Minister played a good rôle at that time. He resigned from the then
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Government because he thought that we were carrying a bigger arms burden than we could bear. We quite agree. If we are going on with the nuclear strategy, if we are going to continue expenditure on the same lines as we are now following with the Polaris submarines at the base at Gairloch, we shall add to our defence estimates and we shall disappoint the people.
My hon. Friends and I give this warning to the Labour Government—and we believe that the great majority of the rank and file are behind us: "You have got to have a policy to stop the arms race, a policy which will lead to the hope and peace of the people of the world."
9.4 p.m.
Mr. Reginald Maudling: We shall be voting for our Amendment and we shall also be voting against the proposition to approve this White Paper because we believe it is a sham from start to finish. Nothing that the Secretary of State said in his rather strange speech this afternoon did anything to dispel our objection on this point. There is nothing in the White Paper and there was nothing in his speech by way of a real attempt to justify the size and scale of the cuts which are being made in our Armed Forces. There is nothing in what he said to explain why the Government consider that this new and drastically reduced level of our Armed Forces can meet the commitments that this country has to face.
It really was deplorable that instead of addressing himself in this extremely important debate to those vitally important matters, he seemed more concerned to pursue his personal vendetta against my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) in a style more suitable to a music hall than to the House of Commons, and based on a series of misquotations of my right hon. Friend and of my hon. Friend the Member for St. Albans (Mr. Goodhew), even misquoting himself at one stage, or under-quoting himself, shall I say. My right hon. Friend the Member for Wolverhampton, South-West reminded the Secretary of State that in November, 1964, he said:
"… the right hon. Member for Monmouth … handed over to me the best weapon that any defence Minister in this country has yet had …"

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The right hon. Gentleman said that he was then referring only to the Ministry of Defence. But let us read on:
"… although I think he may agree with me when I say that the blade needs sharpening a little more and the handle could well be a little lighter."—[OFFICIAL REPORT, 23rd November, 1964; Vol. 702, c. 1026.]
That obviously meant the Armed Forces and could not conceivably refer to the Ministry of Defence itself. I have never heard talk of the Defence Ministry as an organisation needing a sharper blade and a lighter handle.
The cuts announced in the White Paper are very heavy and the reductions in manpower are specified in great detail. But neither are argued on their merits in any way. On the other hand, the White Paper does nothing to reduce any of our commitments, or if the party opposite prefers the word, obligations. It merely impairs this country's ability to meet our continuing commitments and obligations.
The right hon. Gentleman said a very odd thing. He referred to "major changes" in foreign policy. When challenged by my right hon. Friend he said that the Government had been making big reduction in the Forces and implied that these were major changes in foreign policy. They are nothing of the sort. They may amount to a major failure to live up to our foreign policy, but they are not foreign policy.
I hope the Prime Minister will make it clear, because it is of fundamental importance, whether there have been major changes in foreign policy in the course of the review which have led to these reductions in the Forces. As far as I can see, there have been no reductions in the nuclear arm nor in the total number of forces required to meet our European commitment. There have been some changes in stationing, but no reduction in the total. There has been no change in the obligation in Hong Kong. That is specifically stated.
To my relief, this afternoon we were told that there is no intention of giving up our obligations in the Gulf. But that was not specified in the White Paper. Indeed, a story to the opposite effect was leaked to the Press recently. We are glad to have the Government's assurance that there is no intention to
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reduce our obligations and commitments in the Gulf.
What does that leave? It leaves our obligations to S.E.A.T.O. and Malaysia and Singapore. I was absent from the Chamber when it was said, but I understand that, when the Defence Secretary interrupted the hon. Member for Woolwich, East (Mr. Mayhew), he left considerable doubts in the minds of those present about what the Government regard as obligations to S.E.A.T.O. and Malaysia. I ask the Prime Minister to restate them precisely.
Is it true that we have no obligation to defend Malaysia or to assist in its defence? Is it true that we can—although I realise that our contribution to S.E.A.T.O. is not set out specifically—overnight, at our own desire, reduce it to nil, as the right hon. Gentleman seemed to imply? We must be clear as to whether the Government consider our obligations to S.E.A.T.O. and Malaysia have been changed. If they have been reduced, we must be told. If they have not been reduced, there has been no reduction in commitment. All that has happened is that the Government have reduced the forces available to carry them out. That is the main burden of criticism contained in our Amendment.
Our second criticism concerns the prior announcement. One would have thought that the Government would have learnt the lesson of Aden. I say seriously to the Prime Minister that he must recognise that the premature announcement of our departure from Aden did immense damage to our interests in that part of the world. I was there at the time and saw how those most friendly to Britain were cast down and those least friendly rejoiced.
Mr. Wyatt: How much notice does the right hon. Gentleman think should be given—two days, two months, two years?
Mr. Mandling: I will come to that in a moment, because the giving of advanced warning of that kind immediately undermines our ability to maintain our position. "Authority deserts the dying king," and from the moment that the Government made their announcement about Aden our position and ability to help people in that part of the world were diminished.

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In this case it is even more foolish to make an announcement of what we are likely to want to do in 1975 and onwards. How can the Government possibly proclaim that far in advance what we shall be in a position to do? I remember so well hearing Sir Winston Churchill say in the House that it is wise to look ahead but foolish to look further than one can see. The Government have tried to look much further than they can see. It is precisely their determination to make this announcement so prematurely which has caused the greatest concern to our friends and allies in Australia, Singapore and the United States.
We condemn the White Paper on the grounds which I have put forward. We believe that the reason for its faults is that the Prime Minister, once again, is trying to have things both ways. He has introduced cuts in our defence services designed to please his own back benchers, designed possibly with an eye to his own party conference. At the same time the Secretary of State puts in the White Paper phrases about maintaining a military capability and about maintaining forces east of Suez which are clearly designed to reassure of friends in Australia, America and other countries, Yet, as so often happens, when one tries to have things both ways, one finishes by having the worst of both worlds, as the hon. and learned Member for Montgomery (Mr. Hooson) said.
The Prime Minister clearly has not succeeded in appeasing his hon. Friends below the Gangway. He has not satisfied those who wish to see Britain entirely out of playing any rôle east of Suez or those who wish to see our defence services cut to ribbons in order to provide more money for domestic expenditure. On the other hand, he has not given any pleasure or confidence to our allies overseas. The speech of the Secretary of State, particularly the part about our obligations to S.E.A.T.O. and Malaysia to which I referred, unless corrected this evening, will have done even more to undermine the confidence which our allies have in our determination to play our rôle in that part of the world.
I turn shortly to the effects on some of the Services of the proposals in the Supplementary Statement. I hope that the Prime Minister will answer some of the points raised about the effects on the
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Services, because they are important and they are certainly causing very great concern to hon. and right hon. Members on this side of the House. The cuts in the Army are very heavy. Is it not a fact that they will be disproportionately effective in cutting down fighting power? The ratio between teeth and tail is almost bound to get worse in these circumstances. The overheads of a small force will grow. I do not see how that can be avoided.
I gather that all the training of the Army will be carried out in Europe. Can we train men for jungle warfare and operations east of Suez, if our troops have to go there, in Europe? Although it is pointed out that the strategic reserve will be increased, the fact is that the number of Army units available to carry out our obligations will be reduced very severely indeed. It is not enough to increase mobility to compensate for this reduction in numbers. The increase in mobility helps a good deal, but the job of getting troops by air, for example, to South-East Asia may prove very difficult. Over-flying rights, bases on the way there, possibly the difficulty of coming to land—all these things make the mobility argument one on which not too much stress can be laid.
Can the Prime Minister show how it is calculated by the Government that this very large reduction in Army units will still enable them to carry out the tasks which have not been reduced either in Europe or east of Suez.
I come now to the R.A.F. Here the Supplementary Statement is particularly vague. As my right hon. Friend the Member for Wolverhampton, South-West stressed, it tells us with great detail by how much the strength of the Air Force is to be run down. But there is nothing about the armament and equipment of the Air Force beyond the statement that the size of the front line will be reduced. That seems fairly clear. But what will the front line consist of?
What is the position now that the A.F.V.G. has fallen down? What is the position about the Harrier? We have heard it suggested today that there is doubt about its future. If that is wrong, I hope that the Prime Minister will say so. I will be very glad to hear it. When, however, we see in the White Paper the

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extraordinary, vague passage about the armament and equipment of the Royal Air Force, one wonders how, on this basis, the Government can possibly feel confident that this ill-defined force will be able to carry out, as the Government say, all the tasks falling on it in the 1970s.
I turn next to the Navy and the points put particularly by my hon. Friend the Member for Haltemprice (Mr. Wall). It is extraordinary that the White Paper says that the main striking force of the Navy will be the fleet submarine. What sort of weapons, range, radius of activity and effectiveness will these vessels have? Is it not a fact that if that is so the main striking power of the Navy under the Government's definition will be designed entirely for an Atlantic rôle and not in any way to intervene or have influence in activities on land? If that is so, how can it be reconciled with the concept of the amphibious force being our main arm east of Suez in the 1970s?
How about air support? This is a question which was raised by the hon. Member for Woolwich, East (Mr. Mayhew), and it has not been answered. There is no satisfactory answer to the way in which air cover can be provided for our amphibious forces sailing around, to use the Secretary of State's happy phrase, in the ocean. With bases so few in future and with no aircraft carriers, how can air cover be provided? If it cannot be provided, how can our forces operating east of Suez be regarded as credible in any sense?
Among the other points which I could mention are the cuts in research and development. Surely, at a time when forces are being concentrated, the need for higher quality and more developed weapons becomes greater and not less. There is the question of terms of compensation. Can the Prime Minister confirm that the terms of compensation offered on this occasion are, in many cases, substantially worse than the terms offered in 1957, even allowing for the fall in the value of money.
What is the position about our nuclear force and the proportion that it takes in our total military activities? The hon. Member for South Ayrshire (Mr. Emrys Hughes) quoted the figure of £370 million as the total cost of the force. The Secre-
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tary of State denied it, but I have looked it up and checked that that is the figure. Will the Prime Minister confirm that?
Mr. Healey: My hon. Friend was referring to the amount of money yet to be paid. He argued that we could save £375 million by scrapping it.
Mr. Emrys Hughes: I was quoting the £370 million which is published by the Ministry of Defence as the cost of the Polaris submarines, as compared with the Tory figure of £350 million for one submarine less.
Mr. Maudling: The Secretary of State is having a bad day.
I would like to know from the Prime Minister to what extent the expenditure on nuclear weapons is becoming a greater percentage of the total defence budget. Presumably, as the conventional side is scaled down the cost of the nuclear force proportionately must rise. This is the nuclear force which the Prime Minister described in that graphic phrase as equivalent to a dried pea on top of a mountain. Does he still feel that the British nuclear force, on which he is relying for our contribution to N.A.T.O., is a dried pea on top of a mountain? If he does it is a very expensive vegetable.
Clearly, the main issue in the White Paper is the position of Britain east of Suez, around which the debate today has largely centred. There are four main reasons underlying the argument of those who wish to see Britain come out entirely from east of Suez. There are those who, like the hon. Member for Salford, East (Mr. Frank Allaun), link it very much with the position in Vietnam. There are those, who are passionate protagonists of joining the European Community, who think that there is a conflict between our joining Europe and maintaining a position east of Suez.
There are those who are obsessed with economic pressures and the weight of expenditure on our budget. In general, there is a malaise that all of us feel in this country, which is part of the feeling one gets from the withdrawal from empire, that whereas formerly one could do a great deal, now we can do only little. It is part of the feeling one gets by being flouted by those to whom one gave independence. There is that general feeling that because Britain cannot do as much as she used to do east of Suez, she

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cannot, and should not, now do anything at all.
I think all these reasons are miscast. I think that on the arguments about Vietnam the main opponents of American policy in Vietnam have not really yet grasped what the significance for this country as well as for the rest of the world would be if the American position in Vietnam collapsed and if the tide of Communist aggression were to sweep forward over large areas of South-East Asia.
So far as the European argument is concerned, to which, I know, many of my hon. Friends attach great importance, I cannot see that joining Western Europe, joining the Community, would necessarily mean abandonment of any British obligations or commitments in other parts of the world. I do not think we should aim to join the Community in order to shut the door on the rest of the world. Indeed, rather the contrary. There was an argument in the debate about the Community which I remember so well that one of the main reasons for wishing to join the Community was that we would be strengthening the voice of Europe in the world as a whole. It is ironical that in a time when communications are getting so much easier, in a time when in practice the world is shrinking, there should be so many people who wish us to withdraw from world responsibilities, and peace-keeping responsibilities, when peace throughout the world is of infinite value to us.
Mr. J. Bruce-Gardyne: My right hon. Friend referred to slamming the door on the rest of the world, I think. Would he not agree that one can have an open door to the rest of the world without necessarily keeping substantial forces all over it for the indefinite future?
Hon. Members: Hear, hear.
Mr. Maudling: That is not the point I am making. If we are to continue—[HON. MEMBERS: "Hear, hear."] A certain amount of cross-voting seems to be going on. If we are to continue to have a peace-keeping rôle, which is what I am talking about, outside Europe, then we must have the facilities to do it and for that purpose have the bases which are required. It would, I suggest, be a tragedy if the idea were to gain ground
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that somehow or another we must choose between Europe and American. Surely the whole idea of joining the Community is that it strengthens the voice of Europe not only in relation to America but to the world as a whole.
I come to the question of economies. I do not think the Government have yet made out a convincing case for the balance of payments savings they claim. I do not know whether the Prime Minister read that article in the Economist? I thought it very interesting. Can he confirm that in fact in their calculations of the economies the Government are taking into account the loss of exports from and the increase of imports to this country as a result of troop movements back here from South-East Asia?
I think the truth of the matter is that we are facing pressure on the defence expenditure because of the total failure of the Government to achieve any rate of economic growth. As my right hon. Friend said this afternoon, there was a steady reduction under our Government of the percentage of the national income spent on defence; it was a reducing proportion at a time when the national income was rising rapidly. It has been made apparent—it was in the debate in another place—that it is only because of the total failure of the economic policies of the present Government that they have had to turn to this new attempt to cut our forces in the face of the foreign and defence obligations of this country—to save money and make the foreign policy and defence policy of this country fit that and not our country's real interests.
The other argument for leaving the east of Suez arena is that this country can no longer play any effective part. I believe that this also is wrong. For example, in the Gulf I am sure that our continuing presence there is of immense value. I do not accept the argument that because oil is not flowing to us at the present moment our forces are not of any value in the Gulf. Those small Gulf countries, some of them with very large incomes, and some with larger incoming populations than their own indigenous populations, are very inflammable tinder for anyone who wants to cause trouble. Are the Government

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taking account of what could, in the vacuum made by our withdrawal, be very great dangers indeed for us and other countries of the Western world? A vacuum there would be a very dangerous one. We and we alone are in a position politically and militarily to carry out this obligation, for obligation it is, particularly to the Trucial States and other countries of the Gulf who have relied and still rely upon the undertakings which we have given to them.
Further East, I am certain that we can make a significant contribution. Our military strength, as is rightly said, adds only marginally to the military strength of the United States. However, our political position is of immense importance there. I was convinced of that on my recent visit to Washington. If we were to withdraw from east of Suez, the Americans could not long themselves continue there. They could not in political terms continue to carry alone the burden of maintaining peace in that part of the world. Therefore our contribution there, though in sheer, hard, calculated military terms may be small, in political terms is very important.
I conclude my case against the Government by coming back to my original argument that the Government have not gone about this in the right way. They have obviously started with a determination to cut a large sum of money off the defence estimates, and they have made the decision clearly for political and not for diplomatic or strategic reasons. They have not reduced our commitments. We still have commitments and obligations in Hong Kong, Malaysia, S.E.A.T.O., and the Gulf. We have commitments and obligations of a solemn character spread across the world. What they have done is not to reduce the obligations, but to reduce our capacity to carry them out.
What sort of force can we maintain in the Indian Ocean without bases from which to operate? Is there any credibility in the Secretary of State's concept of a maritime force on the basis which he has in mind? What size would it have to be? Would it be totally self-contained like the Seventh Fleet? How much would that cost? If it is not to be self-contained like the Seventh Fleet, how can it credibly and satisfactorily perform any military task? How can air cover be provided on a satisfactory basis?
1098
Then we have to consider the point of view of our allies and their confidence in our determination. How can they continue to be confident in what we intend, having heard what the Secretary of State said this afternoon about our obligations to S.E.A.T.O. and how easily they could be reduced to something very small?
To sum up, we on this side of the House consider that this review is not a coherent attempt to solve our defence problems. It is a piecemeal effort to save money at a cost, in the long-term, to the national interest. The Secretary of State makes no attempt to answer this argument. He merely baits us by saying that we want to spend more money on defence. I give him the point. It may be that we should have to. But our principle would be that any money needed to maintain the security of this country must be a prior charge on the Budget. Let the Prime Minister disagree with that if he likes.
9.28 p.m.
The Prime Minister (Mr. Harold Wilson): Whatever disagreements have been expressed today there has been a general realisation throughout the day that this debate is one of the most important and far-reaching debates on defence that this House has had perhaps for many years. It centres round a White Paper which represents the culmination of nearly three years' intensive review of the nation's defence policy in all its aspects—its implications for, and dependence on, overseas policy, and the rôle of military power in supporting that policy, our commitments, and the planning of the forces and the equipment required to carry out our defence rôle.
What we have been debating is a defence strategy which is projected 10 years ahead. We have to look 10 years ahead if we are to get the maximum economy from the money and resources allocated to defence and the maximum defence effectiveness with those resources.
Not only does the redeployment of forces, if it is to be done efficiently and economically, require several years' planning and implementation, but, in the field of highly sophisticated equipment in terms of aircraft, naval vessels and the increasingly sophisticated requirements of a modern Army, the period of production of that equipment, including essential

1099
R and D, itself dictates that maximum efficiency can be achieved only by looking well ahead.
I do not think that the question of the need to look 10 years ahead is in dispute between the two sides of the House. Indeed, this was the basis of the famous Defence White Paper of 1957, produced by the right hon. Member for Streatham (Mr. Sandys). The fate of that White Paper was due not to any failure to look ahead, because he did that, but to fundamentally wrong appraisals, both of the rôle which the Services would have to carry out over that period, and of the type of weapons required for that rôle—above all, the chronic miscalculation of basing the whole strategy on Blue Streak, which was dead less than three years later.
As my right hon. Friend made clear this afternoon, a great deal of the clearing up which he has had to do, especially in the first year or so after he came into office, stems from decisions taken 10 years ago to stake our all on one precarious weapon and to run down the forces to levels far below those necessary to carry out the tasks assigned to them. And this takes no account of the additional increases in commitments made by the right hon. Gentleman after he left the Defence Department and became Commonwealth Secretary. We inherited these commitments, even though from time to time we had great difficulty in ascertaining exactly what he did commit us to—nothing in writing, but often a nod and a wink, and different people interpreted it in different ways.
This underlines one of the great problems with which we have been faced in defence matters, and which has been covered in defence debates for many years under successive Governments. One of the dominant themes has been the problem of overstretch. The House knows from our previous debates how serious the problem was up to about 1965, how enormously eased the problem of overstretch has been; what this has meant in terms of troops being overseas for long periods away from their families, or being asked to spend relatively long periods in arduous and difficult climatic conditions.
It also means that this chronic and dangerous overstretch has been so much
1100
reduced and will be further reduced as a result of this policy. It means a change from the very high degree of vulnerability with which we were faced, with virtually no strategic reserve in this country, which was the position a year or two ago, and the ever-present danger, therefore, of further unforeseen needs to intervene to preserve peace.
Rear-Admiral Morgan Giles Rear-Admiral Morgan Giles rose—
The Prime Minister: I have only just started, and I want to answer as many points as I can.
Today's debate is not about the necessity to look 10 years ahead. It involves a major question of judgment about whether—this is what is called in question by the Opposition Amendment—our conclusions from this 10-year look are wise and responsible. This is what the debate has been about.
First, there is our decision to withdraw forces from Aden during the next few months. This has been the subject of repeated debates before today. The right hon. Member for Barnet (Mr. Maudling) said that this was wrong, that we were wrong to announce our withdrawal. He went on to attack those who have said that because we had a very limited power in recent weeks in the Middle East, for example, in the matter of getting the oil flowing, our forces were wasted there. He attacked that very strongly. He passed strong strictures on those who said it, but the right hon. Gentleman who has chiefly put this view forward is the right hon. Member for Wolverhampton, South West (Mr. Powell), the defence spokesman for the Conservative Party.
I know that the right hon. Gentleman is a little allergic to quotations, but this is what he said. I do not know whether this quotation is right or not. I will just give it. I do not know whether it is right.
Sir Knox Cunningham: D Notices.
The Prime Minister: The Government have never issued any D Notices. It only happened when the hon. Gentleman was a P.P.S.
Sir Knox Cunningham: Is the quotation right?
The Prime Minister: All I can say is that it is headed "Conservative Central

1101
Office News Service". I presume, therefore, that it is correct. Referring to the events of the last few weeks, it said:
"When this happened it promptly appeared that the so-called British 'presence', either in the Mediterranean or in the Persian Gulf, was powerless to protect our interests either in oil or sterlng. From the Government of Iraq to the Sheikh of Abu Dhabi, those who wanted to, just turned off the oil taps and we—of course, rightly—never dreamt that we could do anything to prevent it by our military presence any more than we could have used force in the area to prevent sterling deposits from being withdrawn.
On the contrary, it became obvious that it was just because we were physically present in the area that our oil and our reserves were in danger, when oilier people's were not."
Perhaps the two right hon. Gentlemen could sort it out and let us know the result. If they do not succeed perhaps the Leader of the Opposition would take a hand. It is a little remarkable that in a major defence debate the Leader of the Opposition has not sought to intervene. When I was Leader of the Opposition I spoke in most defence debates. We even took the initiative in having some sometimes. [An HON. MEMBER: "What about last Monday's debate?"]
I was happy on Monday to leave the demolition of the right hon. Gentleman to my right hon. Friend the President of the Board of Trade. There was no problem on Monday about my hon. Friends' expressing two points of view, but that is what we have had from the Opposition Front Bench speakers today.
Sir Harmar Nicholls: It is an insult to the subject.
The Prime Minister: For the Opposition to have no views on the important subject of defence is an insult to the subject. The view we took on Aden—on everything we know and have seen—and many of my hon. Friends made speeches about this in opposition—the decision to withdraw our forces from Aden, was and is right and necessary. Aden must have a political solution. I do not underrate the difficulties of getting it. An extension of our presence in Aden would do nothing to further that political solution.
I turn now to a bigger question—or a question that has occupied more time—concerning our decisions affecting the Far East. To "recap",—because there has been some misunderstanding—first, we have decided to reduce our forces deployed in Singapore and Malaysia by
1102
about half by 1970–71. That is, we shall reduce the present 80,000 men and women working in or for the Services to about 40,000, of which about half will be civilians, by 1970–71.
Secondly, while we make it plain that we cannot plan the period beyond 1970–71 in the same detail, we have announced that
"we plan to withdraw altogether from our bases in Singapore and Malaysia in the middle 1970s—the precise timing of our eventual withdrawal depending on progress in achieving a new basis for stability in South-East Asia and in resolving other problems in the Far East".
The interesting thing is that the House still does not know, after two Opposition Front Bench speeches, where the Opposition stand—whether or not they support our decision to withdraw in the 1970s. We have not had an answer to this question. When the right hon. Gentleman spoke this afternoon he seemed to convey the idea that he was against the decision; or was he only against the decision to announce the decision now? Our policy is clear, because it is in the White Paper which the House has been asked to approve.
I remember many defence debates in the past. There was the famous one in February, 1964, when the debate ended in an uproar because of a debating point scored by the then Minister of Defence on what our policy would be. Our policy here is clear. We and the country have a right to know—[Interruption.] The right hon. Gentleman the Leader of the Opposition claims to lead not just a negative Opposition. He is not very good at that, either, but his party claims to be an alternative Government. The country has the right to know where they stand on this question.
Mr. Edward Heath: I understand that the Prime Minister has said that the clear policy of the Government is that they intend to withdraw all remaining forces from Singapore and Malaysia in 1975 if there is political stability in the area. If there is not political stability, will the Government withdraw?
The Prime Minister: I do not think that the right hon. Gentleman has studied the White Paper. [HON. MEMBERS: "Answer."] I will answer. Then I shall put a question that I shall ask the

1103
right hon. Gentleman to answer. The answer is that we intend to withdraw from our bases in those areas by the middle 1970s. My right hon. Friend has made that clear. We have said that there is a margin between 1973 and 1977. The timing, as between those two dates, depends on the conditions in the area. But unless we announce now, it will not be possible for Singapore and Malaysia to make either defence arrangements or economic arrangements—
Mr. Heath Mr. Heath rose—
The Prime Minister: I have already answered—
Mr. Heath: And if there is not stability in the area in 1977, at the end of the bracket, do the Government still intend to withdraw?
The Prime Minister: Yes, Sir. We intend to withdraw by the middle 1970s. I should have thought that the long experience, sometimes fought by hon. Gentlemen opposite, is that to delay a withdrawal too long is the very way of provoking instability in the area. That is what they should have learned from Cyprus; that is what they never learned from India.
Now, I want to know where the Opposition stand. We have heard nothing today Of—[HON. MEMBERS: "What is your policy?"] I have said what the Government's policy is. We now want to know what the alternative Government's policy is. They pride themselves on their policy. They have had time to study this. All we have had are statements outside the House. I will quote again, because I want to be clear, answers given by the right hon. Member for Wolverhampton, South-West on television last week. One question was:
"Mr. Powell, do you agree with the main theme of the White Paper that Britain should pull out of the Far East by the mid-1970s?"
The answer was:
"I don't think it's so much a question of whether by the mid-1970s we have ceased to be present in force ashore on the mainland of Asia; I think it's a question of what you say about it now and the effect of that on the circumstances …"
The next question was:
"Are you saying that once having decided to pull out, one should then do it without announcing that you're going to do so?"
1104
The answer was:
"I very much doubt whether it should be necessary, except for purposes of internal consumption …",
whatever that may mean. Yes, but the right hon. Gentleman, who is shadow Defence spokesman, does not get anywhere by pointing across the Chamber. He should tell us: does he support a decision to withdraw in the 1970s or does he not?
Hon. Members: Answer.
The Prime Minister: All right. Does the Leader of the Opposition support it or not? I gave way twice to him and I will do so now—
Mr. Heath: I will tell the right hon. Gentleman that we have specific, limited commitments in the Gulf and in the Far East and that I believe we should adhere to those commitments and obligations with the necessary forces to carry them out until there is stability in the area to enable us to withdraw.
The Prime Minister: I asked the right hon. Gentleman whether the Opposition support this decision to—[HON. MEMBERS: "Answer."] The answer is—[Interruption.]
Mr. Speaker: Order. There are too many sympathetic and unsympathetic noises.
The Prime Minister: I know about the commitments and obligations. I will come to them. I was not clear whether the right hon. Gentleman supports this paragraph of the White Paper or rejects it. Perhaps he will tell us—
Mr. Heath: I have told the right hon. Gentleman what the policy is. It is to carry out our obligations in the Gulf and in the Far East, which are limited and specific, and to have the necessary forces to do so until there is stability in the area which enables us to withdraw. I would call the right hon. Gentleman's attention to column 1957 of the OFFICIAL REPORT for 8th March, where it is clearly stated:
"… it is difficult to prophesy in advance what the situation in the Far East in the 1970s will be. What I am sure would be wrong would be for us to take a decision now which would make it certain that whatever was happening in the Far East then we could in no way influence it …"—[OFFICIAL REPORT, 8th March, 1966; Vol. 725, c. 1957.]

1105
That is the then Labour Foreign Secretary on 8th March, 1966.
The Prime Minister: Yes, Sir, we had that quoted this afternoon. The right hon. Gentleman continues to run away from the question. We know all about, and I hope to come in a moment to, the question of our commitments and obligations and how we are to honour them.
The right hon. Gentleman will not face up to the question that must be decided tonight—whether it is necessary to stay in the bases with a physical presence in order to honour those commitments and obligations. We say that it is not. The right hon. Gentleman who the defence spokesman for the Opposition refuses to answer. [HON. MEMBERS: "Oh."] Well, he spoke for nearly an hour this afternoon and did not answer. The Deputy Leader of the Opposition did not answer and the Leader of the Opposition has a classical formula which does not answer the question either.
Reviewing a book by my right hon. Friend the Member for Woolwich, East (Mr. Mayhew) earlier this year, and talking about my right hon. Friend's views on the so-called world role, the defence spokesman for the Opposition wrote:
"He was right there, of course, though he ought not to have been so surprised, the 'world rôle east of Suez' was a piece of humbug; the reality had resolved itself into the ability to operate either as an American satellite or on a scale so limited that it could not in the worst case demand more than a very small exertion of force. The will to maintain a presence and a pose can betray a nation into inverting its genuine defence priorities and neglecting those preparations and branches of the art of war on which its future independence and existence may depend. It would, for instance, be perfectly possible to prejudice the defence of Western Europe in the ostensible interest of peacekeeping east of Suez' without contributing one jot to the peace and stability of the Orient."
That was the Opposition's defence spokesman. That is why the whole lot of them lack credibility. As long as they cannot settle these policies, for the opposition these defence debates will never be anything but a weary fusillade of obsolescent quotations.
There has been much interest in what I said at Devonport in 1964 about naval ship building. The quotation is on the record and I need not repeat it, because we have it at every defence debate. I
1106
will give the figures. The average new naval construction programme under the 13 years of the Tory Government was £47·1 million. In their final year they got up to £51·8 million. The average for the three years that we have been in office is £84·7 million. I do not think that that suggests that we have gone back on what I said at Devonport in 1964. [HON. MEMBERS: "Oh."] Well, hon. Members opposite quoted it this afternoon to suggest that we had broken that pledge. Now they find that they are wrong, all that they can do is to raise their hands in mock submission to my hon. Friends behind me.
Lieut.-Commander S. L. C. Maydon Lieut.-Commander S. L. C. Maydon (Wells) rose—
The Prime Minister: I am sorry. I cannot give way. I have many questions to answer.
Several Hon. Members Several Hon. Members rose—
The Prime Minister: I have been long delayed in trying unsuccessfully to extract an answer from the Leader of the Opposition.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. The Prime Minister is obviously not giving way.
Hon. Members: We are not interested.
The Prime Minister: Of course you are not interested. I am sorry, Mr. Speaker, I did not mean you.
In the debate about the Far East the right hon. Gentleman quite fairly drew attention to the anxiety which has been expressed by some of our allies and Commonwealth partners. Of course, we have had the fullest consultation at the highest level with them over a period of many months. We fully understand and appreciate their concern and they equally fully understand our position in these matters. We have made absolutely clear not only in relation to Malaysia and Singapore, but also to our other Commonwealth partners in Australia and New Zealand, our continuing interest in the security and stability of that area.
What the House must realise—my right hon. Friend explained it and I will not repeat it—is that if we seek to honour those commitments by bases, we have to

1107
protect those bases and we have to have stocks duplicated with stocks at home, and we must have air cover to protect them and troops to protect the Air Force and all the rest of it. What we have said that what we shall maintain is not a military presence, but a military capability based on the ability to get there to fulfil our remaining commitments. This is a point which, I think, has been well appreciated by our Commonwealth partners.
First of all, if ground troops were needed, it is a question of getting them there. We stated this in paragraph 20 of the 1966 White Paper. This was the main theme of a speech which I made in a Committee room upstairs, which was later made public and which was quoted today. It is that the main question is not having bases all over the world, but having the ability to get there when we are needed.
The assurance we can best give to Malaysia and Singapore lies not in the presence of ground troops—surely, over a period of time, the provision of ground troops must be more and more their responsibility; it is unrealistic to suggest in this day and age that it should be the role of Britain to provide the ground troops in these areas—but in the provision of what they cannot provide for themselves, except with an inordinately expensive use of resources they cannot afford. It is the ability, from sea and air, to provide the sophisticated support, with all the expert equipment that they cannot afford, necessary to deter a potential aggressor from launching a sophisticated attack on them. This is something which they cannot and should not now be asked to provide for themselves. [Interruption.] I do not know why hon. Gentleman opposite want to make a joke out of a lot of this.
Recently, Malaysia was facing an Indonesia armed with highly sophisticated aircraft. It was our role, under successive Governments, to provide a deterrent against the use of those aircraft. It still makes sense in our defence relationships with Malaysia and Singapore—[An HON. MEMBER: "Nuclear weapons?"] There is nothing about nuclear policy in this. This is the rôle that we should take up with Maylasia and Singapore.
Our policy is based on this. Our commitment is not to police the world. We have made it clear that we do not believe
1108
that to be the rôle of this country, but we have pledged this Government against any war, in Europe, out of Europe, west of Suez, east of Suez—and, it is still relevant to say, in Suez—in which Britain would go it alone. This is the basis of our policy. Equally, it is our policy that we cannot police the whole world on the basis of far-flung military stations.
The key to our power to intervene, whether for United Nations peace-keeping purposes or in any other way, is our ability to get there; and our expenditure on long-range heavy capacity transport planes is directly connected to this. Hon. Gentlemen opposite have drawn attention, and fairly, to the anxieties of the Governments of Malaysia and Singapore. This is what the Deputy Prime Minister of Malaysia said after our policy had been announced:
"As far as we are concerned, Britain's withdrawal of bases from Malaysia by mid-1970 is still flexible and we have now nothing much to complain about. We have enough forces to look after our internal defence security if we are attacked. If we are attacked by foreign forces, we won't be able to defend ourselves. But here again, I am glad that Britain has clearly stated she will honour her defence agreement with Malaysia."
The Prime Minister of Singapore, to whom reference has been made today, has said that he could see a situation in the mid-1970s where the capabilities which Britain can contribute
"… could easily match the kind of capability which we can ourselves produce on our own, and together with the Malaysians, the Australians and New Zealanders, we can present a formidable combination."
I should have thought that these statements would provide some reassurance to the House [Interruption.] Of course the Australians would like to see us there. We have had to explain our capacity in this matter. One thing which impressed the Australian Prime Minister was the outline given by my right hon. Friend of exactly what we can contribute in terms of the sophisticated support which these countries cannot provide for themselves in Malaysia and Singapore.
This is the policy which we are asking the House to support tonight. Doubts have been expressed about whether we should have announced this so long in advance and whether, if we announced it, we should have given a more precise date for carrying it out, and so on. I do not believe that it would have been right or,

1109
indeed, possible for us to have taken such a decision without announcing it. The idea that we could wait, without saying or doing anything to indicate our intentions, until a perfect moment arrived, and then suddenly withdraw 40,000 men overnight is an idea which I do not believe anyone would propose. It is not only the logistic difficulties involved in withdrawing a vast number of British servicemen and their families, together with all the equipment in the stockpiles, but of enabling Malaysia and Singapore to adjust their economies and policies to the situation created by our withdrawal.
One of the unfortunate consequences of Britain's military dependence on large bases overseas is that the countries in which those bases are situated have become too economically dependent on the presence of British forces in their midst. We have seen this recently in Malta, and the difficulties which arose there.
The problem in Singapore is no less formidable in nature than the Maltese problem, and very much greater in size. But the Government of Singapore, now that we have stated our policy, are confident, and rightly, that with our help they can establish Singapore's economy on a much sounder basis for the future. They will need financial help, and we have undertaken to give financial help, and that help will be given outside the ordinary aid programme.
But what we have to ensure is that the considerable reduction that we shall be making in the next few years shall take place in as orderly, and controlled a manner as possible, so as to help the Governments of Singapore and Malaysia, who have great and adventurous ideas of what they want to do in the way of economic development, to make their economic transition as smoothly as they can.
This is why we felt it right to announce the decision in any event. Does any right hon. Gentleman think that if we took a decision we should have kept it a secret from the House; that it would have been possible to keep that a secret, with 300 or 400 planners, officers and others, in three countries? Of course, there would have been leaks, and the House would have been right to have been outraged if we had entered into a
1110
secret agreement with our colleagues and partners and not have told the House about it. So we feel it was right, having taken the decision, to make it known.
I have not dealt with the problem which formed one of the central themes of the speech of the right hon. Member for Wolverhampton, South-West—the question of the economic inspiration lying behind this as apart from the motivation behind a great deal of what we have done. My right hon. Friend explained to the House what it means in terms of budgetary expenditure, in terms of saving in overseas expenditure and in terms of saving of manpower overseas. The right hon. Gentleman this afternoon thought that we were wrong to place so much emphasis on economic reality. This was from the cheeseparing Financial Secretary—and I do not complain about that, it is the Financial Secretary's job to be cheeseparing; I have been Chairman of the P.A.C., and I applaud that attitude—who rejoiced in the Defence White Paper of 1957. He complained today of a cut of 24 per cent., but the cut in the White Paper of 1957 was 47 per cent. in the Armed Forces. Soon after that, he resigned, with the then Chancellor of the Exchequer, who then said that we could not afford the mounting defence expenditure at that time.
The reason why I feel that it is right to commend this defence policy to the House, and why I believe that it will be seen to be right, is that it not only expresses the essential unity of defence policy and foreign policy, without which each is meaningless, but it also represents a unity of defence, foreign and economic policy, relating our defence commitments to the resources we can and must make available.
A Government have the duty to provide adequately for the national defence and the contribution they can make to peace. They have the duty to see that their Armed Services are adequate and well equipped. They have the duty to see that the provision for those Services, for this equipment, is sufficient, and that the resources deployed for this purpose are effectively spent and well spent.
For, because in the last resort, the strength of a nation's defences can never be greater than the strength of its economic base, the whole policy—defence,

1111
foreign and economic—must represent a conscious unity based on priorities. It is such a policy that we are asking the House tonight to endorse.
9.59 p.m.
Rear-Admiral Morgan Giles Rear-Admiral Morgan Giles rose—
Hon. Members: Sit down.
Mr. Speaker: Order. Noise does not help.
The Parliamentary Secretary to the Treasury (Mr. John Silkin)The Parliamentary Secretary to the Treasury (Mr. John Silkin) rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the words proposed to be left out stand part of the Question:—
The House divided: Ayes 321, Noes 231.

Division No. 489.]

AYES

[10.0 p.m.

Abse, Leo

de Freitas, Rt. Hn. Sir Geoffrey

Hilton, W. S.

Albu, Austen

Delargy, Hugh

Hobden, Dennis (Brighton, K'town)

Allaun, Frank (Salford, E.)

Dell, Edmund

Hooson, Emlyn

Alldritt, Walter

Dempsey, James

Horner, John

Anderson, Donald

Dewar, Donald

Houghton, Rt. Hn. Douglas

Archer, Peter

Diamond, Rt. Hn. John

Howarth, Harry (Wellingborough)

Armstrong, Ernest

Dickens, James

Howarth, Robert (Bolton, E.)

Ashley, Jack

Dobson, Ray

Howie, W.

Atkins, Ronald (Preston, N.)

Doig, Peter

Hoy, James

Atkinson, Norman (Tottenham)

Driberg, Tom

Huckfield, Leslie

Bacon, Rt. Hn. Alice

Dunn, James A.

Hughes, Rt. Hn. Cledwyn (Anglesey)

Bagier, Gordon A. T.

Dunnett, Jack

Hughes, Emrys (Ayrshire, S.)

Barnes, Michael

Dunwoody, Mrs. Gwyneth (Exeter)

Hughes, Hector (Aberdeen, N.)

Barnett, Joel

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

Hughes, Roy (Newport)

Beaney, Alan

Eadie, Alex

Hunter, Adam

Bellenger, Rt. Hn. F. J.

Edelman, Maurice

Hynd, John

Benn, Rt. Hn. Anthony Wedgwood

Edwards, Robert (Bilston)

Irvine, A. J. (Edge Hill)

Bennett, James (G'gow, Bridgeton)

Edwards, William (Merioneth)

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

Bidwoli, Sydney

Ellis, John

Jackson, Peter M. (High Peak)

Binns, John

English, Michael

Janner, Sir Barnett

Bishop, E. S.

Ennals, David

Jay, Rt. Hn. Douglas

Blackburn, F.

Ensor, David

Jeger,Mre.Lena(H'b'n&St.P'craa,S.)

Blenkinsop, Arthur

Evans, Albert (Islington, S.W.)

Jenkins, Rt. Hn. Roy (Stechford)

Boardman, H.

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

Johnson, Carol (Lewisham, S.)

Boston, Terence

Faulds, Andrew

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

Bottomley, Rt. Hn. Arthur

Fernyhough, E.

Jones, Dan (Burnley)

Bowden, Rt. Hn. Herbert

Finch, Harold

jonee,Rt.Hn.Slr Elwyn(W.Ham,S.)

Boyden, James

Fletcher, Ted (Darlington)

Jones, j, Idwal (Wrexham)

Braddock, Mrs. E. M.

Floud, Bernard

Jones, T Alec (Rhondda, West)

Bradley, Tom

Foley, Maurice

Judd, Frank

Bray, Dr. Jeremy

Foot, Sir Dingle (Ipswich)

Kelley Richard

Brooks, Edwin

Foot, Michael (Ebbw Vale)

Broughton, Dr. A. D. D.

Ford, Ben

Kenyon, Clifford

Brown, Rt. Hn. George (Belper)

Forrester, John

Kerr, Mrs. Anne (R'ter & Chatham)

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

Fowler, Gerry

Kerr, Russell (Feltham)

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

Fraser, John (Norwood)

Laweon, George

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

Galpem, Sir Myer

Leadbitter, Ted

Buchan, Norman

Gardner, Tony

Lee, Rt. Hn. Frederick (Newton)

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

Garrett, W. E.

Lee, Rt. Hn. Jennie (Cannock)

Butler, Herbert (Hackney, C.)

Cinsburg, David

Lee, John (Reading)

Butler, Mrs. Joyce (Wood Green)

Gordon Walker, Rt. Hn. P. C.

Lector, Miss Joan

Callaghan, Rt. Hn. James

Courlay, Harry

Lever, Harold (Cheetham)

Cant, R. B.

Gray, Dr. Hugh (Yarmouth)

Lever, L. M. (Ardwick)

Carmichael, Neil

Greenwood, Rt. Hn. Anthony

Lewie, Arthur (W. Ham, N.)

Carter-Jones, Lewis

Gregory, Arnold

Lewie, Ron (Carlisle)

Castle, Rt, Hn. Barbara

Griffiths, David (Rother Valley)

Lipton, Marcus

Coe, Denis

Griffiths, Rt. Hn. James (Llanelly)

Lomas, Kenneth

Coleman, Donald

Griffiths, Win (Exchange)

Loughtm, Charles

Concannon, J. D.

Grimond, Rt. Hn. J.

Luard, Evan

Conlan, Bernard

Gunter, Rt. Hn. R. J.

Lubbock, Erie

Corbet, Mrs. Freda

Hamilton, James (Bothwetl)

Lyon, Alexander W. (York)

Craddock, Ceorge (Bradford, S.)

Hamilton, William (Fife, W.)

Lyons, Edward (Bradford, E.)

Cronin, John

Hamling, William

Mabon, Dr. J. Dickson

Crosland, Rt. Hn. Anthony

Harper, Joseph

McBride, Nell

Crossman, Rt. Hn. Richard

Harrison, Walter (Wakefield)

McCann, John

Cullen, Mrs. Alice

Hart, Mrs. Judith

MacColl, James

Darling, Rt. Hn. George

Haseldine, Norman

MacDermot, Niall

Davidson, Arthur (Accrington)

Hattersley, Roy

Macdonald, A. H.

Davidson,james(Aberdeenshire,W.)

Hazefl, Bert

McGuire, Michael

Davies, C. Elfed (Rhondda, E.)

Healey, Rt. Hn. Denie

McKay, Mrs. Margaret

Davies, Ednyfed Hudson (Conway)

Heffer, Eric S.

Mackenzie, Gregor (Rutherglen)

Davies, Harold (Leek)

Henig, Stanley

Mackie, John

Davies, Ilor (Gower)

Herbison, Rt. Hn. Margaret

Mackintosh, John P.

Maclennan, Robert

Parkyn, Brian (Bedford)

Stonehouse, John

McMillan, Tom (Glasgow, c.)

Pavitt, Laurence

Strauss, Rt. Hn. G. R.

McNamara, J. Kevin

Pearson, Arthur (Pontypridd)

Summerskill, Hn. Dr. Shirley

MacPherson, Malcolm

Pentland, Norman

Swain, Thomas

Mahon, Peter (Preston, S.)

Perry, Ernest G. (Battersea, S.)

Swingler, Stephen

Mahon, Simon (Bootle)

Perry, George H. (Nottingham, S.)

Taverne, Dick

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

Prentice, Rt. Hn. R. E.

Thomas, George (Cardiff, W.)

Manuel, Archie

Price, Christopher (Perry Barr)

Thomson, Rt. Hn. George

Mapp, Charles

Price, Thomas (Westhoughton)

Thornton, Ernest

Marquand, David

Price, William (Rugby)

Thorpe, Rt. Hn. Jeremy

Marsh, Bt. Hn. Richard

Probert, Arthur

Tinn, James

Mason, Roy

Pursey, Crndr. Harry

Tuck, Raphael

Mayhew, Christopher

Randall, Harry

Urwin, T. W.

Mellish, Robert

Rankin, John

Wainwright, Edwin (Dearne Valley)

Mendelson, J. J,

Rees, Merlyn

Walden, Brian (All Saints)

Mikardo, Ian

Reynolds, G. W.

Walker, Harold (Doncaster)

Millan, Bruce

Rhodes, Geoffrey

Wallace, George

Miller, Dr. M. S.

Richard, Ivor

Watkins, David (Consett)

Milne, Edward (Blyth)

Roberts, Albert (Normanton)

Watkins, Tudor (Brecon & Radnor)

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

Roberts, Goronwy (Caernarvon)

Weitzman, David

Molloy, William

Roberts, Gwilym (Bedfordshire, S.)

Wellbeloved, James

Moonman, Eric

Robertson, John (Paisley)

Wells, William (Walsall, N.)

Morgan, Elystan (Cardiganshire)

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

Whitaker, Ben

Morris, Alfred (Wythenshawe)

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

White, Mrs. Eirene

Morris, John (Aberavon)

Rodgers, William (Stockton)

Whitlock, William

Moyle, Roland

Rogers, George (Kensington, N.)

Wigg, Rt. Hn. George

Mulley, Rt. Hn. Frederick

Rose, Paul

Wilkins, W. A.

Murray, Albert

Ross, Rt. Hn. William

Willey, Rt. Hn. Frederick

Neal, Harold

Rowland, Christopher (Meriden)

Williams, Alan (Swansea, W.)

Newens, Stan

Rowlands, E. (Cardiff, N.)

Williams, Alan Lee (Hornchureh)

Noel-Baker, Francis (Swindon)

Shaw, Arnold (llford, S.)

Williams, Clifford (Abertillery)

Norwood, Christopher

Sheldon, Robert

Williams, Mrs. Shirley (Hitchin)

Oakes, Gordon

Shinwell, Rt. Hn. E.

Willis, George (Edinburgh, E.)

Ogden, Eric

Shore, Peter (Stepney)

Wilson, Rt. Hn. Harold (Huyton)

O'Malley, Brian

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

Wilson, William (Coventry, S.)

Oram, Albert E.

Short, Mrs. Renée(W'hampton,N.E.)

Winnick, David

Orbach, Maurice

Silkin, Rt. Hn. John (Deptford)

Winterbottom, R. E.

Oswald, Thomas

Silkin, Hn. S. C. (Dulwich)

Woodburn, Rt. Hn. A.

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

Silverman, Julius (Aston)

Woof, Robert

Owen, Will (Morpeth)

Skeffington, Arthur

Wyatt, Woodrow

Pad ey, Walter

Slater, Joseph

Yates, Victor

Paget, R. T.

Small, William

Pannell, Rt. Hn. Charles

Spriggs, Leslie

TELLERS FOR THE AYES:

Pardoe, John

Steel, David (Roxburgh)

Mr. Alan Fitch and

Park, Trevor

Steele, Thomas (Dunbartonshire, W.)

Mr. Charles R. Morris.

Parker, John (Dagenham)

Stewart, Rt. Hn. Michael

NOES

Alison, Michael (Barkston Ash)

Channon, H. P. G.

Gibson-Watt, David

Allason, James (Hemel Hempstead)

Chichester-Clark, R.

Giles, Rear-Adm. Morgan

Astor, John

Clegg, Walter

Gilmour, Ian (Norfolk, C.)

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

Cooke, Robert

Gilmour, Sir John (Fife, E.)

Awdry, Daniel

Cooper-Key, Sir Neill

Glover, Sir Douglas

Baker, W. H. K.

Corfield, F. V.

Glyn, Sir Richard

Balniel, Lord

Costain, A. P.

Godber, Rt. Hn. J. B.

Barber, Rt. Hn. Anthony

Craddock, Sir Beresford (Spelthorne)

Goodhew, Victor

Batsford, Brian

Crawley, Aidan

Cower, Raymond

Beamish, Col. Sir Tufton

Crouch, David

Grant, Anthony

Bell, Ronald

Crowder, F. P.

Gresham Cooke, R.

Bennett, Sir Frederic (Torquay)

Cunningham, Sir Knox

Grieve, Percy

Bennett, Dr. Reginald (Cos. & Fhm)

Currie, G. B. H.

Griffiths, Eldon (Bury St. Edmunds)

Berry, Hn. Anthony

Dalkeith, Earl of

Gurden, Harold

Biffen, John

Dance, James

Hall, John (Wycombe)

Birch, Rt. Hn. Nigel

d'Avigdor-Goldsmid, Sir Henry

Hall-Davis, A. G. F.

Black, Sir Cyril

Dean, Paul (Somerset, N.)

Hamilton, Marquess of (Fermanagh)

Body, Richard

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

Hamilton, Michael (Salisbury)

Bossom, Sir Clive

Dodds-Parker, Douglas

Harris, Frederic (Croydon, N.W.)

Boyd-Carpenter, Rt. Hn. John

Doughty, Charles

Harris, Reader (Heston)

Boyle, Rt. Hn. Sir Edward

Douglas-Home, Rt. Hn. Sir Alec

Harrison, Brian (Maldon)

Braine, Bernard

Drayson, G. B.

Harrison, Col. Sir Harwood (Eye)

Brewis, John

du Cann, Rt. Hn. Edward

Harvey, Sir Arthur Vere

Brinton, Sir Tatton

Eden, Sir John

Harvie Anderson, Miss

Bromley-Davenport, Lt.-Col.Sir Walter

Elliot, Capt. Walter (Carshalton)

Hastings, Stephen

Brown, Sir Edward (Bath)

Emery, Peter

Hawkins, Paul

Bruce-Gardyne, J.

Errington, Sir Erie

Hay, John

Bryan, Paul

Eyre, Reginald

Heald, Rt. Hn. Sir Lionel

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

Farr, John

Heath, Rt. Hn. Edward

Buck, Antony (Colchester)

Fisher, Nigel

Heseltine, Michael

Bullus, Sir Eric

Fletcher-Cooke, Charles

Higgins, Terence L.

Campbell, Gordon

Fortescue, Tim

Hill, J. E. B.

Carlisle, Mark

Foster, Sir John

Hobson, Rt. Hn. Sir John

Carr, Rt. Hn. Robert

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

Hogg, Rt. Hn. Quintin

Cary, Sir Robert

Galbraith, Hon. T. G.

Holland, Philip

1114

1115

Hordern, Peter

Mills, Stratton (Belfast, N.)

Russell, Sir Ronald

Hornby, Richard

Miscampbell, Norman

St. John-stevas, Norman

Hunt, John

Mitchell, David (Basingstoke)

Sandys, Rt. Hn. D.

Hutchison, Michael Clark

Monro, Hector

Scott, Nicholas

Iremonger, T. L.

Montgomery, Fergus

Sharpies, Richard

Irvine, Bryant Godman (Rye)

Morgan, Geraint (Denbigh)

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

Jenkin, Patrick (Woodford)

Morrison, Charles (Devizes)

Smith, John

Jennings, J. C. (Burton)

Mott-Radclyffe, Sir Charles

stainton, Keith

Johnson Smith, G. (E. Grinstead)

Munro-Lucas-Tooth, Sir Hugh

Stodart, Anthony

Jones, Arthur (Northants, S.)

Murton, Oscar

Summers, Sir Spencer

Jopling, Michael

Nabarro, Sir Gerald

Tapsell, Peter

Joseph, Rt. Hn. Sir Keith

Neave, Airey

Taylor, Sir Charles (Eastbourne)

Kaberry, Sir Donald

Nicholls, Sir Harmar

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

Kershaw, Anthony

Noble, Rt. Hn. Michael

Taylor, Frank (Moss Side)

Kimball, Marcus

Nott, John

Teeling, Sir William

King, Evelyn (Dorset, S.)

Onslow, Cranley

Temple, John M.

Kirk, Peter

Orr, Capt. L. P. S.

Thatcher, Mrs. Margaret

Kitson, Timothy

Osborn, John (Hallam)

Tllney, John

Knight, Mrs. Jill

Osborne, Sir Cyril (Louth)

Turton, Rt. Hn. R. H.

Lambton, Viscount

Page, Graham (Crosby)

Van Straubenzee, W. R.

Lancaster, Col. C. G.

Page, John (Harrow, W.)

Vaughan-Morgan, Rt. Hn. Sir John

Langford-Holt, Sir John

Pearson, Sir Frank (Clitheroe)

Vickers, Dame Joan

Legge-Bourke, Sir Harry

Percival, Ian

Walker, Peter (Worcester)

Lewis, Kenneth (Rutland)

Peyton, John

Walker-Smith, Rt. Hn. Sir Derek

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

Pike, Miss Mervyn

Wall, Patrick

Lloyd, Rt. Hn. Selwyn (Wirral)

Pink, R. Bonner

Walters, Dennis

Longden, Gilbert

Pounder, Rafton

Ward, Dame Irene

Loveys, W. H.

Powell, Rt. Hn. J. Enoch

Weatherill, Bernard

McAdden, Sir Stephen

Price, David (Eastleigh)

Webster, David

MacArthur, Ian

Prior, J. M. L.

Wells, John (Maidstone)

Maclean, Sir Fitzroy

Pym, Francis

Whitelaw, Rt. Hn. William

Macleod, Rt. Hn. lain

Quennell, Miss J. M.

Wills, Sir Gerald (Bridgwater)

McMaster, Stanley

Ramsden, Rt. Hn. James

Wilson, Geoffrey (Truro)

Macmillan, Maurice (Farnham)

Rawlineon, Rt. Hn. Sir peter

Wolrige-Cordon, Patrick

Maddan, Martin

Rees-Davles, W. R.

Wood, Rt. Hn. Richard

Maginnis, John E.

Renton, Rt. Hn. Sir David

Woodnutt, Mark

Marten, Neil

Ridley, Hn. Nicholas

Worsley, Marcus

Maude, Angus

Ridsdale, Julian

Wright, Esmond

Maudling, Rt. Hn. Reginald

Rippon, Rt. Hn. Geoffrey

Wylic, N. R.

Mawby, Ray

Robson Brown, Sir William

Younger, Hn. George

Maxwell-Hyslop, R. J.

Rodgers, Sir John (Sevenoaks)

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

Rossi, Hugh (Hornsey)

TELLERS FOR THE NOES:

Mills, Peter (Torrington)

Royle, Anthony

Mr. R. W. Elliott and

Mr. Jasper More.

Main Question put:—
The House divided;Ayes 297, Noes 230.

Division No. 490.]

AYES

[10.13 p.m.

Abse, Leo

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

Diamond, Rt. Hn. John

Albu, Austen

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

Dobson, Ray

Alldritt, Walter

Buchan, Norman

Doig, Peter

Anderson, Donald

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

Dunn, James A.

Archer, Peter

Butler, Herbert (Hackney, C.)

Dunnett, Jack

Armstrong, Ernest

Butler, Mrs. Joyce (Wood Green)

Dunwoody, Mrs. Gwyneth (Exeter)

Ashley, Jack

Callaghan, Rt. Hn. James

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

Atkins, Ronald (Preston, N.)

Cant, R. B.

Eadie, Alex

Bacon, Rt. Hn. Alice

Carmichael, Neil

Edelman, Maurice

Bagier, Gordon A. T.

Carter-Jones, Lewis

Edwards, Robert (Bilston)

Barnes, Michael

Castle, Rt. Hn. Barbara

Edwards, William (Merioneth)

Barnett, Joel

Coe, Denis

Ellis, John

Beaney, Alan

Coleman, Donald

English, Michael

Bellenger, Rt. Hn. F. J.

Concannon, J. D.

Ennals, David

Benn, Rt. Hn. Anthony Wedgwood

Conlan, Bernard

Ensor, David

Bennett, James (G'gow, Bridgeton)

Corbet, Mrs. Freda

Evans, Albert (Islington, S.W.)

Binns, John

Craddock, George (Bradford, S.)

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

Bishop, E. S.

Cronin, John

Faulds, Andrew

Blackburn, F.

Crosland, Rt. Hn. Anthony

Fernyhough, E.

Blenkinsop, Arthur

Crossman, Rt. Hn. Richard

Finch, Harold

Boardman, H.

Cullen, Mrs. Alice

Fletcher, Ted (Darlington)

Boston, Terence

Darling, Rt. Hn. George

Floud, Bernard

Bottomley, Rt. Hn. Arthur

Davidson, Arthur (Accrington)

Foley, Maurice

Bowden, Rt. Hn. Herbert

Davies, G. Elfed (Rhondda, E.)

Foot, Sir Dingle (lpswich)

Boyden, James

Davies, Ednyfed Hudeon (Conway)

Ford, Ben

Braddock, Mrs. E. M.

Davies, Harold (Leek)

Forrester, John

Bradley, Tom

Davies, Ifor (Gower)

Fowler, Gerry

Bray, Dr. Jeremy

de Freitas, Rt. Hn. Sir Geoffrey

Fraser, John (Norwood)

Brooks, Edwin

Delargy, Hugh

Galpern, Sir Myer

Broughton, Dr. A. D. D.

Dell, Edmund

Gardner, Tony

Brown, Rt. Hn. George (Belper)

Dempsey, James

Garrett, W. E.

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

Dewar, Donald

Ginsburg, David

Gordon Walker, Rt. Hn. P. C.

MacDermot, Niall

Robertson, John (Paisley)

Gourlay, Harry

Macdonald, A. H.

Robnieon.Rt.Hn.Kenneth'St.P'c'as)

Gray, Dr. Hugh (Yarmouth)

McGuire, Michael

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

Greenwood, Rt. Hn. Anthony

McKay, Mrs. Margaret

Rodgers, William (Stockton)

Gregory, Arnold

Mackenzie, Gregor (Rutherglen)

Rogers, George (Kensington, N.)

Griffiths, David (Rother Valley)

Mackie, John

Rose, Paul

Griffiths, Rt. Hn. James (Llanelly)

Mackintosh, John P.

Ross, Rt. Hn. William

Griffiths, Will (Exchange)

Maclennan, Robert

Rowland, Christopher (Meriden)

Gunter, Rt. Hn. R. J.

McMillan, Tom (Glasgow, C.)

Rowlands, E. (Cardiff, N.)

Hamilton, James (Bothwell)

McNamara, J. Kevin

Shaw, Arnold (llford, S.)

Hamilton, William (Fife, W.)

MacPherson, Malcolm

Sheldon, Robert

Hamling, William

Mahon, Peter (Preston, S.)

Shinwell, Rt. Hn. E.

Harper, Joseph

Mahon, Simon (Bootle)

Shore, Peter (Stepney)

Harrison, Walter (Wakefield)

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

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

Hart, Mrs. Judith

Manuel, Archie

Short, Mrs. Renée(W'hampton,N.E.)

Haseldine, Norman

Mapp, Charles

Silkin, Rt. Hn. John (Deptford)

Hattersley, Roy

Marquand, David

Silkin, Hn. S. C. (Dulwich)

Hazelt, Bert

Marsh, Rt. Hn. Richard

Silverman, Julius (Aston)

Healey, Rt. Hn. Denis

Mason, Roy

Skeffington, Arthur

Henig, Stanley

Maxwell, Robert

Slater, Joseph

Herbison, Rt. Hn. Margaret

Mayhew, Christopher

Small, William

Hilton, W. S.

Mellish, Robert

Spriggs, Leslie

Hobden, Dennis (Brighton, K'town)

Mendelson, J. J.

Steele, Thomas (Dunbartonshire, W.)

Horner, John

Millan, Bruce

Stewart, Rt. Hn. Michael

Houghton, Rt. Hn. Douglas

Miller, Dr. M. S.

Stonehouse, John

Howarth, Harry (Wellingborough)

Milne, Edward (Blyth)

Mitchell, R. C. (s'th'pton, Test

Strauss, Rt. Hn. G. R.

Howarth, Robert (Bolton, E.)

Molloy, William

Summerskill, Hn. Dr. Shirley

Howie, W.

Swain, Thomas

Hoy, James

Moonnan, Erlc

Swingler, Stephen

Huckfield, Leslie

Morris, Alfred (Wythenshawe)

Taverne, Dick

Hughes, Rt. Hn. Cledwyn (Anglesey)

Morris, John (Aberavon)

Thomas, George (Cardiff, W.)

Hughes, Hector (Aberdeen, N.)

Thomson, Rt. Hn. George

Hughes, Roy (Newport)

Moylr, Roland

Thornton, Ernest

Hunter, Adam

Mulley, Rt. Hn. Fredeick

Hynd, John

Murray, Albert

Tinn, James

Irvine, A. J. (Edge Hill)

Neal, Harold

Tuck, Raphael

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

Oakes, Gordon

Urwin, T. W.

Janner, Sir Barnett

Ogden, Eric

Wainwright, Edwin (Dearne Valley)

Jay, Rt. Hn. Douglas

O'Malley, Brian

Walden, Brian (All Saints)

Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)

Oram, Albert E.

Walker, Harold (Doncaster)

Jenkins, Rt. Hn. Roy (Stechford)

Orbach, Maurice

Wallace, George

Johnson, Carol (Lewisham, S.)

Oswald, Thomas

Watkins, David (Consett)

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

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

Watkins, Tudor (Brecon & Radnor)

Jones, Dan (Burnley)

Owen, Will (Morpeth)

Weitzman, David

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

Padley, Walter

Wellbeloved, James

Jones, J. Idwal (Wrexham)

Paget, R. T.

Wells, William (Walsall, N.)

Jones, T. Alec (Rhondda, West)

Pannell, Rt. Hn. Charles

Whitaker, Ben

Judd, Frank

Park, Trevor

White, Mrs. Eirene

Kelley, Richard

Parker, John (Dagenham)

Whitlock, William

Kenyon, Clifford

Parkyn, Brlan (Bedford)

Wigg, Rt. Hn. George

Lawson, George

Pavitt, Laurence

Wilkins, W. A.

Leadbitter, Ted

Pearson, Arthur (Pontyprldd)

Willey, Rt. Hn. Frederick

Lee, Rt. Hn. Frederick (Newton)

Pentland, Norman

Williams, Alan (Swansea, W.)

Lee, Rt. Hn. Jennie (Cannock)

Perry, Ernest G. (Battersea, S.)

Williams, Alan Lee (Hornchurch)

Lestor, Miss Joan

Perry, George H. (Nottingham, S.)

Williams, Clifford (Abertillery)

Lever, Harold (Cheetham)

Prentlce, Rt. Hn. R. E.

Williams, Mrs. Shirley (Hitchin)

Lever, L. M. (Ardwick)

Price, Christopher (Perry Barr)

Willis, George (Edinburgh, E.)

Lewis, Ron (Carlisle)

Price, Thomas (Westhoughton)

Wilson, Rt. Hn. Harold (Huyton)

Lipton, Marcus

Price, William (Rugby)

Wilson, William (Coventry, S.)

Lomas, Kenneth

Probert, Arthur

Winnick, David

Loughlin, Charles

Pursey, Cmdr. Harry

Winterbottom, R. E.

Luard, Evan

Randall, Harry

Woodburn, Rt. Hn. A.

Lyon, Alexander W. (York)

Rees, Merlyn

Woof, Robert

Lyons, Edward (Bradford, E.)

Reynolds, G. W.

Wyatt, Woodrow

Mabon, Dr. J. Dickson

Rhodes, Geoffrey

Yates, Victor

McBride, Neil

Richard, Ivor

McCann, John

Roberts, Albert (Normanton)

TELLERS FOR THE AYES:

MacColl, James

Roberts, Goronwy (Caernarvon)

Mr. Alan Fitch and

Roberto, Gwilym (Bedfordshire, S.)

Mr. Charles Morris.

NOES

Alison, Michael (Barkston Ash)

Bennett, Dr. Reginald (Gos. & Fhm)

Bromley-Davenport,Lt.-Col.SirWatter

Allason, James (Hemel Hempstead)

Berry, Hn. Anthony

Brown, Sir Edward (Bath)

Astor, John

Biffen, John

Bryan, Paul

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

Birch, Rt. Hn. Nigel

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

Awdry, Daniel

Black, Sir Cyril

Buck, Antony (Colchester)

Baker, W. H. K.

Body, Richard

Bullus, Sir Eric

Balniel, Lord

Bossom, Sir Clive

Campbell, Gordon

Barber, Rt. Hn. Anthony

Boyd-Carpenter, Rt. Hn. John

Carlisle, Mark

Batsford, Brian

Boyle, Rt. Hn. Sir Edward

Carr, Rt. Hn. Robert

Beamish, Col. Sir Tufton

Braine, Bernard

Cary, Sir Robert

Bell, Ronald

Brewis, John

Channon, H. P. G.

Bennett, Sir Frederic (Torquay)

Brinton, Sir Tatton

Chichester-Clark, R.

1118

1119

Clegg, Walter

Hogg, Rt. Hn. Quintin

Pereival, Ian

Cooke, Robert

Holland, Philip

Peyton, John

Cooper-Key, Sir Neill

Hordern, Peter

Pike, Miss Mervyn

Corfield, F. V.

Hornby, Richard

Pink, R, Bonner

Costain, A. P.

Hunt, John

Pounder, Rafton

Craddock, Sir Beresford (Spelthorne)

Hutchison, Michael Clark

Powell, Rt. Hn. J. Enoch

Crawley, Aidan

Iremonger, T. L.

Price, David (Eastleigh)

Crouch, David

Irvine, Bryant Godman (Rye)

Prior, J. M. L.

Crowder, F. P.

Jenkin, Patrick (Woodford)

Pym, Francis

Cunningham, Sir Knox

Jennings, J. C. (Burton)

Quennell, Miss J. M.

Currie, G. B H.

Johnson Smith, G. (E. Grmstead)

Ramsden, Rt. Hn. James

Dalkeith, Earl of

Jones, Arthur (Northants, S.)

Rawlinson, Rt. Hn. Sir Peter

Dance, James

Jopling, Michael

Rees-Davles, W. R.

d'Avigdor-Coidsmid, Sir Henry

Joseph, Rt. Hn. Sir Keith

Renton, Rt. Hn. Sir David

Dean, Paul (Somerset, N.)

Kaberry, Sir Donald

Ridley, Hn. Nicholas

Deedea, Rt. Hn. W. F. (Ashford)

Kershaw, Anthony

Ridsdale, Julian

Dodds-Parker, Douglas

Kimball, Marcus

Rippon, Rt. Hn. Geoffrey

Doughty, Charles

King, Evelyn (Dorset, S.)

Robson Brown, Sir William

Douglas-Home, Rt. Hn. Sir Alec

Kirk, Peter

Rodgers, Sir John (Sevenoaks)

Drayson, G. B.

Kitson, Timothy

Rossi, Hugh (Hornsey)

du Cann, Rt. Hn. Edward

Knight, Mrs. Jill

Royle, Anthony

Eden, Sir John

Lambton, Viscount

Russell, Sir Ronald

Elliot, Capt. Walter (Carahalton)

Lancaster, Col. C. G.

St. John-Stevas, Norman

Emery, Peter

Langford-Holt, Sir John

Sandys, Rt. Hn. D.

Errington, Sir Eric

Legge-Bourke, Sir Harry

Scott, Nicholas

Eyre, Reginald

Lewis, Kenneth (Rutland)

Sharpies, Richard

Farr, John

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

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

Fisher, Nigel

Lloyd, Rt. Hn. Selwyn (Wirral)

Smith, John

Fletcher-Cooke, Charles

Longden, Gilbert

Stainton, Keith

Fortescue, Tim

Loveys, W. H.

Stodart, Anthony

Foster, Sir John

McAdden, Sir Stephen

Summers, Sir Spencer

Fraser.Rt.Hn.Hught(St'fford & Stone)

MacArthur, Ian

Tapsell, Peter

Maclean, Sir Fitzroy

Galbraith, Hon. T. G.

Macleod, Rt. Hn. lain

Taylor, Sir Charles (Eastbourne)

Gibson-Watt, David

McMaster, Stanley

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

Giles, Rear-Adm. Morgan

Macmiltan, Maurice (Farnham)

Taylor, Frank (Moss Side)

Gilmour, Ian (Norfolk, C.)

Maddan, Martin

Teeling, Sir William

Gilmour, Sir John (Fife, E.)

Maginnis, John E.

Temple, John M.

Glover, Sir Douglas

Marten, Neil

Thatcher, Mrs. Margaret

Glyn, Sir Richard

Maude, Angus

Tilney, John

Godber, Rt. Hn. J. B.

Maudling, Rt. Hn. Reginald

Turton, Rt. Hn. R. H.

Goodhew, Victor

Mawby, Ray

van Straubenzee, W. R.

Gower, Raymond

Maxwell-Hyslop, R. J.

Vaughan-Morgan, Rt. Hn. Sir John

Grant, Anthony

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

Vickers, Dame Joan

Gresham Cooke, R.

Mills, Peter (Torrington)

Walker, Peter (Worcester)

Grieve, Percy

Mills, Stratton (Belfast, N.)

Walker-Smith, Rt. Hn. Sir Derek

Griffiths, Eldon (Bury St. Edmunds)

Miscampbell, Norman

Wall, Patrick

Gurden, Harold

Mitchell, David (Basingstoke)

Walters, Dennis

Hall, John (Wycombe)

Monro, Hector

Ward, Dame Irene

Half-Davis, A. G. F.

Montgomery, Fergus

Weatherill, Bernard

Hamilton, Marquees of (Fermanagh)

Morgan, Geraint (Denbigh)

Webster, David

Hamilton, Michael (Salisbury)

Morrison, Charles (Devizes)

Wells, John (Maidstone)

Harris, Frederic (Croydon, N.W.)

Mott-Radclyffe, Sir Charles

Whitelaw, Rt. Hn. William

Harris, Reader (Heston)

Murwo-Lucas-Tooth, Sir Hugh

Wilis, Sir Gerald (Bridgwater)

Harrison, Brian (Maldon)

Murton, Oscar

Wilson, Geoffrey (Truro)

Harrison, Col. Sir Harwood (Eye)

Nabarro, Sir Gerald

Wolrige-Cordon, Patrick

Harvey, Sir Arthur Vers

Neave, Airey

Wood, Rt. Hn. Richard

Harvie Anderson, Miss

Nlcholls, Sir Harmar

Woodnutt, Mark

Hastings, Stephen

Noble, Rt. Hn. Michael

Worsley, Marcus

Hawkins, Paul

Nott, John

Wright, Esmond

Hay, John

Onslow, Cranley

Wylie, N. R.

Heald, Rt. Hn. Sir Lionel

Orr, Capt. L. P. S.

Younger, Hn. George

Heath, Rt. Hn. Edward

Osborn, John (Hallam)

Heseitine, Michael

Osborne, Sir Cyril (Louth)

TELLERS FOR THE NOES:

Higgins, Terence L.

Page, Graham (Crosby)

Mr. R. W. Elliott and

Hill, J. E. B.

Page, John (Harrow, W.)

Mr. Jasper More.

Hobson, Rt. Hn. Sir John

Pearson, Sir Frank (Clitheroe)

Resolved,

That this House approves the Supplementary Statement on Defence Policy 1967, Command Paper No. 3357.

THE GAMBIA (GIFT OF A SPEAKER'S CHAIR)
Mr. G. Elfed Davies, Mr. McCann, Mrs. Margaret Thatcher, and Mr. John Tilney to have leave of absence to present, on behalf of this House, a Speaker's Chair to the House of Representatives of The Gambia.—[Mr. Crossman.]

ROYAL ASSENT
Mr. Speaker: I have to notify the House in accordance with the Royal Assent Act 1967 that the Queen has signified Her Royal Assent to the following Acts:

1. Appropriation Act 1967.

2. Sexual Offences Act 1967.

3. Public Works Loans Act 1967.

4. Post Office (Data Processing Service) Act 1967.

5. Bermuda Constitution Act 1967.

6. Anchors and Chain Cables Act 1967.

7. Antarctic Treaty Act 1967.

8. Welsh Language Act 1967.

9. Irish Sailors and Soldiers Land Trust Act 1967.

10. Fugitive Offenders Act 1967.

11. Civic Amenities Act 1967.

12. Road Traffic (Amendment) Act 1967.

13. Aden, Perim and Kuria Muria Islands Act 1967.

1122

14. Wireless Telegraph Act 1967.

15. National Insurance Act 1967.

16. Greenwich Hospital Act 1967.

17. Matrimonial Homes Act 1967.

18. Road Traffic Regulation Act 1967.

19. Police (Scotland) Act 1967.

20. Water (Scotland) Act 1967.

21. Road Traffic (Driving Instruction) Act 1967.

22. Criminal Justice Act 1967.

23. Companies Act 1967.

24. Ministry of Housing and Local Government Provisional Order Confirmation (Greater London Parks and Open Spaces) Act 1967.

25. British Railways Act 1967.

26. British Transport Docks Act 1967.

27. Port of London Act 1967.

28. Kingston upon Hull Corporation Act 1967.

29. Rhymney Valley Sewerage Board Act 1967.

30. Somerset County Council Act 1967.

31. Portsmouth Corporation Act 1967.

32. Dartford Tunnel Act 1967.

33. Essex County Council (Canvey Island Approaches, etc.) Act 1967.

34. London Transport Act 1967.

35. Manchester Corporation Act 1967.

AGRICULTURE AND HORTICUL- TURE (CO-OPERATION SCHEME)
Order read for resuming adjourned debate on Question [19th July]:
That the Agricultural and Horticultural Co-operation Scheme, 1967, a draft of which was laid before this House on 28th June, be approved.
Question again proposed.
10.28 p.m.
Sir Frank Pearson: I do not wish to keep the House for more than a very short time, but it would be courteous of me, as I held the Floor when the Scheme was last debated, to congratulate the Minister on at last having been able to bring the Scheme before the House for its passage.
We have gained somewhat in the slight delay that has taken place inasmuch as now that we come to pass the Scheme, we are aware of the names of the chairman, vice-chairman and members of the Central Council. It would be right for me to say that we wish them well, that we feel that they have a most important task to perform and that we are certain that they will perform it well. Nevertheless, I think that there is some regret in the minds of some hon. Members on this side of the House that the old organisation of A.M.D.E.C. will no longer have a function to perform.
I think that we should pay tribute to the great work done by the Chairman of A.M.D.E.C., Lord Nugent. It is also a matter of some regret to some of us on this side of the House that he and the experience he commands was not made use of in the formation of the new Council. Be that as it may, we send the Council our good wishes, and hope that it will be able to perform this extremely important task for the benefit of the industry.
The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie): If I may have the leave of the House to speak again—
Mr. Speaker: Order. Does the hon. Member for Banff (Mr. Baker) wish to address the House?
Mr. W. H. K. Baker: No thank you, Mr. Speaker.
Mr. Speaker: Very well. Mr. John Mackie.
Mr. Mackie: I thank the hon. Member for Clitheroe (Sir Frank Pearson) for his remarks, and particularly for their brevity. I add my compliments to those that he paid the Chairman of A.M.D.E.C.
I am glad that the hon. Member for Norfolk, South (Mr. J. E. B. Hill) is present. I did not have time to reply to him on the previous occasion when we discussed this Scheme. He asked whether paragraph 3(2) would allow retrospective payments of grant. The answer is that it is no. This provision merely governs the fact that we give "urgent authority".
The hon. Gentleman also asked about the likely cost of the Scheme. The present expenditure is £250,000, and our estimate is that this might rise to £1½ million.
Mr. J. E. B. Hill: Is that the annual cost?
Mr. Mackie: Yes.
Question put and agreed to.
Resolved,
That the Agricultural and Horticultural Cooperation Scheme 1967, a draft of which was laid before this House on 28th June, be approved.

HILL LAND IMPROVEMENT SCHEME
Mr. Speaker: I have heard that it might be possible to discuss the next two Schemes together. If there is no objection, so be it.
10.33 p.m.
The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie): I beg to move,
That the Hill Land Improvement Scheme 1967, a draft of which was laid before this House on 5th July, be approved.
I am glad that we are able to discuss with this Scheme the Hill Land Improvement (Scotland) Scheme 1967, because they are on similar lines.
This Scheme, which is made under Section 41 of the Agriculture Act, 1967, provides for grants of 50 per cent. for a wide range of improvements that will

1125
benefit hill land and raise its productivity. The improvements eligible for 50 per cent. grants are set out in Schedule 1. They include
"the improvement of land by cultural operations"
which covers broadly all the work that is done to make things grow, including of course, the reseeding and regeneration of grazing, and the application of lime and fertilisers.
Among the other items included are reclamation and clearance of land, the provision of shelter-belts, fencing, pens and dips, and the supply of water. The importance of drainage in the hills is recognised by the provision of 10 per cent. supplementary grants for hill drainage.
An outstanding problem in many parts of the hills is that the farms are too small in relation to the quality of the land. To provide grant at the high rate of 50 per cent. for buildings under this Scheme might well tend to perpetuate the present faulty farm structure. The Scheme does not, therefore, cover buildings, apart from simple livestock shelters out on the hills which are not likely to be made redundant by subsequent amalgamations.
But hill farmers, like others, will of course be eligible for amalgamation grants under Part II of the Agriculture Act, 1967, and a Scheme providing for these grants was laid before this House yesterday. Building work that was needed as part of an approved amalgamation would be able to attract a 50 per cent. grant under those provisions.
The land which is eligible under this Scheme is defined in paragraph 2. It covets the class of land which was eligible for grants under the Hill Farming and Livestock Rearing Acts, and suitability for livestock rearing is the main criterion. We recognise that farmers cannot be expected to improve their land if they fear that they will be ruled out of eligibility as a result, and we have therefore included, in sub-paragraph (3) of paragraph 2, a provision ensuring that land in hill areas which is considered inherently poor enough to qualify for these grants will remain eligible for the five-year period of this Scheme even if improve-
1126
ment subsequently shows the land to be better than we thought.
It is our hope that when the time comes to make the next five-year Scheme the Government of the day will include a similar provision in it, so allowing a period of ten years free from the fear of "improving out". If Ministers felt it necessary to exclude any farms on quality grounds after that, we trust that a review of eligibility would take place during the second Scheme, in good time for ample notice to be given to those farmers whose land had become too good to qualify.
If I may anticipate legislation which has still to be presented to the House, we propose to include a parallel provision in the Schemes governing the payment of hill sheep and hill cow subsidies—
Mr. Speaker: Order. The Minister cannot anticipate legislation. If he can, the House can debate it. We are discussing an Order.
Mr. Mackie: In that case, Mr. Speaker, I will proceed to the next paragraph.
I should perhaps mention that under this Scheme farmers will be free to submit applications for one or more improvements and to submit any number of applications. There is no requirement in this Scheme, as there was in the Hill Farming and Livestock Rearing Acts, that the improvements should be comprehensive. If a hill farmer wants to carry out a single worthwhile improvement that will raise the productivity of his land he can apply for grant on it under the Scheme. We hope the success of one improvement will encourage him to go further, but he does not have to start with a comprehensive programme.
I do not think I need run through the other paragraphs of the Scheme, since they are self-explanatory. At the beginning of paragraph 5 there is a reference to the payment of grant on the basis of "standard costs" in accordance with regulations which may be made under Section 36(1) of the Act. We are consulting with the industry and the professional bodies concerned on the "standard costs", and my right hon. Friend intends to make Regulations on this subject before long.
Farmers will then be able to choose—
Mr. Speaker: Order. If the Minister is to discuss what is to happen in the future the House may discuss what will happen in the future. We are on an Order and can discuss only what is in it. There is only one rule for both sides of the House.
Mr. Mackie: I submit, Mr. Speaker, that "standard costs" are to do with the Scheme but I stand by your Ruling, as I am sure that nobody wants to give scope for further debate. I will leave it at that.
Mr. J. B. Godber: To clarify the position, paragraph 5 of the Scheme is fairly important in this respect. I did understand that the Parliamentary Secretary was specifically referring to that. I think that some of my hon. Friends may want to refer to it, as it is a fairly important aspect of agricultural development which we have already incurred in other Orders, and it is, therefore, an extension of what has been considered. I should be grateful if you would allow a little latitude.
Mr. Speaker: I am prepared to allow a little latitude. What I am not prepared to allow is, under this Order, anticipation of what things might happen in the future. Whatever is under paragraph 5 is in order.
Mr. Mackie: The point I was making is that farmers will then be able to choose whether to have grant based on actual costs or on "standard costs" which may suit them better if they do the work themselves.
We expect that the cost of this Scheme, together with the similar Scottish Scheme, will be about £1 million a year. These grants will give valuable help and encouragement to hill farmers for improvements that will increase the productivity of their land. In this way it will help them to improve their incomes and to continue the important rôle they are playing in getting the selective expansion we need.
I invite the House to approve these two Schemes.
10.40 p.m.
Mr. Anthony Stodart: It is generally agreed that one of the deficiencies of the Scheme is the total omission of houses and buildings.
1128
The Parliamentary Secretary said that one exception is simple livestock shelters, but there is, possibly, over-emphasis throughout the Common Market on structural improvements, which are largely to do with things like buildings, although admittedly amalgamations as well. When production grants as we know them are ambiguous in the E.E.C., it is regrettable that the scheme has this omission.
Also, certainly in Scotland, houses and buildings accounted for over 50 per cent. of the cost of the Schemes from 1946 to 1959, and there is, therefore, no question of where the emphasis lay. This is a considerable deficiency also in view of the possible future of more elaborate structures, like indoor sheep houses and indoor cattle sheds, which the Estimates Committee's Report yesterday specifically recommended should be included.
Another grant which used to feature in the previous Schemes was electricity for domestic purposes. Will that be included, or has it gone down the river? Another such item was the production of fertilisers, which the hon. Gentleman said would be included, but what about things like the removal of bracken and whins and the destruction of pests? Do they all come under the heading "Improvement of land …", in the First Schedule? If so, why have they not been specified as they used to be? May we be assured that full details of what is available will appear on the relevant application forms?
The hon. Gentleman estimated the cost at £1 million. What will be the cost in Scotland? Perhaps the Under-Secretary of State could also tell us the estimated number of Schemes which will be undertaken. It is significant that the number of approvals per year under the previous Schemes was 2,000 in the early 1950s, had dropped to 1,500 by the late 1950s, and was only a little over 100 in 1963, and that, in the last year of the Scheme, 94 were approved in Scotland.
I presume that the Department has some indication of what the demand will be for the Scheme. This Scheme will be of merely academic interest if farmers are unable to find the other 50 per cent. It is stated that the hill land to which the Scheme is confined means
"… land situated in an area consisting predominantly of mountains, hills or heath,

1129
being land which is, or by improvement could be made, suitable for use for the breeding, rearing and maintenance of sheep or cattle …".
I have no hesitation in saying that, as long as the money is available, schemes of this kind are valuable. But I do not believe that this can come about from the income at present being received from the breeding of sheep and cattle. The majority of hill farmers are tenants and, therefore, their security for borrowing is that much more difficult. I need not emphasise the hopelessness of their income last year or the prospects for this year. Without wishing to spread gloom, the catastrophic fall in the fatstock market in recent weeks is bound to be reflected in the income of store farmers.
Apparently, their drop in income is all part of the Government's policy, for Lord Hughes said in another place last week that somehow, somewhat lower market prices must be expected to follow from the success of the policy of somewhat higher deficiency payments. Nothing is more calculated to smash store production and make absolute nonsense of schemes of this sort than a complete collapse of the store market. The opening prices at the lamb sales in Scotland three weeks ago were 6s. per head down on a year ago, and last year they were down by between 10s. and £1 on the previous year.
This is not talking gloom, but facing the facts squarely. I urge the Government to realise that, if these schemes are to be successful, the price policy which provides an income for those who are to take advantage of these schemes must be vastly improved.
10.49 p.m.
Mr. John P. Mackintosh: The hon. Member for Edinburgh, West (Mr. Stodart) raised a number of points to which I had intended to draw attention. The objective of the Scheme is entirely admirable. It is the improvement of hill land, something which I would like to see happen. While more intensive cultivation is desirable, along with the improvement of the hill livestock position, one must consider whether the Scheme sets about achieving these objectives in the best way.
The Scheme is based on the assumption that investment will take place in
1130
these areas. This must, therefore, be encouraged and grant-aided. But has the Minister any evidence to show that investment is taking place? Such evidence as I have about the hill farms in my constituency leads me to believe that disinvestment is taking place.
The problem is entirely the opposite, and if we wish to shore up our hill farms and get the type of improvements the legislation seeks it is puttings things on a totally old-fashioned basis to go on the assumption of capital and confidence that do not now exist in this section of the industry.
We have this on the Ministry's own figures. The Price Guarantee White Paper for 1967 pointed out that in the category of farms to which this Scheme refers, the upland rearing farms, the annual income declined between 1964–65 and 1965–66 from £1,308 to £1,166. I would be very surprised if there has not been a further decline this year. I have no evidence from anywhere of upland farmers going round thinking of how much more money they can put into this part of the industry. They are worrying, rather, about whether they can preserve their farms, and whether to encourage their children to go on with this form of occupation. That is the real problem, with which the Scheme does not grapple because it is working on the older assumption of an expansion of activity.
I was with the hon. Member for Edinburgh, West (Mr. Stodart) in a lot of his remarks, but I lost him at that point, which he so often reaches, when he seems to believe it to be necessary to cover up his own renegade Liberal past and push out into party political polemics by saying that the drop in hill prices is the result of Government policy. He knows as well as anyone that if the Government would do anything they could to shore up this section of the farming industry, because it saves time and trouble if hill prices can be maintained.
When the Government put up subsidies on hill cattle and increased the end prices they wanted to shore up these markets, but there is the much more subtle problem of trying to understand why there is this gap between the store market price and the end guaranteed price. Someone is making money in

1131
between, and that is one of the difficulties we have to analyse in looking at the health of the industry.
Another aspect is the tremendous import of cheap beef, which is part of the trading problems we face. Again, I wonder whether the Government are following this, and whether they are prepared to react to it. When he replies, I would like the Under-Secretary to answer the following specific questions. Has he evidence of investment taking place in hill farms? To how many hill farms in Scotland will this Scheme apply? How much money does he expect will be handed out under the Scheme?
A further question I put to my hon. Friend is: how much does he expect the administrative costs of the Scheme to be? I have become more and more worried over these highly selective grants, even if we are to stick to this system of administration. On 3rd July, I asked my right hon. Friend the Secretary of State for Scotland for details of the present administrative costs in Scotland of agricultural subsidies of the type proposed in this Scheme. Hon. Members may have noticed the Answer that of the £35 million worth of subsidies distributed in Scotland, administrative costs totalled £1,390,000, and that of this by far the most went in the particular detailed type of subsidy of which we have an example here.
If one takes the Scottish subsidies for livestock rearing and hill farms alone, the administrative costs are £314,000. I seriously wonder whether the policy embodied in the Scheme is not mistaken, and whether we should not take the money that the Government now propose to make available and then put the administrative costs on the end price of the product of these farms. It seems to me that this would do something to restore confidence in the area and improve the position of the hill farms.
I will admit that there is a weakness in my argument, because even if the end guaranteed price is maintained for fat sheep and fat cattle why is it that the men who rear the cattle and sheep and sell them for fattening are getting so much lower a price?
What is the reason for this gap? I am puzzled why more farmers are not going into this market and buying sheep
1132
and cattle for fattening when they know that they will get the guaranteed price and can get them cheaply. I assume that the answer is that they have not the money to put into it. We should examine the whole question.
I hope that the Government will take steps to check imports. There are such steps within their power. The policy under the Order is sensible, but it is a little out of date. We want an injection of confidence and capital. I am not sure that we have reached the end of this structural readjustment. I hope that the Order will succeed and produce the end effect we want, but I very much doubt that under present circumstances it will. I hope that the Under-Secretary can give an assurance about imports of beef.
Mr. Deputy Speaker (Sir Eric Fletcher): I very much hope that he will not, because it would be quite out of order to deal with imports when discussing this Order.
Mr. Mackintosh: Thank you, Mr. Deputy Speaker.
I hope that he will assure us that those in the sphere of the industry with which the Order deals will have fears and worries removed and confidence restored to enable it to make investment and thus claim the over 50 per cent. grant.
10.56 p.m.
Mr. W. H. K. Baker: I endorse a great deal of the sentiments which the hon. Member for Berwick and East Lothian (Mr. Mackintosh) has expressed, especially those about confidence in the industry in the upland areas and particularly in relation to breeding livestock.
I wish to ask one or two questions of the Joint Under-Secretary of State for Scotland. Perhaps he will confirm that the operation of the Scheme as it affects Scotland will be to cover those areas which get the Winter Keep Scheme either under the varying categories of A, B or C, or on a headage basis. Could he define a little more explicitly than is done in the Order in paragraph 2(2) the expression "material extent" in its relation both to hill farming and fattening of cattle and sheep? The wording seems somewhat loose.
Under paragraph 3(2)
"the applicant may propose more than one improvement in his application".

1133
think that the Parliamentary Secretary in introducing the Order said that it could cover any number of applications. In Schedule 1 there are the words:
"Improvement of land by cultural operations and by the laying down of permanent pasture."
How is the Department of Agriculture to assess this? Is it to be done on the time spent by the farmer on the land, the amount of labour put into it, the hiring of machinery, or perhaps contractors' bills? Will fertiliser and lime costs be included?
My hon. Friend the Member for Edinburgh, West (Mr. Stodart) alluded to supplies of electricity, which have been covered by previous Schemes. Why are they not included in this Scheme? I imagine that this may be because the 1967 Act precluded building improvements from hill farm grants. It seems hard that if an area which was previously without electricity now has a supply, the hill farms there should be excluded from the grant. No doubt they would be entitled to a lesser grant under a farm improvement scheme, but it seems unfair to exclude them from these provisions. Perhaps the Government will look at this again.
Is a minimum and maximum acreage laid down for shelter belts? Will the species of trees to be planted be specified? What part, if any, will the Forestry Commission play in planting the shelter belts? Will it be obligatory for the farmer to take advice from the Commission or will this be done entirely by the Department of Agriculture? Will there be an obligation on the farmer to undertake proper silviculture operations, thinning out, and so on? Lastly, on this point, will fencing against stock, rabbits and, indeed, deer in the higher uplands be obligatory on the farmer when he plants these shelter belts.
The Estimates Committee's Report on the improvement of agricultural land, published on 24th July, suggested in paragraph 52 that the Ministry of Agriculture and the Department of Agriculture for Scotland should examine the possibility of including within the scope of the Scheme such buildings as will be needed to enable the full livestock carrying capacity of the land to be realised. My hon. Friend the Member for Edinburgh, West alluded to this point. The
1134
Committee went on to say that it would be unfortunate if farmers were deterred from increasing their herds of store cattle by being unable to obtain grant for the necessary buildings. The main purpose of this Scheme is to improve the land, and if the land is improved it will carry more grass and, therefore, more livestock. The Government would be well advised to look at this point again.
My next point relates to the reference in the Schedule to the improvement and protection of river banks. Is this intended specifically to help in the prevention of flooding? Who will be the recipient of the grant in this case? Will it be the river boards, private individuals and riparian owners?
I come finally to the question of silage. There is no doubt that it is necessary for winter keep. It seems to me that it is ridiculous to leave out from such a Scheme as this any provision for silage pits, silage towers and silos generally.
The hon. Member for Berwick and East Lothian referred to the prices of cattle and sheep. There have been devastating drops in the prices. I have the record of one farmer in my constituency who has already shown a net loss this year over last year of £475 on the sale of roughly the same number of store sheep. How can any industry or any individual make investments on the scale necessary for the improvement of these upland farming areas if that kind of loss has to be faced?
There is no confidence left in the upland areas, and this is reflected in my own receipts on my farm, which is a category A farm in the Winter Keep Scheme. In 1964 the sale of weaning calves averaged £47 per head. In 1965 a similar number of calves averaged £44 per head. In the autumn of 1966 it was a complete failure, and I was able to sell less than one-third of the annual crop of calves. When they were finally sold in March, April, and June of this year—and sold literally in driblets—the average price was only £36 per head, which represented a deficit of roughly £10 per head; and that was for 60 weaned calves. Furthermore, in addition to the drop in price, there was the winter keep which had to be bought in to keep them going.

1135
With such drops in price, how can this Scheme be effective? What is necessary is a great deal more confidence, and that can be injected into the industry only by a change in Government policy and the keeping out of fat cattle. Let the Minister remember that it is the price of the end product that counts.
11.6 p.m.
Sir John Gilmour: As a lowland farmer who has the benefit of the end product of the grants to farmers selling fatstock, I wonder if sub-paragraph (2) of paragraph 2 of this Scheme is really meeting the needs of the uplands and hill areas of Scotland or, for that matter, of England and Wales. I know very well from my own experience that because I am able to carry my stocks on, and get the benefit of the guaranteed price willy-nilly, whatever mistakes the Government may make, whatever happens about imports into this country, or whatever other changes in policy there may be, I have the safeguard against my final return because there is the guaranteed price system. So, I would ask if this sub-paragraph (2) is really meeting the sort of future of developing farming in the hills which most of us realise is necessary.
One of the things which happens more and more is that industry gets into what we call vertical integration. Those who spend their time producing things, want in some way to command the end product which they sell. I think of my hon. Friend the Member for Banff (Mr. Baker) talking of calf sales, and incidentally, he may have gone on to Hereford bulls rather than Aberdeen Angus, but that is a private matter between us. What I want to ask is whether we could not alter the provisions of sub-paragraph (2) so as not to restrict us so much; in other words, the only way to get hill farming grants is to become a store stock producer.
In the remote parts of the Highlands and in the Islands, people should have encouragement to benefit from the final size of the price guarantee system. So long as we go on giving encouragement by way of grant only, but with no certainty about the end market price—and that is what matters—there is no confidence for farmers to develop their land; and if there is no confidence, then there will be a cutting down on the stock which
1136
they produce. I ask the Minister to consider whether it would not be well to modify the Scheme so as to allow greater guarantees in the final reckoning for the fatstock producer on the hill land.
11.10 p.m.
Mr. J. E. B. Hill: I am interested in the Government's admission in respect of areas of special difficulty. When I looked at the Government's publication, "The Structure of Agricultures", I find in paragraph 19 that it is stated:
"The chief characteristics of hill farms are the high proportion of the land which is rough grazing and the consequent low level of output per acre. Typically, hill farms achieve £10 to £30 of gross output per adjusted acre, compared with, for example, about £50 on good lowland farms in England. Hill farming has therefore to be carried out in larger units than elsewhere if reasonable net income is to be attained."
When one looks at paragraph 43 of the same study, one sees that, in the case of sheep flocks and beef herds, there is a lower rate of movement into larger enterprises. In beef cows, the annual increase in size to 50 or more cows an enterprise is 2·5 per cent. per annum and this applies to breeding ewes also. The significance of these figures is that they show that movement towards larger units appears to be going more slowly in beef and sheep.
What scope does the hon. Gentleman think there is with this Scheme for improving the productivity of this grassland, bearing in mind that the adjusted acre is the equal to three acres of rough grazing which the Scheme hopes to improve? It seems to me that, unless we can get more livestock units per acre, there is not much chance of maintaining incomes.
That brings up the crucial point as to whether investment is going to go into these areas. There is the test in paragraph 4(2),
"… capable of yielding sufficient livelihood' …
Quite clearly, the fall in prices will discourage immediate investment, but I am concerned at the extent to which this net increase in the hill farming areas is dependent upon the production grants themselves, simply because these grants are at risk vis-à-vis the Common Market agricultural policy.

1137
The N.F.U., in a recent study of the Government's farm incomes scheme, has quoted various factors, all of which show a large percentage of hill farming net in- come dependent upon the production grants. In England and Wales in 1964, the proportion of net income attributable to the hill sheep, cattle and calf subsidies was 41 per cent. and it rose to 51 per cent. in 1965.
If, as we know, an expert in Brussels is going to examine this Scheme as soon as the House has passed it and note which side of the line of admissibility he thinks it falls, it is vitally important that the Minister should make the best possible case for the policy of maintaining farming population and farm incomes in our difficult areas.
We could argue that the whole Scheme is not distorting competition but removing deficiencies in that, without it, the landscape would be depopulated and there would be a decreasing production from these difficult areas. We could argue that the only use these areas have is to produce the raw materials of lowland farming—producing livestock units which can be reared on the hills and then fattened on the lowland farms. I hope, therefore, that this will be vigorously defended.
In paragraph 4(3), there is a reference to where a proposed improvement would be rejected because the cost is too high in relation to benefit. There is the statement that, by taking a notional idea of what would have been an acceptable cost of benefit, the grant would be given on that reduced amount.
Could the Parliamentary Secretary say whether this is a new principle and, if it is, is it proposed to extend it to other forms of agricultural improvement?
I hope that the Scheme, which is mainly structural, will succeed. I am sorry that the Parliamentary Secretary has not thought fit to include the items which my hon. Friend the Member for Edinburgh, West (Mr. Stodart) mentioned, which are included in Europe. It is a mistake to leave them out.
11.15 p.m.
Mr. Jasper More: I must apologise to the Parliamentary Secretary for not being here to listen to him introduce the Scheme. I should like to give
1138
it a general welcome, both because the constituency which I represent includes large areas of hill land and because I laboured with the Parliamentary Secretary and other hon. Members in Committee on the Agriculture Bill and we will all be glad to see some results of our labours in the form of the Scheme.
The problem of hill land is a continuing one. It is encouraging to see that a real effort is to be made to tackle it and that the Minister is to take these powers. One of the disappointing features and continuing troubles with any capital Scheme is that it is not a permanent solution. One of the lessons which we have learnt in the hill areas of Shropshire since the war is that it is not sufficient to do the job once. There has to be a continuing effort. An improved grassland does not remain improved. One has to watch it and improve it again.
The Scheme, though it may not go as wide as some of my hon. Friend's would wish, represents a continuing effort to tackle this extremely important problem which affects so many hill farms over a wide area. I have great pleasure in giving it my support.
11.17 p.m.
Mr. Michael Jopling: We have had an extremely good debate. Many questions have been asked and I hope that the Under Secretary of State will try to answer as many as he can. The theme which has run through the whole debate is the question: where is the extra 50 per cent. to come from? This question appeared in the speech of my hon. Friend the Member for Edinburgh West (Mr. Stodart). My hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) drew attention to the lack of confidence in the hill areas and the crises which they had last autumn, and which it seems likely they will have this autumn, in the sale of store cattle and sheep. My hon. Friends the Members for Banff (Mr. Baker) and Fife, East (Sir J. Gilmour) also drew attention to these problems.
This seems to be the theme which has run through the debate. It is not much good the Government bringing out Schemes of this sort unless the means are open to farmers to find the other 50 per cent. so that the Schemes can be brought into being.

1139
I hope, like other hon. Members, that this Scheme will lead to a great many hill farms being improved. Much remains to be done in the hill areas. The advantages of modem "know-how" and agricultural science means that there is great potential for improvement. I agree with my hon. Friend the Member for Ludlow (Mr. More) about the importance of continuing with good management once the land has been improved. Most of us know how hill land can be improved. Going from the valleys to the hills one can see quite clearly the improved areas.
I, too, wish to refer to the deficiencies of the Scheme—that is, the exclusions of houses, on the one hand, and of buildings, on the other hand. We understand much of what the Parliamentary Secretary said when he opened the discussion about his reservations against including buildings because there might later be amalgamations. I do not, however, understand why it was not possible to include a degree of discretion to the Minister's officers to approve schemes which include buildings in hill areas which would be unlikely to be made redundant by subsequent amalgamations. Surely, this could easily have been done and would have been most important.
I am glad that my hon. Friend the Member for Banff referred to the Report, published yesterday, of the Estimates Committee, which came out clearly in favour of including some buildings in the Scheme.
Mr. Baker: Would not my hon. Friend agree that amalgamations are far less likely in upland than in lowland areas and that, therefore, the danger foreseen by the Parliamentary Secretary is, to some extent at least, less likely?
Mr. Jopling: I accept that, but we cannot escape the fact that there might be some amalgamations in hill areas.
The Scheme covers, broadly, the areas covered by the hill cow subsidy area. I am glad that paragraph 3(2) has been included, so that land which has been improved cannot work itself out of the hill subsidies. This is extremely important. Most of us have known of land which has been worked out of these subsidies.
1140
What disappoints me about the Scheme is that it has not been possible to extend it wider than those areas. The Government, I believe, have done nothing to help the upper dales land, which does not qualify for the hill cow and hill sheep subsidies. That land is predominantly a livestock rearing area, which the Scheme sets out to help. Certainly, livestock rearing is in the best interests of those areas. If the Joint Parliamentary Secretary refers to HANSARD of two years ago, he will find that his right hon. Friend the Minister of Agriculture agreed that farms in the upper dales areas, which do not qualify for the hill subsidies, suffer the worst economic difficulties.
One problem which will emerge from the inclusion of paragraph 2(3) is that, because the land is to be improved and does not work itself out of the hill subsidies, a natural corollary will be that an element of fattening and of milk production will inevitably creep into areas which qualify for hill cow and hill sheep subsidy and for the hill land improvement grants. That is quite outside the spirit of paragraph 2(2).
That will give rise to the ridiculous situation, which admittedly is difficult to avoid, that fattening and milk production will occur at farms qualifying for the hill land improvement grants, whereas land which is outside the area and which does not qualify, where people do not perhaps indulge in fattening or milk production, will be excluded from the scheme. That anomaly would cause us all a great deal of difficulty.
A man who rears livestock will be able to point to a farm probably a little further up the hill where fattening and milk production are taking place and where hill grants are being given. I hope that the Under-Secretary will comment on this problem. Whilst one must agree with the basic implications, the difficulty lies in not having extended the scope of the schemes further down the valley.
This Scheme gives 50 per cent. grant for most of the improvements. One problem which the National Farmers' Union has put to me is that it feels that drainage schemes, which qualify for 10 per cent. supplement, making, sensibly, a 60 per cent. grant, just do not work out in this sort of way in hill areas. The Union believes that the grants do not

1141
amount to 60 per cent. and in many cases do not amount even to 50 per cent. The reason for that is that the Ministry's inspectors have lower standards of drainage methods and schemes than those which the farmers who are actually working the land demand. I know that the Estimates Committee referred to this, and that there was evidence on this point from the Ministry and the National Farmers' Union to the Committee, which has been so helpful to us. A point which the National Farmers' Union has put to me is that the Ministry's inspectors are saying that lateral drains should be 11 yards apart, whereas the hill farmers in many cases know they must be seven yards apart if they are to get the maximum benefit of the drainage scheme. This seems to me a serious anomaly, and if the Minister cannot answer the point specifically tonight I hope that he will undertake that it will be looked at very carefully. I know that there is not a rule book on the matter for the inspectors, but many farmers are dissatisfied about it.
Another point worrying the National Farmers' Union is that the Scheme does not allow water to be put into buildings up the hill. As I understand it, Schedule 1 allows the supply of water to be taken to off-buildings up the hill but does not allow the water to be taken through the walls and installed in the buildings. We are told that this grant could apply to simple shelters. I hope that the point will be looked at, that the supply of water through the outside walls of buildings will be eligible for grant.
The final question about the operation of this Scheme arises in Schedule 1, the eligibility of grants for making piers, jetties and slips. I want to ask a specific question on this. My constituency consists of most of the Lake District, where one would imagine piers, jetties and slips would be useful, but I could not imagine farmers wanting to put them in for the purpose of improving their land. I asked myself why this provision was put in. I am told that one reason is that the National Agricultural Advisory Committee has been doing a lot of work on the Minister's hill farms, particularly in Wales, where there are lakes on hill farms. It has been doing a great deal of research on fish farming in those lakes on those hill farms. I believe that N.A.A.S. has been reducing the acidity
1142
of the water and feeding the fish to see if trout can be grown to commercial levels. I believe that the Ministry has become excited about the prospects. What I want to ask is whether it would be within the terms of the Scheme for grants to be made for piers, jetties and slips for this purpose of fish farming on lakes on hill farms. I know that this topic has aroused a great deal of excitement and interest in the Minister's Department.
Those are the questions I wanted to ask, but I cannot resist coming back to the point which has been made so often tonight by hon. Members on both sides of the House, and that is how it is that the Minister expects farmers to find the other 50 per cent. That 50 per cent. has got to come out of the profits of farming. It is no good thinking that it will come from capital reserves, because unless the confidence is there in the industry, unless the farmers know that by producing more store cattle and sheep they will get a fair return, they will not make the investment; indeed, the money will not be forthcoming to go towards the other 50 per cent. It is absolutely vital at this time that hill farmers should have buoyant store prices and they can be buoyant only if the livestock markets themselves are buoyant.
That brings me back to the point which my hon. Friend the Member for Edinburgh, West raised when he referred to the speech of the noble Lord, Lord Hughes, in another place, in which—and I know that the hon. Member for Berwick and East Lothian crossed swords with him on this—he said that somewhat lower market prices must be expected to follow from a policy of higher deficiency payments. This makes quite clear that this is Government policy and that lower market prices for store owners are part of Government policy. We must have an answer on that—
Mr. Deputy Speaker: I do not think that arises on this Scheme which deals merely with subsidies for improvement grants.
Mr. Jopling: I bow to your Ruling, Mr. Deputy Speaker.
Confidence for the hill areas is necessary, in terms of the extra 60 per cent. and getting the necessary work done. Livestock farmers are uneasy, and none more so than the livestock farmers in

1143
the hill areas who are supposed to be helped by this Scheme. Unless the Government are prepared to do something about confidence in these areas, this Scheme, which is worthy, will not have the opportunity to succeed which it deserves.
11.32 p.m.
The Under-Secretary of State for Scotland (Mr. Norman Buchan): It is perhaps regrettable, Mr. Deputy Speaker, that you ruled out of order the hon. Gentleman's comments about Government policy being to produce lower store prices, because there is a complete answer. What the hon. Gentleman said is not only out of order; it is rubbish. I am sometimes appalled that hon. Members opposite find it difficult to say anything good about the Schemes we bring forward, when they recognise them as necessary and desirable.
We have had a number of speeches, but very few have recognised, as farmers recognise, the value of the Scheme. Hon. Members have discussed the problem of marketing. We all recognise this, but hon. Gentlemen opposite say that we must not talk gloom about marketing, and then proceed to talk gloom themselves.
Mr. Stodart Mr. Stodart rose—
Mr. Buchan: No. The hon. Member knows that I have waited on four occasions. He has had his say, and now, with respect, I will have mine.
We recognise the problem of cattle and sheep, and I recognise something of the weight of the argument put forward by hon. Members but this is not the time to enter into debate on that. [HON. MEMBERS: "Why?"] Because we are discussing the merits or otherwise of the Scheme and I am not going to embark at this time of night on a major theoretical debate on agricultural problems. We have had that on several occasions in the last few months.
The question of piers and jetties was raised. It is a curious combination of fish and land farming. I will not explore that point further, but one reason for this provision might be that some farms are on islands and it might be useful.
One hon. Member raised a valuable point when he asked why the 60 per cent. grant for drainage was always rejected. We shall look at this. It is a matter of
1144
judgment. The position varies considerably from area to area and, very often from inspector to inspector. It is something which is frequently drawn to our attention. It is one of the matters which we are asked to look at, and certainly we will look at it again.
The question of buildings came up a number of times in the course of the debate, and reference was made to the Report of the Estimates Committee, published today. It is of value to remember the sentence in the relevant paragraph which was not quoted, which says:
"Your Committee believe that the general principle to be embodied in the Hill Land Improvements Scheme of giving grants for improvements to land, rather than to buildings and fixed capital, is sound."
We must keep that in mind, because it is the basis of the Scheme. That sentence should have been quoted. We have taken note of the last sentence in the paragraph, and the matter will be kept under review.
The hon. Member for Edinburgh, West (Mr. Stodart) raised a point about electricity. It is not really appropriate to this Scheme, and certainly it is not covered by it. Electricity supplies to farms, but not houses, are assisted under the Farm Improvement Scheme.
Bracken destruction is covered in this Scheme. Item 2 in the First Schedule provides for the clearance, levelling and reclamation of land, and that would extend to bracken.
Questions were raised about the total cost of the Scheme by the hon. Member for Edinburgh, West and my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh), who advanced the ingenious argument that, if we saved this Scheme and added on the cost of administration, we could really put something on the end product. However, I do not think that we solve all our agricultural problems by looking at them purely from a market point of view. We have to think of the direct assistance which we can give.
It is difficult to give an exact answer to the direct question raised, but we expect 2,000 applications in a full year in Scotland, at a total cost of something like £600,000 to £700,000; that is, £300,000 to £350,000 in grants. The cost of administration in England and Wales was something of the order of £36,000,

1145
and we can assume in Scotland a figure added on to that of about £12,000, making £48,000 to £50,000 for the complete Scheme.
A number of hon. Members raised the question, as a test point, is investment still taking place in hill farming? One possible method of judging that is to see whether the old Hill Farming Scheme is still being approached for grant. On that, we are paying out nearly £500,000 in grant in Scotland, which means that investment is still taking place commensurately. In England and Wales, the figure is something of the order of £600,000.
The hon. Member for Norfolk, South (Mr. J. E. B. Hill) raised a question under paragraph 4(4,b). The grant may be paid on a qualifying cost, representing the reasonable cost of providing the facilities in question. It is intended to cover the sort of case where, for example, an applicant wishes to erect an expensive wooden fence when the Department considers that a cheaper wire fence would meet the need satisfactorily. The applicant would be allowed to erect the wooden fence, but grant would be related to the reasonable cost of the cheaper wire fence. This is not a new principle. It has been in operation since about 1946.
I think that I have dealt with most of the points which were raised. If I have not, I regret it very much, but there are one or two points which must be made clear. The Scheme must be seen against the background of a good Annual Price Review. Hon. Members have referred to the problems facing us at the present time. We recognise these, but we must take into account the possible effect of this year's Price Review, which was the most generous since 1948—again under a Labour Government.
We must take into consideration the attempts which have been made to help farmers, not only by this Scheme, but by the hill sheep subsidy and the extension of the uplands sheep subsidy. The hon. Gentleman asked why we did not take into consideration the problems of the uplands and the dales. He said that
1146
some farmers felt that they had been badly dealt with compared with men farther up the hill. Where does one draw the line? When does a man become "further up the hill"? We have to arrive at a definition, and we believe that the definition we have chosen is correct.
Mr. More: The weakness of the administration in my area is that the divisions have always been too rigid. There will be a much better spirit if these things are determined more on the facts, on the type of farming in which the man wants to engage, rather than on rigid definitions of contour lines, elevations and so on.
Mr. Buchan: There are two things to remember here. First paragraph 2(2) gives the definition. Secondly, there is a system of appeals by which these problems can be sorted out. I cannot see the problem here. If the hon. Gentleman is thinking of giving more latitude I must tell him that the problem will become greater rather than be diminished.
We have had a good debate. Underlying the points made by hon. Gentlemen opposite was a general recognition of the generous and worthwhile efforts which have been made by the Government to deal with the problems of hill farms. To a great extent we have the confidence of the farmers, and I know that behind all the criticisms which have been made this evening hon. Gentlemen opposite recognise that.
Question put and agreed to.
Resolved,
That the Hill Land Improvement Scheme 1967, a draft of which was laid before this House on 5th July, be approved.
Hill Land Improvement (Scotland) Scheme 1967 [draft laid before the House, 5th July], approved.—[Mr. Buchan.]

HILL LAND IMPROVEMENT SCHEME

  ADJOURNMENT
  Resolved, That this House do now adjourn.—[Mr. Harper.]
  Adjourned accordingly at sixteen minutes to Twelve o'clock.

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  MALTA (ROBENS MISSION REPORT)
ROADS
  M23 and M25
  M23 and M25
  Oxted By-Pass
  Oxted By-Pass
  M5 (Extension)
  M5 (Extension)
  Schemes
  Schemes
  A1 (Berwick-upon-Tweed)
  A1 (Berwick-upon-Tweed)
RAILWAYS
  Sale of Lines
  Sale of Lines
  Devil's Bridge Railway Line (Sale)
  Devil's Bridge Railway Line (Sale)
  Disposal of Assets
  Disposal of Assets
  Passenger Services (South West)
  Passenger Services (South West)
TRANSPORT
  Unused Canals, Wales
  Unused Canals, Wales
  Road Traffic Act, 1933 (Carriers' Licensing System)
  Road Traffic Act, 1933 (Carriers' Licensing System)
DEFENCE
  Royal Malta Artillery
  Royal Malta Artillery
  Manpower Reductions
  Manpower Reductions
  Arab Personnel (Training)
  Arab Personnel (Training)
  Sonic Bangs
  Sonic Bangs
  Low-Flying Aircraft
  Low-Flying Aircraft
  Anglo-French Variable Geometry Aircraft
  Anglo-French Variable Geometry Aircraft
  Canberra Aircraft Crash (Steeple Morden)
  Canberra Aircraft Crash (Steeple Morden)
BOARD OF TRADE
  Copyright (Protocol to Berne Convention)
  Copyright (Protocol to Berne Convention)
  Benedict Breen Ltd.
  Benedict Breen Ltd.
  Mining Areas (Light Industries)
  Mining Areas (Light Industries)
  Estate Agents Council (Members)
  Estate Agents Council (Members)
  Factory Space, Merioneth
  Factory Space, Merioneth
  Exports
  Exports
  Employment (Blyth)
  Employment (Blyth)
  Soap Flakes (Price)
  Soap Flakes (Price)
  Investment Grants
  Investment Grants
  Chipboard (Imports)
  Chipboard (Imports)
  Textile Council (Grant)
  Textile Council (Grant)
SHIPPING
  Pleasure Craft
  Pleasure Craft
AVIATION
  Eurocontrol Organisation (Report)
  Eurocontrol Organisation (Report)
  Airport (South-West Region)
  Airport (South-West Region)
TECHNOLOGY
  Defence Documents
  Defence Documents
  Coal Products (Research)
  Coal Products (Research)
  Short Brothers and Harland (Loan)
  Short Brothers and Harland (Loan)
  National Research Development Corporation (Financial Position)
  National Research Development Corporation (Financial Position)
SOCIAL SECURITY
  Family Allowances
  Family Allowances
  Widow's Pension
  Widow's Pension
  MR. MICHAEL DE FREITAS (SPEECH)
  MR. MICHAEL DE FREITAS (SPEECH)
SCOTLAND
  North of Scotland Shipping Company
  North of Scotland Shipping Company
  Kilmarnock Bypass
  Kilmarnock Bypass
  Tenant Farmers (Security of Tenure)
  Tenant Farmers (Security of Tenure)
  D NOTICE PROCEDURE
  D NOTICE PROCEDURE
  "TORREY CANYON"
  "TORREY CANYON"
  COLONEL LOHAN
  COLONEL LOHAN
  SOCIAL SERVICES (MINISTER'S SPEECH)
  SOCIAL SERVICES (MINISTER'S SPEECH)
  CENOTAPH, WHITEHALL
  CENOTAPH, WHITEHALL
  HONOURS LIST
  HONOURS LIST
  GOVERNMENT EXPENDITURE
  GOVERNMENT EXPENDITURE
  CLYDE SHIPYARDS
  CLYDE SHIPYARDS
  TEACHERS' SALARIES
  TEACHERS' SALARIES
  EDUCATIONAL COSTS
  EDUCATIONAL COSTS
  INDIA (VISIT BY PRIME MINISTER)
  INDIA (VISIT BY PRIME MINISTER)
AGRICULTURE, FISHERIES AND FOOD
  Common Seal
  Common Seal
  Eggs (Processing)
  Eggs (Processing)
  Federation for Animal Welfare (Monograph)
  Federation for Animal Welfare (Monograph)
  Fruit (Retail Prices)
  Fruit (Retail Prices)
  Pig Health Scheme
  Pig Health Scheme
  National Seed Development Organisation Ltd.
  National Seed Development Organisation Ltd.
HOUSING
  Co-operative Housing Schemes
  Co-operative Housing Schemes
  Land Commission Levy
  Land Commission Levy
LOCAL GOVERNMENT
  Party Political Assistants
  Party Political Assistants
PUBLIC BUILDING AND WORKS
  Historic Monuments (Souvenirs)
  Historic Monuments (Souvenirs)
  Royal Mint (Design)
  Royal Mint (Design)
  Bricks
  Bricks

Preamble
The House met at a quarter past eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Wakefield
The Earl of Denbigh—Sat first in Parliament after the death of his father.

ALGERIA: DETENTION OF BRITISH PILOTS
11.21 a.m.
LORD ROWLEY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what information they have with regard to the continued detention of the two British pilots in Algeria.]
THE MINISTER OF STATE FOR FOREIGN AFFAIRS (LORD CHALFONT): My Lords, Her Majesty's Government are continuing to make repeated efforts to get the pilots released. I regret that no reply has yet been received to the representations made by the Swiss Ambassador, who protects our interests in Algeria, or by Her Majesty's Consul-General. The Swiss Ambassador, for whose efforts on our behalf I think the House would wish me to express gratitude, submitted on July 25 an urgent request for an audience with the Algerian Foreign Minister. He is repeating his request daily, but he had had no positive answer up to 6 p.m. yesterday evening.
LORD ROWLEY: My Lords, may I ask my noble friend whether it is a fact that the two Spanish police officers have now been released? If this be so, is it not becoming more and more frustrating that the Government of Algeria should keep these two British pilots in detention, without offering any explanation to Her Majesty's Government and without making any charges against them? Will not the Government instruct the noble Lord, Lord Caradon, to urge the Secretary-General of the United Nations to send a special emissary to Algiers in the
1108
name of the United Nations to secure the release of these two men; and, if he fails, to call a meeting of the Security Council and report the matter to them?
LORD CHALFONT: My Lords, our information confirms that the two Spanish guards have been released and have returned to Majorca. Of course it is frustrating that these two men continue to be held, apparently without any intention to bring charges against them. I can only repeat that we have made continuing representations to the Algerian Government, and we continue to do so through the Swiss Ambassador. We have indeed been in touch with my noble friend Lord Caradon, and the possibilities of action of this sort through the United Nations are by no means ruled out. But Her Majesty's Government believe that we should for the moment continue to press our representations through the Swiss Ambassador who looks after our interests there.
LORD OAKSHOTT: My Lords, it is not so much frustrating as outrageous that we can get no satisfaction, through the help of the Swiss Government, from the Government of Algeria. Is there really no way by which, for an act which has been universally condemned, these people can now be publicly arraigned before the United Nations?
LORD CHALFONT: My Lords, I think it would be unprofitable to go into an exchange of adjectives, such as "frustrating" and "outrageous." We have made our representations about this, and the views of Her Majesty's Government are well known. There is in fact no existing machinery through the United Nations, which would have to be something connected with Human Rights machinery of the United Nations, and there is, I fear, no existing machinery for bringing this matter before a court of the United Nations. A suggestion has been made by my noble friend which may be followed up, but the simple answer is that all we can do in a case like this is to continue to make representations through whatever diplomatic channels are open to us.
EARL JELLICOE: My Lords, I should like to put just two questions to the noble Lord. In the first place, following what the noble Lord, Lord Rowley, has said, given the fact that the two

1109
Spanish guards have been released, have the Government received any information from the Spanish authorities about the circumstances in which this act of piracy took place? Secondly, is he aware that there is growing anxiety in this country about the inability of Her Majesty's Government, in this and other cases, to protect the elementary rights of British subjects?
LORD CHALFONT: My Lords, so far as the Spanish guards are concerned, it is possible, now that they have been returned to Spain, that the Spanish Government may be able to throw further light on the actual circumstances of this affair. We have, as yet, received no information about this from the Spanish Government. So far as the second part of the noble Earl's question is concerned, I can only say that I know of no other way in which a civilised Government can bring pressure to bear on a Government behaving like this except through whatever diplomatic channels are open to them and through the United Nations. I have said that no machinery exists in the United Nations, and I should be grateful to know what action the noble Earl would propose other than continuing to bring the strongest pressure to bear through diplomatic channels. I personally can think of no other way.
EARL JELLICOE: My Lords, may I ask the noble Lord one simple question? Have Her Majesty's Government asked the Spanish Government for a report on this case?
LORD CHALFONT: We have not been in touch with the Spanish Government since—
SEVERAL NOBLE LORDS: Why not?
LORD CHALFONT: If I may just finish my answer to the question, perhaps it will become clear. We have not been in touch with the Spanish Government since the release of the guards. It is possible now, as I say, that the Spanish Government will be able to throw further light on what happened, and I can assure the House that Her Majesty's Government will not let this particular channel of obtaining information go unexplored.
EARL JELLICOE: My Lords, I must point out that Her Majesty's Government
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still remain in diplomatic relations with the Spanish Government.
THE MINISTER WITHOUT PORT FOLIO (LORD SHACKLETON): My Lords, if I may intervene, the noble Earl is not in a position to point out anything. He must ask a question.
LORD OGMORE: My Lords, may I ask the noble Lord what is the position with regard to the British aircraft concerned in this episode, and whether the Government have taken up the matter of the British aircraft with any of the international air organisations?
LORD CHALFONT: My Lords, as the House will know, the British aircraft, which is a privately owned one, is in Algeria with the pilots, and we have made representations for the return of the aircraft, as we have for the release of the pilots.
LORD ROWLEY: May I ask my noble friend whether he would clarify something he said in reply to my Question? He would not suggest, would he, that under the United Nations Charter the Secretary-General has no power to send a special emissary to make investigations into any situation which, for example, is a threat to international peace, or which may lead to international friction.
LORD CHALFONT: No, my Lords, I would not make any such suggestion. I was merely pointing out that under the existing human rights machinery there is no way of bringing this matter before the United Nations. Of course, the Secretary-General has the right to appoint an investigator in a case like this; but I should point out, I think, that the appointment of an investigator is one thing but getting him into Algeria to examine the situation may be quite another.
LORD RUSSELL OF LIVERPOOL: My Lords, may I ask the noble Lord whether he can give your Lordships' House an assurance that steps will now be taken immediately to get in touch with the Spanish Government in order to get this information, instead of just getting up and saying, "We have not heard", or "We have not yet approached them"? I hope the noble Lord realises that not only your Lordships' House but the whole country is absolutely disgusted with what is going on at the present moment.
LORD CHALFONT: My Lords, I can only say that Her Majesty's Government share the disquiet of noble Lords about this whole business. I would ask the House to be assured that we are not treating this matter at all lightly, but, as I have said many times before, we have to take account of the diplomatic means that are open to us. We do not propose to use any means that are not diplomatic in this particular case. So far as obtaining further information from the Spanish Government is concerned, this again is a matter of diplomatic channels and diplomatic relations. Other factors have to be taken into account, but I can assure the House that we will consider very urgently the desirability of asking the Spanish Government to let us have what information they possess.
EARL JELLICOE: My Lords, in view of what the noble Lord has said, may I ask whether Her Majesty's Government will take the simple diplomatic step of asking the Spanish Government for information about this case?
LORD CHALFONT: Yes, my Lords, we will ask the Spanish Government to give us what information they have about this case. I am not entirely sure that they will be able to throw much more light on it than there is at the moment; but I agree that there is no harm in trying.
LORD SALTOUN: My Lords, I have listened to the noble Lord with considerable sympathy. Is it not rather dangerous at this stage even to hint that there may be difficulty in getting an emissary of the United Nations into Algeria? Surely, an emissary of the United Nations must be received wherever he goes. Even to hint that there may be difficulties appears to me to be dangerous.
LORD CHALFONT: My Lords, I am sorry if the noble Lord thinks it dangerous to hint at this possibility; but I can only say that in the world as it is today it is not by any means certain that anybody can gain access to the facts of a case like this. The difficulty of Her Majesty's Government in getting access to the pilots and information about the case surely demonstrates that fully.
EARL FERRERS: My Lords, can the noble Lord assure the House that charges are not going to be preferred against these
1112
pilots, in view of the fact that one of the Sunday newspapers indicated that charges may be preferred?
LORD CHALFONT: My Lords, Her Majesty's Government have no information that the Algerian authorities plan to bring any charges. As I said in reply to a Question on July 18, the pilots themselves have told the head of the British Interests Section that they have had no indication that they are likely to be charged.

CARE OF DISCHARGED HOSPITAL PATIENTS
11.33 a.m.
LORD AMULREE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will advise that doctors responsible for the discharge of patients from hospital will state, in the medical notes on discharge form, whether the patient requires continuing nursing care, care provided by the welfare and other departments, or can lead an independent, normal life.]
LORD BESWICK: My Lords, hospital authorities have been advised of the action to be taken before patients are discharged. A standard form is recommended for use in notifying the general practitioner of his patient's forthcoming discharge, and this contains a section for the hospital doctor to indicate future treatment or other recommendations. Hospitals are also advised, where appropriate, to consult the local health authorities (and, if necessary, the Ministry of Labour resettlement officer) at an early stage, notifying them of impending discharge 48 hours in advance. Thus provision is made for the notification of the need for continued nursing care, or care provided by welfare or other departments, to those concerned with the aftercare of patients.
LORD AMULREE: My Lords, I should like to thank the noble Lord for his satisfactory reply.

THE MIDDLE EAST: UNITED NATIONS AND CEASE-FIRE LINE
LORD ROWLEY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government to what extent the cease-fire line between Israel and her Arab neighbours is now under the supervision of United Nations Observers.]
LORD CHALFONT: My Lords, the fronts between Israel and her Arab neighbours now all appear to be under supersion by United Nations observers.
LORD ROWLEY: My Lords, may I ask my noble friend whether any report has been received from General Bull, Chief of the United Nations Observer Corps, as to whether there is any evidence of a likely clash between the forces of Israel and Egypt over the use of the Suez Canal?
LORD CHALFONT: My Lords, the reports that we have, or that are available to us, about this—the latest of them being a report circulated to the Security Council on July 24—said that General Bull had confirmed that no incidents had taken place between July 13 and that day (July 24) on the Israel-Syria sector and that in the Suez sector the situation remains generally quiet on both sides.
BARONESS SUMMERSKILL: My Lords, may I ask my noble friend whether he has seen the picture and the article in The Times this morning on the conditions obtaining on the Allenby Bridge? Can he say whether the exit of Arabs to Jordan is as great as it was a few weeks ago or whether it has slackened off?
LORD CHALFONT: Yes, my Lords, I have seen the picture and the article in The Times. So far as our own information is concerned, we believe that the flow of refugees has lessened. We understand that some people are returning to their homes; but there remains a very considerable and substantial refugee problem which we shall do all we can to help to solve.

AGE OF MAJORITY: MINORS IN THE SERVICES
11.36 a.m.
LORD GRANVILLE-WEST: My Lords, with permission I beg leave to ask, on behalf of my noble friend Lord Brockway, the Question standing in his name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government when the Defence Ministry will reach a decision on the recommendations made by the Lord Chancellor's Committee on the Age of Majority so far as they refer to the service of minors in the Armed Forces.]
THE MINISTER WITHOUT PORTFOLIO (LORD SHACKLETON): My Lords, as your Lordships are aware my honourable friend the Minister of Defence for Administration is examining the question of boys' service in the Armed Forces. He will of course take into account the report of the Committee on the Age of Majority which he has only recently received. I am unable to forecast when my honourable friend will announce a decision, but I know that he will do so as soon as possible.
LORD GRANVILLE-WEST: My Lords, may I, on behalf of my noble friend, thank the noble Lord for his Answer.

BILLS AND THE ROYAL ASSENT
LORD SHACKLETON: My Lords, before my noble friend the Government Chief Whip, with permission, informs the House on certain matters of business, perhaps your Lordships will allow me to say something about the form of the Royal Assent which is due to be notified later today. I think your Lordships were expecting—and certainly it had been our intention—that this should take place in the traditional form. As your Lordships know, there is a very important debate in another place; and there is a general desire, which we have discussed through the usual channels, to avoid an interruption to that debate. It has therefore not been possible to arrange for the traditional Royal Commission today. There will, of course, be

1115
a Royal Commission in the traditional style at the end of the Session in the autumn. I very much regret the change of plan because, although the undertakings were of a general kind, I think there is no doubt that the House was entitled to expect that the Royal Assent would be notified in the traditional form at the end of this Summer Session. I should like to apologise to your Lordships that this has not been possible.
EARL JELLICOE: My Lords, I am grateful to the noble Lord for his statement. I share his regret. It is true that we had understood that we should be witnessing this traditional ceremony in its traditional form at the end of each term. But if the Government get their Parliamentary programme into a complete muddle, and if they publish a Defence White Paper which invites a Vote of Censure, then of course it is understandable that they have to rearrange their programme. I hope that this will not be a precedent for the end of next term and that the Government will be able to honour the undertaking which we had been led to believe they had given.
LORD BYERS: My Lords, I too should like to ask that we should not lose the traditional Royal Commission. But I think we understand that, as a matter of courtesy, it would be quite wrong to insist that the other place should interrupt a vital debate on an occasion of this kind. But I hope this will not become a precedent.
LORD SHACKLETON: My Lords, I am much obliged to noble Lords, although the noble Earl could not resist what I thought was an irrelevant "dig". The fact is that the House of Commons are liable to have a censure debate at any time. This is not something which is within the control of the Government; but I do not think we want to waste time on that. On the question of the undertaking, it was in general terms. It was, I think, anticipated that there would be rather more Royal Commissions in the traditional style in the first year than perhaps may follow in subsequent years. We certainly anticipate that there will be a Royal Assent of this kind at the end of the Session in October. While, clearly,
1116
we shall have to look at this, I note that noble Lords have said that they hope this is not to be a precedent.
EARL ST. ALDWYN: The noble Lord said that he thought there would be a Royal Commission in October. May I point out that as I understand it there has to be one in October, because the new form is applicable only to the Royal Assent to Bills and not to Prorogation.
LORD SHACKLETON: My Lords, I am sorry if I used a loose expression. There will be one in the traditional style at the end of the Session in the Autumn.
LORD BYERS: May I ask the noble Lord whether he can give any indication of the time at which the Royal Assent may be expected today?
LORD SHACKLETON: My Lords, I should think it will be either at the end of business—it depends on how much progress is made—or perhaps, if we have finished the Companies Bill, before we get on to the Unstarred Questions. This is a matter which we can discuss through the usual channels. I know that my noble friend has been giving thought to it.

COURSE OF BUSINESS
LORD BESWICK: My Lords, with permission I should like to make a short business Statement. It is intended—or perhaps I should say it was intended—to take all the business standing on the Order Paper, up to and including the Road Traffic Regulation Bill, before lunch, together with the consideration of the Commons Message on the Criminal Justice Bill, which will be taken immediately after the Consolidated Fund (Appropriation) No. 2 Bill. It is hoped that the House will adjourn at approximately 1 p.m. and will meet again at 2 p.m. for the consideration of the Commons Amendments to the Companies Bill.

HOUSE OF LORDS OFFICES
Order of the Day read for the consideration of the Fourth Report from the Select Committee.
The Committee's Report was as follows:
1.—PRINTED PAPERS
The Committee considered Peers entitlement to these publications and existing practice in regard to distribution and circulation.
They recommend that the attention of the House should be drawn to the following statement of rules and practice.

(i) PAPERS. In principle Peers are entitled to draw from the Printed Paper Office, free of charge, such parliamentary papers and other publications as they clearly require in order to discharge their parliamentary duties.

(ii) This means, in practice, the working papers of the House (Minutes, Bills, amendments, marshalled lists of amendments, Hansard, etc.), papers published by Command, papers laid pursuant to Act or Measure, and returns to an order of either House. The more expensive non-parliamentary publications, such as Official Histories, are not supplied free without the specific authority of the Clerk of the Parliaments.

(iii) Peers are entitled to one copy of any Command Paper, Act Paper, or Paper printed pursuant to an order of either House; and further copies, if they can show that they require them for the discharge of their parliamentary duties.

(iv) Peers are entitled to one copy of both the Lords and the Commons Daily Hansard; if they have spoken in a Debate, they are entitled to draw up to six copies of the Lords Hansard concerned.

(v) If Peers require further copies of non, parliamentary papers, Command Papers, Act Papers or Hansards, Bills and amendments, they may order these from the Printed Paper Office and such papers will then he dispatched to them, together with an invoice, by Her Majesty's Stationery Office.

(vi) POSTAGE. While no charge is made to Peers for the postage of papers sent to them from the Printed Paper Office, Peers do not enjoy the right to have posted to third parties from the Printed Paper Office copies of papers to which they are entitled. The official frank in the Printed Paper Office is reserved for official correspondence and for forwarding papers to Peers themselves. It is not available to Peers for their own correspondence.

2.—PARLIAMENT OFFICE AND LIBRARY
The Clerk of the Parliaments informed the Committee of the appointment of Mr. J. A. Vallance White as a Senior Clerk in the Parliament Office from 1st April, 1967.
The Committee were also informed of a review of certain posts in the Parliament Office and Library and authorised:—

(a) an allowance, and subsequent regrading for the Assistant Librarian;

(b) the regrading of one Clerical Officer post to Executive Officer in the Accountant's office;

(c) the payment of a secretarial allowance to Mrs. N. Willbourne, the Personal Assistant to the Law Lords, personally, with effect from the 1st July, 1967;

(d) the retention of the allowance to the Head Office Assistant; and

(e) the retention of two posts of Record Office Assistant in lieu of two posts of Paperkeeper.

3.—REVISED SCALES OF PAY AND SPECIAL PAYMENTS
The Committee sanctioned the application of D.E.O. (67) (Pay) No. 18 dated 23rd June, 1967—Messengers, Paperkeepers, etc. Classes revised scales of pay to analogous grades of the staff of the House of Lords.
The Committee also authorised the application of E.C. No. 1/66 introducing new grades of Personal Secretaries and Senior Personal Secretaries, Scales of Pay, Conditions of Service, etc. to applicable staff of the House of Lords.
The Committee sanctioned special payments to the Hansard Editors and Reporters and to the Doorkeepers in respect of additional duty performed during the period to the end of the present Session.
4.—SUPPLEMENTARY ESTIMATE
The Committee approved the presentation of a Supplementary Estimate for the year 1967–68 to meet the expenses of Peers travelling abroad as members of a Parliamentary delegation.
5.—DEPARTMENT OF LORD GREAT CHAMBERLAIN AND SERJEANT-AT-ARMS
The Committee were informed of the temporary employment of an additional Personal Assistant for one week and authorised the appropriate rate of pay.
6.—RETIREMENTS
The Committee sanctioned the payment of the following Superannuation awards under the Superannuation Act, 1965:—

(a) Pension and Additional Allowance to Mr. Edward Henry Stephen Divers, Head Office Assistant who retires on the 2nd November, 1967.

(b) Pension and Additional Allowance to Mr. Horace Anderson Martins, Senior Office Assistant, who retires on the 13th November, 1967.

(c) Gratuity to Mrs. Dorothy Emily Sadd, Housemaid, who retired on the 27th May, 1967.

THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I beg to move that the Report be now considered.
Moved accordingly, and, on Question, Motion agreed to.
THE CHAIRMAN OF COMMITTEES: My Lords, I beg to move that the Report be agreed to.
Moved, That the Report be agreed to.—(The Earl of Listowel.)
On Question, Motion agreed to.

CONSOLIDATED FUND (APPROPRIATION) (No. 2) BILL
Read 2a (according to Order): Committee negatived.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 14), Bill read 3a, and passed.

VESSELS PROTECTION BILL
Brought from the Commons; read 1a, and to be printed.
POLICE (SCOTLAND) (No. 2) BILL [H.L.]
Returned from the Commons, agreed to.
ROAD TRAFFIC (DRIVING INSTRUCTION) BILL
Returned from the Commons with the Amendments agreed to.

CRIMINAL JUSTICE BILL
11.45 a.m.
Returned from the Commons with certain of the Amendments agreed to; one other Amendment agreed to, with Amendments, and with a consequential Amendment; one other Amendment disagreed to, with Amendments to the words so restored to the Bill, and the remaining Amendments disagreed to, with Reasons for such disagreement.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE, HOME OFFICE (LORD STONHAM): My Lords, I beg to move that the Commons Reasons for disagreeing to certain of the Lords Amendments, the Commons Amendments to certain other Lords Amendments, and the Commons consequential Amendment be considered forthwith.
Moved, That the Commons Reasons for disagreeing to certain of the Lords Amendments, Commons Amendments to certain other of the Lords Amendments and the Commons consequential Amendment be considered forthwith.—(Lord Stonham.)
LORD BROOKE OF CUMNOR: My Lords, I must voice the strongest possible protest against this timing. It is treating your Lordships' House with disrespect.
1120
The Commons considered your Lordships' Amendments yesterday, starting at 4 p.m. and going on until some unspecified time in the morning; so much so, that we have not even the advantage of the Commons Hansard for the proceedings in another place on one of these Amendments to which the Commons have disagreed. It will be within the knowledge of the Government that my noble friends and I have taken a responsible attitude to the consideration of this Bill, and I believe that we have effected great improvements in it. I am well aware that it is no part of the responsibility of the noble Lord, Lord Stonham, that so disgraceful a timing is arranged. It is a direct consequence of the mismanagement of Government business at the end of this Session; and here again, neither the former Chief Government Whip in this House nor the present one bears responsibility. The responsibility lies elsewhere. But I sincerely trust that this procedure, too, is not going to be taken as a precedent and that we shall never again have to consider Commons Reasons for disagreeing to Lords Amendments at a time when not even the Commons proceedings on the Amendments in question are available.
LORD LEATHERLAND: My Lords, is it proper for Members of this House to criticise the manner in which the other place carries out its business?
LORD FERRIER: My Lords, I should like to say a word from the Back Benches in support of what has been said by my noble friend Lord Brooke of Cumnor. I think it fair to say that those of us who give of our time to the business of this House are fully justified in saying that to be treated in this way is almost ludicrous. To have Amendments presented to us without even a Hansard to show what was said on them makes a nonsense of attending your Lordships' House, and I should like to add my protest to the protest made by my noble friend Lord Brooke of Cumnor.
LORD STONHAM: My Lords, I think we all agree that it is much to be regretted that we have now to consider this matter at least without having had an opportunity to read the discussions in another place which took place in the early hours of the morning. Nevertheless, I do not

1121
accept from the noble Lord, Lord Brooke of Cumnor, that this is mismanagement. We are here in the position of considering the Commons' views on a Bill to which we, your Lordships, made 262 Amendments after they had been consolidated. This is a matter which I think always affects your Lordships' House, unfortunately, at the approach of the Summer Recess. It is certainly something which should be avoided if at all possible, and it might well have been that this urgency could have been avoided if we had agreed to sit another week. But I remember that when this was discussed by my noble friend Lord Shepherd, when he was Chief Whip, there was no desire on the part of the House as a whole that we should sit another week. Much as I regret the circumstances which have been complained of, I feel that this is a situation which was inevitable.
On Question, Motion agreed to.

LORDS AMENDMENT
[References are to Bill (237) as first printed for the Lords]
[No. 1]
Clause 15, page 13, line 11, at end insert ("or detention in a detention centre")
The Commons disagreed to this Amendment for the following Reason:
Because it would be undesirable to exclude from the benefits of the clause persons who have been sentenced to detention in a detention centre.
LORD STONHAM: My Lords, I beg to move that the House doth not insist on its Amendment No. 1 to which the Commons have disagreed.
Moved, That this House doth not insist on the said Amendment.—(Lord Stonham.)
LORD BROOKE OF CUMNOR: My Lords, this is a matter arising out of questions of bail. Clause 15 places certain restrictions on the refusal of bail, and when the Bill was earlier before your Lordships' House I said that there seemed to me to be much to be said for the general purpose to which this clause is directed. The nub of the matter is in subsection (5)(a) of Clause 15. That subsection relieves from the prohibition on the granting of bail cases where a person is charged with an offence punishable by that court by imprisonment for a term of not less than six months and it appears to the court that he has been previously sentenced to imprisonment or borstal training or detention in a detention centre.
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The words "or detention in a detention centre", to which the Commons have disagreed, were added in your Lordships' House, because it appeared to a majority of your Lordships that magistrates ought to have a discretion to remand a man in custody if he has already served a detention centre sentence. This was opposed by the Government on the ground that there was a fundamental difference between a detention centre and borstal or prison. I would say that to the ordinary young man both borstal and detention centre appear to be incarceration. I find it impossible to understand why discretion should be granted to the magistrates to remand somebody in custody if he has served a sentence of a month's imprisonment but should be withheld from them if he has served a sentence of three or six months in a detention centre.
As I said in the debate which led to a Division on this matter there was a sincere division of opinion between the two sides of the House. I have the support of no less an authority than the noble and learned Lord the Lord Chief Justice, who should know what he is talking about in these matters of the administration of the criminal law. Neither he nor I could see any reason why discretion should be withheld from magistrates in a case of this sort. The Commons have thought otherwise, however, and I would not advise your Lordships to stage a quarrel with another place over a matter of detail of this character. Nevertheless, I am quite clear in my mind that the Government have committed an error of judgment here, and if we agree to the Commons decision, we can do so only with great regret.
LORD STONHAM: My Lords, I very much regret to hear from the noble Lord that he feels that the Commons have been guilty of an error of judgment and that he would accede to this Motion only with a great deal of regret. I agree that there is a sincere difference of opinion here. But the noble Lord must be aware that there is a great difference between a detention centre and borstal. It is true that they are both places of incarceration, but in the main a detention centre sentence is for three months and a borstal sentence is for a maximum of two years; and there is a total difference in the régimes. We have too few detention centre places. Magistrates are

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most anxious to use them, rather than send boys for borstal training or to prison. That is evidence that they, at least, are aware of the great difference between the two régimes.
The point on which I know your Lordships are in agreement with the Government is this. We are all anxious, where it is possible, to avoid subjecting young people to the contamination of imprisonment by remanding them in custody for short periods. We are here discussing the question of the discretion of magistrates to grant or withhold bail. The clause limits their discretion. All of us deplore the fact that out of 35,000 remands in custody more than half of them are not subsequently sent to prison, and we all agree that discretion should be limited in some respect, in order to enable us to reduce that unhappy number who go to prison and are contaminated, as is subsequently proved, unnecessarily.
Not only is there a distinction between the régimes in detention centre and in borstal, but we are preserving that difference. The whole object of this is to prevent these boys, who have committed comparatively minor offences—if they have committed any more serious offence the point does not arise—from being sent to prison by, as it were, a side wind. While I regret this difference of opinion which exists between us, I am completely convinced that the Government are right in this matter and that events will prove it.
On Question, Motion agreed to.

LORDS AMENDMENT
After Cause 23, insert the following new clause—
Extension of Costs in Criminal Cases Act 1952
(".—(1) Subject to the following provisions of this section the Costs in Criminal Cases Act 1952 shall apply to proceedings for dealing with an offender under section 6, 8 or 9 of the Criminal Justice Act 1948 (probation orders and orders for conditional discharge), and to proceedings under section 31(1) of this Act for dealing with an offender in respect of a suspended sentence, as if the offender had been tried in those proceedings for the offence for which the order was made or the sentence passed.
(2) The provisions of the said Act of 1952 other than section 6 (costs as between parties) shall apply with all necessary modifications to proceedings in which it is alleged that an offender required on conviction of an indictable
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offence to enter into a recognizance to keep the peace or be of good behaviour has failed to comply with a condition of that recognizance, as if that failure were an indictable offence committed in the same place as the offence of which he was convicted.
(3) Where any proceedings mentioned in either of the foregoing subsections take place before a court of assize or quarter sessions and the fund out of which the costs of those proceedings fall to be paid by virtue of that subsection is maintained by a local authority other than the authority for the local government area in which that court is held, those costs shall—

(a) be paid in the first instance by the local authority for that area; and

(b) be recoverable, together with such sum (if any) in respect of the expenses of holding that court as may be determined in accordance with regulations made by the Secretary of State under section 18(3) of the Criminal Justice Administration Act 1962 (contributions to certain costs), from the local authority maintaining that fund.

(4) Where proceedings under section 8 of the Criminal Justice Act 1948 for dealing with an offender subject to a probation order or an order for conditional discharge, or under section 31(1) of this Act for dealing with an offender in respect of a suspended sentence take place before a court of assize or quarter sessions before which the offender is convicted of an indictable offence committed during the operational period of the sentence, or by which he is sentenced for any such offence after being committed for sentence to that court, the costs of those proceedings shall be treated for the purposes of the Costs in Criminal Cases Act 1952 as part of the costs of the proceedings in which he was convicted or sentenced.
(5) Where any proceedings mentioned in subsection (1) of this section take place before a magistrates' court and relate to an order made or a sentence passed for an offence committed outside the local government area for which are for part of which that court acts, the offence shall be treated for the purposes of section 7(1) of the said Act of 1952 (local funds out of which costs are to be paid) as having been committed in that area.
(6) In this section 'local authority' means the council of a county or county borough or the Greater London Council, 'local government area' means a county, county borough or Greater London and 'operational period' has the same meaning as in Part II of this Act.")
The Commons agreed to this Amendment but proposed the following Amendments thereto.
[No. 2.] Line 32, leave out from ("proceedings") to ("under") in line 34 and insert ("for dealing with an offender under section 8 of the Criminal Justice Act 1948 (commission of further offences by probationers and persons conditionally discharged) or proceedings.")
[No. 3.] Line 38, after ("during") insert ("the period of probation or conditional discharge or".)
LORD STONHAM: My Lords, with permission, I beg to move that the House doth agree with the Commons in their Amendments Nos. 2 and 3 to the Lords' Amendment. These are two Amendments to a Government clause which was inserted in the Bill in your Lordships' House and which the Commons accept but to which they have made these two drafting Amendments. Subsection (4) of the clause deals with the costs of proceedings in which an offender subject to a probation order or order of conditional discharge is dealt with for the original offence or in which an offender is dealt with in respect of a suspended sentence by a court of assize or quarter sessions which has convicted the offender of an indictable offence or sentenced him for such an offence committed during the operational period of a sentence. The words "operational period of a sentence" are appropriate only to a suspended sentence and it is necessary to refer in addition to an offence committed during the period of probation or conditional discharge.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Stonham.)
LORD BROOKE OF CUMNOR: My Lords, we on this side of the House see no objection to the Government in another place taking steps to make further Amendments to a Government new clause which they inserted themselves in your Lordships' House.
On Question, Motion agreed to.

LORDS AMENDMENT
[No. 4]
Clause 30, page 21, line 35, leave out from beginning to end of line 31 on page 22
The Commons disagreed to this Amendment, but amended the words so restored to the Bill as follows:
[Nos. 5–8]
Page 21, line 36, leave out ("for an") and insert ("in respect of one")
Page 22, line 13, after ("of") insert ("corective training")
Page 22, line 27, leave out subsection (6)
Page 22, line 29, leave out ("so made") and insert ("made by the Secretary of State under this section")
[No. 9]
The Commons made the following consequential amendment to the Bill—
Page 114, line 27, after ("words") insert ("thirty or")
11.59 a.m.
LORD STONHAM: My Lords, I beg to move that the House doth not insist on its Amendment No. 4 to which the Commons have disagreed.
Moved, That this House doth not insist on the Amendment to which the Commons has disagreed.—(Lord Stonham.)
LORD BROOKE OF CUMNOR: This is much the more serious part of the Commons Message. No doubt because the Commons are sending this back with further Amendments, no Reason is given for their disagreement. Nevertheless, I think it is plain on the facts and in the light of the debate we had in your Lordships' House. I do not demur at all at Lord Stonham's having moved this Motion without further explanation, because no doubt he wishes first to hear what I have to say. We are here considering suspended sentences. I think I made clear when we were in Committee on this Bill that I was entirely in favour of an experiment which suspended sentences, as were most of your Lordships who spoke from both sides of the Committee, including the noble and learned Lords, Lord Dilhorne and the Lord Chief Justice, and other considerable authorities. But what we could not accept was that a magistrates' court should be deprived of all discretion and should be forced by the Government to suspend any sentence of not more than six months, unless certain conditions were fulfilled which are set out in the various paragraphs to subsection (3) of the Clause.
Because we felt so strongly that the magistrates should have a discretion, and were capable of using their discretion, we in your Lordships' House took out subsection (3) and certain consequential subsections from this Bill, and the Commons now wish to restore them, with a number of, if I am not mistaken, drafting Amendments. No doubt if there is anything more than drafting in the Amendments set out in the Commons Message, the noble Lord, Lord Stonham, will explain them.
It is common ground that we are dealing here with something like 5,900 cases a year, and the Government's intention all the way through has been to ensure that in all such cases, which on past experience amount to about that annual

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number, the magistrates shall be compelled, even if they do not think fit so to do, to suspend the sentence of imprisonment. The Magistrates' Association, who perhaps are as well qualified as anybody to pronounce on this matter, are opposed to the Government upon it; so is the noble and learned Lord, the Lord Chief Justice, with his great responsibilities and knowledge in this field, and I know that he personally feels most concerned about the action taken in another place yesterday. He is concerned not on any Parliamentary or political grounds but because he feels that this is a blow at the maintenance of law and order, and it is an action to which the Government have been led by administrative considerations, which have overridden the responsibility they should feel for the maintenance of law and order.
As I explained in Committee, we are now going to have the position where a man can be tempted by other wrongdoers with the argument that it will be all right for him to join in with them because he will not get more than six months, and it will not mean going to prison, anyway. That is exactly the sort of situation which a responsible Government ought not to allow to arise in days like these, when, by common consent, crime is far too rife, and far too many weak characters are being tempted by more experienced criminals into criminal ways. What will happen—and I must say this with all the strength at my command—is that in any case where the magistrates are convinced that the man ought to go to prison forthwith and the sentence ought not to be suspended, they will commit him to quarter sessions, who have power to impose a longer sentence. No purpose whatever will be served by compelling them to do that. It will further burden the work of quarter sessions and it will further crowd the prisons, because the accused man will receive a longer sentence.
Again, if the noble Lord, Lord Stonham, suggests that this is only a debating argument, let me remind him that my words on this point were strongly endorsed by the noble and learned Lord the Lord Chief Justice in his speech in Committee. I understand—and I do not think this figure was denied by the Government—that some three-quarters of the 5,900 persons concerned in a normal
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year would in fact be eligible for a longer sentence. So in no less than three-quarters of these cases it will be open to the magistrates to commit to quarter sessions for a longer sentence, where they are absolutely convinced that the man ought to go to prison immediately and that his sentence ought not to be suspended.
As I said in our earlier proceedings, the right course to be followed here is that strong guidance should be given to magistrates—which I am sure the noble and learned Lord the Lord Chief Justice would be willing to give—and that people should not be sent to prison for short sentences unnecessarily I feel that strongly; and I feel it extremely strongly in the case of people who have never suffered a prison sentence, because I believe that for those who have never been in prison the thought of imprisonment has a substantial deterrent value which ought not to be jettisoned except where the man concerned has behaved so seriously that an immediate prison sentence is unavoidable.
I think, as I have said, that the Government here are marring a valuable innovation by over-enthusiasm. They are granting to the courts this new power of imposing a suspended sentence, and thereby giving greater flexibility to the courts. That, I am sure, is right. But having done that with one hand, with the other they are taking away the flexibility from the magistrates' courts and saying that where the sentence is not more than six months it must be suspended, even though the magistrates who have heard the case are convinced that the man should go at once to prison. I am certain that the courts should have as wide as possible a variety of courses open to them. I am equally certain that neither the Home Secretary, the Government, another place, nor, with respect, your Lordships' House, is as well qualified to say what precisely should happen to a particular accused person who has been found guilty of an offence as the court which has tried him, which has seen and heard him, and which has full knowledge of all the facts known about him, the offence and the circumstances.
If the Government insist on restoring this removal of discretion from the magistrates' court, it must be for one of two reasons: either the Government think

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that the magistrates are not doing their duty, or are not capable of doing their duty, in a responsible way, or alternatively—and I think this is the real reason—the Government have decided that the prison population must be reduced at all costs, even if this means that justice fails to be done; even if it means that the general public will be exposed to crime from which they might otherwise have been protected. The Government are taking a very grave decision here. I have little doubt that, after some years' experience, it will be clear to everybody that this decision should be reversed in the public interest.
But, in the meanwhile, I do not want to lose the Bill. Nobody wants to lose the Bill. I am anxious for this Bill to reach the Statute Book as soon as possible. Here there is a deep difference of opinion, and I know that, not necessarily my words, but the sentiments which I have expressed, would be endorsed by the noble and learned Lord the Lord Chief Justice, who has expressed to me his personal regrets that he is not able to be present here to-day to say what he thinks about this decision. But the decision must be, I regret, accepted. My words will be on record, and though I think your Lordships must accept the Commons view, I am quite sure that before many years are out it will be necessary to reverse this ill-advised decision.
House adjourned during pleasure and resumed by the Lord Chancellor.
12.11 p.m.
LORD STONHAM: My Lords, I agree with the noble Lord, Lord Brooke of Cumnor, that this is by far the most important of the matters on which the Commons have disagreed with your Lordships. I also agree with the noble Lord in his concluding words, in recommending your Lordships to accept the view the Commons expressed last night. I completely disagree with almost everything else that the noble Lord said, and I will say why as briefly as I can.
The noble Lord said that this, in the main, deals with subsection (3) of clause 30 in the Bill, as we originally considered it. First of all, I want to make the point on this clause that we are not considering
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people with a criminal record. We are not withdrawing from magistrates discretion with regard to the grant of bail for such people. We are not withdrawing from magistrates discretion with regard to the grant of bail for people who have committed, or are alleged to have committed, the more serious offences. Very briefly, I will read these exceptions to mandatory suspended sentence,
"the act or any of the acts constituting that offence consisted of an assault on or threat of violence to another person, or of having or possessing a firearm, an imitation firearm, an explosive or an offensive weapon or of indecent conduct with or towards a person under the age of sixteen years".
Similarly, the discretion of the magistrates is retained if the accused person has served, or has since the commission of the offence served, a sentence of imprisonment or borstal training. Therefore, it is clear that we are not considering people with bad records. We are not considering people who have committed the more serious offences.
The noble Lord said—and I was not quite clear whether he gave it as his own view or was expressing the view of the noble and learned Lord the Lord Chief Justice—that this is a blow to the maintenance of law and order to which the Government have agreed for administrative reasons. It is true that if this measure of the Government is carried it will have the very desirable effect of reducing the number of people sent to prison for short periods. That is by no means—certainly in my personal opinion—the most important part of this provision. We are agreed—we have been agreed all the time—that short sentences of imprisonment should be avoided if at all possible. No one is more fervently in agreement with that than the noble Lord, Lord Brooke of Cumnor, because of his own experience as Home Secretary. He said so on Second Reading and subsequently. We are all agreed in welcoming the provisions in the Bill for suspended sentences—all of us. They are still in the Bill: that is, discretionary suspended sentences, not just of six months, but up to two years. Everyone agrees with this.
So the only point at issue is the proposal whether or not we should, for certain classes of offenders, withdraw a magistrate's discretion not to suspend a

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sentence for up to six months' imprisonment, and we want to make it mandatory that he will have to suspend the sentence. This is in the case of a first sentence of imprisonment. The person concerned has not got a record. It is only in the case of a first sentence of imprisonment. The words that this is "a blow to the maintenance of law and order", in my submission, is an abuse of language, whoever used the language.
The noble Lord, Lord Brooke of Cumnor, said that magistrates will commit to quarter sessions because they are absolutely convinced that the people before them should be sent to prison. In 1958 your Lordships passed the First Offenders Bill, which puts on magistrates the duty of not sending to prison first offenders if they can find any other means of dealing with them. But in every one of the eight or nine years since the passage of that Bill, 7,000 first offenders have been sent to prison—not all of them, of course, for short sentences; some first offenders commit serious crimes and have to be sent to prison for long periods. But the great majority of first offenders sent to prison were sent for short sentences. In other words, the magistrates decided, on the severity of their crime, that they should spend that time in prison. The magistrates have had that discretion all those years, and in my view, not the majority of magistrates, but those who have sent people to prison in that way have shown a very poor use of that discretion.
What are the kind of people who get sent to prison for short sentences? They are not all like this, but there was a mother of three children, a first offender, a shoplifter, sent to prison for three weeks. Would any noble Lord think that that was the way a magistrate should exercise his discretion? The woman was guilty, but just think. A railwayman steals a packet of cigarettes: six months. Just imagine the consequences. These things happen. I am quoting actual cases, and you can read of them in the papers every week. If we do not send these people to prison but give them another chance—sentence them and suspend the sentence, so that if during a period of one to three years thereafter they commit another offence they can be obliged then to serve the sentence
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originally imposed—can it be sensibly argued that this is a blow to the maintenance of law and order? I should have said that it was a step towards a civilised society, and no mean step at that.
The noble Lord, Lord Brooke of Cumnor, said that if the Lord Chief Justice had given strong guidance to the magistrates it would have been effective. In 1948 we had—
LORD BROOKE OF CUMNOR: My Lords, may I just correct that? I did not say, if he had given strong guidance to the magistrates it would have been effective. I was speaking about the future, and not the past.
LORD STONHAM: My Lords, I understood that the noble Lord was speaking about the future, and I apologise if my words in any way created a wrong impression. Let me start again. The noble Lord, Lord Brooke of Cumnor, said it would have been better, rather than to have the measure we want, to suggest or to ask the noble Lord the Lord Chief Justice to give strong guidance to magistrates, and that he thought that would be effective. In 1948 we had another Criminal Justice Bill, which was enacted under a Labour Government, and, greatly to my regret, we provided in that for preventive detention, whereby men get sentences of up to fourteen years for stealing a bottle of milk. We are ending that in this Bill, with the complete approval of every noble Lord in the House, and not least the noble Lord, Lord Brooke of Cumnor.
But it has taken us a long time to abolish preventive detention. As long ago as 1962 everybody realised it was a complete failure, and judges were still sending people to long sentences—a minimum of seven years, a maximum of fourteen years—for utterly trivial offences. So the noble Lord, Lord Brooke of Cumnor, when he was Home Secretary, set up a Committee to consider this, and he adopted their recommendations. All that time men were still going to prison, and the noble and learned Lord the Lord Chief Justice sent out a Practice Guidance. That is the firmest possible guidance that can be given to his fellow judges, and this advised them not to send men to prison on preventive detention. They still do so. Therefore the guidance was not effective.

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No, my Lords; the Government think that this mandatory suspension is crucial. It is a vital part of the plans for a reduction of the number of unnecessary short-term prison sentences, and for the enlargement of non-custodial treatment for the reduction of recidivism and the reduction of crime. When a man goes to prison for the first time he is not only contaminated, he is not only well on the road to recidivism, but he is labelled for the rest of his life, and there follow all the social consequences to his family and himself. If he has committed a severe crime he must go to prison, and the other uncovenanted benefits must accrue to him also, but if he is a first offender who has committed a less serious offence then the Government say he should not go to prison. If he merits a sentence of only six months or less, that sentence should be suspended so as to give him another chance.
We have had this nine years' experience of magistrates using their discretion in the matter. Naturally, by no means all first offenders get shorter sentences even if it is a first prison sentence it is not always a short one. The people with longer sentences would not be affected by mandatory provisions. But the substantial majority of first offenders—thousands of them—are sent for short sentences. As the noble Lord said, probably 5,900 people are covered by these provisions, and the mandatory suspension would ensure them a second chance and would keep most of them crime-free for the rest of their lives. We can say that from our experience.
All this is weighed against the single factor of the limitation of a magistrate's discretion to send such people to prison and not suspend their sentences. Surely there can be only one answer; and just as the noble Lord, Lord Brooke of Cumnor, said that his words are on the Record and will be seen in years to come, so my words will also be on the record, and although it may not be given to me to see the result I am confident that those who read my words now and who see the result in 10 to 15 years' time will know that those words were justified.
On Question, Motion agreed to.
LORD STONHAM: My Lords, with the leave of the House, I beg to move that the House doth agree with the Commons in their Amendments, Nos. 5 to 8,
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to the words so restored to the Bill. As the noble Lord, Lord Brooke of Cumnor, surmised, these are really drafting Amendments, but they must be explained. They are designed to make it clear beyond doubt that the mandatory provisions will apply to cases where a court passes consecutive sentences of imprisonment. I am now speaking to Amendment No. 5. These are cases where a court passes consecutive sentences of imprisonment which are individually for six months or less but which in aggregate exceed six months. It is believed that this is already the position under the Bill as it stands, but Clause 87(2) might appear to put the matter in some doubt. It could be suggested that the mandatory provisions should not apply to consecutive sentences totalling more than six months, but if the provisions were not applied to these sentences there could be a real danger that courts would impose consecutive sentences in order to avoid having to suspend a shorter sentence, and that is something which it is desirable to avoid.
Amendment No. 6 is a drafting Amendment. It is a curious position but in fact it is possible for a person to be sentenced to corrective training without having previously served a borstal or a prison sentence. I am sure your Lordships would agree that it would be inappropriate for such a person to get the benefit of the mandatory provisions for suspended sentences. Corrective training is, of course, abolished by the Bill, with general agreement, but there will still be people who have in the past served a sentence of corrective training but not one of imprisonment or borstal. With regard to Amendment No. 7 the position is that Amendment 167, to Clause 84, provides that any order made under the Bill by statutory instrument, may be varied or revoked by a subsequent order, Subsection (6) of Clause 30 consequently becomes unnecessary. Amendment No. 8 is consequential.
Amendment No. 9 gives effect to a suggestion made by the Magistrates' Association. Section 110 of the Magistrates' Courts Act 1952 empowers a court
"that has power to commit to prison a person convicted of an offence"
to order him instead to be detained for one day in the court-house or a police

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station. The Amendment enables this power to be used in cases where a sentence of imprisonment proper would have to be suspended under Clause 30. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments, Nos. 5 to 8.—(Lord Stonham.)
THE LORD CHANCELLOR (LORD GARDINER): My Lords, if no noble Lord objects, I will put Amendments Nos. 5 to 8 together.
LORD BROOKE OF CUMNOR: My Lords, I have only one point to raise. Thanks to the extreme shortness of time for examining these Amendments I am quite unable to understand why Amendment No. 9 is consequential. I will, of course, accept the statement of the noble Lord, Lord Stonham, that it is, but it seems to me most extraordinary that we have to amend a clause relating to the detention of offenders for one day in a court-house or police station because we have proposed to agree to these other Amendments in Clause 30. Naturally I have not given the noble Lord notice of this question—I could not have done so—and I have not had time to discover the reason for myself. I do not wish to press it now, but maybe subsequently he will let me know the reason.
LORD STONHAM: My Lords, in some ways I am in even greater difficulty than the noble Lord, Lord Brooke of Cumnor. Since we adjourned last night I have been to Sunningdale to talk to the County Councils Association and therefore have not been able to get any papers in regard to this point, but it seems to me this is fairly clear. The position is that under the 1952 Act there is the power, as the noble Lord is aware, to commit to prison a person convicted of an offence but to order him instead to be detained for one day. As I understand it, here would be these difficulties over the suspended sentence which arise from that. If that is still not clear, I will certainly write to the noble Lord about it, but it seems to me a point of detail which has been previously overlooked and which should be put right.
On Question, Motion agreed to.
LORD STONHAM: My Lords, this Amendment is consequential. I beg to
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move that this House doth agree with the Commons in their consequential Amendment, No. 9.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Stonham.)
On Question, Motion agreed to.

LORDS AMENDMENTS
[Nos. 10–12]
Clause 69, page 54, line 32, leave out ("imprisonment for a term not exceeding six months or")
Clause 69, page 54, line 33, leave out ("£200") and insert ("£50")
Clause 69, page 54, line 33, leave out ("or both")
The Commons disagreed to these Amendments for the following Reason:
Because the Amendments would reduce the penalties imposed by the clause below the level which the Commons consider appropriate.
LORD STONHAM: My Lords, with the leave of the House, I beg to move that this House doth not insist on Amendments Nos. 10, 11 and 12, to which the Commons have disagreed.
Moved, That this House doth not insist on Amendments Nos. 10, 11 and 12, to which the Commons have disagreed.—(Lord Stonham.)
LORD BROOKE OF CUMNOR: My Lords, these Amendments are all linked together, and they derive, I think, from Amendments moved by my noble friend the Duke of Atholl when we came to the subject of shot-guns. We had lengthy, some might say inordinate, discussions, on this Part of the Bill, partly because it seemed to be not quite in keeping with the rest of the purpose of the Bill. At a relatively early stage of those discussions, which were prolonged both in Committee and on Report, my noble friend moved these Amendments because he thought, at any rate in relation to the clauses as they then stood, that the penalty provisions were excessive. By common consent we have improved the clauses, and in addition to that I, as an ex-Home Secretary, am perhaps a little more inclined than most to side with what is evidently the Government view, that the Home Office must keep the maximum penalties for varied offences proportionately in line as far as possible. I think there was a great deal to be said for my noble friend's Amendments, certainly in relation to the clause as it first stood, but in view of what has

1137
happened since, and in view of what is clearly the Government's view, that the penalties here should be the same as those laid down by Parliament as maximum penalties under the Firearms Act, I would not advise your Lordships to dissent from what has been done in another place.
On Question, Motion agreed to.

LORDS AMENDMENT
[No. 13]
Clause 71, page 56, line 23, leave out subsection (3)
The Commons disagreed to this Amendment for the following Reason:
Because the subsection removed by the Amendment confers powers which experience may show to be necessary to secure enforcement of the law relating to firearms and introduces the necessary flexibility into the rule-making powers conferred by the Firearms Acts.
LORD STONHAM: My Lords, I beg to move that this House doth not insist on Amendment No. 13, to which the Commons have disagreed.
Moved, That this House does not insist on Amendment No. 13, to which the Commons have disagreed.—(Lord Stonham.)
LORD BROOKE OF CUMNOR: My Lords, on this Amendment we are under a particular handicap, because the proceedings in another place must have occurred as recently as after 10.30 last night, and consequently we have no Record of the Commons proceedings on the Amendment. I do not know whether there was a Division in another place or not. Fortunately, there is a relatively long explanation of the Commons' decision, and here again I would not advise your Lordships to hold out against another place.
This was an Amendment, if I remember correctly, that was moved by myself, though it had been tabled by my noble and learned friend, Lord Dilhorne; he happened not to be in his place at the time, and I moved it on his behalf. I still think it shows that the Government did not do sufficient preparatory work on their proposals relating to shot-guns, because even now it appears that they are not sure whether photographs will be necessary in relation to shot-gun certificates. I deduce that from the Commons' Reason, which says:
"Because the subsection removed by the Amendment confers powers which experience may show to be necessary …'
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Considering the long period of gestation of this Bill, I should have thought that by this time the Government could have decided whether or not it was necessary for an applicant for a shot-gun certificate to have to go through all the tedious paraphernalia of providing a kind of passport photograph and getting his identity certified by an independent person. This is just the sort of power which ought not to be given to the Government unless the case for it is proved; and the Corn-finitely that we were going to do a thing not been proved, but that experience may show it to be necessary. There it is. I regret this decision, too, but I advise your Lordships to accede to it.
I can only express my thankfulness that it was not decided in another place to reverse your Lordships' decision to the effect that a child of 13 presented with a shot-gun should not be considered as committing a criminal offence. When it is said that Amendments carried in your Lordships' House on a Division are always of null effect because they are invariably reversed by another place, at any rate we can claim for ourselves in this instance that a thoroughly sensible decision carried here on a Division has been accepted by the Commons.
LORD STONHAM: My Lords, the generosity which the noble Lord, Lord Brooke of Cumnor, has shown throughout our exchanges this morning deserted him at the last moment, because he did the Government less than justice over the Amendments with regard to the child of 13 to which he referred. The noble Lord is surely aware that in accepting these Amendments I gave an assurance that they would not be interfered with and that they were fully agreed.
The reason why this permissive power is still permissive and may still not be used is the very best of reasons; namely, that this suggestion was made by an interested organisation, who suggested that it would be a good thing if power were taken to have photographs on certificates. We have not yet discussed it. The noble Lord will be aware that we really cannot discuss this finally with interested organisations until the Bill becomes an Act and the Home Secretary has the rule-making powers for which he asks. There is nothing wrong with that, and it would be quite wrong to say definitely that we were going to do a thing

1139
when in fact we are still deferring a decision until we have had the discussions.
One other point makes this Amendment quite essential, and that is the Secretary of State's power to make different provision for different cases in both the firearm and shot-gun certificate system. That bath water went out with the baby when this Amendment was carried. We certainly need these powers of making different provision for different cases, short-term certificates, for example, for an application for overseas visitors staying here more than 30 days compared with standard three-year certificates for residents and so on. These powers are essential, and they will be used wisely.
On Question, Motion agreed to.

SEA FISHERIES (SHELLFISH) BILL [H.L.]
12.40 p.m.
Order of the Day for the House to be put into Committee (on Re-commitment) read.
Moved, That the House do now resolve itself into Committee.—(Lord Walston.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD STRANG in the Chair.]
THE DEPUTY CHAIRMAN OF COMMITTEES: This Bill has been amended by the Joint Committee on Consolidation Bills, but there are further Amendments to be made in Committee. I shall therefore go through the Bill in the usual way.
Clauses 1 to 16 agreed to.
Clause 17 [Taking and sale of certain crabs and lobsters prohibited]:
THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD WALSTON): These Amendments are not of very great weight, but I think they are valuable. Their object is to remove a discrepancy between the maximum penalties for taking spawn carrying crabs and for taking spawn carrying lobsters. The penalties relating to crabs date from 1877, and are £2 for a first offence and
1140
£10 for a subsequent offence. Those relating to lobsters date from 1959, and are £100 for a first offence and £200 for a subsequent offence. Therefore, as your Lordships will see, the discrepancy arises from the passage of the years, and also from an accident of drafting by which lobsters have attracted a penalty designed for more serious offences.
I can assure your Lordships that those penalties in no way reflect Her Majesty's Government's view either of the biological relative importance of crabs and lobsters, or indeed of their gastronomic value. The Law Commissioners recommended that these penalties should be assimilated, and the fines now proposed are £25 for a first offence and £50 for a subsequent offence. These are in line with current penalties for similar fishery offences, and I trust that your Lordships will agree to them. I beg to move.
LORD HAWKE: Before the noble Lord sits down, can he tell us what is the offence? Is it eating the things?
THE DEPUTY CHAIRMAN OF COMMITTEES: Perhaps I may first put the Amendment.
Amendment moved—
Page 13, line 36 leave out from ("offence") to the end of line 38.—(Lord Walston.)
LORD HAWKE: I was asking the noble Lord whether he could tell us what the offence is. He gave us the amount of fines but we do not know what the offence is.
LORD WALSTON: I am sorry; I had assumed that the noble Lord might have read the Bill. The offence is taking lobsters.
LORD HAWKE: Catching them?
LORD WALSTON: Catching them.
On Question, Amendment agreed to.
LORD WALSTON: I beg to move the next Amendment.
Amendment moved—
Page 14, line 9, leave out from ("offence") to the end of line 11.—(Lord Walston.)
On Question, Amendment agreed to.
LORD WALSTON: I beg to move the next Amendment.
Amendment moved—
Page 14, line 12, leave out ("also").—(Lord Walston.)
On Question, Amendment agreed to.
LORD WALSTON: I beg to move the last Amendment.
Amendment moved—
Page 14, line 13, leave out ("forfeit") and insert ("a fine not exceeding, in the case of a first offence, £25 and, in the case of a second or subsequent offence, £50, and the court by which the offender is convicted may order the forfeiture of").—(Lord Walston.)
On Question, Amendment agreed to.
Clause 17, as amended, agreed to.
Remaining clauses and Schedules agreed to.
House resumed: Bill reported with the Amendments.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 14), Report received; Bill read 3a.
THE LORD CHANCELLOR: My Lords, as your Lordships appreciate, this Bill was an experiment in the field of consolidating our Statute Law to enable Amendments of a rather wider character than usual to be made. I only mention it now because on Second Reading of the Bill some disquiet was expressed in some quarters of the House at this innovation. The whole House agreed that we should try it as an experiment to see what happened.
In point of fact, our most experienced Joint Committee on Consolidation Bills has had no trouble with it at all, except on the one point which was the subject matter of the Amendments just moved by the noble Lord, Lord Walston, which, on the whole, they thought it preferable to leave to the House rather than to deal with themselves. But it is a Bill which has been open in this House, as of course in another place, to amendment at any stage, and there has been no loss of Parliamentary control in any way. I venture to express the hope that this experiment having been successful it may lead to our being able to consolidate our Statute Law in a rather wider field than we have been able to do before. I beg to move that the Bill do now pass.
Moved That the Bill do now pass.— (The Lord Chancellor.)
On Question, Bill passed, and sent to the Commons.

MATRIMONIAL HOMES BILL [H.L.]
12.47 p.m.
Order of the Day read for the consideration of the Commons Amendments.
BARONESS SUMMERSKILL: My Lords, I beg to move that the Commons Amendments be now considered.
Moved accordingly, and, on Question, Motion agreed to.

COMMONS AMENDMENTS
[The references are to Bill 107 as first printed for the Commons]
[Nos. 1 and 2]
Clause 1, page 1, line 10, at end insert ("(in this Act referred to as 'rights of occupation')")
Clause 1, page 1, Line 17, leave out ("under this section")
BARONESS SUMMERSKILL: My Lords, with the leave of the House I beg to move that this House doth agree with the Commons in their Amendments Nos. 1 and 2. In speaking to these Amendments it may be for the convenience of the House if I speak also to Amendments Nos. 5, 7, 9, 10, 11, 12, 15, 16 and 22. By defining "rights of occupation" in Amendment No. 1, it becomes unnecessary elsewhere in the Bill to refer to such rights as being rights "under this section"—that is, at present, Clause 1—and the remaining Amendments accordingly leave out these words.
Moved, That this House doth agree with the Commons in the said Amendments.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 3 and 4]
Clause 1, page 2, line 2, leave out first ("and")
Clause 1, page 2, line 2, after ("children") insert ("and to all the circumstances of the case")
BARONESS SUMMERSKILL: My Lords, with the leave of the House I beg to move that this House doth agree with the Commons in their Amendments Nos. 3 and 4. Amendment No. 3 is introductory to Amendment No. 4. Clause 1(3)

1143
provides that on an application for an order declaring, enforcing, restricting or terminating rights of occupation under the Bill, the court may make such order as it thinks reasonable having regard to the conduct, needs and financial resources of the spouses and the needs of any children of theirs. Amendment No. 4 makes it clear that the court may also have regard to all the circumstances of the case.
Moved, That this House doth agree with the Commons in the said Amendments, Nos. 3 and 4.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 5]
Clause 1, page 2, line 5, leave out ("under this section").
BARONESS SUMMERSKILL: My Lords, Amendment No. 5 is consequential. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 6]
Clause 1, page 3, line 3, leave out second ("or") and insert ("and").
BARONESS SUMMERSKILL: My Lords, this Amendment makes the last part of Clause 1(7) read:
"any yard, garden, garage or outhouse belonging to the dwelling house and occupied therewith"
instead of "or occupied therewith". I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)

COMMONS AMENDMENT
[No. 7]
Clause 1, page 3, line 7, leave out ("under this section").
BARONESS SUMMERSKILL: My Lords, I beg to move Amendment No. 7.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 8]
Clause 1, page 3, line 10, leave out ("section 2 below provides") and insert ("provision is made by section 2 of this Act").
BARONESS SUMMERSKILL: My Lords, this is a drafting Amendment. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 9–12]
Clause 2, page 3, line 16, leave out ("under section 1 above ")
Clause 2, page 3, line 25, leave out ("under section 1 above")
Clause 2, page 3, line 34, leave out ("under section 1 above")
Clause 2, page 3, line 45, leave out ("under section 1 above")
BARONESS SUMMERSKILL: My Lords, I beg to move Commons Amendments Nos. 9 to 12.
Moved, That this House doth agree with the Commons in the said Amendments.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 13 and 14]
Clause 2, page 4, line 6, after ("shall") insert ("for so long as the estate or interest surrendered would have endured if not so surrendered")
Clause 2, page 4, Line 7, leave out ("thereto") and insert ("to the other estate or interest")
BARONESS SUMMERSKILL: My Lords, Clause 2(4) provides that where the matrimonial home is held under a lease the charge for which Clause 2 provides cannot be lost by the surrender of the lease to the freeholder. Amendment No. 13 has the effect of making the charge on the freehold last only so long as the lessee's interest would have lasted if it had not been surrendered. Amendment No. 14 is consequential upon the previous Amendment. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 15 and 16]
Clause 2, page 4, line 9, leave out ("under section 1 above")
Clause 2, page 4, line 37, leave out ("under section 1 above")
BARONESS SUMMER SKILL: My Lords, I beg to move Commons Amendments, Nos. 15 and 16.
Moved, That this House doth agree with the Commons in the said Amendments.—(Baroness Sumerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 17]
Clause 2, page 4, line 40, at end insert—
("(8) Where a spouse's rights of occupation are a charge on the estate or interest of the other spouse, and that estate or interest is the subject of a mortgage within the meaning of the Law of Property Act 1925, then if, after the date of creation of the mortgage, the charge is registered by virtue of subsection (6) above, the charge shall, for the purposes of section 94 of that Act (which regulates the rights of mortgagees to make further advances ranking in priority to subsequent mortgages), be deemed to be a mortgage subsequent in date to the first-mentioned mortgage.")
BARONESS SUMMERSKILL: My Lords, this Amendment meets a point raised by the Committee of London Clearing Bankers. The effect of the new subsection is that any further advance made by a mortgagee will have priority over the wife's charge if the mortgagee was under an obligation to make a further advance, or even where he was under no such obligation provided he did not have actual notice of the charge by searching at the Land Registry before making the advance. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 18]
After Clause 2, insert the following new clause—
Restriction on registration where spouse entitled to more than one charge
(". Where one spouse is entitled by virtue of section 2 above to a charge on the estate or interest of the other spouse in each of two or more dwelling-houses, only one of the charges to which that spouse is so entitled shall be registered in accordance with subsection (6) or (7) of that section at any one time, and if any
1146
of those charges is registered in accordance with the said subsection(6) or (7), the Chief Land Registrar, on being satisfied that any other of them is so registered, shall cancel the registratioin of the charge first registered.")
BARONESS SUMMERSKILL: My Lords, the object of this new clause is to make it clear that the spouse entitled to a charge by virtue of Clause 2 of the Bill may not register such a charge against more than one dwelling-house at the same time. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 19]
After Clause 2, insert the following new clause—
Contract for sale of house affected by registered charge to include term requiring cancellation of registration before completion.
(".—(1) Where one spouse is entitled by virtue of section 2 above to a charge on an estate or interest in a dwelling-house and the charge is registered in accordance with subsection (6) or (7) of that section, it shall be a term of any contract for the sale of that estate or interest whereby the vendor agrees to give vacant possession of the dwelling-house on completion of the contract that the vendor will before such completion procure the cancellation of the registration of the charge at his expense:
Provided that the foregoing provision shall not apply to any such contract made by a vendor who is entitled to sell the estate or interest in the dwelling-house freed from any such charge.
(2) If, on the completion of such a contract as is referred to in subsection (1) above, there is delivered to the purchaser or his solicitor an application by the spouse entitled to the charge for the cancellation of the registration of that charge, the term of the contract for which subsection (1) above provides shall be deemed to have been performed.
(3) This section applies only if and so far as a contrary intention is not expressed in the contract.
(4) This section shall apply to a contract for exchange as it applies to a contract for sale.
(5) This section shall, with the necessary modifications, apply to a contract for the grant of a lease or underlease of a dwelling-house as it applies to a contract for the sale of an estate or interest in a dwelling-house.")
12.54 p.m.
BARONESS SUMMERSKILL: My Lords, the object of this clause, which was inserted at the suggestion of the Law Society, is to give protection to a person

1147
who has agreed to buy with vacant possession a dwelling-house against which a charge is registered under Clause 2 of the Bill. Subsection (1) of the new clause accordingly provides that it is to be a term of any contract for sale with vacant possession that the vendor will, before completion of the contract, procure at his own expense the cancellation of the registration of any charge under Clause 2. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 20]
After Clause 2, insert the following new clause—
Cancellation of registration after termination of marriage, etc.
(".—(1) Where a spouse's rights of occupation are a charge on the estate or interest of the other spouse in a dwelling house and the charge is registered in accordance with subsection (6) or (7) of section 2 above, the Chief Land Registrar shall, subject to subsection (2) below, cancel the registration of the charge if he is satisfied—

(a) by the production of a certificate or other sufficient evidence, that either spouse is dead, or

(b) by the production of an official copy of a decree of a court, that the marriage in question has been terminated otherwise than by death, or

(c) by the production of an order of the court, that the spouse's rights of occupation constituting the charge have been terminated by the order.

(2) Where—

(a) the marriage in question has been terminated by the death of the spouse entitled to an estate or interest in the dwelling house or otherwise than by death, and

(b) an order affecting the charge of the spouse not so entitled had been made by virtue of section 2(2) above,

then if, after the making of the order, registration of the charge was renewed or the charge registered in pursuance of subsection (3) below, the Chief Land Registrar shall not cancel the registration of the charge in accordance with subsection (1) above unless he is also satisfied that the order has ceased to have effect.
(3) Where such an order has been made, then, for the purposes of subsection (2) above, the spouse entitled to the charge affected by the order may—

(a) if before the date of the order the charge was registered in accordance with sub-
1148
section (6) or (7) of section 2 above, renew the registration of the charge, and

(b) if before the said date the charge was not so registered, register the charge in accordance with the said subsection (6) or (7).

(4) Renewal of the registration of a charge in pursuance of subsection (3) above shall be effected in such manner as may be prescribed, and an application for such renewal or for registration of a charge in pursuance of that subsection shall contain such particulars of any order affecting the charge made by virtue of section 2(2) above as may be prescribed.
(5) The renewal in pursuance of subsection (3) above of the registration of a charge shall not affect the priority of the charge.
(6) In this section 'prescribed' means prescribed by rules made under section 19 of the Land Charges Act 1925 or section 144 of the Land Registration Act 1925, as the circumstances of the case require.")
BARONESS SUMMERSKILL: My Lords, the object of subsection (1) of this clause is to facilitate the cancellation of a charge by the Chief Land Registrar when the rights of occupation protected by the charge have come to an end. Although rights of occupation are normally brought to an end by divorce or by the death of the spouse legally entitled to the dwelling-house, such rights may nevertheless continue after the termination of the marriage if the court has made an order to that effect. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 21]
After Clause 2, insert the following new clause—
(".—(1) A spouse entitled to rights of occupation may by a release in writing release those rights or release them as respects part only of the dwelling house affected by them.
(2) Where a contract is made for the sale of an estate or interest in a dwelling house, or for the grant of a lease or under-lease of a dwelling house, being (in either case) a dwelling house affected by a charge registered in accordance with subsection (6) or (7) of section 2 above, then, without prejudice to subsection (1) above, the rights of occupation constituting the charge shall be deemed to have been released on the happening of whichever of the following events first occurs, that is to say, the delivery to the purchaser or lessee, as the case may be, or his solicitor on completion of the contract of an application by the spouse entitled to the charge for the cancellation of the registration of the charge or the lodging of such an application at Her Majesty's Land Registry.
(3) A spouse entitled by virtue of section 2 above to a change on an estate or interest of the other spouse may agree in writing that any other charge on, or interest in, that estate or interest shall rank in priority to the charge to which that spouse is so entitled.")
BARONESS SUMMERSKILL: My Lords, this new clause put it beyond doubt that a spouse may release his or her rights of occupation under the Bill. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 22]
Clause 3, page 6, line 19, leave out ("under section 1").
BARONESS SUMMERSKILL: My Lords, I beg to move Commons Amendment No. 22.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 23]
Clause 4, page 6, line 29, at end insert (",and shall come into operation on such date as the Lord Chancellor may by order made by statutory instrument appoint.")
BARONESS SUMMERSKILL: My Lords, this Amendment postpones the operation of the Bill to a date to be appointed by the Lord Chancellor. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
THE LORD CHANCELLOR: My Lords, this might be a convenient point at which to make some observations. As the House knows, this is a Private Member's Bill which has throughout been welcomed by the Government. But, for reasons which I will explain in a moment, I should like to make repeat observations on the Bill which were made by my right honourable friend the Solicitor General in another place on July 21. He said:
"I would like to refer to one matter which has arisen during the discussions on the Bill. The hon. Member for Crosby, and others, and some outside the House, have expressed a certain amount of apprehension about what will be the position of solicitors
1150
who have to advise their clients after the Bill becomes law. Where, for example, a solicitor is advising the husband, will he be under a duty to advise the wife, even though the wife may not herself be his client?
"It is not possible for the promoters of the Bill, or the Government, to say what view the courts may take of the duty of a solicitor in an individual' case should one ever arise, but it is evident that the courts would be bound to have regard to the facts of the case, as was pointed out by my hon. Friend in Committee. If a solicitor is consulted by the husband alone, it seems to me that it will be very difficult to argue that the solicitor owes any duty to the wife to inform her of her rights under the Bill, still less to protect them by the registration of a charge.
"If solicitors were consulted by both husband and wife it might come to be regarded as a duty to inform the wife of rights conferred on her by the Bill, but it by no means follows that he should go on to advise the wife to register a land charge if the solicitor had no reason to suppose that the marriage was anything but a happy one.
"This is borne out by the fact that solicitors at present do not appear to regard it as their duty to advise husbands and wives to take a conveyance of the matrimonial home in their joint names, although the advantages of doing so may be thought to be even more important than those attached to the registration of a class F land charge, not least because of the considerable saving in Estate Duty in the event of the husband dying first.
"It seems to me that in the case of the results of occupation conferred by the Bill a solicitor, like any other person, is entitled to take account of the practical realities of the situation with which he has to deal and should be under no obligation to advise a wife to register a charge when there is no reason to suppose that the marriage is likely to go, wrong."—[OFFICIAL REPORT, Commons, cols. 2736–37.]
I have asked your Lordships to be good enough to allow me to quote those words in order that I may say that I agree with them. The object of this Bill, if I may remind the House, is to enable a wife if her husband deserts her, or to enable the court if it thinks fit, to secure to the wife the continued possession of the matrimonial home with the children and prevent a deserting husband from selling the house over her head.
Since the Bill was before your Lordships' House a difficulty has arisen because the Law Society have taken fright at an observation made in your Lordships' House by the noble and learned Lord, Lord Denning, when he said, as I understood, that he hoped that all wives,

1151
from the start of the marriage, would at once rush to register a charge in accordance with their rights under the Bill. Any observation made by that noble and learned Lord is always regarded with veneration, but I am bound to make it plain that that is not the intention of the Bill; nor should I think that it was at all a good idea.
It is not intended that houses of married couples who are living happily together should be subject to charges on the Land Register by the wives. Indeed, it would place the staff of the Land Registry in considerable difficulties if they in fact did so. I do not think, therefore, that solicitors need be in the least apprehensive that, where they are dealing with husbands and wives who are living happily together, it is their duty to advise a wife to rush off and register a charge. I have ventured to say so much in order to minimise the effect of the observation which the noble and learned Lord, Lord Denning, made without, it may be, having given much consideration to what might have been the consequences of what he was saying on the conduct of solicitors.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 24]
In the Schedule, page 7, line 15, leave out ("for valuable consideration").
BARONESS SUMMERSKILL: My Lords, these words are unnecessary because the definition of a "purchaser" in Section 20(8) of the Land Charges Act makes it clear, in any event, that a purchaser means a purchaser for valuable consideration. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Summerskill.)
On Question, Motion agreed to.
1.2 p.m.
BARONESS SUMMERSKILL: My Lords, with the permission of the House, may I make a few final comments on this Bill and say how delighted I am to think that it will receive the Royal Assent to-night? I must confess that when my noble and learned friend who sits on the Woolsack referred to the comments of the noble and learned Lord, Lord Denning, I recalled that when he made those comments I applauded them. But the last
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thing I want to do is to cause administrative difficulties anywhere and to swamp the Land Registry. I simply hope that, probably from the newspapers, the women of the country will learn of their rights and of this new contribution to social legislation which will remove the legal disabilities of so many married women.
As a feminist, I am delighted that soon this measure will be on the Statute Book. But of course a Private Member cannot pilot a Bill through Parliament without the help of the expert—the expert who can help to draft it and to advise one through every stage. Therefore, I should like to pay tribute to the wonderful work of the Law Commission, whose Second Report came out two days ago. We have there men and women who are anonymous, but who are working very hard to improve our laws.
Then, of course, another place presents a difficulty to a Member of this place. I have observed through the years, when I have introduced Private Members' Bills, that your Lordships never look over your shoulder—at least, hardly ever—and are prepared to listen to a case with sympathy and understanding. If then you do not agree with it you reject it. Nevertheless, one always feels here that noble Lords listen without saying, "There is a small minority in my constituency who will not like this; therefore I shall reject it", or, "It will not look well in the newspaper if it appears that I have approved it". So I always find that when one is expounding a new measure here one is treated courteously and kindly by the House.
But it is a different proposition in another place, and one is faced with having to find somebody who not only has knowledge and experience but also has sympathy with the cause. So I should like to pay tribute here to the wonderful, brilliant young lawyer, Mr. Peter Archer, the Member of Parliament for Rowley Regis and Tipton, who successfully conducted this Bill through the Commons and who on Committee stage did not have an easy time. I am very grateful to him. Last, but by no means least, I should say this to my noble and learned friend who sits on the Woolsack. Without his continuing help and encouragement and expert assistance, I should never have seen this Bill to a

1153
successful end. May I thank him from the bottom of my heart for what he has done for me and for the women of the country?

ROAD TRAFFIC REGULATION BILL [H.L.]
1.5 p.m.
Order of the Day read for the consideration of the Commons Amendment.
THE LORD CHANCELLOR: My Lords, I beg to move that the Commons Amendment be now considered.
Moved accordingly, and, on Question, Motion agreed to.

COMMONS AMENDMENT
[The references are to Bill 303 as first printed for the Commons]
Schedule 6, page 106, line 9, at end insert—
("THE CIVIC AMENITIES ACT 1967
In section 25 for the words from 'sections' to '1960', where last occurring, there shall be substituted the words 'sections 20, 52 and 53 of the Road Traffic Regulation Act 1967',")
THE LORD CHANCELLOR: My Lords, I beg to move that this House cloth agree with the Commons in their Amendment. This is a Consolidation Bill, and all this Amendment does is to add to Schedule 6, "Consequential Amendments", an Amendment of Section 25 of the Civic Amenities Act 1967. The Bill for that Act was passed only on Monday and the Amendment could not, therefore, be made before. The Amendment is needed because Section 25 refers to three sections of Road Traffic Acts which will be repealed and re-enacted in the Consolidation Act, and as both Bills may receive the Royal Assent on the same day, and I understand will do so to-day, one cannot safely rely on Section 38(1) of the Interpretation Act to effect the substitution for the reference to those three sections of a reference to the corresponding provisions of the Consolidation Act. The Amendment makes the substitution. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
On Question, Motion agreed to.
[The Sitting was suspended at 1.7 p.m. and resumed at 2 p.m.]

SUEZ CANAL
LORD WINDLESHAM: My Lords, I beg leave to ask the following Question of which Private Notice has been given:
To ask Her Majesty's Government whether they will make a Statement about the opening of the Suez Canal to international shipping.
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, my noble friend Lord Chalfont will be replying to this Question in a Statement at a convenient moment after 3.30 p.m.

COMPANIES BILL [H.L.]
2.2 p.m.
Order of the Day read for the consideration of the Commons Amendments.
THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN): My Lords, we have already had a short debate on the amount of time available to your Lordships' House to consider the 351 Amendments which have been moved to this Bill in another place since it left here on January 31. I sincerely hope that it will be unnecessary to go over the ground then covered, and in pursuit of that aim I should like to apologise to the House for the deplorably short time now available for consideration of these Amendments. We have done our best to compensate for the unfortunate position in which the House has been placed by making available as much explanation as possible before to-day.
In fact, the task before us is not, I think, nearly as formidable as might appear from the sheer number of Amendments to be considered, because so many of them fall into groups associated with changes having the same end in view. I trust that this will become clear as we proceed with our task. In order to facilitate our task, we shall be asking the House to debate some large groups of Amendments, and to agree to our moving certain consecutive Amendments en bloc. A list of the proposed grouping of consecutive Amendments is available in the Printed Paper Office.
The Government are exceedingly anxious that all these Amendments be accepted to-day, in order to avoid the

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three months' delay which would otherwise arise in bringing into force those Amendments concerned with the control of insurance and the detection of fraud. In the interests of speed, therefore, I and my noble friends will make our initial explanations of these Amendments as brief as possible, and will reserve our longer comments only if these are called for in discussion. I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(Lord Brown.)
LORD DRUMALBYN: My Lords, the noble Lord said that we have already debated these circumstances but, of course, technically he is not correct. A statement was made, and some observations were made on that statement. In spite of the apology that the noble Lord has offered to the House, I do not think we can pass this Motion just like that because, after all, we are being asked to consider 352 Amendments, including 42 clauses—or we may say 40 clauses if we make allowance for the fact that in one case three new clauses do duty for one in the original Bill. The first Sitting day on which these Amendments were available to your Lordships was Monday of this week, so few noble Lords here will have had more than three days to examine them.
This, of course, is no fault of Members of the Government who sit in this House, who I acknowledge with gratitude have done their utmost to help noble Lords interested to have some idea of what they are expected to consider this afternoon. But I think that at the present time we are sometimes apt to lose sight of what Parliament is for. It is not enough for legislation to be carefully considered by Departments. The whole point of bringing legislation before Parliament is that in Parliament there is a wide cross-section of people with a wide variety of interests who are able to bring their particular points of view and their particular experience to bear on the legislation that is presented to them. If they do not have sufficient time to consider that legislation beforehand, the whole purpose of Parliament is frustrated.
My Lords, there are two democratic principles here which I believe are being
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violated. The first principle is that Parliament ought not to be asked, except in an unforeseeable emergency, to pass legislation which it has not had an opportunity to examine carefully. The second principle is that neither House ought to be asked to consider, still less to pass, legislation which it has no opportunity of amending or rejecting—apart, of course, from the Parliament Act. We may be told that we are perfectly free to amend or disagree with any of the Amendments before us provided we are prepared to accept the consequences, one of which is that, since the Government have so arranged business that there is no time left before Parliament rises for the other place to consider any Amendments your Lordships may make, the Bill could not then become law until the end of October—and we are told that the Government want the powers conferred in the Bill now. Of course, in such circumstances the Government must bear the entire responsibility if the Bill does not pass before the House rises, but this Government are already notorious for not accepting responsibility for the consequences of their own mismanagement.
In these circumstances, in view of the way this House has been treated, it would be entirely justifiable for your Lordships either to decline to accept this Motion, or else to treat the whole proceedings in the way that the Leader of the House in another place must obviously have intended; namely, as a pure formality. Her Majesty's Opposition do not consider that such a course, though justifiable, would be right. The proper thing to do is to consider these Amendments to see whether, in all the circumstances, they are acceptable to your Lordships. But for the Government to assume in advance that this is so would not be right. At best, that is taking a big risk.
My Lords, since we have only one day in which to examine these Amendments, I would suggest that it would be idle to try to examine every Amendment in this House to-day; and I agree with what the noble Lord has said, that we should try to take them in batches. We have no option but to allow many of these Amendments to be taken formally, even though it might have been possible to improve them. This is all the more regrettable in that nine of the new clauses,

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admittedly including two very short ones, came to Parliament for the first time on Report stage in another place; and that of the 303 Amendments, as distinct from new clauses, on the Order Paper at that stage, well over half were put down by the Government.
What makes the total of 40 or so new clauses all the more astonishing is that we were assured by the noble and learned Lord on the Woolsack on December 19 that the scope of the Bill was disclosure, and such matters as provisions with regard to insurance companies, in which field—that is, insurance—recent events, he said, have particularly shown urgent need that the law should be amended at once. He said that the Government would welcome any Amendments which were designed to improve the existing Bill but not, he hoped, to extend it. That may be found in column 1939. Then, in column 1943 he said that if we expanded the Bill in this House the Government would have to reconsider whether, after all, they could go further with the Bill beyond this House.
Now we have 40-odd new clauses, and we shall see when we come to the Amendments, that the scope and content have been extended quite considerably, in particular by the inclusion of new investigation clauses in Part I, and by the extension of the powers of the Board of Trade to investigate the affairs of insurance companies to cover all companies—something we were told would be reserved for the second Bill to be brought before Parliament in a subsequent Session. Then, Part II, which deals with insurance, has been turned upside-down by a completely new definition of "classes". All this makes nonsense of the noble and learned Lord's claim that any legislation on company law brought before your Lordships must be most carefully prepared.
I certainly cannot congratulate the Government on their handling of this Bill, but I hope that the arrangements we propose for handling it to-day will commend themselves to your Lordships. If your Lordships accept this Motion to-day, we on these Benches propose to concentrate on discussion of matters most of which would involve a series of Amendments; and I have given notice of them to the noble Lords opposite. We
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could discuss this proposal, I would suggest, on the first of the Amendments on which it arises. We are indebted to the noble Lord, Lord Shepherd, and to the Board of Trade for providing us with a mass of material which would have received close attention had there been more time. Apart from this, I should be content to allow intervening Amendments to be taken in between, and, of course, any noble Lord would be free, naturally and as always, to question any particular Amendment he chooses. If we deal with the Amendments in this way we shall, I think, make the best of our time and mitigate in some measure the Government's miserable mismanagement of this Bill.
LORD BYERS: My Lords, I do not propose to repeat the protest I voiced when the Statement was made from the Government Benches the other day. I realise that there is some urgency to get this measure accepted and on to the Statute Books, because, as I understand it, of the shaky nature of a number of companies, particularly in the insurance world, but I suggest to the Government that this state of affairs might have been better dealt with by confining the urgent measures to a separate Bill, so that we could have had more time to deal with this voluminous Bill. I am afraid that if we are not careful we are going to allow a number of bad points to get on to the Statute Book. I feel that we require full notice of the intentions of the Government with regard to the next Bill dealing with companies, so that we can put proper Amendments forward. In the circumstances, I think that what the noble Lord, Lord Drumalbyn, has suggested—that we concentrate on the major points—is right; but I am afraid that what happens normally in cases of rushing through legislation is going to happen again. We are going to have bad legislation on the Statute Book, and instead of saving time we are going to take more time to put it right in the future.
LORD ERROLL OF HALE: My Lords, I would apologise to noble Lords for arriving somewhat late. I wish only to add to what was said earlier, that we are in this difficulty: that while we appreciate the need for the Bill's passage, we deplore the fact that we are not able to give proper consideration to the

1159
Amendments. It is only because the Government have made representations to us of the great urgency to secure the Royal Assent that we are submitting ourselves to a procedure which I believe remains an affront to Parliament.
On Question, Motion agreed to.

COMMONS AMENDMENTS
[The references are to Bill 178 as first printed for the Commons]
[No. 1]
Clause 3, page 2, line 30, leave out paragraph (b) and insert—
("(b) if it be incorporated in Great Britain and if it be registered in England and the company be registered in Scotland (or vice versa), the country in which it is registered, and if it be incorporated outside Great Britain, the country in which it is incorporated; and ").
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): My Lords, with Amendment No. 1 can be grouped Amendments Nos. 6 and 8. I beg to move that the House doth agree with the Commons in Amendment No. 1.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 2]
Clause 3, line 13, leave out from ("Trade") to end of line 14 and insert ("agree that the information need not be disclosed").
LORD HUGHES: My Lords, with Amendment No. 2 are grouped Amendments Nos. 9, 10 and 13. I beg to move that the House doth agree with the Commons in their Amendment No. 2.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Huges.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 3]
Clause 3, page 3, line 33, leave out ("advantage's being") and insert ("the fact that advantage is").
BARONESS PHILLIPS: My Lords, I beg to move that the House doth agree with the Commons in their Amendment No. 3.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Phillips.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 4]
Clause 3, page 3, line 41, leave out subsection (7).
LORD BROWN: My Lords, in moving Amendment No. 4 I seek to discuss Amendments Nos. 12, 92, 114, 131 and 317. These Amendments are concerned with the withdrawal from the Bill of the Amendments inserted in this House concerned with no-par-value shares. In another place at Committee stage the Amendments inserted to deal with these no-par-value shares were omitted. My right honourable friend said in Committee:
"The view we really take … is that a technical case can certainly be made out, but we are not convinced that the technical case is sufficiently clear.…"
Noble Lords are already aware that this measure also involves changes in four or five other Acts, and changes, possibly in tax laws, too. To make certain that the changes introduced in the Bill were consistent with the consequential changes in other Acts, it would have been necessary to consider those other changes also. Otherwise it might have been found later that changes to the Bill were not apposite.
These are some of the reasons why the Amendments introduced here were deleted in another place. However, my noble friend has indicated his readiness to introduce these changes into the next Companies Bill which the Government intend to enact before the end of this Parliament. In the light of these comments I would ask your Lordships to accept these Amendments, and I beg to move that the House doth agree with the Commons in Amendment No. 4.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
2.17 p.m.
VISCOUNT ECCLES: My Lords, the history of these Amendments is going to be remembered with sorrow by those who care for the standards of legislation for which the British Parliament has become famous. Of course, the Government have the right, the power and the duty to remove from a Bill any Amendment which they conceive to be prejudicial to the Bill concerned. No one disputes that. But hitherto it has been thought that a Government also have the duty to give consistent and

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cogent reasons for the rejection. Amendments from any quarter were to be treated on their merits; and that was—and, I hope, will one day be again—an essential feature of government in this country by discussion and consent.
Here we have a proposal to introduce a system of no-par-value shares which had twice been recommended by influential Committees appointed by the Government of the day; and, at any rate, the Report of the Jenkins Committee, was very carefully considered and appreciated by the present Government. No public disapproval has been voiced against this system of no-par-value shares. In this House the Amendments were supported from all sides. Why then did the Government refuse to accept them? We have had a number of different reasons. The main reason, advanced by the noble and learned Lord the Lord Chancellor, was that the Government had decided in no circumstances to enlarge the Bill. The merits of the Amendments introducing new aspects of company law were therefore not to be discussed, and in this House the Government refused to discuss either the merits of these Amendments or the drafting of them.
This highly dictatorial attitude was, as your Lordships know, objected to in the Division Lobbies. We were also told that the consequential changes in other Statutes and in taxation required by a system of no-par-value shares had not yet been worked out. We met that objection by inserting into the Bill a clause which gave to the President of the Board of Trade the power to delay the coming into operation of this system until after these changes had been made in a future Finance Bill. I must say that I thought the Government's arguments about the consequential changes were very thin. As I think I have already told your Lordships, I gave notice to the noble and learned Lord the Lord Chancellor, before Christmas, that we intended to put down an Amendment introducing no-par-value shares when the Bill came before this House. We have had eight months, even if we go no further back than last December. There has been plenty of time to work out these changes, but in fact the Government have not been willing to do it.
The Government also hinted that there was some kind of bargain with the Back-
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Benchers in another place that they must hold back from putting down Amendments to enlarge the scope of the Bill and that, if they did, no Amendment from the Opposition to do something of the same nature would be allowed. This kind of bargain I consider very bad legislation. When the Bill reached another place nothing was heard of the restlessness of Back-Benchers to enlarge its scope and put down new provisions, and I cannot now easily believe that there was anything much in this argument. Indeed, the first spokesman in another place changed the ground for rejecting these Amendments. This is what Mr. Darling, the Minister of State said:
"There may well be a case for altering our company law to provide for the issue of no par value shares. We do not deny that. If the issue is properly discussed in Parliament—it has not been properly discussed yet—there may, under this Government, be a majority opinion in favour of the issue of no par value shares. But it is a matter which we would like to have discussed, and, if need be, we shall play our part in making sure it is discussed. What has happened in this case is that, without adequate Parliamentary discussion, provisions for the issue of no par value shares were put into the Bill in another place, and put into it in such a way that neither the advocates of no par value shares in the other place nor those of us who have to deal with the problem here can be sure that the drafting of the Bill on the matter is satisfactory."—[OFFICIAL REPORT, Commons Standing Committee E. col. 154, 2/3/67.]
My Lords, that is a shocking thing to say. If there was no discussion it was the Government who did not allow discussion. Your Lordships discussed no-par-value shares in this House and no one from the Government Front Bench ever referred to the drafting of our Amendments. This is one of the few occasions which I can remember when very serious work has been put in on the drafting of long Amendments on the advice of the very best lawyers in the City of London, and not one single minute has been spent by the Government in discussing the drafting of the Amendment.
I do not think there could be any argument more out of place to-day than that an Amendment must not be proceeded with because there is no time for discussion. What are we doing to-day? We are to pass 300 Amendments with far less discussion than was given to the Amendments on no-par-value shares. My Lords,

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there is one standard of legislation for Government Amendments and another standard for Amendments proposed from any other quarter of the House.
Of course, Mr. Jay, President of the Board of Trade, did not stand by all these flimsy far-fetched arguments put up by his colleagues. With a charming candour (and I was glad that the noble Lord, Lord Brown, read out his words) Mr. Jay told the Commons (col. 182, 7/3/67):
"The view we really take"—
of course he had to say that, it was high time someone said what the view really was—
"… is that a technical case can certainly be made out but we are not convinced that that technical case is sufficiently clear, or that the claim is sufficiently pressing, to justify making the change in this Bill."
Later on, the President said (col. 184):
"… although there is a technical case, it has not been made out with any clarity or cogency for making a change at this stage."
I do not know how much more time we were expected to spend in your Lordships' House making out the technical case. I thought it was made out by the noble Lord, Lord Polwarth, and other noble Lords on the other side of the House with extreme clarity and cogency, which of course was not the opinion of the President of the Board of Trade.
The Amendments have to come out, not because there was anything wrong with the system of no-par-value shares, but because, unless they had been put in by the Government, they could not be considered a pressing matter; and Parliament must learn its lesson not to challenge the view of the Labour Government on what is pressing and what is not. My Lords, this is a story of bad manners and bad legislation, and I do not know which I dislike more. I hope that the Ministers concerned realise that this is something which will long be remembered—particularly the manner in which it was done—by those who care about Parliamentary government. I have listened to what was said by the noble Lord, Lord Brown, and I must accept his undertaking that in the next Bill in the next Session these Amendments will appear again. It will be a matter of very great interest to us all to see whether in fact the Government are going to make much change in the drafting which was
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so carefully prepared by such very eminent lawyers.
LORD ERROLL OF HALE: My Lords, before we part with this subject may I say that I was most interested to hear what the noble Lord, Lord Brown, had to say about the next Bill. It was always to come in the next Session, but now he says that it will come before the end of this Parliament. I would point out to my noble friend Lord Eccles that we have no assurance that we are to get the next Companies Bill in the next Session, but only in the life of the present Parliament. I shall be very interested to see whether it comes even during that period. I hope that the noble Lords opposite, and the noble and learned Lord the Lord Chancellor, will pay special heed to what my noble friend has said about the manners of legislating, as well as making sure that the legislation is good.
2.27 p.m.
LORD BROWN: My Lords, I want to make a very brief comment on what was said by the noble Viscount, Lord Eccles. The argument I have used in this House is directed to the complexity of the consequential legislation arising out of the whole business of no-par-value shares. This has been put on one side as not being a serious argument, but I would draw the attention of the House to the fact that the last Government, in 1957, I think, studied this matter seriously. If my memory is correct, they gave an undertaking that the whole matter of the introduction of no-par-value shares and the examination of the consequent legislation—which was regarded at that time as a complex matter—would be examined in due course. The fact is that it has not been examined. I am not criticising the past Government for this, but merely drawing attention to the fact that there is some evidence of the complexity of this measure contained in that little story of what happened in the last Government.
If I may I will leave the matter there as I should prefer to rest the case for the withdrawal of these provisions from this Bill more on that argument than any other. I am sure that the noble Viscount will agree, despite his enthusiasm for no-par-value shares—which I have already agreed would be a useful

1165
measure—that it is not a matter of great urgency. It is a matter of presentation of information rather than anything which affects the security of our economy and so on, and therefore not so important as the insurance provisions and provisions with regard to fraud. I think that too little account has been taken of the argument put forward by the Government, and I will, so to speak, rest my case there.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 5]
Clause 4, page 4, line 2, leave out ("in") and insert ("comprised in the equity share capital of")
LORD BROWN: My Lords, in moving that the House doth agree with the Commons in Amendment No. 5, I would seek permission to speak also to Nos. 7 and 11. Clause 4 requires a company to give information about another company if it holds more than 10 per cent. of the other company's shares of any class. Amendment No. 5 changes the condition to any class of equity share. Amendment No. 7 states that the company must give information of non-equity holdings in the other company if it holds 10 per cent. or more of the equity share capital of the company. Amendment No. 11 adds a definition of equity capital, which appears in the original Act. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 6–13]
Clause 4, page 4, line 7, leave out from ("meeting") to end of line 9 and insert—
("(a) the name of that other body corporate and—

(i) if it be incorporated in Great Britain and if it be registered in England and the company be registered in Scotland (or vice versa), the country in which it is registered; and

(ii) if it be incorporated outside Great Britain, the country in which it is incorporated.")

Clause 4, page 4, line 14, leave out ("or of other classes") and insert ("(whether or not comprised in its equity share capital), or of other classes (whether or not so comprised),")
Clause 4, page 4, line 24, leave out from ("and") to end of line 28 and insert—
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("(i) if it be incorporated in Great Britain and if it be registered in England and the company be registered in Scotland (or vice versa), the country in which it is registered; and

(ii) if it be incorporated outside Great Britain, the country in which it is incorporated; and")

Clause 4, page 4, line 38, leave out ("consent to the information's not being disclosed") and insert ("agree that the information need not be disclosed")
Page 5, line 10, leave out ("advantage's being") and insert ("the fact that advantage is")
Page 5, line 24, at end insert—
("( ) In this section 'equity share capital' has the meaning assigned to it by section 154(5) of the principal Act.")
Page 5, line 25, leave out subsection (8). Clause 5, page 5, line 44, leave out ("consent to the information's not being disclosed") and insert ("agree that the information need not be disclosed")
BARONESS PHILLIPS: My Lords, with permission, I beg to move that this House doth agree with the Commons in Amendments Nos. 6 to 13.
Moved, That this House doth agree with the Commons in the said Amendments.—(Baroness Phillips.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 14–18]
Clause 6, page 6, line 3, leave out ("be shown")
Clause 6, page 6,line 6, leave out paragraph (a) and insert—
("(a) if one person has been chairman throughout the financial year, be shown his emoluments (unless his duties as chairman were wholly or mainly discharged outside the United Kingdom), and if not, be shown with respect to each person who has been chairman during the year, his emoluments so far as attributable to the period during which he was chairman (unless his duties as chairman were wholly or mainly so discharged) ")
Clause 6, page 6, line 9, leave out ("of all the directors") and insert ("with respect to all the directors (other than any who discharged their duties as such wholly or mainly outside the United Kingdom), be shown")
Clause 6, page 6, line 17, leave out subsection (2) and insert—
("(2) If, of the directors of a company (other than any who discharged their duties as such wholly or mainly outside the United Kingdom), the emoluments of one only (so far as ascertainable from information contained in the company's books and papers or obtainable by right by the company from him) exceed the relevant amount, his emoluments (so far as so ascertainable) shall also

1167
be shown in the said accounts or in a statement annexed thereto; and if, of the directors of a company (other than any who discharged their duties as such wholly or mainly outside the United Kingdom), the emoluments (so far as so ascertainable) of each of two or more exceed the relevant amount, the emoluments (so far as so ascertainable) of him (or them, in the case of equality) who had the greater or, as the case may be, the greatest shall also be shown in the said accounts or in a statement annexed thereto.")
Clause 6, page 6, line 35, at end insert ("(other than contributions paid in respect of him under any pensions scheme)")
LORD BROWN: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 14 to 18 inclusive. At the same time I would seek permission to speak to Amendments 20, 21, 23, 24, 25 and 64. Clause 8 of the Bill releases companies from providing data on salaries of over £10,000 per annum if those receiving them work mainly overseas. The first purpose of the Amendments is to make exemptions applying to the disclosure of salaries of chairmen and directors working mainly overseas. The second purpose is to exempt from inspection the contracts of employment of those directors mainly working overseas. The third purpose is to exclude from emoluments subject to publication under Clause 6 those contributions paid by a company in respect of any director under a pension scheme.
It has been pressed upon the Government in another place that the inclusion for the purpose of publication of emoluments of contributions made under a pension scheme is not reasonably possible, because it is not always possible to divide up sums put aside for pensions between the individuals receiving them, and if the procedure at present in the Bill were to continue there would be a disparity between some emoluments which contained personally attributable pension sums and others which did not. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 19]
Clause 6, page 7, line 3, at end insert—
"(5A) A company which is neither a holding company nor a subsidiary of another body
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corporate shall not be subject to the requirements of this section as respects a financial year in the case of which the amount shown in its accounts under section 196(1)(a) of the principal Act does not exceed £7,500.").
LORD BROWN: My Lords, in moving that this House doth agree with the Commons in Amendment No. 19, I seek the House's permission to speak also to Amendments Nos. 22, 38, 39, 46 to 50, 116, 280, 281, 302 and 303. Clause 37 permitted unquoted companies to leave out of the accounts and directors' report filed with the Registrar of Companies information about directors' and senior executives' emoluments required by Clauses 6, 7 and 8 and Section 196 of the Companies Act 1948 and analysis of turnover and profitability required by Clause 17.
The clause was deleted at Report stage in the House of Commons. A number of changes, have, however, been made to the Bill to exempt small companies from certain disclosure requirements. Thus companies which are not members of a group are exempt from the requirements in Clauses 6 and 7, provided that the aggregate remuneration of the directors does not exceed £7,500 a year. Such companies whose turnover does not exceed £50,000 a year are exempt from the requirement to disclose turnover or the analysis of turnover and profitability between differing activities; companies (other than holding companies) with a turnover of £50,000 (instead of £20,000 as originally provided for) will not be required to disclose exports, nor will holding companies presenting consolidated accounts if the group turnover does not exceed £50,000. It should be noted that where a company qualifies for one of these exemptions it can omit the information from its accounts entirely; that is to say, not only the accounts filed with the Registrar but the accounts circulated to members. I beg to move.
ed, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
2.39 p.m.
LORD DRUMALBYN: My Lords, we regard this as an important series of Amendments, partly because it includes the abolition of Clause 37, which was inserted in your Lordships' House and deals with the exemption of unquoted companies from having to attach a copy of

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the directors' report to their annual return. It is not worth while going over the arguments we had, but I should like to ask the noble Lord whether he can give us any idea of the number of companies involved. He put up the argument that there were some unquoted companies of very considerable substance, and that for that reason he could not accept the Amendment. It would be interesting to know how many unquoted companies there are with, shall we say, a turnover of £250,000.
It is all a question of what level is fixed for exemption. We have not any real figures on this, and I doubt whether the Government have either. I believe that they have some estimates based on a sample that has been taken, but I wonder whether the noble Lord can tell us what is the basis of the level of £50,000 that has been chosen in these Amendments. How many companies will fall below this level? Of those companies, how many are trading at all? It is difficult to say. No doubt a good many of the retail companies will be excluded from this—and this, of course, was one of the arguments which we put forward before. But I am not at all certain that all the independent retail establishments with only the one shop will be excluded from this level. I am, of course, talking more of the traders in the high streets of the small towns, which have a turnover of anything between £30,000 and £150,000 a year. I would ask the Government particularly to watch how this works. If they are going to introduce another Bill in a couple of years, they will by that time have a good deal of evidence on which to draw.
The other matter that I think is important when fixing a figure is that, at a time when values are changing fairly rapidly, the figure soon becomes out of date. We shall have the same problem when we come to consider the minimum assets required in the insurance provisions. This is a difficult problem. But the figure we put into the Bill now will be unrealistic in a few years' time if the present trends continue. Some measure has to be devised for dealing with this. I should have thought it was advisable, in putting figures of this kind into the Companies Bill, to make provision at this time. But the least we can ask is that consideration should be given to this, and to the best
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means of making such provision, so that when we come to the next Bill this can be inserted.
We naturally welcome the concessions, in so far as they go. We do not think they go far enough, and we think that the Government should watch this most carefully to see whether there is any real advantage being derived by the economy through the disclosure of these figures. My noble friend said at an earlier stage:
"The last thing we want to do is to present a whole horde of figures that are going to be of practically no use at all except to individuals who are studying for their Ph.D. as a source of material on which they can make theses."
This is not what is required by the economy. Certainly this will require further effort, and we doubt very much whether that effort will be justified in any way by the results that will be achieved.
LORD CHORLEY: My Lords, I should like to put a slightly different point of view from that which the noble Lord opposite has been putting. I dare say he will say: "That chap over there has been concerned with supervising these Ph.Ds., and it is impractical." But I hope that this is not altogether so. It seems to me a pity, so to speak, that this concession has been made. I think that the more information which is available in the business world, the better. While I have not had a great deal of experience in the actual practical handling of company work, as a lawyer one cannot study the law reports without realising that these very small companies are—and this is a point which I made on an earlier stage of the Bill—frequently used as a vehicle of oppression by dominant personalities, who often treat the company as if it belonged to them. I think the more information that is available to the unfortunate widows, and others, who often are very much oppressed and cannot get effective legal assistance because of the absence of information, which often exists in these cases, the better things will be. These people would be better off, and more able to protect their interests, if this sort of information were made available. Therefore, I am a little sorry that this concession has been made, and I certainly should not like it to go further.

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I do not want to go over the main emphasis of the speech I made on Second Reading, but it has always seemed to me that the privilege of incorporation was too easily acquired: and I think this was the view of the Jenkins Committee. It would be better if the people who run the small liability companies were confronted with difficulties, in the way of disclosure of information and that sort of thing, which would drive them out of the area of incorporated associations and back into that area in which business is done by partnerships, and in which it is not so easy to adopt oppressive tactics towards people, so to speak, peripherally interested, but so often financially very much interested, in the concerns of a company. Therefore, I take a different view about this from the one expressed by the noble Lord opposite.
LORD HAWKE: My Lords, perhaps I may support one portion of the view of the noble Lord, Lord Chorley. It is something which I put forward on Second Reading, when I was briefed by a very able Chancery lawyer on the subject; namely, that the Government, before the next Company Bill comes along, should see whether they cannot find a new animal, something that is not a partnership and is not an incorporated company. It is really ridiculous that one's baker, butcher and so on, with a turnover of £10,000, £15,000 or £20,000, should be a limited liability company and have to go through the same motions as I.C.I.
LORD BROWN: My Lords, I do not want to prolong the discussion other than to say that the criterion of turnover and aggregate now proposed in these Amendments is a somewhat more objective means of differentiating between companies—on the ground that it differentiates on terms of criteria and of size—than the old one of trying to differentiate on the ground as to whether it was a private company or a quoted company. I will not say any more on that.
The noble Lord, Lord Drumalbyn, has asked me to comment on the basis upon which this figure of £50,000 turnover was selected. I am the first to admit that it is somewhat arbitrary. One is in the old
1172
position of not knowing which comes first, the hen or the egg. If we had information about the turnover of companies in this country we could probably make a wiser choice as to the limit at which to set the size of the company in terms of turnover; but at the present stage we do not know. However, the best estimate that we are able to make about this matter—and I cannot vouch for the accuracy of this estimate because of the difficulty of making it—is that this criteria of £50,000 turnover will probably exempt 350,000 companies out of the 540,000 on the register.
The noble Lord has also asked the Government to watch how this works out, with a readiness to change the figure if it does not appear to work out satisfactorily. I am quite happy to give that undertaking, although I think it would probably take a little longer than he expects to get relevant figures, because of the fact that many of these figures will not appear for something like 18 months after this Bill is enacted.
He has also asked me to comment on the effect of inflation on figures of this sort in legislation. The Government are concerned generally about this. Inflation is bringing all sorts of quantitative money figures, inserted in legislation in a situation where they no longer have the results they were supposed to have when the legislation was drafted; and it is a matter for consideration, although I cannot promise action in the near future. The noble Lord, Lord Hawke—
LORD DRUMALBYN: My Lords, the noble Lord is not suggesting that one single solution can be found for these problems everywhere. All I was suggesting was that a solution should be found for the problem so far as this particular legislation was concerned. I think the noble Lord is being very optimistic indeed if he thinks there is a possibility of finding one general solution that will cover the whole spectrum, from social legislation to Companies Bills.
LORD BROWN: My Lords, I do not want to go into the matter. As it happens, I have some personal ideas on it which I had probably better not give voice to here at this stage. Personally, I do not think the matter is as difficult as some might feel. No, I am not suggesting it should cover the whole gamut of legislation. But if one were to introduce a

1173
principle of this sort it would be wise to make it cover a large spectrum. There would be no point in making it cover one piece or one clause of the Bill.
The noble Lord, Lord Hawke, has raised the issue of the need for what was called "a new animal". That was discussed on this Bill at Second Reading, and I believe in the Committee stage too. I would make it clear that the Government have undertaken to introduce a second Companies Bill during the life of this Parliament. The possibility of a third Bill, which would consider issues of this sort, is' under consideration, but it is unlikely that it will be produced in the life of this Parliament. This is a very big issue indeed—to consider a new form of company and the many other bigger issues that have been raised in this House around the whole subject of company legislation—and it is certainly not a matter that could be foreseeably drafted in the form of legislation in the next year or two.
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 20–25]
Clause 6, page 7, line 4, after ("section") insert—
("(a)").
Clause 6, page 7, line 10, at end insert ("and
(b) 'the relevant amount'—

(i) if one person has been chairman throughout the year, means the amount of his emoluments;

(ii) if not, means an amount equal to the aggregate of the emoluments, so far as attributable to the period during which he was chairman, of each person who has been chairman during the year.").

Clause 7, page 7, line 30, leave out ("and (5)") and insert ("(5) and (5A)").
Clause 8, page 8, line 16, after ("subsidiaries)") insert ("and").
Clause 8, page 8, line 19, leave out from ("tax") to ("and") in line 20.
Clause 8, page 8, line 22, leave out from ("cash") to end of line 24.
BARONESS PHILLIPS: My Lords, with permission, I will formally move Amendments Nos. 20 to 25 en bloc. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Baroness Phillips.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 26]
Clause 10, page 9, line 38, leave out subsection (4).
LORD WALSTON: My Lords, coupled with this Amendment are a very large number of subsequent Amendments in the Schedules which, when the time comes, I will move formally. As it is, I do not propose to speak at any length on this Amendment, unless noble Lords would like me to amplify any of my short remarks. Noble Lords will remember that the Jenkins Committee recommended that the accounts of a company should be required to include a summary, covering the five financial years ending with the date of the balance sheet, of issued share capital and reserves, annual profit before and after tax, annual dividend and turnovers. The Bill as at present before your Lordships provides for just that. But subsequently a joint committee of leading accountancy bodies and various other experienced people have pointed out that, although the proposal was welcome in principle, there are very considerable practical difficulties in drawing up such a summary, and possibly these practical dfficulties had not been taken into account in drafting the Bill. Therefore, while I still feel that the proposal is a sound one—and I hope that many companies who do this already will continue to do this sort of thing—the purpose of these Amendments is to leave out all references of summary from the Bill. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 27]
Clause 13, page 12, line 2, at end insert ("provided that the condition mentioned in the foregoing subsection with respect to shares and debentures is satisfied at the time of his appointment.").
LORD WALSTON: My Lords, one of the consequences of the abolition of the status of exempt private companies is that all companies will be required to have auditors with the qualifications which are now required of the auditors of public or non-exempt private companies. Some of the present exempt private companies at the moment have auditors who are not

1175
qualified for the appointment, and so will have to appoint new auditors. Clause 13 contains a number of transitional provisions in order to give companies in this position time to do what is required of them. The intention is that these transitional provisions should be available only to a company which continues to have the characteristics of an exempt private company. But the effect of this intention was not in the subsections in the form in which they left the House of Lords. This Amendment repairs that omission, and therefore I hope your Lordships will agree to it. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 28]
Clause 13, page 12, line 3, leave out ("section 161(2)(b)") and insert ("subsection (2)(b) or (3) of section 161").
LORD WALSTON: My Lords, this Amendment has a bearing on the previous Amendment which I have just spoken to. An exempt private company, unlike other companies, may appoint as auditor a person who is the partner of, or in the employment of, an officer or servant of the company. For example, a company may appoint as auditor the partner of an accountant who is one of its directors. This privilege will cease with the abolition of the status of "exempt private company", but subsection (3) is intended to permit it to continue for four years. I hope that that gives sufficient explanation of this Amendment, and that your Lordships will agree to it as being a practical one designed to carry out the wishes of your Lordships. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 29–32]
Clause 13, page 128, line 7, leave out ("immediately before his appointment") and insert (",on that day,")
Clause 13, page 128, line 7, leave out ("was") and insert ("is").
Clause 13, page 128, line 7, line 8, at end insert ("the condition mentioned in subsection (1)
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above with respect to shares and debentures is satisfied.")
at end insert ("at the time of his appointment and, if this Act had not passed, the said subsection (3) would not operate to disqualify him for appointment")
BARONESS PHILLIPS: My Lords, with permission, I should like to move en bloc Amendments Nos. 29 to 32. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Baroness Phillips.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 33]
Clause 15, page 14, line 26, leave out ("eight") and insert ("nine").
LORD HUGHES: My Lords, with Amendment No. 33, I wish to associate Amendments 45, 52 and 130. I beg to move Amendment No. 33.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
LORD DRUMALBYN: My Lords, does the noble Lord wish to give an explanation of the series at this point, or to wait till we come to No. 45?
LORD HUGHES: My Lords, I shall be quite happy to do it at this time. I understood that this was one on which the noble Lord changed his mind and agreed to permit it to be dealt with formally. Amendments Nos. 33, 52 and 130 are incidental to No. 45. The purpose of the new clause in Amendment No. 45 is to require disclosure in a directors' report of numbers employed and the total wages and salaries bill. The requirement is, however, limited to companies employing more than 100 people. I think that the best way in which I could give information on this matter is to repeat what my right honourable friend the President of the Board of Trade said in another place on Second Reading. He used these words:
"I must also advise the House that I have decided in the course of the Bill's passage that, in the interests of industrial efficiency and modernisation generally, we ought to add one more item of disclosure to those in the Bill; that is a record of the total manpower employed by the company concerned, and of

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the total wages and salaries bill. In the National Conference on Productivity held by the Prime Minister last September, the view was strongly expressed from both sides of industry that such disclosure would be a further spur to industrial efficiency; and the C.B.I. supports this.
I therefore intend to move an Amendment in Committee to this effect, but to limit this obligation to companies employing more than 100 persons, so as again to avoid imposing excessive extra paper work on small companies where the information might be of least public value."—[OFFICIAL REPORT, Commons, col. 364; 14/2/67.]
The clause as it now appears before us in Amendment No. 45 gives effect to that intention expressed by my right honourable friend on Second Reading in another place.
3.2 p.m.
LORD ERROLL OF HALE: My Lords, I am naturally grateful to the noble Lord for his explanation of the key Amendment No. 45, which is preceded by the paving Amendments on which this debate is now about to take place. Both I and my noble friend, Lord Drumalbyn, will have a great deal to say on this subject, because in our opinion it is a ridiculous, useless and unnecessary addition to the Bill. Furthermore, if it had been necessary it could have been put in when the Bill was originally presented in this House, but it was introduced at a later stage. We happen to know that the Board of Trade themselves did not want it; that it was forced upon them by the Department of Economic Affairs, and that it will not help national efficiency or anything else. It was merely said in another place that at a Prime Minister's Conference on Productivity both sides agreed that this would be an aid to national efficiency. We know how these conferences are arranged and rigged so that agreement is obtained over a wide field of related matters. This one is slipped in, and the feeling is, "It is not worth having a row over this particular one, because it is time to get away at the end of the day "—and so on. No case has been made out that this information is necessary in the interests of national efficiency.
Then we are told that it should not apply to companies having fewer than 100 employees, because of the additional paper work that it will impose upon them. But, of course, the additional paper work is just as burdensome to larger companies,
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pro rata to the number of their employees, as it is to the smaller companies. This idea that because a company is big it can just take on any amount of additional paper work is ridiculous. I congratulate the Government on at least realising that they are imposing an additional burden of paper work. This is not a contribution to national efficiency at all. Far from it. It provides for a series of out-of-date, generalised figures which will be of little use to anybody in any Department of Government or in private life. The Government have not made out a case for it at all. It is not relevant to company legislation. The whole thing could have been obtained by means of an order under the Statistics of Trade Act 1947, which they have conveniently forgotten for this purpose.
The Government are going to have great difficulty in extracting all the information and collating it when they get it, because all the directors' reports will be presented at different times of the year, in different forms, by the various chairmen of the companies and stored away in Companies House; and it will have to be extracted individually, case by case, because it cannot be computerised. Therefore the information will not be made use of at all. But this great mass of material has to be collected and the paper work done, which is admitted by Her Majesty's Government to be a severe burden on small companies. This paper work will have to be carried out year after year, simply at the whim of a few old boffins in the Department of Economic Affairs. That is what it amounts to. No case has been made out for this, and for the Government's saying that they must have the Royal Assent to this Bill to-night we should have divided on this Amendment and sent the clause back to the Commons for re-examination. What we object to is that there has been no proper consideration of this clause in your Lordships' House, and we have no time to consider it now properly, or to amend it—and by that I mean the power to amend. We are deprived of the power to amend this clause.
We have been treated to a most flimsy explanation, merely a quotation from what a Minister said in another place. No clear justification has been given for this ridiculous unnecessary imposition upon companies in this country. We

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deplore it; and were it not for the greater issue at stake, namely, the need for the Royal Assent to-night, we would have thrown this ridiculous clause out and sent it back to the Department of Economic Affairs, where it properly belongs.
LORD CHORLEY: My Lords, the noble Lord, Lord Erroll of Hale, with typical truculence, if I may be allowed to say so, has condemned out of hand this important provision in the Bill. He speaks for himself and some of his noble friends behind him, but after all it was agreed at a very important conference at which business interests of great moment were represented, and the Prime Minister himself was present, and it is in accordance with the whole trend of modern company law, which has been directed more than anything else to the disclosure of important information, not only about the actual affairs of companies, but of information which is of the very greatest value to those on whom we have to rely—the economists.
SEVERAL NOBLE LORDS: Oh ! The economists.
LORD CHORLEY: It is all right for noble Lords opposite to laugh, but the whole government of this country, and not only of this country but of every country in the modern civilised world, is to a large extent based on the advice of economists. The science of economics is one of the great modern sciences. It is all very well for noble Lords opposite to laugh out of hand, but they know perfectly well that when they are in power they consult economists. The control of the country's industry and economic affairs is to a very large extent based on the expert advice that the Government receive from the economists, and I deplore this quite gratuitous attack upon this important class of experts, coming from the Benches opposite, which is based on nothing but prejudice and ignorance.
LORD HAWKE: My Lords, I think the noble Lord is under some misapprehension. The figures which the economists want in order to run the economy of the country are already contained in the Statistical Digest. Presumably they get those figures from some authoritative source, and therefore I do not see that it is necessary to have this particular clause in the Bill. I have no doubt that the
1180
noble Lord will find it valuable in his particular academic studies, but I do not think it will be the slightest use to any Government Department.
Among other things, a half-time person counts as one. It is impossible to compare the output per employee, for instance, between two businesses, one of which is run by half its employees on half time and the other all on full time. It would be a statistical distortion, and would merely add to the work of the persons in the firm. What is more, it will add to the work of the auditors, who are already in terribly short supply in this country. Everything in the director's report has to be verified by the auditors, and this will amount to many thousands of man hours by chartered accountants and will be an appalling wastage of time.
LORD DRUMALBYN: My Lords, I wonder whether I might put this point to the noble Lord, Lord Chorley. I am quite certain that if he made more careful inquiries he would find that the language used by my noble friend in regard to this clause was nothing to the language used by some of those on his own side about it. There is of course a place for information of this kind. As my noble friend Lord Hawke has said, this information is available, but not necessarily from company to company.
What are we being asked to do? We are being asked to put in accounts figures that have to deal purely with the number of employees. It has nothing to do with accounts. In addition to that, of course, there has to be added the figure of the total wages, presumably with the object that you then divide the one into the other and say that over the year there have been 363·567 employees on average and you divide those into x, x being the total amount of the wages. What sort of figure are you going to get out of that, and what on earth is the use of it? This is why we are objecting to this. It is a perfectly useless figure to put in. I should not have thought that it will give a great deal of trouble, but it is totally out of place, with no importance and no significance. If this is to be done at all, it should be done in the "Neddies". They should make comparisons, as they do, not necessarily by companies, so that comparisons can be made of total wages costs in certain

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given activities. Here again I hope the noble Lord will have a very close look at this. These figures may be used for facile and totally irrelevant and misleading comparisons. I hope the Department will look to see how misleading these comparisons can be and when the new Bill comes forward they will abandon them.
3.11 p.m.
LORD HUGHES: My Lords, I am not convinced that the noble Lord, Lord Erroll of Hale, was as truculent as my noble friend Lord Chorley thought he was, because it seemed to me that in spite of his violent language he was not able to keep the smile from his face. He has an advantage over me. My experience of Prime Ministers is confined to the present one, so when he claims he has knowledge of the way Prime Ministers' Conferences may be "rigged", he at least had experience of a number of them, and the breadth of his experience I must concede. When he went on to talk about his inside knowledge that this came from the D.E.A., and that the Board of Trade did not wish it, again I must concede that his contacts with the D.E.A. are closer than my own. He may or may not be right; I am not in a position to argue. But I can argue when he misuses the way in which I quoted my right honourable friend.
The noble Lord said the President of the Board of Trade had admitted that this was excessive extra paper work putting an additional burden on people. What I did say, in quoting the President of the Board of Trade, was that this obligation was limited to companies employing more than 100 persons, so as to avoid imposing excessive extra paper work on small companies, where the information might be of the least public value. He completely ignored the last part of the statement. It may be justified to ask people to do additional work if the results which come from it are justified in the public interest. I admit that in these matters it can only be a matter of the opinion of the Government of the value of the information they are getting, against the opinion the noble Lord expressed of its lack of value. If he is right that the D.E.A. are the power behind the throne in this matter, and if he and his noble friends are equally right that the statistics which the D.E.A. are seeking
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are already there in information available to the Department, it makes me wonder whether his source of information is as reliable as he thinks it is. I doubt whether the D.E.A. would go to all this bother to get the Board of Trade to do something it did not want to do in order to provide the D.E.A. with information they already have. I doubt it very much.
LORD POLWARTH: My Lords, may I submit two points on this? First, there is the one put by my noble friend Lord Hawke, concerning the additional burden on auditors which is being added to the many already imposed by this Bill and the previous recent Statutes on taxation. Secondly, I am entirely in favour of the provision of adequate and accurate statistics in the right form and in the right place. I submit that the companies' accounts are not the right place. Nor can a figure which, for example, lumps in one average every salary in the company, ranging from the general manager to the lady who makes the tea, be of any conceivable value statistically.
LORD ERROLL OF HALE: Are we to have a reply?
LORD HUGHES: My Lords, with respect (and the noble Lord, Lord Polwarth, knows the respect in which I hold him), except for the reference to chartered accountants he has not raised a point not already raised by the noble Lords, Lord Erroll of Hale and Lord Hawke. He sought to reinforce the point made by Lord Hawke. But as the value or otherwise of the criticism depends on the value we place on the information, and I have already admitted there must be a difference of opinion as to what that value is, I do not think I can usefully add anything to what I have already said.
LORD BRECON: My Lords, would the noble Lord not agree that companies already make voluminous reports to the Board of Trade every year, and if this information is not already given there could it not be asked for in future reports and let the Board of Trade collate these, rather than give it in the annual report.
LORD HUGHES: My Lords, it is true that the Board of Trade have at the present time samples of this information, but not in the comprehensive form which this Amendment will make possible.
LORD HAWKE: My Lords, is it not correct that an enormous proportion of the trade of the country is carried on by companies employing less than 100 persons. They are not to get information from these. Surely the information from 99 companies employing 100 persons is just as valuable as the information from one company employing 9,900 persons.
LORD HUGHES: My Lords, in the light of experience the Government might arrive at the conclusion that the noble Lord, Lord Hawke, is right, and if so we should lower the figure.
LORD CHORLEY: My Lords, might not a sensible man deduce from the fact that as the Board of Trade already have samples of this information, now that they want it comprehensively it shows they think it is of great value to them.
LORD DRUMALBYN: My Lords, an ex-cathedrâ statement has been made by the President of the Board of Trade that this is in the interests of industrial efficiency and modernisation. May I ask a simple question: how is it?
LORD HUGHES: My Lords, the noble Lord, Lord Drumalbyn, like his noble friend Lord Erroll of Hale, has had experience of the Board of Trade, and I am quite certain that there must have been many cases, when they were at that office, on which they would have been quite unable, without notice, to get up and say the particular use to which the information they had obtained might be put at any given time. But I do suggest, as a general answer to his question, that it is bound to be of value in the attempts to improve the economy to have the maximum amount of information on employment in the country with the minimum of inconvenience to the individual companies concerned, because the efficiency of this country depends more and more on the extent to which its manpower is put to the best possible use.
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 34–36]
Clause 16, page, 14, line 40, leave out ("those assets") and insert ("such of those assets as consist in interests in land")
Clause 16, page 14 line 42, leave out ("thereof as shown") and insert ("at which they are included")
Clause 16, page 15, line 2, leave out ("contain particulars of that difference") and insert
1184
("indicate the difference with such degree of precision as is practicable")
LORD HUGHES: My Lords, with the permission of the House I will move Nos. 34, 35 and 36 en bloc. I beg to move that this House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 37]
Clause 16, page 16, line 45, leave out from body") to ("to") in line 46 and insert—
("(4) An interest in shares or debentures which, under the provisions of this Part of this Act referred to in paragraph (e) of subsection (1) above, falls to be treated as being the interest of a director shall be so treated for the purposes of that paragraph, and the references in that paragraph")
LORD HUGHES: My Lords, with Amendment No. 37 I wish to associate Amendments 79, 80 and 127. The substantive Amendments are Amendments 79 and 80. Amendment No. 79 extends the provisions under Clause 24 to the spouses and the children of directors. Clause 24 prohibits a director of a company from buying an option on the shares or debentures of his company or of any other body corporate which is a subsidiary of the company or the holding company of the company or a subsidiary of the company's holding company. This clause extends the prohibition so that it also applies to the spouse of a director and to a director's infant children. For example, the wife of a director is prohibited from buying an option on the shares of the company of which her husband is a director.
Subsection (1) states that Clause 24 shall apply to the spouse or infant child of a director as it applies to the director. It is a defence for a person charged with an offence under Clause 24 as applied to prove that he did not know that his spouse or parent was a director of the company in question. Subsection (2) includes step-children and adopted children. Subsection (2) of Clause 24 states that a person in accordance with whose directions or instructions the directors of a company are accustomed to act shall, for the purposes of the clause, be deemed to be a director of the company. Such

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a person is also deemed to be director for the purpose of this clause. My Lords, I beg to move Amendment No. 37.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
3.22 p.m.
LORD DRUMALBYN: My Lords, I understand we are discussing these Amendments en bloc. Of course we have no observations on Amendment No. 37; but I think we ought not to part with Amendments Nos. 79 and 80 without some discussion.
LORD HUGHES: My Lords, I deliberately did not say anything about Amendment No. 80, which is of course associated but is slightly different. Noble Lords may think that I should speak at this time to Amendment No. 80, and they may wish to take these Amendments together. I will adopt whichever course is convenient to your Lordships.
LORD DRUMALBYN: My Lords, I think it would be better to take Amendment No. 80 when we come to it, in order that we do not get confused between these two clauses. The point here is that the spouse or child in whose name an option is taken is deemed to be, or will be, guilty of an offence unless that person can prove that he or she had no reason to believe that, in this case, the husband or the father had been or was a director of the company. Surely this cannot be adequate.
We are totally in sympathy with the purpose of this clause to avoid evasion. In fact, one wonders whether it goes far enough. But surely if a person is going to be charged with an offence, that person must have knowledge of that offence. It is quite wrong to say that somebody has constructive knowledge merely because, let us say, the wife knows that her husband is a director of a company. Wives do not know all the things that directors or their husbands do in companies. Why should they know this particular thing? If the director takes an option in his wife's name, how can she possibly know about it? And why should she be convicted of an offence unless she does have knowledge that this has happened? I am not sure that this is satisfactory. I should be grateful if the noble Lord could give us a further explanation.
LORD HUGHES: My Lords, I think the point which the noble Lord has raised is perfectly understandable. But we must not assume that in every case where there is reason to suspect that something wrong has been done, it will necessarily go to the courts. The cases where it will go to the courts are obviously those where there appear to be reasonable grounds for believing that an offence has taken place. So we must, in the first instance, accept as common sense that the obviously innocent cases will never get near the courts; and we must accept that there are obviously cases where this offence could be committed in innocence and where, therefore, it is a complete defence that the wife or child did not know that the husband or father was a director of the company.
Take the case of a child. It might be that, notwithstanding what I have said, a case reaches the courts and the argument is put forward that the child or the wife was in fact an innocent party—this is the more serious of the points which the noble Lord raises. I should like to point out that, particularly in relation to the child, in practice, where the offence by an innocent child had been procured by his father, the father would be charged as an accessory and the court would obviously be in the position to assess quite clearly that the guilt rested with the father as the accessory, and not with the child who had been innocently procured to do this.
The noble Lord said that there could be a case for extending this provision. In fact, in another place it was suggested: why stop at a wife or child? Why not a brother, a mother, a father, a cousin?—going through the whole range of relatives. Obviously, there is a distinction between a wife or child, on the one hand, and a brother on the other. It is a fairly narrow line to draw but the links in a family between a husband and wife, on the one hand, and between a father and his children (and, remember, they have to be under the age of 21) are normally closer than they would be with other members of the family; and it seemed to be a reasonable point at which to draw the line.
I hesitate, when such a term as "ex cathedrâ" has been applied to the words of the President of the Board of Trade to quote him again, but I think that

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either he or the Minister of State at the Board of Trade said on this subject, quoting, perhaps appropriately, from the lines of a hymn:
"One step enough for me".
3.27 p.m.
LORD CHORLEY: My Lords, perhaps I may add a word to what my noble friend has said. Anybody who has had any practical experience of the administration of the law, not only in respect of companies but in other branches, knows perfectly well that it is one of the most common dodges of the unscrupulous person, whether a company director or a businessman who is getting near to bankruptcy, to put shares or other property into the name of his wife or of his children. The advantage of that from the point of view of the fraudulent man is obvious and clear, as is the obvious disadvantage to the community, and particularly to the people who are doing business with that company or with that man as a partner or as a private businessman.
But when the matter comes to be threshed out in a court of law, the task of proving that the wife is cognisant of this is difficult, and the same applies in regard to the children. This is not peculiar to company law. There are numbers of cases where the normal rule that a person who affirms must prove do not hold in English law, because of the considerable practical difficulty of laying down any such rules. I suppose one of the commonest examples is that of a man who is charged with receiving stolen goods, well knowing them to have been stolen. It is difficult to prove affirmatively that a man found in possession of stolen goods knew at the time when he got them that they had been stolen. The simple method is to put on him the job of proving to the jury, or of satisfying the jury, that he was an innocent holder of the goods. It is obviously common sense, and has been the law of England for a long time. Surely, then, this is one exemplification of that quite commonsense rule. In a case such as this, the wife or the child is obviously the person who should satisfy the judge or the official in charge of the investigation that she or he did not know the actual facts of the matter. That should be quite easy and is the common sense of the matter.
LORD ERROLL OF HALE: For once I agree with the noble Lord, Lord Chorley. The whole crux of the matter is that if a man is seeking to evade knowledge of share transactions or putting the shares into the hands of the spouse or child, what matters is whether the spouse or child knows that the shares are being so put in their names. It is the same principle as receiving stolen goods, well knowing them to have been stolen. What is so faulty in the present situation is that the spouse or child is to be found guilty, even when the spouse or child has no knowledge of the fact that they have received shares for the purpose of evasion of this sort. That is what is wrong, and that is where the legislation does not go far enough and is not competent. I would urge noble Lords opposite, in considering their next Companies Bill, to pay particular heed to the noble Lord, Lord Chorley, and also to what was said by my noble friend, Lord Drumalbyn.
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 38 and 39.]
Clause 17, page 17, line 3, after ("company (") insert ("being one subject to the requirements of paragraph 13A of Schedule 8 to the principal Act but")
Clause 17, page 17, line 8, leave out from first ("of") to (") that") in line 9 and insert ("sub-paragraph (2) of that paragraph")
LORD HUGHES: My Lords, with your Lordships' permission, I will take Amendments Nos. 38 and 39 together. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Hughes.)
LORD ERROLL OF HALE: We are moving so rapidly it is difficult to keep pace with what is going on. Am I correct in assuming that these Amendments deal with classes of turnover? If not, may we be told what they deal with?
LORD BROWN: The Amendments dealing with classes of turnover arise, to begin with, on Amendment No. 40.
LORD HUGHES: Amendments Nos. 38 and 39 are consequential on Amendment No. 19. It was one of the list grouped with that Amendment. I hesitated because we had been rather sidetracked from our original purpose. We were going to discuss Nos. 79 and 80

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as a group, but we will come back to No. 80 later on when we actually reach it.
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 40–44.]
Clause 17, page 17, line 9, after ("that") insert (", in the opinion of the directors,")
Clause 17, page 17, line 15, after ("classes") insert ("(describing them)")
Clause 17, page 17, line 31, after ("that") insert (", in the opinion of) the directors,")
Clause 17, page 17, line 38, after ("classes") insert ("(describing them)")
Clause 17, Page 18, line 1, at end insert (", in the opinion of the directors,")
LORD BROWN: My Lords, Clause 17 requires the director's report to state the division of turnover and profits between the different classes of business. Amendments Nos. 40 to 44 inclusive make quite explicit the original intention: that is, that the number of different classes and the split between them and their differential profit contribution is to be stated "in the opinion of the directors". Amendments Nos. 41 and 43 correct a drafting omission, and will make certain that the different classes of business are in fact described and not merely stated as classes. My Lords, I beg to move.
ed, That this House doth agree with the Commons in the said Amendments.—(Lord Brown.)

SUEZ CANAL OBSTRUCTIONS
3.33 p.m.
LORD CHALFONT: My Lords, with your Lordships' permission I should like to repeat a Statement which is being made in another place by my right honourable friend the Foreign Secretary on the situation in the Suez Canal. The Statement is as follows:—
"As the House is aware, the Canal is blocked between Port Said and Ismailia, as well as to the south of Ismailia, and it is also obstructed between the Great Bitter Lake and Suez. There has been no change in this situation since I last reported to the House. I deplore that no steps have yet been taken by the United Arab Republic authorities, whether alone or in conjunction with others who are willing
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to help, to start work on clearing the obstructions. The continued failure to take these steps is clearly contrary to the intentions of the Constantinople Convention of 1888.
"This is not a matter which affects this country alone. I am in close touch with the Governments of other countries affected and am considering with them how we can create conditions to get the Canal opened as soon as possible to the shipping of all nations. I have myself discussed this matter with Doctor Fawzi and with Mr. Eban.
"I have also made it clear in the United Nations General Assembly that in our view any settlement of the problems of the Middle East must cover the right of free and innocent passage through the Canal. As the House knows, the United Nations is urgently tackling these problems; and in this connection the stationing of United Nations Observers in the Canal area is a useful first step."
Lords that is the end of the Statement.
LORD WINDLESHAM: My Lords, the House will be interested to hear that Statement, and we are grateful to the Minister for repeating it. Noble Lords will be delighted to hear about the strength of the Foreign Secretary's own personal protest to Dr. Fawzi and Mr. Eban. I should like to ask the Minister two things. The first relates to the question of relieving and replacing the crews of the four British ships in the Great Bitter Lake. These crews have now been there for nearly two months. Has any progress at all been made in getting these people out, even if the ships themselves have to remain there for a while? Secondly, could we be given any information on reports which suggest that the main channel South of the Great Bitter Lake is not, in fact, effectively blocked; that there is a tug boat sunk in it, but that the main channel of the canal might well be free. If we could be given any further information on those two points, should be grateful.
LORD CHALFONT: My Lords, in regard to the first point put by the noble Lord, the crews of the British ships in the Great Bitter Lake have now been visited and we understand that they are in reasonably good spirits and in good

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health. They are getting their mail. We are taking steps to maintain contact with the Egyptian authorities about a relief for these crews. I understand that arrangements for a relief are under way and we hope to have further information about that soon. In regard to the blocking of the channel South of the Great Bitter Lake, we are informed that it is physically blocked, although the possibility of making the removal of that obstruction a priority over all the others is under consideration.
LORD CHORLEY: My Lords, does not the noble Lord think that the time has now come when these great international waterways, on which so much of the commerce of the world depend, should be transferred to the United Nations, so that individual countries like the U.A.R. should not of their own volition be able to hold up the commerce of the world in this way?
LORD CHALFONT: The actual business of transferring international waterways to the United Nations would raise certain difficulties. All I can say is that Article I of the Constantinople Convention lays down that the Canal shall be open in time of war, as in time of peace, to every vessel, and that the Canal should not be subjected to blockade. What is happening now is clearly in contravention of that international Convention.
LORD WAKEFIELD OF KENDAL: My Lords, is it possible to state how soon free passage will be available through the Canal once the political difficulties have been resolved; that is to say, how long will it take for the physical work to be done to enable free passage to take place?
LORD CHALFONT: I regret that I cannot give the noble Lord a very satisfactory answer to that question. There are various estimates about the time it would take in practice to remove the ships and other obstacles in the channels. As he points out, the immediate difficulties and the important difficulties are political. I am sorry, but I cannot give any really useful estimate of the time it would take physically to remove the obstacles after the political difficulties have been settled.
LORD WINDLESHAM: My Lords, is it a fact that the time problem is an acute one, in that there have been reports that the regular dredging has been discontinued? If that is so, the longer it takes to get the ships out the greater the problem will be if the dredging has not been taking place.
LORD CHALFONT: My Lords, certainly that is so. If indeed dredging has stopped—we have no firm information about that—then of course the silting up of the Canal will continue while the block ships remain there, and the navigation of the Canal will become that much more difficult. For that reason we are trying to get the political difficulties removed as quickly as we possibly can.
BARONESS EMMET OF AMBERLEY: My Lords, could the Minister tell us whether it is a fact that a ship has recently come out from the southern part of the Canal without any difficulty at all, and that really the blockage there is neither here nor there; it is entirely a political factor?
LORD CHALFONT: My Lords, my information—although I will certainly check this to see that it is correct—is that there is a physical obstacle between the Bitter Lake and the South end of the Canal. It may conceivably be that a ship has emerged from the South end of the Canal, but if my information is correct it could not have come from the Bitter Lake. But, as I say, I will check my information to make sure that that is correct.

PROROGATION AND STATE OPENING
LORD BESWICK: My Lords, I hope it may be for the convenience of the House if I make a short statement about the "spill-over" period in October, and about the Prorogation and State Opening of Parliament. As my predecessor has already announced, the House will reassemble on Monday, October 23, subject to the progress of Business. Prorogation will take place on Friday, October 27. The State Opening of Parliament by Her Majesty the Queen will take place on Tuesday, October 31.

COMPANIES BILL [H.L.]
3.42 p.m.
Consideration of Commons Amendments resumed.
LORD ERROLL OF HALE: My Lords, we on this side of the House are grateful to the Government for putting in these Amendments as a result of our instigation. They make it quite clear where the responsibility lies, and it is up to the directors to decide what are substantially different classes of turnover. But, of course, it remains an unsatisfactory arrangement, in that while some companies at present show up the division between classes of turnover, it is to be left to the directors' discretion to decide whether they are in one class of business or two classes of business, which will lead to considerable confusion. For example, one firm of chain stores or supermarkets could decide that they are in only one class of business, while another, similar firm may decide that they are in ten different classes of business, as they have ten different departments in each store.
So there will be no uniformity, no standardisation of practice, and it is very doubtful whether much will be achieved by the inclusion of this clause in the Bill, even though it has been improved. It remains an unsatisfactory arrangement to be put into statutory effect. The position would be much better left as it is at present, where those directors who wish to make the information available to shareholders may do so, rather than attempt to make it a statutory requirement but failing, at the same time, to define it except in terms of "the opinion of the directors".
LORD BROWN: My Lords, I agree with the noble Lord that in a sense this clause is very unsatisfactory, because it is so arbitrary in its application. Nevertheless, it has been for some time a recommendation of the London Stock Exchange that this information should be given. The Government believe that it is sound to have this in the Bill as a means of encouraging firms more and more to give this information, which it is so desirable should be in the hands of shareholders.
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 45–50.]
After Clause 17, insert the following new clause—
Directors' report to state average number, by the week, of employees and the amount, by the year, of their wages.
(".—(1) If, at the end of a financial year, a company does not have subsidiaries, there shall be contained in the directors' report relating to that year a statement of—

(a) the average number of persons employed by it in each week in that year; and

(b) the aggregate remuneration paid or payable in respect of that year to the persons by reference to whom the number stated under the foregoing paragraph is ascertained.

2) If, at the end of a financial year, a company has subsidiaries, there shall be contained in the directors' report relating to that year a statement of—

(a) the average number of persons employed between them in each week in that year by the company and the subsidiaries; and

(b) the aggregate remuneration paid or payable in respect of that year to the persons by reference to whom the number stated under the foregoing paragraph is ascertained.

(3) The number to be stated under subsection (1)(a) above shall be the quotient derived by dividing, by the number of weeks in the financial year, the number derived by ascertaining, in relation to each of those weeks, the number of persons who, under contracts of service, were employed in the week (whether throughout it or not) by the company and adding up the numbers ascertained, and the number to be stated under subsection (2)(a) above shall be the quotient derived by dividing, by the number of weeks in the financial year, the number derived by ascertaining, in relation to each of those weeks, the number of persons who, under contracts of service, were employed between them in the week (whether throughout it or not) by the company and its subsidiaries and adding up the numbers ascertained.
(4) The remuneration to be taken into account for the purposes of subsections (1)(b) and (2)(b) above is the gross remuneration paid or payable in respect of the financial year; and for this purpose 'remuneration' shall include bonuses (whether payable under contract or not).
) This section shall not apply to a company if the number that, but for this subsection, would fall to be stated under subsection (1)(a) or (2)(a) above is less than 100, nor shall it apply to a company that is a wholly owned subsidiary of a company incorporated in Great Britain.
(6) For the purposes of this section, no regard shall be had to a person who worked wholly or mainly outside the United Kingdom.
(7) In this section, 'wholly owned subsidiary' shall be construed in accordance with section 150(4) of the principal Act.")
Clause 19, page 19, line 11, after ("company") insert ("subject to the requirements of paragraph 13A of Schedule 8 to the principal Act")
Clause 19, page 19,line 15, leave out ("Schedule 8 to the principal Act") and insert ("that paragraph")
Clause 19, page 19, line 16, leave out ("£20,000") and insert ("£50,000")
Clause 19, page 19, line 25, leave out ("unless") and insert ("except in a case in which")
Clause 19, page 19, line 27, after ("goods") insert ("or a case in which the company submits in respect of that year group accounts prepared as consolidated accounts in respect of itself and all its subsidiaries and the turnover (so far as stated therein in pursuance of the said paragraph 13A) does not exceed £50,000")
LORD BROWN: My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 51]
Clause 19, page 19, line 41, at end insert—
("(4) The foregoing provisions of this section shall not require the disclosure of information in the director's report of a company if the directors thereof satisfy the Board of Trade that it is in the national interest that the information should not be disclosed.")
LORD BROWN: My Lords, the purpose of this Amendment is to permit the directors of a company not to give information about exports in their report, if they satisfy the Board of Trade that it is in the national interest that the information should not be disclosed. The Government consider that cases where disclosure of a company's exports would be injurious to the national interest would be rare, but since it is clearly difficult to prove that those cases can never occur they have decided to provide an exemption. The exemption will be given only very sparingly when there is the strongest evidence that disclosure would prejudice the national interest. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
LORD DRUMALBYN: This, of course, is a concession, but again we are not
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quite certain that it goes far enough. The type of case about which we spoke when the Bill was last before the House was that of a relatively small company with, perhaps, one export market where disclosure would give a great deal of information about the activities of that company. I should not have thought that this was a particularly rare circumstance. The object must be not to give away to international competition information which is of advantage from the point of view of our balance of payments. That being so, I doubt whether the noble Lord was right in saying that applications would be particularly rare, and I should have thought that, so long as the applications are justified and can show that disclosure would adversely affect the balance of payments, it was in the national interest to grant those applications. Therefore, I hope that when he says that the power will be used sparingly, he does not mean to contradict that proposition, which I think would commend itself to the whole House.
LORD ERROLL OF HALE: My Lords, I would only add to the excellent point of view put forward by my noble friend, that we deplore that although the Government have given a concession, it is only in respect of the national interest. We should have liked it to go far enough to cover damage to the interests of the company—not just damage to the national interest. It does not seem to matter whether the company's interests are damaged; that appears to be of small account, compared with the importance of disclosure of a figure for which we find it very hard to see the justification. Have the Government no concern for the well-being of the individual companies whose interests may be adversely affected by the publication of this information?
LORD BROWN: My Lords, the Government feel that the interests of companies in this country which are trading overseas are identical with the national interest. Therefore, the noble Lord should be reassured that if a company can prove that its export interests will be damaged by disclosure, it will be construed as being in the national interest also.
On the point raised by the noble Lord, Lord Drumalbyn, let me assure him that what I have said in explanation of this clause is in no way an attempt to give a

1197
concession and then to take it back again. If it can reasonably be shown that the interests of the company will be damaged by the disclosure of this information, then it will be granted exemption. But the purport of my remarks was to convey the fact that we have had a number of cases presented to us as samples, and the reasonableness of the case has not by a very long way always been proven. I shall be very interested to see whether there really are cogent cases, where it can be proved that there would be damage to their interests. But we shall see.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 52]
Clause 20, Page 19, line 42. after ("inclusive)") insert ("and section (Directors' report to state average number, by the week, of employees and the amount, by the year, of their wages)")
LORD BROWN: My Lords, I beg to move that the House doth agree with the Commons in this Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[No. 53–58]
Clause 24, page 20, line 41, leave out from second ("of") to ("or") in line 45 and insert ("relevant shares or a specified amount of relevant debentures")
Page 21, line 2, leave out ("any such") and insert ("relevant")
Page 21, line 2, line 3, leave out ("any such") and insert ("relevant")
Page 21, line 2, line 8, leave out ("any such") and insert ("relevant")
Page 21, line 2, line 9, leave out ("any such") and insert ("relevant")
Page 21, line 2, line 15, at end insert—
("( ) In the foregoing subsection—

(a) "relevant shares", in relation to a director of a company, means shares in the company or in any other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company, being shares as respects which there has been granted a quotation on a stock exchange (whether with Great Britain or elsewhere); and

(b) "relevant debentures", in relation to a director of a company, means debentures of the company or of any other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company, being debentures as respects which there has been granted such a quotation as aforesaid.")

LORD BROWN: My Lords, with the permission of the House I will speak to Amendments Nos. 53 to 58 inclusive. This clause is concerned with the prohibition on a director buying options on shares in or debentures of his company, its holding company or its subsidiaries. The Amendments restrict the prohibition on buying these options to options on quoted shares or quoted debentures. In other words, if the Amendments are passed, these restrictions will no longer apply to unquoted shares or unquoted debentures. I beg to move that the House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 59–63]
Clause 25, page 21, line 27, leave out ("its registered office") and insert ("an appropriate place")
Clause 25, page 21, line 32, at end insert ("and all copies and memorandums kept by a company in pursuance of this subsection shall be kept at the same place.")
("(1A) The following shall, as regards a company, be appropriate places for the purposes of the foregoing subsection namely,—

(a) its registered office:

(b) the place where its register of members is kept (if other than its registered office);

(c) its principal place of business, provided that that is situate in England, in a case in which the company is registered in England and in Scotland, in a case in which the company is registered in Scotland.

(1B) Every company shall send notice to the registrar of companies of the place where copies and memorandums required by subsection (1) above to be kept by it are kept and of any change in that place, save in a case in which they have at all times been kept at its registered office.")
Clause 25, page 21,line 33, leave out ("the foregoing subsection") and insert ("subsection (1) above")
Clause 25, page 21,line 43, at end insert (", and, if default is made for fourteen days in complying with subsection (1B) above, the company and every officer of the company who is in default shall be liable to a default fine")
LORD WALSTON: My Lords, with permission, I should like to speak to Amendments Nos. 59 to 63 inclusive. Clause 25 requires a company to keep copies of certain of the contracts of service of its directors with the company, and to make these copies available for

1199
inspection by members of the company. As drafted the clause requires the copies to be kept at the company's registered office. It has been represented by various people with considerable practical experience in these matters that some companies regard these contracts as being confidential, so far as anyone other than a member of the company is concerned, and therefore, in order to ensure that they are kept in a place suitable for their confidential nature, they are frequently kept in the custody of a responsible officer of the company, such as the company secretary, and such an officer may from time to time not in fact work at the company's registered office. We accept this commonsense attitude, and these Amendments are designed to take account of this view. I beg to move that the House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 64.]
Clause 25, page 22, line 7, after ("kept") insert—

("(a) a copy of, or memorandum setting out the terms of, a director's contract or a copy of, or memorandum setting out the terms of, a variation of such a contract, so long as the contract (as made or varied) requires him to work wholly or mainly outside the United Kingdom; or

(b)").

LORD WALSTON: My Lords, I beg to move that the House doth agree with the Commons in this Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 65.]
Clause 26, page 22, line 15, at end insert ("and to any exceptions for which provision may be made by regulations made by the Board of Trade by statutory instrument.")
LORD WALSTON: My Lords, this Amendment requires that a director of a company should notify that company of any interest he has in the company's shares or debentures, or in the shares or debentures of other companies in the
1200
same group. The rules in Clause 27 give a wide meaning to the expression "being interested in shares or debentures", and there is a possibility that some of the interests to be notified will not in fact be of much interest. If these interests can be identified, it is clearly better that they should be excluded for the purposes of the clause. This Amendment, No. 65, will make this possible, since it makes the obligations imposed on directors by the clause subject to any exceptions for which provision may be made by regulations made by the Board of Trade by Statutory Instrument. I beg to move that the House doth agree with the Commons in this Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Walston.)
LORD BOOTHBY: My Lords, perhaps I may ask the noble Lord, Lord Walston, whether he could give the distinction between, or an explanation of, the words "interest" and "ownership", because I think it is rather important.
LORD WALSTON: I think that if the noble Lord studies the Bill he will discover the legal distinction between those two words; and perhaps it would be for the convenience of the House if he made that discovery himself rather than if I quoted it to him.
LORD BOOTHBY: I will try.
LORD ERROLL OF HALE: I think we can say that this Amendment represents a modest improvement in the Bill. But can the noble Lord say whether the Statutory Instrument will be subject to the Affirmative or the Negative Resolution procedure?
LORD WALSTON: Without actually looking it up, I cannot say. I believe it is the Negative Resolution procedure; but I will let the noble Lord know.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 66]
Clause 26, page 22, line 35, leave out ("any such shares or debentures") and insert ("shares in, or debentures of, the company or any other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company").
LORD WALSTON: My Lords, this is a purely drafting Amendment. I beg to

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move that the House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 67–71]
Clause 26, page 23, line 19, leave out ("seven") and insert ("fourteen")
Clause 26, page 23, line 22, leave out ("seven") and insert ("fourteen")
Clause 26, page 23, line 30, leave out ("seven") and insert ("fourteen")
Clause 26, page 23, line 32, leave out ("seven") and insert ("fourteen")
Clause 26, page 25, line 16, leave out ("seven") and insert ("fourteen")
LORD WALSTON: My Lords, with your Lordships' permission I should like to speak to Amendments Nos. 67, 68, 69, 70, 71, 84, 85, 86, 87, 88, 89 and 90 at the same time, and to move Amendments Nos. 67 to 71 inclusive. In spite of the number of Amendments that there are here, this is a very simple and, I think, worthwhile change. Under Clause 26 directors are required to notify their company within seven days of an interest in shares or debentures, or of the occurrence of an event related to such an interest, while Clause 29 requires a person interested in 10 per cent. or more of the voting shares of a quoted company to notify the company, also within seven days, of an interest in the shares or the occurrence of an event related to such an interest. These Amendments lengthen the time which is allowed from seven to fourteen days. I beg to move that the House doth agree with the Commons in the said Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 72 and 73]
Clause 27, page 26, line 19, at end insert ("or of any class of its members.")
Clause 27, page 26, line 20, after ("meeting") insert ("or of his having been appointed by a corporation to act as its representative at any meeting of the company or of any class of its members")
LORD WALSTON: My Lords, I beg to move that the House doth agree with the Commons in these Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 74–78]
Clause 28, page 28, line 5, leave out from ("that") to ("in") in line 7 and insert ("the entries therein against the several names inscribed therein appear")
Clause 28, page 28,line 23, leave out from ("shall") to ("and") in line 24 and insert—

"(a) if the company's register of members is kept at its registered office, be kept there;

(b) if the company's register of members is not so kept, be kept at the company's registered office or at the place where its register of members is kept;")

Clause 28, page 28,line 30, at end insert— ("(7A) The company shall send notice to the registrar of companies of the place where the said register is kept and of any change in that place, save in a case in which it has at all times been kept at its registered office.
(7B) Unless the said register is in such a form as to constitute in itself an index, the company shall keep an index of the names inscribed therein which shall—

(a) in respect of each name, contain a sufficient indication to enable the information inscribed against it to be readily found; and

(b) be kept at the same place as the said register;

and the company shall, within fourteen days after the date on which a name is inscribed in the said register, make any necessary alteration in the index.")
Clause 28, page 29, line 3, after ("£50") insert ("if default is made for fourteen days in complying with subsection (7A) of this section, the company and every officer of the company who is in default shall be liable to a default fine")
Clause 28, page 29,line 4, leave out ("or (4)") and insert ("(4) or (7B)")
LORD HUGHES: My Lords, might I suggest that Amendments Nos. 74 to 78 be taken en bloc? Associated with them are Amendments Nos. 93, 94, 97 and 99. With permission, I beg to move that the House doth agree with the Commons in Amendments Nos. 74 to 78.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 79]
After Clause 28, insert the following new clause—
Extension of section 24 to spouses and children
(".—(1) Section 24 of this Act shall apply to—

(a) the wife or husband of a director of a company, not being herself or himself a director of that company; and

(b) an infant son or infant daughter of a director of a company, not being himself a director of that company;

as it applies to the director; but it shall be a defence for a person charged, by virtue of this subsection, with an offence under that section, to prove that he had no reason to believe that his spouse or, as the case may be, parent, was a director of the company in question.
(2) In this section, 'son' includes step-son and adopted son, 'daughter' includes stepdaughter and adopted daughter and 'parent' shall be construed accordingly, 'infant' means in relation to Scotland, pupil or minor, and a person deemed for the purposes of the said section 24 to be a director of a company shall be deemed also for the purposes of this section to be a director of the company.")
LORD HUGHES: My Lords, this is Amendment No. 79. I beg to move that the House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 80]
After Clause 28, insert the following new clause—
Extension of section 26 to spouses and children
(".—(1) For the purposes of section 26 of this Act—

(a) an interest of the wife or husband of a director of a company (not being herself or himself a director thereof) in shares or debentures shall be treated as being the director's interest, and so shall an interest of an infant son or infant daughter of a director of a company (not being himself or herself a director thereof) in shares or debentures; and

(b) a contract, assignment or right of subscription entered into, exercised or made by, or grant made to, the wife or husband of a director of a company (not being herself or himself a director thereof) shall be treated as naving been entered into, exercised or made by, or, as the case may be, as having been made to, the director, and so shall a contract, assignment or right of subscription entered into, exercised or made by, or grant made to, an infant son or infant daughter of a director
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of a company (not being himself or herself a director thereof).

(2) A director of a company shall be under obligation to notify the company in writing of the occurrence, while he or she is director, of either of the following events, namely,—

(a) the grant to his wife or her husband or to his or her infant son or infant daughter, by the company, of a right to subscribe for shares in, or debentures of, the company; and

(b) the exercise by his wife or her husband or by his or her infant son or infant daughter of such a right as aforesaid granted by the company to the wife, husband, son or daughter;

stating, in the case of the grant of a right, the like information as is required by section 26 of this Act to be stated by the director on the grant to him by another body corporate of a right to subscribe for shares in, or debentures of, that other body corporate and, in the case of the exercise of a right, the like information as is required by that section to be stated by the director on the exercise of a right granted to him by another body corporate to subscribe for shares in, or debentures of, that other body corporate; and an obligation imposed by this subsection on a director must be fulfilled by him before the expiration of the period of fourteen days beginning with the day next following that on which the occurrence of the event that gives rise to it comes to his knowledge.
(3) A person who fails to fulfil, within the proper period, an obligation to which he is subject by virtue of the last foregoing subsection, or who, in purported fulfilment of an obligation to which he is so subject, makes to a company a statement which he knows to be false or recklessly makes to a company a statement which is false, shall be guilty of an offence and liable—

(a) on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding £200, or to both;

(b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or to both.

(4) The rules set out in section 27 of this Act shall have effect for the interpretation of, and otherwise in relation to, subsection (1) of this section, and subsections (9) to (13) of section 26 of this Act shall, with any requisite modification, have effect for the purposes of this section as they have effect for the purposes of that section.
(5) In this section, 'son' includes step-son and adopted son and 'daughter' includes stepdaughter and adopted daughter, and 'infant' means, in relation to Scotland, pupil or minor.
(6) For the purposes of section 28(1) of this Act, an obligation imposed on a director by this section shall be treated as if imposed by section 26 of this Act.")
LORD HUGHES: My Lords, it was agreed that I should say something about

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this Amendment when we came to it. This Amendment extends Clause 26 to spouses and children. Clause 26 is concerned with any interests a director has in the shares or debentures of his company or any other company in the group to which it belongs. It is also concerned with contracts entered into by a director to sell any of those shares or debentures, with rights granted to a director to subscribe for any of those shares or debentures, and with the exercise or assignment of such a right by a director. In general, Clause 26 places an obligation on a director to inform his company of his interests and of any changes in them, of the contracts he enters into, of the rights granted to him, and of his exercise or assignment of those rights.
There are two exceptions. When the grant of a right to subscribe is made by the director's company and relates to shares or debentures in that company, it is assumed that the company does not need to be informed that it has made it. Similarly, it is assumed that the company does not need to be informed of the exercise of such a right. The effect of the new clause is to treat as an interest of a director in such shares or debentures an interest which, in fact, is that of his spouse or infant child. Similarly, a contract entered into by a wife or infant child of a director, or a right granted to one of them, or exercised or assigned by one of them, is treated as entered into by, or granted to, or exercised or assigned by, the director. The new clause therefore places a further obligation on a director. It does not place an obligation on his spouse or infant child. I beg to move that this House doth agree with the Commons in their Amendment No. 80.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
LORD HAWKE: My Lords, I should like to ask one question. In a great many cases the spouse will not know that the shares have been put in her name. Can she in any way be charged with an offence if the director commits the offence of not notifying the company?
LORD DRUMALBYN: My Lords, the closing words of the noble Lord's speech made clear the difference between this case and the one we were dealing with previously. In this case it is the
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director who is obliged to notify, and therefore it is the director against whom proceedings will be taken in the event that the provisions of the clause are not complied with. This, of course, is right in principle. Again I am concerned with the defences available. I can see that there is going to be an investigation and that proceedings will not be taken if the investigator is satisfied that there has not been an offence or, at any rate, if he is satisfied that there has not been a wilful offence. I dare say that is right. The trouble is that the investigator may not believe what is said.
The difficulty in this case—which is different from the last—is that a husband's and wife's affairs may be separate. It may be that the husband has no knowledge of his wife's holdings, or that a wife's affairs may be dealt with for her by her stockbroker or solicitor and she may merely be given a statement of her interests at the end of the year. The director may have no knowledge, until that statement comes along, that he has committed an offence.
This, again, is a case of creating offences where the offender has no knowledge of his committing them. I agree that one must cover all cases; but I should have thought it possible to draft the clause in such a way as to give a clear defence if there were absence of knowledge. If the investigator is not satisfied that the director had no knowledge and took proceedings, it should be possible for the court to accept this as a defence. At the present time it does not seem as if the court could do so.
LORD HAWKE: My Lords, may I put a further question? Is the wife who is living separately from the husband legally a spouse under this particular provision?
THE MARQUESS OF ABERDEEN AND TEMAIR: My Lords, is not this information available in the share register?
LORD HUGHES: The noble Lord, Lord Boothby, was about to rise; but if he will permit me to do so I merely want to say that I did not hear what it was the noble Marquess said.
THE MARQUESS OF ABERDEEN AND TEMAIR: My Lords, I asked if this information was not available in the share

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register in the company's offices and also in many stockbrokers' offices.
LORD BOOTHBY: My Lords, all I wanted to say was that in many cases husbands do not know what shares their wives own. The noble Lord, Lord Drumalbyn, said that the husband would know at the end of the year. If his wife buys shares through her stockbroker I do not see why he should ever know. She sticks to them and does not tell him anything about it. I should be sorry if the director of a company whose wife bought some of his shares because she thought he was a good director was "had up" by the investigator, because the husband did not know that she had bought the shares. Most women do not tell their husbands what shares they buy.
LORD HUGHES: My Lords, without venturing into the field of Lord Boothby's extensive knowledge of what wives tell their husbands, I should like to answer two questions. First, the point made by the noble Lord, Lord Hawke, about the wife's not knowing about the shares in her name. The position is that the obligation is on the director; and, in the circumstances to which he referred, the wife would not have committed any offence. The second point, also raised by the noble Lord, Lord Hawke, was that the director might not know what were his wife's holdings. It was at this point that we had the benefit of Lord Boothby's extensive knowledge. The position is that the director has to report what he knows of his wife's holdings. If he does not know, he cannot report; if he cannot report, he does not commit an offence. The noble Marquess said that this would surely be obvious from the list of shareholders. It will not always be obvious. There may well be a director named Mr. Robert Brown. We must not assume that every Mrs. Robert Brown with shareholdings is necessarily his wife.
LORD BOOTHBY: In any case, my Lords, you can buy through a nominee.
LORD DRUMALBYN: My Lords, I hesitate to interrupt the noble Lord but, before he sits down, may I point out that he says categorically that the director has to report what he knows of his wife's holdings. But that is not what the Amendment says. The Amendment says:
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"an interest of the wife or husband of a director … shall be treated as being the director's interest …"
It says nothing about whether he knows it or not.
LORD HUGHES: Yes, my Lords; but the point is that if a director is not aware of a holding which his wife has he obviously cannot report it, and, in not reporting it, he has not committed an offence. Therefore he could not possibly be the subject of a charge.
LORD CHORLEY: My Lords, I am not sure that that is right. Certainly the criminal law of this country knows more and more of a doctrine of absolute responsibility without any requirement of a guilty mind. It may be that this is one of those cases. I have some knowledge of these subjects, but I should not like to express a strong opinion about this point. I think there is a possibility—though it is not a matter likely to arise often—of a director being held to be responsible without his having any knowledge. I do not think a director can be expected to make a regular search through the entire register of the company which, very often, can run into tens of thousands of names. He would have to employ two or three private secretaries to make such a constant search.
This is one of the difficulties which arise because of the extreme haste with which this Bill is being passed. It is the sort of point that the draftsman himself would have noticed had he been given time. This type of legislation—and I do not want to repeat what I said the other day—is of great importance to the structure of industry and commerce in this country in the way it is organized, and it ought not to be passed in this very rapid way. These are just the sort of points which eventually come before the courts, and judges will say, with the greatest reluctance, "These words clearly establish an absolute responsibility on this man. That he did not know anything about it is neither here nor there: he is to be held guilty". This I think emphasises what was said by some noble Lords opposite and by myself the other day when we were told that we were to deal with these 300 Amendments in one afternoon. I hope that when the next Companies Bill comes along in a year or so, some of these

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matters will be looked at again very carefully. It is not right that a director should be held criminally responsible—because that is the effect of this provision—unless in fact he has a guilty mind.
LORD FERRIER: My Lords, I agree with the noble Lord, Lord Chorley. I cannot see the point made by the noble Lord, Lord Hughes. At the bottom of page 9 of the Commons Amendments there is a defence in the other direction:
"it shall be a defence for a person charged, by virtue of this subsection … to prove that he had no reason to believe that his spouse … was a director …"
LORD ERROLL OF HALE: That has nothing to do with it.
LORD FERRIER: But that is the other way.
LORD HUGHES: My Lords, the information which I gave so specifically was given because I received a very specific note from the Box that that was the case. Therefore the draftsman had no doubt when wording the matter as he did that he was not placing the director in this difficulty. I should like to direct the attention of your Lordships to page 11 and Amendment No. 80. At the top of that page the last words of subsection 2(b) are:
"…and an obligation imposed by this subsection on a director must be fulfilled by him before the expiration of the period of fourteen days beginning with the next day following that on which the occurrence of the event that gives rise to it comes to his knowledge."
What I said was that if a man does not have knowledge of a situation, he cannot create an offence, because the obligation is to do this within this short period after it comes to his knowledge.
LORD CHORLEY: My Lords, that is probably quite a sound point. The difficulty is that we are confronted with a whole page of this and we are given 24 hours, in effect, to study it. I was kindly presented with a copy the other night, but we all know that yesterday there was a very important Bill before your Lordships' House, and one cannot sit up the whole night studying these things. This is not the only Amendment which takes a whole page in length. I hope, and I think, that probably what the noble Lord has said is right, because knowledge is
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obviously necessary. Without knowledge you cannot have a guilty mind. But it emphasises the great difficulty noble Lords have to digest all this in the very short space of time we have at our disposal.
LORD DRUMALBYN: My Lords, I am much obliged to the noble Lord, Lord Hughes, for clarifying the point.
LORD HUGHES: My Lords, I am obliged to the noble Lord, Lord Drumalbyn. This, I must admit, is part of the difficulty under which we are labouring. Noble Lords on both sides of the House are bound to raise queries on points to which the answers are in the Amendment. But they have not found the answers simply because they have not had time to look at the Amendment, and we must accept responsibility for that.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 81]
After Clause 28, insert the following new clause—
Investigation of share dealings
(".—(1) If it appears to the Board of Trade that there are circumstances suggesting that contraventions may have occurred, in relation to shares in, or debentures of, a company, of section 24 or 26 of this Act or of subsection (2) of section (Extension of section 26 to spouses and children) of this Act, they may appoint one or more competent inspectors to carry out such investigations as are requisite to establish whether or not contraventions have occurred as aforesaid and to report the result of their investigations to the Board.
(2) The appointment under this section of an inspector may limit the period to which his investigation is to extend or confine it to shares or debentures of a particular class or both.
(3) For the purposes of any investigation under this section, section 167 of the principal Act (which imposes on officers and agents of bodies being investigated the duty to assist inspectors) shall apply, but with the substitution, for references to any other body corporate whose affairs are investigated by virtue of section 166, of a reference to any other body corporate which is or has at any relevant time been the company's subsidiary or holding company or a subsidiary of its holding company and with the necessary modification of the reference, in subsection (3), to the affairs of the company or other body corporate, so, however, that it shall apply—

(a) to members of a recognised stock exchange or of a recognised association of dealers in securities who are individuals and to officers (past as well as present) of members of such an exchange or association who are bodies corporate;

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(b) to holders of licences granted under section 3 of Prevention of Fraud (Investments) Act 1958 who are individuals and to officers (past as well as present) of holders of licences so granted who are bodies corporate; and

(c) to any individual declared by an order of the Board of Trade for the time being in force to be an exempted dealer for the purposes of that Act and to officers (past as well as present) of any body corporate declared by an order of the Board of Trade for the time being in force to be such a dealer;

as it applies to officers of the company or of the other body corporate.
(4) The inspectors may, and, if so directed by the Board of Trade, shall, make interim reports to the Board, and, on the conclusion of the investigation shall make a final report to the Board.
(5) Any such report shall be written or printed, as the Board may direct, and the Board may cause it to be published.
(6) Section 175 of the principal Act (saving for solicitors and bankers) shall have effect as if the reference to the foregoing provisions of Part IV of that Act included a reference to this section.
(7) The expenses of an investigation under this section shall be defrayed by the Board of Trade out of moneys provided by Parliament.
(8) In this section, 'recognised association of dealers in securities' means any body of persons which is for the time being a recognised association of dealers in securities for the purposes of the Prevention of Fraud (Investments) Act 1958.")
4.15 p.m.
LORD HUGHES: My Lords, I beg to move Amendment No. 81.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 82.]
Clause 29, page 31, line 8. at end insert—
("( ) An interest for the life of himself or another, of a person under a settlement in the case of which the property comprised therein consists of, or includes, shares, being a settlement with respect to which the following conditions are satisfied, namely,—

(i) that the settlement is irrevocable; and

(ii) that the settlor has no interest in any income arising under, or property comprised in, the settlement;")

LORD BROWN: My Lords, I beg to move that this House doth agree with the Commons in Amendment No. 82. In moving this Amendment I should like
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to discuss, with the permission of the House, Amendment No. 91. Clause 29 calls for disclosure of major interests in quoted companies voting shares. The Amendments add to the list of exemptions from disclosure life interests of persons under certain types of settlements, because such exclusion is unlikely to lead to an evasion of the useful intent of the clause. These life interests which are excluded are ordinary life interests, and the settlor has no interest in any income from or property in the settlement.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 83.]
Clause 29, page 31, line 20, leave out paragraph (d) and insert—
("(d) any such interests, or interests of such class, as may be prescribed for the purposes of this paragraph by regulations made by the Board of Trade by statutory instrument;
and a definition of a class of interests for the purposes of regulations made under paragraph (e) of this subsection may be framed by reference to any circumstances whatsoever.")
LORD BROWN: My Lords, I beg to move that this House doth agree with the Commons in Amendment No. 83. This is a minor Amendment. The clause requires a person who has an important interest in the voting shares of a quoted company to notify the company of the interest and any change in it. The Amendment widens the interest which may be prescribed and makes clear that "prescribed" means prescribed by Statutory Instrument.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 84.]
Clause 29, page 31, line 33, leave out ("seven") and insert ("fourteen").
LORD BROWN: My Lords, I beg to move Amendment No. 84.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
On Question, Motion agreed to.
LORD DRUMALBYN: My Lords, if it is convenient we should be quite happy to take Amendments Nos. 85 to 99 together.

COMMONS AMENDMENTS
[Nos. 85–99.]
Clause 29, page 31, line 37, leave out ("seven") and insert ("fourteen")
Clause 29, page 32, line 9, leave out ("seven") and insert ("fourteen")
Clause 29, page 32, line 15, leave out ("seven") and insert ("fourteen")
Clause 29, page 32, line 24, leave out ("seven") and insert ("fourteen")
Clause 29, page 32, line 29, leave out ("seven") and insert ("fourteen")
Clause 29, page 33, line 6, leave out ("seven") and insert ("fourteen")
Clause 29, page 33, line 15, at end insert ("and 'settlor' has the meaning assigned to it by section 403 of the Income Tax Act 1952")
Clause 29, page 33, line 16, leave out subsection (11).
Clause 30, page 33, line 32, leave out from ("that") to ("in") in line 34 and insert ("the entries therein against the several names inscribed therein appear")
Clause30, page 34, line 1, leave out ("company's registered office") and insert ("place at which the register required to be kept by the company by section 28 of this Act is kept")
Clause 30, page 34, line 5. after first ("inspection") insert ("but save in so far as it contains information with respect to a company for the time being entitled to avail itself of the benefit conferred by section 3(3) or 4(3) of this Act").
Clause 30, page 34, line 8, at end insert ("but in so far as it contains such information shall not be open to inspection.")
Clause 30, page 34, line 8, at end insert—
("(5A) Unless the said register is in such form as to constitute in itself an index, the company shall keep an index of the names inscribed therein which shall—

(a) in respect of each name, contain a sufficient indication to enable the information inscribed against it to be readily found; and

(b) be kept at the same place as the said register;

and the company shall, within fourteen days after the date on which a name is inscribed in the said register, make any necessary alteration in the index.")
Clause 30, page 34, line 9, leave out from beginning to ("on") in line 10 and insert ("As regards so much of the said register as is required to be open to inspection, any member of the company or other person may require a copy of it, or any part of it,")
Clause 30, page 34, line 18, leave out ("or (3)") and insert ("(3) or (5A)")
LORD WALSTON: My Lords, I beg to move Amendments Nos. 85 to 99 inclusive.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 100–107]
After Clause 30, insert the following new clause—
Power of Board of Trade to present winding-up petition or petition under section 210 of the principal Act in consequence of investigation, &c.
(".—(1) If, in the case of any body corporate liable to be wound up tinder the principal Act, it appears to the Board of Trade from any report made under section 168 (inspectors' report) of that Act or from any information or document obtained under Part IIA of this Act or section 18 or 19 of the Protection of Depositors Act 1963 that it is expedient in the public interest that the body should be wound up, the Board may, unless the body is already being wound up by the court, present a petition for it to be so wound up if the court thinks it just and equitable for it to be so wound up, and, accordingly, paragraph (d) of the proviso to subsection (1) of section 224 (provisions as to applications for winding-up) of the principal Act shall have effect with the substitution, for the reference to section 169(3) of that Act, of a reference to this subsection.
(2) If, in the case of any such body corporate as aforesaid, it appears to the Board of Trade from any report made or information or document obtained as aforesaid that its business is being conducted in a manner oppressive to any part of its members the Board may (in addition to, or instead of, presenting a petition under the foregoing subsection) present a petition for an order under section 210 (alternative remedy to winding up in cases of oppression) of the principal Act, and, accordingly, subsection (1) of that section shall have effect with the substitution, for the reference to section 169(3) of that Act, of a reference to this subsection").
After Clause 30 insert the following new clause—
Repeal of section 169(1) and (2) of the principal Act, and consequential modification of section 170(1)(a) thereof
(". The following provisions of the principal Act shall cease to have effect, namely,—

(a) subsections (1) and (2) of section 169 (duty of Board of Trade in certain cases after an investigation to refer to the Director of Public Prosecutions or the Lord Advocate, and duty of Director of Public Prosecutions on a reference by the Board of Trade); and

(b) in section 170(1)(a) (persons liable to repay the Board of Trade expenses of and incidental to an inspection), the words ' by the Director of Public Prosecutions or by or on behalf of the Lord Advocate'.")

After Clause 30, insert the following new clause—
Fresh powers of Board of Trade to bring civil proceedings on behalf of body corporate
(".—(1) If, from any report made under section 168 of the principal Act or from any information or document obtained under Part IIA of this Act or section 18 or 19 of the Protection of Depositors Act 1963 it appears to the Board of Trade that any civil proceedings ought in the public interest to be brought by any body corporate, they may themselves bring such proceedings in the name and on behalf of the body corporate.
(2) The Board of Trade shall indemnify the body corporate against any costs or expenses incurred by it in or in connection with any proceedings brought by virtue of the foregoing subsection.
(3) Section 170(1)(a) of the principal Act shall have effect as if the reference to any person who is ordered to pay damages or restore any property in proceedings brought by virtue of section 169(4) of that Act included a reference to any person who is ordered to pay the whole or any part of the costs of proceedings brought by virtue of subsection (1) of this section, and section 170(3) of that Act shall have effect as if the references to subsections (4) and (5) of section 169 of that Act included references respectively to subsections (1) and (2) of this section.")
After Clause 30, insert the following new clause—
Extension of Board of Trade's power of investigation under section 165 of the principal Act
(". Sub-paragraph (i) of paragraph (b) of section 165 of the principal Act (by virtue of which paragraph the Board of Trade are empowered to appoint one or more competent persons to investigate the affairs of a company if it appears to them that there are circumstances suggesting, inter alia that its business is being conducted with intent to defraud its creditors or the creditors of any other person or otherwise for a fraudulent or unlawful purpose or in a manner oppressive of any part of its members) shall have effect as if, after the words 'is being', there were inserted the words 'or has been'; and the power of the Board under that paragraph shall be exercisable with respect to a body corporate notwithstanding that it is in course of being voluntarily wound up.")
After Clause 30, insert the following new clause—
Power of inspectors to secure attendance of persons for purposes of investigation
(". Section 167 of the principal Act (which imposes on officers and agents of bodies being investigated the duty to assist inspectors) shall be amended as follows:—

(a) in subsection (1), after the words 'to produce to the inspectors all books and documents of or relating to the company or, as the case may be, the other body corporate which are in their custody or power', there shall be inserted the words
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'to attend before the inspectors when required so to do'; and

(b) in subsection (3), after the words 'refuses to produce to the inspectors any book or document which it is his duty under this section so to produce', there shall be inserted the words 'refuses to attend before the inspectors when required so to do'.")

After Clause 30, insert the following new clause—
Amendments of provisions as to expenses of investigations
(".—(1) Section 170 (expenses of investigation of company's affairs) of the principal Act shall be amended as follows.
(2) The word 'and' at the end of paragraph (b) shall be omitted, and for paragraph (c) there shall be substituted the following paragraphs:—
(c) any body corporate dealt with by the report, where the inspector was appointed otherwise than of the Board's own motion, shall be liable, except so far as the Board otherwise direct; and
d) the applicants for the investigation, where the inspector was appointed under section one hundred and sixty-four of this Act, shall be liable to such extent (if any) as the Board may direct'.
(3) In subsection (2), for the words 'paragraph (c)' there shall be substituted the words 'paragraphs (c) and (d)'.
(4) In subsection (4)—

(a) for the words 'paragraph (c)', where first occurring, there shall be substituted the words 'paragraphs (c) and (d)';

(b) for the words from 'the said paragraph (a) or (b)' to 'as the case may be' there shall be substituted the words 'any of the said paragraphs shall be entitled to contribution from any other person liable under the same paragraph'.")

After Clause 30, insert the following new clause—
Power of inspector to inform Board of Trade of matters tending to show commission of offence
(". An inspector appointed under section 164 or 165 of the principal Act may at any time in the course of his investigation, without the necessity of making an interim report, inform the Board of Trade of matters coming to his knowledge as a result of the investigation tending to show that an offence has been committed.")
After Clause 30, insert the following new clause—
Extension of Board of Trade's powers of investigation to certain bodies incorporated outside Great Britain
(".—(1) Sections 165 to 171 and 175 of the principal Act shall apply to all bodies corporate incorporated outside Great Britain which are carrying on business in Great Britain or have at any time carried on business therein

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as if they were companies registered under the principal Act, but subject to such (if any) adaptations and modifications as may be specified by regulations made by the Board of Trade.
(2) The power to make regulations conferred by this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
LORD BROWN: My Lords, I beg to move that this House doth agree with the Commons in Amendment No. 100, and I wish also to speak to Amendments Nos. to 107, 118 and 342. Nine of these clauses, and relate to the Companies Act 1948, with regard to the investigation of companies by inspectors appointed by the Board of Trade, and with the new Part IIA conferring powers on the Board of Trade to make investigations themselves. They are intended to speed the handling of suspected fraud.
Amendment No. 100 extends the power of the Board to petition for a winding-up order from companies advertising for deposits for insurance business to any company at all. Amendment 101 leaves the decision whether or not the Board or the Director of Public Prosecutions institutes criminal proceedings to be arranged between the Board of Trade and the Director of Public Prosecutions. Amendment 103 widens the Board's powers to bring civil proceedings on behalf of a body corporate. At present the Board's powers are limited because they can do so only on the basis of an inspector's report, or for the recovery of damages or for misapplied or wrongfully retained property. These conditions are nullified by the Amendment.
Amendment 103 permits the appointment of inspectors when it is felt that a company has been, rather than is being, conducted fraudulently, or when it is in liquidation. Amendment 104 makes it an explicit duty of officers of a company being investigated to attend before inspectors. Amendment 105 makes it possible for the Board to recover the expense of an investigation in wider circumstances than is now the case. Amendment 106 enables inspectors to pass information to the Board more quickly and without observing certain formalities. Amendment 107 enables the Board to appoint inspectors to investigate companies registered overseas and operating in the United Kingdom. Amendment 118 makes clear
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that answers given to inspectors appointed by the Board under the several sections of the principal Act may be used in evidence and thus clears up uncertainty on the point. Amendment 342 repeals certain provisions made redundant by the foregoing new clauses. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Brown.)
4.20 p.m.
LORD DRUMALBYN: My Lords, these are important clauses. I have heard two comments on them. The first is whether they are really necessary: they are such small extensions, if they are extensions at all, that they are already covered by existing legislation. The second is that if these clauses can now be put forward, the astonishing thing is that they were not put forward when the Bill first came before your Lordships' House. For my part, I do not object to them—the purposes they have in mind are very necessary—but I should like to raise one or two points about them.
By Amendment No. 104 it is made an offence to refuse to attend before an inspector when required to do so. This can be an important point. I should have thought that the right phrase would have been "failing without reasonable cause to attend". There must be a positive act of refusing to attend before anybody can be said to have refused to attend. In No. 105, so far as I can see, the expression,
"for the words from ' the said paragraph (a) and (b)' …"
means including "from", whereas when we normally say the word "from" we mean the words coming after. This is an Amendment to the principal Act and no doubt it will be correctly read because nothing else could be meant; but it appears to me to be wrong. In my experience it is desirable that an inspector should be able to draw attention to an offence in the course of an inspection, rather than wait until the inspection has been completed. This provision is very useful.
I should like to ask the noble Lord about the admissibility of evidence. He has explained it to me, but it would be as well to have it said publicly. Section 167 of the principal Act says that

1219
the answers of a person examined by an inspector may be "used in evidence against him". The usual phrase is "used in evidence". The ordinary lay reader would think that the phrase, "used in evidence against him", would exclude the using of evidence in his favour, should it turn out to be in his favour.
LORD CHORLEY: My Lords, may I answer the noble Lord's last point? Every policeman is strongly warned against using that phrase in the way in which it is used in musical comedies and elsewhere. If he were to go into a witness box to give evidence and said that he cautioned a man in that way, he would be rapped over the knuckles by any judge who tried such a case. He must say, "used in evidence", and that is where he has to stop.
I should like to say how much I welcome these clauses, and though I do so with perhaps more enthusiasm than the noble Lord, Lord Drumalbyn, I am dubious whether some of them carry the powers of the Board of Trade much further. The inadequacy of the powers of the Board of Trade in these matters has been known to all company lawyers for a long time and has been commented on in textbooks and articles. We had the impression that for a long time the Board of Trade were not very anxious to increase their powers. I think that goes back to the early days in the development of company law, when the Board of Trade were rather quiescent about these matters and regarded themselves as under no obligation to take an active part and only to come in when pushed to do so. But I think that that attitude has been changing. It has certainly been becoming clear to the business world and to the public that the powers of the Board of Trade in connection with some recent scandals have been altogether lacking. No doubt that is why at this late stage these Amendments have been put in.
During the time this Bill has been going through Parliament, officers of the Board of Trade have been holding discussions with knowledgeable lawyers who have been concerned in some of these investigations as to the direction in which their powers might be improved and strengthened. These discussions have been contemporary—indeed, that is prob
1220
ably the main reason why we have these Amendments now. The important thing is that we have them. I am sure that if they are used by the Board of Trade effectively and with enthusiasm that will make a tremendous amount of difference to the investigations which the Board are bound to be called upon to conduct from time to time.
LORD BROWN: My Lords, I am grateful for the support of my noble friend Lord Chorley. May I assure him that the urgency under which we have been proceeding this afternoon must be some evidence of the desire of the Board of Trade to use these powers vigorously. The noble Lord, Lord Drumalbyn, was good enough to give me notice of the points he was going to raise, which has been very helpful, because they are rather technical. I will refer to the notes I have been given, though I am not quite sure that I understand them myself.
The noble Lord is arguing that Amendment No. 104 may be unfair in that it provides for the punishment of persons who refuse to attend before an inspector, when required to do so, whatever the circumstances. This is not the real effect of the clause. A person who refuses to attend is punishable under Section 167 of the Companies Act in like manner as if he had been guilty of contempt of court. The law of contempt of court in relation to the non-attendance of witnesses provides for the case where there is a reasonable excuse for absence. Sickness, inability to travel, the argument that a proper sum was not tendered to the witness for his expenses—all these are examples of excuses recognised as valid excuses for absence.
The second point the noble Lord raised was in connection with the drafting of Amendment No. 105. This is a technical matter very nearly beyond my comprehension. I hope that the noble Lord understands it better than I do. When an Amendment is made in a Bill to a Statute to leave out a phrase in that Statute, it is usual to identify the phrase to be omitted by quoting the opening and closing words of the phrase. This is not the case when an amendment to a Bill itself is proposed in the House leaving out a phrase in the Bill. In that case, the phrase is identified by quoting the

1221
words immediately before and those immediately after the phrase. I hope that the noble Lord will not question me further on that, because I have not grasped its implications, and it needs a good deal of thinking about.
The third point raised by the noble Lord was the question of the Amendments which put those giving answers to questions asked by inspectors in a position where their answers could be used as evidence against them. It is a fact, I am informed, that in English law there is a time-honoured principle that, in general, answers given by people in giving evidence, and in other situations, cannot be used against them unless the law states that they can. Thus, wherever the law tends to be silent on this point it is open to assume that the principle stands, and therefore that their answers cannot be used in evidence against them. If it is intended that the answers may be used against them, it is necessary to state so. In the case of answers that can be used in their favour, there is no law saying that evidence given cannot be used in favour of a witness, and it is never necessary to make comment on this in a Bill. I hope that those answers satisfy the noble Lord.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 108]
Leave out Clause 31.
LORD BROWN: My Lords, I beg to move that this House doth agree with the Commons in Amendment No. 108.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
LORD DRUMALBYN: This is an Amendment to leave out Clause 31, which is the clause dealing with
"Disclosure of Companies, as regards certain Gifts of Money for charitable Purposes, of Amounts thereof and Identities of Donees or Purposes of Gifts."
This was a clause put in at the instance of my noble friend Lord Polwarth. My noble friend had moved an Amendment to a clause, and this clause was brought forward in place of that. The point here is quite simply that when this Bill first came before this House it had a provision dealing with a combination of political and charitable contributions, which is a matter still covered by Clause 18, and
1222
in this case both political and charitable contributions exceeding £50 in value had to be declared. A list of political contributions had to be provided under Clause 18, and a list of charitable contributions under Amendment No. 108. The truth is simply that the decision to put in charitable contributions at all was intended as a justification of the decision to put in the political contributions. It was, so to speak, to soften the blow and make the thing look a little more respectable. Now that the clothes have been taken off, the political contributions stand in their stark nakedness as a purely political measure.
LORD ERROLL OF HALE: My Lords, it is an impressive commentary on this Government that they come along full of pious intentions that all charitable contributions must be disclosed, without even taking the trouble to find out in advance the enormous amount of additional work that will be imposed on all the companies concerned. Despite the fact that we made representations in your Lordships' House, the Government remained adamant. Then, when they really start looking at it, they see the enormity of their actions, and they remove the clause. We are grateful that they have removed the clause. We hope they will learn from their bitter experiences, so that when they prepare the next Bill they will not resort to the same sort of insulting and incompetent procedures.
LORD BROWN: My Lords, I do not want to prolong this discussion, but I must comment that the noble Lord has overlooked the fact that in the discussion on what I may call the abortive Bill of 1964 in another place it was the Opposition who proposed that lists of charitable contributions should be included.
LORD ERROLL OF HALE: Not by the Opposition Front Bench.
LORD BROWN: No. Nevertheless, it was Opposition speakers from the Back Benches. It was because of their pressure that the Government moved and put in this clause about charitable contributions. I am happy to see it removed, because I agree that it was put in as a measure of equity, because political contributions appear. I do not feel the slightest bit ashamed of the fact that political contributions have to appear. I feel it is just and proper that in a society of this sort

1223
political contributions made by companies should be shown. I think the lessons of pre-war Germany alone are sufficient to indicate what can happen when these things get out of hand. I am not ashamed of the clause itself, but I am happy that charitable contributions are dealt with as they are in this Amendment.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 109]
Clause 32, page 36, line 31, at end insert—
("bearing the same stamp as if they were contained in a deed").
LORD BROWN: My Lords, with your Lordships' permission, I ask leave to move this Amendment, but to speak to a large number of Amendments.
LORD DRUMALBYN: My Lords, if I may interrupt the noble Lord, may I suggest that we treat stamp duties separately from fees? One is under the control of the Board of Trade, and the other is not. This would mean, I think, that Amendments 109 and 112 should be taken together. We have no objection to these Amendments and are prepared to take them formally.
LORD BROWN: My Lords, I therefore formally move that this House doth agree with the Commons in the said Amendment, No. 109.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 110]
Clause 32, page 37, line 43, at end insert—
("(.) In this section, 'prescribed' means prescribed by regulations made by the Board of Trade by statutory instrument.")
LORD HUGHES: My Lords, Amendments Nos. 110 and 113 are minor. They make it clear that the use of the word "prescribed" in the clause means "prescribed in statutory instruments made by the Treasury". I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 111]
Clause 33, page 38, line 31, leave out from first ("to") to end of line 33 and insert ("the condition of the company as to those matters which will obtain upon its re-registration").
LORD HUGHES: My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 112]
Clause 33, page 40, line 9, at end insert—
("( ) In section 112 of the Stamp Act 1891 which charges a duty on the capital of limited liability companies), the first reference to a company to be registered with limited liability shall be construed as including a reference to a company to be re-registered in pursuance of this section with such liability.")
LORD BROWN: My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 113]
Clause 33, page 40, line 9, at end insert—
("( ) In this section, 'prescribed' means prescribed by regulations made by the Board of Trade by statutory instrument.")
LORD HUGHES: My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 114]
Leave out Clause 35.
LORD WALSTON: My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 115]
After Clause 35, insert the following new clause—
Power of Board of Trade to require company to abandon misleading name.
(".—(1) If, in the opinion of the Board of Trade, the name by which a company is

1225
registered gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public, they may direct it to change its name.
(2) A direction given under this section to a company must, if not duly made the subject of an application under the next following subsection to the court, be complied with within a period of six weeks from the date of the direction or such longer period as the Board of Trade may think fit to allow.
(3) A company to which a direction is given under this section may, within a period of three weeks from the date of the direction, apply to the court to set the direction aside, and the court may set it aside or confirm it; and, if it confirms it, it shall specify a period within which it must be complied with.
(4) If a company makes default in complying with a direction under this section, it shall be liable to a fine not exceeding £5 for every day during which the default continues.
(5) Subsections (3) and (4) of section 18 of the principal Act (consequences of change of name under that section) shall have effect as if references therein to that section included references to this section.")
LORD HUGHES: My Lords, this Amendment has associated with it Amendment No. 121. Amendment No. 115 is the insertion of a new clause, and Amendment No. 121 leaves out Clause 42. This has to do with requiring a company to abandon a misleading name. Clause 42 was inserted in this House and widened the existing limited powers of the Board of Trade to direct a company to change the name by which it had been registered. This was deleted in another place and replaced by a new clause designed to remedy some of the drafting weaknesses which were discovered in the original Clause 42. The Board of Trade have, under Section 18(2) of the Companies Act 1948, the limited power to direct a company to change the name by which it is registered. The direction must be made within six months of the date on which the company was registered by the name it is required to change, and the ground for the change must be that the name is too like that of another company that was registered before the company whose name is to be changed so registered.
The Jenkins Committee made a number of recommendations about names, including, in paragraph 456 of their Report, a recommendation that the Board of Trade should be empowered to direct a company to change its name at any time if the name has become misleading in such a manner that it is likely to cause
1226
harm to the public, but there should be a right of appeal to the court. The Jenkins Committee envisaged that the power would be used very sparingly. That is in paragraph 454. The new clause implements the Jenkins recommendation in paragraph 456. The remaining recommendations in the Jenkins Committee's Report on names will be considered in the context of the next Companies Bill.
The new clause differs in the following ways from the original Clause 42. This referred to a name which conveyed a false or misleading indication of a company's activities or of the nature of the goods supplied or the services performed. The new clause refers only to a company's activities, since it is thought these words are sufficiently wide to embrace giving a misleading impression of the goods or services supplied or performed. The original clause provided for a statutory notice of intention to make a direction to a company to change its name, and a statutory right to the company to make representations. Since the company is to be allowed to appeal to the court, it seems unnecessary to provide a statutory right to make representations to the Board of Trade. The Board of Trade would never, of course, make a direction without communicating with the company concerned. The original clause provided for appeal to the High Court. This would mean that the appeal would have to be heard by the Divisional Court. The new clause provides for the appeal to be made to the court having jurisdiction to wind up the company, usually a Chancery Court of the High Court.
The new clause makes some changes in the time allowed for a direction to take effect, and the time during which any appeal must be lodged. The original clause imposed a fine of £5 a day for default. This could have been read as a mandatory fine of £5. The new clause follows the more usual form of permitting a fine not exceeding £5 a day.
The clause also makes a change of substance by requiring there to be harm to the public before the Board's directions may be made. The requirement that a company name must give so misleading an indication of its activities as to cause harm to the public was added for the simple reason that names of many

1227
existing companies could be held to convey a misleading indication of their activities: for example, Army and Navy Stores, Limited; British Electric Traction, Limited. It would be unreasonable to require such companies to change their name merely because they were out of date, or to empower the Board of Trade to force them to do so. The clause therefore gives the Board a more limited power to give a direction to a company to change its name only if it is so misleading as to cause harm to the public. My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
LORD CHORLEY: My Lords, I think the words are "likely to cause harm", which is rather different.
LORD DRUMALBYN: My Lords, perhaps I may be allowed to say a word about this Amendment which, as the noble Lord says, substitutes a new clause, and puts it in a slightly different place, for a clause introduced from this side of the House in the earlier stages of the Bill. I can say on behalf of my noble friend Lady Elliot of Harwood and myself that we are very glad indeed that the Government have agreed to retain this clause, which was so strenuously resisted by the noble and learned Lord on the Woolsack at an earlier stage, not on its merits, but because he thought that it was not suitable to this Bill. I am very glad, and I thank the Government very much for including this clause. I think they have done right to put it in. It was there, and obviously it would have been a mistake to take out a clause which can do some good between now and when the next Companies Bill appears. With the re-drafting of it, I have no quarrel. I only wonder whether, when we come to the Protection of Consumers Bill, regard will be had to these words:
"so misleading as to cause harm to the public",
which seem to me quite a good formula. I quite agree with the Government that merely to mislead, if no harm results, is not a particularly odious thing to do, and certainly ought not to be followed by any heavy penalties.
I have no other comments on the Amendment, except to say that I was very glad that the noble Lord was able to
1228
give the assurance that, in cutting out the requirement in the existing clause, the Board of Trade should allow the person against whom it is proposed to make a direction to make representations to them before the direction is made. The noble Lord has given an assurance that the Board of Trade would never make a direction without communicating first—I take it that he meant "first"—with the company concerned. I welcome this, and I thank the noble Lord for his careful explanation of it.
LORD HUGHES: My Lords, I am very grateful for the way the noble Lord has received this clause. Of course, the Government have never maintained that the Opposition is always wrong. All we have said is that, in our opinion, they are much more frequently wrong than right.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 116]
Leave out Clause 37.
LORD HUGHES: My Lords, I beg to move Amendment No. 116.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.
4.47 p.m.

COMMONS AMENDMENT
[No 117]
After Clause 37, insert the following new clause—
Fees
(".—(1) For references in section 425 of, and Schedule 14 to, the principal Act to Schedule 12 to that Act there shall be substituted references to Schedule (Fees to be paid to the registrar of companies) to this Act.
(2) The Board of Trade may by regulations made by statutory instrument alter the said Schedule (Fees to be paid to the registrar of companies) so as to increase or decrease the amount of a fee payable to the registrar, and any reference in the principal Act to that Schedule shall be construed as a reference to that Schedule with any alterations made by regulations for the time being in force under this subsection.
(3) No regulations shall be made under the last foregoing subsection increasing a fee unless a draft of the instrument containing the regulations has been laid before Parliament and has been approved by resolution of each House of Parliament.
(4) A statutory instrument containing regulations made under subsection (2) of this section none of which increases a fee shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
LORD BROWN: My Lords, in moving Amendment 117, I should like also to discuss Amendments 126, 128, 129, 265, 318 and 343 to 345 inclusive. These Amendments are all concerned with financial matters, changing the scale of fees. I will simply confine myself, so far as possible, to an explanation of how the new fees differ from the current fees. Amendments 117 and 318 set up a new Schedule, and they raise the fees payable to the Registrar of Companies as follows. Registration fees: the old minimum fee was £2 and applied to capital of companies up to £2,000. The new minimum is £20, and there is thus a basic addition of £18. The old scale of fees increased by decreasing increments as the amount of the capital was raised. These increments remain unchanged, so where the maximum registration fee was £50, under the current scale, for capital of £525,000 and over, it has now become £18 more; that is, £68. So, although the scale has gone up very largely for the companies of very small capital, it has cone up only, I submit, to a trifling extent for the larger companies.
In the case of companies registering without a share capital, perhaps it is only necessary to say that the basic fee has gone up again by £18. That makes a minimum fee of £20 as against £2, and the maximum fee has become £38 as compared to the current figure of £20. There are a number of complex situations, such as that where a company reregisters under Clause 33 and is limited by guarantee, but which also has a share capital. This company will pay whichever is the highest registration fee.
A limited company re-registering as unlimited pays £5. For the registration of the annual return of companies the fee is increased from 5s. to £3. Registering a change of name by a special resolution is increased from 5s. to £10—and perhaps a word of explanation is needed here. This sharp increase is to prevent the registration of companies wholesale under the 5s. fee while this Bill is in passage through the House, and selling these cheaply-bought registrations to others when the Bill has passed, when, of course, the registration fee will be much higher. Those who bought them would probably want to change the name and the £10 fee for the registration of the change of name will, we hope, inhibit the whole forestalling
1230
practice to which I have referred. I should add that no fee will be required by the Registrar if, by inadvertence, the first name that a company chose to register itself by has to be changed for reasons under the Companies Act.
The remaining Amendments, Nos. 343, 344 and 345, are all consequential on the introduction of the new scale of fees, and make additions to the list of enactments for repeal in Schedule 7 of the Bill. I beg to move Amendment No. 117.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
LORD DRUMALBYN: My Lords, I should like to thank the noble Lord for that explanation. Of course, reading it just on the figures, this is about as wonderful an example of regressive taxation as one could possibly find. However, we quite understand the reasons for it: that the Government wish to cut down the extent to which companies are, shall we say, unnecessarily, and sometimes even deviously, formed, and that they want to reduce so far as possible the abuses of transferring the purchase of companies and so forth. We have no objection to this at all. I simply wish to ask one question, and that concerns the powers to alter the fees from time to time. I understand that this is to be done by Statutory Instrument, subject to Affirmative Resolution of the House. I do not think there are any further comments I wish to make on this Amendment, except a question that we shall be coming to, about the re-registration of companies—unlimited as limited, or limited as unlimited. I did not quite follow whether or not the noble Lord said that these fees would apply in both cases.
LORD BROWN: My Lords, I am afraid that I cannot, offhand, answer the noble Lord's question.
4.55 p.m.
LORD CHORLEY: My Lords, I should like to say a word or two on this, because it is an important matter. One quite understands and agrees with the view that these registration fees, which have remained at the same figure ever since the great Companies Act of 1861, require revision. That is good. But it seems to me that there is an element of taxation in this. I do not know what are the costs that have to be met, but these fees

1231
for registering companies and other commercial documents ought to be calculated simply to meet the costs. In the old days I think it was the accepted policy that commercial transactions should be taxed, and bills of exchange were taxed. In the great commercial currency which was provided by the business community itself one had, in effect, to pay a tax to the State for providing it with the currency by means of which the commerce of the country was conducted. It was the same with bills of lading and charterparties, by means of which the great marine trade of this country—the greatest in the world—was conducted.
However, during the last twenty years or so, very properly, this outlook has been completely changed. These taxes on bills of exchange and on charterparties and bills of lading, marine insurance policies and many other types of commercial activity—which, as I say, had been taxed on the basis of the documents that were essential to the proper carrying on of these businesses—have been removed, and it seems to me that the element of taxation contained in this is a regressive step, I do not know what are the costs involved, and it might be rather difficult to break down the costs of the actual business of registering companies and re-registering the changes; but on any basis it seems to me that the fees now being imposed will bring in twice as much as the costs are likely to come to.
This step is defended on another ground; namely, that if these much higher fees are charged they would frighten people off from forming limited liability companies; and the Jenkins Committee suggested that this should be done. I think it is a very clumsy method of dealing with these companies, in which both the noble Lord, Lord Hawke, and I are interested. Trying to stop people from forming these smaller companies in this way, by taxing them out, is in my submission the wrong way of going about it. I am sorry that this clumsy method has been adopted in this case, rather than the much more sensible one, in my contention, of altering the structure of the trading organisations on which the business of this country is carried on. I think these are points of some substance, although I am not prepared to object to the actual figures contained here, since
1232
it is extremely difficult to analyse them when one is confronted with them in a hurry.
I should like to ask the noble Lord who is in charge of this Bill about a point to which I have not been able, in a very cursory glance at these new fees to discover the answer. There are many companies which are formed, particularly companies formed by guarantee, which are are in effect charitable. Some years ago I had a part in forming a company limited by guarantee for the purpose of running a law periodical, which I think has been much esteemed by the law schools in this country. That could be done very cheaply indeed, because the registration fees were small. I am not sure whether the situation is still the same now, or whether, under these new arrangements, it will be made onerous for small groups of people who wish to form companies limited by guarantee and who wish to get the advantage—and it is a very real advantage for many charitable and semi-charitable objectives of this kind—of this sort of organisation. I should like to ask how far they will be prevented by much larger fees, or whether the result of this is that there is not very much change. I should be grateful if the noble Lord would inform me on that point.
LORD BROWN: My Lords, to deal first of all with Lord Chorley's point, the further investigation into the whole structure of Company Law may indeed throw up different means of limiting the registration of large numbers of small companies, but in the meantime this new scale of fees is at least a deterrent to a practice which I think all concerned agree is objectionable. This Amendment deals simply with scales of fees, and does not basically in any way alter the structure of the law with regard to who shall be charged, in what proportion. It alters the whole proportion of all the fees, rather than altering differential charges between one type of company and another. The noble Lord, Lord Drumalbyn, asked what the fees are for re-registering a limited company as unlimited. I am sorry I was not able to give the answer straight away. It is difficult to grasp the details of this long series of Amendments. The answer is that the fee for re-registering a limited company as unlimited is £5 and the fee for re-registering an unlimited company

1233
as limited is the same as for a new company.
LORD CHORLEY: My Lords, is the noble Lord able to tell me about the charge for registering a company limited by guarantee?
LORD BROWN: My Lords, the charge for registering a company limited by guarantee is the same as it has always been under the Companies Act, except for the fact that the scale of fees has gone up basically from £2 for up to 25 members to £20, and correspondingly at the top of the scale, where the fee has become £30 instead of £20. There is no difference in the governing principle: simply a basic change in the fees.
LORD CHORLEY: My Lords, it is a very substantial increase. It is ten times higher and it could make quite a difference to some people wishing to establish an organisation of this kind.
LORD DRUMALBYN: My Lords, in relation to what the noble Lord, Lord Chorley, was saying may I ask the noble Lord whether he would confirm that the amounts of the receipts had fallen far short of the costs? And would he also confirm that by far and away the bulk of the increases come from increases of the registration of the annual returns—I think it is in the ratio of something like three to one, as compared with the registration of companies. In so far as the Government are carrying out the recommendations, therefore, of the Jenkins Committee—or in fact they are a little short of that, because the Jenkins Committee recommended £25 for registration and the figure here is £20—the revenue raised would not go far enough. It is true that they are increasing by a very large proportion the fee for the registration of annual returns, which they may be able to justify by the time it has remained at that for some time; but all the same it does seem rather more than necessary for the purpose.
LORD BROWN: My Lords, I am grateful to the noble Lord for giving the indications he has. I confirm that the present situation is that the income from the fees for registration of companies falls substantially short of the expense of carrying out the duties of the office. It is also true that the revenue from new fees will be greater than the expense of the
1234
office, but until we get a provision in these Bills which enables us to alter figures automatically the expenses of running the register of companies will probably rise, while the fees meanwhile will remain stable, so that it is a wise provision for the future.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 118]
After Clause 38, insert the following new clause—
Admissibility in evidence of certain matter
(". An answer given by a person to a question put to him in exercise of powers conferred by—

(a) section 167 of the principal Act (as originally enacted or as applied by section 172 of that At or section (Investigation of share dealings) of this Act); or

(b) general rules made under section 365(1) of the principal Act for carrying into effect the objects of that Act so far as relates to the winding up of companies;

may be used in evidence against him, and a statement required by section 235 of the principal Act (statement of company's affairs to be made to official receiver) may be used in evidence against any person making or concurring in making it.")
LORD HUGHES: My Lords, I beg to move that this House doth agree with the Commons in Amendment No. 118.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 119]
Clause 39, page 45, line 9, at beginning insert—
("( ) Notwithstanding anything in subsection (2) of section 63 of the principal Act, no company need forward to the registrar of companies a printed copy of a resolution authorising an increase of its share capital, if instead it forwards a copy in some other form approved by the registrar.")
LORD HUGHES: I beg to move that this House doth agree with the Commons in Amendment No. 119.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 120]
Leave out Clause 41.
5.7. p.m.
LORD HUGHES: My Lords, with Amendment 120, it will perhaps be convenient to discuss Nos. 256, 257, 258 and 259. Clause 41 dealt with exemptions from prohibitions imposed by Section 434 of the Companies Act 1948, and the formation of partnerships with more than 20 members. This clause is now replaced by the new clause in Amendment 257, which makes only minor drafting changes which exempt certain professional partnerships from the limitation imposed by Section 434 on having more than 20 members.
Another new clause (Amendment No. 258), added by the Commons, removes a similar limitation imposed by the Limited Partnerships Act 1907. A further new clause (Amendment No. 256) modifies the ban imposed by Section 429 of the Companies Act 1948 on the formation of banking partnerships with more than 10 members, and the new clause (Amendment No. 259) provides that the whole of the new part of the Bill dealing with partnerships shall not apply to Northern Ireland. I beg to move that this House doth agree with the Commons in Amendment No. 120.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 121]
Leave out Clause 42.
LORD HUGHES: My Lords, I beg to move that this House doth agree with the Commons in Amendment No. 121.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 122–124]
Clause 44, page 47, line 35, leave out ("22 (both inclusive)") and insert ("17 (both inclusive), (Directors' report to state average number, by the week, of employees and the amount, by the year, of their wages), 18 to 22 (both inclusive), (Power of Board of Trade to present winding-up petition or petition under section 210 of the principal Act in consequence of investigation, etc.), (Fresh powers of Board of Trade to bring civil pro
1236
ceedings on behalf of body corporate) and (Power of inspector to inform Board of Trade of matters tending to show commission of offence)")
Clause 44, page 47, line 38, after ("to") insert ("17 (both inclusive), (Directors' report to state average number, by the week, of employees and the amount, by the year, of their wages) and 18 to")
Clause 44, page 47, line 40, at end insert— ("( ) in the case of sections (Power of Board of Trade to present winding-up petition or petition under section 210 of the principal Act in consequence of investigation, &c.), (Fresh powers of Board of Trade to bring civil proceedings on behalf of body corporate) and (Power of inspector to inform Board of Trade of matters tending to show commission of offence), were included amongst the sections of that Act so specified which relate to investigations.")
LORD BROWN: My Lords, I beg to move that this House doth agree with the Commons in Amendments Nos. 122, 123 and 124. They are purely consequential Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 125–131]
Clause 46, page 49, line 8, leave out ("3") and insert ("4".)
Clause 46, page 49, line 13, at end insert ("and Schedule (Fees to be paid to the registrar of companies) thereto".)
Clause 47, page 49, line 17, after first (`and" insert ("sections (Extension of section 24 to spouses and children), (Extension of section 26 to spouses and children), (Investigation of share dealings),")
Clause 47, page 49, after ("34") insert ("and section (Fees)")
Clause 47, page 49, line 18, after ("Act") insert ("and Schedule (Fees to be paid to the registrar of companies) thereto.")
Clause 47, page 49, line 21, after ("inclusive)") insert ("(Directors' report to state average number, by the week, of employees and the amount, by the year, of their wages")
Clause 47, page 49, line 28, leave out paragraph (d)
LORD BROWN: My Lords, I beg to move that this House doth agree with the Commons in Amendments Nos. 125 to 131 inclusive.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Brown.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 132]
After Clause 48, insert the following new clause—
Classes of insurance business relevant for purposes of Part II, and definitions thereof
(".—(1) The classes of insurance business relevant for the purposes of this Part of this Act are industrial assurance business, liability insurance business, marine, aviation and transport insurance business, motor vehicle insurance business, ordinary long-term insurance business, pecuniary loss insurance business, personal accident insurance business and property insurance business.
(2) In this Part of this Act, "industrial assurance business" has the meaning assigned to it by section 1(2) of the Industrial Assurance Act 1923.
(3) In this Part of this Act, "liability insurance business" means the business of effecting and carrying out contracts of insurance against risks of the persons insured incurring liabilities to third parties, not being risks arising out of, or in connection with the use of, motor vehicles or out of, or in connection with the use of, vessels or aircraft or risks incidental to the construction, repair or docking of vessels or aircraft.
(4) In this Part of this Act, "marine, aviation and transport insurance business" means the business of effecting and carrying out contracts of insurance—

(a) upon vessels or aircraft, or upon the machinery, tackle, furniture or equipment of vessels or aircraft:

(b) upon goods, merchandise or property of any description whatever on board of vessels or aircraft:

(c) upon the freight of, or any other interest in or relating to, vessels or aircraft;

(d) against damage arising out of, or in connection with, the use of vessels or aircraft, including third party risks;

(e) against risks incidental to the construction, repair or docking of vessels, including third party risks;

(f) against transit risks (whether the transit is by sea, inland water, land or air, or partly one and partly another), including risks incidental to the transit insured from the commencement of the transit to the ultimate destination covered by the insurance; or

(g) against any other risks insurance against which is customarily undertaken in conjunction with, or as incidental to, the undertaking of such business as falls within this definition by virtue of any of the foregoing paragraphs.

(5) In this Part of this Act, "motor vehicle insurance business" means the business of effecting and carrying out contracts of insurance against loss of, or damage to, or arising out of or in connection with the use of, motor vehicles, inclusive of third party risks but exclusive of transit risks.
(6) In this Part of this Act, "ordinary long-term insurance business" means business of any of the following kinds, namely,—

(a) effecting and carrying out contracts of insurance on human life or contracts to pay annuities on human life;

(b) effecting and carrying out contracts of insurance against risks of the persons insured sustaining injury as the result of an accident or of an accident of a specified class or dying as the result of an accident or of an accident of a specified class or becoming incapacitated in consequence of disease or of a specified class, being contracts that are expressed to be in effect for a period of not less than five years or without limit of time and either are not expressed to be terminable by the insurer before the expiration of five years from the taking effect thereof or are expressed to be so terminable before the expiration of that period only in special circumstances therein mentioned; and

(c) effecting and carrying out contracts of insurance, whether effected by the issue of policies, bonds or endowment certificates or otherwise, whereby, in return for one or more premiums paid to the insurer, a sum or a series of sums is to become payable to the insured in the future, not being such contracts as fall within either of the foregoing paragraphs;

but does not include industrial assurance business.
(7) In this Part of this Act, "pecuniary loss insurance business" means the business of effecting and carrying out contracts of insurance against any of the following risks, namely,—

(a) risks of loss to the persons insured arising from the insolvency of debtors of theirs or from the failure (otherwise than through insolvency) of debtors of theirs to pay their debts when due;

(b) risks of loss to the persons insured arising from their having to perform contracts of guarantee entered into by them;

(c) risks of loss to the persons insured attributable to interruptions of the carrying on of businesses carried on by them or to reductions of the scope of businesses so carried on:

(d) risks of loss to the persons insured attributable to their incurring unforeseen expense; and

(e) risks neither falling within any of the foregoing paragraphs nor being of a kind such that the carrying on of the business of effecting and carrying out contracts of insurance against them constitutes the carrying on of insurance business of some other class.

(8) In this Part of this Act, "personal accident insurance business" means the business of effecting and carrying out contracts of insurance against risks of the persons insured sustaining injury as the result of an accident or of an accident of a specified class or dying as the result of an accident or of an accident of a specified class or becoming incapacitated in consequence of disease or of disease of a specified class, not being contracts falling within subsection (6)(b) above.
(9) In this Part of this Act, "property insurance business" means the business of effecting and carrying out contracts of insurance against risks of loss of, or damage to, material property, not being risks of a kind such that the business of effecting and carrying out contracts of insurance against them constitutes marine, aviation and transport insurance business or motor insurance business.")
5.10 p.m.
LORD WALSTON: My Lords, I beg to move that this House doth agree with the Commons in Amendment No. 132, and with it I think it would be convenient, although it is rather a mouthful, to speak to some 55 other Amendments. They are Nos. 132 to 137 inclusive, 139, 140, 141, 143, 152 to 156 inclusive, 158, 159, 160, 162, 164, 165, 169, 170, 171, 179, 181, 183, 184, 186, 216, 228, 229, 230, 232 to 236 inclusive, 238, 239, 241, 244, 246, 247, 266, 320, 322, 323, 325 to 330 inclusive, 347, 348 and 349.
Your Lordships should not get distressed by this great number of Amendments, because a large number are consequential, and I shall not have to speak at any great length on each and every one of them. The main object of this group of Amendments is to extend the Board's supervision to all classes of insurance business. I am quite sure that, particularly in view of relatively recent events in the insurance world, there will be general agreement among your Lordships that the objectives at least of these general clauses and Amendments in particular are desirable and much in the public interest.
It is necessary, in my view, to move these Amendments in order to make the new control powers introduced by the present Bill effective over the whole range of insurance business conducted by the insurance companies. At the same time, the Amendments regroup and redefine the classes of business. The most significant Amendments are Nos. 132, 135, 165, 238, 239, 244 and 246, which introduce seven new clauses. The substantive Amendment is Amendment No. 132, which is supplemented by Amendment No. 238. The other Amendments are largely consequential.
Briefly, the seven new clauses will have the following main effects. The new clause under Amendment No. 132 makes Part II of the Bill apply to all classes of insurance. Six of the existing classes under the 1958 Act are redefined so as
1240
to take in, together with two new classes, the types of insurance to which supervision is now extended. This extension is needed so that the new system of authorisation introduced by Clause 50 as replaced by Amendment No. 135 comes into effective operation. The extension also takes account of the growing importance of various types of insurance not previously supervised. As examples of that, I would cite credit insurance, and possibly glass insurance, plate glass insurance, burglary insurance when the insurance is against burglary only and not, as is more usually the case, against fire and theft.
The definitions which are now adopted do not in fact differ much from the former ones, and they have the additional advantage of enabling Her Majesty's Government to conform with the recommendation by the Organisation for the Economic Co-operation and Development that class definitions should be based on an agreed standard classification. This is a considerable advantage.
The new clause under Amendment No. 238 qualifies the class definitions so as to enable companies whose policies in one particular main class embrace risks of another class written as incidental to the main risk without requiring an authorisation from the subsidiary class; in other words, it is a simplifying clause which will make the efficient operation of the insurance companies somewhat easy.
The new clause under Amendment No. 239 exempts from the operation of Clause 49 and of the principal Act, bankers who carry on one of the new insurance classes known as "pecuniary loss insurance business" in the course of their banking business, because it is not really felt appropriate that such bankers should be supervised. So that again is what one might call a relaxing Amendment.
The new clause under Amendment No. 244 is no more than one which facilitates the transitional period and provides for transition. The new clause under Amendment 246 is also a transitional provision needed to prevent any dislocation of the business of those insurance companies which carry on only classes of business to which the principal Act does not apply until the Bill is enacted, and which are expressly precluded by the wording of their memoranda of association from

1241
carrying out any class of insurance business to which that Act, or any enactment amending or extending that Act applies.
LORD DRUMALBYN: My Lords, would the noble Lord say which Amendment he is referring to now?
LORD WALSTON: My Lords, this is Amendment No. 246.
LORD DRUMALBYN: My Lords, with respect to the noble Lord, he did not list that among the clauses that he was dealing with.
LORD WALSTON: My Lords, apologise to the noble Lord. It is not for me to suggest that perhaps I spoke too fast, and therefore he was unable to take it down.
LORD FERRIER: My Lords, the noble Lord said "249".
LORD WALSTON: My Lords, all I can say is that it is on the piece of paper from which I read; but it is perfectly possible that in this long list I did skip over No. 246.
LORD DRUMALBYN: My Lords, with respect, it is not on the list. I have the list also. It comes much lower down the list, and I was hoping to raise that separately.
LORD WALSTON: My Lords, then there must be more than one list. I can assure the noble Lord that it is on the list from which I read, and my suspicion is that I did read it out. Would the noble Lord rather I did not proceed with it? It is most germane to this particular group of Amendments. It is not in fact an Amendment of enormous substance but is a facilitating Amendment, which is designed to make life easier for the companies which are affected by this Bill as a whole, and to ease their path during what might otherwise be an awkward transitional period.
There are, as noble Lords well realise, certain companies whose memoranda of association define within fairly close limits the type of business they can undertake, and as the result of this Bill they may feel that they wish to enlarge the scope of their business. This will entail extending their memoranda of association. This will take a little time, and the sole object of this clause is to enable them to carry
1242
on business during such time. I do not know whether that is a sufficient explanation to encourage the noble Lord to let me deal with these clauses together. But if he is not satisfied now or at a later stage, I will withdraw Amendment No. 246 from this group and speak to it when it takes its turn in the list.
LORD FERRIER: My Lords, I am sorry to interrupt the noble Lord. Amendment No. 246 seeks to insert another clause after Clause 87. I cannot quite make it follow. Is it correct that it is Clause 87?
LORD WALSTON: It certainly inserts a new clause, and I think the noble Lord is right in saying that it occurs at that point. I see that Amendment No. 246 is that, "After Clause 87 insert the following new clause", which reads:
"Any provision of a company's memorandum of association that expressly precludes it from carrying on insurance business of any class shall cease to have effect."
That is one to which I am speaking.
LORD FERRIER: Yes, my Lords, but if one refers to Clause 87 it does not seem to fit in.
LORD WALSTON: Amendment No. 246 is to be inserted after Clause 87, and is to be a new clause.
LORD FERRIER: I am sorry, I still cannot make it make sense.
LORD WALSTON: My Lords, I am sorry that my explanation is not sufficiently clear to the noble Lord, but I hope that, even if the actual position in the list is unclear, the meaning and the scope of the Amendment is clear. It is more important what it does rather than where it actually appears in the Bill. If it is not clear to the noble Lord, undoubtedly he will let me know in due course where it is not clear and I will try to clarify the position further. Then there is a further new clause under Amendment 135 which is simply a replacement of Clause 50, which is a redrafting Amendment; and a further drafting Amendment, which is the new clause mentioned under Clause 165. All the other very long list of approximately 50 Amendments are purely consequential on one or other of these clauses. I beg to move that this House doth agree with Commons Amendment No. 132.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Walston.)
LORD DRUMALBYN: My Lords, I have expressed condolences with the noble Lord for having had to move such an enormous collection of Amendments which would have made a Bill in themselves. I think that he has answered most of the queries I had in mind, particularly that Amendment No. 135 makes no alteration in substance at all in the existing Clause 50. This was a clause which was the subject of a good deal of misapprehension at the time as to what had and had not to be authorised. I think we have now got it clear, although I am bound to say that, comparing the existing Clause 50 and the new clause, I was not at all certain that there were no changes of substance. I am glad to have his assurances that there are not.
On this particular clause I am afraid that I have not been able to understand the noble Lord's explanation of the new clause in Amendment No. 246. I still fail to understand how it is right to secure a temporary provision to enable a company whose memorandum of association expressly precludes that company from carrying on insurance business to carry it on. It seems to be a very curious provision to make in order to achieve a purely temporary effect. But there it is. I do not think there is anything we can do about it now, but I am not at all sure that this was the right way of going about this particular provision.
Dealing with this series of Amendments as a whole, they represent not only quite an extension of the Bill, but a considerable alteration in the concept of the Bill and the classes of insurance in general. I am bound to say that this is such a fundamental change that it is one we feel ought to have been thought of before the Bill was introduced in the first place, rather than at this stage. It may be that this was done in response to representations which were made after the Bill came into effect. I suspect that that is not so, and that it was done as a result of second thoughts in the Board of Trade. I think that this is regrettable. The main reason why it got a place in this Session's legislation at all was because of the insurance aspects, and one
1244
would have hoped that this part of it had been, to use the noble and learned Lord the Lord Chancellor's words, carefully prepared in advance of its being brought before us. It is an extraordinary series of Amendments, and I do not think it reflects the greatest credit on the Government's management of business.
LORD CHORLEY: My Lords, I think Amendment No. 246 is intelligible, although I have not done a geat deal of research into it. In earlier times different sorts of obligation in respect of giving security were imposed on different types of insurance company. When they were formed, companies had to put the type of business they were going to do in the memorandum of association. I imagine that they wished to preclude themselves from entering upon certain areas of insurance which would have attracted obligations with which they did not wish to comply. Therefore, it was quite sensible to say: "While we have set up this company for the purpose of conducting certain types of insurance, we do not intend to conduct other types of insurance, and we preclude ourselves from doing so". If the noble Lord looks at the actual words, he will see that it talks about a "class"—that is to say, insurance business of any class. This surely means an area of insurance such as accident insurance, or whatever it may be.
The obligations imposed under the Bill are quite different. It is quite reasonable to say that, as these obligations are quite different from the old ones which the organisers of a company had in mind when they excluded that particular class of insurance from the business they intended to do, if they had had to comply with the obligation laid down in the present Bill they would not have made that exclusion. It seems not unreasonable that there should be an omnibus clause of this kind which gives power to do this, instead of having to go through all the rigmarole of special resolutions, and so on, in order to alter the objects for which the company is now going to operate. This is a simple and sensible way of handling that particular problem. That is what occurs to me on a rather cursory examination of this matter. It may be that that it is not right, but it seems to me a reasonable explanation.
LORD FERRIER: My Lords, I think I have the point.
LORD CHORLEY: My Lords, with regard to the general group of clauses, they are very valuable indeed. They fall into line with the extended powers of the Board in relation to inspections, which we were discussing earlier. Some of the recent scandals in connection with insurance have brought very much into the limelight the fact that the control over insurance has been altogether inadequate. There has been, indeed, no control over insurance within living memory, and particularly on the security side the requirements were most inadequate. If you compare what was laid down in the Act of Parliament with what was required at Lloyd's (the way in which they built up security in that institution was a model in this respect), the position is very much exemplified: in much the same way as the Stock Exchange have to a very large extent led Parliament in the requirements which now appear in the Companies Bill.
It is high time that very much tighter control was exercised over the business of insurance, because there is hardly anybody in the country who is not insured in one way or another. It is right that an area of business in which the social implications, as well as the economic ones, are so tremendously widespread, and so tremendously important to the great mass of the citizens, should be very carefully looked after by the organs of the State. That certainly was not done, and this Bill goes at any rate some distance towards doing that.
It is true that this has been introduced at a very late stage in this Bill but, as we all know, better late than never! I am inclined to think that there was a certain amount of hurry about this in the first instance, and this Bill has been worked over in the Board of Trade. As I said earlier, I know that they have been in consultation with commercial lawyers in regard to many of the matters which appear in this Bill, and it is clear that during these last weeks they have succeeded in working out a very much more effective system of control than was provided in the Bill when it first came before your Lordships' House. I think it is a good thing that that should have been done, and I welcome this group of clauses.
LORD HAWKE: My Lords, I think this will be the most convenient opportunity to make a few short remarks at large on this part of the Bill. It deals
1246
reasonably effectively with certain of the risks to the general public—the risks of fraud and failure—though I am still doubtful whether the margin of £50,000, et cetera, is a wide enough one. When the long list of new clauses started to unfold before my eyes, my hopes were raised that they might deal with the two very grave risks to the general public which I mentioned on Second Reading. But I am afraid that when I had got to the end of them my heart sank, because it never touched them at all.
I refer, first, to the risk which anybody may run if he moves somebody else's car from one corner of the road to another, and happens to injure somebody on the way. He may be financially ruined because that car may not be insured for any driver, and he may have no knowledge whatsoever of that. Secondly, if any of us accept a lift as passengers in a car, and then, through an accident, happen to be crippled for life, we may never know whether we can get any compensation, because we have no means of knowing whether the car has been insured in respect of passengers. Those are the points which I think are most urgent for the protection of the public, and I trust that Her Majesty's Government will do something about them in due course.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 133]
Clause 49, page 50, line 4, leave out from ("class") to end of line and insert ("relevant for the purposes of this Part of this".)
LORD WALSTON: My Lords, I beg to move No. 133.
Moved, That this House cloth agree with the Commons in the said Amendment.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[Nos. 134–137]
Clause 49, page 50, line 15, leave out from ("was") to end of line 18 and insert ("carrying on in Great Britain insurance business (whether of that class or not)")
Clause 50: Leave out Clause 50 and insert the following new clause—
Authorisations for purposes of section 49
("—(1) In the case of insurance business of each class relevant for the purposes of this Part of this Act (other than industrial assurance business), the following shall, by virtue of

1247
this subsection, be authorised to carry it on in Great Britain, namely,—

(a) an incorporated company which, immediately before 3rd November 1966, was carrying it on in Great Britain;

(b) a registered society which, immediately before that day, was so carrying it on; and

(c) an unincorporated body of persons which, immediately before that day, was so carrying it on:

(not being, as the case may be, a company, society or body that was then carrying on business in contravention of section 2(1) of the principal Act) and, in the case of industrial assurance business, the following shall, by virtue of this subsection, be authorised to carry it on in Great Britain, namely—

(i) an incorporated company which, immediately before 3rd November 1966, was carrying it on in Great Britain; and

(ii) a registered society which, immediately before that day, was so carrying it on;

(not being, as the case may he, a company or society that was then carrying it on in contravention of the said section 2(1)).
(2) Subject to the following provisions of this Part of this Act, the Board of Trade may, in the case of insurance business of each class relevant for the purposes of this Part of this Act (other than industrial assurance business), authorise the following to carry it on in Great Britain, namely,—

(a) an incorporated company;

(b) a registered society; and

(c) an unincorporated body which, immediately before 3rd November 1966, was carrying on in Great Britain insurance business (whether of that class or not);

and may, in the case of industrial assurance business, authorise an incorporated company and a registered society to carry it on in Great Britain.")
Clause 51, page 51, line 25, leave out ("the last foregoing section") and insert ("section (Authorisations for purposes of section 49) of this Act")
Clause 51, page 51, line 30, leave out from ("Britain)") to ("business") in line 33 and insert ("general")
LORD WALSTON: My Lords, I beg to move Amendments Nos. 134 to 137 inclusive.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Walston.)
On Question, Motion agreed to.
5.35 p.m.

COMMONS AMENDMENT
[No. 138]
Clause 51, page 52, line 41, leave out from ("Britain") to end of line 43.
LORD WALSTON: My Lords, with your Lordships' permission I should like to couple with this Amendment some other Amendments, but fortunately this time only two others: Amendments Nos. 151 and 231. As at present worded, Clause 51(5) entitles the Board of Trade to authorise an insurance company not having the requisite solvency margin or paid-up capital to carry on insurance business if the Board are satisfied: first, that the authorisation is required for the purpose only of carrying on a limited category of insurance business, or of insurance of a limited class of persons; and, secondly, that the company does not carry on or propose to carry on in Great Britain any other insurance business.
The restriction imposed by this second condition would prevent the concession being applied in the case of a small company which was already authorised to carry on one limited class of business, such as windscreen insurance (which falls within the definition of motor vehicles insurance business), and which might wish to extend its business in order to carry on another limited, and to some extent allied, category of business, such as plate glass insurance business, which at the present time falls within the definition of property insurance business. Amendment No. 138 removes this restriction. Amendment No. 231 effects an identical Amendment to Clause 79(1), and allows the Board in similar circumstances to grant the concessions described in that clause.
The new clause introduced by Amendment No. 151 will enable the Board to restrict an authorisation under Clause 50 to a specified limited category of business or to the insurance of a limited class of persons, in those cases where the Board are satisfied, in accordance with Clause 51(5), that the financial standards set by Clause 51 need not be met because of the limited business to be undertaken; in other words, where it is only a small amount of business that is proposed to be done, but not if it is a major extension. A company which secured an authorisation under these less onerous conditions would thus be bound to make new application if it subsequently decided to extend its business beyond the limits originally agreed. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 139–143]
Clause 52, page, 53, line 1, leave out ("50"), and insert ("(Authorisations for purposes of section 49)")
Clause 52, page, line 3, leave out from ("of") to ("unless") and insert ("any class")
Clause 53, page 53, line 12, leave out ("50") and insert ("(Authorisations for purposes of section 49)")
Clause 52, page, line 18, after ("directions"), insert ("or instructions")
Clause 54, page 53, line 29, leave out ("50") and insert ("(Authorisations for purposes of section 49)")
LORD WALSTON: My Lords, I beg to move Amendments Nos. 139 to 143 inclusive.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Walston.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 144–150]
Clause 54, page, 53, line 32, leave out from ("body") to ("all") in line 33
Clause 54, page, 53,line 41, leave out from beginning to end of line 9 on page 54 and insert—

("(b) a requirement that assets of the company, society or body to a value not less at any time than the amount of its domestic liabilities at that time shall be maintained in the United Kingdom;

(c) a requirement that assets of the company, society or body of a specified description, free from any mortgage or charge and to a value not less at any time than which ever is the greater of the following amounts, that is to say, the amount of a specified proportion of the domestic liabilities of the company, society or body at that time, and £50,000, shall be maintained in the United Kingdom and that those assets, or, in the case of any of them to which there are documents of title, those documents, shall be held in the custody of a person approved for the purposes of this section by the Board of Trade.")

Clause 54, page 54, line 13, at end insert—
("(1A) A requirement imposed by virtue of paragraph (b) or (c) of subsection (1) above may either be so framed as to come into effect immediately after the day on which it is imposed or he so framed as to come into effect after the expiration of a specified period (or such longer period as the Board of Trade may allow).
(1B) Assets of a company, society or body held in the custody of a person shall he taken to be held by him in compliance with a re- 1250
quirement imposed by virtue of paragraph (c) of subsection (1) above if, but only if, they are assets in whose case the company, society or body has given him written notice that they are to be held by him in compliance with such a requirement or they are assets into which assets in whose case the company, society or body has given him such written notice have, by any transaction or series of transactions, been transposed by him on the instructions of the company, society or body; and documents of title to assets of a company, society or body held in the custody of a person shall be taken to be held by him in compliance with such a requirement if, but only if, they are documents in whose case the company, society or body has given him notice that they are to be held by him in compliance with such a requirement.")
Clause 54, page 54,line 18, leave out subsection (3) and insert—
("(3) The Board may rescind a requirement imposed under this section if it appears to them that it is no longer necessary for the requirement to continue in force, and may from time to time vary any such requirement (other than one imposed by virtue of paragraph (b) of subsection (1) above).")
Clause 54, page, 54, line 19, at end insert—
("(3A) When the Board impose under subsection (1)(c) of this section a requirement on a company, society or body, or rescind or vary a requirement so imposed, they shall forthwith serve—

(a) except where the requirement is one imposed on a registered society (other than one registered in Northern Ireland), on the registrar of companies;

(b) in the said excepted case, on the appropriate registrar as defined by section 73(1) of the Industrial and Provident Societies Act 1965;

written notice stating that fact, and, in the case of a notice of the imposition of a requirement, setting out the terms of the requirement, in the case of a notice of the rescission of a requirement, identifying the requirement, and in the case of a notice of a variation of a requirement, identifying the requirement and setting out the terms of the variation.
(3B) A notice served in pursuance of the last foregoing subsection on the registrar of companies shall be open to inspection, and a copy thereof may be procured by any person on payment of such fee as the Board may direct; and every document purporting to be certified by the registrar of companies, or by a person appointed in that behalf by the President of the Board of Trade, to be a copy of such a notice shall be deemed to be a copy of that notice and shall be received in evidence as if it were the original notice, unless some variation between it and the original be proved.
(3C) Section 71(1) of the Industrial and Provident Societies Act 1965 (which empowers the Treasury to make regulations respecting inter alia, the inspection of documents kept by the appropriate registrar under that Act) shall have effect as if the reference to documents so kept included a reference to notices served in pursuance of subsection (3A) above on the appropriate registrar.")
Clause 54, page, 54, line 19, at end insert—
("(4A) In this section any reference to a domestic liability is a reference to a liability arising under a contract made in the United Kingdom, or under a contract of insurance made elsewhere, being a contract of insurance in whose case, if only one premium is payable thereunder, the premium, or, if more than one premium is payable thereunder, any of the premiums so payable, is payable or has been paid in the United Kingdom; and in computing the amount of any liabilities for the purposes of this section, all contingent and prospective liabilities shall be taken into account, but not liabilities in respect of share capital.")
After Clause 54, insert the following new clause—
Provisions relating to assets subject to certain requirements imposed under section 54
(".—(1) No assets held in the custody of a person in compliance with a requirement imposed by virtue of paragraph (c) of section 54(1) of this Act, and no documents so held in compliance with a requirement so imposed shall, so long as the requirement is in force, be withdrawn from the custody of that person except with the written consent of the Board of Trade.
(2) If a mortgage or charge is created by a company, society or body at a time when there is in force a requirement imposed on the company, society or body by virtue of paragraph (c) of section 54(1) of this Act, being a mortgage or charge conferring a security on any assets which are held in the custody of a person in compliance with the requirement or on any assets documents of title to which are so held in compliance with the requirement, the mortgage or charge shall, to the extent that it confers such a security, be void against the liquidator and any creditor of the company, society or body.")
5.39 p.m.
LORD WALSTON: My Lords, here, again, I would ask your Lordships to agree to my speaking to several other Amendments; namely, Nos. 144 to 150 inclusive, No. 180, No. 182, No. 185 and No. 187. The purpose of these Amendments is to provide an additional safeguard, for United Kingdom policyholders, which I think noble Lords will agree is a desirable aim, by empowering the Board of Trade to require that the company's liabilities to the United Kingdom policyholders be backed by assets in the United Kingdom, and that a specified proportion of those assets (or the documents of title relating to them) should be held in custody in the United Kingdom by "a person"—and that, of course, would include a bank—approved by the Board of Trade. A second purpose is to go as far as possible to meet a particular objection of the British Insurance Association to the wording of the existing clauses.
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As worded at the present time, Clauses 54(1)(b) and 65(1)(b) would give the Board power to require an insurance company to maintain in Great Britain a specified proportion or value of its assets. The power could be used only during the first five years after the issue of an authorisation, or when it appeared that there was a risk of the company becoming insolvent. So it is either the young companies or companies about which there is a legitimate doubt. There was a serious attempt to meet the objections that the British Insurance Association put forward. In fact, they were the subject of Amendments in your Lordships' House earlier on, but those Amendments were withdrawn, I am told, on the understanding that the Government would try to find a more satisfactory formula. However, drafting problems have proved extremely difficult, as we warned at the time, and in the event no solution has been found which would both provide the powers at present contained in Clauses 54 and 65 and, at the same time, meet the B.I.A.'s objection in its entirety. Your Lordships will realise that we have to hold the balance between the reasonable wishes of the reputable insurance companies for the efficiency of their business and the protection of the policyholders in the case of companies which are somewhat less reputable.
As at present worded, these clauses provide in one respect greater powers than are really needed, and accordingly we can go some way to meet the B.I.A.'s fears of our encouraging the imposition of excessive localisation of funds overseas by limiting the Board's powers simply to requiring companies to maintain here assets of no greater value than the company's liabilities in the United Kingdom. Here, perhaps, I may point out that the liabilities are those defined in the 1958 Act—in fact, in Clause 13, subsection (2). On the other hand, we must retain the power to require the maintenance of assets, or the documents of title thereto, in specified custody. We must know where they are. This is to prevent insurance companies from being set up in the United Kingdom with a share capital which is either illusory from the start or, even if it is real, quickly removed outside of the country. Of the various ways of remedying this situation, the most practical is that which empowers the Board

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to require that assets in the United Kingdom of an amount related to the company's liabilities in this country (with a minimum of £50,000) should, during the first five years of the company's life, be held in approved custody.
Amendment No. 144 removes the present limitation whereby the Board's use of the powers provided within Clause 54(1) cannot be applied for any purpose other than that of
"securing the proper conduct of the business of the company …"
It is good to remove this limitation, I suggest, because of the changes in the nature of the requirements introduced by these Amendments, and I believe that the domestic creditors will be adequately protected in this way. As to Amendment No. 145, the substitution of "United Kingdom" for "Great Britain" has been made and put in at the request of the Northern Ireland Government. Amendment No. 146 makes it incumbent on the insurance company to notify the authorised custodian in writing that the assets are to be held by him in compliance with a requirement imposed under Clause 54(1)(c). This is to meet the case where the custodian was the insurance company's normal bankers, and where it would be necessary for the bankers to distinguish between the assets which they were holding in their capacity as bankers to the company rather than as authorised custodian.
The new clause introduced by Amendment No. 150 would, under subsection (1), allow the withdrawal from custody of the assets referred to in the proposed new subsection only where the written consent of the Board of Trade has been obtained; and subsection (2) would have the effect of nullifying any mortgage or charge by the insurance company on assets which were held, or the documents of title to which were held, in custody under the requirements of Clause 54(1)(c) as amended. In order to protect a mortgagee, or a potential mortgagee, Amendments Nos. 148 and 185 were made following a suggestion by the Opposition in Committee in another place, so that arrangements could be made to warn prospective mortgagees when certain assets of an insurance company were the subject of a requirement under the clauses to which I have already referred. The
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Amendments require the Board of Trade to put a notice giving details of the imposition, recission or variation or any such requirement on the public file of the insurance company, and this, of course, is open to inspection by the public. My Lords, I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Walston.)
LORD CHORLEY: My Lords, I think we should all agree that this is a very valuable group of clauses, in so far as it goes. What I am not quite clear about—it may be that I am wrong, and I should be glad to have the Government's view about it; if I am right there is not much we can do about it—is as to whether this is sufficiently tied up. What I am particularly worried about is this period of five years during which the assets are to be held in approved custody. The noble Lord said that the object of this was to cover the period while the insurance company was getting on its feet. I can understand that; but what has happened in a number of cases is that it is not a company which is getting on to its feet but a company which has been on its feet which is bought up.
This happened both after the First World War and after the Second World War. It happened to a number of companies of some prominence in the insurance world which had at some time had large businesses but in which, during the war years, things went wrong; and the same thing might happen even in peace years. After the First World War, at least, there were two, if not three, important companies bought up by rather speculative groups of people in the City; and I think it happened once or twice after the Second World War, too. The result was that they did insurances on a very unsound basis. In particular, after the First World War, there was an enormous increase in motor car insurance, on which the premiums are not easy to calculate. Certainly in those cases—and I remember them very well, because it was when I was first practising at the Bar—there were some very serious losses which occurred throughout the country.
I do not see that that position is tied up by this group of clauses. It may be

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that I am wrong. A company might get itself well established and then be taken over in the way which has become very familiar to us in connection with the take-over of companies by a group of people who are not very scrupulous. They might be companies which were not sufficiently firmly established, although by this time the five years has expired, after which, apparently, the assets no longer have to be held at the bank or otherwise kept in approved custody.
How is this to be dealt with? I appreciate that the Board of Trade are given powers, in cases where they are satisfied that the company is shaky, to call upon it to provide security. I am not altogether clear how far this goes, but in this type of case an organisation like the Board of Trade is apt to move rather slowly. It may be that the company had been ordered to be wound up by the court, possibly before the Board of Trade made the order; and certainly before the company in question had succeeded in providing the security that the Board of Trade had ordered them to provide. This strikes me as being a possible weakness in this arrangement. I should be glad to have the Government view about it. If in fact it is a possible weakness, perhaps it could be borne in mind to be put right in the Bill that we hope to have later on.
LORD DRUMALBYN: My Lords, I wonder whether I could make one or two observations. I should have thought that what the noble Lord, Lord Chorley, has in mind is covered by the necessity to notify any change of ownership. This raises an important point. It is that all the Amendments made—indeed all of the Bill—is going to place a great deal more responsibility for insurance on the Board of Trade than they have at the present time. This was a matter that we discussed at an earlier stage. Many of the Amendments that are here before us are clearly going to involve the Board of Trade in employing people with a very considerable experience of insurance, and in expanding very rapidly their insurance department. The House has not heard about this, and it seems to me that this is a matter of which we ought to take cognizance when we are dealing with these Amendments. That is the main
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point I wanted to make. There is only one rather grumpy observation that I should like to make. It is that, Clause No. 182 is pretty ghastly. There are about 24 lines, purely of reference upon reference. I wonder whether it is really necessary to draft it in this way. I cannot possibly let that kind of clause go past without protest.
LORD WALSTON: My Lords I will reply briefly. It is unusual for the noble Lord, Lord Drumalbyn, to be grumpy. I think that if he skims, rather than reads carefully, through Clause No. 182, he will be less grumpy. I am assured that it is the most effective and clear way of expressing the intention of the Bill.
LORD DRUMALBYN: May I say that if you believe that you would believe anything.
LORD WALSTON: My Lords, my words were, "I am assured"; there was no committal on my part. With regard to the point of the noble Lord, Lord Chorley, I am grateful to the noble Lord—I can almost call him "my noble friend"—Lord Drumalbyn. He answered the question so effectively. Clause 65 is the answer to this. There has to be a notification of change of ownership; and if there is good reason to believe that the company is likely to become insolvent, that there is a risk, the Board of Trade has power to act. All through this Bill, and particularly in these clauses which deal with insurance companies, we have to hold this balance between protecting the public against the unscrupulous and the inefficient and in not interfering unduly with the reputable and efficient. If we gave complete protection to the public there would necessarily be a great deal of interference with people who need not be interfered with. If we gave a full and desired degree of freedom to the reputable companies then there would be a smaller degree of protection to the general public against the others. We have attempted and, I believe, succeeded, in holding the balance here. With regard to the extra work imposed upon the Board of Trade, that is true: there will have to be a strengthening of the Department. I am sure there will be a strengthening not only in numbers but in the quality of numbers.
LORD BOOTHBY: My Lords, I think this is a good Bill. I have supported it all through. It is necessary and desirable. I think it has been hurriedly drafted, although that is neither here nor there. But I am a little worried about not only the extra work to be imposed on the Board of Trade but the extra burden of work to be imposed upon every single company in this country. I wonder whether the Government would have a look at this point, just to see whether they can ease the burden not only on the Board of Trade but on companies in general; because they really will be required to do a tremendous amount of extra work.
LORD CHORLEY: My Lords, may I say how grateful I am to the noble Lord opposite and also to my noble friend? Actually, what he said was, in effect, what I was saying. I was aware that there was this power in the Board of Trade to make an order; but that is not necessarily the solution to this problem. For example, a company which is a going concern is taken over; all its insurances are going on and the agents up and down the country continue to write new insurance. It is during this gap that the assets have gone. You cannot expect the Board of Trade to discover until a certain amount of time has elapsed that the new management is shaky. When it does so, then the necessary routines are to be gone through. The noble Lord opposite, as an ex-Minister, is well aware of how slowly the machinery of a Government Department grinds.
It seems to me that it would be very much better if these assets were kept in the safe custody of the bank, or where-ever it may be, indefinitely, and not just for the period of five years. I am sure there is a sensitive period during which it might be that large numbers of people might find their policies were no longer of any value, and that serious accidents and tragedies would occur which they would find were not covered. All this business we have had during the last year—we have had reports of it in the newspapers—would be repeated. There would be the same public dissatisfaction; and we should then be told that this Bill was not effective.
LORD DRUMALBYN: My Lords, may I ask whether the noble Lord is suggesting
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that each time there is a change of ownership of an insurance company—and this may be the right solution; I do not know—a fresh authority would have to be obtained? I think this is the logical outcome of what he is saying.
LORD CHORLEY: If the assets had to be kept at the bank, not only for five years but during the time that the company was in fact writing insurance, then when it was taken over by some other company they would have to replace them before they could be allowed to take over the management. In effect, the new owners would have to give the security needed. The security is not enormous when one considers the underwriting commitments of the average insurance company. It seems to me that it ought to be maintained indefinitely. People doing this sort of business are being given a very valuable area in which to operate. It does not seem to me out of the way to require that they should secure themselves. At Lloyds, by a very ingenious and not too complicated system, this has been very much more effectively covered than we are doing it in this Bill.
LORD MCCORQUODALE OF NEWTON: My Lords, I wonder whether one general observation might come in at this stage. I am entirely in agreement with these Amendments to strengthen the law about insurance; indeed I am sure that the whole House is. But I think there is one danger. There may be so much publicity about everybody being protected, every insurance company being perfectly safe, and all the rest of it, that the obligation on the individual to take the same care in the future as in the past that his insurance is placed, not wherever he thinks right, but with some care, may go by the board. I think it would be a pity if that impression got about and nobody took any care in the future, because it is quite impossible to protect everybody from the fruits of their folly.
On Question, Motion agreed to.
6.0 p.m.

COMMONS AMENDMENTS
[Nos. 151–187]
After Clause 54, insert the following new clause—
Power to impose restrictions on company benefiting by virtue of section 51(5)
(".—(1) An authorisation under section (Authorisations for purposes of section 49)

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of this Act in whose case section 51 of this Act does not apply to the issue thereof may contain provision imposing on the company, society or body with respect to which it is issued either or both of the following obligations, namely—

(a) to refrain, in the course of carrying on business of the class to which the authorisation relates, from insuring persons other than of a specified class; and

(b) to refrain, as aforesaid, from insuring persons against risks other than of a specified class.

(2) An obligation binding on a company, society or body by virtue of the foregoing subsection may be discharged by the Board of Trade, if it appears to them to be no longer necessary for the obligation to continue in force or may be varied at any time by them.")
Clause 55, page 54, line 22, after ("business") insert ("relevant for the purposes of this Part of this Act")
Clause 55, page 54, line 23, leave out ("50") and insert ("(Authorisations for purposes of section 49)").
Clause 55, page 54, line 5, leave out ("50") and insert ("(Authorisations for purposes of section 49)")
Clause 55, page 54, line 9, after ("business") insert ("relevant for the purposes of this Part of this Act")
Clause 55, page 54, line 9, leave out ("section 50(2)") and insert ("subsection (2) of section (Authorisations for purposes of section 49)")
Clause 55, page 54, line 14, after ("on"), insert ("of")
Clause 55, page 54, line 37, leave out from beginning to end of line 25 on page 56 and insert—

("(a) the restriction appropriate to the carrying on by an insurance company of industrial assurance business is that the company shall not effect a contract of insurance on human life or a contract to pay an annuity on human life;

(b) the restriction appropriate to the carrying on by an insurance company of liability insurance business is that the company shall not effect or vary any such contract of insurance as is mentioned in subsection (3) of section (Classes of insurance business relevant for purposes of Part II, and definitions thereof) of this Act;

(c) the restriction appropriate to the carrying on by an insurance company of marine, aviation and transport insurance business is that the company shall not enter into or vary any such contract as is mentioned in subsection (4) of that section;

(d) the restriction appropriate to the carrying on by an insurance company of motor vehicle insurance business is that the company shall not enter into or vary any such contract as is mentioned in subsection (5) of that section;

(e) the restriction appropriate to the carrying on by an insurance company of ordinary long-term insurance business is that
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the company shall not effect a contract of insurance on human life or a contract to pay an annuity on human life or any such contract as is mentioned in paragraph (b) or (c) of subsection (6) of that section;

(f) the restriction appropriate to the carrying on by an insurance company of pecuniary loss insurance business is that the company shall not enter into or vary any such contract as is mentioned in subsection (7) of that section;

(g) the restriction appropriate to the carrying on by an insurance company of personal accident insurance business is that the company shall not enter into or vary any such contract as falls within subsection (8) of that section; and

(h) the restriction appropriate to the carrying on by an insurance company of property insurance business is that the company shall not enter into or vary any such contract as is mentioned in subsection (9) of that section.")

Clause 56, page 57, line 5, leave out ("50") and insert ("(Atithorisations for purposes of section 49)")
Clause 56, page 57, line 7, after ("class"), insert ("relevant for the purposes of this Part of this Act")
Clause 56, page 57, line 9, leave out ("or")
Clause 56, page 57, line 11, after ("class"), insert ("so relevant")
Clause 56, page 57, line 12, leave out first ("or")
Clause 56, page 57, line 19, leave out ("section 50(2)") and insert ("subsection (2) of section (Authorisations for purposes of section 49)").
After Clause 56, insert the following new clause—
Alteration of scope of the principal Act
(".—(1) Subsection (1) of section 1 of the principal Act (which provides that, with certain exceptions, that Act shall apply to all insurance companies which carry on with Great Britain insurance business of all or any of the classes specified in that subsection) shall have effect with the omission of the words from "of all or any of the following classes" to the end of the subsection.
(2) In consequence of the foregoing subsection and of the classification of insurance business effected by section (Classes of insurance business relevant for purposes of Part II, and definitions thereof) of this Act, the provisions of the principal Act specified in column 1 of Schedule (Amendments of Insurance Companies Act 1958 consequential on sections (Classes of insurance business relevant for purposes of Part II, and definitions thereof) and subsection (1) of section (Alteration of scope of the principal Act) of this Act) to this Act shall have effect subject to the amendments respectively specified in relation thereto in column 2 of that Schedule; and, for the purposes of those provisions, as amended by that Schedule, the expression "ordinary long-term insurance business" shall have the meaning assigned to it by subsection (6) of section (Classes of insurance business relevant for purposes of Part II. and definitions thereof) of this Act.
(3) Subsection (3) of the said section 1 (which requires certain companies carrying on insurance business outside Great Britain to be treated for the purposes of that Act as if they were carrying on such business in Great Britain) shall cease to have effect.")
After Clause 57, insert the following new clause—
Reduction of maximum intervals between actuarial valuations required by section 5 of the principal Act
(". As from the expiration of the period of two years beginning with the day on which this Act is passed, section 5(1)(a) of the principal Act (which, as amended by this Act, imposes on an insurance company to which that Act applies which carries on industrial assurance business or ordinary long-term insurance business the requirement that it shall, once in every five years or at such shorter intervals as may be prescribed by the deed of settlement of the company, or by its regulations or byelaws, cause an investigation to be made into its financial condition, including a valuation of its liabilities, by an actuary) shall have effect with the substitution, for the reference to five years, of a reference to three years.")
Clause 58, page 58, line 42, leave out ("so given") and insert ("given in a statement or report so annexed")
Clause 58, page 58, line 42, at end insert—
("( ) The proviso to subsection (3) of section 34 of the principal Act (which excepts regulations made under the said section 9 from the requirement of that subsection that a statutory instrument containing regulations under that Act shall be subject to annulment in pursuance of a resolution of either House of Parliament) shall not apply to regulations made under the section substituted for the said section 9 by this section.")
Clause 59, page 59, line 11, leave out from ("no") to ("other") in line 12 and insert ("insurance business")
Clause 60, page 59, line 20, leave out from ("of") to ("may") in line 21 and insert ("insurance business")
Clause 60, page 59, line 23, after ("on"), insert ("such")
Clause 60, page 59, line 24, leave out from ("prepare") to end of line 25 and insert ("the prescribed statement of business of that class, being, if a form is prescribed for the statement, a statement in the prescribed form")
Clause 60, page 59, line 25, at end insert—
("( ) The Board of Trade may, on the application or with the consent of an insurance company, modify, in relation to that company, the requirements of the foregoing subsection for the purpose of adapting them to the circumstances of the company.")
Clause 63, page 60, line 42, leave out from ("1965") to ("shall") in line 1 on page 61.
Clause 63, page 60, page 61, line 2, leave out ("so kept") and insert ("kept by the appropriate registrar under that Act")
Clause 64, page 61, line 12, after ("on"), insert ("(whether within or outside Great Britain)")
Clause 64, page 61,line 17, leave out from the beginning to first ("the") in line 18 and insert ("its first financial year")
Clause 64, page 61, line 25, leave out subsection (2).
Clause 64, page 61, line 35, leave out from ("one") to ("Act") in line 36 and insert ("which, immediately before the passing of this Act, was carrying on (whether within or outside Great Britain) business which then constituted general business for the purposes of the principal")
Clause 65, page 62, line 12, leave out from beginning to end of line 23 and insert—

("(b) a requirement that assets of the company to a value not less at any time than the amount of its domestic liabilities at that time shall be maintained in the United Kingdom;

(c) a requirement that assets of the company of a specified description, free from any mortgage or charge and to a value not less at any time than whichever is the greater of the following amounts, that is to say, the amount of a specified proportion of the domestic liabilities of the company, society or body at that time, and £50,000, shall be maintained in the United Kingdom and that those assets, or, in the case of any of them to which there are documents of title, those documents, shall be held in the custody of a person approved for the purposes of this section by the appropriate authority.")

Clause 65, page 62, line 31, leave out ("specified in section 1(1) of the principal") and insert ("relevant for the purposes of this Part of this")
Clause 65, page 62,line 37, at end insert—
("( ) Subsections (1A) and (1B) of section 54 of this Act shall have effect for the purposes of this section subject to the modifications that, in the said subsection (1A), for the reference to paragraph (b) or (c) of section 54(1), there shall be substituted a reference to paragraph (b) or (c) of subsection (1) of this section, and, for the reference to the Board of Trade, there shall be substituted a reference to the appropriate authority, and, in the said subsection (1B), for the reference to paragraph (c) of section 54(1), there shall be substituted a reference to paragraph (c) of subsection (1) of this section; and section (Provisions relating to assets subject to certain requirements imposed under section 54) of this Act shall have effect where a requirement is imposed by virtue of paragraph (c) of subsection (1) above as it does where a requirement is imposed by virtue of paragraph (c) of section 54(1) of this Act, subject to the modifications that, for any reference to paragraph (c) of the said section 54(1), there shall be substituted a reference to paragraph (c) of subsection (1) of this section, and for the reference to the Board of Trade, there shall be substituted a reference to the appropriate authority.
Clause 65, page 62, line 39, leave out from ("no") to ("other") in line 40 and insert ("insurance business")
Clause 65, page 62, line 43, leave out ("specified in section 1(1) of the principal") and insert ("relevant for the purposes of this Part of this")
Clause 65, page 63, line 2, at end insert—
("(3A) When the appropriate authority imposes under subsection (1)(c) of this section a requirement on a company or rescinds a requirement so imposed, it shall forthwith serve—

(a) except where the requirement is one imposed on a registered society (other than one registered in Northern Ireland), on the registrar of companies;

(b) in the said excepted case, on the appropriate registrar as defined by section 73(1) of the Industrial and Provident Societies Act 1965;

written notice stating that fact and, in the case of a notice of the imposition of a requirement, setting out the terms of the requirement and, in the case of a notice of the rescission of a requirement, identifying the requirement.
(3B) Subsections (3B) and (3C) of section 54 of this Act shall have effect for the purposes of this section subject to the modification that, for any reference to a notice served in pursuance of subsection (3A) of that section, there shall be substituted a reference to a notice served in pursuance of the last foregoing subsection.")
Clause 65, page 63,line 6, leave out from ("no") to ("other") in line 7 and insert ("insurance business")
Clause 65, page 63, line 10, at end insert ("and "domestic liabilities" shall be construed in accordance with section 54(4A) of this Act")
LORD HUGHES: My Lords, Amendments Nos. 151 to 187 are a large group of formal Amendments consequential or minor, and non-controversial in their nature. With permission I beg to move this group en bloc.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 188–213]
Clause 67, page 64, leave out lines 2 to 16 and insert—
("The Board of Trade may at any time, if they think there is good reason so to do, give directions to any such body as follows, namely—

(a) a company formed and registered under the Companies Act 1948;

(b) an existing company within the meaning of that Act;

(c) a company to which the said Act of 1948 applies by virtue of section 378 thereof or which is registered under that Act by virtue of Part VIII thereof;

(d) a body corporate incorporated in, and having a principal place of business in, Great Britain, being a body to which any of the provisions of the said Act of 1948 with respect to prospectuses and allotments apply by virtue of section 435 of that Act;

(e) a body corporate incorporated outside Great Britain which is carrying on business in Great Britain or has at any time carried on business therein;

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(f) a body other than as aforesaid, and whether incorporated or not, which is, or appears to the Board to be, an insurance company to which the Insurance Companies Act 1958 applies")

Clause 67, page 64, line 20, leave out from beginning to ("on") in line 21 and insert ("or may at any time, if they think there is good reason so to do, authorise any officer of theirs,")
Clause 67, page 64, line 24, leave out from ("may") to end of line 25 and insert ("specify")
Clause 67, page 64, line 26, leave out ("provisions of this section") and insert ("subsection")
Clause 67, page 64, line 35, after ("by") insert ("or by virtue of")
Clause 67, page 64, line 42, after second ("is"), insert ("or was at any time")
Clause 67, page 65, line 15. at end insert—
("( ) A statement made by a person in compliance with a requirement imposed by virtue of this section may be used in evidence against him.")
Transpose Clause 67, as amended, to after Clause 89, as Part IIA of the Bill.
Clause 68, page 65, line 37, leave out from ("any") to ("until") in line 39 and insert ("such criminal proceedings as are mentioned in subsection (1)(a) or (aa) of the next following section (being proceedings to which the books or papers are relevant)")
Transpose Clause 68, as amended, to after Clause 89 as Part IIA of the Bill.
Clause 69, page 66, line 8, after ("section"), insert ("or under section 18 (power of Board of Trade to require production of documents) or 19 (entry and search of premises) of the Protection of Depositors Act 1963")
Clause 69, page 66, line 13, leave out from ("the") to second ("or") in line 14 and insert ("Companies Act 1948, the Insurance Corn-panics Act 1958, the Protection of Depositors Act 1963 or this Act"
Clause 69, page 66, line 17, at end insert—
("(aa) with a view to the institution of, or otherwise for the purposes of, any criminal proceedings pursuant to, or arising out of, the Exchange Control Act 1947;")
Clause 69, page 66, line 20, leave out ("this Part") and insert ("Part II")
Clause 69, page 66, line 25, leave out from ("Board") to end of line 32 and insert—
(") (d) with a view to the institution by the Board under section (Fresh powers of Board of Trade to bring civil proceedings on behalf of body corporate) of this Act of proceedings with reference to the body or otherwise for the purpose of such proceedings instituted by them under that section;
(e) with a view to the institution by the Board of proceedings for the winding-up under the Companies Act 1948 of the body or otherwise for the purposes of proceedings instituted by them for that purpose.")
Clause 69, page 66, line 32, at end insert—
("or
(f) for the purposes of proceedings under the last foregoing section")
Clause 69, page 66, line 43, leave out ("not") and insert ("other than one")
Clause 69, page 66, line 43, after ("business"), insert ("(as defined by section 1(2) of the Industrial Assurance Act 1923)")
Clause 69, page 67, line 2, leave out ("and")
Clause 69, page 67, line 4, at end insert (", the Treasury and an officer of theirs")
Clause 69, page 67, line 6, after ("business,") insert ("(as so defined)")
Clause 69, page 67, line 10, leave out ("and an officer of his") and insert (",an officer of his, the Treasury and an officer of theirs")
Transpose Clause 69, as amended, to after Clause 89 as Part IIA of the Bill.
Clause 70, page 47, line 14, leave out ("principal Act") and insert ("Insurance Companies Act 1958")
Clause 70, page 47, line 14, at end insert ("and no direction shall be given under subsection (1) or authorisation conferred under subsection (2) of section 18 of the Protection of Depositors Act 1963 after the passing of this Act")
Transpose Clause 70, as amended, to after Clause 89 as Part IIA of the Bill.
LORD BROWN: My Lords, I beg to move, with the permission of the House, Amendments Nos. 188 to 213. In doing so, I also seek permission to speak to Amendments 189 to 213 inclusive; 217, 221 to 225 inclusive and 251 to 255 inclusive. In all, therefore, I shall be speaking to 37 Amendments. All these are broadly concerned, in one way or another, with the prevention, detection, investigation and prosecution of fraud. I will deal first with the least important Amendments. Nos. 195, 197, 210, 213 and 225 all relate to the transfer of the positions of various clauses, and can therefore be considered virtually as drafting Amendments. Nos. 191, 205 and 208 are all essentially drafting Amendments. Clauses 67, 68 and 69 are concerned with the production of documents, entry and search of premises and provisions for the securing of information. Each has been extended or strengthened by some of the group of Amendments to which I am speaking. Amendments Nos. 198, 199, 201, 202, 204, 211, 212 and 217 are all consequential to these alterations to Clauses 67, 68 and 69.
I now move to the more important Amendments, having so far dealt with 20 out of the 37. Amendments Nos. 188, 189, 190 and 192 are all concerned with the Amendment of Clause 67, which itself is concerned with the power of the Board of Trade to require the production of documents. As drafted, Clause 67 would
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apply only to insurance companies. These Amendments extend Clause 67 so that it applies to all companies and will give the Board of Trade powers which it possesses at present only in relation to deposit taking companies and insurance companies.
These new powers enable the Board of Trade, if they think there is good reason to do so, to give directions to companies or bodies corporate to produce specified books or papers, or to authorise one of the Board's officers to require the company to produce papers that he may need. They also will enable the Board of Trade to appoint inspectors, or present a petition for the company to be wound up. Amendment No. 193 enables inspectors to require an explanation of a company's books or papers from past employees as well as from current employees.
Regarding Amendment 194, the new clause under Amendment No. 180 made it explicit in relation to Section 167 of the principal Act that statements made by persons properly questioned under the section by a duly appointed inspector could be used in evidence against them. Amendment No. 194 introduces the same provision into the operation of Clause 67. Amendment No. 196 is essentially a drafting Amendment which adopts for Clause 68 the definition appearing in Clause 69. That is clearer than the definition which appears in the clause as it stands. Amendments Nos. 200, 206, 207 and 209 permit disclosure to the Treasury of information obtained under Clause 67 or 68 for the purposes of any necessary criminal proceedings under the Exchange Control Act. Amendment No. 203 repairs an omission, because Section 1 of Clause 69 fails to list, as one of the purposes for which information may be disclosed, the disclosure to a justice of the peace to satisfy him that premises may contain documents that have not been disclosed on demand.
Amendment No. 251 is a new clause which makes the furnishing of false information under Clause 67 an offence, and provides penalties. Amendment No. 252 is a new clause which extends parts of Clause 38, dealing with the maximum lapse of time for bringing proceedings under the Companies Act 1948 from six months to three years, into operation in relation to offences under Part IIA of the Bill. Amendment No. 253 is a new

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clause. Section 175 of the Companies Act 1948 protects solicitors from having to disclose privileged information, or bank documents, relating to a customer who is not under investigation, and the new clause provides a similar protection to solicitors and bankers under Part IIA of the Bill. Amendment No. 254 is a new clause defining books and papers in the same way as in the original Act. Amendment No. 255 is a new clause, and it states that Part IIA of the Bill shall not extend to Northern Ireland. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Brown.)
LORD DRUMALBYN: My Lords, I should like to thank the noble Lord for his explanation. The Amendments contain some important clauses. This group, among other things, includes the penalty clauses. There has been some criticism in that the penalties—considering that we are introducing new penalties—are not sufficiently heavy compared with the change in the value of money. One has to bear in mind that some of these frauds can be extremely damaging, and the penalty of two years on indictment is perhaps not enough; nor, for that matter, is a penalty of £200 or three months on summary conviction. I wonder whether the noble Lord could say something about this aspect of the matter—what further consideration was given to this, and whether he is satisfied that the present penalties proposed are in line with the general level of penalties at the time. Perhaps I may add that I understand that the whole question of penalties is being considered at present, and I wonder whether these penalties will be considered in conjunction with those already existing.
LORD BOOTHBY: My Lords, before the noble Lord, Lord Brown, replies, may I say one word? I have been a Member of one or other of the Houses of Parliament for 43 years, and I have never known any parallel situation to this one. We are now being asked to consider, in a single day, 350-odd Amendments to a Bill. I would make an appeal to the noble Lord that he should ask the Parliamentary draftsman to draft better Bills in future, because any Bill that requires over 350 Amendments after it is brought
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to this House has no justification whatsoever. It is asking too much of Parliament.
LORD BROWN: My Lords, I note the point raised by the noble Lord, Lord Boothby. I have already apologised to the House for having put your Lordships in this situation. I am sorry about it. I will not again go into the reasons which place the Government in this position. I can assure the noble Lord, Lord Drumalbyn, that the Government are seriously concerned about the matter he raised. It is under consideration in relation to this Bill, and though it was felt that it was not possible to introduce Amendments at this stage, no doubt something will be done in the second Companies Bill which is to come. It is a matter of concern to the Government, and has been under discussion.
LORD CHORLEY: I should like to say to the noble Lord, Lord Boothby, that it is not fair to blame the Parliamentary draftsmen for what has happened.
LORD BOOTHBY: Whom do you blame?
LORD CHORLEY: My Lords, the Government are to blame. The Parliamentary draftsmen have to do what they are told, and draft a Bill according to instructions.
On Question, Motion agreed to.
6.11 p.m.

COMMONS AMENDMENTS
[Nos. 214–260]
Clause 71, page 67, line 17, leave out subsection (1) and insert—
("(1) Every insurance company to which the principal Act applies which is a body corporate shall, upon a person's becoming or ceasing to be, an officer of the company, or acquiring or relinquishing control of the company, be under obligation to notify the Board of Trade in writing of that fact and of his name, and every insurance company to which the principal Act applies which is not a body corporate shall, upon a person's becoming or ceasing to be, an officer of the company, be under a corresponding obligation.")
After Clause 71, insert the following new clause—
Obligation of person who acquires or relinquishes control of insurance company to notify it of that fact.
(".—(1) A person who acquires or relinquishes control of an insurance company to which the principal Act applies, or if it is a body corporate, of another body corporate which is its holding company (within the meaning of the Companies Act 1948), shall, before the expiration of the period of

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seven days beginning with the day next following that on which he does so, notify the company in writing of that fact and, if he fails so to do, shall be liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or to both;

(b) on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding £200, or to both.

(2) Subsection (4) of section 71 of this Act shall have effect for the purpose of this section as it has effect for the purposes of that section.")
Clause 72, page 68, line 5, leave out ("50") and insert ("(Authorisations for purposes of section 49)")
Clause 72, page 68, line 11, leave out paragraph (b).
After Clause 72, insert the following new clause—
Penalty for non-compliance with Part II of the principal Act
(".—(1) An insurance company which makes default in complying with a requirement of this Part of this Act, being a default for which no express penalty is provided, or makes, after the passing of this Act, default in complying with a requirement of the principal Act shall be guilty of an offence and liable, on summary conviction, to a fine not exceeding £200.
(2) Section 26(2) of the principal Act (default by a company in complying with a requirement of that Act, if continued for three months after notice thereof, to be a ground for winding up the company) shall cease to have effect.")
After Clause 72, insert the following new clause—
Penalty on industrial assurance company for non-compliance with enactments relating to industrial assurance.
(".—(1) An industrial assurance company (within the meaning of the Industrial Assurance Act 1923) which, after the passing of this Act,—

(a) contravenes or fails to comply with any of the provisions of the Industrial Assurance Act 1923, the Industrial Assurance and Friendly Societies Act 1948 or Part VI of the Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951, of regulations made for the purposes of section 8 of the said Act of 1948 or of regulations made under section 57 of the said Act of 1951;

(b) contravenes or fails to comply with any directions given under the Industrial Assurance Act 1923 by the Industrial Assurance Commissioner;

(c) contravenes the proviso to section 1(1) of the Industrial Assurance and Friendly Societies Act 1929 (which proviso limits the sums which may be insured or paid for funeral expenses);

(d) fails to comply with a claim made in accordance with the provisions of subsection (1) of section 3 (rights of certain
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endowment policies) of the last-mentioned Act; or

(e) issues such a premium receipt book as is mentioned in subsection (3) of the last-mentioned section which does not comply with the provisions of that subsection;

shall, subject to the next following subsection, be guilty of an offence.
(2) Such a company shall not be guilty of an offence under this section consisting in its insuring in contravention of subsection (2) of section 2 of the Industrial Assurance and Friendly Societies Act 1948 (power to insure life of parent or grandparent for not more than £30) if it is proved that, owing to any false representation on the part of the proposer, the company did not know that the insurance was in contravention of that subsection.
(3) A company guilty of an offence under this section shall be liable, on summary conviction, to a fine not exceeding £200.
(4) So far as regards section 3(1) of the Industial Assurance and Friendly Societies Act 1929, this section shall not prejudice any liability of a company subsisting otherwise than by virtue of this section.")
After Clause 72, insert the following new clause—
Penalty on friendly society for offence under Industrial Assurance Act 1923.
(".—The maximum penalty that may be inflicted on a society registered under the Friendly Societies Act 1896, being a friendly society within the meaning of that Act, for an offence under the Industrial Assurance Act 1923 committed after the passing of this Act shall, instead of being a fine not exceeding £100 or, in the case of a continuing offence, a fine not exceeding £50 a day during which the offence continues, be a fine not exceeding £200; and accordingly, section 39(1) of the said Act of 1923 shall, in relation to an offence under that Act so committed by a society so registered, being such a friendly society as aforesaid, have effect with the substitution, for the proviso thereto, of the following proviso:
'Provided that the maximum penalty that may be inflicted for an offence under this Act shall be a fine not exceeding £200'.")
Clause 73, page 68, line 38, leave out from ("of") to ("who") in line 39, and insert ("any such body as is mentioned in paragraphs (a) to (e) of section 67(1) of this Act or a body other than as aforesaid, being an insurance company, to which the Insurance Companies Act 1958 applies ")
Clause 73, page 68, line 42, leave out ("company") and insert ("body")
Clause 73, page 69, line 2, leave out ("company") and insert ("body")
Clause 73, page 69, line 8, leave out ("who is")
Transpose Clause 73, as amended, to after Clause 89 as Part IIA of the Bill.
Clause 74: leave out Clause 74.
Clause 76, page 70, line 43, after ("directions"), insert ("or instructions")
Clause 79, page 71, line 18, leave out ("or of a registered society") and insert
(",of a registered society or of an unincorporated body of persons")
Clause 79, page 71, line 19, leave out ("or society") and insert (",society or body")
Clause 79, page 71, line 24, leave out ("or society") and insert (",society or body")
Clause 79, page 71, line 26, leave out from beginning to ("and") in line 28
Clause 79, page 71, line 31, leave out ("or society") and insert (",society or body")
Clause 79, page 71, line 36, leave out ("or society") and insert (",society or body")
Clause 79, page 71, line 38, leave out ("or society") and insert (",society or body")
Clause 79, page 71, line 42, leave out ("or society") and insert (",society or body")
Clause 79, page 72, line 2, leave out ("or society") and insert (",society or body")
After Clause 79, insert the following new clause—
Power of Board of Trade to adapt section 3 of the principal Act.
(".—(1) The Board of Trade may, on the application or with the consent of an insurance company to which the principal Act applies,—

(a) by order direct that, for the purposes of section 3 of that Act (separation of funds relating to certain classes of business) in its application to the company, insurance business of a kind specified in the order, not being ordinary long-term insurance business, shall be treated as being such usiness; or

(b) by order direct that, for the purposes of that section in its application to the company, ordinary long-term insurance business of a kind so specified shall be treated as not being such business.

(2) An order under this section may be revoked at any time by the Board of Trade.")
After Clause 79, insert the following new clause—
Circumstances in which persons carrying on insurance business of certain classes are to be taken as not carrying on also such business of other classes.
(".(1) For the purposes of this Part of this Act, a person shall not be taken to carry on liability insurance business by reason only of the incidental inclusion, in a contract of insurance whose principal object is to insure a person against risks of a kind such that the business of effecting and carrying out contracts of insurance against them constitutes property Insurance business, of provision whereby he assumes liability against the risk of the person insured incurring liabilities to third parties.
(2) For the purposes of this Part of this Act, a person shall not be taken to carry on marine, aviation and transport insurance business by reason only of the incidental inclusion, in a contract of insurance whose principal object is to insure a person against risks of a kind such that the business of effecting and carrying out contracts of insurance against them constitutes insurance business of some other class, of provision whereby he assumes a liability of a kind whose assumption by itself in a contract of insurance would make that contract such a one as is mentioned in subsection (4) of section (Classes of insurance business revelant for Purposes of Part II, and definitions thereof) of this Act.
(3) For the purposes of this Part of this Act, a person shall not be taken to carry on motor vehicle insurance business by reason only of the fact that goods, merchandise or property upon which a contract of insurance is effected by him (being goods, merchandise or property on board of a vessel or aircraft) consist of, or include, motor vehicles.
(4) For the purposes of this Part of this Act and of sections 3, 5 and 11 of the principal Act, a person shall not be taken to carry on ordinary long-term insurance business by reason only of the incidental inclusion in a contract of insurance whose principal object is to insure a person against risks of a kind such that the business of effecting and carrying out contracts of insurance against them constitutes marine, aviation and transport insurance business, motor vehicle insurance business or property insurance business, of provision whereby he assumes liability against the happening of personal accidents (whether fatal or not).
(5) For the purposes of this Part of this Act, a person shall not be taken to carry on pecuniary loss insurance business by reason only of the incidental inclusion, in a contract of insurance whose principal object is to insure a person against risks of a kind such that the business of effecting and carrying out contracts of insurance against them constitutes marine, aviation and transport insurance business, motor vehicle insurance business or property insurance business, of provision whereby he assumes liability against such risks as are mentioned in paragraphs (c) and (d) of subsection (7) of section (Classes of insurance business relevant for the purposes of Part II, and definitions thereof) of this Act.
(6) For the purposes of this Part of this Act, a person shall not be taken to carry on personal accident insurance business by reason only of the incidental inclusion, in a contract of insurance whose principal object is to insure a person against risks of a kind such that the business of effecting and carrying out contracts of insurance against them constitutes marine, aviation and transport insurance business, motor vehicle insurance business or property insurance business, of provision whereby he assumes liability against the happening of personal accidents (whether fatal or not).")
After Clause 79, insert the following new clause—
Exception for bankers
(".A person who carries on pecuniary loss insurance business solely in the course of carrying on banking business and for the purposes of that business shall be excepted from the operation of section 49 of this Act so far as regards such insurance business, and the principal Act shall not apply to a person by reason only that, in the course of carrying on banking business and for the purposes of that business, he carries on such insurance business")
After Clause 79, insert the following new clause—
Power of Industrial Assurance Commissioner to exempt Northern Irish collecting societies from provisions of Industrial Assurance Acts 1923 to 1958.
(".—(1) The Industrial Assurance Commissioner may, on the application of a collecting

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society registered in Northern Ireland, by order exempt it from any provision of the Industrial Assurance Acts 1923 to 1958 if he is satisfied that the existence of a provision of an enactment of the Parliament of Northern Ireland renders it unnecessary for the first-mentioned provision to apply to the society.
(2) The Industrial Assurance Commissioner may by order revoke an order made under the foregoing subsection with respect to a society, but the revocation shall not take effect until—

(a) such period as may be specified in the order (which shall not be less than the four weeks next after the making thereof) has expired; and

(b) notice that the order has been made has been published in the London and Edinburgh Gazettes;

and where he does so he shall, within the three days next after doing so, give written notice to the society that he has done so.")
Clause 80: leave out Clause 80.
Clause 81, page 72, line 20, leave out from ("in") to ("to") in line 21 and insert ("section 49(2)(b) and section (Penalty on friendly society for offence under Industrial Assurance Act 1923) of this Act and section 1(1A) of the Industrial Assurance Act 1923 references.")
line 22, leave out ("a reference") and insert ("references")
After Clause 86, insert the following new clause—
Temporary limitations of effect of alteration of scope of the principal Act
(".—Notwithstanding anything in this Act—

(a) until such day as the Board of Trade may by order (made by statutory instrument) appoint, section 4 of the principal Act shall apply only to companies to which it would have applied had this Act not passed;

(b) until the expiration of the period of one year beginning with the day on which this Act is passed, section 3 of the principal Act (separation of funds relating to certain classes of business) and section 11 thereof (amalgamations and transfers) shall have effect as if this Act had not passed; and

(c) until the expiration of the period of two years beginning with the day on which this Act is passed, section 13 of the principal Act shall have effect as if this Act (with the exception of sections 51 and 64 thereof) had not passed, and the references, in section 55(1)(b) of this Act, to general business shall be construed accordingly;

and nothing in this Act shall have effect in relation to the winding up of an insurance company commenced before the passing of this Act.")
After Clause 86, insert the following new clause—
Saving for discharge of liabilities lawfully assumed before passing of this Act
(".—A company, society or body shall not be taken to carry on insurance business in contravention of section 49 of this Act by reason only of its carrying on business for the
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purpose of discharging liabilities lawfully assumed by it before the passing of this Act.")
After Clause 87 insert the following new clause—
Revocation of provision of companies' memorandums of association restricting carrying on of insurance business
(".—Any provision of a company's memorandum of association that expressly precludes it from carrying on insurance business of any class shall cease to have effect.")
Clause 88, page 74, line 7, leave out ("Schedule") and insert ("Schedules (Amendments of Insurance Companies Act 1958 consequential on section (Classes of insurance business relevant for purposes of Part II, and definitions thereof) and subsection (1) of section (Alteration of scope of the principal Act) of this Act) and").
Clause 89, page 74, line 15, leave out ("74") and insert ("section (Penalty on industrial assurance company for non-compliance with enactments relating to industrial assurance)".)
Clause 89, page 74,leave out lines 35 to 43 and insert—
("(b) sections (Penalty on industrial assurance company for non-compliance with enactments relating to industrial assurance) and (Penalty on friendly society for offence under Industrial Assurance Act 1923);
(c) section 76, so far as it relates to offences under subsection (4) of section 49 consisting in carrying on business in contravention of subsection (3) thereof and offences under section (Penalty on industrial assurance company for non-compliance with enactments relating to industrial assurance);
(d) section 77, so far as it applies section 38(2) to offences specified in the last foregoing paragraph;
(e) section 81, so far as relates to the Industrial Assurance Act 1923;
(f) section (Power of Industrial Assurance Commissioner to exempt Northern Irish collecting societies from provisions of the Industrial Assurance Acts 1923 to 1958);
(g) section 83 and Schedule 5, so far as they relate to the Industrial Assurance Act 1923;")
Clause 89, page 74,line 44, at end insert 'and
("( ) section 86(2), so far as it defines 'registered society' and 'director', and section 86(3)".
After Clause 89 insert the following new clause—
Penalisation of furnishing false information under Part IIA
("(1) A person who, in purported compliance with a requirement imposed under section 67 of this Act to provide an explanation or make a statement, provides or makes an explanation or statement which he knows to be false in a material particular or recklessly provides or makes an explanation or statement which is so false shall be guilty of an offence.
(2) A person guilty of an offence under this section shall be liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or to both;

(b) on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding £200, or to both.")

After Clause 89, insert the following new clause—
Application for purposes of Part IIA of certain provisions of Parts I and II
(".—(1) Subsections (2) to (5) (both inclusive) of section 38 of this Act shall apply to, and in connection with, summary proceedings for offences under Part IIA of this Act and to informations relating to offences thereunder which are triable summarily as they apply to, and in connection with, such proceedings for offences under the Companies Act 1948 and Part I of this Act and to informations relating to offences thereunder that are triable summarily.
(2) Sections 75, 76 as read with 86(3) and 78 of this Act shall have effect in relation to offences under Part IIA of this Act as they have effect in relation to offences under Part II of this Act.")
After Clause 89, insert the following new clause—
Saving for solicitors and bankers
(".— (1) Nothing in Part IIA of this Act shall compel the production by a solicitor of a document containing a privileged communication made by or to him in that capacity or authorise the taking of possession of any such document which is in his possession.
(2) The Board of Trade shall not, under section 67 of this Act, require, or authorise an officer of theirs to require, the production by a person carrying on the business of banking of a document relating to the affairs of a customer of his unless either it appears to them that it is necessary so to do for the purpose of investigating the affairs of the first mentioned person or the customer is a person on whom a requirement has been imposed by virtue of that section.")
After Clause 89, insert the following new clause—
Interpretation of Part IIA
(" .—References in this Part of this Act to books or papers shall be construed as if they were contained in the Companies Act 1948.")
After Clause 89, insert the following new clause—
Extent of Part IIA
(".—Part IIA of this Act shall not extend to Northern Ireland.")
After Clause 89, insert the following new clause—
Exemption from prohibition imposed by section 429 of the Companies Act 1948, of banking partnerships with more than ten members.
(".—Section 429 of the Companies Act 1948 (which prohibits the formation of a company, association or partnership consisting of more than ten persons for the purpose of carrying on the business of banking unless
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it is registered as a company under the Companies Act 1948, or is formed in pursuance of some other Act, or of letters patent) shall not prohibit the formation of a partnership consisting of not more than twenty persons each of whom is for the time being authorised by the Board of Trade to be a member of a partnership formed for that purpose and consisting of not more than twenty persons.")
After Clause 89, insert the following new clause—
Exemptions from prohibition imposed by section 434 of the Companies Act 1948 of the formation of partnerships with more than twenty members.
(".—(1) Section 434 of the Companies Act 1948 (which prohibits the formation of a company, association or partnership consisting of more than twenty persons for the purpose of carrying on a business (other than the business of banking) for gain as therein mentioned unless it is registered as a company under the Companies Act, 1948 or is formed in pursuance of some other Act or of letters patent, or is such a company as is therein mentioned working mines within the stannaries) shall not prohibit the formation—

(a) for the purpose of carrying on practice as solicitors, of a partnership consisting of persons each of whom is a solicitor;

(b) for the purpose of carrying on practice as accountants, of a partnership consisting of persons each of whom falls within either paragraph (a) or paragraph (b) of section 161(1) of the Companies Act 1948;

(c) for the purpose of carrying on business as members of a recognised stock exchange, of a partnership consisting of persons each of whom is a member of that exchange.

(2) The Board of Trade may by regulations made by statutory instrument provide that the said section 434 shall not apply to the formation (otherwise than as permitted by virtue of the foregoing subsection) for a purpose specified in the regulations, of a partnership of a description so specified.
(3) In this section 'recognised stock exchange' means any body of persons which is for the time being a recognised stock exchange for the purposes of the Prevention of Fraud (Investments) Act 1958, and 'solicitor', in relation to England and Wales, means solicitor of the Supreme Court, and, in relation to Scotland, means a person enrolled or deemed to have been enrolled as a solicitor in pursuance of the Solicitors (Scotland) Act 1933.")
After Clause 89, insert the following new clause—
Exemptions from prohibition imposed by section 4 of the Limited Partnerships Act 1907 of limited partnerships with more than twenty members.
(".—(1) So much of section 4(2) of the Limited Partnerships Act 1907 as provides that a limited partnership (other than a partnership carrying on the business of banking) shall not consist of more than twenty persons shall not apply—

(a) to a partnership carrying on practice as solicitors and consisting of persons each of whom is a solicitor;

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(b) to a partnership carrying on practice as accountants and consisting of persons each of whom falls within either paragraph (a) or paragraph (b) of section 161(1) of the Companies Act 1948;

(c) to a partnership carrying on business as members of a recognised stock exchange and consisting of persons each of whom is a member of that exchange.

(2) The Board of Trade may by regulations made by statutory instrument provide that so much of section 4(2) of the said Act of 1907 as provides that a limited partnership (other than a partnership carrying on the business of banking) shall not consist of more than twenty persons shall not apply to a partnership (other than one permitted by virtue of the foregoing subsection) carrying on business of a description specified in the regulations, being a partnership of a description so specified.
(3) In this section 'recognised stock exchange' and 'solicitor' have the same meanings respectively as in section (Exemptions from prohibition imposed by section 434 of the Companies Act 1948 of formation of partnerships with more than twenty members) of this Act.")
After Clause 89, insert the following new clause—
Extent of Part IIB
(".—This Part of this Act shall not extend to Northern Ireland.")
Leave out Clause 90.
LORD HUGHES: My Lords, with the permission of the House I will move en bloc that this House doth agree with the Commons in Amendments Nos. 214 to 260. All these Amendments are either consequential or not controversial.
Moved, That the House doth agree with the Commons in the said Amendments.—(Lord Hughes.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 261]
After Clause 90, insert the following new clause—
Board of Trade's certificate that a person is a hanker to be conclusive evidence of that fact for the purposes of the Moneylenders Acts 1900 to 1927.
(".—(1) A certificate given by the Board of Trade that they are satisfied that a person can properly be treated for the purposes of the Moneylenders Acts 1900 to 1927 as being a person bona fide carrying on the business of banking shall, for those purposes, be conclusive evidence that he is so carrying on that business.
(2) If, upon an application (made before the expiration of the period of six months beginning with the day on which this Act is passed) for the issue of a certificate under the foregoing subsection, the applicant satisfies the
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Board of Trade that he can, as respects a period before the issue of the certificate (whether beginning before or after the passing of this Act), properly be treated for the purposes of the said Acts as having been a person who was bona fide carrying on the business of banking, they may certify that they are so satisfied (specifying the period in question), and the certificate shall, for those purposes, be conclusive evidence that, as respects that period, he was so carrying on that business.
(3) A certificate given under subsection (1) above with respect to a person may be revoked by the Board of Trade if they cease to be satisfied as respects him as mentioned in that subsection, but the revocation shall be without prejudice to the effect of the certificate as respects any period before the revocation.")
6.12 p.m.
LORD BROWN: My Lords, the purpose of Clause 90 is to deal with the uncertainty, illustrated by the United Dominion Trust v. Kirkwood case, felt by some banks as to whether they can safely rely on the exemption gfiven by Section 6(d) of the Moneylenders Act 1900 to a person bona fide carrying on the business of banking. If the clause were to become law, every person who wished to be exempted from the Moneylenders Act as a banker would have to satisfy the Board of Trade that he should be so exempted. The established banks object to the clause on the ground that, whatever may be necessary to meet the difficulties of some banks, the clearing banks and the established merchant banks are satisfied with the exemption given by Section 6(d) and do not wish to see it replaced by an exemption dependent on the consent of a Government Department.
I will not go into the reasons for their feeling that. The Government propose to meet the objection made by the established banks by substituting for Clause 90 a new clause. I am not sure whether that is sufficient information, but if your Lordships' require further explanation I will give it. I beg to move that this House doth agree with the Commons in the said Amendment.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
LORD DRUMALBYN: My Lords, the noble Lord has not referred to the fact that subsection (3) still enables the Board of Trade, once they have given a certificate, to withdraw it just as easily as they give it. I do not want to go into all the

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difficulties, but I think that this is something that has to be watched carefully. Parliament does not readily give authority to a Department to withdraw a permission to trade in any particular sphere when that permission has been allowed. I still think that, somehow or other, we have to devise means by which this can be done in a manner that is not only fair but also appears to be fair.
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 262–351]
Clause 91, page 75, line 39, leave out ("as regards Great Britain").
After Clause 91, insert the following new clause—
Extent of Part III
" —This Part of this Act shall not extend to Northern Ireland.")
Clause 95, page 76, line 40, leave out from ("Assurance") to ("1948") in line 41 and insert ("Acts 1923 to").
Clause 96, page 77, line 4, after ("inclusive)",) insert ("and Schedule (Fees to be paid to the registrar of companies)")
Clause 96, page 77,line 6, leave out from first ("and") to ("may") in line 7 and insert ("Part II of this Act, Schedule (Amendments of Insurance Companies Act 1958 consequential on section (Classes of insurance business relevant for purposes of Part II, and definitions thereof) and subsection 1 of section (Alteration of scope of the principal Act) of this Act) to this Act and Part I of Schedule 5 hereto ")
Clause 96, page 77,line 14, at end insert—
("( ) The provision of the Industrial Assurance Act 1929 specified in column 1 of Part (Repeal in Industrial Assurance Act 1929) of that Schedule shall, to the extent specified in column 2 of that Part, be repealed at the time specified in column 3 thereof")
Clause 96, page 77,line 16, leave out ("Schedule 7") and insert ("that Schedule")
Clause 96, page 77,line 19, at end insert—
("( ) The provision of the Industrial Assurance and Friendly Societies Act 1948 specified in column 1 of Part (Repeal in Industrial Assurance and Friendly Societies Act 1948) of that Schedule shall, to the extent specified in column 2 of that Part, be repealed at the time specified in column 3 thereof;
("( ) The provision of the Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951 specified in column 1 of Part (Repeal in Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951) of that Schedule shall, to the extent specified in column 2 of that Part, be repealed at the time specified in column 3 thereof: ")
Clause 96, page 77,line 25, leave out ("the provision") and insert ("each of the provisions")
Clause 96, page 77,line 27, after ("specified",) insert ("in relation to it")
Clause 96, page 77,line 28, after ("time") insert ("so")
Clause 96, page 77,line 39, leave out ("Act 1923 ") and insert ("Acts 1923 to 1948 and to the Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951")
Schedule 1, page 78, line 5, leave out from ("1") to end of line 6.
Schedule 1,Page 80, line 45, after second ("of"), insert ("fixed")
Schedule 1,Page 81, line 16, leave out paragraph 11.
Schedule 1,Page 82, line 23, after ("of"), insert ("provision for")
Schedule 1,Page 82,Line 24, after ("charged") insert ("by way of proviison")
Schedule 1,Page 82,Line 26, after ("revenue"), insert ("by way of provision ")
Schedule 1,Page 82,line 43, leave out ("the following sub-paragraphs") and insert ("sub-paragraphs (2) to (4) below")
Schedule 1,Page 83, line 7, at end insert—
("( ) A company shall not be subject to the requirements of this paragraph if it is neither a holding company nor a subsidiary of another body corporate and the turnover which, apart from this sub-paragraph, would be required to be stated does not exceed £50,000.")
Schedule 1,Page 83,line 18, leave out paragraph 17.
Schedule 1,Page 84, line 15, after ("10"), insert ("and")
Schedule 1,Page 84,line 16, leave out from ("(8A))") to ("and") in line 17.
Schedule 1,Page 84,line 20, after ("13"), insert ("and")
Schedule 1,Page 84,line 20, leave out from ("14") to end of line 21
Schedule 1,Page 84,line 34, after ("8"), insert ("and")
Schedule 1,Page 84,line 35, leave out from ("11") to end of line 36.
Schedule 1,Page 84,line 39, at end insert ("but, where in its balance sheet reserves or provisions (other than provisions for depreciation, renewals or diminution in value of assets) are not stated separately, any heading stating at an amount arrived at after taking into account a reserve or such a provision shall be so framed or marked as to indicate that fact, and its profit and loss account shall indicate by appropriate words the manner in which the amount stated for the company's profit or loss has been arrived at")
Schedule 1,Page 85, line 8, after ("of"), insert ("Part I of")
Schedule 1,Page 85,line 11, after ("7"), insert ("and")
leave out line 12.
Schedule 1,Page 85,line 15, leave out from ("12") to end of line 16 and insert ("and paragraph 13A")
Schedule 1,Page 85,line 43, leave out from beginning to end of line 5 on page 86.
Schedule 2, page 86, line 20, leave out ("11A") and insert ("11")
Schedule 2, page 86,line 21, leave out ("14A ") and insert ("14 ")
Schedule 2,Page 92, line 5, after second ("of "), insert ("fixed ")
Schedule 2,Page 92,leave out lines 35 to 47.
Schedule 2,Page 92,line 5, after ("of "), insert ("provision for ")
Schedule 2,Page 92,line 6, after ("charged "), insert ("by way of provision ")
Schedule 2,Page 92,line 8, after ("revenue "), insert ("by way of provision ")
Schedule 2,Page 92,line 21, leave out ("the following sub-paragraph ") and insert ("sub-paragraphs (2) to (4) below ")
Schedule 2,Page 92,line 29, at end insert— ("(5) A Company shall not be subject to the requirements of this paragraph if it is neither a holding company nor a subsidiary of another body corporate and the turnover which, apart from this sub-paragraph, would be required to be stated does not exceed £50,000.")
Schedule 2,Page 95, leave out lines 11 to 29.
Schedule 2,Page 98, line 39, after ("10 "), insert ("and ")

AFTER SCHEDULE 3
Insert the following new Schedult—

("FEES TO BE PAID TO THE REGISTRAR OF COMPANIES

PART I

TABLE OF FEES

Matter in respect of which Fee is payable

Amount of Fee

For registration on its formation under the principal Act of a company as one limited by shares, registration under that Act in pursuance of Part VIII thereof of a company as one so limited (not being a company in whose case the liability of the members thereof was, before registration in pursuance of that Part, limited by some other Act or by letters patent) or re-registration under the principal Act in pursuance of section 33 of this Act of a company as one limited by shares.

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

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

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

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

For registration on its formation under the principal Act of a company as one not having a share capital, registration under that Act in pursuance of Part VIII thereof of a company as one limited by guarantee and not having a share capital or re-registration under that Act in pursuance of section 33 of this Act of a company as one so limited and not having a share capital.

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

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

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

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

Schedule 2,Page 98,line 40, leave out from ("(8A))") to ("and") in line 41.
Schedule 2,Page 98,line 44, after ("13"), insert ("and")
Schedule 2,Page 98,line 44, leave out from ("14") to end of line 45
Schedule 2,Page 98,Page 99, line 23, after ("8"), insert ("and")
Schedule 2,Page 98,line 24, leave out from ("11") to end of line 25
Schedule 2,Page 98,line 28, at end insert ("but, where in its balance sheet reserves or provisions (other than provisions for depreciation, renewals or diminution in value of assets) are not stated separately, any heading stating an amount arrived at after taking into account a reserve or such a provision shall be so framed or marked as to indicate that fact, and its profit and loss account shall indicate by appropriate words the manner in which the amount stated for the company's profit or loss has been arrived at").
Schedule 2,Page 100, line 2, after ("of"), insert ("Part I of")
Schedule 2,Page 100,line 4, after ("7"), insert ("and")
Schedule 2,Page 100,line 5, leave out from ("11") to end of line 6.
Schedule 2,Page 100,line 9, leave out from ("12") to end of line 10 and insert ("and paragraph 13A")
Schedule 2,Page 101, leave out lines 27 to 34.
Schedule 2,Page 101,Leave out Schedule 3.

Matter in respect of which Fee is payable

Amount of Fee

For registration on its formation under the principal Act of a company as one limited by guarantee and having a share capital, or as an unlimited one having a share capital, registration under that Act in pursuance of Part VIII thereof of a company as one so limited and having a share capital or re-registration under that Act in pursuance of section 33 of this Act of a company as one limited by guarantee and having a share capital.

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

For re-registration of a company under the principal Act in pursuance of section 32 of this Act.

£5.

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

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

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

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

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

£3.

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

£10.

PART II

LIMITATIONS ON OPERATION OF PART I

1. Where in the case of a company limited by guarantee and having a share capital or an unlimited company having a share capital, an increase of share capital is made at the same time as an increase of membership, the company shall pay whichever fee is the higher, but not both.

2. The total of the fees to be paid by a company by reference to its membership shall in no case exceed £38.

3. The total of the fees to be paid by a company by reference to its share capital or of the fees to be paid by it by reference to its membership and the fees to be paid by it by reference to its share capital, shall in no case exceed £68.

4. In determining what fee (if any) is to be paid by a company upon an increase in its membership it shall be assumed, for the purpose of the application of the foregoing provisions of this Part of this Schedule, that the amount that would be payable by it by reference to its membership immediately before the increase has been paid, and in determining what fee (if any) is to be paid by a company upon an increase in its share capital, it shall be assumed, for that purpose, that the amount that would be payable by it by reference to its capital immediately before the increase has been paid.")

SCHEDULE 4
Page 104, line 27, at end insert—
("Section 449 … Power to enforce orders.")

AFTER SCHEDULE 4
Insert the following new Schedule—
("AMENDMENTS OF INSURANCE COMPANIES ACT 1958 CONSEQUENTIAL ON SECTION (Classes of insurance business relevant for purposes of Part II, and definitions thereof) AND SUBSECTION (1) OF SECTION (Alteration of scope of the principal Act) OF THIS ACT

Provision amended and Subject-matter thereof

Amendment

Section 3 (separation of funds relating to certain classes of business).

In subsection (1)(b), for the words 'two or more of the said classes' there shall be substituted the words 'both the said classes'.

In Subsection (5), for the words 'life assurance business, industrial assurance business, bond investment business and employers' liability insurance business' there shall be substituted the words 'ordinary long-term insurance business and industrial assurance business'.

Section 5 (periodic investigation of certain companies by actuary).

In subsection (1), for the words 'life assurance business, industrial assurance business or bond investment business' there shall be substituted the words 'ordinary long-term insurance business or industrial assurance business'.

Section 11 (provisions as to certain amalgamations and transfers).

In subsection (1), in paragraphs (a) and (b), the words 'or employers' liability insurance business' shall be omitted and, in the proviso, the words 'carrying on life assurance business or industrial assurance business', the word 'that', where secondly occurring, and the word 'life', where last occurring, shall be omitted, and after the words 'in the company' there shall be inserted the words that is attributable to the carrying on of ordinary long-term insurance and industrial assurance business'.

In subsection (2)(b), the words 'except in relation to a transfer of employers' liability insurance business' shall be omitted, and for the words 'sinking fund or bond investment' there shall be substituted the words 'or capital redemption'.

Section 33 (interpretation).

In subsection (1), immediately before the definition of 'chairman' there shall be inserted the following definition:—

'"capital redemption business" means such business as, by virtue of paragraph (c) of subsection (6) of section (Classes of insurance business relevant for purposes of Part II, and definitions thereof) of the Companies Act 1967, falls within the definition in that subsection of ordinary long-term insurance business',

in the definition of 'general business', the words 'of a class or classes specified in section one of this Act' shall be omitted, in the definition of 'long-term business', for the words 'business of all or any of the following classes, namely, life assurance business, industrial assurance business and bond investment business' there shall be substituted the words 'business of either or both of the following classes, namely, ordinary long-term insurance business and industrial assurance business', for the definition of 'policy', there shall be substituted the following definition:—

'policy—

(a) in relation to ordinary long-term insurance business and industrial assurance business, includes an instrument evidencing a contract to pay an annuity upon human life;

(b) in relation to insurance business of any other class (except capital redemption business) includes any policy under which there is for the time being an existing liability already accrued or under which a liability may accrue; and

(c) in relation to capital redemption business, includes any policy, bond, certificate, receipt or other instrument evidencing the contract with the company',

and, in the definition of policy holder', for the words 'bond investment business' there shall be substituted the words 'capital redemption business', immediately before the word bond ', where secondly occurring, there shall be inserted the word 'policy', and for paragraphs (a) to (c) there shall be substituted the following paragraphs:—

'(a) in relation to such ordinary long-term insurance business or industrial assurance business as consists in the granting of annuities upon human life, includes an annuitant; and

(b) in relation to insurance business of any kind other than such as is mentioned in the foregoing paragraph or capital redemption business, includes a person to whom, under a policy, a sum is due or a periodic payment is payable'.")

Schedule 5, page 104, line 38, after ("(6)") insert ("at the beginning there shall
Schedule 5, page 104,line 41, at end insert—

Provision amended and Subject-matter thereof

Amendment

("Section 6 (statements of business by Committee of Lloyds, &c.)

In subsection (1), for the words 'under and for the purposes of subsection (6) of section one of this Act' there shall be substituted the words 'for the purposes of Part II of the Companies Act 1967'

Section 13 (margin of solvency for general business].

In subsection (2)(b), the words '(whether or not being insurance business of a class specified in section one of this Act)' shall be omitted.")

Schedule 5,Page 105, line 13, at end insert—

("Section 24 (bond investment companies).

For the words 'bond investment business' there shall be substituted the words 'capital redemption business in the case of which the premiums in return for which a contract is effected are payable at intervals of less than six months'.")

Schedule 5,Page 105, line 13,at end insert—

("Section 32 (expenses).

In subsection (1), the reference to the Act shall include a reference to Part II of this Act.")

Schedule 5,Page 105, line 13,leave out lines 17 to 19.
Page 105,line 20, column 2, at beginning insert—
("In paragraph 7, in the proviso, for the words 'life assurance fund' there shall be substituted the words 'ordinary long-term insurance fund'.")
Schedule 5,Page 105, line 38, at end insert—

("Schedule 3 (rules for valuing policies and liabilities).

In paragraph 3, for the words 'a bond investment policy' there shall be substituted the words 'a capital redemption policy'; in paragraph 4, for the words 'a current fire, accident, motor vehicle, marine, aviation or transit policy' there shall be substituted the words 'a current policy of any kind other than a life policy or a capital redemption policy'; and in paragraph 5, for the words 'a periodic payment under an accident or motor vehicle policy' there shall be substituted the words 'a periodic payment under a policy, being a payment in respect of personal injury or of disease'; and paragraphs 6 and 7 shall be omitted'.")

Schedule 5,Page 106, line 32, leave out ("for the references")
Schedule 5,Page 106,line 34, at end insert ("for the references to a company there shall be substituted
Schedule 5,Page 107, line 30, at end insert—

("16 & 17 Geo. 5. c. 9.

The Economy (Miscellaneous Provisions) Act 1926.

In section 13, subsection (2), and, in subsection (4), the words from the beginning to 'and thereafter'.")

("19 & 20 Geo. 5. c. 28.

The Industrial Assurance and Friendly Societies Act 1929.

Section 3(5).")

Schedule 5,Page 107,line 31, column 3, at beginning insert—

("Section 53(6).

In section 329, the words 'with or without hard labour'.

In section 438, the words 'with or without hard labour'.")

("In section 124(1), in the proviso, the words from 'and (d)' onwards.")

Schedule 5,Page 108, column 3, leave out line 7 and insert—

"In section 3, in subsection (1), the words 'Subject to the provisions of this Act'; in subsection (2), the words 'Subject as aforesaid'; and subsections (3) and (4)."

be inserted the words 'With the exception of section 6(1) thereof and")
Schedule 5,Page 107,line 34, leave out from ("of") to end of line 35 and insert ("any class")
Schedule 5,Page 107,line 36, leave out first ("and")
Schedule 5,Page 107,line 38, at end insert ("and the words 'in respect of insurance business of any class specified in section one of this Act' shall be omitted")
stituted references to a collecting society and for the references")
Schedule 6, page 107, line 30, column 3, at end insert ("In Schedule 1, the entry relating to section 21")

Schedule 6, page 107,leave out line 8 and insert—

("In section 33, in subsection (1), the definition of interest ', and subsection (5).

Section 34(4).")

Schedule 7, page 108,line 22, at end insert—

("PART (Repeal in the Industrial Assurance and Friendly Societies Act 1929)

REPEAL IN THE INDUSTRIAL ASSURANCE AND FRIENDLY SOCIETIES ACT 1929

Provision

Extent of Repeal

Time at which Repeal is to take Effect

Section 3.

Subsection (1) in so far as it penalises industrial assurance companies, but except in relation to failures by them occurring before the passing of this Act.

The passing of this Act.")

Subsection (4) in so far as it penalises such companies, but except in relation to issues of premium receipt books before the passing of this Act.

Schedule 7, page 109, line 15, at end insert—

("Section 169.

The whole section.

The passing of this Act.

Section 170.

In subsection (1)(a) the words 'by the Director of Public Prosecutions or by or on behalf of the Lord Advocate'.

Schedule 7, page 109, line 27, at end insert—

("Section 425.

In subsection (1), the proviso.

The expiration of the period of three months beginning with the day on which this Act is passed.")

Schedule 7, page 109,line 30 at end insert—

("Section 454.

In subsection (2), in paragraph (a), the words from 'the Twelfth Schedule' to 'that Schedule'.

The expiration of the period of three months beginning with the day on which this Act is passed.")

Schedule 7, page 110, line 16, at end insert—

("Schedule 12.

The whole Schedule.

The expiration of the period of three months beginning with the day on which this Act is passed.")

Schedule 7, page 110,line 21, at end insert—

("PART (Repeal in the Industrial Assurance and Friendly Societies Act 1948)

REPEAL IN THE INDUSTRIAL ASSURANCE AND FRIENDLY SOCIETIES ACT 1948

Provision

Extent of Repeal

Time at which Repeal is to take Effect

Section 16.

Subsection (2) so far as relating to industrial assurance companies, but except in relation to contraventions or failures occurring before the passing of this Act.

The passing of this Act.")

("PART (Repeal in the Reserve and Auxiliary Forces (Protection of Civil Interests Act 1951)

REPEAL IN THE RESERVE AND AUXILIARY FORCES (PROTECTION OF CIVIL INTERESTS ACT 1951)

Provision

Extent of Repeal

Time at which Repeal is to take Effect

Section 57.

Subsection (5) so far as relating to industrial assurance companies, but except in relation to contraventions or failures occurring before the passing of this Act.

The passing of this Act.")

Schedule 7, Page 110,line21, leave out lines 28 to 30.
Schedule 7, Page 110,line21,leave out lines 34 to 40.
Schedule 7, Page 111, line 16, at end insert—

("Section 33.

In subsection (1), the definitions of 'accident insurance business', 'bond investment business', 'employers' liability insurance business', and 'fire insurance business'; the definition of 'life assurance business', except for the purposes of section 29(8) of the Finance Act 1966; the definitions of 'marine aviation and transit insurance business' and 'motor vehicle insurance business'; and, in the definition of 'court', the words 'except in the provisions of this Act relating to deposits'. Subsections (2), (3) and (4).

Section 34.

In subsection (3), the words 'or subsection (3) of section thirty-three thereof'.

Section 35.

Subsection (2).")

Schedule 7, Page 111, line 20, column 2, leave out ("paragraph 11") and insert ("paragraphs 11 and 12").

Schedule 7, Page 111, line 32, at end insert—

("Section 15.

In subsection (1), the words 'Subject to subsection (3)' and paragraphs (b), (c) and (d), and subsection (3).

The passing of this Act.")

Section 20.

The whole section.

LORD HUGHES: My Lords, with the permission of the House, I beg to move that this House doth agree with the Commons in Amendments Nos. 262 to the final Amendment, No. 351. All these Amendments are either consequential or are not controversial.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Hughes.)
LORD DRUMALBYN: My Lords, is this to be taken as an Amendment to the speech of the noble Lord, Lord Boothby?
LORD HUGHES: My Lords, it may be noted that I arranged matters with the noble Lord, Lord Boothby, in advance.
On Question, Motion agreed to.
6.16 p.m.
LORD CARRINGTON: My Lords, I do not think that, as Leader of the Opposition in this House, I ought to let this Bill go without saying a word about the way in which this House and Parliament have been treated. This afternoon's proceedings have been a charade.
LORD BOOTHBY: A farce!
LORD CARRINGTON: I agree with the noble Lord, Lord Boothby—a farce and a charade. I greatly admire my noble friend Lord Erroll of Hale and Lord Drumalbyn who, in the space of a very few days, have been compelled to examine 351 new Amendments including 43 new clauses. Most of these were inserted on Report stage in another place and therefore were not capable of amendment in another place. All of them came up to

1293
this House and we have had to discuss them in one afternoon. It may be thought that perhaps we have not spent so long as we should have in discussing these Amendments, but anybody who knows anything about Parliamentary business, or about the way Bills are discussed in this House, knows that it is essential for an Opposition to consult the professional bodies who are available and who have expert knowledge—in this case, such bodies as the Institute of Directors and the C.B.I. In the short time available, it was almost impossible to do that, and I congratulate my noble friends on doing the best they can. Does the noble Lord, Lord Walston, think this funny?
LORD WALSTON: My Lords, I was taking up what the noble Lord said about "the best they can".
LORD CARRINGTON: My Lords, I do not happen to think it is funny. I think that it is a complete contempt of Parliament. It is not the way to legislate. There has been no time for any amendment. I must ask the noble Lord the Deputy Leader of the House to assure the House that this sort of procedure will not take place in future. My noble friends and I are greatly concerned, and as a Parliamentarian I am really angry at it.
LORD SHACKLETON: My Lords, I certainly do not take the noble Lord's remarks lightly. Whatever else I may feel, we have at least had the pleasure of his strongly expressed eloquence, and I certainly do not resent the way he puts these matters. I do not think that the noble Lord wants me to go over again the details of the eloquent defence of my noble friend Lord Shepherd, who is now in sunnier, but I think not cooler, climes than we are in at the moment.
I will certainly give a personal assurance to noble Lords opposite that I shall do my utmost, and I give this assurance to my noble friends on this side of the House, who have also had to bear a difficult brunt. I express my gratitude to noble Lords on both sides of the House. We have asked a lot of them, as we have of the Hansard writers and the staff. It is true that in previous years we have sat later. On this occasion we are as anxious as anyone to try to meet the wishes of your Lordships with
1294
regard to the holiday. I would say to the noble Lord, Lord Carrington, that I have noted what he has said. I do not think that your Lordships will want to pursue this discussion any further. We have some Scottish Business which (though perhaps I should not suggest this) should interest the noble Lord, Lord Boothby, and I hope that we can now proceed. With that assurance, I should like to wish noble Lords a very pleasant rest after their labours.
LORD SILKIN: My Lords, I agree with every word that the noble Lord, Lord Carrington, said. I have said them myself in the years gone by; in fact, I have made about 13 similar speeches at about this time of year. The trouble is not with the Government. I do not think it is fair to blame the Government, unless perhaps they are too ambitious in trying to get too much legislation through in too short a time. I think it is time that we began to look at our procedure more carefully, so that we are not put in this position year after year. So long as we maintain the present kind of procedure we are going to find ourselves clogged up every July. The Commons take up time and go into these things meticulously.
The noble Lord said yesterday that it does not appeal to him that we should point out that they have gone into these things meticulously and that to a certain extent we might accept their investigation. I agree with him that we have a duty as well, and we are not able to do our duty. However, it is no good railing against the Government and trying to get assurances from them so long as we have not gone into the whole system. I hope that we shall, and that we shall try to find some solution for this. It may be that starting legislation in this House more than we have done would help towards a solution. This Bill, of course, was started here, but perhaps we should do much more of it. I would ask my noble friend, not to give assurances that this state of affairs will not happen again, because it will, but to impress on the Government that something fundamental and basic must be done if we are not going to be put in this position every year.
LORD SHACKLETON: My Lords, I am sure we do not want to prolong this irregular debate. Every word that has

1295
been said has been carefully noted. I certainly cannot promise that we shall not have trouble in the future: I am really too new as Deputy Leader, and I certainly should not wish to bind my noble friend Lord Beswick. I can only say that we will, at least, use our best endeavours, as the noble Earl, Lord St. Aldwyn, and my noble friend have done in the past. My noble friend Lord Silkin made some interesting points, but I do not think this is the moment to discuss them.

WATER (SCOTLAND) BILL
6.22 p.m.
Order of the Day read for the consideration of Commons Reasons for disagreeing to certain Lords Amendments.
LORD HUGHES: My Lords, it may be for the convenience of the House if I move this Motion formally, so that the main discussion can take place on the next Motion. I therefore beg to move that the Commons Reasons for disagreeing to certain of the Lords Amendments be now considered.
Moved, That the Commons Reasons for disagreeing to certain of the Lords Amendments be now considered.—(Lord Hughes.)
On Question, Motion agreed to.

WATER (SCOTLAND) BILL

  LORDS AMENDMENTS
  [The references are to Bill (231) as first printed for the Lords, The Commons Reason is printed in italics]
  [Nos. 1–3]
  Schedule 1, page 22, leave out lines 20 to 23.
  Schedule 1, page 22,leave out line 27.
  Schedule 1,page 23, line 24, at end insert—

  ("10A.

  The Orkney and Zetland water Board

  Limits of supply of:—

  Kirkwall Town Council

  Orkney County Council

  Stromness Town Council

  Lerwick Town Council

  Zetland County Council")

  The Commons disagreed to these Amendments for the following Reason:
  Because the Amendments would deny to the North of Scotland the benefits which would derive from the establishment of a regional water board covering the four counties of Sutherland, Caithness, Orkney and Zetland.
  LORD HUGHES: My Lords, I beg to move that this House doth not insist on its Amendments to which the Commons have disagreed. This matter was debated on Monday night in another place. I think it is fair to say that no new points emerged. The Opposition in another place repeated their contentions that the wider amalgamation reflected the Government's passion for uniformity; that the difficulties of communication would cause serious inconvenience, and that, on the analogy of what has happened with the fire service, it would lead to increased costs. These are all points which were made in discussion in another place before the Bill came to us. They are points which were made, I might almost say, time and time again in your Lordships' House when the Amendments to which the Commons disagree were inserted.
  Whatever may have been said, with complete justification, about the lack of time to consider the Amendments which we have had from another place on the Companies Bill which we have just finished, no one can say that the position of the Orkney and Shetland Water Board has not been adequately discussed, because there has been very full discussion in both Houses. The fact remains that at the end of all this discussion the Opposition are of one point of view and Her Majesty's Government are of another. The Commons have stated that their Reason for disagreeing with the Lords' Amendments is that
  "the Amendments would deny to the North of Scotland the benefits which would derive from the establishment of a regional water board covering the four counties of Sutherland, Caithness, Orkney and Zetland."
  Moved, That this House doth not insist on the Amendments to which the Commons have disagreed.—(Lord Hughes.)
  6.26 p.m.
  THE EARL OF DUNDEE: My Lords, it is with very deep and bitter sorrow that we have learned of the decision of the Government to disagree with these Amendments giving independence in the administration of their water affairs to Orkney and Shetland, and of the determination to force through their own proposals in defiance of all reason and all common sense. I do not suppose there are a lot of people in England, and I

  1297
  sometimes think not a great many in Scotland, who know or care a great deal about these remote northern islands, and when something which is blatantly stupid and unfair is done in regard to their administration there is, of course, all the less likelihood of a general movement of indignation against it. But I must say that I do not think I have ever read a more derisory and contemptible collection of reasons for disagreeing with your Lordships' Amendments than those which were given on Monday night to another place by the Minister of State.
  The Minister referred to a joint non-Party letter appealing to reason and good sense which was published a few weeks ago in The Times by Members from all Parties and in both Houses, and he said that there were a number of errors in that letter which it was his duty to point out. The letter had said that the authority would be administered from Wick, and the Minister replied that it would not necessarily be administered from Wick; that it might occasionally be administered from somewhere else, or that it might even be administered from a number of places, the Board moving like a kind of circus from one island to another. I wonder whether it has ever occurred to the Government that if it is hopelessly inconvenient to get from Shetland to Wick, it is equally inconvenient to get from Wick to Shetland. And as for moving from one point to another, that may be very amusing if they were exhibiting some kind of entertainment, but when they are discussing seriously the administration of water, I do not see how it would greatly add to the economy and administration, or to its efficiency, that it should be moved about in this manner. It would be not perhaps much more inefficient, but about equally inefficient, to a permanent administration at Wick or any other place.
  Then the Minister of State went on to refer to the statement in this letter that
  "the combination of a water authority between Orkney, Shetland, Caithness and Sutherland would be as sensible as combining Cumberland and Cornwall."
  I cannot refrain from quoting his comment on this. He said:
  "What is meant by that is beyond my comprehension. If it is meant to refer to geographical distance it might have a point, but I do not see its relevance."—[OFFICIAL REPORT, Commons; 24/7/67, col. 213.]
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  I wonder what else he thought it could have referred to except geographical distance. Of course, the signatories of this letter, I admit, were wrong in saying that it would be as sensible as combining Cumberland and Cornwall. What they ought to have said was that it would be very much more sensible to combine Cumberland and Cornwall than to combine the Islands with the mainland in the North of Scotland. If you have to go from Cumberland to Cornwall, even if you conscientiously observe the latest speed limits prescribed by the Minister of Transport, if you start early enough you can easily motor there in one day. To get from Shetland to Wick, or vice versa—it does not matter which—takes three days.
  LORD BOOTHBY: My Lords, there are aeroplanes.
  THE EARL OF DUNDEE: And the aeroplanes do not always fly. And when they do fly, where do they go? They do not go to Wick; they go to Aberdeen, and then you have to travel all the way from Aberdeen to Wick. That is why it takes three days to get there. As for the expense, it is much less expensive to travel, whether by car, train or any other method, from Cornwall to Cumberland than it is to travel from Shetland to Wick.
  LORD STRATHCLYDE: My Lords, the ships do not often sail. Often they do not sail from the Shetlands either to Wick or to Aberdeen. It is one of the most treacherous seas in the world, and the storms are terrific. So how people get there in the winter months, goodness only knows! They cannot fly and they cannot go by sea.
  THE EARL OF DUNDEE: That is very true, and I hope that my noble friend, one of the signatories to this letter, may perhaps say a word to support what I am saying in a few minutes, because the lack of comprehension which we have encountered about this really is monstrous.
  Then the Minister of State goes on to say that in the other water authorities, like Argyll, Ross and Cromarty and Inverness, there is only 1 per cent. or 1½ per cent. of the population of Scotland, and about the same percentage would be contained in a combination of Caithness,

  1299
  Sutherland, Orkney and Shetland. We all understand the arguments for regionalisation. If you combine contiguous land areas together which have the same collection—two or three watersheds all contiguous—it is clearly more sensible to combine them in one water authority. But population is not the only consideration. Surely, however many, or few, people happen to live in these Islands has no relevance at all to the sense, or nonsense, of trying to combine them with landward areas which are three days distant in travelling time.
  Then the Minister tried to make a point which perhaps we should answer. It was said in this letter that the Government at one time, recognising the common sense and unanimous wishes of the Island local authorities, proposed a certain course, which afterwards they went back on. The Minister was at great pains to point out that at this time, on March 31, the local authorities were not unanimous. Let me just remind your Lordships why they were not. When this was discussed in another place in Committee, the local authorities and all the people of Orkney and Shetland naturally desired to keep their own two water boards—which is much the best solution, because Orkney and Shetland are a very long way from one another—one in Shetland and one in Orkney.
  When the Member for Orkney and Shetland moved an Amendment, which he did very strongly and emphatically on this subject, the Minister gave what I would certainly have regarded, and what any Parliamentary person in either House would have regarded, as a very satisfactory reply. He said that, when the Member for Orkney and Shetland heard what was proposed, he would be quite happy. So he withdrew his Amendment, thinking it was going to be all right.
  Then they had this meeting on March 31 at St. Andrew's House, attended by representatives from Orkney, Shetland, Caithness, Sutherland, Ross and Cromarty. The compromise proposal put forward was that if Ross and Cromarty would agree to combine with Caithness and Sutherland, making one big mainland block, and if Orkney and Shetland would agree to combine in one Island block, then the Government would consider favourably agreeing to this as a
  1300
  compromise settlement. Naturally, at that meeting the representatives from the Islands were not unanimous. They said, "We have got to go back and consult with our people about this." It had taken them by surprise. When they all went home they at first were not agreed on this solution, as one can well understand. But they were afterwards unanimous in saying that anyhow they wanted to be independent of the mainland and that, in order to please the Scottish Office, although they did not think it was the right solution but a very second best solution—in order to satisfy this inordinate devotion to uniformity the Scottish Office insisted upon—they would, although at some inconvenience to themselves, agree to a combined board for Orkney and Shetland if they were left independent of the mainland; and for the last two or three months they have been unanimous on that.
  But what happened? Ross and Cromarty would not hear of being compulsorily amalgamated with Caithness and Sutherland. I need not go into why they would or would not. They said they would not. The Scottish Office agreed that they need not if they did not want to, but they said, "Because Ross and Cromarty would not agree to make this nice big mainland unit, therefore we will not allow Orkney and Shetland their local government independence. We must have this big collection of areas, whether they are contiguous or not contiguous, somewhere in the North of Scotland. So we shall insist upon Orkney and Shetland joining up with Caithness and Sutherland, because Ross and Cromarty will not do so". This is the kind of reason one might expect to hear in a Gilbert and Sullivan opera, or in a story in Alice in Wonderland, but not, my Lords, on a serious piece of legislation which Parliament is supposed to consider in a spirit of sense and reason.
  In spite of all these hopes that were raised, first in the mind of the Member for Orkney and Shetland, which were ruthlessly dashed to the ground, and then afterwards in the minds of all of us, by this meeting at St. Andrew's House, the Government at a late hour on Monday night have insisted on using their majority. If your Lordships read the debate you will perhaps form the conclusion that not

  1301
  all the Members who voted were particularly well versed or particularly interested for the moment in the subject; but I do not want to go into the proceedings of another place in too great detail. They have, by a not very big majority, steamrollered their proposals, against all the dictates of reason and of common sense, for no reason whatever that I can make out, except that of a senseless devotion to uniformity. There is no good reason that has been given—none. And this decision, my Lords, which the Government have the power to insist on, will leave a sense of deep and permanent bitterness in the minds of the people of Orkney and Shetland. It will also leave a sense of deep disillusionment in regard to the ability and the capacity of the Scottish Office to administer our affairs.
  6.40 p.m.
  LORD STRATHCLYDE: My Lords, in referring to the reasons why another place disagreed with this House in the Amendments we made, my noble friend has said that they were derisory. I think that, but for the courtesy which this House generally extends to another place, one could have used words a good deal stronger than that. We were told by the noble Lord that the reason was that of denying the benefits. On the last occasion when we talked of this matter I asked the Minister what those benefits were. He was unable to say that there was any benefit at all, other than to give the House figures with which he was supplied at the last moment, as to the benefits which would accrue as a result of the water rate being lower in Orkney and Shetland, if this combination were to go ahead, than it would be if they were left on their own. Despite that, the Islands have made it abundantly clear that they would much rather be left by themselves than have that benefit. Whether one can calculate with any degree of accuracy what the situation will be after this combination takes place, I do not know. Nor do I know where the figures came from; or how they were arrived at. We have not been told that, and altogether it seems to me to be absolutely outrageous that the ridiculous suggestion contained in the last four lines should be allowed to stand. I think it is absolutely nonsensical.
  There is one other question I should like to put to the noble Lord. As far as I know, the "North of Scotland"
  1302
  refers—geographically at least—to the mainland of Scotland. How does it come about that Orkney and Shetland come under the title "The North of Scotland"?
  LORD HUGHES: My Lords, perhaps I could answer that point quite simply. It has never at any time been suggested that Orkney and Shetland are not part of the Kingdom of Scotland; and as they are the most northerly part of the Kingdom of Scotland, under any sort of logic they must be accepted as being in the North of Scotland.
  LORD STRATHCLYDE: My Lords, the noble Lord may satisfy himself as to that. They may have been part of the Kingdom of Scotland, but in that case why not say so? Certainly geographically they are not part of Scotland. It is only in the last 200 or 300 years that they have come under the Scottish tongue, as the noble Lord knows perfectly well.
  LORD HUGHES: My Lords, that may be, but they are part of the country of Scotland. They are the most northerly part of Scotland, and if at this stage we have to go back a period of 300 years to find reasons for disagreeing with the Commons, we are getting pretty hard pressed.
  LORD STRATHCLYDE: My Lords, my noble friend has already pointed out to the noble Lord that he himself knows quite well why we disagree with these reasons that are before us, and I should not be surprised if, in his heart, the noble Lord sympathises with us.
  LORD HUGHES: My Lords, I answered only that one point. With regard to the reasons to which the noble Lord has referred, I will deal with them when I reply to the debate generally. It seemed to me that this point was so far wide of the mark that it ought not to be allowed to go further.
  LORD STRATHCLYDE: My Lords, I hope the noble Lord will be able to tell us something about these benefits. The Northern Islands may be part of the Kingdom of Scotland, but they are certainly not part of Scotland generally. I agree most strongly with everything that my noble friend has said as to the ridiculous nature of the Reasons which we are given on the paper before us.
  LORD BOOTHBY: My Lords, in reply to my noble friend Lord Dundee, I should like to say that I am not entirely unfamiliar with these regions, because at the age of 23 and in the year 1923 I stood as a Parliamentary candidate for Orkney and Shetland. They made the fatal mistake of not electing me, but I came fairly near it. The noble Lord, Lord Hughes, will no doubt be astonished to hear that I think he is right. I agree with him. I think that uniformity, to a considerable extent, is now necessary in a modern community. It is no good saying any more that Orkney and Shetland are out of reach. It will always be a rough voyage for my noble friend Lord Strathclyde from Scrabster to Kirkwall, because the Pentland Firth is a pretty rough crossing. But one can get aeroplanes from Aberdeen to Wick, and Wick to Kirkwall, and on to the Shetlands. These are pretty quick and pretty good. I think it is a wise thing to consolidate these counties.
  I should like to say one other thing. It is no good telling any Orcadian or any Shetlander that they are not part of Scotland, because they are. They are right in it, and they would not want to be anywhere else. They are Scots and they are proud of being Scottish. There was a claim in Shetland about 500 years ago that they were Danish, but they are much happier being Scotsmen. They are real, good Scotsmen in Orkney and Shetland, and I believe that there will be no difficulty in regard to this. I am in favour of it. I am sorry to go against my noble friend, but I really think this is the right answer to the problem, and I should like to assure my noble friend Lord Hughes of my almost impassioned support.
  BARONESS ELLIOT OF HARWOOD: My Lords, I should not have entered into this discussion in order to prolong it if it had not been for the words of my noble friend Lord Boothby. I know of his interest in Orkney and Shetland, and I know that many years ago he was a candidate for Orkney and Shetland; and so no one could say that he does not know something about them. But he does not live there now. He has nothing to do with local government there, and he does not have the slightest knowledge of what is happening there. He does not know the strong feeling
  1304
  there is. If local government is to be democratic and—as I think the Government are anxious it should be—an effective and strong voice of the views of the people, then there is no doubt at all that as regards Orkney and Shetland and the water supply, they are anxious—that is not a right word; they are really furious at the idea that they will be tied to the mainland, for the excellent reason that it will make everything much more expensive for them.
  LORD BOOTHBY: My Lords, there is nothing about Orkney and Shetland that I do not know.
  BARONESS ELLIOT OF HARWOOD: My Lords, I know that. I have already said that the noble Lord was once, many years ago, a candidate for Orkney and Shetland—
  LORD BOOTHBY: And I have been there since.
  BARONESS ELLIOT OF HARWOOD: No doubt on odd occasions the noble Lord has been there, but we who signed that letter and who have been in discussion with the present Member of Parliament for Orkney and Shetland, Mr. Jo Grimond, know that this is a matter on which they feel passionately. No one can say that there is anyone in the country more aware than Mr. Jo Grimond of what is wanted by his constituents in Orkney and Shetland. He knows that they want their own water supply not tied up to the mainland and therefore made very much more expensive and difficult to organise; and involving the representatives of Orkney and Shetland in having to travel down to the mainland, which they definitely do not want to do.
  I am very surprised at this scheme, as I admire enormously the way in which the noble Lord, Lord Hughes, understands local government in Scotland. He has himself been engaged in it, and indeed was for many years the Lord Provost of Dundee. I am surprised that he has allowed himself to be overruled by colleagues who, from the point of view of tidiness, perhaps, or some other absolutely unnecessary criterion, have persuaded him that it is a good idea to do something in the teeth of the opposition of the elected—and democratically elected—members of, first, the local authorities,

  1305
  and, secondly, the Member of Parliament who represents them in the House of Commons.
  I feel very disappointed because I believe, knowing that Lord Hughes feels very strongly in favour of local government, that he has allowed himself to be overruled by people in interests which are not the interests of Orkney and Shetland. After all, that is what we are interested in—doing something for Orkney and Shetland. In spite of what the noble Lord, Lord Boothby, says, this is not in the interests of Orkney and Shetland. This is in the interests of some centralised authority which wants to make a tidy pattern and bring this matter down into a group which has really no geographical liaison with Orkney and Shetland at all. I oppose this very strongly. We can do nothing to-night. It is the last hour or so of this present term, and there is nothing one can do except protest on behalf of those in Orkney and Shetland who are very much opposed to this arrangement.
  LORD HENLEY: My Lords, I should like to support the noble Earl, Lord Dundee, in what he said. I do not want to review the arguments. They have been gone over very fully, in the other place, and on Second Reading and Committee stage here, and the noble Earl has given them a full covering to-night. The noble Baroness, Lady Elliot of Harwood, says there is nothing we can do except protest, but if the noble Earl were to wish to divide the House on this issue I should be only too delighted to join him.
  LORD FERRIER: My Lords, I had not intended to join in this discussion, because it is four or five years or more since I was in Shetland, but I was provoked by what was said by the noble Lord, Lord Boothby, and the noble Lord, Lord Hughes. Shetlanders do not regard themselves as Scotsmen: they call themselves Shetlanders. They are nearer to Norway than to Aberdeen. I feel that some of the things that have been said here to-night are not correct, and we are fully justified in protesting, as the noble Baroness has done, about this extraordinary move on the part of the Government, which has only one benefit, as I see it; and that is that it
  1306
  will increasingly provoke the dislike of this Government's management of this sort of affair.
  LORD MCCORQUODALE OF NEWTON: My Lords, having some interest in Ross and Cromarty, might I be allowed to ask why Ross and Cromarty were listened to and allowed to opt out of the scheme put up by the Scottish Office, and Orkney and Shetland penalised thereby? Was it for some political reason—possibly, representation; or what other reason? Was it that Orkney and Shetland were thrown over because of the wishes of Ross and Cromarty?
  6.55 p.m.
  LORD HUGHES: My Lords, like the noble Lord, Lord Henley, I do not wish to go again over all the arguments. However, as in another place the Opposition denied to my right honourable friend the Minister of State an opportunity to reply to the debate, and what he said in that debate has been the main theme of the remarks of the noble Earl, Lord Dundee, I think it would be wrong, even at this stage, if I did not take advantage of the opportunity of replying to some of the things which were said—and with complete sincerity: of that I have no doubt—but which are completely misguided and wrongly represent the attitude and the point of view of Her Majesty's Government. In fact, if it were not that I were completely convinced of the sincerity of what has been said by noble Lords opposite, I should not have used the words "wrongly represent": I should have used the word "misrepresent" what the Government have done. But I do not use that word, because it would connote an intention to deceive; and there is no such intention, I know.
  I will refer first to the last point, raised by the noble Lord, Lord McCorquodale of Newton, who asked why Ross and Cromarty were allowed to opt out when Orkney and Shetland were not. This, I think, was the first point on which the noble Earl, Lord Dundee, was not fair to Her Majesty's Government, because he quoted what the Minister of State had arranged at the meeting on March 31. May I remind him of what that arrangement was? If Ross and

  1307
  Cromarty would join with Caithness and Sutherland, and if Orkney and Shetland would join together, the Government would depart from the proposals of the Advisory Committee to that extent. The conditions were never fulfilled, because Ross and Cromarty, which under the Advisory Committee's proposals was to have a separate water board, decided that it did not wish to join with Caithness and Sutherland. There was no question of Ross and Cromarty opting out. Ross and Cromarty elected to adhere to what the Advisory Committee recommended.
  That brings me to the second point of wrong viewing of the Government's attitude. The noble Earl, Lord Dundee, said that the Government had "steamrollered" their proposals through, against the dictates of common sense. One of the things which noble Lords opposite have completely ignored in their argument is what was the origin of this proposal. The Government did not think up the idea of Orkney and Shetland being on their own. The Advisory Committee, which included engineering, financial and legal experts, made a recommendation on the way in which the water services should be organised in Scotland; and the recommendation of that Committee was that Orkney and Shetland and Caithness and Sutherland should form one Board. The Government accepted that recommendation. To talk about the Government's "steamrollering" their proposals through against all the dictates of common sense; to describe the proposals which the Government have accepted as being stupid and devoid of common sense, is not, I would suggest, the best way of getting the free services of professional people on Advisory Committees.
  BARONESS ELLIOT OF HARWOOD: My Lords, may I ask the noble Lord whether, in his experience, the words of Advisory Committees take precedence over those of the elected members for an area such as Orkney and Shetland, who from the very beginning have said, and said unhesitatingly, that they were opposed to this scheme? It seems to me that is a very undemocratic point of view.
  LORD HUGHES: My Lords, I do not think so in the slightest, but I will come to that point. I think the noble Baroness
  1308
  has fallen into a trap of her own creation. I could not understand the arguments of the noble Lord, whom, against all conventions, notwithstanding the rough treatment he gave me to-night, I should like to refer to as my noble friend Lord Strathclyde. He was very hard put to it to argue that at this late stage he has discovered that Orkney and Shetland are not part of the North of Scotland. He is still the Chairman of the North of Scotland Hydro-Electric Board, and if there is any group of people who have made greater claims upon the noble Lord to give them a supply of electricity in the North of Scotland than the people who live in Orkney and Shetland I should like the noble Lord to rise now and name the people who have pressed him more hardly.
  LORD STRATHCLYDE: My Lords, the noble Lord is quite correct. Like everyone else, they want electricity, and they are quite entitled to have it. That is no argument for saying that geographically the North of Scotland includes Orkney and Shetland. The people of Orkney call themselves Orcadians, not Scotsmen, as the noble Lord well knows.
  LORD BOOTHBY: They do not. They call themselves Scotsmen.
  LORD HUGHES: My Lords, in all the years when the noble Lord was denying electricity to some of the people of Orkney and Shetland, he never at any time advanced the argument, "You are outside my bailiwick; you are not in the North of Scotland". If he had thought about that, it might have made life easier for him. The noble Lord was unfair—and this is unusual for him—in one sense. He said that I had advanced only one reason of benefit to Orkney and Shetland, and that I quoted some figures—he knew not where they came from; he knew not how they had been worked out. He implied that in any event he did not believe them and that they were produced at the last minute. I would remind the noble Lord that these figures were given, not as part of the argument which I advanced but in response to a question which he put forward on the subject of cost.
  This brings me to the point of the noble Baroness. She said, without giving any justification for the statement, any

  1309
  more than anyone else did, that it would be more expensive for Orkney and Shetland to have their water in this way than if they were left on their own. The facts do not justify this. Orkney and Shetland will have a cheaper water supply under this scheme than if they had a Board on their own.
  LORD STRATHCLYDE: My Lords, I said that. The noble Lord will agree that I referred to the figures that the noble Lord had given and said that the only benefit was that they would get a cheaper water rate, which they did not want; they would rather be by themselves.
  LORD HUGHES: My Lords, the noble Lord did not quite say that. He said that that was the only reason I advanced, and it was not. I am making it clear that I produced these figures in response to a question which he put on the financial benefits which would accrue. But the financial benefits are not the only benefits, and they were not the benefits which persuaded the Advisory Committee to recommend that there should be a combined Board. The Advisory Committee recommended it on the basis that there would be a better all-round service for Orkney and Shetland as well as for Caithness and Sutherland if there was a Board of this kind.
  The final point is the one which the noble Baroness made and which was the subject of an interjection by her; namely, did I think that the advice of an Advisory Committee was sufficiently strong for the Government to override the democratic views of a local authority and its elected representatives? This happens from time to time. Do noble Lords opposite think that in these proposals which are going through, with this the only Amendment moved against it in your Lordships' House, that every local authority in Scotland which has its own water undertaking at the present time came and volunteered to the Government that they wanted to be part of these water boards? I could name a considerable number of local authorities in Scotland who want to remain on their own. I could start with the City of Edinburgh. Every local authority which thinks that in the first instance its water will be cheaper if it remains on its own than it would be if it joined in, had primary objections to joining. So there were many objections. We do not argue that every
  1310
  local authority which comes into these proposals will immediately have a cheaper water supply. What we do believe is that every local authority, without exception, will in the long run have better and cheaper water supplies than if they remain fragmented in 199 separate water undertakings.
  If we are to accept the point of view that it is a reasonable argument against regionalising water supplies or anything else that the people in a particular area want to do that, why was there only an Amendment for Orkney and Shetland? Why not an Amendment for every small burgh that wanted to remain on its own; for every single county that wanted to remain on its own; for the City of Edinburgh which wanted to remain on its own, and for the county of Kincardine which did not want to be divided between two water boards? These were all things in regard to which the recommendations of the Advisory Committee went against the first choices of the local authorities concerned. But if a country is to progress, it cannot progress on the basis that everybody is going to opt out of what is going to be for the greatest good of all, because they see, either temporarily or permanently, an advantage to themselves. This is what has been sought for the counties of Orkney and Shetland. It is not reasonable that this should be done.
  My final point is that I do not think that noble Lords opposite do a service to Orkney and Shetland—I am most grateful to my noble friend, Lord Boothby, for his intervention on this point—to create the impression that Orkney and Shetland are so remote that you cannot get from Shetland to the mainland of Scotland in less than three days. Orkney and Shetland do expect from time to time to increase their revenue through the tourist trade. I hope that these remarks are not given undue publicity.
  THE EARL OF DUNDEE: My Lords, on that point, nobody said that you cannot get to the mainland. They said that you could not get to Wick in three days, which is a different matter. You have to go to Aberdeen first—
  LORD BOOTHBY: My Lords, that is not true.
  LORD HUGHES: My Lords, that is not the case. The noble Lord, Lord Boothby, drew attention to the fact that there are air services to Wick. I have flown from Wick to Orkney and I have flown from Orkney to Wick, and I do not know—
  THE EARL OF DUNDEE: But not to Shetland.
  LORD HUGHES: But you can go from Shetland to Orkney. You do not need to go from Shetland to Aberdeen in order to get to Wick. I know it is a good thing to exaggerate one's case in order to help it, but it is not going to help Orkney and Shetland to create the impression that the normal journey to Wick takes three days. I will admit that in the worst possible circumstances in the winter this could happen, but it is a less common thing—I think that is the fairest way I can describe it. But to argue the case for legislation of this sort on the basis that it takes three days to get from Shetland to Wick is no service to the Shetland Islands.
  I know that the noble Lord and the noble Baroness speak the truth when they say that these people do not want these proposals. I should be quite wrong if I attempted to dispute that. This is probably the one thing in many years upon which they are united. It has almost united the Orkneys and the Shetlands; I say "almost", because of course they have no enthusiasm for that. But the fact that they are united in something which is wrong is no reason for doing it. This is, therefore, my answer to the noble Baroness: that it is not good democracy to depart from the interests of a large number for the demands, even although it is not for the benefit, of a small number.
  I will close by reminding your Lordships of what the noble Lord, Lord Strathclyde, said when I gave him the financial answer, and the remark which he has repeated tonight: that the people of Orkney and Shetland are saying, "We do not care if it is going to cost us more to be on our own. We want to be on our own." That is the answer to the point which has been made that the Government are thrusting something upon Orkney and Shetland which is not to their benefit. It may not be to their pride, but it will be to their benefit.
  7.9 p.m.
  THE EARL OF DUNDEE: My Lords, if I may, with the leave of the House, say one more word, it is simply that in what the noble Lord, Lord Hughes, has just said, in his winding-up remarks, there is nothing to which I can take exception. He is entirely correct in his account of what happened on March 31. Ross and Cromarty were not opting out of anything; they were merely asked to do something which had not been proposed. What we have objected to is not that they refused to opt out, but that their willingness to come in should have been made a condition for giving Orkney and Shetland a Board which, although it was inconvenient to themselves they agreed to for the sake of uniformity. It was a very flimsy reason for the Government to say they cannot do what Orkney and Shetland want because Ross and Cromarty will not do something which they had not originally been asked to do but were asked to do as a condition of Orkney and Shetland being given independent administration.
  The noble Lord is also correct in saying that the proposal was made by the Advisory Committee. We agree with that and cannot go into that now. We went into it at Committee stage in your Lordships' House, and my noble friend Lord Lothian quoted a very significant passage of a general nature from the report of the Committee which had a bearing on this matter. But it is the Government who must take the responsibility for the particular proposals of the Committee, which I still think, in this instance, were entirely unreasonable and mistaken.
  With regard to my noble friend's question about expense, again I would not dream of going into any criticism of the basis of the figures which the noble Lord, Lord Hughes, gave to my noble friend a few weeks ago. I would only say that, although my noble friend may accept them, the people of Orkney and Shetland do not think they are going to get cheaper water. They may be wrong, but they see that Caithness has the highest water rate in Scotland and they think that their own rates will go up in order to help the rates of Caithness. That is their view.
  We have done our best in this matter. We have given every opportunity to another place to reconsider what we believe

  1313
  to be a thoroughly bad and foolish decision which we bitterly regret. But if we were to insist on this Amendment, we know well that the only result would be that in a few months it would come back again and no difference would be made. We have enabled all reconsideration to be given by another place. Unfortunately the other place has not taken advantage of that. We can do no more than say that we have done everything which is constitutionally practicable to achieve common sense and we bitterly regret the decision of the Government and of the other place.
  On Question, Motion agreed to.

GIBRALTAR: REFERENDUM AND FINANCIAL AID
7.15 p.m.
LORD MERRIVALE LORD MERRIVALE rose to ask Her Majesty's Government whether they would be prepared to review the financial aid given and state the support proposed if the majority of the people of Gibraltar vote in the Referendum to retain the link with Britain, in view of the changed circumstances which could arise out of the threatening implications of the aidemémoire of the Spanish Government to the British Government on 3rd July 1967, and given the present critical circumstances of Gibraltar whether they would not agree that the constitutional discussions which are proposed with their representatives should be of a wider nature than would appear intended. The noble Lord said: As Spain is increasingly moving along the cruel path of demoralisation with regard to the community of Gibraltar, I trust your Lordships will agree that it is right that, on this last occasion, we should discuss the matter before the Referendum, some of their problems should be aired this evening and that certain assurances should be sought from Her Majesty's Government.
The noble Lord, Lord Beswick, will be aware that on July 3 this year the Spanish Government in their aide-mémoire rejected the Government's proposal of June 14 last to hold a Referendum in Gibraltar in September. If I may paraphrase some remarks in the aide-mémoire, it went on to say that should the British Government persist in this decision the Spanish Government will feel itself without any further obligation
1314
towards Gibraltar. I should have thought that that was a threat in anybody's understanding. Therefore, I plead with the noble Lord to give a categorical assurance that Britain is prepared to guarantee an injection of capital aid which will ensure that Gibraltar can remain economically independent of Spain if the majority of the people of Gibraltar vote in the referendum to retain the link with Britain, should Spain—and I stress the word "should"—increase the pressure. I am not asking that the Minister should give an assurance that there should be a review of financial aid if the people of Gibraltar vote for retaining the link with Britain, but only if Spain increases the pressure as a result of the Referendum, thus occasioning further economic difficulties for Gibraltar. The noble Lord will be well aware that over the past few months, and even past years, Spain has constantly been increasing its strangulation of Gibraltar both from an economic point of view and from the aspect of communication with the outside world.
If we may consider the statement which the noble Lord, Lord Beswick, made on April 13 last to the effect that on the previous day an order had been published in Madrid establishing a zone in the immediate vicinity of Gibraltar in which all flying would be prohibited, that order in Madrid has made investors outside Gibraltar very loath to invest there. This restriction has also been responsible for the suspension of the development project planned by Messrs. Hood's of Wolverhampton. This project, as mentioned in the Financial Times of October 28 last year, as part of the gradual disengagement of the Rock's economy from Spain, was for a scheme costing over £1 million to form a little Gibraltar Riviera, including the construction of 100 chalets to be let to tourists. I am not saying anything new when I say that Gibraltar needs tourists as well as it needs more hotels. But not only has all residential development been halted by these Spanish restrictions upon overflying and so on, but so has hotel development been halted. I understand that £300,000 has been earmarked—I should like to say "allotted"—by Her Majesty's Government for capital development, and I believe that sum is mainly for hotel construction. Under present conditions this is a totally inadequate amount.
Therefore, I would ask the Minister, in view of the special circumstances prevailing in Gibraltar, to give very careful consideration to subsidising hotel construction on the Rock on a larger scale than is at present envisaged. I am asking for this on account of the present economic difficulties of Gibraltar. In other words, I ask Her Majesty's Government favourably to consider increasing the percentage of Government money which is to be provided for the development of hotels. I ask this since I believe that such a percentage increase would make a considerable difference in attracting the right sort of developer. Therefore, I was surprised and disappointed to read in Hansard of another place on July 25 this year a Government statement to the effect that Her Majesty's Government had allocated £600,000 to enable a start to be made on an expanded development programme up to 1970, as laid out in the Government of Gibraltar plan. But that is the same £600,000 which was mentioned by the Colonial Secretary Mr. Fred Lee on November 3 last year.
But—and this is the important point—since the statement of November 3 conditions have changed, and they have changed to the detriment of Gibraltar, particularly since the overflying ban by the Spanish Government. As I understand it, this amount of £600,000, like the £300,000 which I mentioned earlier, is to come out of the £2,500,000 which is the total amount to be provided for the expanded development programme. It seems that under the conditions at present prevailing in Gibraltar, Her Majesty's Government should raise their sights a little and possibly consider increasing the amount, which is to be spread over the period to 1970, from £2,500,000 to £3 million.
As I said earlier—and I would stress this—development is halted on account of the latest Spanish air traffic restrictions. In this context of a higher percentage of Government funds being provided for desirable development, and with a view to assisting it, I should like to ask the noble Lord whether consideration could be given to speeding up the relinquishing of some Ministry of Defence land on the western side, so that it could be developed to provide a strong tourist attraction.
As the Spanish aide mémoire states that holding a Referendum is contrary to the wishes of the United Nations (this is the Spanish point of view, and not my point of view or that of Her Majesty's Government) can the noble Lord say whether the very reasonable suggestion by the noble Lord, Lord Rowley, last week, that the United Nations Secretary-General should send a representative during the Referendum, has been implemented, and whether a reply has been received from the Secretary-General?
Various rumours are going round Gibraltar at the moment, and these have been mentioned in the local Press; for instance, that the Spanish labour force employed in the docks will be withdrawn after the Referendum; and that the Algeciras-Gibraltar ferry will no longer call at Gibraltar. Finally—I do not think this is a rumour, but it is a worrying thought which should be most carefully considered by Her Majesty's Government, because it fits into the Spanish pattern of slow strangulation of Gibraltar and its economy—there is the question of Spanish interference with the boundaries of Gibraltar's territorial waters. Therefore, will the Minister give a categorical assurance that Her Majesty's Government will not tolerate in the future any hindrance of free access by sea to the port and harbour of Gibraltar?
Access by air is already hindered by the air traffic restrictions and by crosswinds. For instance, on account of these crosswinds B.E.A. flights on June 10, July 8 and July 15 this year were diverted to Tangier, Malaga and Tangier respectively. Is it not feasible to believe that this coming winter, when Tangier airport is closed at night, the Spanish Government may endeavour, by a tightening up of the air traffic restrictions, to force diverted aircraft to land in Spain at Malaga? In other words, we could be playing into Spanish hands.
Regarding the need to maintain effectively and even to develop existing communications to and from Gibraltar, which are so essential to the Rock's survival, to the strengthening of its economy and to its development as a tourist centre, I should like to refer again to a point which I made on March 9, 1966. I should add that this suggestion has the wholehearted backing of the

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Gibraltar chamber of commerce, as well as of the members of the United Kingdom Mission of the Federation of Commonwealth Chambers of Commerce when they went out to Gibraltar; namely, the idea of some air link with Portugal.
As the noble Lord will no doubt be aware, trade is building up between Gibraltar and Portugal. Such an air link would be an added facility for tourists to visit the Rock and also to visit Portugal. On March 9 of last year, the noble Lord, Lord Walston, at column 1205 of Hansard said:
"British European Airways is an independent Corporation, and it is for the Corporation to fly where it considers its duties and its financial profit is likely to take it."
Might I respectfully ask the noble Lord, Lord Beswick, whether a different yardstick could not be applied in the very special circumstances existing in Gibraltar? The link for which I am asking is more than just a service for purely social reasons or reasons of profitability. I believe this to be a means of opposing the stranglehold of Spain.
As B.E.A. would have to make an application to the Air Transport Licensing Board before the Board of Trade could apply to the Portuguese authorities, would the noble Lord consider taking the initiative with B.E.A. in this matter? On March 9, 1966, the noble Lord, Lord Walston, said that perhaps my remarks would be considered by B.E.A. Maybe they have been but, so far as I know, no action has yet been taken in this matter. Perhaps the noble Lord, Lord Beswick, would be willing to see whether Her Majesty's Government could take some initiative in this circumstance. This could be either a London-Gibraltar service, calling at Lisbon in both directions, or an extension of the London-Faro service, going on to Gibraltar, or purely a Gibraltar-Faro service.
Finally, I should like to turn to the last part of my Question. On July 19 the noble Lord, Lord Beswick, said:
"I do not think that such an exceptional arrangement "—
he meant a Round Table Conference—
"would be suitable or necessary in the present circumstances of Gibraltar."—[OFFICIAL REPORT, col. 254.]
What I am asking Her Majesty's Government to do is to consider to-day that
1318
after the Referendum there should be some form of discussions, which would be a reflection of, or would give effect to, the present feelings of every Gibraltarian; in other words, that both the political and economic aspects of their situation should be considered, for they are uppermost in their minds at the moment.
The decision which the people of Gibraltar will be asked to take in September is a political decision, which must of necessity have economic repercussions. The noble Lord, Lord Beswick, said last week that the Government envisage that the discussions will be held in Gibraltar. Are the Government proposing to send someone of the calibre of Sir Hilary Blood, or some Government nominee? I imagine that I am right in assuming that a constitutional conference, as such, is not proposed, for I presume that would be held in London. In order to allay the fears of some Gibraltarians who feel that a Government nominee's report would facilitate arbitrary decisions being taken by Her Majesty's Government, with no opportunity for consideration, debate or amendment by Parliament, would the noble Lord reconsider his previous statement on this matter? For if the people of Gibraltar vote for retaining their link with this country, surely that will entail recognition by Her Majesty's Government that the 1964 Constitution Order should be looked at again in the light of present economic conditions and restrictions.
My Lords, surely members of a Round Table Conference could look closely at and report on all these aspects. Most of the terms of reference of the Malta Round Table Conference would, it seems to me, be appropriate. They could, for instance, be amended as follows:
"To consider constitutional and related questions arising out of a majority decision for a free and voluntary relationship between Gibraltar and the United Kingdom; to consult representatives of all shades of political opinion and such other persons as may seem fit to them; to report their conclusions and recommendations."
My Lords, if the noble Lord looks at the report of the Malta Round Table Conference he will see that economic development in this case is related to constitutional changes, and I should have thought this applies perfectly in the situation that

1319
will arise after the Referendum in Gibraltar. I cannot see why the noble Lord will not admit that there might be, that there could be, or that there is a relationship such as I have said.
In conclusion, wider-based discussions would surely give the required flexibility, and I would plead with the noble Lord to give some encouragement this evening to the people of Gibraltar, so that they may be assured that if they vote for retaining their link with this country, and if, because of this, Spain increases its pressure, Her Majesty's Government will take the necessary steps to safeguard their economic future.
LORD GRANTCHESTER: My Lords, before the Minister replies, may I ask him if he would say whether the meetings between Her Majesty's Government and the Government of Spain have come to a complete end, or deadlock?
7.34 p.m.
LORD BESWICK: My Lords, first of all, may I say that we must all admire the persistent way in which the noble Lord, Lord Merrivale, represents the viewpoint of some of the people of Gibraltar in this House. He has put forward a number of questions this evening, and, quite frankly, I cannot answer all the detailed questions which he has put to me. I have not had notice of all he was going to say; but I will undertake to look at what he has said and I will write to him further if I cannot answer all his points. The noble Lord, Lord Grantchester, asked me about the position with regard to Spain. There is at the moment (shall I call it?) a pause. Each side, I suspect, is waiting for the other to make another move. So far as the particular discussion about the air space is concerned, that is a matter which is being referred to the International Civil Aviation Organisation at Montreal.
The noble Lord, Lord Merrivale, himself put questions which fall into two parts, economic and constitutional, and I should like first to deal with the economic. Let me first say to him—and I say it in, I hope, a friendly way—that I think he would not be doing the people of Gibraltar a service if he allowed the impression to grow that they were becoming disturbed by Spanish propaganda and were in doubt about the validity of the assurances of support for Gibraltar which
1320
Her Majesty's Government have given. We have made our position regarding aid and support for Gibraltar perfectly explicit. I add only that assurances are rather like paper currency: if they are issued in too great a volume they are devalued. Moreover, it would be a mistake to overstate the vulnerability of the economy of Gibraltar.
The bread and butter of Gibraltar is the naval dockyard, as the noble Lord knows, and the activities of the Service Departments. These provide about 60 per cent. of the national income of Gibraltar. The Gibraltar Government's Development Plan for the years 1967–70 is primarily devoted to the maintenance of the dockyard and other key industries at the present level by ensuring an adequate supply of skilled labour. It provides for the building of houses, of which about 50 a year will be available for skilled immigrants to take the place of Spanish men in key posts who are lost by natural wastage. Our military activities in Gibraltar are not vulnerable to Spanish action.
The second main source of income, as the noble Lord himself indicated, is the tourist industry, and there is hope that a thriving industry, based more on holidays within Gibraltar and less on transit visitors, can be developed. The Gibraltar Development Plan acknowledges this. It includes expenditure of nearly £250,000 on improvements to the amenities, and some of these improvements are already under way, financed by Colonial Development and Welfare grants. It is also the Gibraltar Government's intention to stimulate private investment, not merely by the recently introduced taxation concessions to private investors but by Government expenditure to assist the private sector, especially in the hotel field. Over £300,000 has been earmarked by the Government for this purpose.
LORD MERRIVALE: My Lords, may I interrupt the noble Lord a moment? I understood it was £300,000, and the noble Lord says it is over £300,000. That is encouraging. To what extent is it over the £300,000? Because, as I mentioned, the £300,000 is not sufficient at the moment.
LORD BESWICK: I would rather leave it at that figure. Obviously, I do not think that it is a very large amount over that £300,000.

1321
Despite what the noble Lord says about the recent discouragement, although the number of tourists entering Gibraltar is falling the time they spend in Gibraltar is not. The length of time spent by tourists in Gibraltar is increasing as holiday habits change. The number is still low and the amount of time they spend is still too low—it is between two and three nights each on average, as I understand it—but this can be further increased as the awareness of what Gibraltar has to offer is increased and the improvement in facilities begins to show. Many things could be done to increase the tourist industry in Gibraltar, and it was for this reason that the Gibraltar Government, financed by our own Ministry of Overseas Development, recently appointed a Director of Tourism. Mr. Scrace has now taken up his appointment, and results will no doubt soon begin to show.
I should mention the aid we have already given or promised. Gibraltar is by no means bankrupt, and our only support for the budget has been two special grants, in 1965 and 1967, of £100,000 each, to help with special expenditures arising out of the Spanish measures. Our capital assistance has been a £1,000,000 allocation of grant money for the years 1965–68, and an Exchequer Loan of £200,000, which the Gibraltar Government intend to use to finance the extension of their public utilities. More recently, the Gibraltar Government prepared their supplementary development plan for the four years 1967–70, which envisaged a total expenditure of £3,871,000, of which £2,500,000 would require finance by other means than loans. The then Colonial Secretary announced in November, 1966, as the noble Lord said, that the British Government supported the general objectives of the plan, and allocated £600,000 to enable a start to be made on it.
On October 31 the Foreign Secretary said in another place:
"Let me therefore make it quite clear that it remains the firm intention of Her Majesty's Government to sustain Gibraltar in her present difficulties, and if we think that further financial aid is needed for that purpose we will provide it".
This is a pledge that we are carrying out in practice.
The noble Lord referred to the threatening implications of the Spanish Government's
1322
aide-mémoire of July 3. I suppose he was alluding in particular to the final paragraph, which said, in translation:
"If Her Majesty's Government proceed with their unilateral decision of 14th June, 1967, they will have embarked on a course contrary to that indicated by the United Nations, with all the consequences which that entails. The Spanish Government will then be under no obligation towards Gibraltar, for Great Britain will have violated Article X of the Treaty of Utrecht and the question of sovereignty will have been reopened."
Her Majesty's Government will, of course, make their views known on the Spanish aide-ménoire through diplomatic channels in the usual way. It would not be appropriate for me now to suggest what the implications of this passage may be. Whatever they may be, however, there is no need or justification for my adding to what my right honourable friend the Foreign Secretary said last October about supporting the people of Gibraltar.
It would not be profitable for me to speculate on the possible scope or effect of any measures which the Spanish authorities might see fit to take with the aim of inconveniencing Gibraltar and damaging its economy if a majority of the people of Gibraltar vote in the Referendum for retaining their links with Britain. If the economy of Gibraltar were to suffer further restrictions, we should then confront a new situation which Her Majesty's Government would then consider, in close consultation, as is customary, with the Government of Gibraltar.
The noble Lord asked questions about the constitutional aspect. To put the matter into perspective I might remind the House of the terms of the Statement regarding the Referendum which was made here on June 14. It included the following words. It said that if the majority of the people of Gibraltar voted
"to retain their link with Britain with democratic local institutions and with Britain retaining its present responsibilities … we will regard this choice as constituting in the circumstances of Gibraltar a free and voluntary relationship of the people of Gibraltar with Britain. We will thereafter discuss with representatives of the people of Gibraltar appropriate constitutional change which may be desired."

1323
I said, "with representatives of the people of Gibraltar". I made it clear then, and I do so again, that that would include representatives of all shades of opinion in Gibraltar. I do not believe, and I said this at the time to the noble Lord, that a round table conference in this case is the right way of going about things. The Malta Round Table Conference was a special conference held to meet the exceptional circumstances of Malta arising from the proposal that Malta should be integrated with the United Kingdom and represented here in Parliament at Westminster. The Round Table Conference with members of all Parties was in that circumstance thought to be appropriate to that particular situation. The case of Gibraltar is different. Frankly, we do not see any necessity to widen the nature of these discussions. They are wide enough to cover all the needs of the situation.
LORD MERRIVALE: The economic needs too?
LORD BESWICK: All the needs of the situation. If I were the noble Lord I should read that in conjunction with the assurance given by my right honourable friend the Foreign Secretary. I was asked a specific question about lands held by the Ministry of Defence and the possibility of making them over for tourist purposes. The fact is that we have had no specific requests by the Gibraltar Government for the release of these lands: but if a request were made we should, of course, consider it.
LORD MERRIVALE: My Lords, they cannot make a request because all development has been halted on account of the air ban restriction.
LORD BESWICK: The noble Lord asked me if it would be possible for the land to be made available. What I said is that if such a request were made it would be considered. He asked a number of questions about air links. I cannot answer them "off the cuff". I will look into these matters. Finally may I say that the people of Gibraltar themselves, and the Legislative Council, as the noble Lord knows, have welcomed the holding of these constitutional discussions, and I should have thought we must now await
1324
the Referendum and its results, and then ensure the most fruitful constitutional discussions.

ROYAL ASSENT
7.45 p.m.
THE LORD CHANCELLOR: My Lords, I have to notify the House that, in accordance with the Royal Assent Act 1967, the Queen has signified Her Royal Assent to the following Acts:

Appropriation,

Sexual Offences,

Public Works Loans,

Post Office (Data Processing Service),

Bermuda Constitution,

Anchors and Chain Cables,

Antarctic Treaty,

Welsh Language,

Irish Sailors and Soldiers Land Trust,

Fugitive Offenders,

Civic Amenities,

Road Traffic (Amendment),

Aden, Perim and Kuria Muria Islands,

Wireless Telegraphy,

National Insurance,

Greenwich Hospital,

Matrimonial Homes,

Road Traffic Regulation,

Police (Scotland),

Water (Scotland),

Road Traffic (Driving Instruction),

Criminal Justice,

Companies,

Ministry of Housing and Local Government Provisional Order Confirmation (Greater London Parks and Open Spaces),

British Railways,

British Transport Docks,

Port of London,

Kingston upon Hull Corporation,

Rhymney Valley Sewerage Board,

Somerset County Council,

Portsmouth Corporation,

Dartford Tunnel,

Essex County Council (Canvey Island Approaches, etc.),

London Transport,

Manchester Corporation.

PRESERVATION OF HISTORIC BUILDINGS
7.47 p.m.
BARONESS PLUMMER BARONESS PLUMMER rose to ask Her Majesty's Government whether they are yet in a position to say what provision will be made in the Town and Country Planning Bill for the preservation of places of historic or architectural interest, and whether they will make a Statement. The noble Baroness said: My Lords, I beg to ask the Question standing in my name on the Order Paper. Would my noble friend agree how real is the importance and beauty of our historic town and countryside houses and the part they play in tourist attraction? Is he also aware of the growing concern over the loss of listed buildings every year?—reminding him of his statement last summer that listed buildings were being lost at the rate of 400 a year. The recent Civic Amenities Bill binds local authorities to designate conservation areas and attend to the preservation and enhancement of their character in exercising their planning functions, and it also gives local authorities power to purchase a house for preservation purposes and to carry out emergency repairs at their own expense to unoccupied houses.
I see from the recent White Paper on Town and Country Planning that further provisions for the protection of buildings of historic and architectural interest will be announced later and will be included in the Town and Country Planning Bill. Has my noble friend any news of these? Much has already been done, and this country, happily, is not among the laggards in protecting its architectural heritage; but we are still very conscious of the fact that fine old houses and fine old towns are going all the time and that so much more remains to be done.
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, I am grateful to the noble Baroness for asking this Question at this moment—the very last item of business, not on the last day of the Session but on the last day before the holidays. I entirely agree with the noble Lady about the importance of the matters comprehended in her Question and would confirm that the Government welcome the
1326
changes proposed in Part I of the Civic Amenities Act which was recently before your Lordships' House and has received the Royal Assent, as my noble and learned friend the Lord Chancellor has just told us, to-day. My right honourable friend the Minister of Housing and Local Government, in conjunction with the Secretary of State for Wales, will shortly be communicating with local authorities about the implementation of the Bill, and I hope that the Government and local authorities will, together, be able to move in this way towards a steady improvement in the arrangements for preserving this part of our heritage.
At the same time, as the White Paper on Town and Country Planning indicated, we believe that some further strengthening is needed in the law. The basis on which the protection of historic buildings rests is, of course, the statutory lists prepared by the Ministry of Housing and Local Government of buildings of special architectural or historic interest. It has been, as your Lordships know, an immense task which has taken very many years to complete, but we have recently made a great effort to speed things up—and with some success. At the end of 1964 25 per cent. of the local authority areas had not got their statutory lists. To-day there are fewer than 4 per cent. who have not, and I am able to say with some confidence that the issue of statutory lists covering the whole of England will have been virtually completed by the end of this year. The lists include more than 100,000 buldings, apart from the supplementary lists, which do not have statutory force but cover approximately another 100,000. The process of listing can, however, never be finished because we must constantly be revising the lists to keep them up to date with physical changes and changes in public taste.
My Lords, the noble Baroness asked specifically whether there was yet news of the Planning Bill, as the White Paper on Town and Country Planning said there would be. I am now in a position to announce that the Government intend to make five changes in the law concerning the preservation of listed buildings. They are as follows. First: At present, anyone who wants to demolish or alter a listed building has to give six months' notice of

1327
his intention to the local authority. If the local authority does not put on a building preservation order and get it confirmed by the Minister in that time, he is free to go ahead. If the local authority does put on a building preservation order, the owner of the building may appeal against it to the Minister; and even if he does not appeal against it to the Minister the latter must specifically confirm it. In either of these cases the Minister often has to set up a local inquiry to go into objections. When a building preservation order is confirmed it does not mean that it is impossible to demolish or alter that building; it simply means that the owner must have express permission to do so. For this permission he can apply to the local authority, and, if it is refused he can again appeal to the Minister, in which case there may be a second local inquiry. So it can happen that there are two local inquiries going into exactly the same case.
This is a cumbrous procedure and the Government propose to simplify it by running the two stages into one. The Town and Country Planning Bill, which it is my right honourable friend's intention to introduce, will provide that the mere fact of listing will have the same effect as a building preservation order does at present; that is to say, anyone wishing to demolish or alter a listed building must apply to the local authority for express permission to do so, and, if he is refused it, may appeal to the Minister. This reform will eliminate a great deal of time-wasting, expense and confusion, and will provide more effective control.
Second: The main cause of the loss of listed buildings is decay, and in some cases (about which there has been publicity recently) the decay has been not unwelcome to the owner of the listed building, who wanted nothing so much as to demolish it and develop the site. At present, if the owner of a listed building wilfully damages it in such a way as to accelerate decay—for instance by removing a tile from the roof, so letting the rain in—local authorities already have the power to make him reinstate
1328
the damage. But if he just stands aside and lets the wind blow the tile off, the local authority has no power to make him replace it. Subject to detailed consultations which are still going on, it is my right honourable friend's intention to give local authorities that power. It will enable them to require the owner of a listed building to carry out specified repair works within a specified time, and if he does not, to do the work themselves and recover the cost from the owner. There will be provisions for appeal against the exercise of these powers—for instance, if the owner claims that he cannot afford it, or that the works required go beyond the simple purpose of preserving the building.
Third: At present it is possible for local opinion to be unaware, until it is too late to make representations, that there is a proposal to demolish, or alter, a listed building. This may be preventing the growth of an informed interest in the amenities of our towns and villages so the Government will provide that a local authority which receives such a proposal must advertise it in the local Press.
Fourth: Is an administrative reform to speed up the listing process itself. It is that the responsibility for transmitting the notice of listing to the owner of a property should be transferred from the Minister to the local authority.
Fifth: For unavoidable reasons a few listed buildings must continue to be demolished, and it is proposed to provide that the owner in such cases must allow the recording of the building before it is demolished.
My Lords, the Government have had evidence that willing buyers of listed buildings sometimes arrive just too late to save them. We are therefore considering what machinery can best be provided to remedy this situation. My right honourable friend, the Secretary of State for Scotland will be consulting in due course the local authority associations and other bodies concerned in Scotland, with a view to including similar provisions in the new Scottish planning legislation foreshadowed in the White Paper.

  DISQUALIFICATIONS OF COMPANY DIRECTORS
  DISQUALIFICATIONS OF COMPANY DIRECTORS
  INDONESIA AND FAR EAST FORCES' NUMBERS
  INDONESIA AND FAR EAST FORCES' NUMBERS
  THE YEMEN: EGYPTIAN USE OF POISON GAS
  THE YEMEN: EGYPTIAN USE OF POISON GAS
  SCOTTISH ROADS: A92 AND A94 TRAFFIC FIGURES
  SCOTTISH ROADS: A92 AND A94 TRAFFIC FIGURES
  COMPUTERS AND STATE'S CASH DEALINGS
  COMPUTERS AND STATE'S CASH DEALINGS
  WEST LONDON AIR TERMINAL
  WEST LONDON AIR TERMINAL