Sitting of 9 May 1967

Preamble
The House met at half-past Two o'clock
PRIVATE BUSINESS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  GREATER LONDON COUNCIL (MONEY) (NO. 2) BILL
  Read the Third time and passed.
  NEWCASTLE-UNDER-LYME BURGESSES' LANDS BILL [Lords]
  Read the Third time and passed, without Amendment.

  PORT OF LONDON BILL
  [Queen's Consent, on behalf of the Crown, signified.]
  Bill read the Third time and passed.

  BATH UNIVERSITY OF TECHNOLOGY BILL [Lords]
  Read the Third time and passed, without Amendment.
  UNIVERSITY OF ASTON IN BIRMINGHAM s BILL
  Read the Third time and passed.
  LONDON TRANSPORT (NO. 2) BILL
  As amended, considered; to be read the Third time.
  SAINT STEPHEN, SOUTH LAMBETH BILL [Lords]
  Read a Second time and committed.

  EAST KILBRIDE BURGH BILL
  Standing Order 208 (Notice of Consideration of Lords Amendments) suspended.
  Lords Amendment to the Bill to be considered forthwith.—[The Chairman of Ways and Means.]
  Lords Amendment considered accordingly and agreed to.

STANDING ORDERS (PRIVATE BUSINESS)
The Chairman of Ways and Means:I beg to move,
That the Amendment to Standing Orders relating to Private Business set out in the following Schedule be made:—

STANDING ORDERS (PRIVATE BUSINESS)

  SCHEDULE
  Standing Order 242, line 20, at end add 'but only if objection to locus standi or such rights has been made in a memorial duly deposited as aforesaid'.
  This Amendment is designed to meet certain misgivings felt by Members of all parties on both sides of the House. It simplifies the procedure for bodies such as amenity societies to petition against Special Procedural Orders. It will bring the procedure on such Orders into line with the practice on Private Bills, and I commend it to the House.
  Hon. Members: Object.
  Deferred till Thursday, 11th May.

ORAL ANSWERS TO QUESTIONS
  MINISTRY OF POWER

    National Coal Board (Brickworks)
    Mr. Patrick Jenkinasked the Minister of Power whether he will give general directions to the nationalised industries for which he is responsible that when charging depreciation on assets used in diversification activities they shall ignore any relief from capital liabilities conferred by Statute unless such relief shall have been expressly related to such diversification activities.
    The Minister of Power (Mr. Richard Marsh): No, Sir. The point is applicable only to the N.C.B. and I prefer to rest on the guidance given in Cmnd. 2805 and my control over withdrawals from the N.C.B.s Reserve Fund.
    Mr. Jenkin: Is the Minister aware that although the book value of the National Coal Board brickworks assets increased by over £1,250,000 between March 1965 and March 1966, the amount of depreciation charged in that year was exactly the same as in the year before? If this was due to the fact that Parliament wrote off part of the long-term debt of the National Coal Board, is this not a grossly unfair form of trading with private brickworks, many of whom were losing money in this period?
    Mr. Marsh: No. The position is quite clear. The Government's intentions in this respect were quite clearly explained in the White Paper on the Finances of the Coal Industry. I have not received any proposals for writing down the Board's brickworks assets and, if I did, I would consider them on their merits.
    Mr. Ridleyasked the Minister of Power if he will give a general direction to the National Coal Board to pay interest on the full amount of capital invested in their brickworks division.
    The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): No, Sir. The Board pays interest on borrowings as a whole and the apportionment of interest to different activities in its accounts is a matter for the Board.
    Mr. Ridley: Since the Minister has just admitted that a reduction was made in the capital applicable to the brickworks division of the National Coal Board—because this House wrote off a large slice of Coal Board capital—is this not the most unfair form of competition that there could possibly be between private and public enterprises in the same sphere? Will the hon. Gentleman give an undertaking that he will set up an inquiry into this scandalous procedure?
    Mr. Freeson: No, Sir. I do not consider the position to be scandalous, and I do not think that there is any need for an inquiry to be set up by my right hon. Friend. As I have already indicated, the apportionment of the Board's total interest liability is an accounting matter for the Board and its auditors.
    Mr. Patrick Jenkin: Does this not conflict with every undertaking that the Minister has given about fair competition with private enterprise if these diversified
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    activities are to have their capital written off in this way?
    Mr. Freeson: The answer is "No Sir", it does not conflict. [HON. MEMBERS: "Of course it does."] The Minister has control, and maintains control over the capital investment programme.
    Mr. Biffenasked the Minister of Power what changes have taken place in the interest liabilities of the National Coal Board brickworks division since 1964–65; if he is satisfied that the present capital structure of the brickworks division properly reflects the capital assets; and if he will make a statement.
    Mr. Freeson: I would again refer the hon. Member to the information given to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) on 4th April, which included details, extracted from the Board's accounts, of capital employed in the brickworks division.—[Vol. 744, col. 2.]
    Mr. Biffen: But, in view of the indifferent commercial record and reputation of the brickworks division of the National Coal Board, would the hon. Gentleman realise that the kind of fudging which this afternoon's Answers indicate has taken place in the accounts will cause grave disquiet throughout the country?
    Mr. Freeson: I do not accept for one moment that there is any impropriety in the figures appearing in the accounts of the National Coal Board. As I indicated on a previous occasion, it would be wrong for Members to deal only with two years' accounting. The brickworks of the National Coal Board make an important contribution to that industry in this country.
    Mr. Ridley: Is the hon. Gentleman aware that on 1st November his predecessor gave an undertaking that he would stick to rules laid down by the C.B.I. for fair competition between public and private enterprise? He has broken that undertaking. What does he intend to do about it?
    Mr. Freeson: No undertaking has been broken.
    Mr. Alisonasked the Minister of Power whether he will give a general direction to the National Coal Board, in the national interest, to cause its brickworks to use the cheapest available fuel for firing.
    Mr. Freeson: No, Sir. I would refer the hon. Member to the reply I gave to the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) on 25th April.—[Vol. 745, col. 257.]
    Mr. Alison: Would the hon. Gentleman ask his right hon. Friend, whom it would have been slightly quicker to have had answer the Question himself, whether he will give a general direction that if the Coal Board acquires new brickworks in future from the private sector if will not spend public money converting oil-firing to coal-firing?
    Mr. Freeson: I am not aware of the conversion to which the hon. Gentleman referred latterly, but I would expect the Board to bear in mind all considerations when coming to decisions on matters of this kind.
    Mr. J. H. Osbomasked the Minister of Power to what financial disciplines Her Majesty's Government expect the National Coal Board to adhere in the operation of their brickworks division.
    Mr. Freeson: I would refer the hon. Member to the reply I gave to the hon. Member for Oswestry (Mr. Biffen) on 12th April.—[Vol. 744, col. 276.]
    Mr. Osborn: Is it not true that in fact the target is about 14 per cent. and that performance has been ridiculously below this? Is not that an unsatisfactory reply to give to an intelligent and piercing Question at this time?
    Mr. Freeson: I do not think that it is unsatisfactory. The previous reply referred to is on the record. Brickmaking is a long-established ancillary activity of the industry and, as with other nationalised industries, the Board has a statutory obligation to keep accounts in a form which conforms to the best commercial practice.
    Sir T. Beamish: What sense does it make to subsidise these brickworks when dozens of private enterprise brickworks have been forced out of business by Government policy, thousands of men are on short time, and there is a colossal stock of bricks which nobody can sell?
    Mr. Freeson: The Government are not subsidising the brickworks of the National Coal Board. As I said in reply to the previous question, it would be wrong to judge the industry's activities in this field on the basis or one or even two years'
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    experience. We must look at it over a period of time.
    Mr. J. H. Osbornasked the Minister of Power what was the budgeted rate of return on capital employed, forecast by the National Coal Board, when they applied for approval of an investment of £1 in the Desford brickmaking plant.
    Mr. Freeson: It is not the practice of the National Coal Board to publish either forecasts or results for its individual units, whether they are mines, opencast sites, manufactured fuel plants or brickworks.
    Mr. Osborn: Should it not be the practice of the National Coal Board to give such information? Is it not true that when purchased this company was operating at a loss, and is continuing to do so?
    Mr. Freeson: This restriction on the provision of detailed financial information of the kind suggested is a common practice in industry, private as well as public.

    Gasholders
    Mr. Ronald Bellasked the Minister of Power what is the approximate number of sites in England at present occupied by gas boards on which a gas board could, without planning permission specifically given under the Town and Country Planning Act, 1962, erect a gasholders more than 50 feet high; whether he will introduce legislation requiring specific planning permission for all structures over 50 feet high by gas boards; and whether he will make a statement.
    Mr. Freeson: About 600, many of them fully occupied already by plant and buildings. As to the second and third parts of the Question, I would refer the hon. Member to the reply given by my right hon. Friend the Minister of State for Housing and Local Government to the hon. Member for Poole (Mr. Murton) on 27th April.—[Vol. 745, c. 344.]
    Mr. Bell: Is the hon. Gentleman aware that the figure of 600 is a little alarming for those who are aware of what has happened recently in Oxfordshire and Buckinghamshire and that the Answer to which he refers said that the matter was being looked into? In view of the technical developments in the storage of gas which the North Thames Gas Board tells me mean that it will not

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    need a gasholder above ground in its present programme up to 1971, would he agree that building a gasholder above ground must be an exceptional procedure for which there should be specific planning permission?
    Mr. Freeson: The question of planning permission is for review by the Ministry of Housing and Local Government. We will consult that Ministry in so far as the Ministry of Power is drawn in on such matters. On the question of technological developments, it is true that the number of low pressure gasholders which will need to be built will be reduced, but there will still be a need for some holders in different parts of the country.
    Mr. Neaveasked the Minister of Power if he will give a general direction to area gas boards not to erect new gas holders until legislation, under which statutory undertakings may claim compensation from planning authorities, has been reviewed.
    Mr. Freeson: No, Sir. This would not be appropriate.
    Mr. Neave: As the hon. Gentleman is very well versed in the case of Abingdon, would he not agree that the present law is most unsatisfactory with regard to compensation? Would it not be better to stop building all new gasholders and introduce early legislation?
    Mr. Freeson: As the hon. Gentleman knows, I have a great deal of sympathy with some of the feelings expressed, but there are two points of view on what has happened in Abingdon, with which he has been closely concerned recently. It would not be appropriate to stop the building of all gasholders at this stage, because some will be needed between now and the time when there may be a reduction in their requirements with the development of North Sea gas. Planning law review is a matter for the Minister of Housing and not for my Department, although, if it touches on our field, we shall be consulted.
    Mr. Neaveasked the Minister of Power whether he will give a general direction to area gas boards to abandon old-style low pressure gasholders and instal modem high-pressure systems.
    Mr. Freeson: No, Sir, but the justification for the additional expenditure involved in compression will be studied in each case.
    Mr. Neave: Is not expert opinion now very much in favour of introducing high pressure storage instead of old-fashioned gasholders, would the hon. Gentleman agree with the very excessive figures produced by the Southern Gas Board about high pressure storage in the Abingdon case?
    Mr. Freeson: It would not be right for me to comment on something which is the subject of extensive discussions. I hope that there will be satisfactory conclusions. With regard to expert opinion, as I said in reply to a previous supplementary question, the practice of installing high pressure storage instead of gasholders will grow, but there will still be a need for the latter.
    Sir A. V. Harvey: Is the hon. Gentleman aware of the grave possibility that two new gasholders will be erected to the north-east of Macclesfield? Will he go there and discuss this with the authorities, because there is grave concern?
    Mr. Freeson: We will consider going there to discuss the matter, if necessary. I discussed this briefly on a recent visit to the North-West. The handling of this matter by the North Western Gas Board has been beyond reproach.

    Pumped Storage Power Station, Bucks Mill
    Mr. Peter Millsasked the Minister of Power (1) what proposals have now been made by the Central Electricity Generating Board on their pumped storage power station at Bucks Mill, North Devon;
    (2) what guidance he has given to the farmers who are affected by the delay to the building of the pumped storage power station at Bucks Mill, North Devon.
    Mr. Freeson: The position is still as stated in the reply given to the hon. Member on 29th November, 1966.— [Vol. 737, c. 65.]
    Mr. Mills: But this delay is causing considerable anxiety among many people in this area. If this scheme went forward, it would help very much to solve the economic and unemployment problems in this area. We urge the Central Electricity Generating Board to get on with the task.
    Mr. Freeson: I appreciate that there is concern about this. The Board assures

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    us that it is very conscious of the difficulties referred to by the hon. Gentleman and will be willing to consider applications to sell land from anyone concerned about the position. It is not possible yet to anticipate the final outcome of the investigation as a number of important matters have to be completed, but I have no doubt that the Board is proceeding with the matter as quickly as it can.

    Underground Gas Storage (Oxfordshire)
    Mr. Neil Martenasked the Minister of Power if he will make a statement about the underground storage of gas in Oxfordshire.
    Mr. Marsh: The Gas Council has been carrying out investigations of a geological formation which may prove suitable for an underground storage of gas in the vicinity of Sarsden in the Cotswolds. It will be some time before the Gas Council can decide whether the results justify making an application for a storage authorisation order, under Part II of the Gas Act, 1965.
    Mr. Marten: Would the right hon. Gentleman realise that there is considerable anxiety in the area about the superstructures above the ground which might be involved? Would he give an assurance that before firm proposals are agreed not only the county planners but the local people affected by these superstructures will be fully consulted?
    Mr. Marsh: Local authorities, planning authorities, water authorities, land owners and others concerned are notified of, and can object to, an application to the Minister for a storage authorisation order, and there would be a public inquiry if there were any real objections.

    Iron and Steel Board (Headquarters)
    Sir Harmar Nichollsasked the Minister of Power, if, on vesting day, he will issue a direction to the Iron and Steel Board to obtain particulars of less expensive sites and premises for their headquarters before signing a lease for the expensive multi-storey offices in St. Giles' Circus.
    Mr. Gresham Cookeasked the Minister of Power whether on vesting day he will direct the National Steel Corporation to reconsider their decision to set up headquarters in London and instead
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    to establish it in Sheffield, the geographical centre of the steel industry, so as to fall into line with government policy for the decentralisation of offices.
    Mr. Marsh: No, Sir. As I said on 4th April in reply to my hon. Friend the Member for Monmouth (Mr. Anderson), the Government have accepted a recommendation by the Organising Committee that the head office of the National Steel Corporation should be in London. The choice of office premises in London is a matter for the Corporation, which moved yesterday to No. 22, Kingsway, W.C.2.—[Vol. 744, col. 1.]
    Sir Harmar Nicholls: But is the right hon. Gentleman aware that in line with Government policy the Location of Offices Bureau has persuaded many private firms to take their head offices out of central London to save money? Why should this organisation, which is spending public money, be absolved from that sort of recommendation, particularly when the saving can be as much as £400,000 a year, as I pointed out in a letter?
    Mr. Marsh: The Corporation is acting in accordance with Government policy by ensuring that the number of people who will be employed in London will be cut by about half as a result of public ownership compared with private enterprise.
    Mr. Cooke: At a time when the Government are telling the Patent Office and the Mint to get out of London, is it not ridiculous to allow the National Steel Corporation to set up a huge office with 800 employees a hundred miles from the nearest steel works? Should it not be right in the geographical centre of the steel industry?
    Mr. Marsh: The hon. Gentleman's indignation is rather surprising. The Steel Corporation is proposing to reduce the number of people employed in London by private steel companies from something like 1,700 to something like 700. I cannot understand why he has kept his criticism for the numbers employed by the publicly-owned industry.

    North Sea Gas
    Mr. Biffenasked the Minister of Power by what amount he estimates power generation and distribution costs during 1968–69 and 1969–70 are likely to

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    be revised on account of the development of North Sea gas; and if he will make a statement.
    Mr. Marsh: No decision to use natural gas in power stations has been taken. The possibilities are being studied by the industries concerned in consultation with my Department.
    Mr. Biffen: Nevertheless, is the right hon. Gentleman not aware that there is a great deal of speculation that the Chancellor's hope that he can reduce the levels of public expenditure turns in part upon the relative costs of power distribution which might arise from the exploitation of North Sea gas? Can he, therefore, give an indication to the House when he expects to be able to answer a Question of the character which I have put down?
    Mr. Marsh: I would hope to do so primarily as part of the Fuel Policy Review. The scope for using gas in power stations depends very much on two factors of which we are not yet aware. One is the price, and the other is the amount available.
    Mr. Edward M. Taylorasked the Minister of Power if he will make a statement on the progress made in the talks between the oil companies and the Gas Council about the price at which North Sea gas will be made available to the gas boards.
    Mr. Hector Hughesasked the Minister of Power if he will state the details and aspects of the negotiations now proceeding, under his authority, between the Gas Council and the producers of gas in the North Sea; when these negotiations will be complete; and what steps he is taking to ensure that British consumers of gas can get supplies at moderate prices and at what prices.
    Mr. Marsh: I would refer to the reply which I gave to my hon. Friend the Member for Hampstead (Mr. Whitaker) on 21st April.—[Vol. 745. col. 187.]
    Mr. Taylor: As the right hon. Gentleman's own figure for the price of gas in Scotland is more than 20 per cent. above the average for the rest of the country, can he give a categorical assurance that North Sea gas will be made available to the Scottish Gas Board at the same price as to the rest of the country?
    Mr. Marsh: As I explained to the hon. Gentleman before, I am not in a position
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    to say what will be the terms for the supply of natural gas to the gas boards, because we have not fixed the price for it.
    Mr. James Johnsonasked the Minister of Power what progress he has made with the piping of natural gas from the North Sea fields to Yorkshire and Humberside.
    Mr. Marsh: First supplies of North Sea gas are already reaching the gas plant at Killingholme on Humberside. Additional quantities are planned to reach the methane line south of Sheffield this summer when further work on the undersea and land pipelines is completed.
    Mr. Johnson: Is my right hon. Friend aware that civic leaders and industrialists on Humberside will feel happier with his Answer, since there is a feeling in Hull that they are often neglected by Government Departments? Will he give the House an assurance that he will put his best foot forward to get supplies ashore as quickly as possible?
    Mr. Marsh: My intention is to put both best feet forward as quickly as possible to get the maximum benefit from this find.
    Mr. Whitaker: On the future price of North Sea gas, have the oil companies now disclosed their figures to my right hon. Friend? Would he confirm what public opinion feels and defend those economic experts who maintain that 2¼d. is a generous profit for the companies?
    Mr. Marsh: I do not know what figures my hon. Friend has, but we have access to all the figures we need in this exercise. When the decision is taken, it will be on the basis of that information.

    Electricity (Forecast Demand)
    Mr. Palmerasked the Minister of Power on what basis he has approved a reduction of the estimated national demand for electricity to 54,000 megawatts for 1972–73 since the Electricity Council in 1965, before the National Plan, allowed for 62,000 megawatts in 1970–71 in order to give a safe margin; and what margin of safety against load shedding the new reduced figure represents.
    Mr. Marsh: The Electricity Council's 1965 forecast for 1970–71 was based on the National Economic Development

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    Council's assumption of a 4 per cent. rate of growth in the economy. The Council's forecast for 1972–73 is their latest assessment of the likely increase in electricity demand. The Central Electricity Generating Board planned safety margin over the forecast demand remains unchanged.
    Mr. Palmer: Is my right hon. Friend aware that it is the opinion of many people with expert knowledge of this subject that this new estimate is putting the future economy of the country at grave risk, in view of the fact that ample supplies of electricity are essential to national expansion?
    Mr. Marsh: I can only say that the expert advice which I have obtained is that of the Central Electricity Generating Board, which is not without experience in these matters. The Board is responsible for maintaining the margins, and its argument is that this would retain the intended margin and make no difference in it.
    Mr. Peyton: Does the Minister realise that we on this side of the House have great sympathy with him, because he needs considerable protection from some of the advice which he is likely to receive? In particular, he has to be protected from the pontifications of "Neddy" and the ludicrous advice which he is likely to get from the Department of Economic Affairs bearing in mind the First Secretary's speech to "Neddy" the other day.

    Fuel and Power Policy
    Mr. Palmerasked the Minister of Power if, in view of the expected delay in preparing his new White Paper on fuel and power policy, he will make an interim statement.
    Mr. David Griffithsasked the Minister of Power if he will make a statement on the future energy needs of the nation.
    Mr. Marsh: I should prefer to wait until I can make a full statement.
    Mr. Palmer: Is my right hon. Friend really being quite fair to the House in withholding this information for so long? Could he say if the speech made by his hon. Friend the Parliamentary Secretary
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    recently at Manchester, in which quite a numbers of figures were given, represents firm policy? If it does, should not that statement have been made first to the House?
    Mr. Marsh: I have said over and over again that when we get to the stage of taking policy decisions, of course they will be announced to the House. However, no policy decisions have been taken. The speech which my hon. Friend made recently did not give any firm figures on coal production—that is a statement of fact, not of opinion. As soon as we have the policy settled, clearly it will be given to the House, as it should be.
    Mr. Griffiths: Is it not time that someone got a move on—either my right hon. Friend or his staff? Is it not a fact that the miners of this country are bewildered and bewitched and do not know what is to happen? We have the steel industry fighting against gas and gas fighting against coal. What I want to know and what my people want to know is where we are going.
    Mr. Marsh: I have a lot of sympathy with the point made by my hon. Friend. A good deal of the worry emerging from the coal mining industry recently is the result of ill-informed, irresponsible statements which are not connected with the facts. No policy decisions have been taken. When they are, they will be discussed with the parties concerned.
    Mr. Alison: Is the Minister aware that his famous review of fuel policy is assuming the character of an aged and time-worn television serial which the producer dare not bring to an end? Will he not take his courage in both hands and crystallise the position now?
    Mr. Marsh: I am attracted by the enthusiasm of hon. Gentlemen opposite for the fuel policies of the Government. They did not produce one fuel policy White Paper in their 13 years' of office, and they are now worried because we have not yet produced a second one in three years.
    Mr. Varley: Has my right hon. Friend's attention been drawn to a suggestion in certain high places that the Ministry of Power is not technically equipped to deal with fuel policy and that a fuel industry investment board

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    should be set up? Would he care to comment on that?
    Mr. Marsh: I could make a lot of comments on that last point. It always seems to me that these are decisions which ought to be within the purview of this House and Ministers. It is the Exchequer and the Government who pay the bill. It is not a bad idea for this House to have control over it.
    Sir K. Joseph: When does the Minister think that his fuel policy will be ready, and can he tell us unequivocally whether the House and the country will be informed of this fuel policy by a White Paper or by other means of that sort?
    Mr. Marsh: It would be wrong to rush it for the sake of rushing. There are vast amounts involved and important implications for the economy. My intention would be to make a definitive statement as early as possible, which I hope would be not too far removed, and to follow that with a White Paper. But there is nothing secret about this, and I give the assurance that the House will have all the information which we have available.
    Mr. Eadie: Is my right hon. Friend aware that there must be suspicion on this side of the House about his coordinated fuel policy when only last week, for example, it was discovered that a secret working party had been meeting for eight months dealing with the future fuel policy and that the National Coal Board knew nothing about it? Is it not time that my right hon. Friend came clean?
    Mr. Marsh: My hon. Friend should not believe everything that he hears. In fact, I have come to the conclusion that it is almost impossible to have secret committees in Government. On this one, the Chairmen of the nationalised industries have been kept fully in touch with all developments. I shall be meeting them again in the near future, and, indeed, I have met them all within the last two weeks.
    Mr. Lubbock: According to published reports of the Parliamentary Secretary's speech in Manchester, a great many detailed figures were given, including a prediction that the production of coal would drop by 30 million tons a year by 1970, that oil would increase to between 132 million and 136 million tons of coal
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    equivalent and so on. Will he see that a full transcript of his hon. Friend's speech is placed in the Library, instead of the sketchy outline of it which is available now?
    Mr. Marsh: If anyone had asked for it they could have had it. In that speech—and I mean in the speech, not in newspaper reports—there is no reterence to coal figures, and I should have thought that the hon. Gentleman would have checked.
    Mr. Shinwell: Is my right hon. Friend aware that it is perfectly true that we do not believe all that we hear, but that the trouble is that we do not hear the facts of the situation from him? There is considerable disquiet in mining areas—my own in particular—because of the uncertainty and insecurity. In view of that and the fact that the General Secretary of the Mineworkers' Union has himself expressed disquiet, could not my right hon. Friend give a definitive intimation to the House about when he will be in a position to say what future coal production will be?
    Mr. Marsh: I would like to be able to say something before the House rises for the long Recess. I can understand the uncertainties and fears which men in the coal industry have, because they are involved in a difficult position, but I think it ought to be made quite clear that no decisions have been taken in respect of the future of the coal mining industry, and people who go around pretending that they have do a great disservice to the industry.

    Shipbuilding (Steel Plate)
    Mr. Wingfield Digbyasked the Minister of Power whether he will give a direction on vesting day to the National Steel Corporation to supply the home shipbuilding and ship-repairing industry with plates and sections at a specially reduced price, as recommended in the Geddes Report.
    Mr. Freeson: No, Sir.
    Mr. Digby: Is the hon. Gentleman aware that the Government have accepted the recommendations of the Geddes Committee, that they have introduced a Bill, and that one of the fundamental recommendations is that this

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    practice should be restored? How can the hon. Gentleman justify such a ridiculous answer?
    Mr. Freeson: The decision in this respect was taken by the previous Administration, not by this one. What we can say is that steel nationalisation, with the reorganisation of the shipbuilding industry, will provide improved opportunities for reducing the cost of shipbuilding steel.

    Nuclear Power Stations
    Mr. McGuireasked the Minister of Power (1) whether he will refuse to approve the Central Electricity Generating Board's applications for nuclear power stations at Heysham in Lancashire and Seaton Carew in Durham on the grounds that his own department do not now expect electricity produced from the early A.G.R. stations to be any cheaper than that produced from new conventional stations, despite the considerably greater capital cost of the nuclear stations;
    (2) what is the average cost per kilowatt hour of electricity being supplied from the present nuclear power stations and the average cost from coal-fired stations built about the same time.
    Mr. Dickensasked the Minister of Power if he will refuse to authorise the building of more nuclear power stations until the first of the advanced gas-cooled reactor stations is in operation and reliable figures for the running costs are available.
    Mr. Marsh: The Magnox type stations now coming into commission generate at about 0·7d. per kilowatt hour; typical costs for contemporary coal-fired stations would be about 0·55d. Dungeness B at 0·1d. per kilowatt hour is expected to show a clear cost advantage over contemporary coal-fired generation and to compete with oil generation at present tax rates. Costs are expected to fall in each of the later A.G.R.'s and parity with oil before tax may well be achieved by the final station of the second nuclear power programme.
    Mr. McGuire: Would not my right hon. Friend agree that there have been many contradictory statements and expectations in the past about the cost of nuclear power production, namely, that it
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    would be cheaper than coal-fired stations, whereas the present estimates and trends are that it will be dearer? Would not my right hon. Friend agree that what we really want is a proper inquiry into the full cost and not to have nuclear power costs deflated at the expense of conventional power stations?
    Mr. Marsh: There would be no point in anybody pretending that the future of nuclear power was much worse than it is if this were contrary to the truth. It is not true that all the present estimates show that nuclear powered generation will be more expensive than by coal. The facts are that the estimates all show that the second range A.G.R. will be cheaper, and increasingly so.
    Sir K. Joseph: While recognising that forecasts of nuclear power costs are rising both in America and in this country, may I ask the right hon. Gentleman to undertake that no decision will be made by the Government on Heysham and Seaton Carew until the formidable analysis by Mr. Duncan Burns in his recent book has been given full study by the Select Committee and fully answered by the A.E.A.?
    Mr. Marsh: I do not think that one can get to a position where major Government policies are held up because somebody has written a book. I think that Mr. Duncan Burn's book is rather heavily criticised in many quarters for some pretty glaring inaccuracies.
    Mr. Hogg: Will the right hon. Gentleman be extremely cautious about accepting criticisms of the cost of nuclear power, which are very often motivated by interested alternative sources of fuel, and sometimes by American industry?
    Mr. Marsh: I think that the right hon. and learned Gentleman has raised an important issue on his last point. It does not do this country a great deal of good to have people going around deliberately decrying something in respect of which we have done extraordinarily well.

    Gartsherrie Iron Works, Coatbridge
    Mr. Dempseyasked the Minister of Power if he will give a direction to the National Steel Corporation to continue production at Gartsherrie Iron

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    Works, Coatbridge, which is due to close down, as £1 million was spent in modernising the plant in 1960; and if he will make a statement.
    Mr. Marsh: Decisions of this type are the responsibility of the Corporation who are considering various proposals.
    Mr. Dempsey: Is my right hon. Friend aware that shortly 640 men will lose their jobs at works which were modernised in 1960 at a cost of £7 million, not £1 million? Can he say whether this matter will be investigated in view of the fact that there was such a large expenditure with such limited results, and can he say whether there is any hope of the works being used for some other purpose?
    Mr. Marsh: The question of the works being used for some other purpose would not be a matter for me. The Steel Corporation must be in a position to judge commercially whether a particular works are to its advantage or not, but proposals have been made of varying types and some of these are being looked at, but this is not a decision for the Government.

    Steel Industry (Union Representation)
    Mr. Moyleasked the Minister of Power whether on vesting day he will direct the Steel Corporation in consultation with the appropriate trade unions to provide national collective bargaining machinery for staff employees in the nationalised steel industry.
    Mr. Freeson: The Iron and Steel Act, 1967, already requires the Corporation to consult the trade unions about the establishment of collective bargaining machinery covering all employees and at national, works and intermediate levels.
    Mr. Moyle: Is my hon. Friend aware that there is as yet no recognised staff trade union in the Steel Corporation's purview? It would be a pity if the nationalisation of the steel industry were allowed to pass without providing the staff with the protection of collective bargaining and the opportunity for trade union organisation.
    Mr. Freeson: The Act requires the Corporation to act in the way I have stated. It is not for the Government to specify what form the trade union negotiating
    1266
    machinery should take. We are aware that the industry has been criticised by some of the unions involved, and we think that nationalisation will provide an opportunity for an improvement in this respect.

    Scotland (Minister's Visit)
    Mr. Edward M. Taylorasked the Minister of Power how many official visits he has made to Scotland since his appointment.
    Mr. Marsh: I shall be making my second visit later this month. My Parliamentary Secretaries have made four visits.
    Mr. Taylor: As membership of the European Coal and Steel Community must inevitably lead to savage pit closures in Scotland, which can severely damage Scottish steel production, would it not be appropriate for the Minister to come to Scotland to say precisely where we are going?
    Mr. Marsh: I have just told the hon. Gentleman. I thought he was listening to the Answer. I am going later this month.

    Power Stations (Fuelling)
    Mr. Alisonasked the Minister of Power whether he is satisfied that the present ratio of coal to oil, as fuel for power stations, is the most conducive to lowering industrial costs in the United Kingdom; and if he will make a statement.
    Mr. Marsh: Decisions on primary fuel use for electricity generation are taken in the light of all the relevant factors, including the need to keep down costs.
    Mr. Alison: Does the right hon. Gentleman remember, from his informal discussions with Sir Ronald Edwards, that Sir Ronald wanted to taper off the preference given to coal and that the Minister asked Sir Ronald to defer this tapering off until publication of his new fuel policy, and that he said that it would be published early in this new year?
    Mr. Marsh: There is, of course, a number of frequently conflicting objectives in fuel policy. Cost is one and, obviously, preference must be looked at from time to time.
    Mr. Kelley: In assessing the usefulness of any form of fuel, will my right hon. Friend assure us that the social consequences of displacement of labour are taken into consideration by his Department?
    Mr. Marsh: I was referring to the faot that there are other factors besides sheer costs. I should have said that the displacement of labour is not just affected by changes in fuel consumption but largely by methods of working and increased mechanisation.

    Conversion of Appliances (Labour)
    Mr. Carmichaelasked the Minister of Power (1) if he will give a general direction to the Gas Council to intensify their recruitment and training programmes for gas fitters, in order that the conversion of appliances to use natural gas may be carried out by employees of the area boards or by a special organisation set up for the purpose by the Gas Council itself;
    (2) if he will give a general direction to the Gas Council that in the conversion of appliances to burn natural gas the maximum use should be made of direct labour and that the use of outside contractors be reduced to the absolute minimum.
    Mr. Freeson: The gas boards are likely to need both direct labour and outside contractors for the many tasks associated with the rapid absorption of natural gas, of which conversion of appliances is only one. The boards must be left to decide how this work can best be carried out bearing in mind that conversion teams must be mobile and the men will not be required as part of the industry's permanent labour force.
    Mr. Carmichael: Does my hon. Friend realise that, if too much of this work is taken outside the boards, bearing in mind that most of the recruits in any new organisation will come from those employees, many employees will be disillusioned and that this will do the industry's future no good?
    Mr. Freeson: I understand my hon. Friend's point. The boards are aware of the need for training facilities and have organised themselves accordingly, and I
    1268
    am sure that they will make the best possible use of the labour available to them now in the industry.

  COAL

    Scottish Steel Industry (Coal Prices)
    Mr. Eadieasked the Minister of Power what representations have been made to him about coal prices in Scotland charged to the steel industry.
    Mr. Freeson: My right hon. Friend has had no recent representations.
    Mr. Eadie: Is my hon. Friend aware that the differential coal prices charged to the steel industry in Scotland have a most disadvantageous effect on the steel industry in Scotland? Will he take steps to stop this nonsense?
    Mr. Freeson: I am aware that there is some general feeling in Scotland about energy pricing as a whole, not just about coal charges. Some pricing principles may need re-examination if we enter or are seriously affected by developments in the Common Market. I have no reason to believe that Scottish prices are out of line with production costs.
    Mr. Edward M. Taylor: How can the hon. Gentleman say that he has had no representations when I have written to him three times since New Year's Day on this subject? Does he realise that the price of coal in Scotland adds £3 million to the costs of one firm alone? How can the steel industry have any hope for the future as long as this continues?
    Mr. Freeson: The hon. Gentleman will know that the correspondence to which he refers was connected with Questions in the House. [Interruption.] If we say that every Question in the House is a representation to the Minister, we are rather misusing language. I am perfectly well aware of the letters which have been received, because I have had something to do with replying to some of them. We have been asked whether representations have been made on this matter recently, and I have replied that there have been no representations from the industry. [Interruption.] It might help if hon. Members were to listen to the reply.
    Sir K. Joseph: Surely the hon. Gentleman realises that the Question does not refer to representations from the industry. He should withdraw the answer "No" since my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor), as the Parliamentary Secretary admits, has written to him on three occasions on the subject referred to in the Question.
    Mr. Freeson: I do not accept that this is a Question from the hon. Member. [HON. MEMBERS: "Representations."] It might help if hon. Members were to listen to the reply.
    Dame Irene Ward: Go back to school.
    Mr. Speaker: Order. The hon. Lady's intervention does not help at all.
    Mr. Freeson: I have indicated, and I repeat, that we have not had any representations recently on this matter from the industry.
    Sir Knox Cunningham: On a point of order. When a Member puts a Question in the House which is a representation on behalf of a constituent, is it in order for a Minister to say that it is not a representation?
    Mr. Speaker: Order. The hon. and learned Gentleman knows that is not a point of order.

    Large Coal Production (Scotland)
    Mr. Eadieasked the Minister of Power what tonnage of large coal suitable for domestic consumption is planned to be produced in Scotland in 1967.
    Mr. Freeson: Planning the output of particular coals from each of the coalfields is a matter for the National Coal Board; I have asked the Chairman to write to my hon. Friend.
    Mr. Eadie: Is my hon. Friend aware that if a pit closure policy is carried out in future there will be a substantial reduction in the production of large coal? Therefore, in the interests of the consumer, would my hon. Friend undertake to look into this matter?
    Mr. Freeson: I understand that the National Coal Board expects to have sufficient large coal available in Scotland to meet normal demand, but, as I have indicated, I have asked the Chairman to
    1270
    write to my hon. Friend. If there are matters to be pursued following that, we shall consider any further representations made.
    Mr. Emrys Hughes: Is it not a fact that output per man in Scotland has considerably increased, thus setting a good example to many private industries?
    Mr. Freeson: It is perfectly true that productivity in the coalfields in Scotland has improved immensely in recent years, and we hope that it will bear fruit in the near future.

  PRICES (MINISTERIAL RESPONSIBILITY)
  Mr. Ridleyasked the Prime Minister if he will take steps to coordinate the activities of Ministers responsible for preventing prices rising.
  The Prime Minister (Mr. Harold Wilson): My right hon. Friend the First Secretary is responsible for coordination of prices and incomes policy and no further co-ordination is needed.
  Mr. Ridley: Does the right hon. Gentleman agree that it appears to be unpopular to have a complete stop on wages, particularly of the lowest paid workers, at the same time as there is an increase in prices of 5d. in the £?
  The Prime Minister: The argument here, whether on popularity or on necessity, has been fully debated in the House in a series of debates, but I think that the hon. Gentleman will recognise, as regards the Index of Retail Prices, that the change from last June to this March—nine months—is 1·5 points, or 1·3 per cent. and, on wholesale prices, of 0·7 points or 0·5 per cent.
  Mr. Atkinson: Would my right hon. Friend accept that, as a result of the work done in London recently, there is evidence that, for a man earning £15 per week, the cost of living went up 3½ per cent. between July, 1966, and February, 1967?
  The Prime Minister: I have seen different estimates of different families. I was given some myself, which I am having examined, when I met representatives of the Post Office Union. But, generally, my figures represent a fair comparison between wages and prices.
  Sir C. Osborne: Would the Prime Minister look again at his official figures, as most housewives do not accept that prices have risen by only that small amount? Their experience is that they have gone up much more.
  The Prime Minister: It has been the experience of successive Governments that most housewives are certainly much more conscious of the prices which rise than of those which fall. Also under successive Governments, there has been complaint about the accuracy or otherwise of the cost of living index, but I think that the House as a whole will agree that it is a fair index.
  Mr. Maxwell: Is my right hon. Friend aware that the nation has received with gratitude the Government's action in getting the detergent makers to reduce their prices? What other steps have the Government in mind to force a further reduction of prices?
  The Prime Minister: This action followed the Report, and was in line with the recommendation, of the Monopolies Commission. I should not like to speculate about special price movements, though—voluntarily, I think, on behalf of the industries concerned—there was a significant reduction in margarine prices recently.

  RHODESIA
  Mr. Hastingsasked the Prime Minister what evidence he has of the existence of agents provocateurs and secret police maintained in African villages in Rhodesia.
  The Prime Minister: The statement made to me on board H.M.S. "Tiger" by Mr. Ian Smith, Sir, and from other sources.
  Mr. Hastings: The right hon. Gentleman will be aware that Mr. Smith has since denied categorically telling him anything of the sort. Will he explain what he thinks constitutes an African village, how many he thinks there are in Rhodesia, and how often they move from place to place? Is not his allegation as impracticable as it is unlikely? Why does he not withdraw it and turn again to negotiate?
  The Prime Minister: It is not for me to define the African village or to say how
  1272
  this works. I rely on the statement to me in the presence of my right hon. Friend and many others by Mr. Smith that this was their practice. The fact that he has denied it since is only in accordance with another case about which there have been exchanges in the House, when he told us frankly on H.M.S. "Tiger" that he had lied to the Governor when he persuaded him to institute a state of emergency on the eve of I.D.I. This was also made clear by Mr. Smith.
  Mr. Winnick: Arising out of this question, would the Government consider publishing a White Paper setting out a list of those hon. Members opposite who have given comfort and assistance to the illegal régime——
  Mr. Speaker: Order. Supplementary questions must arise out of the Question on the Order Paper.

  WASHINGTON (PRIME MINISTER'S VISIT)
  Mr. Eldon Griffithsasked the Prime Minister if he will state the purpose of his visit to Washington following his attendance at Expo 67 in Montreal.
  The Prime Minister: For informal talks with President Johnson, Sir.
  Mr. Griffiths: Since our relations with the United States could prove one of the sticking points in our negotiations to join E.E.C., will the right hon. Gentleman assure the President that, in seeking to join Europe, we have no intention of isolating ourselves from America or of turning our backs on the Far East? Will he also say that it is Britain's intention to make this a first step towards a wider Atlantic community, joining all of Europe with North America?
  The Prime Minister: I have already discussed the question of Britain's relations with the United States with President Johnson when I met him recently in Bonn. One of the things I found from American leaders is that Anglo-American relations, which the hon. Gentleman has not done much to help recently, are extremely good. Indeed, American leaders told me that the hon. Gentleman in question was not only wrong in what he said but had been told, while in Washington, that he was wrong.
  Mr. Blaker: Since there has been a good deal of discussion in the country recently about Anglo-American relations, would it not be useful if the House had a debate on the subject, perhaps after the Prime Minister returns from his visit to Washington?
  The Prime Minister: I agree that this is an important issue. The matter of a debate is a question for my right hon. Friend the Leader of the House. I do not know what plans are being discussed for a future foreign affairs debate, but I think that this could form part of it.
  Mr. Griffiths: On a point of order. In view of the inaccurate and——
  Mr. Speaker: Order. I appreciate the temptation, but the hon. Gentleman must be conventional.
  Mr. Griffiths: On a point of order. I wish to give notice that I shall seek to raise this matter on the Adjournment of the House.
  Mr. Dickensasked the Prime Minister if he proposes to discuss the United Kingdom's defence commitments in South-East Asia with President Johnson during his forthcoming visit to Washington.
  The Prime Minister: Questions relating to the security of South-East Asia may well be among those I shall discuss with President Johnson.
  Mr. Dickens: That is welcome news. Will my right hon. Friend accept that he will have the overwhelming support of this side of the House and of the country generally if he is going to tell President Johnson that we intend to give up our rôle in South-East Asia in a military sense by the early 1970s?
  The Prime Minister: The subject matter of my hon. Friend's supplementary question is completely hypothetical. I will be discussing with President Johnson, and, I hope shortly, with leaders from Australia and New Zealand, further questions affecting Britain's deployment in the Far East.
  Sir Alec Douglas-Home: Does the right hon. Gentleman recall that on several occasions lately I have asked him what steps Her Majesty's Government
  1274
  are taking 'to give a lead in the reorganisation of the S.E.A.T.O. Treaty and Alliance and that he said on the last occasion that the S.E.A.T.O. Conference was about to take place and that, after that, something might be said? Nothing has been said. Are we to conclude that Her Majesty's Government have taken no lead and are making no proposals?
  The Prime Minister: No, Sir. The right hon. Gentleman will be aware of what occurred at the S.E.A.T.O. Conference, which was abundantly publicised at the time. The question raised by my hon. Friend is not, I think, one primarily for discussion within the S.E.A.T.O. Conference because, as he no doubt recalls, it is a matter for each individual country to decide what force levels are needed to fulfil their obligations within S.E.A.T.O.
  Sir Ian Orr-Ewing: Would not it be unwise to make a unilateral declaration of withdrawal from any of these areas east of Suez in view of the fact that this shakes the confidence of one's allies and friends, and will he desist from this in future?
  The Prime Minister: I have said that, so far as this area is concerned, we shall have consultations with Australia and the United States. At the end of the day, as my right hon. Friends have made clear on a number of occasions, we must limit our commitments, presence and expenditure to what this country can afford.
  Mr. Heffer: Would my right hon. Friend give the House an assurance that he will take the opportunity while he is in Washington to inform President Johnson that we would be bitterly opposed to any further escalation of the war in Vietnam and that the time has come for the Americans to switch their policies in relation to Vietnam because of the obvious movement towards a third world war?
  The Prime Minister: President Johnson is as well aware as anyone of the dangers of escalation in the Far East. This is one of a number of reasons why President Johnson is anxious, as he repeated again a couple of days ago, to get to the conference table if he can find anyone there with whom to talk.

  BRITISH FORCES (EAST OF SUEZ)
  Mr. Biggs-Davisonasked the Prime Minister what assurances he has recently given the Australian Prime Minister on the stationing of British forces east of Suez.
  The Prime Minister: I have assured Mr. Holt that it is our intention that there should be full consultations, and opportunity for us to consider Australian views, before any new decisions are reached on our future defence arrangements in the Far East.
  Mr. Biggs-Davison: At this delicate time in Anglo-Australian relations, will the Prime Minister give earnest consideration to the desirability of assuring his Australian colleague that British forces will remain east of Suez until they can be adequately replaced by Asian and Australasian Powers?
  The Prime Minister: I am, of course, in close touch with the Australian Prime Minister and I hope to have a chance of discussing these matters further with him when he visits Britain next month. Beyond that, I do not think that it would be helpful for me to say anything this afternoon.
  Mr. John Lee: Will my right hon. Friend represent to the Australian Prime Minister that if he wants British troops east of Suez he should pay the market price for them? [Interruption.]
  The Prime Minister: We do not decide the deployment of our troops on a market price basis. We shall decide the proper disposition of our forces in relation to Britain's defence needs, our relations with our allies and, of course, in relation to what this country can afford. But we do not go into these negotiations on the basis of British troops being mercenaries.
  Mr. Hogg: Will not the right hon. Gentleman also remember, and take into account, what the Australians and New Zealanders have done for us twice in our lifetime?
  The Prime Minister: Yes, Sir. That was the theme of the speech made by my right hon. Friend the then Foreign Secretary in Canberra last year and, of course, the theme of the commitment which he entered into in that respect.
  Mr. Rankin: Is it not the case that we have just reached agreement with France on a swing wing aircraft which has a purely European rôle? Does not that indicate that we stand by our attitude of reducing our commitments east of Suez?
  The Prime Minister: It has been our attitude, as shown in the White Papers of 1966 and 1967, to continue to review our deployment, commitments and weapon expenditure in the interests of the best defence policy for this country. I do not think that my hon. Friend should deduce too much from developments in relation to the Anglo-French swing wing aircraft.

  EUROPEAN ECONOMIC COMMUNITY
  Sir D. Walker-Smithasked the Prime Minister whether he has yet concluded his consideration of the case for the publication of a Command Paper setting out the changes required in the Statute law on Great Britain adhering to the Treaty of Rome.
  The Prime Minister: I would refer the hon. and learned Gentleman to the speech of my noble and learned Friend the Lord Chancellor in another place yesterday, and to my speech to this House.
  Sir D. Walker-Smith: Does not the Prime Minister recall that it is almost exactly a year since I originally asked for such a White Paper? Would not it have been much better to have had this White Paper well in advance of this debate, particularly having regard to the observation of the Master of the Rolls, made some years ago, that signing the Treaty of Rome would have a profound effect on our law and would cause our Statute law to be rewritten in the context that our sovereignty was now shared?
  The Prime Minister: The right hon. and learned Gentleman will know that, in addition to all the references that I made on this subject yesterday, my noble Friend dealt with this issue at greater length in another place and said yesterday that we hoped to include further information on this subject among the material which we propose to make available to Parliament in the near future.
  Mr. Woodburn: Is the Prime Minister aware that we have had a Common Market in this country for about 250 years and that the Scots still have their own laws which are very good indeed?
  The Prime Minister: Yes, Sir. I am well aware of the coexistence of these legal systems, though I have never tried to understand the one north of the Border.
  Dame Irene Wardasked the Prime Minister whether he will produce a White Paper, specifically dealing with increased food prices consequent on the United Kingdom entering the Common Market; and indicating how the position of those living on small fixed incomes and unable to increase them through Government or private sources. will be safeguarded.
  The Prime Minister: I would refer the hon. Lady to the speech I made to the House yesterday. [Vol. 746, c. 1061.]
  Dame Irene Ward: In view of the pledge which the right hon. Gentleman gave on the "Panorama" programme last night, what is he going to do about those who are living on small fixed incomes, who do not or cannot get Government support but who will be vitally affected upon our entry into the E.E.C. because of the increased price of food? Will he give a pledge about them, because they have just as much right to consideration via this House as have other sections of the community?
  The Prime Minister: The hon. Lady will be aware of what I said in the House yesterday——
  Dame Irene Ward: Nothing.
  The Prime Minister: I took a lot of the time of the House yesterday in saying what the hon. Lady considers to be nothing. She may, if she scratches through it, find that what I suggested related to those who are recipients of State pensions. I agree that there is a wider problem and that it will have to form part of any review which is made about the consequencies of our entering the E.E.C.
  Mr. Henig: If Britain adopts the system of the European Economic Community and thereby does not have to give so much in subsidy to British farmers, will the money saved, rather than being used for reducing taxation, be used to help those
  1278
  people, like the old-age pensioners, who will be most affected by the rise in food prices?
  The Prime Minister: That is a point on which I touched yesterday when dealing with the problem of the cost of living. My hon. Friend will recall also that I had something to say about the, on the whole, higher standards of social security to be found in the E.E.C. as compared with those in this country.
  Mr. Tilney: Would the Prime Minister consider issuing a paper, preferably in pictorial form, for the British housewife, showing how prices have risen in each of the Common Market countries, and also whether wages and incomes have risen more in comparison?
  The Prime Minister: I would certainly be prepared to give consideration to that suggestion. There will be a publication very shortly on the working of the Common Market, but I think that this is a matter worth consideration.
  Mr. Emrys Hughes: Will the Prime Minister tell us why in his prospectus for the Common Market yesterday he forgot the theological case of the Archbishop of Canterbury?
  Mr. Speaker: I think that the connection between the Archbishop of Canterbury and food prices is a little remote.
  Sir C. Osborne: How soon will prices start to rise after we get into the Common Market, if ever we do get in?
  The Prime Minister: This is clearly, as I said yesterday, a matter for the negotiations. It is a question, first, of the time taken for negotiation, and the time taken for ratification, and legislative changes here, and for the period of transition before the Common Market agricultural policies, with whatever changes might be made, were adopted in this country.
  Mr. Kelley: Is my right hon. Friend aware that many hon. Members on this side of the House have regarded the agricultural price support system as a means of providing cheap food for the people and not a subsidy for the farmers?
  The Prime Minister: I think that many of us in all parts of the House have regarded this country's system of price

  1279
  support as an extremely well-devised one over the years. I said yesterday what I think some of us have felt about the Common Market agricultural programme but, as I said, it would be unrealistic to feel that that will be changed as a result of negotiations for British entry.

  OFFICIAL REPORT (CORRECTION)
  Mrs. Renée Short: On a point of order, Mr. Speaker. In an intervention in yesterday's debate, I am reported in col. 1154 of the OFFICIAL REPORT as having said:
  "And then have the Russians and the Americans round our neck."—[OFFICIAL REPORT, 8th May, 1967; Vol. 746, c. 1154.]
  What I said was that we would then have the Six and the Americans round our neck. May I ask that the record be corrected in the OFFICIAL REPORT?
  Mr. Speaker: Order. We will see that the right people are reported as round the hon. Lady's neck. [Laughter.]
  Seriously, it is not easy to report interventions, and the wonder is that so many of them are so accurate.
  Hon. Members: Hear, hear.
  Mr. Speaker: I will see that the correction is made.

  EUROPEAN ECONOMIC COMMUNITY
  Sir Harmar Nicholls: On a point of order, Mr. Speaker. Is it in order for the prime Minister, as I think, to mislead the House? Replying to a supplementary question by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), the Prime Minister referred him to the speech made by the Lord Chancellor in another place yesterday. In the OFFICIAL REPORT I find this reference which, I think, means that the House has been misled. The Lord Chancellor said:
  "Perhaps I should explain here two difficulties which our lawyers have had. First, the Treaties and the Community laws are … published in French, German, Dutch and Italian. There is not even … an authorised English version of the Treaty of Rome."— [OFFICIAL REPORT, House of Lords, 8th May, 1967; Vol. 282, c. 1201.]
  In those circumstances, is it fair to refer my right hon. and learned Friend to someone who says that it is published in a language that is not ours?
  Mr. Speaker: I cannot comment on the fairness or unfairness of either side. This is a political point which could be made in the debate, which the hon. Member for Peterborough (Sir Harmar Nicholls) is at the moment preventing us from resuming.

ORDERS OF THE DAY
  SUPPLY
  [20TH ALLOTTED DAY] [2nd Series],— considered.

EUROPEAN COMMUNITIES (MEMBERSHIP)
Order read for resuming adjourned debate on Amendment to Question [8th May]:
That this House approves the statement contained in the Command Paper, Membership of the European Communities (Command Paper No. 3269.—[The Prime Minister.]
Which Amendment was, to leave out from 'House' to the end of the Question and to add instead thereof:
'regrets that Her Majesty's Government, having failed to inform the country of the estimated results of Great Britain's entry into the European Economic Community, have nevertheless declared their intention of applying immediately for entry, leaving substantial matters to be negotiated thereafter, and thereby causing anxiety to our partners in the Commonwealth and the European Free Trade Association and creating the probability of injurious repercussions on British sovereignty and the rule of law, on the price of food, on the balance of payments and on the rôle of sterling in the world'.—[Mr. Turton.]
Question again proposed, That the words proposed to be left out stand part of the Question.
Mr. Stanley Orme: On a point of order, Mr. Speaker. Has your attention been drawn to an Amendment——
Mr. Speaker: Order. I thought that it would help the House—and answer the point of order about to be raised by the hon. Member for Salford, West (Mr. Orme), which he has put in anticipation—if I were to put the House in possession of the position as now I see it. I see that there is a new Amendment on the Order Paper in the names of the hon. Gentleman the Member for Houghton-le-Spring (Mr. Urwin) and his hon. and right hon. Friends. The Amendment which I have selected, that in the name of the right hon. Gentleman the Member for Thirsk and Malton (Mr. Turton), is the Amendment before the House.
At the end of the debate tomorrow night, the first Question that I shall put is the Question we are now considering, That the words proposed to be left out
1282
stand part of the Question. If this is carried, there is no possibility of further Amendments, and I am then bound to put the Motion itself as the main Question.
If, however, the first Question is defeated, the second part of the Amendment which I have selected must still be disposed of, by being agreed to or by being negatived, before any other Amendment can be considered. I hope that that is clear.
3.38 p.m.
Mr. Edward Heath: Once again, Mr. Speaker, we are debating the question of an application for Britain to join the European Economic Community. The House will understand if I say that this is a pleasurable occasion for me personally, even though it may be a somewhat nostalgic one at the same time. What we are debating today is not an isolated incident, however important that incident may be. It is, I believe, part of the wide sweep of European history, and to treat it otherwise is both to exaggerate the importance of the incident itself and to under-estimate its importance in the historical perspective of Europe as a whole.
The theme of Britain's relations with the rest of Europe has run throughout all our history. Over many centuries we have tried to prevent the development of unity on the Continent, and we have done so in order to bring about a balance of power and to prevent the domination of this country by any combination of other countries. But, since 1945, we and other countries have worked, at times desperately and passionately, to bring about a closer unity in Europe to try to prevent an outbreak, once again, of internecine warfare between old traditional peoples and, at the same time, to try to establish a better position of balance between Europe and the two great super-nuclear Powers which have emerged during and since the last war.
The theme of European unity has been the theme which I have put before this House since my maiden speech in June, 1950, when the then Labour Government, after a long and extraordinarily interesting debate, finally rejected the Schuman Plan proposals. We all recognise how very different things might be today if that decision of the House had also been different. Then there followed a period when we as a Government took

1283
little part in the Messina Conference which produced the Treaty of Rome. There was the attempt to get the Free Trade Area which, despite the hard work of my right hon. Friend the Member for Barnet (Mr. Maudling) proved abortive, and finally the application for membership in July, 1961.
Now this fresh application is being made and is often termed historic. This. I think, is probably a misnomer, because one application has been made. What I think is historic is that the present Labour Government and the party opposite have brought themselves to make application for full membership. This, I believe, fits into the wide sweep of European history, particularly in the post-war period. So in the House today both major parties and the Liberal Party are now broadly in support of full membership and I believe that in the Divisions which are to come at the end of this debate that will be shown.
We as a party, as we were as a Government and as we are as the Opposition today, are committed to this European policy. We have been so since 1960, through the negotiations and all through the party conferences. Of course, I respect the views of my hon. and right hon. Friends who have throughout this period consistently and with integrity differed from me and the policy I have been putting forward as the policy of my colleagues. Now we have the Leader of the Government and the great majority of his party and most of his colleagues behind this policy. So we on this side of the House are backing the Government's application. I wish that to be known everywhere. This clearly demonstrates that the great majority of the House of Commons are backing it also. What is important at this juncture is that this is all history and must make its own impact on Europe and make its impact as it has never made it before.
We therefore hope that the negotiations will be successful and we shall do everything that lies in our power to make them so. Of course, we shall not pursue protectionist interests purely for political reasons. We reserve our right to examine the negotiations carefully and closely because that is our duty as an Opposition, but whatever the outcome on this
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occasion Europe can see that now Parliament as a whole wants to bring about British membership of the European Economic Community.
This is not just a flash expedient of the moment. I have always regarded the European policy as a long-term policy in every respect. It is a long-term policy if we are to be accepted as a member of the Community. That is so under the Treaty. If the application is not successful on this occasion I believe that this should remain the objective of British policy in the long term, also. The Prime Minister mentioned the alternative and I shall deal with that later in my speech. I believe that this policy is one on which the great majority can now agree. That is the real historic significance of this debate and one which Europe must not fail to notice.
The Prime Minister and his party have come a long way during the last six years, indeed during the last six months, even the last six days.
Mrs. Renée Short: Hours.
Mr. Heath: Yes, I agree with the hon. Lady.
Those who watched "Panorama" must have thought that the Prime Minister has moved fast, since after his speech in the House there was a firm commitment to increase old-age pensions—we knew that before the election—and now it is being connected with Europe. The speed of the convert gets greater just as he thinks he catches sight of the Holy City and gets nearer. At the same time, the memory of what it was like once to be an infidel becomes very much weaker. That we notice from the Prime Minister's speech yesterday.
A week ago today, when I asked the right hon. Gentleman whether he accepted the Treaty of Rome, for the first time he enunciated unequivocally, "Yes". I was delighted that in his speech yesterday he gave every impression not only of having accepted it, but, even if he did not write it, of having discovered the document itself. We accepted it in 1961. I understand from what he said that the Prime Minister now accepts the common agriculture policy intact and the levy system.
Only a year ago, at Bristol, he made those memorable remarks—I am sure that

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the Prime Minister wants to hear them again—
"we must be free to go on buying food and raw materials, as we have for 100 years, in the cheapest markets …"—
Now, of course, the dash does not matter at all—
"and not have this trade wrecked by the levies the Tories are so keen to impose …An unacceptable increase in the cost of living … An unacceptable increase in our imports bill … A total disruption of trade with Commonwealth countries."
That was a year ago. All that has gone. What is more, the Prime Minister has accepted the common tariff, the loss of preferences and the creation of reverse preferences. The Prime Minister even now believes that the Labour Opposition accepted this and supported it in 1961–62. I suggest that the Prime Minister should go back and look up the record to see what was said by the then Leader of the Opposition and himself about reverse preferences in 1961–62.
Then we come to the question of E.F.T.A. Now the Government have abandoned the London Agreement, too. This needs to be put firmly on the record. They had the agreement that all members of E.F.T.A. should come into the Community at the same time as we as full or associate members. The Government have now abandoned that. They set such store by it in 1961, indeed, I remember the right hon. Member for Leyton (Mr. Gordon Walker) telling me that I must not even conclude negotiations until all the E.F.T.A. negotiations had been concluded. Well, that was an option for delay if ever there was one, but this is the point which the Government have now reached: they have abandoned the E.F.T.A. Agreement.
There is, of course, still the myth in which the Prime Minister persists that these negotiations were long-drawn out. It was his own Leader of the House of Commons on 7th November, 1962, who said, as he had already said at the Brighton conference, accusing us of hurrying negotiations, "Why don't you delay, break off negotiations, have a pause and carry them on and see how you get on?". That was what I was being asked to do. This is another myth that we were being urged to get on and that there were long delays. This time, we shall watch the progress of the negotiations. Already, last
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night, the Prime Minister was laying down a timetable. I suggest to him that it is unwise to say that the negotiations will be through by Christmas. That is only urging others to cause embarrassment. The Prime Minister would be wise to eschew time-tables of any kind.
Finally, there are the special arrangements for which the right hon. Gentleman is asking. The Prime Minister mentioned yesterday in his speech the arrangements we negotiated for association for independent territories in Africa and the comprehensive trade agreement with certain Commonwealth Asian countries. I understand that he wishes to take this up from the point at which we left it. The Secretary of State for Commonwealth Affairs mentioned special arrangements for the older Commonwealth countries. We expected that there would be special arrangements which again will be the tariff arrangements which we negotiated. No doubt the Minister of Agriculture—I am glad to have the Prime Minister's endorsement—will say that he wants to take up the Price Review which was negotiated by my right hon. Friend. I see that I have the agreement of the Minister of Agriculture to that.
The Government are, in fact, taking up the greater part, at any rate, of the arrangements which we negotiated. After the Kennedy Round, if there are no commodity agreements, no doubt the Minister of Agriculture will want to take up the preference which we negotiated for cereals for the old Commonwealth and various other arrangements of that kind.
We have heard nothing about voting rights, which were of immense importance in the debates in the House in 1961 and 1962. Perhaps the Prime Minister is now content to adopt the voting rights arrangement that preserved the two-thirds qualified majority voting position and has worked out a similar position to what we had before. So all these things the Government have decided to take up.
As to the Commonwealth in Africa and the West Indies, gone are the cries of neo-colonialism. Gone is the idea of the rich man's club. It is now a very acceptable position to have established. As to the industrial tariffs with the Commonwealth, gone is all the derision on the kangaroo meat which, in fact, took only about five seconds. What they are going to

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take up is all the industrial tariffs which we negotiated during the course of those hard-drawn negotiations.
All this gives us cause for great satisfaction. [Laughter.] It gives great satisfaction to those who did the work. It gives one even greater satisfaction when one reads what the Prime Minister said about this at Bristol, when he talked of
"the unacceptable terms the Conservative Government was ready, even willing, to see imposed upon it".
The Prime Minister is taking practically every single one of them.
Then, what did the right hon. Gentleman say about the terms when he looked at them in 1963? I wish to remind him of this. He said that the terms
"already constituted a national humiliation." —[OFFICIAL REPORT, 11th February, 1963; Vol. 671, c. 963.]
Those were the Prime Minister's words in describing the whole of the agreement that he has now come to the House and said that he is to accept and take over willingly.
The Prime Minister justifies all this on the grounds that the Community has changed. What the Community has done is to develop, and it has developed along the lines laid down in the Treaty of Rome and exactly as foreseen in 1961. It is not the Community which has changed. It is the Prime Minister who has changed. I am delighted that he has done so, but perhaps it would also be more honourable for him to say that he has changed and that he has accepted everything which was done before.
The Prime Minister has described the position in the Community. I differ with very little of what he has said in expounding the position as it exists today. I agree particularly with what he said about New Zealand and about the constitutional position, which he described in some detail and which corresponds to the view which we ourselves held.
Perhaps on taxation and on the value-added tax the Prime Minister was somewhat disingenuous, because I think that he will find that it is a tax which comes in automatically in 1970 and that we shall require to accept it if we become a member. Also, the Prime Minister is perhaps labouring under one misapprehension about the Luxembourg Agree-
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ment. This was an agreement to differ. It was an agreement which, in fact, represented what one had always known, that the Community would not break on any major item of policy. It is not an agreement which removes supranation-ality from the Treaty of Rome. I therefore hope that there will be no misunderstanding about that. This particularly applies, I believe, to the neutral countries of E.F.T.A.
I want now to deal very briefly with three or four points about the forthcoming negotiations themselves. We rely on the Prime Minister and his colleagues to give the House the fullest information. He has often mentioned an opening speech we made. We wanted those negotiations, like any others, to remain confidential, because that gives much more flexibility to those who take part. But it proved to be impossible. I believe that it would be a mistake to think that it will be possible in Brussels, with a negotiation involving so many countries spread right across the world. Therefore, as we did afterwards, let us make the whole of the information available as soon as possible.
If the Prime Minister and his colleagues are to carry this through, it will mean a constant flow of information and argument to the public. We have had experience of the arguments which can take place about this great matter and the way in which public opinion over a time can be eroded by the constant impact of arguments which are not answered. Only the Government have the power and the resources to do this job. Therefore, I urge them most strongly to do it as well as they possibly can.
In the House last November I put forward proposals for handling this matter. Very briefly, they were that the Government should accept the Community as it is, that they should then negotiate all the transitional arrangements right across the board, and that they should take up the special arrangements which we had negotiated in so far as they wanted to do so. I suggested that there should be detailed discussions at a high official level on the transitional arrangements and on the special arrangements after the declaration of intent. I suggested that this should be done in order to have as short a negotiation in public as possible.

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I went on to list four other major items—the I.M.F. debt, the sterling area, the political organisation, and defence. I listed these as problems to be discussed beforehand so that it would be possible to see a way through the negotiations. Personally, I still believe that this was a method which could have been used very profitably. The Prime Minister has chosen his own way of doing this and, quite lightly, as he is entitled to do, his own time to do it. We must wait and judge this on the results.
The Prime Minister told me in answer to a question when he made his first statement a week ago that he had to do this without knowing what the reactions of other countries would be. That was a very frank statement and set out the position very clearly. It raises a question as to exactly what emerged during the probe which the Prime Minister was making and whether he ought not to have gone further to try to find the attitude of other countries before engaging in the negotiations. I think that one of the reasons why he could not discover their attitude was that he stated the problems, but was not prepared to state the possible solutions. Therefore, he was not able to get the reactions of the other countries in the Community to specific proposals which were being put forward.
On the solutions, I would like to propose this. First, the Government must put forward what I would term Community solutions, solutions which are on a Community basis, which are consistent with one unified market, and solutions which affect the Community as a whole; because this is the structure and the nature of the Community. Solutions which are put forward purely from a national point of view, except as a transitional phase, will not be accepted by the Community as a final solution. [Interruption.] I have said this before, but I repeat it, because I believe that it is essential if we are to have a successful negotiation, which I want.
The Prime Minister will find that other members of the Community are just as insistent on this as the French Government. This is not a matter of one Government. This is a matter of all members of the Community and the Commission.
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It applies particularly to the financial regulation, on which the Prime Minister spoke at some length. During the last negotiations we were able to take up a position. We accepted the regulation as it then was. Now it has further developed. The problem here is that, where there is one market, it should not matter into which port either foodstuffs or industrial goods come if there are levies or tariffs on them.
This is not, therefore, the prerequisite of the port or the country of the port itself. This must be the case with one unified market, in exactly the same way as it is in this country: if goods come into London, Southampton, or Liverpool, then the Customs duties or dues of all kinds go to the centre and not to the port of entry. The problem is that with a unified market, but separate currencies, there can be a balance of payments problem.
This is the difficulty. Therefore, what has to be reconciled is the nature of the market, in which there is this logical answer, and the problems with foreign currency which it presents or can present while there are individual currencies. There can be no doubt that the logical conclusion in a complete market is to move over de facto or de jure to a common currency, because this is the only way in which stresses and strains of this sort can be avoided and in that way the logic of the market kept intact. I wanted to give that as an illustration of the particular problem which the Prime Minister and his colleagues will come across in the negotiation.
The Prime Minister (Mr. Harold Wilson): Before the right hon. Gentleman leaves that point on the financial regulation, may I put this question to him? Is it his point that, in the negotiations, apart from transitional arrangements, we should not seek any changes, as, for example, Germany did in the matter of a ceiling on the financial regulations, but we should accept whatever is the present position, with adequate transitional arrangements? Does he not feel that perhaps it is a little inequitable that we should be paying more than the other Six put together? Is that a matter about which he would negotiate, or pass over?
Mr. Heath: It is inequitable so long as there are individual national arrangements for currencies, and during the transitional stage, but from the point of view of the full unified market into which they will be moving, with the financial regulation, in 1970, the logic is that the funds go to the centre. It is logical, also, that, according to gross national product or population, the funds should be distributed afterwards; that also, is a matter for negotiation. There is no doubt about it. If the right hon. Gentleman raises that point, there is also the point he will have to face as to what is to happen about Customs dues in 1970 as well, because exactly the same problem arises and the Community has to face it.
The second point I make here is that the solutions must be reasonable and practicable for the transition period. This applies particularly to agriculture. I was glad to hear the right hon. Gentleman say yesterday as a general point—but it applies particularly to horticulture, I think—that the Government ought to use Community and national resources to bring about changes where required. This is absolutely true, and I hope that the Government will work out plans to do it.
Third, there is the question of the lesser items in the negotiations. The Prime Minister owes it to the House to say what the lesser items are. This is not a question of holding the cards close to one's chest. If things are to be left to be settled in the Community, the Community should be told so, and so should Parliament. If they are matters which the Community has not yet settled, it is right to leave them to be settled later. I think that it was a mistake on our part to try to negotiate and settle matters for the future which had not already been settled in the Community itself. This proved to be impossible, and I believe that it will be impossible again. Apart from that, the situation is that there is a policy and that this country has either got to move by transitional arrangements to what exists or go straight away to what exists. I do not understand how it can be left unaltered until we get into the Community. So I hope that the Prime Minister will state what the lesser items are.
The transition period, which covers the whole board, does not automatically
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produce results for this country. Positive action must be taken to bring about a change-over from this country's position in industry and agriculture to the position of the Community. This requires new economic policies to enable industry to adapt itself, and in some cases new fiscal policies. In particular, if the Prime Minister is worried about capital movement, either direct or portfolio, the answer in the Community, once we are in the Community, or while we are going into the Community, is to bring about a state of affairs in this country in which people will not want to move portfolio investment out into Europe or direct investment out into Europe either.
That is the real answer to the anxieties which the right hon. Gentleman has about portfolio and capital investment. [An HON. MEMBER: "The right hon. Gentleman did not deal with it."] We did not have to deal with it because it did not exist in the Community.
Mr. Robert Maxwell Mr. Robert Maxwell (Buckingham) rose——
Mr. Heath: No, I am sorry. The hon. Gentleman is one of my friends from whom I wish sometimes to be saved.
I turn now to the economic situation, which has concerned the House very much and which the Prime Minister discussed—the problem of sterling and the balance of payments. I hope that the Prime Minister will not underestimate this problem and its connection with the negotiations. The hon. Member for Ebbw Vale (Mr. Michael Foot) was absolutely right in the emphasis which he put upon it yesterday. There are very real problems about the sterling area and the balance of payments in negotiations at this time. They are well known here, and the Prime Minister will find that they are just as well known in Europe.
The right hon. Gentleman has constantly harped upon the fact that the Motion on which he and his right hon. and hon. Friends voted against us when we went into the negotiations accused us of going in on a weak situation, and today, he says, it is strong. Sterling today is at 2·79⅞, still below par at 2·80. When we announced the negotiations it was 2·81×E;, and when we went into the negotiations it was slightly higher than that. That is the comparison

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between the two sets of negotiations, and it is good to have it on the record.
The balance of payments situation may be improved. The Prime Minister has said that everyone in Europe will recognise that it is one of the strongest. Has he compared it with the Federal Republic of Germany, one of the countries with which he will be negotiating? In the first quarter of this year, the monthly surplus balance of trade was £130 million in sterling terms—£130 million a month, I ask the House to note—and that is the context in which the Foreign Secretary, or whoever it is, will be negotiating.
The Chancellor of the Exchequer (Mr. James Callaghan): Much too high.
Mr. Heath: The Chancellor of the Exchequer says that it is much too high, but he would not say it if he had that balance himself. Our balance of payments, of course, is brought about by acute deflation and a situation in which the trend of unemployment is still upwards and production is stagnant.
If the Prime Minister is to address himself to these problems, he must be able to show that this is not just a question of an improved balance of payments with deflation, but that he can carry it through during the next few years, to the end of the transition period, and get expansion, still maintaining a surplus on the balance of payments. This is what the right hon. Gentleman must be able to say to the Europeans with whom he is negotiating, and he cannot be effective by just trying to sweep it under the carpet.
Mr. Emrys Hughes: Does the right hon. Gentleman want him to be effective?
Mr. Heath: Yes, I do, and that is why I am asking the Prime Minister to face the reality of the situation. He will have to face it in the negotiations once he starts. Everyone in Europe knows that he has £900 million worth of debt to repay——
The Prime Minister: That is the right hon. Gentleman's debt.
Mr. Heath: —and that will take our balance of payments for years to come. This is recognised in Europe. The Prime Minister will have to have policies to deal with it, and he must face discussion of it in the negotiations.
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In a brilliant phrase yesterday, the hon. Member for Ebbw Vale said that the Prime Minister was cooking uncaught hare and dishing it up with lots of sauce as well. But that is what the Government have been doing. They have been asking us to live on uncaught hare during the past two and a half years. This is absolutely typical of them, but it will not wash.
Now that the Prime Minister has been able to relax once again, I put this point to him. His own proposal to exclude sterling from Article 108, when it is not concerned with balance of trade factors, raises a difficult argument to substantiate. Obviously, he attaches great importance to it, but how can one distinguish factors which operate outside the balance of payments?
The right hon. Gentleman instanced the case of Australia running down her reserves. But this, of course, is bound to affect gold and dollar reserves; it is bound to become known in the normal publications. It can undermine confidence, and then it has an effect on sterling. It is impossible to differentiate one from the other. The second argument against it is that it is not a Community solution. It is an attempt to isolate this country from the Community on a particular item, and, in that respect also, I suggest that it is not the sort of solution for which we ought to work. The Prime Minister will find out whether this will be acceptable as a solution to the sterling area problem, and will have to discuss it further in the negotiations.
I want to deal with the general question on the economic side of the alternatives. The Prime Minister said that there are some alternatives. He did not put them forward, and I think that that was wise, because they are not a bargaining counter and it is better not to put them forward. I can deal with them. I can say that the Prime Minister did not indicate that there is any Commonwealth solution. All the proposals he used to put forward for bulk-buying agreements have disappeared. He no longer believes in them as an alternative to a European policy. In that he is quite right. He mentioned new economic groupings, presumably thinking of the American free trade area, and said that this was not a current solution. I believe that that is also right.

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My right hon. Friend the Member for Kinross and West Perthshire (Sir Alec Douglas-Home) mentioned a free trade area of Canada, possibly Australia, possibly New Zealand, possibly the United States and possibly E.F.T.A. I do not believe that that is a current solution, nor one which secures support in other areas. The main alternative is to go on as we are, as a member of E.F.T.A. and of the Commonwealth preferential area. That is the alternative.
Let us be quite clear about it and face it—either to have a European policy, endeavour to be successful and, if we are, to carry on in the Community, or if we are not, the alternative is to go on as we are in E.F.T.A. and in the Commonwealth preferential area. [An HON. MEMBER: "It is a good one."] I do not believe that it is as good as a European one if we can bring it off. But there is an immense amount we can do in it as an alternative, to carry on as we are.
I believe that if this is to happen it is essential to change economic policies. We have discussed these on many occasions, but I do not believe that we can keep pace in any way unless there is a change in the policies of the Government which will produce a greater drive and efficiency in British industry.
Sir Cyril Osborne: If negotiations fail will E.F.T.A. still be there for us to go back to as an alternative policy? Will it not have broken up in the period of negotiations?
Mr. Heath: I very much hope that E.F.T.A. will continue to exist. I believe that it is very important that there should be the fullest consultation with it. If the negotiations fail, of course, we want it to be there; it is of immense benefit to our trade and to the other E.F.T.A. countries. Let us be quite clear about that.
Mr. Michael Foot: If the right hon. Gentleman thinks that it is highly desirable that E.F.T.A. should continue to exist, does he not think that it would be a good idea if the Government renewed their pledge to E.F.T.A.?
Mr. Heath: I understand that the E.F.T.A. countries have accepted the situation. All they are entitled to now
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is the transitional arrangements which, of course, every country would have to have in any case. If the E.F.T.A. countries are prepared to accept them well and good. It undoubtedly greatly eases the negotiations, but it is the Government which has changed the position as far as E.F.T.A. is concerned.
Finally, there is the question of the balance. The hon. Member for Ebbw Vale rightly emphasised this. The main objective in the negotiations is political, I believe—it was in 1961. In the debate after our application then the present Prime Minister paid tribute to Mr. Macmillan. He said that it was a political matter first and foremost and that the Prime Minister had made it so. That is right, and the political purpose is for Europe to be able to expand its influence and for Britain to do so as part of it.
I have never seen a European policy as a policy of withdrawal into a "fortress Europe", either for ourselves or for other countries. I have always seen it as a means of enabling us with Europe to continue an influence which I believe to be beneficial in other parts of the world. I have hoped that it would be continued with other countries in Europe.
This is where I disagree with the hon. Member for Ebbw Vale, who thinks that we can do more if we remain outside. From my experience, part of it in the Foreign Office, I do not believe that this is the case. We can do a considerable amount alone; we have great resources in diplomacy, great communications, knowledge, know-how and techniques. But I do not believe that we can do as much as if we are part of a larger grouping in Europe.
I have always believed that one of the main purposes of having European political unity is to be able to find a solution to the German problem. This has always seemed to me to be first and foremost, because it would help to bind the Federal Republic more and more closely into a peaceful democratic Europe, to reduce tensions with the Soviet Union thereby, and to help to find a solution to the problem of the two Germanys.
This has always seemed to me to be important, and we, with our experience, long traditions of democracy and our Parliamentary system, have a unique part

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to play. But if this is to be done it must be done through economic means, and the negotiations will be the economic means of trying to secure that greater European unity. Everybody concerned in the negotiations will know what the ultimate purpose is—for Europe to have its political influence. What they will want to know is that Britain shares that objective and shares it fully.
On the economic balance, I do not accept the figures in The Times. The more the Government can tell us about this the more helpful they will be. The problem which faces us of the kind described faces us outside the Community just as much as inside. The problems of reducing our proportion of imports for home consumption and increasing our exports face us just as much, particularly in a world of fiercer competition and diminishing Commonwealth preferences.
The Community provides the opportunities, and we must be able to seize them. There is a price to be paid, and the real price is change. But that price must be paid whether we are inside or outside the Community. For me, the balance, which is the political balance, goes on the side of paying the price of change, because I know that it must be paid in any case. But if European unity is to be effective there must be a means of exerting it. This is where I believe the Prime Minister yesterday failed to bridge the gap. In fact, he deliberately maintained the gap by saying that he was not prepared to discuss defence or any of the aspects with it.
I believe that with the Rome meeting coming on we may very well see a movement of some kind, however slight, towards political unity in the Community. As that moves forward I believe that Europe will want to do more for its own defence; it would be most extraordinary if it did not. I believe that this is where the Prime Minister failed to bridge this all important gap. He did not convince us on how Europe can exert its influence in the world unless it has the organisation for unity and is prepared to deal with the political and defence problems.
This brings us to the policies of the last few months, in which there have been divergencies between Britain and the countries of the Community—very important and deep divergencies. Of
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course, we must stand up for our national interests, but the question which has been facing us is how we do so and with whom. Let us take the question of the Kennedy Round. This has obviously been a situation in which we have been separated from the Community on many issues. Again, taking the non-proliferation treaty, we did not go to the lengths to which we should have gone as a country to ensure that the civil use of atomic energy in Euratom and the Community was not in any way damaged. This was fundamental.
In the international financial arrangements, we have not been thinking as a member of the Community and of a wider Europe, which is the next stage. I give the Prime Minister every credit. He has come a very long way, and has brought his Cabinet and party a very long way. But the next stage is for him to be thinking in terms of Europe and the interests of Europe, because the purpose of this development is to create an entity which redresses the balance with the United States and Canada on the other side of the Atlantic—redresses it in trade, commerce, agriculture, finance and, ultimately, in its political unity and, to some extent, in its defence arrangements. That is the purpose of the European unity which is developing. It is this to which the Prime Minister and his colleagues must address themselves.
I say frankly that there is the question whether a Europe which is closer in its unity of forms of organisation will seize this opportunity or not. There are some—I think that the right hon. Member for Easington (Mr. Shinwell) is one—who will say that they will never do it or will never contribute towards these ends.
Mr. E. Shinwell: They never did.
Mr. Heath: The right hon. Gentleman is not entirely right. But the question now is whether they will do it in future. Has Europe the will power, the determination to do this? I believe that we must create it and play our part in creating it because, unless we do, our own continent will not have that influence in the world that it should have and it is for this reason above all——
The Prime Minister: The right hon. Gentleman is on desperately important

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subjects when talking about European defence. He will know, of course, what certain proposals would mean in terms of the hopes of a détente with Eastern Europe. The right hon. Gentleman has been reported as being willing to propose that the so-called British independent nuclear deterrent should be shared with other European countries. Will he say that that is his policy or not?
Mr. Heath: I have said on a number of occasions, as the right hon. Gentleman knows, that I believe that Europe will want to contribute to its own defence. It can do so on orthodox grounds with orthodox procurements. I have said, in relation to nuclear defence, that, with the French force de frappe and the British deterrent, it should be possible for these two aspects of nuclear weapons to be held in trust for Europe. This, in my belief, would not end non-proliferation in any way. In fact, I understand that the non-proliferation treaty has been deliberately designed to enable a united Europe to have its own nuclear force. That cannot be denied. Why, then, are the Prime Minister and the Foreign Secretary looking so shocked? This is a different matter from the position in this early stage, where the French and British deterrents exist separately and should be held in trust for the European countries which want it so.
Therefore, I say to the Prime Minister that I believe that the real purpose of Europe now is to achieve an entity, that we should play our part in creating it, giving the will and the determination to bring about its own development as a European civilisation. It is because of this, above all, that I support this application.
The Prime Minister: I am not clear about what the right hon. Gentleman has said. Does he accept or repudiate the proposal to share Britain's so-called independent nuclear deterrent with other European countries? I do not say "held in trust", whatever that may mean. Is the right hon. Gentleman advocating— [HON. MEMBERS: "Oh."] We want to know what he is proposing, because he is trying to help us get in, as he has said. Does the right hon. Gentleman propose sharing the so-called British independent nuclear deterrent for the purpose of
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forming a European nuclear deterrent, or does he propose keeping things as they are? We want to know.
Mr. Heath: I will tell the Prime Minister, because he is trying to get in a tricky question for his own benefit. If the Prime Minister means that, in the existing situation, I am suggesting that the British nuclear deterrent should be handed independently to other members of the Six, such as the Federal Republic of Germany, Belgium, the Netherlands, or Italy, the answer is clearly, "No".
I propose that France and Britain, each with its nuclear deterrent, should say that we are prepared to have, for example, some sort of committee as there is in N.A.T.O.—the Macnamara Committee or something of the sort—in which members of the enlarged Community can deal with these matters. If this is done in N.A.T.O., I see no objection to its being done in the Community. We would hold the deterrent in trust for these European countries. That is perfectly clear, and the right hon. Gentleman cannot make any capital out of that.
These are the developments I want to see come about and which, I believe, will come about and it is to these that the Prime Minister should address himself.
Mr. Shinwell Mr. Shinwell rose——
Mr. Heath: I am sorry, but I have given way on a number of occasions.
We have said that we will support the Government in their application. Having gone through these negotiations myself, I do not wish to see our present negotiators subjected to the sort of things that we were subjected to. I know what it means.
Here in this House we shall be as helpful and as constructive as we can in enabling the Government to find a solution and also in bringing them to face reality, because that is the best way in which they will be able to bring about a successful negotiation. We welcome the application which the Government are making and we wish them every success.
4.25 p.m.
The Chancellor of the Exchequer (Mr. James Callaghan): I wish today to speak principally about the effects on

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our balance of payments and the rôle of sterling in the event of our entering Europe. But, first, I should make some general political comments, arising to some extent out of what the Leader of the Opposition has said; and I will also take up later some of the points he made.
I welcomed, as I am sure we all did, the beginning of the right hon. Gentleman's speech, in which he expressed his approbation of the initiative that Her Majesty's Government have taken and his indication to Europe that the parties are united in their approach to this problem. This is of great help and it should be widely understood and recorded throughout Europe.
But there were other parts of his speech with which I found myself not wholly in agreement, including some parts of history. Indeed, if the right hon. Gentleman does not mind my saying so, when he was conducting an inquest on the last series of negotiations, I could not help feeling that self-justification is the opiate of the politician whose future is behind him. But I felt that what he had to say about our approach to current problems, particularly in relation to the Kennedy Round, was not really accurate on examination of the details.
I shall not take up what the right hon. Gentleman had to say about the nuclear deterrent. It was of such importance that it needs careful examination and, I would have thought, much more explanation by him of what he was putting to the House and the country. As far as I could make out, he was suggesting at one moment that the nuclear deterrent should be held in trust for the Community by France and Britain and then that it should be shared with those Europeans who wanted it.
Mr. Heath: No.
Mr. Callaghan: Those last words I have used were words I thought the right hon. Gentleman used.
Mr. Heath: No.
Mr. Callaghan: I agree that the right hon. Gentleman was under interruption at the time and perhaps under emotional excitement—I do not know. But he did not make the position clear. It is something that needs spelling out carefully for the sake of our future relationships with
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other countries of Europe and with Russia and the United States. I hope that he will take an early opportunity of explaining what he had in mind, because some interpretations that could be put on what he said could be highly dangerous in the attempts that are now being made to secure the non-proliferation treaty and in trying to rid the world of the nuclear threat.
I do not intend, however, to follow that matter up any more. [Interruption.] I believe these issues should be very carefully set down if a Minister is to speak about them from this Box because they are extremely delicate issues—much more delicate than some of the others I shall talk about. But the matter which the right hon. Gentleman raised at the end of his speech is undoubtedly one of extreme gravity.
I want to pick up some of the questions which were raised yesterday and by the right hon. Gentleman today. I must address myself to the Amendment, because the House is broadly united apart from that. The first of these questions, posed in the Amendment and by hon. Members on both sides, concerns the alleged inroads into British sovereignty entailed in joining the Community, the freedom of action which, it is alleged, would be restricted in that we should be unable to take our own decisions.
My experience over the last two and a half years has led me to the conclusion more and more that to a very large extent nations are not free at the moment to take their own decisions. This is becoming increasingly true, as I have observed in financial, economic and political matters, and it certainly is not limited to the United Kingdom. Although some people may say, "It is because you have a debt which you owe to the International Monetary Fund", that is not so in my experience.
I have been struck by the effect of the international forums in the world today on the policies of individual countries, an effect which is much more than I had assumed before I took office. The effect of the G.A.T.T., E.F.T.A., O.E.C.D., and I.M.F. and the World Bank are all quite substantial in the matter of their discussions and their impact on the policies of individual nations, and it is very clear from standing outside the Community that

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consultations inside the Community are growing in importance in achieving a concerted view by the members of the Community.
Every nation now surveys the affairs of the others. We know a great deal about them. Forums of discussion are almost continuously in action; views are expressed, and sometimes advice is given. I must say that I have found that some international forums seem to know more than the members of the legislatures do, and that this is influencing me in my consideration of the problem, which has been raised in the House more than once, of how far we ought to publish to the House of Commons economic forecasts which we are ready to give to international organisations. It seems rather absurd that they should know more than hon. Members here do. [HON. MEMBERS: "Hear, hear."] I hope that that was applause and not irony, because there were earlier opportunities. Of course, it could have been done.
This practice is growing increasingly and the reason for it is obvious and clear to anybody who has taken any part in these matters. It is that economic ill-health is infectious and that one nation catches it from another. Hence the close scrutiny and the continuous consultation which take place among nations today.
The right hon. Gentleman thought to use the point against us that Germany was running a large balance of payments surplus. "Ha, ha", he said, "Would not the right hon. Gentleman like it if he had it!" No. The right hon. Gentleman will not know, but, in fact, the size of the German surplus in its balance of payments is causing some considerable concern among the nations which make up these economic discussions, because it is having an effect on the rest of us which is not altogether healthy.
I take up the right hon. Gentleman's point in passing, but this is an illustration of the way in which these discussions of each other's economic problems are becoming much more prevalent throughout the G.A.T.T. and throughout O.E.C.D. Everybody is having to take a view about our problems communally, and although it would be too much to say that international solutions are being
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worked out, nevertheless, international pressures of opinion are being applied to countries which seem to be departing from what is regarded as the best path for economic progress.
In the event of entry into the Community, we should be hammering out much more common economic policies. I myself would welcome this; I believe that it would be right to do so. I do not believe that Britain would lose from it or that the rest of the Community would suffer from it. Of course, one country can run amok and run counter to the general trend, but that is not the rôle which a great trading nation such as we should seek.
I finish what I have to say on this point by repeating that my conclusion is that the argument about sovereignty is rapidly becoming outdated. It takes no account of the very substantial developments in consultation during the last decade. What nations can do successfully in these international forums, as I have seen, is to insist on safeguards for their own vital economic or political interests, and where they are regarded as being too sensitive, other nations will step back. That would be the case for example, as I would see it, in problems which might arise for regional development in the United Kingdom, and I would have no hesitation, taking the line from what other countries who are now members of the Community have done, in saying that we would be able fully to safeguard the development of our own regions. Speaking as one who comes from South Wales, I regard that as a prime necessity.
Another factor which certainly influences me in our approach now is that the probe has shown that five out of the Six are eager for us to enter. The sixth, I agree, is veiled in greater obscurity, but when one is asked to join that is a powerful reason for not rejecting any opportunity which is offered. The Six are growing together in policies. I said that they do not yet speak with one voice, but attempts are being made to co-ordinate policies the whole time, and if we are outside our task will be more difficult than if we are inside.
Mr. John Hall: The right hon. Gentleman has made a very interesting statement. He has said that five out

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of the Six are in favour. Can he say whether they have stated that they will support our application even against French opposition?
Mr. Callaghan: I did not say that there was any opposition from the sixth member. What I said was that its attitude was veiled in obscurity. I therefore cannot answer a hypothetical question of that sort.
What is quite clear—and I understand that the hon. Gentleman is trying to help—is that five out of the Six are anxious that this country should join the Community at the earliest possible moment. That should be an influence in determining our thinking about the alternative roads which are open to us. That is the point which I am making and in these circumstances it is a valid point.
It is obvious that common policies arrived at by a group of countries, policies which we cannot influence because we are outside, can be much more damaging and unpalatable than those which we can help to influence from inside. But I do not regard it purely in that negative light.
The U.S.A. and the U.S.S.R. are two great power blocs. The Community is becoming such a great power bloc. We have the chance—we may have the chance—of joining and forging a common viewpoint on political and economic matters. This should be our aim if we go in. If we go in, we should aim to play our full part in developing the Community's interests. This is a rôle which will be better for us and better for Europe than if we stay sniffing around on the outside.
Yesterday fears were expressed about worsening relationships between the Communist and the anti-Communist world. This is an over-simplified description of the world today. It may have been true some years ago, but anybody who reflects on the relationship between President de Gaulle and the U.S.S.R. cannot believe that the creation of the Community has worsened relations between E.E.C. and Eastern Europe. If anyone were still to advance the view of a conflict between the Communist and the anti-Communist bloc, I would have to say that rather over-simplified the matter when one considered the relationships and tensions between China and the U.S.S.R.
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If I may venture a personal view, I believe that in future the increasing emphasis in international discussions will be not on the Communist versus the anti-Communist bloc, but on the problems of race and poverty. These will be the twin problems on which the world will have to focus and I see no reason why we should not contribute fully to the solution of these problems and the release of these tensions from inside the Community.
It has been suggested that we should do more to build up the Commonwealth. My right hon. Friend the Secretary of State for Commonwealth Affairs dealt with this yesterday. There is no doubt that the Commonwealth has a considerable future, but events in recent years have shown conclusively that the Commonwealth is not an exclusive relationship for any one of its members. Those in Asia seek appropriate groupings and relationships with their neghbours, as do those in Africa.
It would be difficult to speak, as my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) did yesterday, in one breath of the necessity to build up the Commonwealth, and in the other of the necessity for ending the east of Suez policy. These two things are not compatible. One can have a changing relationship—[Interruption.] I can assure my hon. Friend that if they really believe that we can build up a tightly-knit Commonwealth—much tighter-knit than today; this was the proposal—and, at the same time, relieve ourselves of all or part of our obligations for defence in the Far East, then they are not living in a world of reality.
Mrs. Anne Kerr: Has it occurred to my right hon. Friend that there are other ways of knitting the Commonwealth together man by military means?
Mr. Callaghan: Of course there are, and it is those ways that the Government wish to follow.
I am now speaking, not of my argument, but of the argument of my hon. Friend the Member for Ebbw Vale. It takes two to do some knitting in this matter. The countries in Asia who are concerned about this policy have their own views about the nature of the knitting that should take place, and my hon. Friend should not overlook that.

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Go it alone? It would be possible, but we should need to follow autarchic and self-sufficient policies, which would fragment our relations with Europe and maybe with others. It would be a serious matter for ourselves and Europe if we did follow such a course. Industry is opposed to it. The general view of industry is that it wishes to join the Community. It has expressed its views very strongly about the value of entering. We can see—and I do not want to hark back to 1961–62 as much as the right hon. Gentleman did—that there is a much more realistic assessment now about the prospects than there was six years ago. There is no longer the heady feeling that existed then, that entry would solve all our economic difficulties.
Today, there is a greater appreciation that economic success depends on ourselves, and on our comparative efficiency, whether we are inside or outside the Community. I agree with what the right hon. Gentleman the Leader of the Opposition said about that. We approach the question in a rather more sober mood than six years ago. There is greater understanding and information about the issues involved today than then, and a more realistic approach is necessary. One thing that is becoming clear now, which was not clear then, and there was very little information about it, are the figures in the economic balance sheet.
These are clearly adverse in the short term. The long-term positive effects of going in cannot be determined by figures alone. These depend on increased investment, on a willingness to be as efficient as others, on our readiness to adapt to changing and larger markets. One cannot put a figure to the value of the political changes that would take place. The Prime Minister made clear yesterday that, while the long-term effects of joining would be beneficial, the impact on our balance of payments would be adverse in the initial period of our membership.
I can assure the right hon. Gentleman the Leader of the Opposition that we do not under-estimate the seriousness of this matter. We have wrestled with the balance of payments for a long time, and now seem to be getting on top of these difficulties. What effect will entry have on our recovery? I agree that the House
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and the country, and our European partners, have a right to be satisfied that we are in a position to undertake the additional obligations that are involved in membership of the Community. Having studied all the published figures and the forecasts of balance of payments, I must say that this is the most difficult area of all in which to prophesy with clarity, as those who have experience will know.
On the whole, the most that one can say is that it is easier to forecast the trend than to forecast the actual figures. On the favourable side of the balance sheet as regards our balance of payments, what I can say is that the best forecasts and trends show that we should join the Community with a strong balance of payments. That is not only a forecast, it is a requirement, because we have to get the economy into the best possible shape before we enter.
As far as can be foreseen, the present position, as I have indicated to the House, is that last year's deficit which was £189 million, will be turned into a surplus during the course of this year. That involves much improvement in the trend of our balance of payments. During the course of this year, in spite of the removal of the import surcharge, it is my expectation that, on the basis that I outlined in the Budget, this satisfactory trend will continue in 1968, and I would expect a substantial balance of payments surplus in that year.
We would, therefore, be able to enter the Common Market, as regards our balance of payments, from a position of strength. The next factor that I must draw to the attention of the House in trying to draw up a balance sheet is that, as has been said more than once, the full effects of all the elements which will influence our balance of payments, adverse and beneficial, will not be felt in total all at once. Their effects will be cumulative, and will be spread over the transitional period.
I understand that the need for these transitional arrangements is fully recognised among the members of the Six, who went through such a period: for example, the gradual introduction of the Common Market's agricultural policy, the common external tariff and the abolition of tariffs within the Community—none of

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these is due to be completed before 1st July, 1968, although the Treaty was signed 10 years ago. It is, therefore, reasonable to assume that, after the period of negotiation, signature, ratification, and legislation, there will be a period of some years during which the necessary transitional arrangements and adjustments will apply and can be made. These arrangements could perhaps extend over different periods for different problems.
The third favourable factor that I put on the credit side of the balance sheet is that the period of transition will be eased by our proposed reductions in overseas defence expenditure. The House is fully seized of the difficulties of bringing these changes about in the short run. But the economies that are now under way, and are planned, are of a substantial nature in terms of overseas expenditure. They will have increasing effects. Probably their maximum effects will be at the end of the 'sixties and in the early 'seventies, that is, at a time when the transitional arrangements will be operating. That is a factor which will assist us.
The fourth factor to take into account, again on the credit side, is that our policies are putting us in a position finally to discharge our obligations to the International Monetary Fund, implying that we shall have a continuing, strong balance of payments surplus, as we intend to do. I do not want to take up the rather small points made by the Leader of the Opposition about the rate. If he has had the experience of the former Chancellor he will know that this is not a serious matter. When his party left office the rate stood at just over 2·78¾. It was right down, bumping along the floor, but the position had been adjusted, for various technical reasons, about which I do not complain.
It is making rather small and cheap party points to talk about the rate in this connection. It depends upon whether one intends to allow the rate to go up by refusing to skim dollars off the market, or whether one intends to take dollars off the market and keep the rate down. There are many technical factors, and I hope that the right hon. Gentleman will stop making this silly point, which has no validity in relation to the job that has to be done.
Mr. Iain Macleod: We have listened with interest to what the Chancellor has said about the balance of payments. He has forecast a surplus for this year, and I hope that he gets it, and a more substantial surplus next year. Is he prepared to put figures, however wide, to these estimates?
Mr. Callaghan: No, for the reason that I gave at the beginning, that this is the most difficult area of all to forecast. I do not know whether this was intended as a trick question, but I will give it a straight answer. It would not be helpful to give such a forecast because it could not be regarded as reliable. As far as can be forecast, there will be a surplus this year and a bigger surplus next year, and I must leave it at that. Anyone with the advantage of seeing balance of payments forecasts will realise that I am trying to give the most sensible answer to that question.
I have indicated that this year we shall complete our repayment of the initial borrowing of £385 million.
Mr. Reginald Maudling: I appreciate the difficulty of making balance of payment forecasts, but could the right hon. Gentleman indicate the scale of surplus which he would regard it as necessary to aim at in order to join the Community?
Mr. Callaghan: The scale of surplus must depend on a number of factors. It must depend on our need to enter the Community with a strong balance of payments, on the level of employment at home, and on the need to ensure that there is a reasonable rate of growth at home. Those three factors must be constantly balanced when making an assessment.
We negotiated a loan of £385 million in November, 1964, a month after we came to office. That was with the International Monetary Fund and the Swiss Government. The Leader of the Opposition referred to the loans which we need to repay; he said that the £900 million would be a source of weakness. I have some good news for him this afternoon. Repayment of this sum is due by December, 1967. It has been reduced by £75 million, and it now stands at £310 million as a result of sterling drawings by other countries to which we have agreed.

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During recent months our reserves have been building up steadily. They now stand at the impressive total of £1,216 million in addition to other reserves in liquid form contained in the Treasury portfolio. This is, therefore, an appropriate moment to repay a further part of the loan, and I am glad to inform the House that on 25th May I intend to repay to the International Monetary Fund the sum of £145 million and, at the same time, to discharge the whole of the Swiss debt of £28 million, making a total of £173 million.
The point about this repayment is that it represents the amount borrowed by the Fund in 1964 from countries participating in the General Arrangements to Borrow, and by far the greatest part of it, therefore, will be made in the currencies of the present Community member countries which will then be repaid by the Fund. I take this opportunity of thanking them for their co-operation in the autumn of 1964 and of demonstrating that we make good use of their help. This means that by the end of this month we shall have paid off six months in advance nearly two-thirds of the debt repayment due next December. I expect that there will be some further drawings by other countries.
It is clear that, taking together the resources in our front-line reserves, the Treasury portfolio and this year's surplus in the balance of payments, the December instalment will be entirely within our capacity and quite manageable. This repayment of the I.M.F. loan has a dual effect: not only do we discharge our liabilities, but, at the same time, and by the same process, we create new credits for ourselves in the I.M.F. Therefore, after 25th May, our normal front-line reserves will be backed by the proceeds of the Treasury portfolio and by additional drawing rights of the I.M.F. which, by the end of the year, when we shall have repaid the full amount of the loan, will be £357 million. We shall have transferred some of our front-line reserves to the second line. These will be further increased as we make further repayments of drawings in later years.
Mr. J. Bruce-Gardyne: Is the right hon. Gentleman saying that
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he will transfer the Treasury portfolio into the reserves and, if so, when?
Mr. Callaghan: No, I did not say that.
To sum up: to withstand the adverse impact on the balance of payments of joining the Common Market, we shall be able to rely on a present surplus in our balance of payments and the benefit of a transitional arrangement over a period of some years before the full impact is felt.
Yesterday, the Prime Minister gave details of where the adverse effects will be felt in the short term. The impact has been quantified most easily in the cost of accepting the common agricultural policy of the Community. This might eventually amount to between £175 and £250 million. I do not depart from those figures, but even that estimate, which is probably the most reliable which can be made, rests on a multitude of assumptions about the future level of world prices, the future level of Community food prices, the future level of agricultural production and consumption in this country and on the size of the Community's agricultural fund.
I suggest to hon. Members that they take with appropriate grains of salt a lot of the various "authoritative" figures which have been put around in recent weeks. In the event, the cost will also depend on the terms of entry which may be negotiated. In other matters—for example, trade in manufactures and the consequences of removing tariffs—the impact on our balance of payments is more speculative. It will depend on the effects on our industrial efficiency, the effect on consumer prices and wage demands and the effect of tariff cuts.
The view generally taken by leaders of industry is that industry will respond favourably to the opportunities presented by a larger market, greater economic integration and greater competition. There is much to be said for the view that exposure to these pressures and opportunities will accelerate the existing trends to greater product specialisation and will encourage the development of the more sophisticated and technological industries in which the economies of large-scale production and marketing are to be found.
This favourable long-range forecast is based on a number of factors. Foremost is the trend in our visible imports and exports. The rate of growth in our

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visible exports has been accelerating over recent years mainly due to the fact that the share of our exports to fast-growing markets has been rising all the time while the share of our total exports to the slow-expanding markets has been declining. So our overall performance has thus been improving as a result of a gradual shift in the structure of our exports. There are good reasons for supposing that this will continue, and it must be our policy to ensure this.
We shall need these extra exports to cover the balance of payments costs of agriculture and the possible cost of capital movements. If these are to be found, but not at the expense of the domestic standard of living, the basic trend of productivity will need to improve. The required improvement is not large and certainly is not beyond our capacity.
The increase in food prices is measured at 2½ to 3½ per cent, spread over the transitional period. Other things being equal, this would tend to lead to higher wage demands. We would, therefore, run the possible risk of higher industrial costs with a resulting encouragement of imports and discouragement of exports.
On the other hand, against the rise in food prices, there would be some lower prices of manufactured goods both for consumption and for use in manufacturing and service industries. This would tend to offset some of the pressures. What will be quite clear to the House, as the Prime Minister said last night, is that we shall need to adjust our social benefits so as to shield pensioners and others from the adverse effects of food price increases.
Dame Irene Ward: Would the right hon. Gentleman expand a little on the effects on those in small fixed income groups? How does the right hon. Gentleman propose to deal with them?
Mr. Callaghan: I cannot say any more. I was referring to the adjustment in our social benefits, which cover not only pensioners, but other groups.
Mrs. Anne Kerr: Particularly the old people.
Mr. Callaghan: I am not sure what the purpose of that intervention was. What I was saying was that we need
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social benefits so as to protect the old people.
I turn to the question of capital movements. Here—and this is not intended as a joke—we are very much in the field of speculation. Capital movements are of great importance to our balance of payments. We have always been a major source of capital for the rest of the world, even though at present we maintain restrictions and a close control on direct investment in the non-sterling area, as well as a voluntary programme for restricting the outflow of capital to certain countries inside the sterling area.
As regards portfolio investment outside the sterling area, that is at present limited by the investment currency arrangements. The relevant Articles of the Treaty of Rome and the Directives on capital movements within the Community show that there is a wide gap between our present policies and the liberal régime now operating within the Community. Most members of the Community have little or no restrictions on long-term capital' movements between themselves and countries outside the Community.
We should of course need to accept the Treaty of Rome Articles, and our policies would have to be aligned with those of the Community. In the early years. this would involve some additional strain on the balance of payments, but the net effects are very uncertain. There will be some outflow to the Community, but not all the movement will be one way. Indeed, during the discussions which my right hon. Friends the Prime Minister and Foreign Secretary had with some members of the Community, the point was made by one or two of them that our concern about United Kingdom funds flowing outwards might be paralleled by Community concern about their funds flowing to the United Kingdom and thence onwards, through the United Kingdom, to develop the Commonwealth. So this is not wholly a one-way street. It is not a problem which the Community has had to face hitherto. Up to the moment, there has been a continuing inflow of funds into their countries—some perhaps regard the inflow as excessive—and therefore they have had no need to be restrictive.
Another factor is the distinct possibility of a flow of direct investment

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from outside the Community to this country. Some firms may prefer to base themselves in the United Kingdom in order to produce for the Community as a whole.
The whole question of capital movements. is of considerable importance to us, and we cannot afford to take any avoidable risks with our balance of payments; nor would the Community wish us to do so. We shall, therefore, need to discuss the whole question with them, and, from my reading of the preliminary probe undertaken by my right hon. Friends, it seems likely that we can work out satisfactory transitional arrangements.
Portfolio investment may present a particular technical problem. In the absence of any special arrangements, United Kingdom residents would be able, in effect, to channel portfolio investment to North America through financial intermediaries in the E.E.C. such as investment trusts which hold substantial dollar portfolios. This is not the intention of the Community's present régime, but it could be an effect of it. If that were to happen, it would add a significant cost to our balance of payments. If our discussions with the Six show that they find that this is a problem, we could all no doubt think in terms of a general Community solution, because it is one which they have not faced so far. If, as I rather expect, it is more of a particular problem for the United Kingdom, I have no doubt that they will agree to a United Kingdom solution to a problem of this sort; that is, appropriate action by our own exchange control, as provided for in fact by Article 70(2) of the Treaty of Rome.
The difficulties of trying to quantify all these effects will be clear from what I have said. We can anticipate an overall adverse effect on the balance of payments in the short term. But I repeat again that most of the so-called calculations which have been made are no better than the assumptions which have gone into them, and the assumptions frequently reflect the views, both for and against, of the calculators. We can look for time to make a progressive adjustment of the economy to absorb the short-term costs of entry.
The Prime Minister indicated yesterday what shift of resources might be needed:
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when fully in operation, that is to say, perhaps several years after entry, something of the order of £100 million each year for four or five years—£100 million in the first year, £200 million in the second, and so on. It would, therefore, be necessary to increase our exports or save imports over and above what we expect to do in any case by a further £100 million a year on top of our present total exports, which are £5,000 million a year.
I indicated in the Budget that we can secure a rate of growth of 3 per cent. a year; that is, £1,000 million of extra resources every year. Part of that would need to be allocated to additional exports. The Government's view is that a 3 per cent. growth rate is the base line from which we start. It can be bigger as our competitive efficiency grows—[Interruption.] Right hon. Gentlemen opposite are wrong. It has started, and no doubt they will be glad to make the amende honorable later. to use Common Market language.
Mr. William Baxter: In his Budget speech, before we were committed to apply for entry into the Common Market, my right hon. Friend suggested that we required a 3 per cent. increase in productivity. Yesterday, my right hon. Friend the Prime Minister said in his speech that, if we went into the Common Market, we should have to have a 3 per cent. increase in productivity. Do those two statements presuppose the requirement of a 6 per cent. increase?
Mr. Callaghan: I am relieved to say that they do not. The Prime Minister was speaking in the same terms as I am now. However, I want to come to my conclusion, in the course of which I will deal with my hon. Friend's point.
Perhaps I might sum it up thus. The bigger our competitive efficiency grows and the more competitive we are, the greater the advantages which we can expect from joining the European Community. Here I deal with my hon. Friend's point, and I can promise him that my right hon. Friend the Prime Minister and I are in full agreement. The broad conclusion which I have reached is that, given a 3 per cent. growth rate as the starting figure, the

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sort of adjustment that is required by joining the Community—and it is a serious adjustment—is a manageable proposition. If our entry results in an acceleration of the underlying growth of productivity in our economy, the potential long-term gains will far outweigh the short-term costs.
It will be necessary for all of us to emphasise, in the course of our discussions with the Community, that this country has a serious and long-term economic strategy for improving its productive efficiency and for ensuring a steady and continuing balance of payments surplus over the years. I agree with the right hon. Gentleman the Leader of the Opposition that such a strategy will be necessary whether or not we are members of the Community. But, assuming that the Government's policies are correct in believing as we do, based on the best information available, that we can maintain a 3 per cent. growth rate with a high level of employment and with a satisfactory balance of payments, as this policy stands it would carry us through any reasonable transitional period with a continuing strengthening of our competitive position and with the possibilities of a growth in our economic potential.
I remind the House of Article 6 of the Treaty of Rome, because it is of great importance here. It lays down as a basic principle,
"that the institutions of the Community shall take care not to prejudice the internal and external financial stability of the member states."
That is a principle set out at the beginning of the Treaty, and I am certain that it will be observed. With that principle written into the Treaty, and with the long-term strategy which Britain is following, in my view there is no need to doubt our capacity to join the Common Market on equal terms and to accept the responsibilities of membership.
That brings me to the other factor in the current discussions which I wish to bring out, namely the position of sterling as an international currency and, with it, the linked problem of international monetary reform.
On the first of these questions, sterling is bound to continue as an important international currency whether our future lies with the Community, as we hope, or
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not. I have made it clear on many occasions that it is not the policy of the present Government to seek any extension of sterling's rôle as an international currency, but that rôle cannot be abandoned, because the balances which are held in sterling by overseas countries are the liabilities of this country. Obviously there can be no question of defaulting on them, or of altering the character of the Commonwealth and other countries' sterling assets without their general consent.
I was glad to see that in a recent interview given by M. Debre, the French Minister of Finance, he stated his view quite categorically that the reserve currencies will continue to be needed to play a substantial rôle in financing world trade. Likewise, he said, he sees them as continuing to provide a medium in which other countries can hold their reserves if they so wish, just as the franc zone does today. He went on to say that there would be nothing abnormal in those countries closely bound to Great Britain and to the United States in economic and monetary matters continuing to hold the essential part of their external assets in the form of £s sterling and of American dollars respectively. Those clear statements show that there is much more common ground in this matter than some commentators have suggested.
I do not complain that the rôle of sterling has been raised, although I note that the Treaty of Rome contains practically no provisions for dealing with monetary subjects. It seems to me legitimate that the matter should be raised and, as I would expect, disposed of. Confidence in sterling is now at such a degree that it is possible to discuss the future quite normally, and from a position of considerable strength. We cannot be pushed around by events.
As a preface to what I have to say, I want to emphasise again the old refrain that a strong balance of payments and confidence in sterling go together. When we are paying our way in the world, and are seen to be paying our way, confidence is high. When we are running further and further into debt, confidence becomes low. Given the strategy which I have outlined, this problem should not worry us, but would the question of the strength of sterling hang like a Sword of Damocles

1319
over the heads of our future partners in Europe?
Does Article 108 of the Treaty of Rome hold some hidden threat for them? Should we, as the Leader of the Opposition said, seek a Community solution? Article 108 is, of course, the Article which refers to a country being threatened with balance of payments difficulties either as a result of disequilibrium in its own balance of payments—and this is the crux of the matter—or because of the type of currency at its disposal. In my view this is not so, nor do I think that we should go for a Community solution on a matter of this sort, despite the right hon. Gentleman's view.
The Prime Minister dealt with the matter fully yesterday and I think it will be clear that we are not proposing that our entry into the Community should put any extra obligation on the other members of the Community.
Sir Harmar Nicholls Sir Harmar Nicholls (Peterborough) rose——
Mr. Callaghan: I cannot give way. This is a difficult point. I do not agree with the Leader of the Opposition that we should go for a Community solution. We have endeavoured over the years, under the leadership of the former Chancellor of the Exchequer, and others, to build up confidence in a world system in this matter. The obligations which have been assumed by a number of coutries cover not only the Community, but Japan, Canada, the United States, and others, and it is important for the sake of the future development of world trade that we should not fragment this question of strengthening world liquidity into various compartments.
The Community countries have already accepted obligations in relation to reserve currencies, irrespective of their position as Community countries, but because of their membership of the Group of Ten, or because of membership of the International Monetary Fund. I see no reason why, in the case of sterling, which is a world currency, we should endeavour to thrust additional obligations upon the Community in regard to this. They should be shared, and it is in the interests of everybody throughout the world to share them; and this is why I would not seek such a solution, nor is it clear that the
1320
Community itself wishes to propose such a solution. As I understand their anxiety, it is that they should not be beset by such an additional problem as this, and I see no reason why they should. This matter could be, and is, dealt with increasingly on a world basis.
Sir Harmar Nicholls: The Prime Minister went further than this. When he returned from Luxembourg he said that he had given an undertaking that we would not invoke Article 108 if sterling got into trouble. An undertaking from the Treasury Bench cannot overcome the signatures of the Treaty of Rome. We cannot tie down future Governments. If we are going to forgo the one point which may be of value to us, if we have to join, can we say that the area covered by the franc has already given the undertaking that it will not call on Article 108 to fulfil the obligation?
Mr. Callaghan: I cannot answer the last part of that question. I am not yet an expert on all the practices inside the Community. As far as we are concerned, and indeed as far as the problem itself is concerned, I submit that it is better to try to seek a world solution to this problem rather than a Community one. I do not think that we will get additional assistance under Article 108, and I put to the hon. Gentleman the further thought that Article 108 was drawn up in 1956 or 1957. This was well before the much newer arrangements for supporting currencies were devised. It is well known that these arrangements could have come into play increasingly since 1957. This was drawn up in different circumstances, and for different purposes. I do not think that we could revert to it—at any rate it is not our desire to do so. If there was a desire on the part of others to revert to it, it would be a matter for discussion.
Mr. J. T. Price: I agree with my right hon. Friend's argument that this problem requires a world solution. Will he carry that reasoning a little further, and reconcile the establishment of a common external tariff wall around Europe against the rest of the world with this concept of solving the financial equation by world means? I cannot reconcile it.
Mr. Callaghan: If my hon. Friend, and others of my hon. Friends who are so

1321
passionately interested in this question of international monetary forms, will wait, I shall come to the question later.
I come now to the long drawn out discussions on reforming the world monetary system and increasing international reserves.
Mr. William Molloy Mr. William Molloy (Ealing, North) rose——
Mr. Callaghan: In the interests of the House I must get on. The suggestion is sometimes made, and indeed the Leader of the Opposition made it, that our decision to apply for membership of the Community must imply a complete reversal of what we have said or done in the past on reforming the world monetary system. The right hon. Gentleman came very close to this in a recent speech. This, in my view, is inaccurate, and represents an over-simplified view of the negotiations being conducted at the present time. No final decision has been taken by the Six, nor has a final decision been taken by the United Kingdom on this matter.
Looking back over the last three years, it is clear that there has been a continuing evolution of thinking by nearly all the major participants in the discussions on international monetary reform. There was a moment when the United States seemed to be more attracted to the idea of drawing rights, and the French to the notion of a unit, but positions have evolved since then. They are now both taking rather different views on this subject. The Six have not made up their minds on all these points, but I was glad to see that the communiqué issued following the recent conference of Community Finance Ministers at Munich showed a considerable advance, not only—and I welcome this—towards a greater measure of agreement among themselves, but also towards a position which holds out a better prospect of agreement with all the parties to the negotiations.
I will not go into details now, but I express the view that even where the contrast between the differing position of various countries seems to be sharpest, an answer can be found. I do not believe that there is an important issue of principle involved here. The approach of the British Government is to work for an agreed solution by narrowing the points of difference where they exist. This is
1322
surely a better policy, I suggest, than trying to extract some short-term political advantage from an abrupt change of front which would surely impress nobody, and which few would believe.
In the Community today there is close consultation and co-operation between the members in domestic monetary policies, interest rates, and credit controls. Here I come to the point made by my hon. Friend. If we join, we shall want to enter into that consultation and cooperation, and indeed to develop it further.
I recognise that the Treaty of Rome does not yet provide for the development of a common European currency. It is not an immediate possibility, nor is a clearing union for payments—which is part of my answer to my hon. Friend—and nor are other ideas of this kind. I am sure that the Community would not wish to take them up in the forthcoming negotiations. They are long-term issues, but, in my view, they are of considerable concern if we desire closer economic integration. I mention them to indicate that, so far as the rôle of sterling is concerned, whether in its international aspect or as a domestic currency, we are ready for change, subject only to safeguarding the interests of the present holders of sterling.
There is no need for us to fear change in this, as in the other matters. The world rôle of sterling is not a matter of prestige but a practical matter. So far from the Community acquiring a potential liability—the House should know this—my own conclusion is that, in financial matters, the accession of Britain would bring practical benefits to the Community and greatly enhance its rôle in the world both economically and financially.
The question of the harmonisation of taxation was dealt with yesterday, so I will only say that we would certainly expect to participate fully in the erection of a system which would do away with economic frontiers and mark an important step in Europe's economic integration.
The House is under no illusion that joining the Community will mean many changes in our economic and fiscal arrangements. So it would be if we were finally to be shut out. From inside the Community, we are ready to accept and indeed welcome many of these changes. We shall play our full part

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in developing its institutions and influence. We cannot take a static view of developments in the Community or in the world.
Much of the argument about the consequences of joining is conducted on the basis of the world's affairs standing still. It is not given to any of us to look too far into the future, but I would hazard my own guess that, 10 years from now, if Britain becomes a member of the Community, it will be healthier for Britain, advantageous for Europe and a gain for the whole world. I do not know of many economic or political problems in the world which will be easier to solve if Britain is outside rather than inside the Community.
From outside—[Interruption.]—yes, I do not think that it makes it any easier to solve the problems because we are outside. From outside, we should need to maintain and develop this network of separate relationships. If we are compelled to do that—this is a problem for Europe as well as for Britain—we shall certainly survive and, indeed, we may prosper, but it would be at the expense of fragmenting the world instead of uniting it and we should have to build up barriers instead of tearing them down.
I understand and share the strong desire to develop the Community so that the voice of Europe speaking together is heard throughout the world. There are other paths for our future if this venture should fail, but I do not believe that the other alternatives offer, either to us or to Europe, advantages comparable to those presented by a negotiated membership of the Community.
5.24 p.m.
Mr. Jeremy Thorpe: This debate is a cause for celebration by Liberals; I congratulate the Government on their decision to apply for membership of the European Economic Community and I wish them success in that application. I believe that today, whatever may be the past, both the Prime Minister and the Foreign Secretary are now accepted on the Continent as committed and enthusiastic Europeans. I hope to touch on one or two matters which I think may be relevant to the successful outcome of the negotiations,
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and I will refer only briefly to the past—first, as it is relevant to the future, and, second, as it is necessary to avoid certain pitfalls.
I must confess that the history of the post-war Europe as understood by the Leader of the Opposition had some astonishing gaps. I found only slightly more astonishing his new nuclear deterrent policy on which there appeared to be some difference as to what he was saying. No one really seemed to know what he was saying—least of all, perhaps, the right hon. Gentleman himself.
If the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) and the Leader of the Opposition thought that we were in difficulties today because we were late entrants, how right they were. But if that is the only reason in their view, they have failed to take into account the reason that General de Gaulle, on 14th January, 1963, decided to exercise his veto because he said that this country was not ready for membership. Whether he was right or wrong—and I believe that he was wrong—it is vital to assess why he came to that view, so that we should not fall into that position again.
The reason that we were held in that position was that the hypercritical in Europe thought that we were bad Europeans, and even our closest colleagues in Europe thought that we were almost insensitive to trends on the Continent. It is perfectly true that the Atlee Government cold-shouldered the Iron and Steel Community whilst the European Defence Community, which was the one way of including a German Army within a European force, was thrown out by the French Assembly, only after the Eden Government refused to have any British participation in that force.
Indeed, perhaps the monumental understatement of this debate was when the Leader of the Opposition talked of the Messina talks in 1955, and said that we had some small part in them. Indeed we did. We walked out after a couple of days and boycotted them. One can only suppose, from the attitude of the Government of the day, that they suspected the Messina Powers to have some connection with the brothers of the same name.
I well remember the lack of enthusiasm in the 1959 election, when candidates like myself advocated that we

1325
should join the Common Market. But when one looks at the election addresses, not only of the Prime Minister and the Foreign Secretary but of the Leader of the Opposition himself, one finds not a single reference to the Continent of Europe and still less to the Common Market in their individual election addresses.
It is, of course, true that the right hon. Member for Barnet (Mr. Maudling) was more aware of the situation. That was why he made his speech in October, 1959:
"We never dreamed of entering the Common Market. If we joined, we would have to abolish all tariff protection for agriculture and horticulture and give up control of our own agricultural policy."
We would sell the Commonwealth down the river and bankrupt the housewife, and this was why the Tory Government could never support what the Liberal Party was advocating——
Mr. Maudling: Is that an exact quotation, may I ask?
Mr. Thorpe: In regard to the first section—
"We never dreamed of entering the Common Market. If we joined, we would have to abolish all tariff protection for agriculture and horticulture"—
I am delighted to give the right hon. Gentlemen this added opportunity of refreshing his memory—
"and give up control of our own agricultural policy"
that was verbatim. The reference to the housewife and to the British Commonwealth, he will find not only in this speech, which he made outside the House, but in the first speech which was made in the House of Commons——
Mr. Maudling Mr. Maudling rose——
Mr. Thorpe: I will answer the right hon. Gentleman. To be fair to him—the words relating to agriculture are verbatim and I am sure that he would agree with that—the reference to the housewife and selling the British Commonwealth down the river——
Lord Balniel: No.
Mr. Thorpe: If the noble Lord would just exercise noblesse oblige for a moment, I should be grateful. I believe that I have given a wholly correct paraphrase
1326
of what the right hon. Gentleman said. If, in my references to his remarks about the Commonwealth and his comments about it adversely affecting the housewife, I have in any way misrepresented his argument, I will willingly amend my remarks.
Mr. Maudling: I gather that the right hon. Gentleman was using a mixture of a quotation, which I accept, and a paraphrase, which I do not accept. Is he aware that that is not the normal way of conducting a debate in this House?
Mr. Thorpe: As I said, if I have misquoted the right hon. Gentleman I will be happy to withdraw the section of my remarks which, he claims, misrepresent his views. I am sure that he will agree that he took the view then that adverse effects would flow not only for the Commonwealth but for the British housewife. He does not intervene, so I take it that that was his view.
I also remember two occasions in this House—14th December, 1959, and 25th July, 1960—when we Liberals divided the House on the need to join the Common Market. On the first occasion the then Conservative Government voted us down, while the Opposition abstained. On the second occasion the then Conservative Government had the added assistance in the Lobby of the present Prime Minister, Secretary of State for Defence, President of the Board of Trade and the Secretary of State for Commonwealth Affairs. Perhaps that added Labour support was fortunate, because the present Leader of the Opposition was not able to be present.
Being late entrants, let us realise that one of the reasons for our late entry is that we have given the impression, not only by words but by actions, that we were not anxious to become part of the Community. I believe that the Prime Minister's success lies in the fact that he and the Foreign Secretary have convinced our European colleagues that we are anxious to join and are enthusiastic Europeans. The Prime Minister said:
"… if we do not succeed, the House will … be able to judge at the end of the day that it was not our fault."—[OFFICIAL REPORT, 2nd May, 1967; Vol. 746, c. 316.]
I believe that if we are not successful it will be largely the fault that for too long we had men in control who had no vision of what was happening across the Channel

1327
and whose horizon was bordered either by the Channel Isles or by the Isles of Stilly. Thus, as late entrants, we have in my view no more than a fifty-fifty chance of success.
Because of me undertakings that will be needed for the transitional period—concerning our commitments to agriculture and the Commonwealth; and not being a founder member it is difficult for us to negotiate these matters—it will probably take three or four years, even if we are successful, before our application has been signed and we are a member of the Community.
Having said that, the first point I wish to make about the application is that if it is to be a long haul of three or four years, we must guard against public opinion in Britain going sour and becoming impatient. If that were to happen, people would search after alternatives, one of which is the Atlantic Community—and, in my view, the North American Community as an alternative would give us the economic benefits but would also give us the political status of Porto Rica. We therefore need patience.
In the Government today are four senior Ministers who have, up to the very last moment, been passionately opposed to the idea of our joining the E.E.C. What will be their position if there is a long haul of three or four years? It is an interesting acrobatic sight to see senior Ministers standing on their heads. I have great respect for the Secretary of State for Commonwealth Affairs, but I have seldom seen a Minister putting forward an argument with less enthusiasm such as that which the right hon. Gentleman was asked to put forward last night. One can at least say of the Minister of Agriculture, who has not yet spoken in favour of the Common Market, that his previous speeches have been totally consistent throughout.
The Prime Minister would be in a much stronger position if those who are hostile to the Common Market gave practical expression to their hostility now and were not seen lurking like Trojan horses so that, in three or four years' time, their patience was found to have become exhausted.
The Chancellor of the Exchequer speaks with great knowledge about sterling
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However, the view of the Leader of the Opposition about the need for a European reserve currency is a matter to which greater attention should be given. The fear in Europe is not the present weakness of sterling but its potential vulnerability, which is a very different thing. When the Prime Minister said, on his return from Luxemburg, that we had given assurances under Article 108 that we would not co-ordinate the assistance of Europe if sterling came under pressure—not external but only internal pressure —I sought to make him realise that we had to distinguish between external and internal pressure on a reserve currency.
We are now in the position in which nearly one-third of the world's trade is financed by sterling. Some of us believe that this places an intolerable burden on the economy of this country. Indeed, many of the countries for which we act as banker are not even members of the Commonwealth and have no ties of kinship with Britain. The possibility of a new European reserve currency will, I believe, arise when we are a member of the E.E.C. Instead of the Prime Minister saying, as he did in reply to a Question from me, that this cannot or would not be ruled out after we were in, he should agree that it is a matter that should be ruled in now for discussion so that we really are intent on there being a real Common Market.
After all, we cannot have a Common Market in the fullest sense if one member is acting as banker with an external currency while the others are acting in a different capacity. The speech of Giscard D'Estaing on 4th May to the Federal Trust in London made this point clear when he said that, whether or not we liked it, sterling would be one of the great question marks and worries in Europe during the negotiations. Whatever may be the position of sterling today, a European reserve currency would be very much stronger in future than sterling could be on its own.
Sir Richard Glyn: Is the right hon. Gentleman arguing that sterling should cease to be a reserve currency?
Mr. Thorpe: No. I am suggesting that sterling should continue to be a European reserve currency but that when we are in the Community we should be

1329
able to expand and fuse sterling into a European reserve currency; to interleave it so that in perhaps 10 or 15 years' time we might be able to transform sterling into a new European reserve currency. That would place less of a burden on this country and would make it a strong world currency.
Indeed, the position of sterling is such that, in terms of politics, it has created a weakness. Some people are so cynical and uncharitable—and I am one of them—as to believe that most of our attitude towards. Vietnam has been dictated by our attitude towards sterling. I consider this to be true. A new reserve currency is, therefore, a matter which we should be prepared to discuss.
Politically, the Prime Minister has always maintained that one of the main reasons why the Common Market negotiations broke down in 1963 was because of the Nassau Agreement which followed the talks at Rambouillet; that it was an effort to keep up a special relationship with America. If that view was right in 1963, it is equally right to say that the continuation of our Polaris programme and the possibility that we shall buy another generation of nuclear missiles in the form of Poseidon is an indication of our intention to keep up some form of special relationship. I should have thought that, again, some criticism could be levelled against us by our prospective European colleagues.
With regard to the idea of the Leader of the Opposition of a new European deterrent, I believe that Britain should give up the pretence of being an independent nuclear Power. I believe that with as much conviction as did the Prime Minister before the 1964 election, although I am less likely to change my views than he is. First of all, we have to renegotiate N.A.T.O., because N.A.T.O. has been shaken to the foundations by the attitude of the French. But we may well see a European defence community evolving from the Common Market. It should be non-nuclear. We must realise that the two nuclear Powers are, should be, and, indeed, will remain, Russia and the United States of America.
I believe that if we get in we shall, having; been the most frightened of political involvement, become one of the most political members of the Community; and that we shall probably insist in the
1330
European political assembly that there should be far closer control over the Commission. In 10 or 15 years' time we may be pressing for the direct election of members to the European Parliament.
The Prime Minister mentioned that the Commission has proposed that by 1969 the added value tax as operated in France shall be at the same level throughout the whole of Europe, but I should like us to introduce this tax here before we get in. I had hoped that this would have been done in this Budget, but it may well be in the autumn Budget—nowadays we always have at least two every year, so we may not have as long to wait. If we are going in, we must prepare our physical fiscal system to match that in Europe, but I believe that, even if we are not successful, this fiscal change would release the technical energies of our people.
Technologically, whether we go in or not, the more co-operation we have with Europe the better. I am sure that the House would take comfort to learn of the comparative success of the recent discussions which the Secretary of State for Defence had in France. One of the possible reasons for the change in attitude of President de Gaulle was, I believe, his surprise when he woke up to find that an American company, G.E.C., had a commanding position in the French computer industry by the purchase of a very substantial shareholding in the computer machinery firm of Machine Bull. Technologically, and from the tax point of view, there is much we could do now to prepare the country for entry into Europe.
I do not believe that the Commonwealth position—particularly in the case of the tropical countries—presents insuperable difficulties. Nigeria has applied for associate membership and so have some East African countries. In Canada, from which country I returned last week, the possible short-term effects on aluminium, pulp and wheat are appreciated. The long-term prospect of Britain's being within the Community, and therefore having greater power of capital investment, is that the Canadians feel they could have diversified investment and so get relief from the enormous economic pressures from the United States.
New Zealand presents perhaps the most difficult of the Commonwealth problems.

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We have read the speech in Auckland by Mr. Leslie O'Brien, Governor of the Bank of England, in which he says that Britain's position is broadly understood. This is helpful. I see no reason why we should not be able to negotiate outlets for New Zealand.
I believe that our agricultural industry is already suffering from the effect of our exclusion from the Common Market. When fanners complain about bacon being exported from Denmark and about the increase in beef exports from Ireland, this is one of the prices we have to pay for our exclusion from the Common Market, because these are exporting countries which cannot export for the Community and so turn to Britain as the softest port of entry.
But even though we are outside the Common Market, British agriculture is greatly affected by the position in Europe. I do not know the position in other constituencies, but I know that in my division the price in the beef market is very largely affected by the extent to which in any particular week we are exporting to the Continent. The question is asked: what is happening in the German market? What is the price there? We are already greatly affected by fluctuations in Europe itself. I have always wanted to see a managed market. I believe that Harold Woolley, as he then was, was quite right in saying that it was lunacy to have a managed home market in this country and a totally unplanned import policy. But, of course, I was howled down on that score in this House six weeks before we announced that we intended to try to join the Common Market; for advocating precisely this for agriculture.
Very great care must be given to the position of our production grants to hill cow and hill sheep farmers. We must see that if there is to be some variation in support, their position is not worsened, because I believe that here we have very great scope for expansion of British agriculture.
Since I understand, Mr. Deputy Speaker—and perhaps this will be some relief to the House—that only one Liberal Member is likely to catch your eye, for which reason I make no apology for having spoken at some length—I wanted to work off my euphoria at the conversion of the very many sinners—I have to say
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that my Scottish colleagues are very disappointed to know that the Secretary of State for Scotland will not be speaking in the debate. It may well be that his outlook is not sufficiently favourable, or perhaps not sufficiently unfavourable, to the Common Market for him to be put in to bat, but it is certainly hoped that the right hon. Gentleman will make clear the position for Scotland, possibly in the Scottish Grand Committee, at an early moment——
Mr. Emrys Hughes: When the right hon. Gentleman says that, can he assure us that his Liberal colleagues in Scotland will vote for the Common Market?
Mr. Thorpe: My colleagues are perfectly prepared to vote for themselves and to make up their own minds. If the hon. Gentleman is here tomorrow night his anticipation will be answered and he will see exactly what we shall do—[An HON. MEMBER: "A three-line Whip."] Obviously, a party that believes in the very old-fashioned doctrine that hon. Members should vote according to their conscience and not according to the dictates of the party Whips would not, on an issue like this, have a three-line Whip. Neither did we think it necessary to have one on such a great political issue as decimal currency.
I want to hear what the Minister for Agriculture believes about the transitional period. I expect he would like 50 years, but we will need at least three or four years to bring about the transition, and possibly slightly more. If we get in—and I still think that we have only a fifty-fifty chance, it will be our opportunity to make the Community an outward-looking body. In many ways the external tariff is very much lower than the system we already operate here, with the exception of our Commonwealth partners.
There are very great dangers if we are out of the E.E.C. and, frankly, I do not believe that we have any other practical option but to go in. It is because there are no other practical options that the Prime Minister has been so decisive. He is only really decisive when there are no other options available.
I believe that not only economically but politically we have a duty to go in. The last thing I want to do is to try to inflame the feelings one might have about

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Germany, a country which has, in many ways, had a remarkable record in democracy since the war, but we see the Germans' present disinclination to sign a non-proliferation treaty, which is interpreted by some as a wish to reserve to herself a possible right to independent nuclear manufacture. We see the emergence of the N.D.P., which frightens people in Germany just as much as it frightens them here.
I believe that, politically, the presence of Britain would have a very steadying effect, not only on Germany but on the possibilities of East-West relations. It is very significant that whatever else Soviet Russia may have said in recent years in her criticisms of the Common Market, although she may pay lip-service to current anti-capitalist slogans, the Common Market has not been regarded by Russia as a menace and threat to her own integrity and security.
If it is an outward-looking Community, if it continues with its very impressive record of development, of investment in developing countries—I think Germany has invested more in India's Five Year Plan than this country—because of its economic potential—this can be an expanding Community and a force for world peace, but it will be a long haul. We must be careful not to revive the fears of our being bad Europeans which we did so much to create in the years immediately after the war. If we can convince them that we are good Europeans and that we can make the Community work as a territorially expanding Community, not only this country but Europe has one of the greatest contributions to make to the world in the whole of her long history.
5.51 p.m.
Mr. Stanley Orme: I am sure that the right hon. Member for Devon, North (Mr. Thorpe) will forgive me for not following the train of his thought and his conclusions, because mine lie in the opposite direction. I make one comment, however. He should be very careful before criticising members of the Government who might have an opposite point of view to his and then talking about the freedom which the Liberal Party has saying that Liberal hon. Members do not have any three-line Whips. It does not lie with him to take that attitude.
Mr. Thorpe: Liberal Members are free. The Government are imposing a three-line Whip.
Mr. Orme: The points in the Amendment signed by my hon. Friends and me appear in the policy of the Labour Party and in the manifesto on which we fought the General Election. The Amendment clearly suggests that the safeguards which we undertook in 1963 still stand so far as we are concerned, but those five conditions have not been written into the negotiations which are about to take place with the European Community. Those conditions, which cover E.F.T.A., foreign policy, national planning and agriculture, we believe, have not been eroded away. We were told only the other day that the E.F.T.A. position was possibly one issue which was eroded more than any other, but if we read the reports of the E.F.T.A. conference, recently held in London, we find that there was far from unanimity among the E.F.T.A. countries represented here at that time. That position is still exceedingly valid.
I turn, first, on the economic side to the European Economic miracle we hear so much about and its relationship to Britain's economy and what the Chancellor was dealing with this afternoon. There is a real contradiction here about the 3 per cent. growth rate which was talked about in the Budget prior to the decision to apply to join the Common Market. It was necessary for this country if we were to be outside the Community. Surely with added commitments a 3 per cent. growth will not be sufficient, if we are to attain membership, because of the additional adverse effects on balance of payments, capital, and so forth. This needs to be cleared up. My hon. Friend the Member for West Stirlingshire (Mr. W. Baxter) made this point in April. Is it 3 + 3 or just 3 per cent.? This should be answered.
Following the destruction suffered in the war by Germany, Italy and France, and the build-up which started in their economies when they were redeveloped with new plant and modern industry, the economic miracle we hear so much about—the yearly increase in productivity—was quite large over a number of years. I maintain that this had nothing to do with the Economic Community as such.

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It was purely a matter of economic recovery. These nations were catching up with other Western nations, particularly Britain, and they were helped by the Marshall Plan. In addition, Germany had been shorn of her dependencies and France was contracting out of what is now Vietnam and was formerly Indo-China. They were getting rid of their overseas commitments.
We are part of Europe. Although people talk about our going into Europe, without us a European Economic Community might not have been possible. This country has nothing to be ashamed of when we consider that part she played in the 1939–45 conflict against Fascism. These other countries were shorn of their international responsibilities to which our country still clings and which involve vast overseas expenditure. They were able to capitalise on that situation. Even with those benefits compared with Britain, we find that in Germany there is rising unemployment—to the tune of about 700,000. There is unemployment in the Netherlands.
The European Economic Community information memorandum published in Brussels in April, 1967, stated:
"The gross index in the fourth quarter was only 3·.5 per cent. higher than a year earlier; this was due primarily to an unmistakable slackening in the industrial production of the Federal Republic of Germany. But growth continued in the branches of industry not covered by the index and in services.
In most member countries pressure on the labour markets eased in varying degree, partly because of the way the general economic situation was developing, partly because of a strong increase in the labour force; the rise in unemployment was particularly rapid in the Netherlands and the Federal Republic of Germany."
The economic problems and crises of Western Europe are common to Britain and to the Community. It is no good burking this issue.
Of course, we have to have drastic measures if we are to rejuvenate industry. We want to have increased productivity. Without it the Government, no Government, would be able to fulfil their promises in relation to social services and all those improvements we want to make. This is absolutely obvious, but does it mean that we should go into a bigger economic unit which, even allowing for other countries which might apply for
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membership at the same time as we do, is only a very small part of the 26 nations which make up Europe as a continent? This corner of Europe is the richest and most highly developed of Western Europe. It is known as "the rich man's club." It has an inward, selfish approach to the economic problems which face the world. Britain should look at a far greater and wider aspect of the world than is contained in some of these countries.
I turn to the question of planning and public ownership. I say this as a Socialist, a member of the Labour Party, and believing very firmly in the necessity for public ownership and its extension into some of the major sections of our economy. This is one of the basic factors. I shall not carry hon. Members opposite with me in this, and I do not expect to do so.
We can study what some of my hon. Friends have said on this issue. The Leader of the Opposition very pertinently reminded the Prime Minister this afternoon of one or two things he has said in the past. It is important to consider some of these previous statements. I and many of my hon. Friends want to know what has changed from 1962 to 1967. It is not the Treaty of Rome. That has not been amended. Every Article is an it was when it was produced. Nothing drastic has changed in relation to Europe and its economic development
I turn to Article 92 of the Treaty, which deals with aids granted by States and says this:
"Except where otherwise provided for in this Treaty any aid granted by a Member State or granted by means of State resources in any manner whatsoever, which distorts or threatens to distort competition"—
that is what the market consists of—
"by favouring certain undertakings or the production of certain goods shall, in so far as it adversely affects trade between Member States, be deemed to be incompatible with the Common Market."
Mr. Eric S. Heffer: Is my hon. Friend aware that Article 14 of the E.F.T.A. Agreement, which was ratified by the various E.F.T.A. States at the end of last year, contains a very similar clause? The rules of competition between E.F.T.A. and the E.E.C. are practically the same.
Mr. Orme: My hon. Friend and 1 do not normally disagree. The House

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can see what happens over an issue like this. My hon. Friend will be the first to agree that the E.F.T.A. agreement and the decisions arrived at are not the same as making one single economic unit based on the Treaty of Rome. The E.F.T.A. agreement is far more loosely interpreted than the Treaty of Rome.
I have stated the issue. I want to quote something which was said in August, 1962:
"… we recognise that there is a strong desire in Europe for a form of planning, European planning as opposed to national planning, but let us be clear about this. The aim and objective of that planning is not the same as, for example, the T.U.C. has rightly demanded, planning for full employment. It is planning aimed at holding the ring with conditions for full, free capitalistic competition. That is not what we understand by planning."—[OFFICIAL REPORT, 1st August, 1962; Vol. 664, c. 700.]
That was not a spokesman for the Socialist Party of Great Britain. That was said in 1962 by the present Prime Minister.
Earlier, in August, 1961, my right hon. Friend had said this:
"I say frankly to the House that as I read the Treaty of Rome, and the intentions of those who at present operate it"—
they have not changed—
"the measures necessary to fulfil the policies set out, for example, in 'Signposts to the Sixties' cannot be implemented without substantial amendments to the relevant articles to the Treaty."—[OFFICIAL REPORT, 3rd August. 1961; Vol. 645, c. 1657.]
We are now told that the Treaty does not need to be altered in any shape or form.
Mr. Maxwell: Is not my hon. Friend aware that the President of the Commission—Hallstein—has just resigned? Is he not further aware that supranationality has ended with that resignation?
Mr. Orme: I am sure that my hon. Friend is not so naive, and would not expect the House to be so naive, as to believe that because Hallstein has gone there would be a profound change. We have been informed by well-informed correspondents of responsible newspapers that the person who is to replace Hallstein, who is in conflict with the French on this issue, will be sympathetic to the British application and will take a similar view of the development and operation of the Treaty in Brussels.
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In August, 1962, Pierre Mendes-France said this about planning:
"There is no contradiction between national planning and membership of a group of nations practising planning. But it is difficult to see, on the other hand, how national planning can be integrated into a Common Market based on strict liberal principles, which has abjured governmental intervention and leaves economic evolution solely to the laws of the market."
Is that what my hon. Friends want, because this issue must be examined?
During the debate on steel nationalisation hon. Members opposite raised the question whether nationalisation would be incompatible with the Treaty of Rome and the Iron and Steel Community. Vesting day has been brought forward, and I welcome that. I wonder how much this had to do with our application to join the E.E.C. Many independent observers believe that nationalisation could have been ruled out of court because it would have conflicted with Article 92. We had an assurance from the Government that this was not so. As a supporter of nationalisation, obviously I welcome the fact that it has gone ahead.
Italy has nationalised its electricity industry since the Treaty has come into operation, but there has been no form of public ownership in any of the six countries which in any way could conflict with Article 92. The one country which has fought against this has been France. I want to make an interesting quote from something said by Sir Robert Shone, who was until recently the Secretary of the N.E.D.C. He said this:
"The French planners are increasingly moving away from detailed interventions that characterised their early plans. This is partly because many forms of discriminatory help or subsidy are ruled out … and partly because of the greater part now played by market pressures."
Mr. S. C. Silkin: My hon. Friend has made a number of quotations from what various people have said. Has he visited the European Economic Commission in Brussels and found out from the Commission what it is doing in the way of its medium-term plans?
Mr. Orme: In view of the organisations with which my hon. and learned Friend is associated and the manner in which they ply my hon. Friends and myself with material, it is hardly necessary for me to go out there.

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I turn to what is happening inside the Common Market itself and some of the developments which have taken place. We shall have to join this mixture, if we gain entry. On practically every aspect there have been delays, reservations and a slowing-down. Most people know that the French not only have different views on foreign policy, but are at odds on economic planning and at odds on the agricultural policy as such. One of the reasons why the French are not so keen to let Britain in to the Community at the present time is that they think that we will side not with them but with the other five members.
I can go down the list. On harmonisation of taxation, there is delay. The common transport policy has run into difficulties and has been postponed until 1972. On fusion of executives—I am quoting here from "Britain in Europe", by Professor Pickles, a good authority—on fusion of Communities, and on a common commercial policy and freedom of movement of established services movement is very slow. On free movement of capital, it is slower still. On equivalence of university degrees, it is dead slow. So it goes on. Under the Treaty as it exists at present, the Community is making no forward steps at all.
Mr. David Ginsburg: Is my hon. Friend arguing that the Common Market is moving too fast or too slowly in these matters?
Mr. Orme: I am trying to show that, instead of being the overall planned economic miracle which it is supposed to be, a thriving and thrusting economy into which we can go, just the opposite is the case at present. General de Gaulle has just taken emergency powers in France which are not altogether dissimilar from what Her Majesty's present Government took on the wage freeze and Part IV of the Prices and Incomes Act recently, but that is rather a sensitive point and I shall not go into that further.
I find the unsigned article in The Times of 1st May dealing with capital flow and the balance of payments very interesting. A lot of figures have been bandied about on all sides. My right hon. Friend the Chancellor warned us today not to take too much notice of these figures. Unfortunately, he did not
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give us any of his own. The Prime Minister has given us some figures on payments into the Fund in respect of foodstuffs and movement of capital, and these figures, together with those in the article in The Times, could involve us in £500 to £600 million a year; and many think that the figure could be as high as £700 million or £800 million. This is a tremendous amount of overseas exchange for this country to cope with and keep right. There will have to be an enormous infusion into our economy if we are to make a success of it.
We have had some rather sublime statements about the injection of a fresh impulse into our economy, about an increase in productivity, and about how going into the Common Market will get industry off its knees. I want to know, in realistic terms, how all this is to be achieved. No one has dealt with that yet.
We have been told about the infusion of American capital which is likely to come to this country if we join the E.E.C. I am a Member from the North-West, and there are Members here from Wales, the North-East, Scotland and Northern Ireland. These Members are concerned about economic planning and the state of the regions. In spite of the measures which the Government took after 20th July to try to safeguard the regions, the regions were, nevertheless, hit the hardest. The reasons are obvious. If there is a slowing down of industry, a firm based in Birmingham or London and with a subsidiary in Scotland, Manchester or Northern Ireland will close the subsidiary first, and back the capital comes to the centre.
What will happen if we join the Common Market? If someone wanted to start a new factory, where would he put it? First, there are all the inducements in the form of grants and the rest which the Government give to help the development areas. But, if the Government make it difficult and say that the firm cannot go to A, B or C, that firm will be free to go to Luxembourg, the Low Countries, or anywhere else on the Continent of Europe.
Mr. F. J. Bellenger: Where the labour is.
Mr. Orme: It sucks the labour down with it.

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Ideally, we want that firm to follow the best planning concepts and set up in one of the regions or development areas. But, if it is refused a development certificate, it is free to go to the Continent. The drift to the South-East will be accentuated, and—let me remind the right hon. Member for Devon, North—it will go from Cornwall and Devon, as well.
Mr. Thorpe: Is the hon. Gentleman suggesting that firms are not at this moment able to go to the Continent? Is he aware how many firms have gone simply to get over the external tariff?
Mr. Orme: It will be much easier for them to go, because they will be able to export back to this country, if necessary, as the tariff wall is withdrawn. The question of regional planning must be treated very seriously. Depopulation in areas like Scotland has not been arrested by most stringent Government action. It will be impossible to stop that depopulation from becoming a flood almost breaking its banks if we go into the E.E.C.
I come now to the vital point raised by the Leader of the Opposition today in relation to the political aspects of this matter. He was right to raise the question of the European deterrent, the British deterrent and the French deterrent. It is proposed to join an economic Community which the Government themselves say they want to see spread out into political association. Yesterday, Dr. Kiesinger called for a common foreign policy. How can issues of defence be excluded?
Mr. Maxwell: For the time being.
Mr. Orme: At any time.
My right hon. Friend the Prime Minister was right to challenge the Leader of the Opposition to clarify where he stood, but my right hon. Friend ought to clarify where he stands on the defence issue. Why have the Germans not supported a non-proliferation treaty? They want nuclear weapons, and they think that they will have more bargaining power if Britain goes into the Common Market. There is no doubt about that. How can we avoid discussing defence? As my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) said yesterday, the last talks broke down on a defence issue, the Nassau Agreement on nuclear weapons at
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that time and what was agreed between Mr. Macmillan and President Kennedy.
There are those of us on this side of the House who are glad that the nuclear weapons issue has been brought out. It it time to get down to the realities of the situation. I am convinced that these issues will be discussed between the Six and ourselves when we apply for membership. We are entitled to know where we stand. There are many of us on this side who are very dissatisfied—I certainly speak for myself here—about the maintenance of nuclear weapons and an independent deterrent by this country, but I do not want to see Britain going into a Community in which the Germans and others will have use of that weapon. My right hon. Friend and the Leader of the Opposition could have discussed these issues tomorrow night, when they are in the same Lobby.
That brings me to what is, for me, the important issue. A very serious democratic decision is to be taken in the House. My right hon. Friend the Prime Minister said last week, when he was questioned by an hon. Member opposite:
"This is a major decision of Government policy and will be put to the House as such next week. It is recognised, with the tolerance shown in our party and, I am sure, in the party opposite, that this is a matter on which hon. Members may feel that very deep issues are involved. It is not for me to dictate to hon. Members the conclusions which they may reach."—[OFFICIAL REPORT, 2nd May, 1967; Vol. 746, c. 324.]
I do not think that, short of a declaration of war, a more important decision could be taken by this country. It is one of the major issues of our lifetime and it is, therefore, only right that we should honestly and sincerely express our opinions about these matters. We live in a democracy, if, by "democracy", we mean that we reflect the different strands of opinions, reflect what the people really think and believe. As we know, the two major parties are basically coalitions, representing varying points of view. We come together here to work within a party discipline because that must be done to achieve the legislation we want. But there are times when issues go above that, and when we are asked to take a decision a Member must stand up and be counted. When we do that in a genuine way we make the House a living reality, and we make democracy mean something.

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People outside tend to deride us at times and criticise Members of all parties for being "Lobby fodder", because to be otherwise might be detrimental to themselves, because they might have the Whip withdrawn, because they might be expelled from their party if they stood up. The party opposite has had Members who have stood up and have suffered for it, and that has also happened on this side.
After a lot of thought, I feel that on this occasion, whatever the consequences, I must follow my conscience tomorrow night. On this issue, abstention is not enough. Therefore, I shall vote against the Government, knowing that four-fifths of the Opposition will be in the same Lobby as my party at the time. I shall vote against the Government believing in what I have said here, and believing that we are making the application without the safeguards which should be guaranteed by the policy of the party which I and other hon. Members represent. I feel that we must make this stand, and I shall, therefore, vote with some of my hon. Friends tomorrow night against the Motion.
6.23 p.m.
Sir Harmar Nicholls: Whatever views we may have on the details of the speech made by the hon. Member for Salford, West (Mr. Orme), we all agree that we have just listened to an honest speech. That is the sort of thing which raises the standard of House of Commons debate. Hon. Members will note that my arm is in a sling. I thought that I would come in my Emergency Ward 10 gear in the hope of getting a sympathy vote or two.
I agree with the hon. Member; I do not object to the three-line Whip which both Front Benches have put out. In many ways they have a duty to do so, because a three-line Whip in a Parliamentary debate on this sort of issue underlines the importance the Government and the Opposition place on it. It also underlines the importance placed on the issue by those of us who feel that we must ignore that three-line summons from our respective leaders.
Naturally, I could not agree with the hon. Gentleman when he seemed to deplore the possibility of our joining the
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Community because it would interfere with the speedy advance of Socialism as he wants it. He was rather frightened of the capitalists of Europe stopping him going his merry Socialist way. His hon. Friend the Member for Liverpool, Walton (Mr. Heffer), who interrupted him, seemed to be eager to enter the Community because he thought that our entry could speed up bringing Socialism to it.
My comment on those contradictions is that the issue has nothing to do with the dogmas of Socialism or capitalism. It has to do with Great Britain, Europe and the world, and my Conservatism and his Socialism form only one part of it. It is, however, an important part, and it is the clash of arguments one against the other which we hope will eventually get us along something like the right lines in playing our part for the world and for Europe in the future.
There is a great deal of frustration in having to make a speech on an issue of this importance when one knows before one starts that one will be defeated in the vote. We know that that will happen, so what is our part, what are we doing in continuing the debate as did the hon. Gentleman and as I shall do? We hope that, although the Government will get their mandate to make the application, we can put enough doubts and thoughts into their minds to make them rather more keen than they would have been when they conduct the negotiations.
I also hope that if, through no fault of the Government and whoever conducts the negotiations for them, we are once again not allowed to enter the Community, the debate will at any rate have caused the Government and my right hon. Friends to say, "We have tried honourably with all the effort we can produce but have not got in, and we shall now look at some of the alternatives to see how to live without the Community."
I voted for the then Government in 1961. When this debate and argument was in its early stages then, although I was suspicious and did not like the proposal—my views were not dissimilar to those of the hon. Gentleman—I voted for it because I thought that one should not have on one's mind that we did not give our leaders a chance to go in and find out more about it. With all my doubts, I voted to see the results of the negotiations and probes, which were carried out with

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great skill by my right hon. Friend the Leader of the Opposition. But those negotiations and probes confirmed my doubts, they confirmed that entering the Community, which means signing the Treaty of Rome, is not for us.
I was appalled by the opening of my right hon. Friend's excellent speech today. He certainly showed that he can dominate the House and that on this topic he is an authority who should be heard. He was impressive, but I should have liked to feel that the skill and ability which he showed so clearly today would be used for the alternative, if eventually—in 12 months or whatever time it takes—we are again not allowed in. But he said that if we were again rebuffed we should go on trying. How often must we be spurned, if we are going to be spurned, before we take the hint?
My right hon. Friend also said that he had no doubts that we would live without entering the Community, that we have all our ability and our exporting strength. He mentioned E.F.T.A., the Commonwealth and the rest of world trade that is ours, and he said in a way that they will still be there.
If it is that we are spurned time and again and that we go on making these applications in the spirit of the last one and of this, are we, in making those applications, going to keep telling our Commonwealth partners that we are prepared to take away their Commonwealth preferences and, indeed, to put tariffs up against them? If it is that we disclaim as clearly and loudly as we are that we have so forgotten the members of the Commonwealth that we are prepared to keep on applying for membership of the E.E.C., the Commonwealth will simply not be there afterwards. If we fail, we shall not be able to fall back on the real base of our export trade.
The same applies to E.F.T.A. I would not presume to claim that they could be anything like as strong as the Government's or my right hon. Friend's, but my contacts in E.F.T.A. countries show that our partners are very disturbed by the eagerness with which we are prepared to end the association with them. So we cannot guarantee that, if it is that we do not get into the Community, we shall automatically have E.F.T.A. to fall back on. We are applying in a weaker position
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than we were last time. Our position is slightly weaker because many of our friends, many of our trading partners and customers, have left us following the indications we have given of the mood of this country.
I want now to talk for a while about the position of the Conservative Party. No one could have tried harder than my right hon. Friend the Member for Barnet (Mr. Maudling) to make us partners in Europe. Later, no one could have used more skill than my right hon. Friend the Member for Bexley (Mr. Heath) in his negotiations. They were in the Conservative Government. If it proves to be the case that the Labour Government cannot do it either, then surely we should make it clear that this is the last time we are going to crawl to do this thing, which so many of us feel in any case would not do us any good.
The Chancellor of the Exchequer was too patronising about the Commonwealth. He said that there was some talk of a possible weakening of the ties with the Commonwealth and added that of course the "Commonwealth has a future". But he left it at that. It was patronising and is likely to leave members of the Commonwealth who have been loyal—although, naturally, keen in trade—in the position where they think that these ties which have kept us together are now not so strong.
The right hon. Gentleman said how well we had been doing in building up our reserves. He said that the future was bright, that we had got our strength back and that the world was standing open-mouthed at our strides forward. But we did not do all this as a member of the E.E.C. If we can make such strides, we cannot say in the same breath how vital and important and almost indispensible it is for us to join the Treaty of Rome.
Mr. R. T. Paget: What seems to be to be the worrying thing is that we shall not meet an acceptance or refusal but will left hanging about for at least two or three years. What is to happen to any alternatives during that period?
Sir Harmar Nicholls: I thank the hon. and learned Gentleman for reinforcing the point I was making. Speed is the essence of this. I was trying to say that we could not afford to hang about because it is

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important that we should deal with the alternatives, and one alternative is certainly to make better use of the opportunities for trade that we already have. I am certain that, if we had given one-tenth of this time and effort to building up our existing trade with the Commonwealth, E.F.T.A. and the rest of the world, we would not only have been wealthier but in a stronger position to help Europe and the world in the way we want.
Yesterday, the Prime Minister claimed that the decision of the C.B.I. was pretty well unanimously in favour of entry. He said that it was 90 per cent. He rather suggested that all the people who know in industry are overwhelmingly in favour of joining and are enthusiastic about the consequences. I do not suppose that he did it deliberately but the impression he gave was not true. It is not the case that 90 per cent. of the C.B.I. are enthusiastic and eager to get into Europe.
The truth is that 1,700 firms were asked and that 865 replied to the questionnaire. Only 34 per cent. thought that there would be a clear and progressive advantage in British membership. Of the total membership of the C.B.I., this figure represented only 17·7 per cent., who thought that they would gain from free access to the markets of the Six.
Sir John Rodgers: My hon. Friend should complete the statistics. It is also true that 91 per cent. of those firms which replied thought that there would be a balance of advantage to the country although not necessarily to their individual companies.
Sir Harmar Nicholls: The only point I want to make is that it is not right to give the wrong impression, particularly from the Treasury Bench, for it is not true that 90 per cent. of the members of the C.B.I., which is the most authoritative body in industry, think that it would be a good thing to do in.
Nor is it true that the nation is eager to join. I do not know how important it is that we should count heads on an issue like this. It may not necessarily be the best thing to do. But certainly it is a matter of such importance that the view of the country should not be misrepresented. It is not true, as the Prime Minister and others have suggested from time to time, that the country over-
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whelmingly wants to join. On what the people know of the issue—and it is not their fault that they do not know more—I would say that they are by and large against joining. Of course, if we do join, we must want to make it a success. I have my doubts and suspicions. I think that it is wrong to apply. But if we do get in, we want the Community to be a success and to do all the good things that we have been told it will be able to do.
But if it is that we do go in, we must not have misled the people in doing so, for the people are, in the last resort, the only ones who can make it a success. This would be the biggest change in our form of government since 1066 and if ever there was a time when we should count heads—not necessarily because the people can understand all the implications and details but because, in the end, it is they who will have to accept the good or ill which comes from it—this is it.
There is an alliance on the issue between the two Front Benches and I do not see how we can count heads on this issue by way of general election. Indeed, the last general election, if it did anything, showed that the people preferred to vote for a party which they understood did not want to go into Europe. Of course there were all sorts of words in the Labour Party manifesto but on this issue the people could recognise that the Liberals were keen to go in on any terms, that the majority of the Tory Party, under my right hon. Friend the Member for Bexley, would want to go in but that the one party that gave the general impression that it did not want to go in was the Labour Party.
It may be that this issue is so important that, if the alliance between the two Front Benches continues, we may have to think in terms of a referendum or some way of getting the views of the people, so that if we apply and fail at any rate the people will have the decision on their own heads. I beg the Minister without Portfolio to put this to his colleagues in the Cabinet before they take us into the Community if they have the chance. But, of course, I do not think we shall get in. I say that with no joy, but all the pointers are that the same difficulties are present today

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as were present last time. My main purpose now is to try to get both Front Benches to see that they ought to be giving a little time and thought and effort to building up the alternatives.
I now make my one contribution on the actual issue itself and then I shall give way to the next speaker. I think that I understand industry and I think that I understand the minds and the moods of the people who run the industries of this country. Anybody who was born in the Black Country and who has lived there all his life and who was connected with it could not help but have some sort of idea of what makes industry and industrialists tick. I am as certain as certain can be that if and when we apply we succeed and get in, in the short, the medium and the long term the industrial strength, and that is the wealth of the country, will go downhill, and go downhill fast.
It is perfectly true that many industrialists have said that they think that it would be in their best interests to have this bigger market for their research and for the general technological advance which we must have in these days. But when they say that it would be in their interests, these industrialists literally mean that it would be in their firms' interests. I can well see that it would be in the interests of some of the big firms. They do not mean that it would be in the nation's interests. It is not their job to do that. Their job is to make their industry successful.
The job of people in industry is to make a profit by running it well and to pay good wages and to have good working conditions and still get their markets. Their job is to concentrate on being successful in their industries and businesses. It is not for them to weigh up the pros and cons of the social and political consequences. Their job is to be successful businessmen. If they had this bigger 300 million market inside the tariff barriers, there is no doubt that many of these firms would be better off, but I can categorically state what would happen within 15 to 20 years from now, perhaps less.
We know that in industry the second most important ingredient in cost, next only to salaries, is transport costs. If four-fifths of the enlarged home market
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which is being so lauded is on the other side of the Channel, that is where firms will want to domicile their factories. They will do so not out of spite or malice, but because it will be their duty to do so. In my tuppeny ha'penny business, in the Nicholls organisation, we put our warehouses in the middle of where the business is, not on the perimeter. If they were on the perimeter, that would put an added burden on transport costs, and one would lose business, because that is how keen business is.
As soon as we are inside this great market of 300 million with the tariff protection round it and with four-fifths of the market on the other side of the Channel, firms in this country which now have subsidiaries in Europe will find that those subsidiaries become the main factories and we will be on the perimeter. This is precisely the problem which now faces Ulster. The reason why we cannot get industry to go to Ulster to help with the great unemployment problem there is precisely the added cost of taking raw materials there and of putting machines into cases and putting them on ships and bringing them here.
As sure as sure, if we are successful and get in, the result may well be that British named firms will have better balance sheets and British named firms may retain their head offices in this country and pay some of their taxes into our coffers, but Great Britain as an industrial centre, which has built up some of the greatest industries in the world and which has impressively led the way in technological advance, will no longer be that centre. We shall be on the perimeter and while the European Economic Community as a whole may be more successful, our share will be smaller.
I still believe—it may be old fashioned and some may think it to be selfish—that the first responsibility of a British Government is to look after Britain. If Britain is kept safe and wealthy, then in our wealth and in our strength we shall be able to share with other parts of the world, as we have in the past, as good neighbours.
This much-lauded application to join the Six does not have for me the magic which it is supposed to have. I believe that it will weaken our chances of doing those things. Even when the Government get their mandate tomorrow night,

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without my vote, I hope that they will not think that they have to go on applying until we have weaned ourselves from all those things which we hold to be important and which have been successful.
6.45 p.m.
Mr. F. J. Bellenger: The hon. Member for Peterborough (Sir Harmar Nicholls) has made a remarkable speech and some remarkable remarks, not least about transport, about which he may know more than I do because of his so-called "tuppeny ha'penny" business. I am certain that transport in this country will only benefit by our joining the Common Market. Why, otherwise, should we dream of building the Channel Tunnel?
I think—I may be wrong and, if I am, perhaps the hon. Gentleman will correct me—that he was a member of the Conservative Government who——
Sir Harmar Nicholls: No.
Mr. Bellenger: He was a member of that Government, but not when the Common Market was debated. [HON. MEMBERS: "He resigned because of it."] Then I give him my approbation.
When the hon. Gentleman comes to vote tomorrow night, let him take comfort from the fact that, although he is in a minority, it is probably bigger than my minority when, during the war, I voted against the Government of Mr. Churchill. I believe that my right hon. Friend the Member for Easington (Mr. Shinwell) was also in that minority. Because we believed in what we advocated, we voted against the Government who, of course, had an overwhelming majority. I agree with him that those who think as he does should act as he tells us he is to act.
The hon. Gentleman was wide of the mark in what he said about our E.F.T.A. partners whom we consulted and whose approval we obtained. It is on the record that at least one of them, Denmark, is bursting to get into the Common Market. What is the good of saying that we are letting down our E.F.T.A. partners when we are doing nothing of the sort? We are proceeding constitutionally, and although some of them may have some apprehensions, in the main they approve of our taking this step.
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It does not help the debate to engage in recriminations about the past. No doubt the right hon. Gentleman the Leader of the Liberal Party can proclaim a "holier-than-thou" attitude on behalf of the Liberal Party on this issue. I concede at once that the Liberals have been consistently in favour of joining. But what is the good of the Liberals saying that my right hon. Friend the Prime Minister has done something reprehensible because he has changed his mind, while the Liberal Party has not? As far as we can, we have to concentrate on the more substantial issues, and I hope to hear from my right hon. Friend the Member for Easington, as I have heard from others, the arguments against our going in.
The Government spokesmen have put their argument, notably my right hon. Friend the Prime Minister in a rather protracted speech, for entry, and in the main I accept what my right hon. Friend said. It is true that the Leader of the Opposition taunted him with his conversion, but those of us who still read Biblical history should never forget that Paul on the road to Damascus was a convert from an infidel—and look where he came in the Christian calendar! The Prime Minister may go down in history as one of the noblest converts who saw the blinding light and, if so, good luck to him:
"… shall be in heaven over one sinner that repenteth, more than over ninety and nine just persons, which need no repentance."
Mr. Ronald Bell: Would the right hon. Gentleman agree that St. Paul, on that occasion, did not add, as the Prime Minister added, that there were other acceptable alternatives?
Mr. Bellenger: I agree. One can make witty points over these illustrations, as the right hon. Gentleman the Leader of the Opposition did. Let us try to debate this issue in a responsible fashion.
The question that will be put tomorrow night, no matter in what form Mr. Speaker may present it is: do we approve of the Government's policy of applying for membership, or do we not? All the frills in the shape of Amendments, if they are put, are beside the point. I thoroughly approve of the Motion and I am about to try to give the House a few reasons why.

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I was very interested to hear my right hon. Friend the Chancellor talking this afternoon about the repayment of our debts which he proposes to make in the near future. I am glad of it. There is no doubt that it will give a good deal of comfort in certain financial circles. At first, I was inclined to question whether this came from real savings or whether it came from money flowing into this country, as a result of the high Bank Rate. He assures me that it is not because of this. He tells me, as we all know, that Bank Rate has been considerably reduced. He said that it is because the investment balances are being restored to normal.
Whatever the reason may be, I have been brought up from my youth on one principle alone—the "Micawber" principle. That is the principle of "£1 income —19s. 6d. expenditure". This country can have a true balance only if we have a true balance of trade, namely, more coming in than going out. I believe that my right hon. Friend, with a good deal of unpopularity, is trying to produce that end. I further believe that the reason why he wants us to join the Common Market is because he believes that his balances at the end of the year will be bigger. I think that they will.
Mr. Molloy: My right hon. Friend has used the analogy of the wise Micawber principle. Would he not agree that there is also a danger of this being considered from the point of view of the other Micawber principle, that of being poverty-stricken and waiting for "something to turn up"?
Mr. Bellenger: No, I was proceeding on the more positive principle of Mr. Micawber, not on the negative one. That is the trouble with so many of my hon. Friends, and some hon. Gentlemen opposite. They are "dismal Jimmies", including the right hon. Gentleman the Leader of the Liberal Party, who talks about a fifty-fifty chance. It is an evens chance, at any rate, which is probably better than what my right hon. Friend, the Member for Easington thinks.
My right hon. Friend calls it a gamble. Life is a gamble. There is only one certainty in life, and we older ones know what that is. It is because some of us are still young in mind in spite of our age, that we believe in a gamble. This is probably
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why the majority is in favour of our joining the Common Market. We could have a referendum, but I do not believe that the question could be put in a form that the majority of people would understand.
They have already been confused by the Pundits in the newspapers and elsewhere, saying that we were literally going to the dogs, that our food will cost us more. At least the Government are honest on this. When I listen to my right hon. Friend the Minister of Agriculture, perhaps I shall know a bit more. It is probable that our food prices will go up, but there are balancing features. My right hon. Friend the Prime Minister spoke of the social welfare. He said that balancing features must be made, quite rightly. We know that on the Continent butter costs more than here, because we buy cheaply from New Zealand and Denmark. The housewives on the Continent know this better than housewives here. In my view, things are not going to be as extreme as is made out by some commentators.
Perhaps I may direct the attention of my hon. Friend the Member for Salford, West (Mr. Orme) to some further points about nationalisation. He has only touched the fringe of the subject. He mentioned the nationalised industries in Italy, but let him examine some of the nationalised industries which were established long before the war in West Germany. Let him examine the electricity industry there. True, it is not nationalised on the same basis as ours, centrally. Probably because of that, it is a better form of nationalisation than ours.
For many years Germany has been ahead of us, as have other countries. The railways are an example. In France, Switzerland and Germany the railways are much more advanced than here. Their Socialism and nationalisation is much more advanced. If it can be done on that basis there, controlled like the electricity industry, by municipal authorities among others, why should it not be done here? My hon. Friend is a little "off beam" in this respect.
We have to consider how the Six came about. We cannot go too deeply into the history, but the booklet which has been issued by the Government, "Britain and the E.E.C., the Economic Background,"

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gives us the details of how these countries decided, in the midst of adversity to get together, old opponents, like France and Germany included. I saw it for myself, after the war.
I was in Germany then, while I was a junior Minister, and I saw the devastation, the near anarchy existing there. An Opposition Amendment talks about law and order. The trouble was that law and order in Germany was almost demolished after the Nazis had been dealt with. These men realised, thank God, that if they were to survive, and to build themselves up, they had to get together, instead of working alone. That is the issue facing England today. We have to work in co-operation.
Mr. John Rankin: Surely more than England is concerned in this? There is also Scotland.
Mr. Bellenger: I beg my hon. Friend's pardon.
What will happen when we get into the Common Market, and the foreigners have to understand this subtle difference between Scotland and England, I really do not know. I would urge my right hon. Friends to put this high on their list of priorities. I ought to say Britain. Britain has to get into the Common Market and to co-operate with the others if she is to survive. Especially if we are to survive in affluence.
No one can doubt that affluence exists on the Continent. In many cases, wages are higher than in this country, but, of course, there is a balancing feature in that prices are higher. I imagine that the same thing will happen here. But full employment has not been surrendered. Consider Germany, which has 600,000 to 700,000 foreign workers. We boast of coloured workers from the Caribbean, and so forth, and say that they are citizens of the Commonwealth. The countries of the Six have foreign labour too. They are in Switzerland. There are hundreds of thousands of foreign workers, and this is a sign of affluence.
They do not have enough labour in their own countries to produce that satisfactory balance which they need. That is probably the reason why they are rapidly overhauling this poor little country, which has been shedding its empire.
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Also, what is far more pertinent, it has been shedding a lot of the funds in those countries.
Take the balance of trade between Canada, one of the old Dominions, and this country, which is mainly tied up with the United States financial system. Some of the best investments in the world, certainly in the Commonwealth, are in Australia, because she has a lot of raw materials—not like coal, which is a waning raw material in this country—which are being developed largely by American and Japanese capital. The Australians—and I was in Australia two or three years ago—would perhaps prefer to deal with the British market; that is the tie of blood, as it were. But, as one Australian said to me, "Money is the same, from wherever it comes. If it is invested in our industries, and if it makes them more prosperous, we do not care whether it is Japanese or Chinese money".
We must take these factors into account. It is no good using mainly rhetorical arguments, saying that we are letting down the Commonwealth. The Commonwealth knows that we are not doing that. It knows that it has to search for other markets, and it is finding them. I do not believe that Commonwealth countries will be any less prosperous if we go into the Common Market.
My hon. Friend the Member for Salford, West (Mr. Orme) talked about the regions. The wages of people in at least one region are being subsidised to the extent of £2 million per annum. If inducements like that can be given, and if tax-free inducements can be given to Ireland, it is small wonder that many European countries are setting up factories in Northern Ireland and Southern Ireland.
My hon. Friend the Member for Salford, West referred to German nuclear armaments. A distinction should be made, which the Leader of the Opposition made, between nuclear armaments and civil nuclear research. There is not the slightest doubt that if we were to drop all the nuclear weapons into the sea tomorrow, nuclear power would remain. It is badly wanted. Small wonder it is that the Germans, in particular, refuse to sign a non-proliferation treaty under these circumstances. Judging from statements made in responsible quarters in

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that country, Germany does not want nuclear weapons. Germany would be the first to suffer in a nuclear war. She is bang in the centre of Europe. If Russia were to engage in a nuclear war, the probability is that many of the targets would be in central Europe.
But why should not countries have nuclear power for civil purposes? I agree with what the Leader of the Opposition said about this matter. Nuclear power should not be hogged by the two power blocs, America and Russia. Why should we leave it all to them? Everybody knows that, whether it be in civil nuclear power or military nuclear power, Britain is far behind the United States and the Soviet Union. Knowledge should be spread. If it is used for evil purposes, I am against it entirely. That is why I should be loath to see Germany have nuclear power for military purposes.
But I do not believe that Germany wants it. I do not believe that there is any chance of her getting it, except possibly through one of her partners. France, which is coming up well in nuclear power, is a partner of Germany. Hon. Members may say that I have a suspicious mind, but nuclear knowledge might be imparted by commercial firms in Germany and France, many of them allied in trade. They will somehow get that knowledge, whatever we may say or do to deny it to them.
I have not attempted to advance many of the positive arguments which I advanced on a previous occasion when the Conservative Party tried to get this country into the Common Market. Many of Mr. Gaitskell's colleagues were very disappointed when he made his Brighton speech, not least one of the leading members of this Cabinet. Many of us, including Mr. Strachey and I, went to see him in his room and tried to persuade him to stand firm. He did not. He made what I call a face-saving speech—[HON. MEMBERS: "No."] That is my opinion.
Some of my right hon. and hon. Friends, not least my right hon. Friend the Member for Easington—I would not deign to call him an ancient Briton; that was said by somebody else—look backwards instead of forwards. I happen to be one of the forward-looking people. Much of what would happen if we were to join the Common Market will not
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happen in my time, but it would be better for my children if we were to join than if we were to carry on as we are. That is why I shall vote for the Government tomorrow night.
7.8 p.m.
Mr. Gwynfor Evans: I intend to vote against the Motion, but not because I am anti-European. On the contrary, I very much want to see Wales in close and fruitful relationship with Europe. But I ask for the sympathy of the House and ask hon. Members to put themselves in the position of a small nation without a Government. If Wales went into the Common Market as she is now, as an integral part of England—we were incorporated in England in 1536—the result would be a further deterioration of economic prospects in Wales, which are already very grim indeed.
I concede that there is room for debate about the economic consequences of membership if Wales had her own Government, if she were in the Common Market as a separate political entity. But I do not think that there is any room for debate about the consequences of Wales being in the Common Market without a Government. They would be deleterious and they could be damning. For that reason, I think that Welshmen who put the welfare and interest of their country first should vote against the Government.
I recognise that the close economic interdependence of Wales and England means that, whatever constitutional status Wales has, we have no choice in the matter. We are so closely bound up together that, if England goes in, we have to follow, and that would apply even if Wales had her own Government. When Wales has her own Government, of course, there will be a common market between Wales and England, with no tariffs and no passports. We are too closely bound up——
Mr. J. T. Price: Can the hon. Gentleman give the House an assurance that, if this delectable state of affairs ever comes to pass, there will be no balance of payments between England and Wales?
Mr. Evans: That remains to be seen. There would certainly be no border in the sense of a frontier, and no tariffs or

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passports. If England is in the Common Market, obviously Wales is in. However, if we had our own Government, we should be in with a means of adapting ourselves to the situation, and that is essential for us.
The ground of our opposition today, therefore, is not so much that we object to being swallowed in a bigger organisation than this Whitehall State but, rather, that we object to being swallowed at all. In this debate, there has been talk of a partnership, but there is no possibility of partnership between Wales and the other nations of Europe as long as Wales has not the means of acting for herself.
If we went into the maw of the European whale with freedom to use our own limbs, we should make our presence felt as Jonah did, but we are already in the belly of another capacious fish—let us call it a shark—which is seeking lodgings in that whale, and dire economic consequences to Wales in that situation would be inevitable.
I am sure that no one can speak with precision about those consequences. Certainly no one has been able to throughout the debate so far. There seem to be hard facts to reassure us about the effects, for example, on the basic industries of Wales. I should have been very glad if the Government had been able to give more of the facts and say that the effect of entry would not be adverse on our basic industries. The only industry about which we have had any facts is agriculture, where the effects would be adverse, particularly in Wales where we are dependent to such a great extent on milk production and hill farming. But we have no facts about the effects of entry on coal or steel.
In the Common Market, even Italy imports cheap coal from America. If we were in the Common Market, we, too, would see the import of cheap coal into our country, and that would further depress an already depressed industry. I cannot say what the consequences would be on steel, although I see that steel is included by the Economist amongst those industries upon which the effect of entry could be adverse. Therefore, even with the industries which we have today, the consequences are likely to be pretty grim
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in Wales. But that is not the worst of it. The worst of it is when we look forward to future development, and I am sure that the House will agree that we have need of development in Wales.
We Welsh are a happy people, and our Ministers are a notably happy and hopeful band. However, although we tend to sing hymns in a minor key, I suspect that the favourite hymn of our Ministers is "All Things Bright and Beautiful". They fail to see the cloud for the silver lining. But the cloud is there—too much of it.
According to the last available figures, there are 42,000 unemployed in Wales, which is between 4 and 4·2 per cent. of the total number of employees. As we look forward we see that unemployment is almost bound to rise. We have been told by some economists who have a good grasp of the situation that, by the early 1970s, we shall need something like 100,000 new jobs in Wales if we are to avoid mass migration or still heavier unemployment.
That is the background of the proposition which the Government make of entry into the Common Market, and it takes no account of the added adverse effects of entry upon our economy.
In Wales, we have an eastern problem. The area to the east of Wales—and Bristol and the West Midlands are to the east of Wales, not to speak of London and the South-East—is a powerful magnet which, for the past 40 or 50 years, has drawn our people away from their homeland. We have lost about a million people this century, and, for the last half-century, we have not had the necessary amenities to develop our own industry in our own country.
One hon. Member has talked about the part which transport plays in the costs of industry. We have not yet had the development of major roads in Wales, and that makes it very difficult for us to develop new industry. We have not an efficient network of railways and, as a result, there is this tendency towards the east—this Drang nach osten, or Tuedd i'r Dwyrain, if I may use foreign words in this Chamber, one phrase from Germany and the other from Wales. This has been a feature of our history in Wales, as it has been a feature of German history in the past.

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In these circumstances, it is not hard to imagine the dire effects of entry upon Wales and her economy as long as we remain an undifferentiated part of England, because the economic centre of gravity is bound to move further east. The trend has been marked for decades and will be accelerated. As a result, the development of new industry in Wales will be still more difficult.
Last week, I read in The Guardian that Sir Roger Stevens, who is Chairman of the Yorkshire and Humberside Economic Planning Council, said that joining the Common Market will benefit particularly the eastern side of his region, where it would encourage industrial development and commercial activity because of easy access to the Continent. What is notable is that he does not expect the western side of what could be described almost as a far-eastern region to benefit very much. Obviously, therefore, proximity to markets on the Continent will be extremely important. In that situation, what chance is there of Wales securing benefits, lying, as it does, on the western periphery of this island, as long as the basic disequilibrium continues, which will be increased with entry into the Common Market?
The Prime Minister told us yesterday that he has high hopes of the regional policies inside the Common Market and, of course, even countries like Wales and Scotland are referred to as "regions" by many people. But how often in the last half-century have we heard hopeful sounds like this about what are called regions and their development? Surely the development of these areas depends upon their political strength or upon the determination of the central Government, who are responsible for them, to assist them. How can Welshmen reasonably have faith that government in Whitehall, of whatever colour, will fight for Welsh economic development? No government in Whitehall have ever fought for Welsh economic development. They will still have to fight and even harder in the circumstances of the Common Market.
All the Governments that we have known, without excepting present company, have ignored Wales in the formulation of their policies, and this question of entry into the Common Market is no exception to the rule. None has shown the slightest interest in creating conditions
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of full nationhood in Wales. On the contrary, they have all tolerated action or inaction which has hastened the decline in the vitality of Welsh nationhood. What hope have we of the Government acting effectively to safeguard the interests of Wales?
Mr. James Dempsey: I am interested in what the hon. Gentleman is saying about the alleged neglect of Wales. Would he like to comment on the fact that in spite of the strong claims made by Scotland, Wales got the Mint?
Mr. Evans: I thank the hon. Gentleman for raising that point. It has been used to strengthen the position of Plaid Cymru. We face the position that, whatever happens in the rest of Britain as a result of our going into the Common Market, the consequences to Wales will be unfavourable. How can we have confidence that the consequences will be favourable in England. Many hon. Members have referred to the now famous article in The Times last Monday, which seems to have some authority behind it. It said:
"To save £600 million of imports by general deflation, demand and output at home has to be cut back by roughly £3,000 million or 10 per cent. of the national income. This would mean unemployment of about 2 per cent. above current levels, that is a long-term average rate of 4 per cent."
If that is true—I know that the Chancellor has denied that we can rely on these figures, but one has to listen to facts like this—as unemployment in Wales has constantly been twice that in the rest of Britain for the last 40 years or so, it means that if Wales goes into the Common Market as an undifferentiated part of England we can expect a long-term average unemployment rate of 8 to 10 per cent.
What is certain is that, whatever price England may have to pay for entry into the Common Market, Wales will have to pay a higher one. Indeed, if the situation is as bad as I have described it, to put Wales into the Common Market without a Government of her own will be an act of criminal folly, and for a Labour Government to do this provides evidence that it is Labour policy to write off Wales as a nation.—[HON. MEMBERS: "Nonsense."]—I shall give my reasons for saying that.

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For a generation it was the policy of the Labour Party to give Wales self-government. This was reaffirmed more than once at the Labour Party's Annual Conferences, and as late as 1928. In fact the idea was not dropped until about 1931, and it was dropped then not because the leaders of the Labour Party had ceased to believe that self-government for Wales would be a good thing. Indeed, they said that it would, and in fact Arthur Henderson went further than any Welsh Nationalist would think of going and said that if Wales had her own Government she would be a Utopia among nations. No Welsh Nationalist would make an inflated claim of that kind, and yet within a few years of that being said the Labour Party dropped the idea of giving Wales self-government, not because the leaders of the Labour Party thought that it would be bad for Wales—in fact they knew it would be good—but because they thought that it was bad for the Labour Party.
The Labour Party and the Labour Government have a duty to Wales. They owe her a great debt. There would be no Labour Government here today if it were not for Wales, and they would repay that debt in part if they were to ensure that if England went into the Common Market Wales would get self-government. The company in which Wales would find herself in that event would not be purely a company of giants. Benelux was not a group of giants. Luxembourg, whose support for entry was sought the other day by the Prime Minister and the Foreign Secretary, is not one of the world's greatest Powers. Its population is about that of Monmouthshire, but its voice is listened to. It is heeded in the Common Market. Its opinion was asked, but nobody has asked the Welsh people for their opinion. Nobody has asked us whether we want to go into the Common Market. Nobody has taken the trouble to do that.
I do not want to give the impression that I am against the idea of the Common Market. I am saying that if we go in in our present position the effect on Wales could be devastating. I think that the Common Market idea can be a very effective device for ensuring the perpetuation and development of the lives of smaller nations in Europe by safeguarding
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their political freedom and ensuring for them the advantages of the economies of scale. It opens up a vista in which European civilisation will be the richer for giving its national communities the conditions for developing their full potential. It will be a Europe of the nations, rather than a Europe of the states. Wales, Scotland, and Brittany, among others, would be the gainers from a Europe of this kind, and they would have a great contribution to make to such a Europe.
I think that we have a right to this status. It will give us the benefits for which we are asking, and I think that the Government have a duty to grant us this status. In peace and in war Wales has suffered immeasurably from the consequences of English or British policy. For centuries the Welsh have been seen here as a minor part of English history, and they are still being treated in that way. Our place in this attempt to get into the Common Market is another example of that.
In his peroration yesterday the Prime Minister spoke about creating a unity in Europe, and I fully sympathise with that. He spoke of it as
"a unity the greater and more real because it builds on, and does not reject, the rich diversity of those nation States whose national aspirations, culture, and characteristics will become more vigorous and more fruitful by being welded together in a wider outward-looking unity."—[OFFICIAL REPORT, 8th May, 1967; Vol. 746, c. 1097.]
I go along with that, but on one condition, namely, that Wales becomes one of those nation States. The fourteenth Mr. Wilson, unfortunately, pursues his course regardless of the effect on Wales, and it is for Wales that I speak in opposing this policy.
7.29 p.m.
Mr. Bert Hazell: I am glad of the opportunity to intervene briefly to make a few comments about the effect which joining the Economic Community might have on the agriculture industry. I am sure that the House is aware of my lifetime association with the industry, and particularly with those who work in it. For the last 20 years, British agriculture has been safeguarded by the Labour Measures of 1947, and if we abrogate those successful policies, we shall do agriculture a disservice.

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The Prime Minister referred to some of the problems for the industry presented by our application, but I do not think that we fully appreciate the full impact on our farm structure. I am convinced that if we join the Common Market—unless there are some very firm assurances, which I did not gather from the Prime Minister's speech—Britisli agriculture will suffer.
Representing a constituency in North Norfolk, I know that cereal growers on the East Coast will benefit from current European cereal prices, but large numbers of our producers rely on those cereals for maintaining their own farming. Climatically, and for other reasons, it is impossible for us all to grow barley or wheat.
The Foreign Secretary rather oversimplified the position at a meeting recently when he said that small livestock producers who could not early turn to cereal production would be hit. During the war, I was a member of the West Riding of Yorkshire War Agricultural Executive Committee, and we had vast quantities of tractors and equipment to plough up the lush pastures of the Pennines for cereal-cropping. We got the crops, but never had the weather to harvest them.
It is an over-simplification to suggest that, because cereal growers will do well by our application and because cereal production has increased in recent years, everyone might well go over to cereal production. This just is not physically or climatically possible. We are still a nation of small farmers who will be hit by our membership.
The hon. Member for Carmarthen (Mr. Gwynfor Evans) talked of the problems of Wales and I believe that Welsh and Scottish farmers will feel the draught keenly. In spite of the assurances from both sides of the House that we will not let agriculture down, if we join the Common Market we shall be letting down a large percentage of our farmers. On the high ground and ground of marginal quality there will be a quick return to derelict land, because the farmers will not be able to meet the high cost involved.
The cost of feedingstuffs and the lack of subsidies which will follow our joining will put them largely out of business. We must recognise that many hill
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farmers and those on poor land rely almost entirely on subsidies and grants and the milk cheque to keep them going. No one can say that the agricultural policy of the Six is likely to continue to favour many of the subsidies which British farmers receive.
That policy does not favour producer boards. The establishment of the Milk Marketing Board in the 1930s brought some hope of relief for a large section of milk producers who faced hard times. In spite of the more prosperous era of British agriculture in recent years, there are still large farmers who rely almost entirely on subsidies and the monthly milk cheque from the Marketing Board. If, because of their remoteness, they are unable, as is suggested, to sell their milk in the liquid market, they will not be able to farm as they have for so long and there will be no means of providing a substitute form of farming in these areas.
For over 20 years, I have been a principal negotiator on farm workers' wages. When we submit our claims, the officers of the Ministry show us tables of farmers' incomes in their respective groups and the employers use the argument of small farmers' inability to pay a good wage and say that their profitability and income cannot meet our claim. If the income of small farmers is lessened—I can see no alternative—the chances of securing a reasonable standard wage for agricultural workers, based as it largely is on that ability to pay, will remain low for all time.
I cannot support a policy which must, in the long run, mean a continuation of low wages and long hours for the men of the countryside. Because of this and because of the weakness of the European agricultural policy and its effect on the future standard of living of countryside workers, I cannot support such a policy.
Neither the Government nor any speakers have focused the public's attention on the impact on the cost of living which will result. I know that the Prime Minister said yesterday that the cost of food might rise between 10 and 14 per cent., which does not appear much in this context. I have read and reread my right hon. Friend's speech. I agree that attention has been drawn to the fact that certain foods might be even cheaper

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than they are now while the prices of others may be contained. While that may be true, it is even more true to say that the prices of some foods will rise astronomically.
Another reason why I cannot support the proposed application for entry is because of certain basic essential foods which will rise enormously. The prices of milk, meat, bread and butter will rise by a lot more than 10 per cent. to 14 per cent. I do not believe that the public generally realises the impact that joining will have on our cost of living. Certainly we can do without some of the "frilly" foods, but the four basic foods which I mentioned will certainly cost a lot more.
It has been suggested that we will be able to adjust our social services to take account of those who will be adversely affected by these food price increases. We are proud of the Welfare State, but only a fortnight or so ago we were debating, on an Opposition Motion, the poverty that exists among certain sections of the community. When the prices of certain basic foods rise substantially, their standard of living will be at an even lower level. The public should be made fully aware of the impact that joining will have on the prices of essential foodstuffs.
I took part in the recent election at Brierley Hill. As I went from door to door in the campaign I was invariably told, "We are not voting this time, because you have done nothing to contain prices". Do my hon. Friends seriously think that, by imposing additional prices, we will get the support of the housewife? If they do they are living in a fool's paradise. The housewife will never be convinced that it is good for her and her family for Britain to join the E.E.C. when she sees the cost of living rising substantially.
When we talk, as the Prime Minister did yesterday, about spreading the overall increase of 2½ per cent. to 3 per cent. rise in the cost of living as a result of our joining the E.E.C, do we consider that that is the end of the story? My hon. Friends must be aware that, as food prices rise, trade unions are bound to demand substantial wage increases. How can food prices go up while wages are frozen? If, as I believe will happen, substantial wage increases will be demanded
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as a result of food prices increasing, the overall picture will be more disastrous than the one so far presented to the country.
For all these reasons, but mainly because I believe that our joining the E.E.C. will do tremendous harm to our agriculture industry, I cannot support the Government in this matter. Joining will remove the security and stability that has proved the value of the agriculture industry for the last 20 years or more. The second reason why I cannot support the Government is because of the impact that joining will have on the cost of living. That impact will be much greater on our essential foods than the country has been led to believe. The third reason is because many of our people who are already living on the poverty line will find themselves in even more serious difficulty.
7.46 p.m.
Sir David Renton: Although I represent a farming constituency, I disagree with a great deal of what the hon. Member for Norfolk, North (Mr. Hazell) said, and I believe that his predictions are unnecessarily gloomy for the farming community. However, I do agree with him that on the present cereals policy of the European Agricultural Community our farmers in East Anglia are likely to benefit. I do not anticipate that policy being changed for the worse because the agriculture lobby is very strong in the countries of the E.E.C, stronger than it is in this House. I believe that my farming constituents will, on balance, in the medium and long-term, gain from our joining the Community.
Mr. Paget Mr. Paget rose——
Sir D. Renton: I do not want to give way. Many hon. Members wish to speak, so I will romp through my speech. I promise to give way if I become controversial.
The small farmers to whom the hon. Member for Norfolk, North referred will not feel the draught which he predicted. They are more efficient, better equipped and better capitalised than the greater proportion of small farmers on the Continent and I believe—so far as one can form an opinion at this stage—that they will more than hold their own. There is nothing, I understand, in the policy of

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the European Agricultural Community or in the Treaty of Rome to prevent us from injecting further capital into the industry if we think it right to do so.
The House will have gathered that I am in favour of our applying to join the Common Market. I do not consider, and never have considered, that we should join unconditionally. The Government are presumably not asking for a carte blanche to negotiate the minimum conditions that would get us in and I assume that, when the negotiations are over, we will have a chance to consider what has been agreed and that the Treaty of Rome will not be signed without the approval of Parliament. This has not been plainly stated and I hope that this will be confirmed by the Government before the debate goes much further.
I regard the E.E.C. as an economic grand alliance of independent sovereign States inspired by good political motives. As a lawyer who wants to see Britain remain independent under the Crown, I have naturally looked closely at the effect of the Treaty of Rome on our sovereignty The Lord Chancellor yesterday spoke clearly and at length on this matter and, without wishing to repeat what he said, I would like to add a gloss on some of his remarks because the Treaty has caused a great deal of misunderstanding. Incidentally, as the Chancellor of the Exchequer pointed out, some of it—the right hon. Gentleman referred to Article 108—is already obsolete. After all, it was drafted 10 years ago.
The Treaty of Rome is mostly a statement of aims and principles, rather than a code of positive law. There are some positive provisions in it, but they are only provisions which come into force after other agreements have been made. Those aims and principles have to be implemented by numerous agreements between the member States, and when those agreements have been made they are translated into the laws of each country. In many economic matters—and I agree with my right hon. Friend the Leader of the Opposition when he says that eventually also in defence matters—there must be a pooling of sovereignty. But there is nothing new in that. Every time we make a trade agreement or defence agreement there is some pooling of sovereignty. But I agree that if we enter there will be a much greater pooling of sovereignty than before.
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Even in those matters where there is to be a pooling of sovereignty following agreement, the six member States have so far gone cautiously. After tough bargaining, and understanding bargaining—an understanding of each other's circumstances—they have reached agreement. There has been no gleichschaltung—no compelling everyone to toe the line. After all, they all had enough of gleichschaltung during the war. So there has been a spirit of compromise in the negotiations which they have carried on between each other. One hopes that the same spirit of compromise will prevail in their negotiations with us.
My right hon. Friend the Leader of the Opposition today, in what I thought was an extremely clear and helpful speech on the matter, referred to "Community solutions", but even those solutions have been reached as a result of compromise based on the recognition that circumstances vary to a considerable extent in each country. One illustration of this is the agricultural policy, which still has not been completed. The Six are still negotiating it. It will have to be varied as time goes on and as circumstances develop.
Another example of what I mean, and which I should like to mention in greater detail is employment of labour. The Preamble to the Treaty speaks of "eliminating barriers which divide Europe", and Article 48 says that the free movement of workers shall be ensured before the end of the transitional period. That is what the Treaty says—but what has happened? Despite those resounding phrases, all the Six countries still have immigration control, and use it if necessary on each other's nationals. The movement of labour is not entirely free. It is strictly limited, as the Prime Minister pointed out.
When the Six were negotiating, the Italians had very much more unemployment than they have now and they rightly insisted that if there were to be complete freedom of movement of labour from the other countries into Italy it might cause things to get even worse there. So, in this spirit of compromise, it was decided that there should be a notification of vacancies through a Government agency and a filling of vacancies through a Government agency. Frankly, therefore, I do

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not think that the provisions about freedom of movement of labour will make a great deal of difference to us in this country.
We already have masses of Europeans coming here every year on short visits. Each visitor has a time limit stamped on his passport. Others come here with Ministry of Labour permits, generally for six months or for 12 months. If they stay for five years or more, they can apply for British nationality. If we join, I would expect those things to continue in very much the same way as they do now, and that the Ministry of Labour would still issue labour permits, but would do so under the Community's policy.
As many of my hon. Friends and some hon. Members opposite know, I have joined the ranks of those who are very anxious about the over-population and over-urbanisation of this country, and I have, naturally, considered the effect on that position of our joining the Common Market. Having done so, I doubt whether it will really make much difference.
I wish the Government well in these negotiations. When they are completed, we shall have to scrutinise the outcome. For myself, I think that the most important objectives for agriculture are to get a transitional period of at least five years, and an annual price review.
As to the Commonwealth countries, I greatly appreciated what was said by the Secretary of State for Commonwealth Affairs last night, and I would hope that he would agree with me that it should not be beyond the wit of all concerned to link the future prosperity of Europe and the future prosperity of the Commonwealth in various ways. I am sure that he was right in saying that those objectives are not incompatible, but here I must add something, having heard the speech of the hon. Member for Bassetlaw (Mr. Bellenger), because the year before last he and I went to Australia together with the C.P.A. delegation. It would be a tragedy if we made new economic allies only at the expense of losing our best friends—and I name them: Australia, Canada and New Zealand.
I hope that if the Government pick up the threads that my right hon. Friend had put down in 1961, that can be achieved, and that we can keep our friends and
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ensure the prosperity of the Commonwealth and of Europe. I would be very disappointed if that did not happen.
I wish that I could speak as hopefully about E.F.T.A. I was really very shocked at the tearing up of the London Agreement, under which it was a question of "all in or none in". As my right hon. Friend the Leader of the Opposition pointed out, it is most regrettable if a position has now been reached in which the most that the E.F.T.A. countries can hope for is merely a good transitional period. When I heard this I almost changed my mind about how I would vote—[HON. MEMBERS: "There is still time."] I will tell hon. Members why I decided not to change my vote, and then they can say whether they think I was wise or not!
I am relying on an assurance given to me at Question Time on Tuesday of last week by the Prime Minister—[HON. MEMBERS: "Oh"]—in answer to a question which I put to him when he made a small slip in his original Answer to my right hon. Friend about the E.F.T.A. countries. The Prime Minister said at first that the E.F.T.A. countries would be associated in any way they could negotiate and cared to choose. I asked whether that meant associated in the technical narrow sense, and the right hon. Gentleman said, "No", that he meant associated with a small "a", which would include full membership. I hope, for the honour of this country, that the Government will strive to achieve full membership for as many of the E.F.T.A. countries as want it.
Last week, I visited Berlin for the first time for many years, and it made an impact on my mind, especially in relation to the young people there. After all, everyone there under 25 is now unable to remember the war and a united Germany. What do they find? They find East and West Berlin divided by a horrible wall, with different standards of living on each side. They find Germany itself divided between two ideological systems, and they find 300,000 crack Russian troops in East Germany. I do not know for certain whether the enlargement of the Economic Community by our joining it will be a solution to all that, but if it would give any hope at all I say that is an additional reason for our going in.
8.0 p.m.
Mr. Charles Pannell: I thought that the Leader of the Opposition was rather smug in his speech this afternoon. I suppose that he had some reason to be, because in 1961 he was in favour of going into the Community and he would not be a Parliamentarian unless, having that tactical advantage, he made the most of it. Whatever appeal he might address to the Government Front Bench, he could not have been addressing me, because over a long period of years I have always been in favour of going into Europe. Everything that has happened and everything that happens from time to time strengthens me in my resolve and conviction that it is right to go in.
It is possible, of course, to make a very formidable case against, as my hon. Friend the Member for Norfolk, North (Mr. Hazell) did when he spoke about agriculture in Norfolk. Anyone who knows his record as a negotiator knows of the conviction with which he speaks and he deployed his case with very great effect, but I could make just as good a case for going into the Community. [An HON. MEMBER: "Make it."] Someone says that I should make it; in that case the House would be in for a long speech.
I want to deal with general principles. I could make a case concerning my constituents in the wool trade which would prove the decline of the wool trade in the Commonwealth and its upsurge in Europe. If I took the wool industry alone, I could make a good case for going in. [An HON. MEMBER: "TO pull the wool over our eyes?"] My hon. Friend must not talk about pulling wool over eyes. It is not blind eyes that I want, but shut mouths. In the same way I could make a formidable case, as my hon. Friend the Member for Edmonton (Mr. Albu) knows, for the engineering trade, and particularly for the motor car industry, which is in for a pretty rough time unless we go into Europe.
Having looked at this matter and listened to the whole debate it seems that the arguments which have motivated speeches against entry have been in the main economic ones. To me, this is more of an emotional issue than any I have known. It is a question of how we start, how we look at history, and where we expect to go. I agree with my hon. Friend the Member for Salford, West
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(Mr. Orme) who said that, short of war, this is the most momentous issue which most of us are likely to face in our Parliamentary lives.
It is known in other places that I would hope at the end of the day, because of profound conviction, that we could have a really free vote on what after all is a great Parliamentary matter. I have been convinced over a period of time, as much as a man can be convinced, that we should go in. I recall, as many hon. Members will, the greatest speech that was made about not going into the Common Market. Everyone knows of the great speech made by the Leader of my party, Hugh Gaitskell, in 1962. Having listened to that speech, and been unconvinced against going in, very few of the third-class speeches I have heard this afternoon would be likely to convince me.
I remember the last conversation I had with Hugh Gaitskell. I understood that it was an emotional issue with him. Questions affecting India went back to his boyhood days. The Commonwealth to him was a living reality. There was an emotional appeal because he thought of a thousand years of history. But that was always a false analogy. Although a party and a nation must always be conscious of its great men and revere past history, more than anything else we must be conscious of our historic mission, where we are going and the people who will come after us. These are the things which move me now.
The Leader of the Opposition appealed to history. I can give only my view of it. I take, first, the Gaitskell five conditions. The first was E.F.T.A. interests, on which, presumably, there has been some accommodation and some agreement. The second was that we should be free to plan our own economy. When I look around Europe I think that they do not seem to be very inhibited about that. The third was the question of agriculture, on which we have heard much this afternoon. Here we have to make a stark choice between agricultural support costs running at about £400 million which could be released for other things and the sort of agricultural industry we have at the moment and joining the Community. I put these against other issues affecting us as a great trading nation. When I consider that there are

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only five agricultural constituencies represented in the House, I know on which side I come down.
The fourth condition was an independent foreign policy. I find it odd when my colleagues call for an independent foreign policy. They have been grumbling, certainly since 1964, that we have had no independent foreign policy. They have argued that largely because of commitments to the £ and sterling we have been inhibited in our foreign policy; and, as the Chancellor said, the years have proved that we could not have an independent foreign policy. We could not "go it alone." When we look at the geography of our islands and at the resources we have and the call to pull in from east of Suez we know that, geographically, an independent foreign policy outside the United Nations and N.A.T.O. is an absurdity.
Mrs. Anne Kerr: Surely my right hon. Friend is not suggesting that collusion at the time of Suez was in the national interest?
Mr. Pannell: I was here at the time and I can honestly say that I have never suffered more in the House than I did in those debates. I was not particularly pleased to read what Mr. Nutting has written. Suez was a great national humiliation. The House had better pause before it debates it further. Hon. Members had better remember what has happened over Singapore. We do not want to resuscitate that. Suez was a watershed which proved beyond anything else that we could not "go it alone" and that there was no independent foreign policy for us. Do not invoke that as a reason for not going into the Community now. It is a sham to use that as an argument.
Then we have the argument about the Commonwealth. Surely that has altered since then. Australia is looking to the United States for defence and to Japan for its trade. If China came into the United Nations we would have another watershed. Canada is looking to the United States for the financial fertilisation of its trade and more often than not it appears to be an American land rather than a Commonwealth one. These are the facts of life. No one can argue that the world has stayed still since
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the Gaitskell conditions were put forward. I find it a trifle wounding at times that while so many people want to invoke the Hugh Gaitskell conditions they had so little time for him in his lifetime. At least, I was one of those in those days whom Hugh Gaitskell could count on.
I happen to believe, too, that we should look at big issues in a big way, in exactly the same way as I always believed that Hugh Gaitskell was good for the Labour Party. I did not bother about peripheral things very much. Integrity and other such qualities came higher in my order of things. I was proud to be counted as one of his friends and he would not have held me accountable merely for what happened in that speech.
It always seemed to me that the speech that Hugh Gaitskell made the year before, the "fight and fight again" speech in the teeth of the wind and not with the flowing tide from the wrong people, was his greatest speech. But for that speech and that stand, there would have been no Labour Party and there would have been no Labour Government for the Prime Minister to have inherited. Let us get all that perfectly clear when people speak about "the Gaitskell conditions". I speak with some emotion on this matter. [Interruption.] Do not interrupt me from the back.
Mr. James Dickens: Does not my right hon. Friend agree that these are not "Gaitskell conditions" at all? They are, in fact, the official policy of the party of which both he and I are members.
Mr. Pannell: I find the idea that we should cast a name overboard as a name associated with conditions, as a sort of alibi at this stage, very funny. Everybody knows that these are the Gaitskell conditions, whoever they were who collaborated with him on the National Executive and who are now gone and probably forgotten.
The Leader of the Opposition treated us to some history. We should remember that in the 400 years between the two Elizabeths we grew up as the first nation in the world; we went to the five continents; we built an empire by all sorts of means, for which many of my hon. Friends apologise today; and eventually

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we arrived at the stage in about 1780 which was the transition period of the Industrial Revolution. That was 1780–1830. We were first in that field. The nineteenth century will for ever be known as the British century. That was the great century of our historical development. We were: able to keep our great empire. We were able to oppress overseas peoples. We were able to levy our tribute from those people. Eventually, with the turn of the tide, those places grew up to their full stature and became emergent countries, free countries.
I remember the late "Nye" Bevan saying that so many Conservatives, including Winston Churchill, thought that every time a nation grew up it was a calamity for the British Empire. "Nye" Bevan said that, instead, we then had to learn to be great in other ways. In the nineteenth century our trade protected the infant United States, which grew up under the shadow of the British Navy. In two world wars there occurred the dissipation of our foreign balances while we bought time for the Americans to enter the war.
There has been a change. Those countries do not look at us in the curious relationship of the mother country any more. We have seen the disappearance of an Empire and the foundation of a Commonwealth. That is change. The watershed was 1960, when Africa started being independent.
We saw the turn of trade all the time. I will give the House some figures. Between 1957 and 1965 the value of British exports increased from £3,500 million to £4,900 million. In this period the value of Britain's exports to the Commonwealth remained virtually static at about £1,300 million, while the value of exports to the E.E.C. and E.F.T.A. nearly doubled. In 1957, exports to Europe were about two-thirds the value of Britain's exports to the Commonwealth. However, by 1965 the value was greater and, at £1,600 million, was approximately one-third of Britain's total exports. Yet we understand that exports to the Commonwealth still account for nearly one-third of Britain's total exports.
My right hon. Friend the Secretary of State for Commonwealth Relations drew attention to this last night. In effect, even taking the figure as one-third, it is a tiny fraction where the other ones arerising.
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We live by trade. Going into Europe is not the enemy of the Commonwealth, because we can aid emergent countries only to the extent that we are rich and can afford to pay out.
The British Commonwealth sells four times as much to the rest of the world as to Britain; in other words, we are not its principal customer.
These are the facts of life in which we live. This issue must be judged against this mighty background. I do not think that there is any particular future in remaining outside Europe. Of course, we could get on without Europe. This has been said already; but, as my right hon. Friend the Prime Minister rightly said, these other things are second best. We are largely an industrial nation. After all these years, we are back where we belong—in Europe.
This is one of the great debates that we face. I can only tell the House that I admire—even revere—the sincerity and emotion which other people bring to their attitude of staying out. I would not attempt to interfere with that. I hope that they will grant that those of us who want to go into Europe are just as inspired in our vision, just as lofty, just as sincere, and just as emotional.
8.18 p.m.
Mr. Ronald Bell: This subject has been plagued by generalities for a long time. I do not say anything adverse to the speech made by the right hon. Member for Leeds, West (Mr. C. Pannell), who plainly feels strongly about this subject, if I say that his speech was characteristic of many that we hear in support of our entry to the Common Market. Indeed, I would pay the right hon. Gentleman a compliment, which he may not appreciate, by saying that his speech was in that respect rather similar to that made by the Prime Minister.
The right hon. Gentleman spoke of the trends of history which seemed to carry us, by a secular inevitability, into a larger unit—the European Common Market. I have to some extent the same feeling and the same bias as the right hon. Gentleman has. I suppose that most of us are in some degree biased by our education or other circumstances of our lives towards an association with Europe. Like the right hon. Gentleman, at the time

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of Suez I remember saying to myself, "The lesson of this is that we must go into Europe".
But this is not a debate about whether a connection with Europe is desirable. It is a debate to decide whether an application to accede to a Treaty with 248 Articles, four Annexes, 15 Protocols and 8 regional declarations, should be approved by this country with no other amendment than that occasioned by a change in the number of members, all other matters of British concern being dealt with by protocol, by informal understanding, or by their being left to be solved from inside after entry.
That is the issue before us today, and, for my part, I do not find helpful vague background inducements related to the tide of history sweeping us forward into this or that new arrangement.
This is like a Second Reading debate for the course of action which I have just described, and any further debates which we have as the negotiations move along will be rather like Committee debates. If the time comes—I do not think it will—when we have to decide whether to approve some negotiated terms and sign the Treaty of Rome, that debate will be presented—make no mistake about it—as a Third Reading debate on something the principle of which has already been irrevocably decided by the House.
I have seen all this happen before. Like one of my hon. Friends who spoke earlier today, I did not in 1961 oppose the inception of what I thought were exploratory conversations, an application to discover what sort of terms would be available to us for joining the Common Market. But it is a fact of life that once negotiations start, people get committed. Reputations are at stake. It is not long before one begins to hear the syren song about matters being better decided from inside the club. The price that is acceptable begins to rise. After all, the disadvantages are measurable and the arguments in favour are imponderable, and imponderables, by their nature, can be represented as balancing almost anything.
The White Paper and the Prime Minister's skilful insistence on the factors which cannot be precisely calculated tell
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me all that I need to know about the course of negotiations, on this occasion, for our adherence to the Treaty of Rome. I have come to the conclusion that this Motion should not be approved tomorrow night, and I shall vote against it, despite the attraction which I still feel for some form of association with the continental States of Europe.
I have risen only to explain, as shortly as I can—at least, it will seem short to me—why I have reached that conclusion. But, before doing that, may I say that I do not complain about the three-line Whip which has issued from both sides. I cannot imagine that any Member of this House would permit his attitude on a subject which may be a breaking point in national history to be governed by the attitude of any other Member or vote other than in accordance with his own judgment. Therefore, I do not mind what is in the Whip.
This matter has been presented to us on either economic or political grounds, and sometimes on both. The danger we must watch for is that there may be a bit of skilful shifting back and forth from one ground to the other as each becomes wobbly. On the last occasion, the House will remember, we began in 1961 on the basis that our entry was economically necessary, and, after particular examination of the matter over the months, we finished on the basis that the economic case was quite evenly balanced but it was the political opportunity which counted.
I turn, first, to the economic arguments against our adhering to the Treaty of Rome, arguments which are fairly precisely definable. The first is the familiar one about the balance of payments. The House has heard so much about it that I do not propose to go over it again. The Times suggested a figure of £600 million per annum as the extra cost across the exchanges of going into the Community, and Professor Beckerman has suggested a figure of £800 million. I do not know which is right, but I was puzzled by what the Chancellor of the Exchequer said today—I sought to interrupt with a question at the time but, quite naturally, he did not give way—when he spoke of £100 million a year. The Prime Minister also referred yesterday to £100 million a year, and he dismissed it, pointing out—not the most obvious reason for dismissing

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it—that it was only one-tenth of £1,000 million.
Inasmuch as we know from the Government themselves that the cost of the agricultural policy unamended will be between £175 million and £250 million a year, obviously the total of all the factors cannot be £100 million. Therefore, although I may have misunderstood the Chancellor's point, we can be clear in our minds that the cost will be somewhere in the region of £600 million or £800 million—even though it may be less than both, it will be of that order of magnitude—and we must regard this as a very important factor to be put on one side of the argument.
This is not to be looked at in isolation or only for its effect upon the costs of production in this country. It is a reflection of the fact that we have grown up as a nation shopping around the world for food where it can be most cheaply bought. It has been a matter of gratification to us to find that food can usually be most cheaply bought where it is produced by British people somewhere else in the world. But that is by the way.
If that is cut off—and let us make no mistake about it if we put on a levy and bring up the price of food to the price in the Community, the incentive for shopping around the world for the cheapest food is destroyed—then what happens to British shipping and investment beyond the seas in the production of that food? What is to happen to the great refrigerated fleets owned by Britain and used to bring food here? Entry to the Community would be found to be one of the greatest blows to British shipping it has ever experienced. What about the trade and financial services which have grown up around the great maritime system upon which Britain has relied in the past? Nobody has taken them into account in the figures, already large enough, that I have mentioned.
Those are things to which one can point specifically. What is on the other side? It has been pretty clear that the only two items on the other side of the balance sheet economically are competition and the size factor. I find the Prime Minister's conversion to competition a little surprising. I knew that he accepted it as part of the mixed economy, but that it should become the principal medicine for all the ills of the State I had
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never expected to hear from his lips. He talked about the reflex action or some such thing, or perhaps we were to be flexed, by the competition of going into the Common Market.
But what kind of reflex action, what kind of stimulus and upward surge—another phrase he used—shall we get from our economy if, when we go into the Common Market, we must place an extra burden on our balance of payments of the order of magnitude that we have heard about? Of course, it will have to be dealt with by deflationary measures at home, because nothing else is permitted under the Community rules, and what upward surge can one get from a nation which is being subjected to deflationary pressures?
So much for competition. Incidentally, I suggest to the right hon. Member for Leeds, West, if he really thinks that the motor car industry will be the first shining beneficiary of going into the Common Market, that if it is having difficulties now they are nothing to the difficulties it will have when its tariff protection in this country is removed.
The next matter which is so heavily relied upon is the size factor. I can be short about this because other hon. Members have spoken on it. Perhaps I can almost tabulate it. There is a population of about 80 million in E.F.T.A. We have the whole Commonwealth, where we have a Commonwealth Preference, and there is the rest of the world, which remains indifferent whether we change either way. Shall we have a larger market by entering the Community when we lose the Commonwealth Preference, lose E.F.T.A. and gain the Six nations? My hon. Friend the Member for Wembley, South (Sir R. Russell) referred to comparative figures of how much of our trade is with the Six and how much with the rest of the world. One must have a mighty big——
Mr. Leslie Spriggs: Is the hon. and learned Gentleman saying that the Commonwealth buys British cars? If he is saying that he had better think again.
Mr. Bell: I was not saying that the Commonwealth is buying British cars. I was talking about Imperial Preference, which we enjoy over a very large part of our exports—[Interruption.]—I had

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better get on, because many hon. Members wish to speak.
We must have a very large increase in the 20 per cent. or so of our trade that we do with the Six if it is to offset the damage to the 80 per cent. that is not done with the Six. What is meant by the domestic market in the Community? That refers to the average tariff of between 10 and 11 per cent. which is around the Community at present. That is all that it means. Remove that tariff, and the whole discussion falls to the ground. I do not think that a conception of a domestic market which is founded upon nothing other than an average tariff of 10½ per cent. has much reality.
Each succeeding G.A.T.T. round-perhaps I am using "succeeding" in both senses—each G.A.T.T. round which succeeds reduces that common tariff around the market, and as that process goes on the whole of that advantage is whittled away. We are all committed to that process, even if it is grinding a bit at the moment.
Is it not really a lot of nonsense? Look at Switzerland. It has not got a large home market, but we should not be sorry to have a company of the size of Nestles, or to have the Swiss pharmaceutical industry. I wish that we could rival that. Holland has Philips and Royal Dutch Shell, and they were not built up after the Community was formed. The fact of the matter is that the size factor is far too much of a talking point among economists today and, to some degree—I do not want to overstate it—a lot of nonsense.
I come now to the political side, which has been stressed by most speakers. Yesterday we heard a short and pungent speech from my right hon. Friend the Member for Streatham (Mr. Sandys). He brushed aside the economic arguments in the interests, as he said, of brevity—and we all appreciate that in others. He said:
"… I have no doubt whatever that the balance of economic advantage is overwhelmingly in favour of going in."
He left it at that. While it was all right for him to state that proposition briefly in order to allow more time for others to take part in the debate, I have never heard my right hon. Friend establish it
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by argument in any of the speeches he has made on the Common Market.
Turning to the political aspect, my right hon. Friend said:
"… together, we could be one of the giants."—[OFFICIAL REPORT, 8th May, 1967; Vol. 746. c. 1124.]
What is meant by "together"? There is really nothing about that in the Treaty of Rome. This shows that those who do want us to go in want us to go on much further than that and in fact to become a United States of Europe.
My right hon. Friend the Member for Streatham said that if we did not the world would be dominated by America, Russia and China. But what have these three in common? Each has its own language. I know that there are many different kinds of Chinese but basically the language is the same throughout the country, just as the language is basically the same throughout the United States and Russia.
I am sorry to say this, and I shall not be more particular, but I was immensely impressed at the time, in about 1959, when my right hon. Friend the Member for Barnet (Mr. Maudling) pointed out that the idea that one could build up a European community which would be like the U.S.A. was a fallacy because it lacked the community of history and language which had made the United States an effective national entity. That is the truth.
This is highly relevant to the last point I want to make, which concerns the constitutional issue referred to by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton). I do not take the comfortable view which I know that he, with the utmost sincerity, takes about this. In the Treaty of Rome, initiative in policy lies with the High Commission, which is a bureaucratic institution the members of which are not answerable individually to the nation States which appoint them. The Council of Ministers has only power to veto, to approve or not to approve. It cannot replace an initiative of which it disapproves by a new one of its own.
That is the Community arrangement. There is no other Parliamentary or democratic control of the institutions of the Community. Of course, the Ministers in the Council of Ministers are controlled by

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their national Parliaments. One of my hon. Friends has said that he hopes that the European Parliament will be directly elected before long. Splendid! It is envisaged in the Treaty of Rome that it should be directly elected but it is not envisaged in the Treaty that it should ever have any powers of its own. It is purely consultative and it is not in the Treaty that it be anything else. It would require amendment of the Treaty if it were ever to be given any powers.
Mr. Martin Maddan: Does not my hon. and learned Friend agree that the European Parliament has power to sack the Commission?
Mr. Bell: Not to any real effect. The only power given to it by the Treaty is by a two-thirds majority to pass a motion of no confidence in the High Commission. If it does that, the High Commission collectively must resign, but it may remain in office to carry out its day-to-day functions until a new Commission is appointed, and serving members may be re-appointed. I shall not say that that is no kind of power, but collecting a two-thirds majority would not be very easy anyway and this is not a weapon with a cutting edge enabling a Parliament to exercise day-to-day control over an Executive in the way that this Parliament, for example, effectively—at least we try—controls this Executive. At least we keep our own Executive in some degree of order.
Those who say that these problems can be solved when we are inside forget that there is a unanimity rule in the Community, not now but at all times, for amendment of the Treaty. It is all very well to leave matters for solution when we get inside, but if any solution which we want involves amendment of the Treaty, we could be blocked by Luxembourg alone. It is all very well to leave the penny numbers to this principle, but no matter which is of major concern to Britain can be left in that way to be swept under the carpet, and it must be sorted out before we go in.
It may be asked, if this is a true balance sheet, why on earth anybody should try to go in. I can give the answer in almost one sentence. The motive now is much the same as it was last time. When an incomes' policy begins to get a bit sticky, people begin
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to look for other ways of solving the problem. This is not a great step forward; it is a step sideways.
Solving the economic problems of a country like this with universal adult suffrage is no joke, and the temptation to shift some of the problems to some of the institutions in Brussels, which are more insulated from democratic pressures, is very great. Not all Administrations are strong enough to resist it.
It is time that this country stopped refusing its fences, and got down to solving our problems at home, not looking for escape routes. I am afraid that we are about to waste another opportunity on another escapist interlude and for that reason I shall go into the Lobby with very good heart tomorrow.
Mr. Deputy Speaker (Mr. Sydney Irving): Mr. Pavitt.
Mr. W. Baxter: On a point of order. I understand that there is some dubiety as to whether under the Act of Union it is possible for this Parliament, if it decides to go into the Common Market, to commit Scotland—and it appears that there is some justification for this belief, because the Secretary of State for Scotland is not to speak in the debate and no Scottish Member has yet been called.
Mr. Deputy Speaker: Entry into the Common Market is not a matter for the Chair; selection of speakers is. The presence of the Secretary of State for Scotland is a matter for the Government, and I have no doubt that the Government have heard what has been said.
Mr. Emrys Hughes: On a point of order. My hon. Friend was dealing with the Act of Union.
Mr. Deputy Speaker: I would appeal to hon. Members to remember the time. A large number of Members wish to speak in the debate, and there is very little time.
Mr. W. Baxter: On a point of order. In fairness—and I regret that I am keeping some speakers from participating in this debate—it seems obvious to all that Scotland is being excluded and is not being called in the debate. Is it the intention of the Chair to exclude Scotland? That is all that I am asking.
Mr. Deputy Speaker: The Chair at all times tries to take all circumstances into account in making a selection, but the selection must me left to the Chair.
Mr. Rankin: Further to those two points of order—
Mr. Deputy Speaker: Order. I hope that the hon. Gentleman is really adding something new to the point of order, and not reiterating what has already been said.
Mr. Rankin: I am adding something entirely new. Unlike my two fellow Scots, I have been here all day and have failed to be called. Most of their information came from me. Further to that part of my point of order, would it be in order for me to suggest that you might convey these facts to Mr. Speaker and that there might be a change?
Mr. Deputy Speaker: I will be happy to do that, but I think that the hon. Gentleman's best chance of catching Mr. Speaker's eye is not to waste time on further points of order.
8.47 p.m.
Mr. Laurence Pavitt: I have every sympathy with my hon. Friends, having sat here since 3 o'clock yesterday. I had some dread that I might have to follow Welsh Nationalism, but I find that I am having to follow Scotland instead. I can assure my hon. Friends that I have the greatest sympathy with the point that they are making, for I too, have sat since 3 o'clock yesterday and still haven't had a cup of tea today.
The hon. and learned Gentleman the Member for Buckinghamshire, South (Mr. Ronald Bell) addressed a good deal of his remarks to the question of negotiations, and the way in which they are being made. This is what the debate is about. We are concerned with the conditions of entry. We have had a heavy debate, with everyone being very sincere whether for or against. But this is only the start of a very hard round of negotiations, and we should be concerned with those outside the House and those on the Continent who should pay attention to the very pertinent questions in this debate. We are all on the European bandwaggon, it has its full head of steam and momentum and it is now rolling. Some people joined it first, and are the original inhabitants. Others have joined it in comparatively recent times and then
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there are people like myself who are unwilling passengers.
Having heard all but one speech I can say that everyone is bringing their own baggage with them. They are bringing their own ideals and aspirations, experiences and prejudices. It has been amazing listening to the debate, to find out how diverse these are. I wonder if it was the Patronage Secretary and the Chief Opposition Whip who found themselves in the same carriage of a train at York. One said that he was going to Edinburgh, and the other said that he was going to London, and they remarked how marvellous it was that modern technology should have them in the same train in the same carriage going to different destinations. It has seemed in the debate that a lot of people have been putting one set of arguments and reasons which are diametrically opposed to others, and yet both members want to do the same thing to get in or to stay out.
As you are the keeper of customs in this Chamber, Mr. Deputy Speaker, I declare my two most important pieces of baggage and they are: first, the National Health Service and, secondly, India. No other traveller so far has declared either of these two important items. I want to say to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) that my baggage also contains much that was in his. I supported a good deal of his speech. He saw a world without barriers, where it was possible to make progress to the kind of world unity which we all want, both politically and economically. I am very open to conviction, and when the probe started there was no one who was able to convince me more than my right hon. Friend the Prime Minister. I was in the position of wanting to be convinced.
I have been looking over the arguments and the changes which have occurred since 1961 and I have to confess that I remain unconvinced. I still find that it is the wrong group, it is the wrong move at the wrong time. It is wrong economically and wrong politically. One of the major changes which I concede as being extremely important, and I am very glad that it has taken place, is to do with regional development. This is a major gain for those who want to go in, and I am glad that we have achieved it, but it does not outweigh many of the other things on the negative side.

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I want to know more about the point put by my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot). Would it have been possible, within 10 days of the 1964 General Election, for all office building in London to be stopped? Would this kind of planning be possible under the Treaty of Rome? I am not talking about I.D.C.s for development areas but the sort of measure taken in order to restrict competition and private enterprise in an area where it was injurious to other sectors of the community.
I find that there is no change in so many things. There is no change in the basic philosophy. It is neither free trade nor planning. But, as my right hon. Friend the Prime Minister said on 7th June, 1962,
"…the whole philosophy …edication to one principle, and that is the principle of competition."—[OFFICIAL REPORT, 7th June, 1962; Vol. 661, cc. 679–80.]
It seems to me that it still favours cartels as against small firms. It is still an undemocratic structure dominated by officials. It remains inward-looking, because there has been no reduction in tariff barriers against the outside world in the 10 years that it has been in existence.
I turn now to the effect on our economy. Unlike some of my hon. Friends, I am in favour of the prices and incomes policy. I do not see how we can have such a policy without starting with prices, difficult as it is. I do not see how, if there are to be rises in the price of foodstuffs such as those to which my hon. Friend the Member for Norfolk, North (Mr. Hazell) referred, we can successfully hold a prices, incomes and productivity policy. It is all very well to talk about increases of 10 or 14 per cent. in food prices; but for old age pensioners the increase will be 30 per cent. I accept the assurance of my right hon. Friend the Prime Minister that pensions will be raised. But, in my experience, whenever pensions are raised, it is a long time after prices have increased. Many old age pensioners in my constituency will not live to see the increase in pensions.
I am very much concerned from the consumers' point of view. The consumers' voice is rarely heard in this place. The housewife will take the brunt of the blow. It is said that the price of
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butter will go up but that the price of margarine will remain stable. I do not wish to become a margarine addict.
I now turn to the question of the effect of entering into the E.E.C. on the National Health Service. I am not referring to social security benefits. If I had more than the quarter of an hour to which I wish to limit myself, I could deal with social security benefits quite separately. But joining the Common Market will have a tremendous effect on our National Health Service. Doctors, dentists, opticians, nurses, midwives, pharmacists, physiotherapists, patients—the lot—will be affected. One of the greatest features of my country, of which I am proud, is the National Health Service. Anything which is injurious to it is injurious to the nation. Professions supplemental to medicine will be affected. The free movement of people, services and capital will inevitably have an impact on the National Health Service.
I wish to pay tribute to the work of Dr. Walter Hedgecock, Deputy Secretary of the British Medical Association, who made a strong plea for these matters to be dealt with before negotiations are completed. A large number of them may well have to be dicussed in the negotiations.
Professional qualifications will be the same across the board, and automatically accepted in member countries, because Article 57 is due to be ratified on 1st January, 1968. I am indebted to a speech by Lord Cohen in another place during the last attempt to join. If we try to compare standards of doctors in this country and elsewhere, the only common ground we have is the extrance examination for the brain drain to the United States. The figures in respect of people who wished to pass examinations in order to practise in the United States which Lord Cohen gave showed that the failure rate is 6 per cent. in the United Kingdom; 30 per cent. in Paris; 30 per cent. in Rome; 34 per cent. in West Germany; 37 per cent. in Brussels; 51 per cent. in Naples; and 71 per cent. in Milan. This shows a wide disparity of standards. We are to have freedom of movement and equality of qualifications. Will we have to lower our standards?
Mr. Austen Albu: Is my hon. Friend suggesting that the standard

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of doctors in the countries of the Community is lower than the standard of doctors in this country?
Mr. Pavitt: I have just quoted the figures for comparable examinations. There is a wide disparity between a failure rate of 6 per cent. in the United Kingdom and a failure rate of 71 per cent. in Milan. As Chairman of my party's Health Group, I addressed seven questions on 14th February to any party seeking elucidation. So far, none has been answered. During the Government's negotiations, some of these questions ought to be answered. For example, will doctors be flowing in or out, because that will affect the brain drain and, in turn, our Health Service? At the present time, in Italy, with a comparable population, there are 90,000 qualified doctors. In this country, we have just under 60,000. Shall we see a flow of Italian doctors here?
Could we have an authorised version of Article 48, because there appear to be two versions. The Article says, dealing with the freedom of travel of members of professions between the member countries, that there is an exemption, according to one version, for people in public administration. According to the other version, it is for people in public service. If it is public administration, it will not apply to doctors. On the other hand, if it is public service, that cuts out the whole French hospital service, because that is a public service. These are details which I would like to see clarified. The E.E.C. practice at the moment is to permit such a movement between the member countries without let or hindrance. However, we shall discriminate against doctors from the Commonwealth who will still have to appear before the General Medical Council.
Will we have the same health checks for people from E.E.C. countries as we have for immigrants? What study has been made of the effect on dentists and physiotherapists? Will there be a need for an amendment to the Medical Act of 1956, Section 26 of which gives the Privy Council powers to override the General Medical Council? These are negotiable matters, but, for people engaged in the National Health Service, they are extremely important matters which we should like to hear answered.
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We have a principle in the National Health Service that a person who is ill is treated, and his treatment does not depend on the power of the purse. However, there is still a paying section, and most of our consultants are on what is known as the nine-elevenths basis, whereby they do two-elevenths in, say, Harley Street and nine-elevenths in the Health Service. With ratification on 1st October, 1968, it will be possible for our doctors to practise abroad temporarily. We are short of top consultants. Will it mean that they will be doing operations in Rome today, in Brussels tomorrow and doing only four-elevenths in the National Health Service, thereby creating longer waiting lists? We could lose the services of top men who are irreplaceable in the short term.
In relation to the drug industry, there is not a great deal to be said either way. There are points for and against going in. At the moment, as more than 50 per cent. of National Health Service drugs come from America, anyway, the only point is whether American firms set up factories in France or Italy rather than here. There is the problem of vetting drugs, because each country has different standards. Should we have had thalidomide here without having to pass the Dunlop Committee?
These matters are negotiable, but important. However, the basic concern is more intangible. At present, we are the only country with a health service which is financed from direct taxation. Hon. Members opposite are concerned that direct taxation shall be reduced. I am concerned that we still maintain the principle of the National Health Service, for reasons which I have not time to debate here. However, there are pressures, and although we can keep to our present 3·9 or 4 per cent. of the gross national product for health purposes, I am concerned that we shall not be pressurised not to increase it without getting money from other sources. The practice in the Common Market is to have an insurance system, or employee contribution, with the patient paying something at the time of service. Should we pay prescriptions in order not to have more subsidy for the Health Service from direct taxation which may be regarded as unfair competition? In West Germany, for example, the health service is paid for as part of

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an employer's contribution. I am afraid that there may be pressures in this country to erode the National Health Service. There have been such pressures ever since it started, but I am concerned that those pressures may gain added impetus because of the way in which health services are organised on the Continent and the Treaty provision for "harmonisation".
As I have said, the second main topic of my speech concerns India. We have heard a lot about New Zealand, and I am grateful to the hon. Member for Wembley, South (Sir R. Russell) for the excellent case which he put forward on the Commonwealth in general. As an internationalist I had the privilege of working for three years between 1952 and 1955 for the United Nations on providing technical assistance in Pakistan, India, Burma, Ceylon and other Asian countries. The concept of justifying riches because one is prepared to give 1, 2 or 3 per cent. of our surplus, yet retaining the present imbalance between the primary producers and the sophisticated nations of the West is the wrong way to secure the kind of one world for which I am looking.
Last night my right hon. Friend gave the figures to show what was happening in regard to trade. The Commonwealth percentage is still great. I am reminded of the excellent speech which my right hon. Friend the Prime Minister made to the T.U.C. on 7th September, 1964, when he said:
"… we are currently being carried by the export earnings of those Commonwealth countries which only two years ago this Government was prepared to sell down the river in their eagerness to enter the Common Market on intolerable and unacceptable terms."
He went on to say:
"… we shall set out our plans for a new drive in exports, not least in those neglected Commonwealth markets where Tory cynicism has meant a decline in the proportion of our total trade coming from the Commonwealth from 44 per cent. to 30 per cent."
It is because I believe in this drive that I am anxious to do something about it.
In her trade with the United Kingdom, India enjoys the advantages of the absence of quantitative restrictions on imports from the sterling area, duty-free entry, and preference in respect of a large number of items over non-Commonwealth sources of supply. Due to these special
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advantages enjoyed by India's trade in particular, the United Kingdom has become the largest market for India's exports, and has also led to a balanced development of trade between the two countries. The close economic relationship of the two countries has influenced the level, structure, and pattern of production of a number of commodities, and over a wide range production in India is geared closely to the requirements of the United Kingdom market.
In contrast to the position obtaining in the United Kingdom, Indian products suffer many disadvantages in the European Economic Community. While India would not wish to influence the decision of the British Government, the least that could be expected is that if Britain decide to apply she would safeguard the interests of India and would take into consideration her problems.
The entry of the United Kingdom into the E.E.C. without proper arrangements for safeguarding the trading interests and advantages enjoyed by India and other Commonwealth countries would have a serious effect on India's trade with the United Kingdom. If the current level of common external tariffs of the E.E.C. were adopted by the United Kingdom on her entry into the Community, the following would be the consequences of India's trade with us. First, the age-old free entry into the United Kingdom would cease. Secondly, in place of duty-free entry, a tariff barrier ranging from 5 to 15 per cent. on semi-processed products such as vegetable oils; from 18 to 32 per cent. on such simple industrial products as cotton textiles, jute goods, hand-knotted woollen carpets, and so on, and 50 per cent. or more on items like unmanufactured tobacco could come into force. Thirdly, preferences for Indian products, which range from 5 per cent. to 15 per cent., would be withdrawn. Fourthly, reverse preferences of varying dimensions would be created in favour of member States of the E.E.C. on such simple manufactures as I have previously mentioned.
These new tariff barriers would affect more than 40 per cent. of India's sales to the United Kingdom, excluding tea, on which the E.E.C. has temporarily suspended duties. These would also inflict on Indian exporters a price disadvantage in the United Kingdom market, and

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they would be compelled to reduce the prices of goods to compete with supplies from new preferred sources. This would result in heavy losses in export earnings from the United Kingdom, and could affect the whole pattern of Indian development. Moreover, many Indian industries, which for many years have been dependent for a large part of their production on sales to the United Kingdom, would have to contract their production, and in many cases close down. This is a market of 500 million people, with another 90 million in Pakistan, which has precisely the same kind of problem. In the short term I accept that one does not lose quickly, but in the long term, in the kind of world that I want, this will be a tremendous market.
They will not be just hewers of wood and drawers of water. They will be a nation with a balanced industrial and agricultural economy, and it will be disastrous if at this stage we do not enable them to continue with their third and fourth five-year plans. This is what we are doing to a country which we exploited for more than 150 years. It is on these grounds that I think we would be wrong to go into the Common Market, and why I shall be heavily opposed to it. I hope that my right hon. Friends in the Cabinet who also have doubts will continue to try to meet the five conditions which we are trying to get. This will be a long haul and it would be disastrous if they moved from their present position. They should stay there to ensure the best possible terms.
There has been much talk of the great debate in 1962 when Hugh Gaitskell's speech finished with the words:
"If we are ever to win peace and prosperity for mankind, then the world community that must emerge will be based on precisely such diverse elements as exist in the Commonwealth today—pledged as we are, to friendship and mutual aid. This is our vision of Britain's future and of the world's future—and it must not be allowed to fade."
The greatest problem in the last half of this century is how to create a multiracial, one-world society and to maintain peace. If I thought that entry of the E.E.C. was a step in that direction, I would be the first to approve. It is because I believe that it is not a step in that direction but a barrier that I hope that, at the end of the day, we shall stay out.
9.6 p.m.
Sir John Rodgers: I hope that the hon. Member for Willesden, West (Mr. Pavitt) will forgive me if I do not follow his argument about the possible effects on our National Health Service and on India if we join the Common Market.
I agree with the hon. Member for Salford, West (Mr. Orme) that, short of a declaration of war, this is probably the most important subject to be discussed in the House this century. All the pros and cons of our entry have been debated, facts and figures have been given us frankly and clearly as they are known, estimates and "guesstimates" have all been deployed and the major problems which we all know will arise have been discussed. We hope that a satisfactory solution will be found during the negotiations.
I refer to our relations with our E.F.T.A. partners, with the Commonwealth countries, in particular, New Zealand and India, and with our home agriculture. The Prime Minister has not clearly defined what he means by the "lesser problems" which will be left until we join. Presumably, they include the balance of payments and the cost of living, but these seem very important; we require a much clearer definition of these lesser issues.
I believe that it is the right move to apply for membership and I am certain that, despite the voices in this debate which might have led outsiders to think that the issue is evenly divided here, the Government will have a majority of well over 500 in the Division tomorrow.
For the last 18 to 20 years, I have done my best to bring about and foster the United Europe Movement. I have not done anywhere near as much as my right hon. Friend the Member for Streatham (Mr. Sandys), but I have attended with him, from 1950, many conferences on various aspects of a more united Europe.
In 1956, with my right hon. and learned Friend the Member for Hexham (Mr. Rippon), a group of us tabled a Motion expressing agreement in principle to the establishment by stages of a common market in Western Europe. We urged Her Majesty's Government to accept the invitation to participate in the negotiations then taking place with the six countries which now form the E.E.C. with a view to ensuring that the way

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would be open to British participation on an acceptable basis and in accordance with the interests of the Commonwealth and Empire. Even then, 11 years ago, just under 100 Conservative Members signed that Motion. Since then, the support for going into Europe has gained strength.
The history of our relations with Europe is one of missed opportunities. Going back to the Attlee Government of 1950 and the subsequent Tory Government we have missed great opportunities to get in at the start of the Common Market, which might have been a quite different organisation if we had taken part in the formation of the Treaty of Rome and the subsequent development of the organisation.
A great many of the problems we face, economically and in other ways, would not have arisen had we gone in much earlier with the Common Market countries and forged a more united Europe. But that is history and we must consider the present. However, it is interesting to ask why we did not go in, and, in answering this question, there are two major reasons. Indeed, they are still operating to a certain extent.
The first is because the country as a whole, the electorate, was not ready for such a move. We were still living in the tradition of the war, with enmity between various parts of Europe. This prevented most people from wanting to join the E.E.C. If, as I believe, the present application may result in protracted negotiations, public opinion may become sour on the subject. I therefore support the plea made by my right hon. Friend the Leader of the Opposition that the Government give adequate publicity, explanation and education to the public while the negotiations are going on so that the problems, difficulties and ends in view are constantly before the people. It is most important that the Government undertake this publicity.
The second reason why we did not go in—and this applies to both the Labour and Conservative Parties; both are guilty to a certain extent—was because, at that time, the political parties were divided. If the Conservative Party had expressed any intent, we would have found an almost united Opposition from the Labour benches. One thing about which we can congratulate ourselves now is
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that the majority of hon. Members of the three major parties are in support of Britain's application to join the E.E.C. [HON. MEMBERS: "No."] We will see what happens when the vote is taken tomorrow night.
Mr. Roland Moyle Mr. Roland Moyle (Lewisham, North) rose——
Sir J. Rodgers: Not much time remains and I do not want to give way.
The Government should recognise the great support they are getting from the Opposition. We respect the views of those on this side of the House who do not agree about our joining, but the great majority of my hon. Friends are solidly behind Britain's attempt to join the E.E.C. and we want the people of Europe to know that. Having said that, I admit that it is a little hard to take to see the Prime Minister strutting about like a knight in shining armour, the great crusader in favour of our joining.
Mr. T. L. Iremonger: Rolling on his back like a spaniel.
Sir J. Rodgers: I do not want to exacerbate relations between the two Front Benches. Suffice it to say that there has never been a more sudden conversion since St. Paul's day than the conversion of the Prime Minister to a devotee of the European idea. There are profound reasons why it would pay us to join the E.E.C. and I profoundly hope and devoutly wish that the Prime Minister is successful in this venture. My hon. Friends and I will do all we can to help in these negotiations.
It is in the long-term economic interests of this country that we should join. In the short term, the issue is finely balanced and undoubtedly there will be immediate problems, such as the rise in the cost of living, the rise in some food prices and balance of payments difficulties. However, in the long term I am absolutely certain that, provided industry—management and labour—becomes truly efficient and competitive, there is little to fear from our entry into the Community, while the reverse is absolutely true, for there are many advantages to be gained.
With access to a market of about 300 million people, with a rising standard of living, protected by a common tariff, we

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could, I believe, give Europe a new impetus, a new stature and a new excitement. The new science-based industries require enormous sums to be spent on research and development. The subsequent work to be undertaken will involve many millions of pounds. As a result, subsequent output must have access to a market far wider than the 55 million in our own home market. We shall not stay in the vanguard of the technological revolution unless we foster these new science-based industries.
I believe that if we join, as I hope we shall, we could develop, through computerisation, a technology in Europe equal to that in America. This would enhance the future economic prosperity not only of this country, but of the Community as well. It would allow us to play a much better part in financing Commonwealth development and in helping under-developed nations. There is no antagonism between the Commonwealth and our joining the Common Market. The reverse is true. The riches that would flow from the union would allow us to invest more in the Commonwealth and the under-developed countries.
The same could be true not only of the computer industry, but aircraft, space travel, telecommunications, chemicals, fertilisers, man-made fibres and the like. The prospect of joint efforts, with the prospect of sales in this huge home market, would offer individual manufacturers the prospect of recovering the large investments involved in these new science-based industries.
It would be a challenge, and an exciting, glittering prospect to those who wished to stay in the vanguard of progress. Such people would have the benefit of a home market bigger than that enjoyed at the moment by either the United States of America or the Soviet Union. That is something we should never forget. But while the efficient would reap great rewards, we must not underestimate what the Prime Minister said about the cold winds of competition that would blow into this country from Europe.
But this is to the good. The efficient would weather the storms and take advantage of them and reap great benefits, but some would suffer. It would not only be the hillside farmers, the old-age
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pensioners and the like who would suffer in the short-term from the rise in the cost of living; a great many firms would suffer unless they pulled up their socks, improved their management techniques and their marketing methods. Nevertheless, it is a challenge, and not one which we should burke. If we rise to that challenge, it will be of enormous benefit to the country.
I thought that the Prime Minister played down a little the effect of that cold wind of competition. The negotiations are likely to take quite a time. It may be five years before we get into the Common Market, and it will be about 10 years before we recover from the first effects—[HON. MEMBERS: "Oh."] I say that deliberately. It will be quite a shock. But I am confident that, with the skills, the will power and the imagination of our people, it will be to our lasting advantage.
We shall all benefit—the British people and the European nations. It is not only to our benefit to go in, but to the benefit of Europe itself. Never in history has the voice of Europe been more muted or of less effect than today. How can we expect Europe to have the power it had when it is already divided into four parts—the E.E.C., the E.F.T.A., the Warsaw Pact countries and a fourth group of unfortunate States like Spain that belong to none of the other three groups?
The first step is to try to bring E.F.T.A. and the E.E.C. together, thus making a wider common market. Later, in the years to come, I hope that the apron strings tying the Warsaw Pact countries to Russia might be loosened so that they could join in the wider Europe. Then, who knows, Russia herself might join in.
It is not only on the economic side that I am in favour of going in. The political and defence issues are perhaps of even more importance than the economic issues——
Mr. Emrys Hughes: And theology.
Sir J. Rodgers: Yes, perhaps theology, too. After the hon. Gentleman had drawn attention to it, I read what the Archbishop had to say, but I do not think that it is relevant to what I am saying tonight.
Our job is to prevent Europe getting more inward-looking and help her to

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get more outward-looking. This is the wider concept of a United Europe, not only of the Six—and the Seven, as it may be—and the main E.F.T.A. partners, or all of them, but of Spain, the countries of the Warsaw Pact, and perhaps Russia. When we have achieved that—and we should never overlook the fact that this is not just the creation of a third independent force—it gives an opportunity to look eye to eye with the Americans in an Atlantic community of two equal partners—America, with a market of about 250 million, and a purchasing population in the new Common Market of 300 million or more.
A joining together of those two partners in an Atlantic pact could be of immense value, not only to Europe but to the whole world, and to the peace of the world, and to the prosperity of the world. That is the great ideal we should keep before us. Of course, all these great issues we have debated about the cost of this or that and the effect on this or that will create problems, but that is not the issue today. The issue today is whether we set our sights high enough and prepare the future for our children and Europe's children.
I do not believe that there is an alternative. There are residual groupings we could try to join if we failed this time, but the effect if we failed in our endeavours to join the Common Market would be disastrous for this country and for its influence and also disastrous for Europe itself. We are building an organisation, not for the next five or 10 years, but for many years to come. There are all sorts of differences between the negotiations we had in 1961 and those about to be embarked upon. There is the effect of the Franco-German Treaty. Who knows what the position over that Treaty will be when President de Gaulle has passed from the scene?
This project of our joining E.E.C. could be of enormous advantage to Europe and the peace of the world. Those who want peace and those who want prosperity should support the Government for once in their attempt to get into the Common Market.
9.22 p.m.
The Minister of Agriculture, Fisheries and Food (Mr. Frederick Peart): I have listened very carefully to the speeches made this afternoon. I am sorry that
1402
I missed the speech of my hon. Friend the Member for Norfolk, North (Mr. Hazell). He made a very sincere speech in defence of agriculture, a very good speech. Apart from being an hon. Member of this House, we know that he is also a distinguished leader of the National Union of Agricultural Workers. It was no discourtesy on my part that I was absent when he made his speech. I have had a very full account of what he said and I shall take up some of the points he made.
There are many aspects of the Common Market question which we should cover and which the House is covering in this wide debate. Agriculture and food are my particular responsibilities and these are the subjects on which I shall now speak. I think it right that the Minister responsible for agriculture and for food policy should state the position as he sees it. This is why I am speaking. The right hon. Member for Grantham (Mr. Godber) will be opening the debate for the Opposition tomorrow and no doubt he will reply to many of the points which I make this evening.
I shall not touch on the main problems of Commonwealth trade. My hon. Friend the Member for Willesden, West (Mr. Pavitt) spoke about India, her trade, and particularly exports of tea. Those matters are very important. I noted carefully what he said. My right hon. Friend the Secretary of State for Commonwealth Affairs dealt with the question of Commonwealth trade yesterday and the Minister of State is present today. He has listened carefully to the debate and will note what my hon. Friend said and its importance to our country in any discussions and negotiations.
I will not deal with the main problems of Commonwealth trade in relation to food products entering this country as my right hon. Friend has dealt with this matter. I shall deal as clearly as I can with the nature of the Community's farm policy and arrangements and with the impact of coming to terms with this on our farmers, farm workers, consumers and, indeed, on the nation as a whole.
As my right hon. Friend the Prime Minister said in his statement on 2nd May, a common agricultural policy raises problems affecting
"the cost of living and … the structure and well-being of British agriculture … and

1403
balance of payments".—[OFFICIAL REPORT, 2nd May, 1967; Vol. 746, c. 312.]
Hon. Members on both sides, for various reasons, have stressed these points. They are important and they are problems which I wish to examine.
It is because these matters are important and of great moment, which hon. Members and people outside the House wish to understand, that my right hon. Friend the Secretary of State for Scotland and I were asked by our colleagues to present a White Paper. I can assure my hon. Friends from Scotland that my right hon. Friend the Secretary of State accepts responsibility for this White Paper. [Laughter.] It is a Departmental Paper. There is no need for anyone to be hilarious about it. My right hon. Friend and I produced it. I am merely suggesting that in the White Paper we cover many agricultural matters affecting Scotland. However, it is not for me to get involved in controversy over the choice of speakers. This is certainly a matter for the Chair.
Hon. Members: Oh.
Mr. Peart: We have presented the White Paper. I hope that all hon. Members, including right hon. Members opposite, have read it.
First, joining the European Economic Community will inevitably create problems for this country in this sphere. The Prime Minister's statement recognised this fact. It is just no good pretending that these problems do not exist. [HON. MEMBERS: "Hear, hear."] There are some who do not accept this, but I am glad that some hon. Members accept my point. We cannot pretend here.
I should be failing in my duty if I did not explain the problems to the House and to the country. That I have done in conjunction with my right hon. Friend in the White Paper to which I have referred. There may be arguments about my White Paper, but we have tried honestly and objectively to present the facts. We have tried to give information for the benefit of hon. Members on both sides and for those who are for or against and those who may take up other positions. We have tried to present objectively the facts as we see them. For this reason, I hope that my White Paper has
1404
been carefully read and studied by all hon. Members.
Secondly, I do not in any way retract my view that our present system of agricultural support is a better system and better adapted to our needs. What I recognise, however, in common with my colleagues, is that the common agricultural policy of the European Economic Community is an integral part of the Community and that, if we are to join the Community, we must come to terms with it.
Thirdly, in common with my colleagues, I maintain that, in coming to terms with it, we must resolve some of the key problems and make suitable arrangements, including an adequate transitional period, to enable the necessary adjustments to be made.
Mr. J. B. Godber: How long?
Mr. Peart: It would be very wrong if I started to negotiate with the Opposition on what it should be. It should be adequate, and it should be as long as possible. It would be wrong for right hon. Gentlemen opposite to tie me down specifically on the time limit. This is a matter for negotiation.
Sir Derek Walker-Smith: The right hon. Gentleman has advanced two propositions, unexceptionable in themselves: first, that the transition period should be adequate; second, that it should be as long as possible. Would he give a third? What is the minimum period which he envisages?
Mr. Peart: The right hon. and learned Gentleman is making the same mistake as his right hon. Friend the Member for Grantham (Mr. Godber). He wishes to pin me down to a specific period. We cannot do this on the Floor of the House. It is a matter for negotiation. Perhaps I may now make my speech. Time is getting on, and I have a lot to say which I regard as important.
We must have suitable arrangements, and we must have an adequate transition period for the necessary adjustments. As the Minister responsible for agriculture and food it is my concern to see how the problems can be most satisfactorily resolved. There will be those who accuse me of being negative

1405
in my approach—no doubt, the right hon. Gentleman will follow that theme tomorrow—but I can only say that they are wrong.
I think that it is entirely right—if I did not, I would not be here tonight—that we should enter these negotiations determined to succeed if essential British and Commonwealth interests are safeguarded. How we can best do so, in all the various aspects of the matter—some substantial, some less important—is a question first for resolution in the conduct of the negotiations which must precede entry, and later for discussion and for adjustment in the light of what might emerge thereafter.
The House will not expect me to define a negotiating position on agriculture, but it is entitled to expect me to set out objectively both the advantages and some of the areas of major difficulty. Since time is short, I shall do my best to satisfy the House on this score by reference to the White Paper.
First, a general word about the fundamental difference in method between the Community's agricultural system and our own. Many hon. Members who specialise in agriculture will know what the basic differences are, but, as not all hon. Members are familiar with the topic, I shall say something about the fundamental difference in approach between the two systems.
As the House knows, our system, broadly speaking, allows market prices to remain at or near world price levels and provides an assured return to producers by means of deficiency payments. In other words, we make up to our producers the difference between the world or market prices and a price which the Government guarantee.
The Community's system seeks to give producers a reasonable return by varying degrees of market management for different commodities. This is achieved, in the main, by means of levies and tariffs on imports, by export subsidies, and for some commodities by support buying.
I have said that our present system has served us well. It has kept food prices low. It has helped to maintain strong trading links with our overseas markets and suppliers, and it has enabled us to build up an efficient and expanding agriculture. I do not believe that right
1406
hon. Gentlemen opposite will dissent from that. It has proved itself capable of flexibility in adaptation to meet changing conditions at home and in world trade. This has been due in no small measure to the operation of the built-in procedure for an Annual Review with representatives of the farmers. In this way we have been able to plan ahead on a comprehensive basis, making all the adjustments necessary to secure a balanced development of the industry.
So far, the Community has not yet reached this stage of development. It has performed an enormous and difficult task in achieving the basic elements and structures necessary for a common agriculture policy, but the single market stage is only now about to be reached for some of the main commodities. I think that the Community would be the first to agree that much remains to be done, and that the future development of its system, whose expressed aims are that there should be a reasonable return to farmers and stability of prices, must call for some form of improved review procedures covering more comprehensively the position, prospects and plans for the continued well-being of agriculture as a whole. Indeed, it seems an almost inevitable concomitant of its present arrangements for the annual fixing of prices.
I know that the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) feels strongly about this. He pressed me on it, and I agree with him. This is important and I have carefully noted the point he made yesterday.
I now turn to the general effect on British agriculture of current community arrangements and prices—
Mr. Godber: On the point the right hon. Gentleman was discussing concerning the Review, could he tell us a little more about just how far the Community has gone? It is a very important aspect and he is hanging quite a lot on his argument on it. He knows that this is developing.
Mr. Peart: I was pressed by the right hon. Member for Kinross and West Perthshire on this matter. The Community has nothing like our Annual Review. There are certain elements in the Community—particularly the French producers—who recently had joint discussions with our own producers in Paris and accepted the argument that a Review of the type we

1407
have could be advantageous to the Community. But there is nothing in the Community to compare with our Review procedure.
I now turn to the general effect on British agriculture of the present Community arrangements and prices. They are summarised in the White Paper, and I can be brief, because I have spelt them out there. The assessment inevitably contains a degree of speculation, but it is as objective and realistic as we can make it. I say this sincerely, and, as I have said in public and privately—I have never hidden this—the picture is not all black or all white.
It is clear that cereals growers would do substantially better. Producers' returns could be as much as 40 per cent. higher for wheat and 25 per cent. higher for barley. Beef producers in general could also do well and producers of fat sheep could benefit. Sugar beet growers should also benefit, although this would largely depend on the agreements we might negotiate with the Community, in particular about the level of production quotas.
All this represents a plus factor in an agricultural equation, but we must not overlook the minus factors. Higher prices for cereals mean higher prices for feeding stuffs, and higher feed prices must take their toll of profitability throughout most of the livestock sector. I bring this out in the White Paper, and I have often stressed it. Most of the increase in production costs would inevitably fall on the dairy, pig and poultry farmers.
For different reasons, some sectors of the horticultural industry, faced with increased competition from imports, could also expect to find their profitability reduced. These sectors of the livestock industry and horticulture together currently account for about 60 per cent. of total farm sales. It is right that I should point clearly to some of the problems and difficulties.
As the White Paper says, the aggregate net income of the industry might well be about the same as if we were outside the Community, but it would be very differently distributed as between commodities, types of farm and parts of the United Kingdom. There will, of course, be varying degrees of effect on individual
1408
farmers and growers. Even if we were to introduce the common agricultural policy completely unchanged and in its entirety, it would be a mistake to suppose that the effects on profitability whether good or bad, would be anything like uniform as between producers of the same commodities. Anyone who knows the nature of our form of farming will, I am sure, accept that.
In practice, the size and scope of the individual farm enterprise, the production methods practised or available, the local as well as the national market outlets, and the effects of these factors on the new level of prices must combine to determine the eventual degree of profitability likely for the individual farmer whether he is producing cereals or beef or eggs and poultry.
What is clear, as the White Paper points out, is that the general changes in relative profitabilities would inevitably affect the whole structure and balance of the industry as farmers sought to readjust to the new level of prices and costs under the system. This was stressed by my hon. Friend the Member for Norfolk, North (Mr. Hazell).
This brings me to the point stressed by my right hon. Friend the Prime Minister in his statement of 2nd May. We must have suitable arrangements, including an adequate transitional period, to enable the necessary adjustments to be made. This is not a process that can be carried out quickly or easily nor settled in its entirety during negotiations preceding entry. After all, cycles and methods of production cannot be changed quickly nor can the whole system to which they are related be dismantled suddenly. Investment and the redeployment of capital resources would be required.
All this is very well known to the present members of the Community. They themselves have had the practical experience of what was necessary over the last seven years, during which they have managed to move from the first formulation of a common policy concept to the beginning of a single market stage for the main commodities. I would be the last to belittle their difficulties and achievements. But the changes involved for this country in methods of support, in prices and in relative profitability are, in the nature of things, greater than any

1409
involved for the Six in moving from their former national systems to the common agricultural policy they have evolved.
I have tried deliberately to avoid too much detail about particular commodities, partly because the nature of any problem they impose is sufficiently indicated in the White Paper and partly because it would be invidious to select too many items for detailed treatment in the debate. But I want to mention one commodity, milk, not only because it is important both to producers and consumers but because of the special nature of the problems we have to resolve.
There is a Common Market regulation for dairy products and there have been decisions by the Council of Ministers on liquid milk. If we were to apply these exactly as they stand, not only would the average level of profitability be somewhat reduced for United Kingdom milk production over the year as a whole but winter milk production would become far less profitable than in summer. As a result, on this hypothesis, there could be a shortage of liquid milk supplies during some parts of the winter.
I want to stress that this is on the assumption of applying unchanged to this country present arrangements and decisions designed primarily for the furtherance of a dairy product system to meet the E.E.C.'s own very different circumstances. As the White Paper points out, however, it would scarcely be in the interests of those members of the Six who are exporters of milk products to enforce on this country a system which would switch the emphasis of United Kingdom milk production away from the liquid milk market. This is a clear example where I would hope that in the course of negotiations about British entry a change could be effected of benefit to us and which might not be unwelcome to the Community.
I now want to refer to an important matter raised yesterday by the right hon. Member for Kinross and West Perthshire and by the hon. Member for Carmarthen (Mr. Gwynfor Evans) and the right hon. Member for Devon, North (Mr. Thorpe) today, and which is certainly important to Scotland—marginal areas and hill farming. I take note of the comment of the right hon. Member for Kinross and West Perthshire that there are special considerations affecting hill and marginal
1410
land areas in Scotland, Wales, England and parts of Northern Ireland. This matter was also raised by my right hon. Friend the Member for Llanelly (Mr. James Griffiths).
In these areas, although, as elsewhere, prospects for individual producers will vary with their circumstances, generally the scope for adjustment and adaptation is limited by both nature and money. Clearly, much would depend on whether the direct grants, particularly those which have been specially designed to help in those areas, could still be paid, or some form of comparable assistance given. There is a problem of structural adjustment which we are seeking to tackle now, and hon. Members will be aware of the provisions of the Agriculture Bill, which should become law tomorrow. Clearly, these issues will become of even greater importance for the future.
As my right hon. Friend the Prime Minister has already said, we must certainly press, and press hard, our claims for money from the guidance sections of the Community's Agricultural Fund to help the adaptation and to improve the structure of agricultural production and marketing in this country. Nor should we assume that acceptance of the Community's arrangements mean an end to all forms of continuing State aids to agriculture.
The Six gave their farmers very considerable assistance, particularly on the structural side, and I have little doubt that they would wish to continue to do so in various forms which do not infringe the rules of fair competition within a common policy. In addition, the Treaty itself specifically provides in Article 92 for State aids which are necessary to promote and sustain the economic development of regions which face similar difficulties.
So far, I have been taking a broad view of the economic effects on the industry and I have done so with reference to the farmers and growers. But I have not forgotten the half million or so agricultural workers whose livelihood is closely bound up with the industry's future prosperity. Adjustments in the pattern of distribution in the industry arising out of the new agricultural arrangements would inevitably have their repercussions on agricultural workers. This was emphasised by the hon. Member

1411
for Norfolk, North. Their well-being is bound up in the well-being of our farms and farmers. One point which the White Paper mentions is that there is no reason to suppose that the safeguards over wage rates and conditions secured by the operation of the Agricultural Wages Board would be at risk.
The Community does not as yet have any Common Market regulations for fish and is still in the preliminary stages of formulating a common fisheries policy. There is bound to be a common interest in fishery matters. Although both we and the Six are net importers of fish and fishery products, there would be possibilities of selling our fish to the Common Market. We also have a common interest in the effective conservation and proper management of the stocks which we fish in common in many waters.
There is also the very important question of fishery limits and access to fishing grounds. This would be of particular concern to the inshore fishermen—and I know what their feelings are. If we joined the Six, we would not be alone in having important inshore fishing interests. Taking together the several different aspects of the fishing question, there is sufficient common interest to make possible the devising of a common fisheries policy acceptable alike to the Six and to Britain.
So far I have spoken about the implications for producers and agricultural workers. I want now to turn to the effects on consumers.
Lord Balniel Lord Balniel rose——
Hon. Members: Give way.
Mr. Deputy Speaker: Obviously, the right hon. Gentleman is not giving way.
Mr. Peart: The right hon. Member for Grantham, is to reply to me tomorrow. I have to finish at ten o'clock and I still have much to say. If I have time, I will give way.
It is inevitable that the adoption of the E.E.C. general arrangements on prices would mean a substantial increase in the cost of food. This is a consequence of coming to terms with the common agricultural policy and it is part of the price which we would have to pay. As the White Paper explains, it arises basically because we should be
1412
bringing the prices of all supplies covered by Common Market regulations, whether home grown or imported, into line with Community price levels at the wholesale stage. For the most part, these price levels are higher than those in this country. The increase at the wholesale stage must also have repercussions on the processors' and distributors' mark-up before we get the price in the shops.
I do not wish to make claims to precision where only estimates are possible, but to make estimates we have to make assumptions about world and Community price levels at the end of any transitional period. Assuming that the relativities remained unchanged, the increase in cost to the consumer might well lie within the range of 10 per cent. to 14 per cent., depending mainly on the degrees of increase in the processors' and distributors' margins. This is equivalent to an increase of 2½ to 3½ per cent. in the cost of living. The estimate also allows for some change in the pattern of present consumption.
It is right to point out that this range of averages necessarily conceals a much wider degree of price changes for many separate commodities. For some, like apples, tomatoes and certain other fruits and vegetables, prices might be lower than now. But for most foods—including some of the basic foodstuffs—they would be considerably higher. The price of butter would probably double; the price of beef, if we take an average of all qualities, might well rise by over one-third; and the price of bread by something approaching 20 per cent.
These increases would be substantial. They would fall particularly heavily on those people with small incomes and often with big families where food is the largest item of the domestic budget. [Interruption.] Right hon. Members opposite should be concerned with this; it makes it all the more essential for increases to be spread over a transitional period. This period must be fully adequate to cushion the shocks involved in a radical change of system. [HON. MEMBERS: "How long?"] As long as possible.
I come, finally, to the impact on our balance of payments. As the White Paper explains, this would arise for two reasons. First, at the end of any transitional period we would be paying full Community prices for our imports of food

1413
from other members. Secondly, on the basis of the present financial arrangements, we would be a very large net contributor to the Community's agricultural fund. This is mainly because we are, and would largely remain, in spite of an expansion of production to be expected in some sectors, a big importer of food from third countries. [Interruption.] I hope that the right hon. Gentleman will listen. I know that his right hon. Friends would have the minimum of a transitional period. [HON. MEMBERS:' "No."]
Mr. Peter Kirk Mr. Peter Kirk (Saffron Walden) rose——
Mr. Godber Mr. Godber rose——
Mr. Deputy Speaker: Order. There is very little time left for the debate tonight. Members would be advised to hear it in silence.
Mr. Peart: The right hon. Member for Grantham can explain his position tomorrow. [HON. MEMBERS: "Withdraw."] I will not withdraw.
We must, therefore, bear in mind the balance of payments cost, which, we have stated, has been estimated to be between £175 to £250 million annually. This arises very largely from the financial arrangements and the handing over of levies. As my right hon. Friend the Prime Minister said, it is certainly the Government's view that if these arrangements were applied to us without modification they would impose on this country a quite inequitable share of the burden of supporting the common agricultural policy in an enlarged Community. That is important. We should hope that the people with whom we negotiate would recognise these problems.
I have tried to deal with the main issues arising for our agriculture, fisheries and food. [HON. MEMBERS: "What about horticulture?"] There are difficulties about horticulture because there is no support system as we know it for agriculture. A solution will de-
1414
pend so much on a long transitional period.
I have tried to deal with the main issues. There are many other problems: the position of our marketing boards; the problems of harmonising regulations in a wide variety of fields—from food standards to animal and plant health safeguards; and, more generally, how the organisational and other arrangements for working the new system are to be devised. These are important examples which it would be wrong to underestimate. The Community is still far from having settled all these matters, let alone having implemented their arrangements.
As I have said, it would be wrong for me tonight to try to spell out a negotiating position. I hope that what I have said will be sufficient to convince the House that we have overlooked none of these problems. We are determined to safeguard adequately the essential interests of agriculture and of consumers in this country. Let me assure the House that we intend to deal with these problems realistically and effectively. It is in this spirit that we shall enter the negotiations.
Motion made, and Question proposed, That the debate be now adjourned.—[Mr. Armstrong.]
9.59 p.m.
Mr. John Hall: In the minute left to me, may I say that, after listening to the Minister's speech, it is obvious that he will go into the Lobby to vote against the Motion. I have never heard——
It being Ten o'clock, the Motion for the adjournment of the debate lapsed, without Question put, and the debate stood adjourned.
Debate to be resumed Tomorrow.

EUROPEAN COMMUNITIES (MEMBERSHIP)

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

ELECTRICITY
  Power Stations and Overhead Lines
  Power Stations and Overhead Lines
  Tidal Power
  Tidal Power
  Nuclear Fuel
  Nuclear Fuel
  Nuclear Power Stations
  Nuclear Power Stations
  Charges (Generating Systems)
  Charges (Generating Systems)
COAL
  Smokeless Fuels (Prices)
  Smokeless Fuels (Prices)
  National Coal Board (Financial Results)
  National Coal Board (Financial Results)
MINISTRY OF POWER
  Nationalised Fuel Industries (Prices)
  Nationalised Fuel Industries (Prices)
GAS
  Gas Council (Financial Results)
  Gas Council (Financial Results)
TECHNOLOGY
  Shipbuilding Industry (Orders)
  Shipbuilding Industry (Orders)
  Aircraft Industry
  Aircraft Industry
  Fairfields (Glasgow) Ltd. (Government Investment)
  Fairfields (Glasgow) Ltd. (Government Investment)
  Helicopters (Imports)
  Helicopters (Imports)
  Atomic Energy Authority (Research)
  Atomic Energy Authority (Research)
  Culham Laboratory
  Culham Laboratory
  British Aircraft Industry (Productivity)
  British Aircraft Industry (Productivity)
  Sonic Bangs (Compensation)
  Sonic Bangs (Compensation)
  Fast Reactor Power Station (Plutonium)
  Fast Reactor Power Station (Plutonium)
NATIONAL FINANCE
  Exchequer Grants and Loans
  Exchequer Grants and Loans
  Tax Reserve Certificates (Interest Rate)
  Tax Reserve Certificates (Interest Rate)
  Personal Taxation
  Personal Taxation
  Taxation (European Economic Community)
  Taxation (European Economic Community)
  Greek Loan Act, 1898
  Greek Loan Act, 1898
  Surtax
  Surtax
  Selective Employment Tax
  Selective Employment Tax
  Snowdon
  Snowdon
  Personal Savings
  Personal Savings
  Anglo-German Offset Agreement (Civil Private Purchases)
  Anglo-German Offset Agreement (Civil Private Purchases)
  Travel Allowance (Students)
  Travel Allowance (Students)
LOCAL GOVERNMENT
  Ecclesiastical Buildings (Restoration Grants)
  Ecclesiastical Buildings (Restoration Grants)
  Nationalised Industries (Planning Approval)
  Nationalised Industries (Planning Approval)
  Coastal Authorities (Sewage Disposal)
  Coastal Authorities (Sewage Disposal)
  Coke Tipping (Coventry)
  Coke Tipping (Coventry)
  Baguley Hall, Manchester
  Baguley Hall, Manchester
  Rate Relief (Clubs)
  Rate Relief (Clubs)
HOUSING
  Rent Rebate Schemes
  Rent Rebate Schemes
  Rent Acts (Hire-Purchase Agreements)
  Rent Acts (Hire-Purchase Agreements)
  Households (Changes of Residence)
  Households (Changes of Residence)
  Council Houses
  Council Houses
  Housing Authorities, Merseyside (Loans)
  Housing Authorities, Merseyside (Loans)
COMMONWEALTH AFFAIRS
  Rhodesia
  Rhodesia
  British Colonies (Security Arrangements)
  British Colonies (Security Arrangements)
  Zambia (Mr. Simbule)
  Zambia (Mr. Simbule)
  Swaziland
  Swaziland
  Seychelles (Fishing Industry)
  Seychelles (Fishing Industry)
  Pacific Territories (Expatriate Officers)
  Pacific Territories (Expatriate Officers)
  India (Blocked Accounts)
  India (Blocked Accounts)
SOCIAL SECURITY
  Supplementary Pensions and Allowances (Easington Parliamentary Division)
  Supplementary Pensions and Allowances (Easington Parliamentary Division)
  Supplementary Benefits Scheme (Expenditure)
  Supplementary Benefits Scheme (Expenditure)
TRANSPORT
  Motor Vehicles (Safety Standards)
  Motor Vehicles (Safety Standards)
RAILWAYS
  Concessionary Fares (Merchant Seamen)
  Concessionary Fares (Merchant Seamen)
  Coal Freight (Power Stations)
  Coal Freight (Power Stations)
  Paddington Station (Unofficial Strike)
  Paddington Station (Unofficial Strike)
ROADS
  Principal Programme (First Instalment)
  Principal Programme (First Instalment)
MINISTRY OF LABOUR
  Paddington Station (Unofficial Strike)
  Paddington Station (Unofficial Strike)
  Selective Employment Tax
  Selective Employment Tax
  Vacancies (National and Local Government Service)
  Vacancies (National and Local Government Service)
  Working Hours (Asian Countries)
  Working Hours (Asian Countries)
PUBLIC BUILDING AND WORKS
  New Royal Mint
  New Royal Mint
SCOTLAND
  Power Stations (Electricity Generating Costs)
  Power Stations (Electricity Generating Costs)
  Woodlands (Fires)
  Woodlands (Fires)
  EUROPEAN ECONOMIC COMMUNITY (BRUSSELS DELEGATION)
  EUROPEAN ECONOMIC COMMUNITY (BRUSSELS DELEGATION)
  NASSAU AGREEMENT
  NASSAU AGREEMENT
  EUROPEAN ECONOMIC COMMUNITY
  EUROPEAN ECONOMIC COMMUNITY
  HORSE-RIDING ESTABLISHMENTS (DEPARTMENTAL RESPONSIBILITY)
  HORSE-RIDING ESTABLISHMENTS (DEPARTMENTAL RESPONSIBILITY)
AGRICULTURE, FISHERIES AND FOOD
  Small Farmers (European Economic Community)
  Small Farmers (European Economic Community)
MINISTRY OF DEFENCE
  Royal Navy (Caning)
  Royal Navy (Caning)
EDUCATION AND SCIENCE
  The Arts (Expenditure)
  The Arts (Expenditure)
  Monmouthshire (Area Museum Services Map)
  Monmouthshire (Area Museum Services Map)
  Teachers, Wales (Migration)
  Teachers, Wales (Migration)
  Colleges of Advanced Technology and Central Institutions (University Status)
  Colleges of Advanced Technology and Central Institutions (University Status)
HOME DEPARTMENT
  Police Recruits (Colour Blindness)
  Police Recruits (Colour Blindness)
  Commonwealth Immigrants
  Commonwealth Immigrants
BOARD OF TRADE
  Nuclear Reactors (Exports)
  Nuclear Reactors (Exports)
AVIATION
  Viscount Aircraft (Sales to New Zealand)
  Viscount Aircraft (Sales to New Zealand)
WALES
  Roads
  Roads
  European Economic Community
  European Economic Community

Preamble
The House met at two of the clock, The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Worcester.
The Lord Brain—Sat first in Parliament after the death of his father.

ADVERTISING COSTS AND SELLING PRICES
2.6 p.m.
LORD BARNBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether the recent pressure for reduction in the selling price of a widely distributed branded commodity on the grounds of high promotion cost content in the selling price is to be now regarded as normal practice; and if so what other commodities are at present listed for similar attack.]
THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD WALSTON): My Lords, the discussions between the President of the Board of Trade and the two major manufacturers of household detergents followed the recommendation of the Monopolies Commission that these manufacturers should be encouraged to reduce their selling expenses by 40 per cent. and to pass on the saving to the consumers by a reduction of 20 per cent. in their selling prices. The report was confined to the particular circumstances of that industry, and no other heavily advertised consumer goods in a comparable market situation are at present being investigated by the Commission.
LORD BARNBY: My Lords, arising from that reply, which appears to report a savage attack on private enterprise and market-place economy, I gather, if I correctly understood the noble Lord, that it is not intended to apply this treatment to any other commodity he can name. But can the noble Lord now give an assurance that it is unlikely that the same treatment would be applied to synthetic
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fibres, the sale of which must necessarily contain a similarly large proportion of promotion expense, as is the case with detergents; and, therefore, if such a step were applied, does he not think it would create dislocation in the industry in succeeding stages?
LORD WALSTON: My Lords, I would re-emphasise the fact that the particular action to which the noble Lord has referred was taken as a result of the recommendation of the Monopolies Commission, with which, I think I am right in saying, noble Lords opposite had something to do when the Commission was originally set up. The Commission made a particular recommendation, and it was following upon that recommendation that my right honourable friend made this particular order. Therefore, I do not think that it would be accurate to describe this as "a savage attack on private enterprise"; rather is it an action taken following upon a recommendation of the Monopolies Commission, which was set up to deal with abuses of monopoly situations.
With regard to the second part of the noble Lord's question, so far as I know there is no problem relating to synthetic fibres at present before the Monopolies Commission, which goes into these matters very carefully. It took some three years to make a thorough investigation of this last problem. Therefore, there need be no fear (if "fear" is the right word to use) that in the future, in the next few years, any similar order will be made. But clearly it would be wrong for me to give any blanket assurance covering the Government in future as to what might be done then. It will depend primarily on any action which the Monopolies Commission recommend.
LORD BARNBY: My Lords, in thanking the noble Lord for his reply, may I ask whether he is in a position to make any disclosure as to the formula to be applied in similar cases, so that there would be some forewarning to other industries that might be attacked in a similar way, where the selling content contains so large a proportion of promotion expenditure?
LORD WALSTON: My Lords, I certainly could not give any short or concise terms of reference, as it were, for any future action. But in an attempt to do

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so for the noble Lord—without I hope laying myself open to the possibilities of being misunderstood—I would say that if the Monopolies Commission, having made a thorough investigation, come to the conclusion that certain monopolies, or quasi-monopolies, are operating in such a way that it is against the public interest, then it is open to the President of the Board of Trade to make certain orders in the public interest. This particular order does not in any way affect the freedom of the industries concerned, or the firms themselves, to continue to advertise as much as they like and to market under any trade names they wish to. That is not impeded in any way. This is, if one wishes to call it so, simply an experiment to see how a non-advertised product of similar quality in fact appeals to the public.

COLOUR TELEVISION SETS: ADVANCE RENTALS
2.12 p.m.
LORD WILLIS: 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 reduce the amount of advance rental required for the hire of colour television sets, with a view to making such sets more widely available to all sections of the community.]
LORD WALSTON: My Lords, the control of advance rentals is linked with the control of down-payments under hire-purchase agreements, and imposed for the purpose of restricting credit. A special concession for colour television sets would not be justified.
LORD WILLIS: My Lords, while thanking the noble Lord for that dismal, discouraging and doleful Answer, may I point out—
SEVERAL NOBLE LORDS: No.
LORD WILLIS: May I ask the noble Lord whether he realises that in fact the Answer goes against all the tenets of the Party of which he and I are happy to be members, in that it imposes a colour bar? Does he not realise that the down-payment required in hiring a colour television set is now of the order of £70?
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This will therefore create a class of élite people who will own colour television sets, just as Onassis owns yachts. Will he not give consideration to this in case the Government go even further than creating a colour bar and in fact create a new privileged class?
LORD WALSTON: My Lords, it pains me very much to have to disagree with my noble friend on any matter, and particularly on one so close to his heart and about which he knows so much more than I do. I disagree with him completely when he says we are now imposing a colour bar or, indeed, discriminating as between rich and poor. In fact in this instance, as in all others, we are giving exactly equal treatment to black—or, shall I say, black and white—television and to colour television. The fact that it may cost more to buy or to hire a colour television set is no responsibility of Her Majesty's Government. The actual conditions which are laid down for these rentals are identical, whether the receiver is for colour television or black and white.
LORD ROWLEY: My Lords, may I ask my noble friend whether, in view of the fact that when one goes to the United States of America one finds colour television in a great many homes, we are to understand that the obstacle to our own people having colour television is not that we are behind the United States technically, but is purely on an economic basis?
LORD WALSTON: My Lords, my noble friend is perfectly right.
LORD WILLIS: My Lords, may I press this matter just a little further? Does not the noble Lord realise that millions of people will not be able to have colour television because of the cost? Does he not agree that his comment that this condition applies equally to black and white and to colour is rather like the remark made by Anatole France, that it is equally wrong for a millionaire and a beggar to beg in the streets? The point is that it is unlikely that the millionaire will ever have to do so. Therefore, will not the Government make some concession by reducing the amount of rental required in advance so that ordinary people can have the opportunity to look at colour television, which they

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will not be able to do if the present rates are maintained?
LORD WALSTON: My Lords, I do not want to pursue my noble friend into the realm of analogies, but if he is asking whether it would apply to other things it is rather like suggesting that down payments on Rolls Royces should be significantly less than those on Morris Minors or Minis, thereby allowing people to buy Rolls Royces just as easily as Minis.
LORD POPPLEWELL: My Lords, would the noble Lord not agree that the main problem is really the high cost of television? We are told that colour television sets will cost somewhere in the region of £200 or more. Is my noble friend satisfied that this cost will be fully justified? If not, is he conducting some inquiries to see whether this is the cheapest price at which colour television sets can be placed on the market?
LORD WALSTON: My Lords, with respect, I would suggest that whether colour television sets are being sold at too high a price is a somewhat different question, but I will gladly undertake to look into that side of the matter to see whether there is any evidence for suggesting that the manufacturers of colour television sets are in fact charging too much for them. But I think that is going a little far in connection with the present Question.
LORD WILLIS: My Lords, is the noble Lord aware that the rental companies are in fact prepared to allow hirers to have a set for a much lower advance down payment—something like 20 weeks—and that it is the Government who are insisting on 42 weeks?
LORD WALSTON: My Lords, I am well aware that the companies are quite happy to allow people to have all sorts of things—colour television sets, ordinary television sets, motor cars, washing machines or anything else, at a very much lower rate of down payment than the Government have laid down. This is part of our whole financial policy in our attempt—unsuccessful—to stem inflation. If the sellers or renters of colour television sets would be prepared to accept a lower rental, then the down payment would correspondingly become lower.
LORD STRABOLGI: My Lords, would the noble Lord not agree that if
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the Government made it easier for all sections of the community to own colour television sets the price of them would probably come down?
LORD WALSTON: My Lords, I am sure that if the Government considered it was in the national interest to give a subsidy of 50 per cent. for colour television there would be far more sets sold or rented, in the same way that there would be more houses or other things if they were subsidised.
LORD SALTOUN: My Lords, may I ask Her Majesty's Government to ensure that any efforts which they make in the direction of cheapness will be modified by an awareness of the danger of getting what I am told is the crudity of colour that they have in the United States, as compared with the greater perfection in this country?
LORD WALSTON: My Lords, I think even more important than the crudity of colour is the crudity of some of the things one sees on the television screen. I think both these facets could be investigated.

METROPOLITAN WATER BOARD BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
PORTSMOUTH CORPORATION BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
SAINT MARY-LE-PARK, BATTERSEA BILL
Read 3a, and passed.

PRIVATE BILL STANDING ORDERS
2.20 p.m.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL)THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL) rose to move that the following Amendment be made to the Standing Orders relative to Private Bills, etc.:—
Page 86, Standing Order 208, at end insert: "but only if objection to locus standi or such rights has been made in a memorial duly deposited as aforesaid".
The noble Earl said: My Lords, in moving the Motion in my name on the Order Paper I should like to explain briefly to your Lordships the purpose of the proposed Amendment to our Standing Orders. Your Lordships may recall the debate on April 4 on Lord Molson's Question regarding the locus standi of amenity societies to petition against Special Procedure Orders. At the conclusion of the debate I said that in view of what had been said during the debate by noble Lords in all parts of the House I would ask my right honourable friend, the Chairman of Ways and Means in another place, to study the debate and consider whether the Standing Orders of both Houses should be amended to give effect to the opinions expressed in this House and certain misgivings felt in another place.
The point was clearly made in the debate, and indeed I myself emphasised in my speech, that there is a very important difference in procedure between Special Procedure Orders and Private Bills. In the case of Special Procedure Orders the Standing Orders of both Houses require the Chairman of Committees and the Chairman of Ways and Means to examine Petitions and to decide whether or not the Petitioners have locus standi. In the case of Private Bills, however, it is only when the Promoters of a Bill challenge the locus standi of a Petitioner that in this House the matter is referred to the Select Committee set up to consider the Bill and in the House of Commons to the Court of Referees. The effect of this is that in the past in many cases, because their locus standi has not been challenged, amenity societies have been able to petition against Private Bills, whereas the Chairmen have had to decide in the light of the Standing Orders that similar societies had no locus to petition against a Special Procedure Order.
It is with a view to resolving this discrepancy of procedure between Private Bills and Special Procedure Orders that I am moving this Amendment to our Standing Orders this afternoon. The effect of this Amendment will be that it is only when the Minister or one of the applicants promoting the Special Procedure Order challenges the locus standi of the Petitioner that the Chairmen will be
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called upon to examine the Petition with a view to determining whether or not the Petitioner has a locus standi. I hope that for the reasons I have stated the House will agree that this Amendment goes some way towards meeting the points made in the debate on April 4. I think I ought to add that a similar Amendment is being moved by my right honourable friend the Chairman of Ways and Means in another place this afternoon. I beg to move.
Moved, That the following Amendment be made to the Standing Orders relative to Private Bills, etc.:—
Page 86, Standing Order 208, at end insert ("but only if objection to locus standi or such rights has been made in a memorial duly deposited as aforesaid").—(The Earl of Listowel.)
LORD MOLSON: My Lords, I realise that we have important debates this afternoon, and I am going, to confine my remarks on this Motion to as brief a speech as I can. The Lord Chairman has said that this Amendment goes a little way to meeting the points that were raised. Indeed it goes a very little way: this is, in tact, a hurried ad hoc measure designed to enable the Petitioners against the North Devon (Meldon Reservoir) Water Order to be heard. Your Lordships have heard from the Lord Chairman, and no doubt you will recall, the circumstances in which the amenity societies were refused locus standi to appear before the Joint Committee. When I drew the attention of the Government to the assurances that had been given by Mr. Herbert Morrison (as he then was) and Mr. Arthur Greenwood at the time of the passing of the Parliamentary Special Procedure Act 1945 they behaved more than fairly—I would say generously—in the matter, and withdrew the Order.
It is fairly clear that this hurried Amendment to the Standing, Orders, which I understand was agreed upon only in the middle of last week, is intended to deal with this particular case. In fact it does not necessarily deal even with this immediate case. I know that the Minister will not question the locus standi of the amenity societies, but there is nothing to prevent the North Devon Water Board from doing so. The Minister has no power to forbid them to do so, and when I asked the Department this morning

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whether they had received any assurance from the Board I was told that they had not. Indeed, they felt that it would be difficult to ask for an assurance until the Petitions had been laid. It therefore follows that if the North Devon Water Board question the locus standi of the Petitioners, the matter will go again to the two Chairmen, who will then be in this position: that either they will have to say that their previous decision was wrong, or we shall all be back in the same position that we were before.
Briefly I must invite your Lordships' attention to the much broader issues which this decision of the Chairmen has raised and which was very fully debated in your Lordships' House on April 4. Under Standing Orders as interpreted by the two Chairmen—and, what is of great importance, the Chairman of Ways and Means is also Chairman of the Court of Referees in another place—the amenity societies have no right to petition against proposals affecting landscape. I showed in the last debate that amenity societies have in fact petitioned without let or hindrance since 1910, and that has not been disputed by those who support the Chairmen's decision.
It is now argued that because in these cases Promoters of Private Bills have not objected to locus standi they will not do so in future, and that therefore the position is satisfactory. To that my answer is twofold. First, it is surely intolerable that a right to petition Parliament should depend, not upon the decision of Parliament or of the particular House concerned, but on the good will or negligence of the opponent. I should like to quote what was said by my noble and learned friend Lord Dilhorne in this matter. He said:
"It seems to me very wrong and anomalous that a right of being heard under the Standing Orders of either House—and the Standing Orders of the two Houses are the same in this respect—should depend, not on the decision of the House, or of anyone appointed by the House, but on the question whether or not the point is taken by the Promoters of the Bill."—[OFFICIAL REPORT, 4/4/67, col. 931.]
When there is this uncertainty as to whether Petitioners will be granted a hearing before a Select Committee, it is obvious that they will be reluctant to incur the very heavy expenditure involved in preparing a case because they do not know whether there will be an opportunity of putting it forward.
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The second answer that I would make is that the reason why Promoters of Bills have never objected to the locus standi of amenity societies since 1910 is that it was the accepted doctrine of practitioners that the Promoters would not be able to object successfully. What has happened now is that Parliamentary agents and the Parliamentary Bar have been alerted to the view of the Chairman of Ways and Means that if they do object, amenity societies and many other interests also will be denied a hearing. Clearly, it will be their duty in the interests of their clients to take this technical point, and they invariably will. The doctrine extends beyond amenity societies. It will apply probably to the Yachting Association in a matter which has already arisen, and also to the Central Electricity Board. It is surely quite intolerable that the right of Petitioners to be heard should depend just upon the willingness of the parties on the other side not to object.
What will be the practical consequences of this? In the first place, in the case of Private Bills, those who are concerned to oppose them will do so on the Floor of the House by having a Second Reading debate upon it, instead of the matter being referred to a Select Committee upstairs and being heard properly in a judicial atmosphere. Secondly, in the case of Special Parliamentary Procedure Orders it will become customary for there to be Motions for annulment moved on the Floor of both Houses. This was exactly what the Statutory Orders (Special Procedure) Act 1945 was designed to prevent.
I do not propose to ask your Lordships this afternoon to reject this Amendment, I have much in mind, as I have said, that there are important debates to come on, and I do not want to take up the time of the House. I recognise, with gratitude, that this is an attempt on the part of the Lord Chairman of Committees to give effect to the assurances which he gave in his speech on April 4. But I am bound to say that what he has been able to do so far is quite inadequate.
This involves a whole matter of principle in regard to which Petitioners are entitled to be heard by Parliament, and this Amendment does nothing to clarify the vague wording of the Standing Orders. Many of your Lordships will have heard the weighty speech from my noble and

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learned friend Lord Dilhorne, where in two important matters he differed completely from the interpretation put by the Chairmen and their legal advisers upon the Standing Orders that they are required to interpret.
I propose, therefore, to raise this matter at an early date after the Whitsuntide Recess, on a substantive Motion or otherwise, so that there may be an opportunity to probe the matter further. What I believe are involved are the following matters: first, the rights of the subject; secondly, efficient procedure for establishing those rights; thirdly, the need for harmony between the two Houses; and, fourthly, the need for Standing Orders to be so drafted that there is no doubt as to their meaning.
2.34 p.m.
LORD SALTOUN: My Lords, I shall not detain your Lordships for more that a few seconds. In all my experience of Private Bill Committees I have known a great many cases where the locus standi of Petitioners was challenged by the Promoters, and in every case it was your Lordships' Committee that decided whether or not the opponents had the locus standi that they wished to have. I admit that probably it would be more satisfactory to opponents if they knew earlier, but at least a body to which the matter has been committed by your Lordships' House has the duty of deciding the point.
Recently I was engaged in a Scottish Private Bill Committee where a Bill was objected to by the Petitioners and their locus standi was challenged on the ground that as they were not mentioned in the Bill they had no locus standi. My Committee accepted that view. I challenged it, and I asked whether Damocles had really no interest in the sword suspended over his head. But the matter was not of major importance because quite shortly it was going to be overlain by a Public Bill. So I did not press the matter. But it seems to me that my noble friend Lord Molson is exaggerating a little when he says that the matter is settled by somebody quite independent of your Lordships' House, because ultimately it is your Lordships' Committee which decides it.
EARL ST. ALDWYN: My Lords, I wonder whether the noble Earl the Chairman
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of Committees would consider having some consultation with those who are most directly concerned with this matter. To the best of my knowledge there has not been any consultation, certainly not through the usual channels. Although one or two individuals may have been consulted, there has not been any general discussion, and it seems to me that there would be considerable advantage in having some private discussion before the Motion which Lord Molson is proposing to move is tabled.
THE CHAIRMAN OF COMMITTEES: My Lords, I appreciate the point of the noble Earl, Lord St. Aldwyn. I would point out to him that I take no cognisance of the usual channels, because all channels are to me equally usual. But if after the Recess he would like a consultation between all those who are interested in this matter, naturally I should be more than willing to take part. I will not reply to the points made by the noble Lord, Lord Molson, because I do not want to detain your Lordships who are waiting for the continuation of a debate on a most important public matter. I would only say that I am sorry that I cannot satisfy him completely, but I am glad that he thinks that I have gone a short way towards meeting him, and that he supports this Amendment. I can assure him that if, after the Recess, he wishes to discuss the matter again on a Motion, I and my right honourable friend the Chairman of Ways and Means will give the most careful consideration to what he and any other noble Lord may say on such an occasion.
On Question, Motion agreed to.

FERTILISERS (UNITED KINGDOM) SCHEME 1967
2.38 p.m.
LORD WALSTON LORD WALSTON moved, that the Draft Fertilisers (United Kingdom) Scheme, 1967, laid before the House on April 18, 1967, be approved. The noble Lord said: My Lords, I beg to move the Motion standing in my name. In essence, the Scheme is similar to the previous ones approved by the House regularly since 1952, but there has, of course, been a change in the rate of subsidy. This will give a saving of just under £2 million a year. Put another way, the cost will be

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6 per cent. less than it would have been had the subsidy for the fertiliser year of 1967–68 remained at the level at which it was previously.
As before, subsidy will be paid upon the phosphoric acid and/or nitrogen content of chemical fertilisers bought in lots of 4 cwt. or more for use on agricultural land or on crops or for growing mushrooms. No subsidy is paid on potash or on fertilisers wholly derived from organic matter. The cut in subsidy, which is a small one, was agreed at this year's Annual Price Review. It follows the general trend of past Reviews. I understand that expenditure on this subsidy during the next fertiliser year is expected to remain at the figure at which it runs during the current year—that is to say, £30 million. Incidentally, that is very much the same as it has been over the past eight years. This scale of contribution represents approximately 25 per cent. of the gross cost of those fertilisers on which subsidy is paid. Taken together with the improved returns to agriculture resulting from the other changes made in this year's Review, I am certain farmers will be well able to maintain and improve the productivity of their soil. At the same time it is proposed to give extra assistance, up to 50 per cent. of the cost of fertilisers, which will cover the cost of spreading, to those who qualify for grants under the Hill Land Improvement Scheme which we intend to make as soon as the Agriculture Bill becomes law.
Apart from this slight reduction in subsidy, as your Lordships know, manufacturers' prices for fertilisers have recently risen. The increase, however, was very thoroughly examined and reported upon by the National Board for Prices and Incomes, and the Government have accepted the findings of the Board. In spite of this rise, compound fertilisers are still cheaper per ton of plant food than they were ten years ago, and this is a point worth emphasising. It is a tribute to the efficiency of our fertiliser industry in this country. It is gratifying to know that since 1952–53 the use of fertilisers eligible for subsidy has gone up in terms of plant nutrients as opposed to gross tonnage by nearly 85 per cent. Apart from using a greater quantity of fertiliser, farmers now use different types, and they use especially the higher nitrogen
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applications, either through straights or compounds. At present, well over 75 per cent. of all plant nutrients in subsidised fertilisers are applied in the form of compounds. The concentration of such nutrients in fertilisers has gone up from under 27 per cent. in 1952–53, some 15 years ago, to about 42 per cent. to-day. In other words, the concentration has been nearly doubled.
This, of course, represents a very large economy to the farmer, since because of this higher concentration he has far less bulk to handle, and the merchant has far less bulk to transport to the farm. Put simply, to have distributed the 1966–67 plant nutrient tonnage at the 1952–53 concentration rate, merchants, manufacturers and farmers would have had to handle an additional 1½ million tons of product on top of the present movement of about 4¾ million tons—in other words, nearly one third more as regards actual bulk.
As to the future, there is no question that farmers now realise the benefits which they obtain by the use of the right kinds of fertiliser. A farmer's main problem is to judge how much more fertiliser he could profitably use in his own special personal circumstances. On the whole, I believe that farmers make the right decision in this matter, but in certain cases—I am thinking particularly of grassland—farmers are still perhaps inclined to be a little cautious, and they could, with benefit, use rather more fertiliser on their grassland with worthwhile returns. All the same, more and more farmers realise the good return that the sensible use of fertiliser gives them, and I am certain that the increased supply, especially of nitrogen, which is now available will encourage this trend still more. I am sure that the demand for more concentrated forms of nitrogenous fertiliser will go on increasing, and so will the supply. An added incentive to the use of straight nitrogen is that this is not affected by the recent price increases; there has been no rise there. A high and ever-growing rate of fertiliser use is essential if our agriculture industry is to maintain its record of productivity. The subsidy which is the subject of this Order encourages this. I therefore ask the House to approve this Scheme and to enable the subsidy to continue for a further year.
Moved, That the Draft Fertilisers (United Kingdom) Scheme 1967, laid before the House on April 18, 1967, be approved.—(Lord Walston.)
2.45 p.m.
LORD NUGENT OF GUILDFORD: My Lords, may I thank the noble Lord, Lord Walston, for explaining to us the purpose of this Statutory Order. I should like to comment on the major point which he made, that this year the Government have in fact made a reduction of about £2 million, about 6 per cent., in the rate of subsidy. I would point out that this coincides with the moment when the fertiliser manufacturers are increasing their prices, as the Prices and Incomes Board is now allowing them to do. I understand that this price increase is also, by coincidence, 6 per cent. One might have expected the Government to have increased the subsidy by 6 per cent., but No. So the total effect is that the farmers will have to pay 12 per cent. more for their fertiliser, which is quite a big increase in price. I suggest to the noble Lord that this could be a significant disincentive to the use, and indeed the greater use, of fertiliser which he so rightly advocates. My impression is that, despite the great increase in fertiliser used in the last decades, there is still a considerable under-usage, and indeed the noble Lord confirmed that this was the case on grass land. I should have thought that it applied to arable land as well.
If the noble Lord could give us the figures, it would be interesting to know how the Ministry of Agriculture's specific estimate of the tonnage of fertiliser for optimum application in Great Britain compared with the actual application. I suspect that there is a quite big discrepancy. Does the noble Lord not think that the effect of what he is doing now may be to cause a levelling off in the usage of fertiliser rather than bring about the increase about which he spoke? In fact there has been a reduction in the amount of fertiliser subsidy in the last couple of years. It was running at about £33 million a year and is now running at about £30 million a year, so that already there appears to be a reduction over the last couple of years as compared to the quantity being used before. Perhaps the noble Lord will be able to give the details
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of the actual figures of fertiliser usage in the last couple of years as compared with the figures for previous years of this decade.
One other point in this context is in relation to yields. It is noticeable that the yields of cereals have fallen in the last couple of years. There was in earlier years a certain levelling off in yields for wheat and barley, while there was a very spectacular increase in yields in the 'fifties. Has the levelling off been due to a check in the application of fertiliser? Perhaps the noble Lord could tell us whether this is so, or whether there is some other cause. Again, I ask: is this the right moment to make a 12 per cent. increase in price?
As we are about to continue with the very important debate on the Common Market, it is perhaps not inopportune to remind the noble Lord that if entry into the Common Market is accepted and we therefore have to adopt the E.E.C. agricultural policy, there will be a quite dramatic effect on arable farming, with a great increase in wheat prices of 40 per cent. and in barley prices of 25 per cent. Perhaps even more significant, the cost of imported grain into this country would, of course, go up very substantially. In fact the cost would rise by about 50 per cent., due to the application of the levy system; and bearing in mind that we import something over 10 million tons of grain a year, this would seem to involve a levy of about £100 million of which about 90 per cent. would then go to the E.E.C. So that for both of those two reasons there would be an enormously greater incentive to increase the arable acreage of this country. Therefore this again would seem to be a reason for looking very carefully at the fertiliser application, because the extension of acreage in this country would have to be on the less good land, and, of course, on land in the hands of the less good farmers. Again, I would ask the noble Lord: is he sure that this is the right time to start giving a disincentive to fertiliser use?
Finally, would the noble Lord, when he is asking his right honourable colleague the Minister of Agriculture to look at fertiliser policy, also ask him to look at the possibility of extending the subsidy to potash, which clearly will be very much more important if we are going to bring back into cultivation the

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less good land, most of which is very deficient in potash. Is it a fact that the old monopoly argument still applies to extending the fertiliser subsidy to potash?
I do not wish to detain the House any longer on this subject, although it is a very important one and may be even more important in the future, but I would conclude with these remarks. I should have thought it was always rather objectionable to make a disincentive to fertiliser use, and certainly it would be hard to find a time when it was more inappropriate than now. I would therefore ask the noble Lord whether he will most cogently convey to his right honourable colleague the Minister of Agriculture that this matter should be studied closely in the next Price Review, in order to see whether it would not be wise to continue to give the maximum incentive to greater fertiliser use, rather than tapering it off. With those rather critical remarks, I would reluctantly agree that the Order should be passed.
LORD INGLEWOOD: My Lords, may I ask the noble Lord one question? In order that we may judge the effect of this Order as against the effect of last year's Order, can the noble Lord tell us what will be the extra cost to the farmer, assuming that the same levels of fertiliser are used? He has told us that there is a 6 per cent. decrease in the value of the subsidy and, I believe, an increase in the price which the farmer has to pay. What, in simple terms, does that really mean to the farmers' pockets, taking the country as a whole?
LORD WALSTON: My Lords, I must say that I am rather surprised at the point of view put forward by the noble Lord, Lord Nugent of Guildford. It seems to me the antithesis of what I always understood he and his friends stood for politically. But perhaps I can deal more specifically not with the political philosophy behind these matters, but with the questions which he has raised. At the same time, perhaps I can answer briefly the question of the noble Lord, Lord Inglewood. My information is that the reduction of subsidy will mean an additional cost of about £2 million, as the noble Lord said, whereas the rise in manufacturers' price will add a total of £6 million to the farmers' bill, making a total of £8 million, or approximately
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8 per cent. extra, which has to be paid for fertilisers. I think that answers the question of the noble Lord, Lord Inglewood.
So far as the under-usage (a curious expression, if I may say so, which the noble Lord used) of fertilisers is concerned, the fact is that very few farmers use the optimum amount of fertilisers. A few use more than they should and waste it, and the crops may go down, but the vast majority use rather less than they should. I do not know of any estimate of the amount, and it would be a very subjective estimate if there were one. My own purely personal guess, taken more or less out of the air, is that on our present cropping we could increase our use of fertilisers by at least 25 per cent. and still get an economic return. But I emphasise that that is my own personal view, my own guess, rather than any considered view of Her Majesty's Government or of the Ministry of Agriculture.
So far as the fall in yields is concerned, as the noble Lord knows well there are many reasons for that—climatic being very prominent among them. But I would say that it is more of a levelling-off of yields than a continuation of the spectacular rise which took place in the 'fifties. Far be it from me to suggest that the spectacular rise which took place in the 'fifties was due to Governmental action in the late 'forties, though we all know that there is a certain delayed action; nor should I like to suggest that any decrease in yields two or three years ago was due to Governmental action during the preceding decade.
I think that another possible reason, putting that aside, is the fact that during the war years, and the years immediately following, there was an enormous increase in the skill of farmers and in the techniques. The techniques of the best farmers were adopted and became the average techniques, due very largely to the National Agricultural Advisory Services and also to the admirable work of the plant breeders. We have now reached a levelling-off stage, which I hope will be followed in a few years by another surge forward. The present position is certainly not due to a decreased use of fertilisers.
I have the full figures here, which I shall gladly show to the noble Lord afterwards. May I simply read out the

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figure of nitrogen utilisation in 1951–52 and compare it with 1966–67? In 1951–52 it was 181,000 nutrient tons, and in 1966–67 it was estimated to be 630,000 nutrient tons; in other words, something over three times as much. Phosphates rose from 277,000 tons to 477,000 tons—not quite twice—and potash rose from 172,000 tons to an estimated 430,000 tons—about two-and-a-half times as much. The total of them all rose from 630,000 tons to an estimated 1,537,000 tons; in other words, over twice as much nutrient tonnage—not gross tonnage—is expected to be used in 1967 as compared with the figure for 1951.
The main point which the noble Lord, Lord Nugent of Guildford, made was when he asked me: is it right at this stage to reduce the subsidy? Of course, that really depends on what philosophy you hold. If you believe that the "gentleman in Whitehall knows best" and can dictate to the farmer what he should use, then obviously you should retain the subsidy in the hands of Whitehall as a weapon for encouraging what one might call an artificial use through artificial prices. If, on the other hand, you believe that after the initial stimulus for adopting new techniques, for making use of fertilisers and so on, it is really the farmer who should make the decision, then it is far better to lower the subsidy on fertilisers and raise the price, as we have done, on the finished product, on the crop itself, and leave the choice to the farmer. That, I believe, is the correct method to follow, and I repeat that I am a little surprised that the noble Lord suggests that it is really the "gentleman in Whitehall" who knows better than the farmer on the ground what fertiliser should be applied. I shall not detain the House any longer pursuing this rather fascinating subject, and I am thankful to the noble Lord for his qualified support.
LORD FORBES: My Lords, if the use of fertilisers decreases, will the Government raise the subsidy at the next Review?
On Question, Motion agreed to.

PLOUGHING GRANTS SCHEME 1967
3.0 p.m.
LORD WALSTON LORD WALSTON moved, that the Draft Ploughing Grants Scheme 1967, laid before the House on April 12, 1967, be approved. The noble Lord said: My Lords, I trust that it will be convenient, when dealing with this Order, to deal also with the Ploughing Grants (Scotland) Scheme 1967. This Scheme is somewhat different from previous Schemes. Your Lordships will remember that, going back quite a long way—25 years or so—it was necessary to introduce specific incentives to encourage farmers to follow what was then thought by many established farmers to be bad farming practice, but which leaders of agricultural thought realised was good farming practice; that is, to plough up old grassland, to take the plough round the farm.
In this context we all think of the name of Sir George Stapleton, one of the great pioneers in these matters. As a result of his work, of the work of many of his colleagues, and of the incentives given by successive Governments, advisory services and others, rotational farming has now become an accepted pattern of British agriculture. The benefits are very widely realised. There is scarcely a farmer to-day who does not know when it is profitable for him to plough up his old grass or his old short-term leys so as to cash in on the fertility of the land by growing other crops.
It has now been decided that it can safely be left to the farmer himself to decide whether it would pay him to plough a particular piece of grassland or whether he would prefer to keep the grass for grazing, for hay or for silage. That being so, there is no longer any need for the payment of a specific incentive by way of ploughing grant for ploughing up leys. But there is one exception to that; that is, the ploughing up of really old grass—the type of grass which is extremely expensive to plough; the sort of grass which has previously come under the provisions of Part II of the previous Schemes. Not only is this sort of grassland particularly expensive to plough, but it is becoming increasingly advisable in certain cases that it should be ploughed, because to some extent it counteracts the

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loss of land which is taking place year by year to urban development. So it is becoming increasingly necessary for farmers to bring in an increasing amount of land which was formerly considered uneconomical and which, because of its particular condition, costs a great deal to plough. It is therefore proposed that the £12 ploughing grant, which is for land of this sort, should be retained.
One minor change is proposed which is in effect the widening of a clause introduced last year to allow approvals given under the 1965 and 1966 Schemes to remain valid for the current Scheme. This is a convenience both to the farmer and to the Department, and involves no loss whatsoever of financial controls. I hope your Lordships will agree that even though the need for ploughing grants on what I may describe as the ordinary type of grassland is no longer necessary, there is still a place in our agricultural economy for the £12 grant. I beg to move.
Moved, That the Draft Ploughing Grants Scheme 1967, laid before the House on April 12, 1967, be approved.—(Lord Walston.)
LORD NUGENT OF GUILDFORD: My Lords, may I thank the noble Lord. Lord Walston, for moving this Statutory Order and telling us its purpose. May I also tell him that to this Order I can give a warmer welcome. I have no wish—in fact probably a good deal less wish than he has—to dictate from Whitehall what a farmer should do, but there are certain specific aids to farming which experience has proved to be valuable, and we should not lightly reduce them unless we are prepared to see consequences which may be unwelcome. But in this case I feel that the substantial removal of the ploughing grant is something which we can contemplate now, because times have changed. Although I feel a slight nostalgic pang at seeing it go (because it stems from the Agriculture (Ploughing Grants) Act, 1952, which my noble friends Lord Crathorne and Lord Carrington and I together put on the Statute Book; I think it was the first piece of legislation we put on the Statute Book in the 1951 Parliament), I think it is right that it should go and that it is also right, as the noble Lord said, that we should keep the special £12 per acre grant for ploughing out old grassland.
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As the noble Lord said, this grant was introduced originally as an incentive to rotational farming, and for that it was very valuable. The grant was kept on, first in its £2 or £3 an acre form, and then its £5 an acre form, because the general view was that the establishment of the three-year ley system was a valuable rotation on farms which were growing corn, but that in areas where for one reason or another they could not grow root crops, either sugar beet or potatoes, the three-year ley made a good break in the cereal rotation because the land could be restored in its fertility and the weeds could be brought, at any rate to some extent, under control. This problem, of course, is still very much with us—in fact, in some areas it is rather worse than it was. But there are now other ways of dealing with it, and I therefore think it is quite right to get rid of the rigidity of the three-year qualification.
The fact is that most land cannot be kept in continuous cereal production without running into serious problems of loss of fertility, on the one hand, and proliferation of weeds, on the other; but one can use such devices as the one-year or two-year ley, and also the kind of break crop for which the Government have introduced a subsidy in this Price Review—that is, the bean crop. It is in this particular context that I congratulate the noble Lord on choosing the right moment psychologically for removing this particular subsidy—because he is beginning to put something else in its place. There must be a break in the cereal crop. In areas where root crops cannot be grown then something else must be grown, and the bean crop is such an alternative. I would only ask the noble Lord that he should do even better and consider at the next Price Review including rape seed as a further crop which might be used as a break crop, and give a subsidy there as well. There are certain marketing problems, but I believe that they could be overcome; and this would introduce a little more flexibility into a picture which has considerable difficulties.
But the point I would make to the noble Lord is that he is sweeping away a system which had a certain specific value, apart from its original incentive, and he therefore has a particular responsibility to put something else in its place. He has begun to put something else in

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its place with the subsidy for the bean crop, but it seems to me that he must go rather further than that, and I look with confidence to him to see that this is done in the next Price Review. With those few comments, I have much pleasure in supporting the Order.
On Question, Motion agreed to.

PLOUGHING GRANTS (SCOTLAND) SCHEME 1967
LORD WALSTON: My Lords, I beg to move that the Scottish Order be approved.
Moved, That the Draft Ploughing Grants (Scotland) Scheme 1967, laid before the House on 19th April 1967, be approved.—(Lord Walston.)
On Question, Motion agreed to.

COMMONWEALTH SETTLEMENT BILL
3.9 p.m.
Order of the Day for the Third Reading read.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (LORD BESWICK): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Beswick.)
LORD BARNBY: My Lords, before assent is given to this stage of the Bill I feel obliged to raise an omission from the earlier discussions. It is a point about which I have given notice to the noble Lord; and, even though the Bill was covered effectively by my noble friend Lord Bessborough on Second Reading, he also omitted this point. I refer particularly to the migration of children from here to the Dominions. As your Lordships will be aware, a considerable number of children are in the custody of the great local authorities. They are very expensive to keep; and I suspect that the degree of cost to the community will not be within the knowledge of many noble Lords. These children are in their care as the result
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of orphanage, confused parentage, abandonment, and so on; parents are often not known. Regulations lay down that there shall be proper custody of the children and that guardianship should be established for each child.
In the Dominions, as is well known, are the four great approved societies to which the noble Lord referred in moving the Bill. There is the Fair-bridge Society, which has vacancies, and there are other societies which can be of assistance. Because of my long association with this movement—earlier as a member of the Overseas Settlement Board and, more recently, as chairman of the Overseas Migration Council—I have tried to keep myself familiar with these matters. In view of the expense to which I have referred it is rather strange that the local authorities put up every kind of resistance to releasing these children to the societies in the Dominions. I recognise that there has been some advanced thinking as to how, and into whose custody, children should be transferred; but these bodies in the Dominions are so conducted as to have the greatest compassion and sympathy for the children. There can be no question of anxiety whether these children will be properly cared for. Considerable numbers of children are involved and, there is, without doubt, plenty of room in the Dominions for them. There are societies ready to receive them. It is that point that I particularly wanted to raise, and I hope Her Majesty's Government will be more successful in the future than has been the case in the past in somehow fusing these various possibilities.
I am aware that in the Dominions it is thought that the best immigrants are babies, but my suggestion is not so much for the benefit of the Dominions as for the good of the children that are here. I can assure the noble Lord that he will find on investigation that the cost of keeping these children is burdensome and, indeed, difficult because recruitment of staff for their supervision is also difficult. I have read carefully the Second Reading debates in both Houses, and although the Secretary of State in another place dealt at some length with the question of children lie omitted this particular point. Owing to absence from London I regret that I could not attend the discussions here; and therefore I raise it now.

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My Lords, may I, at the same time, express disappointment at the small amount of money that is spent for this purpose? Your Lordships will be aware that Parliament voted recently about £1½ million a year—of which only £160,000 a year has been spent—to promote Commonwealth settlement. I am sure that more effort could be made to familiarise the country with the possibilities of life in the Dominions and with the advantages that might well come to those who have a sufficiently adventurous spirit. I have always believed it is the adventurous spirit which, in the main, has motivated migration from this country to the Dominions and built up the great overseas territories of which we are so proud. But so little is spent when so much can be done. It is incongruous that we should spend hundreds of millions of pounds in the development of new towns while there are large areas overseas where migrants could well help to increase the purchases from this country and expand our exports.
In another place, it was stated that by the end of the century, a little over 30 years, we are to expect a population of 75 million—some 20 million greater than at present. Presumably by then each household will have an automobile, and there is going to be great discomfort in moving around; but that is another angle. We have in this country a density of population of 570 to the square mile. What movement will then be like, I do not know. But it is because of that lack of perspective, because of what we spend to develop these things and of what could be spent in building up power abroad that I particularly wanted to draw attention to this matter.
There is another point I would bring to the attention of the noble Lord. I hope he did not overlook the suggestion made in another place, that out of this substantial unspent sum, since the movement of people is the best promise for the lessening of tensions in the world we should initiate various schemes in this country for the movement of undergraduates to the Dominions, and to Canada particularly. Would it not be possible for Her Majesty's Government to arrange that some part of these large funds could be made available to encourage more movement of undergraduates, in the formative years, to the
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Dominions, and that the schools should propagate the possibilities for the development of the large Dominions overseas? I support the Third Reading of this Bill.
VISCOUNT ST. DAVIDS: My Lords, I had not meant to speak in this debate, but after hearing the noble Lord, Lord Barnby, I wondered whether my noble friend would consider paying very careful attention to the noble Lord's suggestion about shipping small children abroad when those children are already deprived of their parents, either by accident or by abandonment. A child who has lost his parents is already a very disturbed child. He has suffered a very great loss, and that loss is not good for the child's balance. It is important, as far as that child is concerned, that he should be kept in surroundings which he knows and understands and which are familiar to him. This is necessary for the sake of his mental balance and health. Therefore it is important for these children that great thought is taken before any are shipped abroad into circumstances which are very different. It is this point alone that I wish to bring to the attention of my noble friend.
3.20 p.m.
LORD BESWICK: My Lords, the noble Lord, Lord Barnby, emphasised the importance of emigration, and its value to the Commonwealth, and that of course is what this Bill is about. I am pleased to have his support for its purposes. The noble Lord raised two particular points. One concerned the possibility of orphaned children being sent to different parts of the Commonwealth, perhaps to the other side of the world, to start a new life there. This was the kind of thing that was done in the 1930s but as I said on the Second Reading of the Bill opinion nowadays does not favour this, and finance has not been made available, except in those cases where a child is accompanied by one parent. My understanding was that that attitude commanded support in another place, and the support of the majority of noble Lords in this House. I think my noble friend Lord St. Davids has indicated the kind of consideration that lay behind the decision to restrict the emigration of children to those cases where there is one parent.
LORD BARNBY: My Lords, may I ask the noble Lord if it is to be understood

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that it is now a requirement that every child shall be accompanied by a parent? I do not think that has been the case up to now.
LORD BESWICK: Yes, my Lords, that is the present policy. But if in a particular case it was thought desirable that an orphan should be enabled to start a new life under one of these schemes in a Commonwealth country where these schemes operate, that would not be ruled out.
The noble Lord, Lord Barnby, also asked about the possibility of using the monies that will be voted under this Bill for the purpose of sending young men or women from this country to take a graduate course in a university in the Commonwealth. I am sure that many of your Lordships will have much more sympathy with this idea than with his first one. There is a good deal to be said for it, but the provisions in this Bill would not enable this money to be used for that purpose. Certainly there is a reference to the possibility of giving financial assistance for training those young men or women who were assisted to emigrate under this Bill but that was considered to be vocational training. Education in a university is not thought to be covered by the Bill.
BARONESS SUMMERSKILL: My Lords, as the Fairbridge Homes have been mentioned, can my noble friend tell me whether Australia is prepared to accept coloured orphan children?
LORD BESWICK: No, my Lords, I could not say without notice.
On Question, Bill read 3a.
LORD BESWICK: My Lords, I beg to move that this Bill do now pass. As we are about to move on to a discussion on the Common Market, and as our courtship of Europe has been one of the factors that has given an impression in some parts of the Commonwealth that we have lost the interest in Commonwealth settlement and in the development of the Commonwealth that we used to have, perhaps I might say that I am
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particularly pleased to have the opportunity to move this Motion to-day. I am sure that we should all wish to take the opportunity to emphasise that whatever we do about going into Europe, it will not prevent us from looking forward to the continuance of the friendly connection between this country and those other lands of the world which we have helped to develop. My Lords, I beg to move.
Moved, That the Bill do now pass.—(Lord Beswick.)
THE EARL OF BESSBOROUGH: My Lords, I think I ought to support the noble Lord, Lord Beswick, in this matter, in just a few words. Whatever may have been said in another place, and in your Lordships' House, about the sums which have been set aside for this purpose and which are not related closely to the requirements in the past five years, we warmly welcome the Bill. I might also add that I fully appreciate the points made by my noble friend Lord Barnby. I am sorry that it does not seem to be practicable to consider them in the context of this particular Bill. I hope that the Government will look at the points made to see whether these proposals might be satisfied in some other way. Finally, my Lords, however keen we may be to get into the Common Market, the Commonwealth still exists, and this Bill is a fine example of the Commonwealth in action and I hope that it will now pass.
On Question, Bill passed.

ROAD SAFETY BILL
Returned from the Commons, with the Amendments agreed to.
HOUSING SUBSIDIES BILL
Returned from the Commons with certain of the Amendments agreed to, and one other Amendment disagreed to, with a Reason for such disagreement: the said Amendment and Reason to he printed.

THE EUROPEAN ECONOMIC COMMUNITY
3.27 p.m.
Debate resumed (according to Order) on the Motion moved yesterday by The Lord Chancellor—namely, That this House approves the White Paper entitled Membership of the European Communities (Cmnd. 3269).
LORD MCCORQUODALE OF NEWTON: My Lords, I wonder whether I might ask for one moment of your sympathy, for one of the main difficulties in opening the second day of a great debate of this sort is the welter of conflicting words with which one has been oppressed yesterday and to-day. There were the admirable speeches yesterday in your Lordships' House, to some of which I was privileged to listen (and the rest I have read), and there was the debate in another place which occupies an enormous Hansard, including an hour and a half's speech of great importance by the Prime Minister. There was a very high-class speech, if I may say so, from Sir Alec Douglas-Home (as we in this House should expect) and some barbed wit from Mr. Michael Foot. I did not get any further, because there was not time. Then there was the "Panorama" exercise for the general public which one was supposed to pick up; and all the newspapers this morning had it all over again. Believe me, my Lords, I am a little confused. In this condition I feel that it is better, to use sporting parlance, to "go back to square one".
My Lords, it is a strange coincidence that in the great debate on Britain and the Common Market held in this House on August 1 and 2, 1962, I was privileged to be the last Back-Bench speaker on the second day, and was followed by the noble Lord, Lord Silkin. Incidentally, on that occasion the noble Lord was remarkably kind to me and about my remarks. I only hope that to-day, in following me again, he will not be too harsh. I am sure that the whole House is delighted, as I am, that we are also to have a speech from the noble Earl, Lord Cromer. It seemed to me that possibly the one gap in the debate yesterday was the lack of a real authoritative speech from the great commercial and banking centre of the City of London
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—something which the noble Earl is uniquely able to give us.
May I, at the outset of my remarks, quote two or three isolated statements from the previous debate to which I have referred, because I think they are not only pungent and relevant, but well worth reading to your Lordships. The late Lord Morrison of Lambeth made a great speech on that occasion which I well remember. In balancing up the pros and cons of going into the Common Market he finished up by saying:
"But that does not prevent my feeling that, if it be practicable, in principle it is right that the British should go into the Common Market."—[OFFICIAL REPORT, Vol. 243, col. 312; 1/8/62.]
Lord Morrison of Lambeth was one of those great men who was able to put into simple words what a great number of people in the country were thinking at any one time. Indeed, he could exercise that gift possibly as well as anyone I have ever known. I believe that the feeling then expressed is now shared by the great majority of people in this country. I know from my association with organised industry that these views are overwhelmingly held by industrialists, both great and small.
I wonder whether I might quote, also from the previous debate, a remarkable prophecy made by the noble Lord, Lord Robertson of Oakridge. He said, at the end of his remarks:
"….there remains one plain cold fact, and that is that if we do not join the Common Market, the Economic Community, the Community will go ahead without us; it will succeed without us; and it will grow in exclusiveness, to our detriment, because our voice will not be heard in its councils."—[OFFICIAL REPORT, 1/8/1962, col. 367.]
Surely five years later the truth of that prophecy is apparent to us all. Then, in possibly a lighter vein, may I quote one sentence of a former Prime Minister, Lord Attlee, who was strongly opposed to our application to join the Common Market and made a strong attack on the proposition at that time? He claimed that if we went in we should be putting the Germans before the Australians, and so on, and the noble Earl, Lord Home (as he then was) interjected with these words:
"Our motive in entering the Common Market is so as to be able to serve our old friends better by getting additional friends for Britain."—[col. 428.]

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I think that that is worth remembering, too.
It is instructive to note that both Mr. Macmillan, the Prime Minister at our last attempt to get into the Common Market, and Mr. Wilson, the Prime Minister now, have become progressively enthusiastic about joining as they have gone more deeply into the whole question. This has been most marked. Why, it is only two years since Mr. Wilson was very cold about the whole idea. Two years ago, almost to the very day, he said:
"There can be no question at present of a new British effort to enter the E.E.C."
For my part, I am glad that he has now not only changed his own view but also changed the views of the great majority of his Party. That is a very good thing. I believed five years ago, and I believe even more strongly to-day, that entry by Britain into E.E.C. on anything like suitable terms will be a good thing, not only for Britain and for Europe but also, in the long run, for the people of the whole world.
Nevertheless, if French opposition once again makes it impossible for us to join on fair conditions—and I agree with what the noble Lord, Lord Sherfield, said yesterday, that we do not want the negotiations to be bogged down for months and years; we must have some time limit to these discussions—I am convinced that we should not despair. I agree with much of what the noble Lord, Lord Caccia, said on this subject yesterday.
I should like to speak from an industrial point of view for a few moments. What have we to offer Europe from an economic standpoint? We have one of the great markets of the world to share with them. We have an industrial potential second to none for the size of our country. And we have a know-how which has been developed over many years. There is a regrettable tendency in many quarters to criticise British industry, both management and men. Of course, neither arc perfect—no human beings are—and in industry we have great difficulties, many of our own making; but I believe that the worst mistake we possibly can make is to continue to decry ourselves and run ourselves down. I hope that if we get into the Common Market, this odd talent of ours will be abolished. For I claim confidently that British industry
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is remarkably healthy, considering all the buffets and difficulties that it has had to contend with in recent years. It is not only healthy, but also well able to stand up for itself most adequately in the competition in Europe, if we join the Common Market. After all, we are still the greatest exporting nation in the world for our size, and how many of the most notable technological advances in recent years have not come from Britain? We have not always developed them ourselves, to our cost, but the inventive genius is still there in British industry and still lively.
But what we shall need—and this I would impress upon your Lordships—is increasingly year by year a greater scale of individual operations in industry. The size of enterprises in the United States of America is so vast, the market is so great, that one firm can readily and rapidly evolve in its own special market to a scale which enables it to cater for a whole nation in Europe. And to get to this same level, Britain must be able to achieve a scale of operations which I believe can only be found (if I may put it this way) in balanced partnerships on an international basis. This will be most conveniently achieved by joining the E.E.C.
I wonder whether I may go into this matter a little more deeply. For these remarks I am much indebted to some admirable articles in the Economist recently, drawing attention to a remarkable and authoritative inquiry which has been held into the American and the British chemical industries at the present time. Nowadays it requires 2½ British chemical workers to produce as much as one American chemical worker. This disparity is due, not to bad management or to "feather-bedding" of unions—although, of course, this does not help—but chiefly to the advantage American industry enjoys through the economy resulting from its scale of operations.
The Americans, this report found out, gain greatly, not only from their much larger plants and their mass production of goods but also from such things as bulk buying, bulk handling, bulk transport and also—a point which I thought was interesting—from not having to export small packets of chemicals to so many small markets all over the world, as British exporters have to do, especially

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to the Commonwealth, if they wish to keep up the scale of their exports. The British exporter finds these small exports expensive, but he has to pursue them and then, when the market to which he is exporting becomes enlarged in value, the country to which he is exporting sets up its own plant, sets up tariffs against imports from outside, and an impasse is reached. Surely the Economic Community of the Six, a free market in Europe, is the obvious solution to this impasse. It is close to Britain and, very important, it uses in general the same type of goods as we do here at home.
In a speech the other day, Mr.Brown, the Foreign Secretary, gave some figures of gross national productivity which I think are worth mentioning in your Lordships' House. He said that in Britain to-day our gross national product, on a 1964 basis, is something like 35 billion pounds. But if we joined the European Economic Community and EFTA together the gross national product at the present time would be over 135 billion pounds. In the United States it is 210 billion pounds, and in the U.S.S.R. 72 billion pounds—more than twice what it is in this country. Here, then, is the price.
But there is another point. If size gives such advantages, as we saw in this inquiry into the chemical industries, then, if we do not go into the Common Market, and Germany, France and Italy, our competitors, have the advantage of size within their Community, they will be even more serious competitors to us in our own markets outside. But if we get into the Common Market, then I believe we shall benefit especially, because those industries in which we appear to have an advantage—the science-space industries, the modern industries, which if they are to grow need a mass market—will be the first to prosper. But this will be so only if we have this mass market.
There are many lessons which we can teach Europe, and there are many which they can teach us, to our mutual advantage. It is encouraging, I think, to note that, so far as industry is concerned, Europe as a whole is most anxious that we should come and work with them. Even in France the Patronat are most cordial and friendly to us in this project —and the Patronat are the equivalent of the C.B.I. in this country. I would at this
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point say how much I agree with one of the remarks made by the noble Lord, Lord Clitheroe in the debate yesterday—although I do not agree with all that he said—when he expressed the hope that we should adopt some of the taxation principles of the countries of the Common Market. They seem to base their taxation on principles to encourage enterprise and industry, and not to stifle it.
I claim, therefore, that it is the carefully considered view of industry in this country that we shall be able to compete reasonably successfully in this huge market of 300 million people if we succeed in getting into it, and that thereby we shall be able to increase greatly the prosperity of this overcrowded little Island of ours. Surely this is of great importance, so far as the Commonwealth is concerned. For if we prosper in this country, we can help the demands of the Commonwealth. As we have seen, over the last few difficult years we have had to cut off even sending capital to the Commonwealth because of the difficulties at home. One thing that the Commonwealth, and indeed the underdeveloped countries throughout the world, want above all others at the present time is capital; and we can provide this capital only if we are prosperous.
As a nation which has a larger inherited series of skills in manufacture, commerce and finance than any other in the world, it will surely be our own fault entirely if we do not compete successfully should we enter the Common Market. But I would emphasise that there will have to be adjustments, and painful adjustments; and we heard about a good many of them in the debate yesterday. Many people tend to be frightened of adjustments, but in industry, surely, we are having to make adjustments every day to meet the changing needs and requirements of our markets. It is those firms, those industries and those countries which refuse to make the necessary adjustments that go to the wall.
In conclusion, I would just say this. In the admirable debate yesterday, so much was so well said about the political opportunities, the cultural opportunities, the religious and moral opportunities and the opportunities, above all, for strengthening peaceful ties that I thought this afternoon I should confine my

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remarks mainly to the industrial scene in which I have been engaged all my life. But let me assure your Lordships that this in no way implies that I do not think these possibilities are not of immense and permanent importance, and in many ways probably even more important than the industrial scene which I have endeavoured to describe. I agree with every word spoken by my noble Leader, Lord Carrington, the most reverend Primate the Archbishop of Canterbury, in his remarkable speech, and the noble Lords, Lord Caccia and Lord Sherfield, speaking from their expert knowledge.
Are we going into the Common Market? I trust that we shall go into the negotiations with our heads high and our reasonable demands firmly adhered to. We wish the Government well in their endeavours, and we only hope that their timing in this matter is right. But I see in some papers—indeed, in the majority of papers—that the possibility of our getting into the Common Market at this time is rated at only about 50–50. I hope this is not true; and I cannot believe that it is true. But even if, in spite of all the efforts—and this time the efforts of a combined nation, of all Parties together, which we never had before—we fail, then let us still hold our heads high, our principles intact and our confidence in ourselves unimpaired. We have many friends in the world outside Europe, and many other opportunities will offer themselves to this country in due course.
3.48 p.m.
LORD BLYTON: My Lords, I hope that the noble Lord, Lord McCorquodale of Newton, will excuse me if I do not follow him in the industrial, field. In the last paragraph of the White Paper the Prime Minister said:
"For all of us this is a historic decision which could well determine the future of Britain and indeed of the world for decades to come."
Although I take a contrary view to that contained in the document, a view long held by those in the Cabinet who are now embarking on this perilous journey, I agree that it is a historic decision, and one that will probably smash the Commonwealth to smithereens. The procedure that has been adopted by our Government is the same as that adopted by Mr. Macmillan when he was Prime Minister
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in 1962. First we had the probe, followed by an application to join the E.E.C. Then, when negotiations were taking place, we were told that nothing could be said because we could not show our cards. Then, if we had not been evicted by General de Gaulle, we should have faced a fait accompli. This is again the same procedure, and in the months ahead we shall probably be told that the negotiations are confidential until we settle the terms.
I do not apologise, on a day of loud hosannas from all sides for disturbing the jubilations by putting a contrary point of view. I rise to-day to restate the Labour Party policy of 1962 and support our Party's Conference decision on the five conditions laid down by our late respected Leader, Mr. Hugh Gaitskell, which up to date has not been changed. Those conditions were designed to safeguard the Commonwealth, its trade, British agricultural policy, the right to determine our own foreign policy without interference, the right to plan our own economy and safeguard our reserve currency and for the fulfilment of a pledge to EFTA. I know I shall be told that those conditions have been eroded since 1962, but in what respect they have been eroded has never yet elicited clarification. Even the Foreign Secretary, only seven months ago at our Conference at Brighton, said that those five conditions were still valid.
We were told last year that there would be the "great debate"; and what has been the debate till this week? It has been the Press and radio exclaiming in a loud voice: "We must go in. It is sure to come. If we do not get into the Common Market we shall be excluded from a substantial share of world trade. How can we isolate ourselves from Europe? Are we not Europe?". Those have been the headlines continually over the last twelve months. Then we had the fanatical "Europeans" of Britain shouting: "Sign the Treaty of Rome and negotiate after. Get in at all costs, regardless of the price to be paid and the damage done to our Commonwealth." I am pleased, as I said last week, that at least the Government have not gone that far.
Let me make it quite clear that, with all the attempts by propaganda in the last twelve months, I do not by any means think that the people of Britain have been brainwashed by it. I am confident that

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if this question can be tested with the people on the basis of the cost-of-living increase and the destruction of our Commonwealth, all those who advocate the Common Market policy must certainly get a rude awakening. I have not much in common with the Daily Express or the Morning Star, but they are the only two papers that have put the opposition point of view against the rest of the Press.
The Government have decided to apply, and in the negotiations there must be no sacrifice of our principles and no violation of our freedom. I seek co-operation with all countries, but not on terms dictated by the Economic Community of Europe. Neither does our survival depend on our being reluctantly admitted into the Market. The Treaty of Rome, the Treaty of Paris and Euratom are, political institutions seeking to reach a political goal by an economic method. Their goal is a European Parliament, and we shall have to accept it if we enter. When the last Government in 1962 tried to get in, and accepted humiliating terms in their endeavour to get in, they were always told of the perils if we did not get in and the real reward there would be if we did. But this time we are at the stage where now we are told, "In the first few years it will be painful, but in the long term great rewards will be yours."
What are we asked to do in our application to join, accepting the Treaty of Rome and the Treaty of Paris? We are asked to give up the right to determine our own destiny, for once we sign it is for an unlimited period and there is no escape clause. No country can legally withdraw, and that applies to us once we enter. We should have to accept in many spheres a European Court of Justice which will have power to overrule the decisions of the British High Court. And our elected Parliament would have to accept decisions made, though they might be derogatory to our economy. The House of Commons would be subservient to a High Authority abroad, and the elected representatives of the people would be powerless in many respects.
It has always been the cardinal principle in England for the people to exercise the right to influence Governments. We do this through the Press, lobbying, demonstrations and pressure on Members of Parliament. These things, as we
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all know, do exert influence, and rightly so. These rights would be stripped from us if we joined the Common Market under the Treaty of Rome. We should retain control over certain domestic matters such as education, housing and health. The Board of Trade, the Commonwealth Office, the Foreign Office, Customs and Excise, the Colonial Office, the Chancellor of the Exchequer and the Ministry of Agriculture would all, in varying degree, lose their independence of action. They would be no longer free to make decisions on their own judgment of facts and the people's wishes. They could take only those decisions which a majority of the Common Market agreed to permit. We should have to bow to majority decisions of a Council of Ministers, in which we should have 3 or 4 out of 20. Worse; these Ministers would be forced to take decisions against their judgment and against the people's wishes whenever a majority of the Common Market insisted.
It would be no good trying to sack a Government, as their successor would have to take up that position. It would be useless to demonstrate by lobbying; the matter would be out of Parliament's hands. Power of decisions would be shifted out of this country to a group of bureaucrats in Brussels and Luxembourg, whom we could not sack, except on the basis of a two-thirds majority in their Assembly, however much their policies might injure us. Since the High Authority is not responsible to us, we should not he able to lobby or demonstrate; and Brussels is a long way from London.
In the time that I have served in Parliament I have always seen a healthy anxiety lest excessive power be vested in our own Civil Service, who, after all, are accountable to Ministers, who in turn are responsible to the people. Under the Treaty of Rome, our civil servants will have no importance at all compared with the High Authority in Brussels, who will then have become our effective masters. The rights of our elected Parliament, for which struggles have taken place over the years, will have been usurped, at a time when many people are thinking of trying to make Government not less, but more, responsive to the public will. We shall have to surrender to the Executive Commission, composed of non-elected civil servants, the right to negotiate trade agreements

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with nations outside the Common Market. In other words, we shall not be able to make freely a trade agreement with Australia, Canada, New Zealand or South Africa, although these nations are among our best customers.
To take from the State its power to organise its economy is to give up a vital and essential part of Government. I want to see planning based not solely on economics, but with the aim of creating a kind of society which will be conducive to the happiness of our people. It must take into account such matters as the location of industry, the creation of the right balance between town and country, and the preservation of the beauty of Britain.
By joining the Common Market our country will be planned by others. It is true that we shall partake in these decisions, but in effect we shall cease to be able to build the Britain we want, and we shall have to accept the kind of Britain which foreign experts think will best fit in with their Continental plans. It will most certainly mean a substantial increase in food prices, estimated by some at 25s. a week for a family of four, and by others at 50s. a week, as the Meat Traders' Association said. Nevertheless, the Common Market requires big taxes to be imposed on agricultural imports from overseas. Half of our food to-day comes in duty free from the Commonwealth. In addition, control over our domestic food prices would pass from Parliament to officials on the Continent. I have seen Press reports of prominent men in this set-up stating that food prices must be stabilised at a higher level than that obtaining in the world market. It also involves the ending of our agricultural support system, which provides our farmers with a secure income and consumers with reasonably priced food, and substitutes for this a system specially designed for the needs of the less efficient peasant farmers on the Continent. It is known as an import levy system.
Our experience from the last negotiations was that the Government of the day accepted the principle of taxing cheap Commonwealth food in order to let dear European food come into this country tax free. At the last General Election the Conservatives made it a plank of their programme that they approved of an im-
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Ports levy tax which was to condition our economy for going into the Common Market. I have no complaint about that—they were defeated. But the Labour Party did not take the same line. Even the Prime Minister himself said at Bristol in the General Election, in the context of the Common Market
"That Britain should retain the right to buy its food and raw materials in the cheapest markets, the Commonwealth, and not have this trade wrecked by levies the Tories are so keen to impose."
This has been abandoned, and it seems that we have now accepted a dear food policy.
Whatever transitional arrangement we could get, at the end of the time we should be buying our food in the dearest markets of Europe and imposing a levy on the Commonwealth and the rest of the world. In accepting the Treaty of Rome it is implicit that we accept the European levy system. But what about labour and industrial issues, the movement of labour and the question of work permits for Commonwealth subjects? There will be free and unrestricted entry for workpeople from the Six countries. Will our Commonwealth people be allowed free entry into Europe? Trade unions have not much status in Europe; at High Authority level it is purely consultative. So far as I can see, all these issues are regarded as irrelevancies, but I am sure that they will loom as large issues before our entrance into the Common Market is effected
From the point of view of coal and steel, under the Treaty of Paris there is nothing to be gained for the worker. Coal on the Continent is stacked high on the ground, and so is steel. They have more than they can sell, and their capacity for producing steel has been reduced. These two industries of the European Coal and Steel Community are in serious trouble, and I doubt very much whether, on entry, our new nationalised Steel Board will not be forced to fragment the industry under the rules of competition under the Treaty of Paris. We know of High Court decisions against Belgium, which meant that they were prevented from price fixing in respect of coal. It is probable, if we get into the Common Market, that the Steel Board will be prevented from fixing steel prices as being against the rules of competition under that Treaty.

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Article 92 of the Treaty of Rome subjects workers and employers to the rules governing competition, one of which forbids any Member State to aid industry in any manner likely to destroy compettion within the Market. That means that our Government could be denied the right to give specific help to enable industries in this country to modernise and to become more efficient. If this rule were applied we should not be able to help the coal, steel or shipbuilding industries
The entry of Britain into the Common Market means the abandonment of the Commonwealth. When we tried to enter the Common Market last time, M. Couve de Murville, who was then the Foreign Minister of France, said:
"If Britain enters the Common Market with the Commonwealth, the Common Market is finished. If Britain enters the Common Market without the Commonwealth, the Commonwealth is finished"
How true this is, as we shall soon learn in the months that lie ahead. We know that when the late Government accepted the conditions for entering the Market, and accepted a discrimination within the Commonwealth, African dependencies were to be treated as second-class citizens and were to get in return a favourable entry to the British market. Canada, Australia and New Zealand did not even get this, and I, for one, do not expect that we shall get any better terms.
Many of the Common Market supporters have written off the Commonwealth. As one dependency after another attains independence, the stronger becomes the advocacy that Britain should now join Europe regardless of the Commonwealth. I do not subscribe to this philosophy. The Common Market is avowedly political in its aims. The Six form a political bloc aiming at a united Europe, and if we are accepted Britain, for the first time in her life, would be bound politically to the Continent of Europe. While I support the organisation of defence in NATO, which we can leave by giving notice, I do not support a Britain which would become merely a part of the Continent of Europe, bound up with the aims of the Continental powers which do not concern us. There is still the whole of the outside world with which we can trade. What is needed is world unity, not continental grouping. Europe, after years of domination,
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has now to live in a world where other continents, inhabited by black, whites and yellow races, no longer acknowledge white supremacy.
It is often suggested that a vast market is available if we join. By joining we must bring to an end Imperial Preference and discriminate against Commonwealth countries with a market of 700 million people. Our trade with the Imperial Preference area is 39 per cent.; with EFTA it is 14 per cent.; with the E.E.C. it is 19 per cent., and with the rest of the world it is 28 per cent. So if we join by ourselves we shall have to put tariffs against 81 per cent. of our trade with all countries outside the E.E.C. In turn we can expect that the other countries will reciprocate and put tariffs on our exports. In this context we could lose more world trade than we can gain by entering the Common Market. Our trade with the European Community has increased although we did not sign the Treaty of Rome and we still retain our sovereignty.
Again, if the cost of living goes up then wages will have to increase, and if we are also to put a levy on imports of our raw materials it will mean that our costs will go up, and that will reduce our competitiveness. And what happens to the prices and incomes policy? You cannot restrain wages when by your own political action you increase the cost of food that people have to buy. To those who say, in their advocacy of the Common Market, that the Market is necessary to us, I reply: so is our market necessary to them. In any case, big as the Common Market is, it is only part of a worldwide scene in which a nation like ours can look for its trade. One of our principles in the Labour Party has been that we will safeguard Commonwealth trade. That means that we cannot accept to tax imported food from the Commonwealth, as we will have to do under the Treaty of Rome. If our conditions are not acceptable—and they will not be unless the Treaty is altered to suit—then we ought to concentrate on a policy with EFTA and the Commonwealth. This would be a return to our future destiny of friendship and co-operation with the multiracial Commonwealth and the Scandinavian countries. After all, the Commonwealth and the EFTA countries as a whole offer most of the economic

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resources of the world, and their potential resources are much greater than those of any part of Western Europe.
We should invite all other countries, like Poland, Yugoslavia and the Soviet bloc, to join EFTA, and then we should all work out plans for a rapidly expanding trade between us. In this plan there would be no loss of sovereignty and no loss of our control over our own affairs. This is my alternative to the supra-nationalism that we see abroad, and if we must have groupings that is the grouping I should like to see. It is only the fainthearted, and those who want to tie us up, hip and thigh, to the Common Market, who will not see a programme of this character.
My Lords, it is my firm belief that if Britain does not get into the Common Market—and we are a long way from it yet—we shall not only survive but prosper; and we shall not only retain but increase our influence in the world. If we face humiliation a second time it will be most deplorable. The great task before us is to give a new lead in international policy aimed at the expansion of international trade, the maintenance of full employment and securing a greater share of world prosperity for the developing nations, without being hamstrung by High Authorities of Europe who are responsible to no Parliaments and who can override the wishes of an elected Parliament.
If the five conditions of the Labour Party Conference were accepted by the E.E.C., it would mean a conscious decision to liberalise their commercial policy and to become outward-looking rather than an inward-looking Community. It would mean they would have to recognise, in deeds as well as words, that Britain has obligations, not just to 200 million people within the Common Market but to 700 million people within the Commonwealth.
How is it that the Government now think that our safeguards are more easily attainable? There has been no alteration in the Treaty of Rome: it is the same as when it was made in 1957. And the Treaty of Paris is also the same. They are the same as when Mr. Heath got his terms. The Treaty of Rome is still the same as when members of my own Government were very critical of
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these Treaties in 1962. I see no evidence at all to justify the arguments we now have, that the Treaty of Rome is not so rigorous as they thought then, and many of us have grave misgivings about this. I seek to trade with all countries but not on terms dictated by the Treaty of Rome. Make agreement, yes, complementary to each other's economies, but not to hand over the liberties we have gained in Britain over all these years. There are many other problems that arise, though I will not touch on them to-day. I am thinking of the agricultural levy, the position of sterling, the balance of payments, and so on, which await the negotiations.
It is now becoming fashionable for those who disagree with my point of view to call us "Little Englanders" or "Ancient Britons", as "Manny" Shinwell was called. It is easy to sneer when argument fails. I must say that I am pleased to be a "Little Englander". I am fighting not to destroy the Commonwealth, which twice in my lifetime has come to our aid, with material wealth and manpower, in two world wars. Many of their sons, who fought to save us from those whom we now want to embrace, lie in battlefields abroad. Whilst I have forgiven much that was done by those who fought against us, I could not throw overboard our people of the Commonwealth for new-found friends in Europe, especially under the Treaty of Rome and all the political implications that are involved.
The peoples of Canada, Australia and New Zealand are, by birth and descent, as much British as we are, and we cannot sever or repudiate the union of history and of common interest. We cannot desert those other member nations of the Commonwealth of different blood who by conquest in the past are still with us as a result of our years in their countries. If we have to face a choice between Europe and our British partners in the Commonwealth, and it has to be made in the future, then, my Lords, I know my choice.
This decision should be taken only after the people have been told plainly what it involves and have been given the right to decide such momentous issues. Moreover, as we have long been accustomed to ruling ourselves, before any part of our liberty to do so has been delegated to

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others the people ought to be consulted. Even to-day, it is reported that Professor Hallstein has said that we must accept political union. Without the people understanding what is involved, it is not right that the Government and Parliament should commit us forever to the European Community, which would deprive every future Parliament of much of its sovereignty in a number of major issues affecting the life of every person, living and unborn. To take this, as the Prime Minister said, "most historic decision in our lives" without giving the people that elected the Government, and for whom they hold their powers in trust an opportunity of deciding, or even expressing an opinion on Britain's future as a democracy, would, in my opinion, be travelling a dangerous road.
To-night, if a vote is taken I shall abstain and reserve my position until we see what conditions for entry are accepted by the Government. To-day, in my opinion, the so-called benefits from entry consist of speculation, conjecture and imagination. The Commonwealth countries are now becoming alarmed. They fear for the second time that they are to be sacrificed if we can get into Europe. The countries in the Commonwealth who grow sugar and which are one-crop-only countries are greatly alarmed also, as they know that the Six are concentrating on a huge sugar beet industry. They are dependent on our market because we geared their economy to ours. If we go in, ruin awaits those people.
I await with anxiety the long negotiations ahead. It is a gigantic gamble. The problems are immense. My last word is, let the people know and let them decide the issues. This is what Labour demanded from the Tories in 1962. I conclude by saying that it is a sad day for the Commonwealth, apart from all the other issues involved. In my 47 years in the Socialist Party I never dreamed that our Party would be the one to strike such a mortal blow at our friends with whom we have been associated for over a hundred years. At this stage I say to the Government and to the people of Britain, in the words of the great Bard, William Shakespeare:
"Those friends thou halt, and their adoption tried,
Grapple them to thy soul with hoops of steel"
4.24 p.m
THE EARL OF CROMER: My Lords, I rise to-day to support the Motion before the House. As has been said by a number of noble Lords, and by nobody more clearly than the noble Lord the Leader of the Opposition, in what I thought was a remarkable and outstanding speech in yesterday's debate, this is a historic decision, of fundamental importance not only to the country but to the world at large. It is a declaration of our intent to move forward in step with like-minded neighbours towards building a world fitted to meet the problems, economic, financial and industrial, of the 20th century.
As the noble Lord, Lord McCorquodale of Newton, in another outstanding speech mentioned, the scale of industrial production is probably the keynote to the second half of this century in the industrial world; and the scale on which investment in industry of the future will be called for can only be justified on a market size that supports the demand. The capital intensiveness of modern industry is going to become greater and greater, and with the capital intensiveness the greater will be the investment required.
But this declaration of ours is at the same time an acknowledgment, I think, that we are now ready to leave behind us, albeit with honour and respect where it is due, those elements of outworn dogma, some of which have bedeviled our progress in the modern environment. If, with respect, I suggest that the noble and learned Lord on the Woolsack did perhaps less than full justice to the changes implied in our life by accession to the Treaty of Rome, I think it can be claimed that other noble Lords have fully filled in any gaps there may have been. But I think it is right and proper that we should recognise that change is implicit. Some of these changes will be fundamental, and they will affect our daily lives in a variety of ways.
The basic subject of tariffs was touched on yesterday by the noble Lord, Lord Kahn, who deplored the fact that we should be lowering tariffs more than other countries would be doing. I personally welcome this move, as a move away from discrimination and preference, albeit only within the circle of the Community. But

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I believe it is a move in the right direction.
While this is indeed an Economic Community, the implementation of economic and financial policies stems from political decision. I think that the political decision lying behind the Motion before the House to-day is the right one for this country. So far as the political judgment in the timing of making the application is concerned, I am in no position to judge. I have no doubt that it has been carefully weighed by the Government against the serious and far-reaching results that are possible if the negotiations are not brought to a successful conclusion. I do not mean by this that there are not other alternatives for us if the negotiations are unsuccessful. Of course there are. I do not think they will be any easier. I do not think life will in any way be simpler; and the fact of the negotiations failing, were that to happen, would, I think, have a disruptive effect on world trade and world relations generally.
Most of the topics connected with our accession to the Common Market have already been touched on, with the rather notable exception of those particularly within the financial field, and it is with those that briefly I should like to deal to-day. I welcome this Motion, as I believe that if the negotiations are successful this country will once again find itself in the mainstream of world financial affairs instead of the financial backwater that we have busied ourselves in trying to contain, largely as the result of our Exchange Control measures, brought upon us by the circumstances of our affairs. I wonder whether noble Lords fully realise the extent to which we have withdrawn from the financial mainstream of the world as a result of these restrictions. Many of these restrictions now are even more rigorous than they were during the war. The noble Lord, Lord Clitheroe, yesterday mentioned that one of the companies with which he was associated had either branches or affiliations with the Common Market countries. Of course, he is lucky, because anybody else who wanted to emulate him to-day would not be allowed to do so; nor, for that matter—for those who think that this is entirely confined to the Community—would he, as things stand, receive any
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encouragement to make an investment in Australia, New Zealand, Canada, South Africa or Eire.
I feel that this degree of retrenchment is perhaps not as fully recognised as it might be. Curiously, it is more clearly discernible when viewed from a distant vantage point, with the benefit of perspective that only distance can give. We are finding ourselves opting out of more and more international business. It is true that the ingenuity displayed by the British financial community in seeking legitimate ways of participating in world financial affairs disguises to some extent the full effect of the restrictions which exist; but the cumulative effects of these restrictions are progressive. They work through over a period of time. The immediate results and effects are not particularly noticeable, but the erosion which is taking place is continuous.
I know there are those who are concerned at the possible results of the removal of restrictions inherent in accession to the Treaty of Rome. Personally, I feel that the fears on this score are rather exaggerated. I do not believe that there would be a rush of portfolio investment from this country into the Community countries if restrictions were removed—one has only to look at the yield on equity investments in Continental countries to find some support for this argument. But more fundamentally, whether we join the Community or not, I think that most economists, no matter what particular camp they belong to, agree—it is rare that they agree on anything, but I think they agree on this—that this country needs to see an inflow of foreign capital of investments from abroad coming to this country in the years ahead. This will come about only if the opportunities and conditions for the employment of funds in this country and the treatment of investments in this country are at least as good as they are in the other industrialised countries of the world.
If this is to be the case—and we must make it the case—the incentive to the British investor to seek the first opportunity to invest abroad in preference to investing at home is not very great. Given that the conditions at home are satisfactory, the degree of diversification that the average British investor is likely to seek is not, in my opinion, likely to be

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any serious threat. The institutional investor is a different matter; for quite different reasons he, too, has quite severe limitations on the extent to which he is likely to seek overseas investment—at least as the law stands at present—not as a result of exchange control, but as a result of his contractual liabilities to his investors.
I make these remarks in the hope that it may not be considered necessary to seek too long a transitional period in adherence to the Treaty of Rome in this regard. I feel that the next few years will see major changes in the structure of industry within the Community and the continuation of rationalisation within British industry. It would, in my belief, be unfortunate if these two movements take place separately—in two separate streams, if you like—rather than comprehensively to meet the needs of the European market as a whole as one envisages it existing towards the end of the century. And it is towards the end of the century that we should now be planning. In this connection, we have to look at the future. It is important, in my belief, that we participate as fully as we can in the process of rationalisation in the Community as it is a sphere of activity in which we are particularly skilled, and if vie fail to participate from the start it will become progressively more difficult to do so later; that is to say, if we accede to the Treaty of Rome.
One further point I should like to mention relates to the suggestions which have appeared in the Press that means should be found to differentiate between investment in the Community and investment on a world-wide basis. It would, in my belief, be a mistake to attempt to introduce by regulation discrimination between one area and another. The removal of discrimination on payments as between one country and another was one of the great tasks in the financial and monetary field in the decade following the war, culminating in regard to what are known as current payments with the adoption by the United Kingdom and the leading countries of Europe of external convertibility, from which great benefits have accrued to the trade. I feel that it would be a retrogressive step to attempt to introduce discrimination, and I would suggest that it would be displaying some naïvety
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in the knowledge of the viscosity of money.
One last point relates to sterling as a key currency, and the Sterling Area. Here again, I know that there are misgivings, misgivings amongst Continental observers rather than in this country. I regard these misgivings as being exaggerated. I think it is well to bear in mind that the Sterling Area is a by-product of British history in the field of finance, and is not an end in itself. The rather formal concept of the Sterling Area is of relatively recent origin. The use of sterling, both as a reserve currency and a trading currency has been, and doubtless will continue to be, a subject of a constant evolution. The foreign holder of sterling has long been entirely free to convert his sterling into some other currency, but despite the vicissitudes through which sterling has passed the tendency to do this has been markedly unimportant. The vicissitudes themselves have stemmed from the manner in which we have managed our economy here at home. The international use of sterling as a trading or a reserve currency has not of itself been a source of weakness, but has been the medium through which the lack of confidence from time to time has manifested itself. On the basis that we manage our economy here at home within our means, which is incumbent upon us whether we join the Common Market or not, then I do not see the international role of sterling as any impediment to the obligations which we may assume under the Treaty of Rome. If anything, I see it in the contrary sense as being advantageous to ourselves and to the other members of the Community.
The noble Lord, Lord Gladwyn, introduced in his speech yesterday the thought of some sort of European currency, and indeed perhaps our grandchildren may see something of the sort. I myself do not believe that this is something which is of any great concern to us at present. I think it is a very distant dream. On the other hand, the degree of co-operation which exists to-day between the central banks, which has been of such immense assistance to us in this country, will, if anything, be enhanced, and I think that this development is likely to continue regardless of this particular discussion. I

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support this Motion, and I wish our negotiators all success in the task that lies ahead of them.
4.40 p.m.
LORD SILKIN: My Lords, I had not intended to speak in this debate but I was asked yesterday to do so, and I felt very much like the noble Lord, Lord McCorquodale of Newton, in wondering what there was left to say after so many admirable speeches, and particularly after the opening speeches by my noble and learned friend the Lord Chancellor and by the noble Lord, Lord Carrington. I thought that at any rate the case for the Motion had been adequately covered in those two speeches, and I was quite ready to vote at the end of what they said. But I thought I should get some inspiration, as the noble Lord, Lord Lord McCorquodale of Newton, did, from the debate which we had on August 1 and 2, 1962, which was indeed a remarkable debate.
It was opened by my late noble friend, Lord Alexander of Hillsborough, and there took part in it my noble friend Lord Attlee and my late noble friend Lord Lucan. All three of them were bitterly opposed to our entering the Common Market and, like the noble Lord, Lord Blyton, they stated what they thought was the Labour Party's position as that time. Among other people who were opposed to our entering the Common Market was the noble Lord, Lord Balfour of Inchrye, and I am very glad that he had courage to come and say that he had changed his view. May I say to the noble Lord, Lord McCorquodale of Newton, as I said on the previous occasion, that I agreed with everything he said? My own views have been very much confirmed by what has happened in the intervening years since 1962. I was gratified to find that a great many of the things which I said then have been repeated on this occasion. For instance, the noble Lord, Lord Caccia, talked about the spirit in which we should enter the Common Market. We should not enter as suppliants. We should not apply from weakness, nor from strength. All these things were said in 1962, and there were many others which have been said again now.
There is one important new factor which we did not adequately discuss at
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that time, and that is the common agricultural policy which has now largely been agreed upon but which at that time was merely foreshadowed. We had no exact idea as to what kind of agreement would be made by the Six, or whether any agreement would be possible. We now have it, with all its disadvantages in the short term, and those who are opposed to our entering the Common Market, and who always have been, have made use of this new factor in advocating their objection.
I am in favour of this Motion and of applying to enter the Common Market, as I think everyone else is, on two grounds. The first is our long-term self-interest: the larger markets that will be available to us; the greater opportunities for making use of our skill, our technological ability and experience, our nuclear progress and matters of that kind. I need not elaborate on this, because the case has already been made so admirably. If anything, the case is even stronger to-day than it was then. The second reason I favour entry into the Common Market is the political one, and in that I want to include, as the noble Lord, Lord McCorquodale of Newton, did, the cultural case, the opportunities for widening the scope of culture; the spiritual case, which was made by the most reverend Primate yesterday, and, generally, the widening and broadening of the whole sphere of human activity.
Some people, including myself, regard the political case as even more important than the economic case, although we all recognise that this will have to evolve and will not come about in the very near future. It would be highly dangerous to prepare to-day any framework for such an ultimate evolution. But we must face the fact that, if we do enter the Common Market, eventually political unity is inevitable.
We shall be working very closely economically with a number of nations, but we shall also be working with them in the modification of certain laws. I agree with the noble Lord, Lord Blyton, that our entry into the Common Market must affect some of the Statutes and laws of this country; that we shall be handing over to the Commission of the Six the power to make laws which will affect this country. But, of course, we shall

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have a voice in any changes which are made and one must assume—and I do assume—that our fellow members of the Community will be acting reasonably, and that our influence will be felt in any changes which are made. Moreover, we shall retain our own domestic and national interests, and our national characteristics. The Treaty of Rome does not permit of any interference with the day-to-day lives of its member nations.
In 1962 a great case was made by my noble friend Lord Attlee about the danger of entering the European Community, from the point of view of its political consequences. He feared, as was the case at that time, that it might even accentuate the difficulties between the East and the West; that we should have been joining a clique which he thought at that time existed largely for the purpose of combating Communism and preventing its growth and influence. That view is not held to-day to anything like the same extent. I believe that most of the members of the Community would welcome a closer relationship with the countries of the East, and it would be very interesting, once we are in—as I hope we shall be—to see what line was taken if there were an application to join by, say, Yugoslavia, Poland or some other member of the Warsaw Pact. I think that we should be prepared to accept such an application on its merits, and that the Community would gain.
Eventually, if our objective is really achieved, it will be a Community of the whole of Europe. This may take many years, but that is the ultimate objective; a Community of the whole of Europe, with a population running into perhaps 500, 600 or 700 million people. The time may well come when even such a Community will not be too large, because we still have to face the possibility of a community of the whole of the American continent (and steps have already been taken in that direction by the United States) and the possibility of another Asian community, with China perhaps as its focal point. So I look forward, from a political point of view, to a Community of the whole of Europe although, as I have said, one cannot necessarily plan for this at the present time.
The real case against our applying, if there is one, was made by the noble Lord,
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Lord Kahn, the noble Lord, Lord Woolley, and the noble Lord, Lord Blyton, and it is that for the short-term it will undoubtedly mean some increase in the cost of living: how much is a matter for discussion and speculation. The Government have given certain figures. In their view, it might be between 2½ and 3½per cent.; but if they can negotiate to spread the effect it will be over a period of a number of years and will not be felt very substantially by those who are going to be affected. To the extent that it would be a hardship on certain classes of persons, such as people on fixed incomes, people on low incomes, old-age pensioners and so on, the Prime Minister, in his, I think, wonderful television appearance last night, answered by saying that the Government would contemplate increases in pensions for people who are the victims of any increase in the cost of living; and, of course, we should do everything we possibly could to mitigate and alleviate the results of any hardship that might be incurred.
I do not propose to give the Government any detailed advice on how to carry on the negotiations. The House, in passing this Motion, must be held to express confidence in the ability of our negotiators to do just this. Where some hardship is inevitable they will, as I have said, do their utmost to mitigate it, either by internal action or as the result of negotiations with the members of the Six. We shall also try to ease the transitional stage—and I agree with the noble Earl, Lord Cromer, that the transitional stage should not be too long. I think it would be a great mistake to hang it out for, as some think, four or five years. I do not propose to put a time limit on it, but I think it should be very much shorter than that.
The Prime Minister has already said that in negotiating he would try to discuss principles and not details, leaving these for determination until we are inside the Community. I think that is right. Once we are inside the Community and have settled the main principles then I think that our influence should be sufficient to ensure that we get a reasonable settlement of the details. To get bogged down by detail would be making the same mistake as I regret to say we made on the earlier occasion. In saying this I am not criticising Mr. Heath at all. He did his best, and I think he did an excellent job; but the one mistake I think he made

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was to get too much bogged down by detail, with the result that he gave the impression that, as a people, we were not really serious, or were not wholly serious, about joining the Market.
Of course, there was something to be said for that view. In the debates in this House and in the other place in 1962 there was a great deal of opposition to our joining the Market—opposition which does not exist to anything like the same extent to-day—so it was natural that getting bogged down in detail should have given the impression that we as a nation were not yet ready to join the Market. We must not give that impression to-day.
There are a few principles we must discuss and settle. We all know what they are. They have been referred to over and over again in the course of the debates here and in the other place. Once we have settled those, there should be no delay in applying formally to join the Market. I was very glad to hear the Prime Minister say, in this same Panorama programme last night, that he hoped we should be in a very favourable position for coming to a firm decision by the end of this year.
My Lords, there has been some question as to timing. Is this the right time for making the application? I am sure it is. My own view is that if we do not make our application now it will be too late. This is our last chance. We cannot go on discussing the pros and cons of joining the Common Market and remain shivering on the brink. This is the time when we must make our decision; and I agree with all those who have said that it is a most fateful decision that we are making. I myself am as convinced as ever that by accepting the Motion before the House to-day and by making application we shall be taking a step which will be for the benefit of our people, of the Commonwealth, of the whole of Europe and of the world.
4.58 p.m.
LORD BUTLER of SAFFRON WALDEN: My Lords, I hope noble Lords will excuse and tolerate me for a few minutes in a short intervention. I do not wish to make a speech because I think it is far too late; and I must apologise for not having been present during the debate yesterday, which was
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impossible owing to a previous engagement elsewhere. However, I have been able to read the whole debate in both Houses.
I speak as the Chairman of the Home Committee of the Government to which the negotiators reported during the course of our previous negotiations to join the Common Market. I speak also as one who sat side by side with Mr. Macmillan, when he was Prime Minister, at the very difficult Commonwealth Conference which took place before the negotiations finally broke down—a Conference of such extreme difficulty that I can remember walking round Marlborough House garden with our then Prime Minister and our wondering whether we should ever be able to bring that Conference along with us and make application. It was largely due to the drive and determination of Mr. Macmillan that we were able to go ahead and make application on the last occasion. I simply wish to say that the position with regard to the Commonwealth has, in my view, almost completely changed since that date, and from the point of view of the Commonwealth is very much better now than it was then.
I also speak as one who was President of the O.E.E.C. in Paris for four years running. In those days—it was only the 1950s—it was regarded as normal in Europe for Britain to take the lead and, indeed, to take the chair. The whole of the affairs of Europe, economic or otherwise, were then discussed; and I look forward with confidence to the day when Europe will again find it useful to have Britain taking the lead and taking part in her most intimate affairs. I often wonder why we did not take part earlier in the discussions about the Common Market. I believe it was due to our Ministers and our Government Departments—including the Treasury, the Foreign Office and the Board of Trade—not taking the Messina conversations seriously, and in their being unduly frightened about the word "federation".
I should like to say to the noble Lord, Lord Blyton, in answer to his very moving and eloquent speech to-day, that I think it is a very grave exaggeration to say that the signing of the Treaty of Rome is going to interfere with our own Parliament and with our own daily life. I believe that signing the Treaty of Rome

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is the sine qua non of successful negotiations with the Six at the present time. I am glad that the Government have taken that hurdle, because without it I do not think we could hope for the negotiations to be successful at all. I now wish the negotiations well for political and economic reasons.
As Sir Winston Churchill pointed out —and I gave recently the Churchill Memorial Lecture in Zurich describing his spirit and his ideas—it is vital that we should have a presence in Europe, politically. This has also been brought out by the noble Lord, Lord Gladwyn, not so much in his speech yesterday, but in his previous writings. It is really essential for Britain to be in Europe to keep the balance between France and Germany. There was little mention in the debate yesterday on the possibility of Germany developing in a certain way which we all fear. Whether she does or not, I believe that we are the only nation who, politically, in Europe can be right in the middle and be the right strength for peace by simply being part of Europe. That is the political argument.
The economic argument has been described by the noble Lord, Lord McCorquodale of Newton. The only difference I have with him is that his figures of the gross national product of the various countries differed markedly from those given by the noble and learned Lord the Lord Chancellor yesterday. I do not wish to go into details, except to say that when we see the size of our own gross national product as an Island, and what it would be if we had the Community and EFTA with us, if we all got together, I do not think it needs any further words of mine in this very short intervention to point out that for our industry it is absolutely vital to have wider markets, wider potentialities, and to take part in a wider and greater gross national product than we could alone.
My Lords, before I joined Mr. Macmillan in agreeing that I was in favour of entry into the Common Market, I had reserved my position about agriculture. I should like to warn the House that I do not think the position about agriculture is very easy to-day. The nub of the whole thing is the financial arrangement surrounding the agricultural policy. The Prime Minister said yesterday in the House of Commons that the levy bill
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might be as much for us as for all the other countries put together. The noble and learned Lord reminded us of the excellent paper which has been published by the Government on the agricultural situation, and that the strain on our balance of payments may be between £175 million and £250 million a year. We must find a solution to this problem.
I have kept in touch with the leaders of the Six ever since I was Foreign Secretary, and ever since I was taking part in the previous negotiations. I keep in touch with representatives of the French Government and with others concerned. I can assure noble Lords that this is the point upon which the Six feel that the difficulties will really arise. Some reference has been made to-day by the noble Lord, Lord Silkin, and by other speakers to the fact that the transitional period should be short. I do not mind a bit if the transitional period is short on the rest of the canvas; but on the agricultural canvas we may find that we shall have a long transitional period before we finally settle this matter. I go so far as to say that if we settled this matter and then had a long transitional period for agriculture to work itself out, it might well be the most sensible solution of all—at any rate, a great deal more sensible than breaking down the financial arrangements of the agricultural policy.
My Lords, I promise not to detain you. I want to add only three further points. The first concerns what I have mentioned about the Commonwealth. What we said to that Commonwealth Conference was that a Britain strong economically would help the Commonwealth more than any other arrangement we could possibly make. It is because I believe that going into Europe will make Britain strong that I believe that, eventually, it will be better for the Commonwealth than any other plan. The second is in regard to the Treaty of Rome. I agree with the noble and learned Lord the Lord Chancellor who said in his speech yesterday that the remarks made by the noble and learned Viscount, Lord Dilhorne, on August 2, 1962, were correct.
"I venture to suggest" —
he said —
"that the vast majority of men and women in this country will never directly feel the impact of the Community-made law at all"—[OFFICIAL REPORT, col. 420.]

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I think the noble Lord, Lord Blyton, was exaggerating greatly when he said that we shall all suffer in the way he suggested.
Lastly, my Lords, a word on the balance of payments. I was glad that the noble Earl, Lord Cromer, referred to this matter, because my friends in Europe tell me that our position with sterling is the second big difficulty—the first being the Financial Resolution relating to the agricultural policy. For once, I do not agree with Lord Gladwyn that we shall easily reach a European currency, although I hope, as Lord Cromer said, that that will come in due course. At the moment, we have to go in with our sterling proudly flying, as it should, as our own proud achievement. I hope that we shall never give it up as our currency and as a world currency.
I believe that the difficulties have been grossly exaggerated; though I recognise that there is a lot to be done by the Chancellor of the Exchequer, and by other Ministers concerned, in supporting sterling internationally. I believe it will be strengthened by going into Europe. But means of supporting it, even within Europe, may be found. I believe that we are going to have difficult negotiations, particularly on the points of the agricultural Financial Resolution; and therefore I do not mind if we see a longer transitional period for agriculture to work itself out.
I agree with my old friend Lord Clitheroe that if we do not go in wider groupings are still possible, and that we should never lose our nerve. But I disagree with him in that I believe we should make this further attempt, make it firmly and on a wide front. The most reverend Primate spoke from the particular spiritual angle. I want to say a last word from the cultural angle. I have recently assumed the presidency of the British Committee of the European Cultural Foundation, because I believe that now I am not active politically I should do something in the sphere of culture to further what we all have at heart; that is, the unity of Europe. It is in that spirit that I shall support this Motion.
5.9 p.m.
THE MARQUESS OF SALISBURY: My Lords, I had not intended to intervene in
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this debate. For I am certainly not an economist, and I realise that I am speaking to a gathering of experts. If I do speak, for a very few minutes indeed, it is because of some things that were said—or perhaps it would be more accurate to say were not said—in this House yesterday. One noble Lord (I think it was the noble Lord, Lord Carrington) said in his speech that he thought our discussion was to some extent bound to be a sham fight; for everyone on both sides had made up his mind long ago what he thought on this particular subject. I am afraid that I am not one of those. Like, I think, the noble Lord, Lord Champion, who spoke yesterday, I am one who still finds it terribly difficult, even now, to decide my final attitude on this difficult and tortuous subject.
My main object in coming to this House yesterday, was to listen to what was said on both sides and to make up my mind on which side the true balance of the argument came down. Even after listening to the speeches of some of those in your Lordships' House whose judgment I most respect, in favour of the course which the Government now advocate, I still find, I must confess, that I am very much in two minds—even in spite of the advice of my own Leader—as to whether the present decision of the Government is right.
A striking feature of the debate yesterday—at least so I thought—was that, although all the theoretical arguments used in favour of our entry into the Common Market were impeccable, they were never supported by figures. On the other hand, all the speeches made by those expressing doubts did include figures—and all those figures seemed to me to point rather in the other direction. Take the speech of the noble Lord, Lord Kahn, to which we all listened with such deep interest. He is, I know, an acknowledged expert on these subjects, and one of very great distinction. What was the general effect of his speech? I think it was this: that the entry of this country into the Common Market would mean a substantial rise in the cost of living in this country, and, above all, in the cost of living of the very poorest classes; and he gave figures in support of that view.

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If I am not misquoting the noble Lord, he said that the rise in the general cost of living might amount to about 3½ per cent., and that for the poorest classes, if I may say so, where bread consumes a much larger proportion of their weekly wage than is the case in other sections of the population, it would be very much more. The rise in the cost of bread was likely to be about 14 per cent., and though this was likely to be offset over the whole country by a fall in the cost of vegetables and fruit, the poorest classes, as he pointed out, do not in fact eat much vegetables and fruit and so it would not help them very much; and the noble Lord gave other examples of the same kind.
What is more, my Lords, similar views were expressed by my noble friend Lord Clitheroe, also a man of long experience in politics, and later in financial circles; and he, too, quoted figures in support of his argument. Nor have these figures, so far as I have heard, been controverted in any way by protagonists of the other side. The Prime Minister, indeed, has given an assurance (I think he gave it in another place, and I gather that he repeated it last night) that if the poorest people—for example, the pensioners—were heavily hit, their difficulties would be alleviated—he gave that assurance—by higher pensions and lighter taxes.
But, my Lords, if there are to be lighter taxes and higher pensions for these people, and possibly for others as well, it is surely fair to ask where the money for that is to come from. That point was very much skated over in your Lordships' debate yesterday. It was hardly mentioned at all. The money will clearly not come from the taxes on tobacco and alcohol which to-day, as was said by the noble Lord, Lord Kahn, bring in, I think, £1,700 million annually to the Exchequer; for, as the noble Lord pointed out (col. 1237), there are already proposals being considered by the Commission for:
"the harmonisation of tax rates on alcohol and tobacco"
I do not know exactly what that means; but in the context in which the noble Lord used the words, it seemed to indicate that, at any rate in his view, if we joined the Common Market there would be a lower yield to the Exchequer from these two items.
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Where then, my Lords, is this money to come from? We have not been told, and I feel that the country, and your Lordships, too, ought to be given more information on this particular aspect. I hope that the Leader of the House will give it in his reply. It would be a very great help to a great many of us, I am sure, to know what his answer is, and it is surely relevant; for, up to now, all we have been given are comfortable assurances that all will be well in the long run. My Lords—and I would say this in particular, if I may, to the noble Lord, Lord Silkin—my grandfather, who was Prime Minister at the end of the last century and who as a result of the hard experiences of his political life had become more and more sceptical about comfortable assurances, used to have a phrase which he sometimes used. It was, "My old enemy, the long run." Much that we have heard to-day seems to me to be a classic example of "My old enemy, the long run."
I may of course be asked, and quite properly, "You may not be altogether happy about this plan, but what is your alternative?" My Lords, judging by the debate to-day there seems to be a number of alternatives. We have heard them produced in more than one speech. The noble Lord, Lord Caccia, mentioned no fewer than three—certainly two, and I think three; and no doubt there are others. I must confess that for political and other reasons the one I should have greatly preferred would have been what the noble Lord, Lord Caccia, yesterday called
"…a trading association of EFTA with the Atlantic Powers, or such an association with selected Powers to include Australia and New Zealand as well as Canada; this with or without the United States and Japan, at least in the first stage".—[OFFICIAL REPORT, col. 1230.]
I think that an admirable idea, if I may say so with all deference. It seems to me to have no important disadvantages over the Government's present plan and to have one vastly greater advantage, in that it provides, politically, a far more adequate balance between the Communist bloc and the Free World than an arrangement limited strictly to Europe can ever have. I do not know whether President Johnson would prove as obstructive as General de Gaulle has been; but he could not possibly be worse.

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However, having said all this, and having expressed my doubts, I do not, I can assure your Lordships, propose to vote against the present proposal, if it is pressed to a vote. We must recognise that it is supported by the leaders of all the great political Parties and by the majority of their supporters, at any rate in Parliament. I emphasise the words "in Parliament", because it seems to me to be yet another example of a steadily growing practice, even in Parliamentary democracy as it is now developing, that there is no necessity for Parliament to consult the people, even on matters that most intimately concern them. In this case, I recognise that a decision has been taken: the die has been cast. Mr. Wilson has made up his mind: Mr. Heath has made up his mind: Mr. Thorpe has made up his mind. In such circumstances, and matters having gone so far, may I very diffidently wish the attempt well. But my Lords, I cannot conceal from myself that it will not break my heart if this attempt fails and we can turn to Lord Caccia's alternative; and I suspect that in saying this I speak for quite a considerable proportion of the British people.
5.19 p.m.
LORD BYERS: My Lords, we have had a long debate and a good debate, and I am glad to say that we on these Benches do not have the difficulty the noble Marquess, Lord Salisbury, has in making up his mind; although I must say from these Benches how much we appreciate the good wishes with which he ended his speech. We have believed for a very long time in the British people playing their full part as good Europeans in the politics and economics of the world. It is for this reason that for many years we have been unwavering in our support of efforts to bring the European nations together in a much larger political and economic community. This has not by any means been a Liberal monopoly, but leading Liberals, like the late Lord Layton, my noble friend Baroness Asquith of Yarnbury, and my noble friend Lord Gladwyn, who spoke yesterday, have all played a vigorous part in trying to educate the public of this country to appreciate the excitement and the challenge presented by these wider horizons.
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Liberalism is essentially international; it is essentially a belief in the free movement of peoples, goods and services across frontiers. To many of us this greater community, enlarged by British membership to about 300 million people, offered the economic scope and the breaking down of barriers which we believed would bring out the best in our industry, and indeed, even in our agriculture. It had the added advantage to the free traders that it made the protection of the common external tariff seem respectable. I was interested in what the noble Lord, Lord Butler of Saffron Walden, said in his short intervention about the way in which there was so little enthusiasm in this country and also in Europe for a wider community and a wider arrangement.
As I have said, we claim no monopoly, but we can claim not to have wavered in our support for British entry. In the other Parties there have been changes of view and of heart. Some of them we have welcomed. We do not object to people changing their minds. Mr. Shinwell in 1951 was a strong advocate of European unity. Mr. Peart, however, has never wavered, so far as I know, in his opposition to the idea. Some of the Conservatives were, on the whole, pretty lukewarm and aloof for quite a long time after 1957, until they presented Mr. Heath with the almost impossible task of trying to negotiate our entry with inadequate preparation of the public mind. I think that it was this lack of previous enthusiasm by the Conservatives, coupled with an uneducated public, a hostile Opposition and a frightened Commonwealth, which made Mr. Heath's task so unenviable and thankless in those days.
To-day, as many speakers have said, the climate is much better. The Commonwealth has had time to diversify and adjust a good deal of its trade. Public opinion, despite the crusade of the Express newspapers, is far more understanding an amenable, and the Opposition is more friendly to the idea. But we still have to overcome the suspicions of our future co-partners, as a result of the hostility and lack of support by the two other Parties over the early years of the building up of the Common Market.
In 1959 Mr. Maudling was assuring the country that: "We never dreamed of

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entering the Common Market". The I am sure is the way to success in our Conservative Party Weekly Newsletter of August 6, 1960, which criticised the Liberals for voting in favour of the Common Market, and listed the four major disadvantages of joining, ended by saying:
"Why not ask your local Liberal M.P. or candidate whether he is willing to accept all these consequences of the policy his Party advocates."
I well remember this anti-Liberal and anti-Common Market campaign, because a few weeks afterwards I fought the Bolton by-election, and fought it largely on this issue. So unenthusiastic were the Conservatives that it was said of my Conservative opponent that he thought the Common Market was behind the Town Hall—and there were many people who agreed with him. This was the atmosphere in the early 'sixties which made it difficult to get in.
I mention these things because they undoubtedly lowered Mr. Heath's chances of success when he was given the job of entering, and also because to-day I am worried on another score. I am worried whether the well-publicised divisions in the present Cabinet will impede our negotiations in Brussels. I very much hope that they will not. It is inexplicable to me how one can hope to demonstrate one's sincerity and enthusiasm for entry into the E.E.C. when it is reported that at least six members of the Cabinet are against entry in any event. I hope that this is not true. But it is odd that one of these members is in charge of trade, and another is in charge of agriculture. These are the two major issues on which we have great difficulty. If there is no division of opinion in the Cabinet, the sooner this is said the better. I believe that we must not lower our chances of success in our discussions by having people in the Cabinet who are known to be completely against entry at all costs. I do not think that our future partners will be impressed if we try to get into the Community on the basis of a majority verdict.
I was particularly reassured by the emphasis which the noble and learned Lord the Lord Chancellor put on our intention to discuss matters on the, basis of what will be best for the new expanded community, rather than of seeking advantages for Britain alone all along the line. This
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I am sure is the way to success in our negotiations. We must think and behave like good Europeans from the start. We must not go in and try to seize every advantage we can for this country. We have to see that what comes out of the discussions is good for the Community as a whole. The prize is a large one. The advantages of this vast market which is offered to us can be many. But I believe that, in the long run, notwithstanding what the noble Marquess, Lord Salisbury, said, that this will be a good thing.
I want to deal briefly with two or three general points. The first is the attitude of the Commonwealth. I would reinforce what the noble Lord, Lord Butler of Saffron Walden, said. Two months ago I was in Australia. I found, from talking to businessmen and politicians, that the general concensus of opinion was exactly what was said at the Commonwealth Conference. They said to me that the most important thing for Australia is for Britain to be economically strong. If membership of the Common Market will bring about that strength, then they were in favour of it. I found this practically everywhere I went.
I know that the noble Lord, Lord Blyton, feels sincerely about the Commonwealth, but the idea that our entry into the Common Market will smash the Commonwealth to smithereens is absolute nonsense. We should also remember that from the trade and politics points of view Australia is rightly looking more and more towards Japan and the Far Eastern complex. You cannot avoid getting this impression as you travel through South-East Asia, Japan and down into Australia. In Hong Kong and Malaysia I found no fear of the effect which Britain's joining the Common Market would have. In the last four years there have been major readjustments of trading patterns in this area. New Zealand presents a real problem and one on which we have to keep our eyes very firmly. But in 1958 special treatment was afforded by E.E.C. to Algeria and Surinam: therefore there is a precedent for exceptions being made.
I do not think that the Commonwealth is going to suffer. I believe that the improved strength of Britain and of Europe will help the member countries more than Britain could do alone. Regarding the problem of agricultural

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policy I believe, with the noble Lord, Lord Butler of Saffron Walden, that the answer is largely to be found in the length of the transitional period. Although I would go for a short period on other issues, I think that a long transitional period for agriculture might be the right answer. But as the noble and learned Lord the Lord Chancellor said yesterday, we must realise that we have to accept Common Market policy as it stands to-day. The only question is the length of the period of readjustment. Some of the agricultural agreements in E.E.C. have been reached only with great difficulty and after long negotiations. The agricultural marathon of January, 1962, involved 45 separate meetings, 137 hours of discussion, with 214 hours in sub-committee, and the result was over half a million pages of documents and three heart attacks. Surely we are not going to ask people to renegotiate in a hurry in that sort of detail.
Of course, the E.E.C. system will mean a rise in the cost of living. There have been many different estimates of what this rise will be, but I am sure that the increase from this cause is not likely to be nearly as much as we get through the normal annual increase of inflation. I think that we should remember two things. First, we can, and should, deal with this problem for those on low incomes through social security. It is not just a question of pensions; it also concerns those on low incomes. We are moving into a new social security atmosphere in which we have to take care of people who, from whatever cause—low wages or large families—are not able to keep up. I have no worry on this score. The other thing we must remember is that we are going into the E.E.C. to obtain the economic benefits which offer us a real chance of an improved standard of living all round: greater production runs, economies of scale—which the noble Lord, Lord McCorquodale of Newton, mentioned—the better use of manpower, lower overheads per unit, and all the other benefits which we hope will provide bigger incomes for both farmers and consumers.
The only other economic matter of importance and difficulty might be with our regional policy and economic subsidies,
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such as investment grants. I want to say only one thing to the Government on this. I hope that where an investment grant has been promised and is to be taken over a period of years, there will be no question of taking it back or cutting it off suddently at a particular point. This could create a great deal of uncertainty, particularly in the development areas, where the investment grants are serving a useful purpose. In the main, I believe that this vast new trading area must be good for Britain and good for Europe. We welcome the initiative taken by the Government. I only hope that there may be a vote to-night, because I should like to see an overwhelming vote on the part of your Lordships in favour of our entry into the Common Market, which I believe would help our negotiating power.
5.31 p.m.
LORD ERROLL OF HALE: My Lords, I am sure we all agree that we have had a most interesting debate, extending well into the second day, and that a number of extremely important and valuable speeches have been made. I should like, however, to begin by thanking the noble and learned Lord the Lord Chancellor for his introduction to our debate yesterday afternoon, and for the extremely cogent and lucid description he gave of the legal consequences of our entry into the Common Market. It could have hardly been bettered, and will certainly serve to allay the fears of those who, although generally in favour of our entry, may have had reservations on that count. In other respects I thought his speech was cast in a somewhat sombre vein. Maybe, having scored such a notable success in the papers with his speech over the weekend, he thought it was the turn of the Prime Minister to have the headlines on the following day. I should have liked to see a little more of the exuberance and enthusiasm of his speech over the week-end in his speech of yesterday.
Noble Lords have made a great number of points in the course of their speeches, and it would be a superhuman task for the noble Earl, Lord Longford, to try to reply to them all in the course of his winding up. I am sure I can say on behalf of those who have already spoken that we certainly should not expect him to reply immediately to all of them. We in this House may perhaps feel that

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the debate in another place is getting more public attention. On the other hand, we can rest assured that the Government will look carefully at what has been said here and seek to benefit from the course of our discussions. It would take too long for me to praise the many good speeches made from the Benches behind me, and I am grateful to my noble friend Lord McCorquodale of Newton for thanking yesterday's speakers and so lightening my task. But it was a particular pleasure to hear the noble Earl, Lord Cromer, and also my old friend Lord Butler of Saffron Walden, contributing with their usual clarity and from their wide experience.
Despite all that has been said, there are, I think, still several matters which might usefully be referred to at this point. I should have liked to hear more, for example, about the problem of population movement. This is a sensitive area. We do not want to think just of our own difficulties in this matter. For example, will Pakistanis in Bradford be able to go to the silk mills at Lyons, with equal freedom for Italians to come and work in Britain, and so on? These are matters of great importance to the trade union movement. While I have not heard every speaker in this debate, I have heard most of them, and I do not think any noble Lord referred to the views of the trade union movement. They must, surely, have views on this subject and I am surprised that they have not been ventilated in your Lordships' House, particularly when so many have spoken about the need for large-scale industry, manufacturing complexes, taking Europe as their market. Surely in the British trade union movement there must be some thought about a European trade union movement: perhaps a single chemical workers' union for the whole of the large Community—and if things are to go wrong, a chemical workers' strike throwing every chemical plant in Europe out of action for the time being. But to look on the brighter side of this matter, let us hope that the trade union movement in Britain is as solidly behind a move to the Community as the Government are at the present time.
I was going to say something about capital movements, but the noble Earl, Lord Cromer, has said it so well, and it was mentioned by the noble Lord, Lord Butler of Saffron Walden, who reminded us of what. I had temporarily forgotten:
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namely, that there was a time when Britain was the automatically accepted leader of economic affairs in Europe and we were expected to take the chair at the O.E.E.C. We have come a long way indeed from that day, when it is now practically impossible for a British firm to obtain the necessary foreign exchange from the Bank of England to add to an existing factory plant which they have on the Continent of Europe. This is an important matter which the Government must do their best to clarify as soon as possible.
In view of what has been said on the problems of the Commonwealth countries, I would make one comment on a subject that has not been referred to, and that is the difficult problem of Commonwealth textiles coming from Asian Commonwealth countries into this country. When we were involved in the negotiations we were able to bring about some sort of arrangement whereby Europe would take a little more, and thus ease the burden on our own domestic textile industry, which would at the same time derive benefit from access to the markets of Europe. This is a field which can cause difficulties later on, and I hope the Government already have the matter well in hand.
I am concerned, too, about our EFTA partners. This Association has successfully withstood a number of extremely difficult situations, and not least the one when Her Majesty's Government felt it necessary to impose a 15 per cent. import surcharge with the minimum notice. Despite that severe blow to our partnership, it remained firm and resolute; and even now they have accepted the compromise from the original London Declaration because they are confident of our good faith. I am sure they are right to be confident of our good faith, but I earnestly hope there will be no question of letting down our EFTA partners at any stage in the negotiations.
On technical matters, I think the question of a European patent and of European designs, the merging of our patent system with that of Europe, will represent a substantial change for established technological producers in this country; but this is something that we shall have to face. The noble Lord, Lord Byers, referred briefly to the development areas

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policy, and I was glad to see from the Prime Minister's Statement that he has found the present development areas policy no obstacle to our joining the Community.
I should like to stress at this stage that if we try to prevent development in the London and South-East—assuming, that is, that we join—we shall be denying ourselves a considerable economic and geographic advantage. With its proximity to the Six, London and the South-East must assume greater importance in our economic development. While not in any way wishing to derogate from the importance of revivifying our development areas, I think we shall have to accept a further surge forward of economic activity in London and the South-East of England.
On a lighter note, when one understands that the Community represents a Customs Union, noble Lords who have not yet seen the illustrated article in the Weekend Telegraph might be well advised to do so. It is illustrated, and it shows the smuggling which now takes place on the frontier between Holland and Belgium. This is a prosperous and lucrative business, and by the time a man is 30 he is usually able to retire on the profits. What are they smuggling through this non-barrier frontier?—butter. Apparently, with all the arrangements that have been made, with all the piles of committee documents to which the noble Lord, Lord Byers, referred, the differential in the price of butter in Holland and Belgium is such that there is a profitable and lucrative, and sometimes rather bloodthirsty, smuggling trade going on. This leads me to ask what the Government are going to do about the harmonisation of excise duties. Are we going to continue with purchase tax when we join the Community, or are we going over to the added-value tax; and, if so, are we contemplating a move to the French or the German model?
Several of your Lordships have referred to the costs of entry. The noble Lord, Lord Butler of Saffron Walden, particularly referred to the cost of the levy on agriculture, but there are other costs as well. The speech of my noble friend Lord Clitheroe yesterday was particularly cogent on this matter, as indeed was The Times in an extremely good and balanced article on Monday, May 1, from
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which I might give a short quotation, if noble Lords would bear with me. It says:
"All things considered, £600 million a year after the transitional period would appear to be the minimum realistic estimate of the total balance-of-payments (current and long-term capital) cost of joining the E.E.C. If the range of probability is preferred, the bracket might extend from £500 million to £800 million."
My noble friend Lord Clitheroe expressed the hope that Her Majesty's Government would be able to comment on the figures he gave, and perhaps I may reiterate that point and hope that Her Majesty's Government, in replying, will be able to deal with the question of these extra costs.
Another reason why I was particularly glad that Lord Butler of Saffron Walden was able to be here to-day and to speak was that he referred to the fact that he was Chairman of the Ministerial Group which was looking after the progress of the negotiations at the home end. I had the privilege of serving in that Committee under his inspiring leadership, and I am glad to have this opportunity of saying so to your Lordships. Having been a member of that Committee, naturally during the last few weeks I have permitted myself a backward glance over my shoulder to remind myself of some of the difficulties we had and some of the problems we solved, which will thus make the present negotiations that much more easy, and also to consider to what extent the negotiations should follow the same path as last time and to what extent the present Government may be able to learn from our experience.
The first question is whether there is going to be a new Ted Heath. Are the Government going to find such a single man? I must say—and I do not wish to strike a violently partisan note in this amicable Assembly—that it would be extremely difficult for them to find someone as good as Ted Heath for this job. And, if they fail to get somebody equally good, then whoever is chosen will suffer by comparison, because in Brussels it will be said, "This chap isn't as good as Ted Heath was." Therefore, they may well be driven to, and it might be wise to adopt, a different policy from the start; namely, that of a Ministerial Group in Brussels, or visiting Brussels, each Minister being responsible for his own sector. It is a problem for the Government, but I suggest that they should go into the question very carefully.

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As the negotiations proceed there may come various occasions when one is apt to say, "We have come to the crunch"; but then that difficulty is overcome and the next arises. In these negotiations there may well come a stage when it would be in the Government's own best interests to refer the issue back to Parliament, not for a broad, progress-report type of debate, but to discuss a particular issue and obtain a Parliamentary mandate. The Prime Minister in his speech held out a good deal of hope in this respect, and I will quote briefly from the end of what he said:
"We shall take the opportunity to enable Parliament to form a full, fair and informed judgment of the great issues involved."
There is no point, really, in working away to have an informed judgment unless we can have an opportunity of exercising it.
This is not a theoretical matter. It is difficult to give an exact case, because the negotiations have not begun, but the problem could arise in an acute form if the Six, for example, said they would be prepared to consider immediate British, and perhaps Danish, applications but no others for the time being. This could happen, and it would mean that we should be in breach of our undertakings to our EFTA partners. This is not a matter which the Government on their own should decide, because it involves the honour of Britain as to whether we withdraw from the negotiations because of our EFTA partners, or say, "It is too bad. We have enjoyed the ride with EFTA, but we shall now let them go". A decision of that sort should be taken by Parliament and not just by the Government. But I hope it will not have to come to that.
In moving on, I wonder why so much should have been made of the fact that the negotiations are going to be prolonged. Inevitably, some of the Prime Minister's favourite clichés came into his statements and speeches: they are going to be "tough negotiations", naturally; they are going to be "realistic". The thing that bothered me was that they are going to be long negotiations. We felt at the end of our negotiations, when they broke down, that we had at least got the difficulties ironed out, and that, if there were to be a second application, long negotiations would not be necessary. In my view, it would seem that all that
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has to be done, if I may put it colloquially, is for the present Administration to pull out the old papers where matters were agreed, and alter a few figures and a few dates, because all the essential features were agreed. The details have changed, but not the main fabric of the agreements which we negotiated.
Do we really have to go back to square one and start all over again with the duty on imported tea from India and Ceylon? Well, we do not have to do that one, because, thanks to our negotiations, although they broke down, the Six agreed to abolish the duty on Commonwealth tea; so that is one thing less to be done. But has the whole of the Commonwealth section of the negotiations to be gone over again in detail? Because that can take a very long time. Several noble Lords I think were quite right when they stressed that there should be a timetable or time limit on the negotiations.
But overhanging everything else is one crucial issue which I believe ought to be faced squarely and openly; and I say this in a constructive spirit. At the end of 1962 the negotiations were on the point of success, but, as everybody knows, in January the President of France made a statement which showed that the negotiations were going to be broken off; and (without going into a lot of detail, if I may put it in "telegraphese") he said that Britain was not ready to join the club; Britain was not sufficiently European to be a member of the Community. This had never been part of the discussions. It had never been taken into account at all. In other words, the negotiations were broken off for something which had nothing whatever to do with the negotiations for entering the Community. Whether the General was right or not is another matter. That is history, although I have put it to your Lordships very briefly so as not to take too long.
I think that the first thing to make sure of, before making a second application, should be to get it clear from the Government of France that we have in fact grown up, so to speak, in their opinion, and that entry to the Common Market will not be denied to us any longer on those grounds. It seems to me that the whole negotiations will inevitably have an element of unreality about

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them so long as this issue remains unresolved. I should not ask the President of France to say he would not exercise a veto in any circumstances when the negotiations had come to an otherwise successful conclusion, because conceivably new factors could arise; but in regard to the facts of January, 1963, could he not give us an open, clear undertaking that what he had claimed then was an obstacle was an obstacle no longer?
It seems to me, from all that has been said, and from the Prime Minister's excellent replies on the Panorama broadcast last night, that he has not, and the British Government have not, been successful in this matter. It is therefore taking a chance. But maybe, by the way the negotiations are carried out, it will be shown that we have, in fact, in the opinion of the General, grown up enough to be good Europeans. But I think it is going to hamper the negotiators in the coming months, and I am only sorry that it has not been possible for it to be cleared up in advance. Indeed, it is not too late, if the Government were so minded, to hold up the letter of application for a few days. They could say to the General, "We have had our debate. You now see how enthusiastic Parliament is. Will you give us our clearance before we post the letter to Brussels?" I make that as a constructive suggestion.
Inevitably one thinks of the decision as being the General's, but it is important to realise that many people in France are suspicious of our entry. I have been surprised at the number of prominent French businessmen whom I had the privilege of meeting who have expressed doubts about our going in. Indeed, one of the matters which give rise to most suspicion is the very reason why we tell each other we should go in; namely, that it will have great advantages for us. So they say, in their logical way, "That means it will be a disadvantage to France."
I should like to see the Government, in the weeks and months to come, stressing to us and to Europe the great advantages to the Six of our going into Europe. I presume there are such advantages. We have hardly heard of them. I have done my best to trawl around to find some of the advantages, one of which would be access to the London capital
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market, if only that could be done; but there are many others. It would strengthen the hand of our negotiators immensely, because I know Mr. Heath always found that the difficulty was that there was no real bargaining; and the negotiators this time will be faced with the same problem. One goes as an applicant, and then the matter gets whittled down and one has to decide whether to accept a little less than one asked for. It is impossible to put anything else as an alternative on the bargaining table, and it would be a great help if the Six could be made to feel that there were great advantages for them in our going in and that it would be a great misfortune for them if our application did not succeed and was not handled expeditiously.
So although I wish the Government well, I think there is an intrinsic weakness in our posture as we begin the negotiations, and it would be foolish if we did not recognise that our negotiators will be working under substantial difficulties. First, we have not spelt out the advantages to the Six; secondly, the negotiations will have an air of unreality as long as the General refuses to revoke publicly his former objections, and, thirdly, we are applying for the second time. How much better it would have been if we could have been invited unanimously to make an application! However, realising that there are some weaknesses in our application, I am sure your Lordships have been a great help to the Government to-day in supporting almost unanimously the Government's proposals, which I myself most heartily endorse. Her Majesty's Government have demonstrated their intention to succeed. We wish them well and we hope that the Membership of the Community will crown their efforts.
5.53 p.m.
THE LORD PRIVY SEAL: (THE EARL OF LONGFORD): My Lords, I know that the Government, and I am sure the House, will be grateful to the noble Lord, Lord Balfour of Inchrye, for postponing his Motion after it had been brought forward from tomorrow. I can assure him that we all admired his speech—I might almost call it his conversion—yesterday, and I hope that that knowledge will be some consolation for what must have been a rather inconvenient afternoon.

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We have listened to close on thirty speeches, all of them interesting and some of them deeply impressive, even moving, from the classic exposition in which the noble and learned Lord the Lord Chancellor opened the debate, to the graceful encouragement of the noble Lord, Lord Erroll of Hale, who has himself had so much experience of international negotiation. He was kind enough to absolve me from the duty of replying to all, or most, of the points that have been raised, but I can assure him that the Government will study all that has been said, and in particular what has been said by him, although I cannot think that after tonight the idea of sending a messenger to General de Gaulle to try to clear up his attitude, would commend itself to many of us. I am sure the noble Lord realises that the Government have conducted a most systematic probe and while perhaps it would have been agreeable to have discovered more than we have discovered, I do not think that a last-minute and rather desperate plea to get the General to "come clean" would be particularly helpful.
The noble Lord, Lord Erroll of Hale, put one other question with which I will deal now, then I will deal with his general argument, perhaps, as I go along. He asked whether there was a single man in the Government who was the equal of Ted Heath for the purposes of negotiation. I do not know about a single man—we have so few batchelors in our Government—but we have quite a few excellent married men who I think could do the job exceedingly well.
In the spirit of the noble Lord's remarks I will ask some noble Lords to forgive me if I do not comment on their speeches. For example, I will take the notable contribution of the noble Earl, Lord Cromer, which I am sure will be widely studied. But there will be other noble Lords whom I cannot even mention; I can only ask them to believe that I value their remarks almost as highly as those of the noble Earl, Lord Cromer. The Government have every reason to be grateful to the House, to those who have spoken and those who have attended the debate, and those who, in one way or another, I suppose, will show their approval in perhaps half an hour from now. We are particularly grateful to the noble Lord, Lord Carrington, the Leader of the official
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Opposition; to the noble Lord, Lord Byers, the Leader of the Liberal Party, who spoke so generously in support of the Government, and also, if I may say so, to the most reverend Primate the Archbishop of Canterbury who gave us spiritual guidance. We certainly hope that when this Motion is put by the noble and learned Lord the Lord Chancellor the House will overwhelmingly support it.
The noble Lord, Lord Gladwyn, has done more perhaps than any one man in this country to bring about this day, and I think he is entitled to sing a Magnificat to-night, though not, I hope, a Nunc Dimittis, because we cannot do without him quite yet. But certainly it must be a happy day for him and for many others who followed him in his course. The fact that the House now seems ready, so far as one can judge, to support this Motion does not mean that anybody has won a victory over anyone else. The noble Baroness, Lady Gaitskell, divided us into three categories: the fanatical pro-Marketeers, the fanatical antiMarketeers and the cool, dispassionate group (to which I think she herself certainly belongs), which judged the matter at every stage on the facts and according to the balance of the argument.
I suppose that the great majority of the House can now be said to belong to that third group, but within that third group I should say the overwhelming majority now appear, so far as I can judge taking the sense of the debate, to favour an application for entry. There were one or two noble Lords of great eminence who expressed some doubts: for example the noble Lord, Lord Champion, and the noble Marquess, Lord Salisbury. I understand that if I give the noble Marquess satisfactory answers before the end he may come round. I hope that will be possible. I must not say that there will then be more joy over one sinner who repents, because it is not yet a sin to be doubtful about the Common Market; but I think I can say that there will be more joy about a "doubting Thomas" who becomes a believer than about all the other Apostles put together. At any rate, we shall see at the end of the debate.
My Lords, we are going forward, I hope enthusiastically, with this application. But, of course, we are applying to enter upon a negotiation: we are not applying

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to sign on a dotted line. We are not asking a favour of anybody. To use an image of Lord Champion's, we are not "crawling on our bellies", or, to adapt an even more elegant phrase of Mr. Gladstone's, we are expecting, hopeful, though on this occasion far from suppliant. Speaking of negotiations and the negotiating posture, which the noble Lord, Lord Erroll of Hale, dealt with, we (and I am speaking now of my own Party and of the Government, and also, I think, of the political leaders generally) have never failed to insist that essential British and Commonwealth interests must be secured. We believe that the essential British and Commonwealth interests will be secured; but secured they must be if these negotiations are to succeed.
The noble Lord, Lord Rowley, speaking with all the authority of one who has done so much for Commonwealth relations, and who is also a convinced European, asked me to satisfy him rather fully on a number of points affecting the Commonwealth. In view of the debate yesterday, perhaps both he and the House will forgive me if I do not deal with his points at length. May I remind the House, or inform the House if they have not had the time to read the discussion elsewhere, of the words with which the Secretary of State for Commonwealth Relations wound up his speech last night. He said:
"Of course, we may fail in our negotiations… They may refuse to give us safeguards for ourselves. They may refuse to give us the safeguards for the Commonwealth that we seek. If that turns out to be the case, our rejection, or maybe withdrawal, will be honourable, and will. I believe, be understood and accepted by the Commonwealth and the people in this country alike."—[OFFICIAL REPORT, Commons, col. 1184.]
In view of those words, I hope there will not be even the faintest suggestion anywhere that we are "selling the Commonwealth down the river"; and while it is possible for "the ranks of Tusculum" to have been moved by the speech of the noble Lord, Lord Blyton, I would say that he was totally wrong about the intentions of the Government with regard to the Commonwealth. Indeed, safeguards of Commonwealth interests will be one of the main features of the whole negotiation.
It was very encouraging to hear from the noble Lord, Lord Butler of Saffron
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Walden, who intervened in the debate to the pleasure of us all, that he feels (though he did not spell out this point) that the situation with regard to the Commonwealth is going to be a great deal easier this time than last. I felt that was one of the important things said in the debate. I certainly agree with another thing said by him and by the noble Lord, Lord Rowley, and others; that one of the best services, certainly an outstanding service, that we can render to the Commonwealth is to make sure that Britain herself is strong and prosperous. Certainly, a weak and economically wretched Britain can be of no use to the Commonwealth at all. That is obvious, and I think the other side of that is equally true.
As regards our negotiating posture, I was not quite clear where the noble Lord, Lord Erroll of Hale, discovered his grounds for criticism. But I must read more carefully what he said about where he felt that we had erred—I could not quite follow him there. As regards our posture and tactics, I think that all who want these negotiations to succeed—and that is nearly everybody here—can draw much pleasure and encouragement from the words of some distinguished Ambassadors who have taken part in this debate, including the noble Lord, Lord Caccia, who was in charge of the Foreign Office at the time of the last negotiations, and also the noble Lords, Lord Sherfield and Lord Hankey. They, as I understood it, applaud us for not exaggerating the difficulties and not ignoring them but for taking up a balanced approach. I feel that we are entitled to rest a great deal of weight on their opinions.
I must not spend too long on any of the main issues raised; I shall have to proceed through them fairly rapidly. As regards agriculture, I was bound to note the rather doubtful assessment by the noble Lord, Lord Butler of Saffron Walden. He certainly feels that that road is going to be hard. Turning for a moment to the noble Lord, Lord Erroll of Hale, may I assure him that we do not want these negotiations to last any longer than they must. We are not seeking lengthy negotiations for the sake of them, but we face the fact that they are going to be hard; and of course they may be long.

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Lord Woolley's tribute to a great Labour Minister of Agriculture was appreciated far and wide among his own colleagues and throughout the House. I hope that he, with his infinitely greater knowledge of agriculture than mine, will accept the general proposition that a Community where the proportion of the labour force employed in agriculture is four times what it is in the United Kingdom is not likely in the long run to set out to damage agriculture. In other words, agriculture globally is likely to receive very careful treatment, to say the least, and favourable treatment it may be, within the Community.
But, of course, we are insisting on a transition, and doubts have been expressed as to what will occur during the transition and what will occur afterwards. I think the language used about agriculture in the Statement is quite firm. The House will be aware of the statement in the White Paper, that:
"…the financial arrangements which have been devised to meet the requirements of the Community's agricultural policy as it exists to-day would, if applied to Britain as they now stand, involve an inequitable sharing of the financial cost and impose on our balance of payments an additional burden which we should not in fairness be asked to carry."
I hope that that language is quite clear enough for any noble Lords who wonder whether we are going to stand up to our partners in these discussions. I would only add that all these arrangements arc due for review in the course of 1969. So, while one cannot guarantee success—and clearly we are calling for quite substantial adjustments—I can only assure the House that there is no sign of weakness in any language or posture that we are employing.
The noble Lord, Lord Blyton, referred to the five conditions propounded by the late Hugh Gaitskell. I have said a word about our determination to safeguard Commonwealth interests and agricultural interests. The other three conditions would not appear to afford the same difficulty.
The noble Lord, Lord Erroll of Hale, asked me about EFTA, and hoped that there was no question of forsaking or betraying EFTA. I can give him that assurance absolutely; there can be no question of forsaking or betraying EFTA. Without embarking on new assurances,
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because the whole matter has been recently cleared up with EFTA, I should have thought that our relationship with our EFTA friends was healthy at the present time: they understand the position very well.
The noble Lord, Lord Blyton, no doubt was concerned, is concerned, about the interference with our freedom of action. I will not pursue that aspect in detail now, but if we look at the way the European countries have handled their own foreign policies during the time of the Community, or their own internal economic policies, I would feel—and this is certainly the view of the Government—that it is a good deal clearer to-day than it was five years ago that the Community as it functions is not precisely the same entity as the Community as written and described on paper. So as regards those two points, freedom of action in foreign policy and domestic economic policy, our anxieties are not of the same order, or, rather, do not weigh so heavily with us.
But of course since 1962, to be quite candid, and speaking as a champion of this policy, one has to admit that the balance-of-payments question has come to loom larger. It was not in itself one of the five conditions, but clearly it is now a very important issue. And, this being so, any Ministers who in recent discussions would say that they have been supporters of this kind of policy for years are bound to consider very carefully indeed what effects, so far as one can possibly tell, there would be on our balance of payments and on our cost of living. Here, perhaps, I can discuss the issues most conveniently by referring to some of the remarks made by the noble Lord, Lord Kahn, who is one of the leading economists in the country.
The noble Lord confesses himself quite at a loss to understand how what he calls the "malaise", and the difficulties and tribulations of the transition period, can be reconciled with the promotion of economic growth. According to my dictionary, a "malaise" is defined as "bodily discomfort, especially without the evidence of a specific disease." I am not going to accept from the noble Lord that my colleagues have admitted that there will be a malaise. I do not quite know how this phrase has crept in.

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Certainly there will be adjustments to be made. The noble Lord, Lord McCorquodale of Newton, told us earlier with great authority that he has been engaged in adjustments all through his business life; and we gathered from him, I am sure correctly, that they never did anybody any harm. So I feel that the talk of the difficulties and tribulations of a transition period have been considerably overstressed by the noble Lord, Lord Kahn. Certainly, British business does not seem to share his pessimism.
The noble Marquess, Lord Salisbury, attached great weight to the words of the noble Lord, Lord Kahn. If I may say so in a friendly spirit, he has not always attached so much weight to the sayings of theoreticians as compared to practical men. I am told occasionally that what is much more useful than academic experience is a little management of affairs. So here the great business leaders are against him, or at any rate against Lord Kahn.
THE MARQUESS OF SALISBURY: My Lords, I would only say that I regard Lord Kahn as both.
THE EARL OF LONGFORD: Well, far be it from me to disparage Lord Kahn's reputation as a tycoon, but I think he is better known as a political economist. At any rate, we have tycoons here who can speak for tycoons, and there is no doubt that British business does not in any way share this rather painful pessimism of the noble Lord, Lord Kahn, which for the moment seems to have infected the noble Marquess, Lord Salisbury.
May I turn to the noble Lord, Lord Clitheroe, who certainly made a powerful speech. He has explained to me that owing to an engagement, I believe in church, he cannot be with us this afternoon. I am sure he is much better occupied there than listening to me. But I listened to his speech carefully, and I read it carefully. He quoted an article from The Times, with a great deal of approval, on the damage to our balance of payments if we join the Common Market. The article in The Times must of course be read like other documents. But as the Prime Minister yesterday explained, some of the figures which are being bandied about are based on the assumption that nothing whatever comes
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of our negotiations. They are based on the assumption that we go into the Community exactly as it is, which is all right, I suppose, for an academic discussion, but clearly has little or no relationship to the practical situation. We must all assume that if these negotiations are to succeed, as we believe they will, something practical will come from them. So those who make the other assumption are falsified from the beginning.
The truth is—I say this with great respect to the noble Marquess if it is of any interest to him—that I personally would distrust anybody who came out too confidently with some estimate of what the balance of payments in the middle 'seventies will be if we go into the Common Market, compared with what it will be if we do not go in. The noble Marquess seemed to feel that the kind of speculative dogmatism that would lead one to lay down figures of that sort constituted evidence of a practical mind. But I would distrust a man who believed that things of that sort could amount to very much, and if I had any money I would take it out of his business.
If I may still be allowed to use The Times, I should much rather quote the conclusion of their leading article in the same issue from which Lord Clitheroe quoted, which I think we may treat as their summing up.The Times says that one fact is clear, that British business stands, almost unanimously, strongly in favour of the United Kingdom joining the Common Market. So if we can talk about the practical men and the men who know their job, and we put our cards on their experience and prudence, I would myself consider that this view of British businessmen is one of overwhelming significance in this debate. The noble Lord, Lord McCorquodale of Newton, spelt out some of the reasons why they believe that this is so. I will not go into them now, but I think we can accept that this is the conclusion of those who have, in a personal sense, to make the decisions on which the fortunes, net only of themselves, but of their depositors or shareholders, or whatever they may be, will rest.
The noble Lord, Lord Kahn, rather leaned in his argument on the rise in food prices that would follow membership of the Community. I have already discussed with him privately one of his

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phrases, which I will not argue about now. His main point in this connection was perhaps the argument that the prospective rise of 2½ to 3½ per cent. would represent a considerably higher rise for the poorer citizens of the country. This aspect has also worried the noble Lords, Lord Wells-Pestell and Lord Segal, among my own colleagues, and also the noble Marquess, Lord Salisbury. As the Prime Minister said yesterday, we are only too well aware that, whether the increase is 2½ or 3½ per cent., or a little less or a little more, this is a serious matter for the poorer section of the population, those on the lowest incomes.
I am sure that all noble Lords will have been consoled by something which the Prime Minister said yesterday in another place, and also, I gather, on television. In another place the Prime Minister, speaking of these people with the low incomes, said (col. 1065):
"The answer to their problem must lie in social policies, particularly pensions, to ensure that they are not asked to bear a disproportionate part of the cost of British entry into the Community. Rather, indeed, will it be our aim to shield them from any short-term adverse effects."
I hope noble Lords will feel that even since yesterday considerable reassurance has been given on that most important point.
The noble Marquess, Lord Salisbury, however, went on to ask where this money was coming from. Again, I do not think that, looking so far ahead, one can speak dogmatically there. May I call the attention of the noble Marquess to something else that the Prime Minister said just before the passage which I quoted a moment ago. He referred in the same column to the figures of increase in the cost of living, and he said that they should not be laughed off at all, but
"they should be capable of some offset through the reduction of prices of non-food items, for example, imported consumer goods, to say nothing of the possibility of some reduction in taxation as a result of savings in agricultural subsidies."
So that there will clearly be, on the face of it, and looking some years ahead—I think the Prime Minister is wise not to pledge himself about the use of some moneys that will fall into the pool in this way—a considerable sum available to the Exchequer when we switch over from our present method of subsidising agriculture
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to the method of the Community. So the short answer is that on the face of it, although some years ahead, there will be a considerable sum of money available here from the reduction in the subsidies. I hope, therefore, that I have done something, if the noble Marquess was exactly balanced before, to bring him over.
The noble Lord, Lord Kahn, went on to assert that the Government have left entirely out of their appreciation the consequences of substituting over a period of years a new system of indirect taxation for our present one. On this matter I can at least speak with first-hand knowledge. The noble Lord is certainly quite mistaken in thinking that this has simply been overlooked by the Government. I hardly think that, on reflection, he meant to say that. He can hardly suppose that the Government failed to notice Article 99 of the Treaty of Rome which deals with the harmonisation of indirect taxation. I have only time to say a word of reassurance. This whole business of harmonising indirect taxation has proved long and arduous. It was only a few weeks ago that the Community managed to agree on the first step, which will not come into force until 1970. It is unlikely that any harmonised rates will have been settled before our own application is decided, and once we are members we shall be able to play a prominent part in producing a system acceptable to all. I am afraid that I must leave some of the noble Lord's other points for correspondence with him, or possibly for discussion on the next occasion.
My Lords, we are approaching a conclusion. The decision has been based both on political and on economic considerations. Though I would feel myself that it is impossible to separate these two considerations in a great matter of this kind as readily as some find convenient, basically this is a political decision. The economic arguments to me, and I think to most of my colleagues, seem to favour entry, but it is the political arguments which seem to us to be the strongest. On that matter we had with us a number of noble Lords, certainly my noble friend Lord Silkin who spoke very strongly about the political arguments. We see great opportunities here for us, as the noble Lord, Lord Carrington, pointed out, for Europe, and for the world.

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A point which was made with much force by the noble Lord, Lord Butler of Saffron Walden, was the balancing role which we can play in Europe. Certainly we do not see this policy as being aimed against anybody. We are convinced that it is in everybody's interest. We feel sure that a Europe united economically and developing its full economic and technological strength will have a better role to play in the future political development of the world than ever it has done in the past. We think of our role within the Atlantic Alliance, in promoting a detente between East and West, and our role, which was stressed by the noble Lord, Lord Ritchie-Calder, of giving far more assistance to the underdeveloped countries of the world. There are those of us, certainly I am one, who see our way beyond this stage to an even greater vision, a vision of an even wider unity within the world. I myself think that this is the one clear step which we can take at this time in the direction of ultimate world government.
Therefore, I leave these thoughts with the House. I have done no more, as Edmund Burke said, than state a case and, as he said all those years ago, many things occur. We cannot be sure, as we come together today, whether our application will succeed, whether the negotiations will succeed, and we cannot tell what will happen thereafter. Certainly we in the Government believe that success is not only possible, but probable; but it is only probable so long as we do not at any time suppose that the Common Market is going to offer us an easy way out, a sort of magic carpet which will heal our woes without any great exertion by ourselves. We shall only succeed now and later if we view this step as a tremendous and glorious challenge to greater efficiency, greater exertions, and much more dedication than in the past. Whatever the outcome, let this at least be said of our generation, when the history of this period comes to be written: that we responded fully to a unique opportunity, that we took up a position inspired in the first place, not ignobly by enlightened self-interest, but on a deeper level by concern for all humanity. Let it be said that at this moment of destiny we stood where it was an honour to stand.
On Question, Motion agreed to.

CIVIL AIRCRAFT NEEDS
6.26 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE rose to draw attention to the urgent need for Government decision on the development of new British civil aircraft; and to move for Papers. The noble Lord said: My Lords, I regret very much having to detain some of your Lordships at this late hour—
LORD FERRIER: No, no.
LORD BALFOUR OF INCHRYE: —but as you know it was not of my seeking or making. Nevertheless, in spite of the hour I feel it necessary to pursue this debate, which raises a matter of vital national importance, whether we be in the Common Market or whether we be outside it. My problem is to try to put briefly and in fairly simple language various rather complicated questions.
It is accepted that it is essential for British civil aviation to be world-competitive, if world-competitive means having the right operational equipment at the right time; and to achieve this demands Government decisions which are well overdue. It is no easy task for anyone concerned, Government or otherwise, to forecast our needs during the 'seventies. Indeed, forecasting up to 1980 requires a mixture of deduction and crystal-gazing. The deduction involves consideration of what can be safely expected from development of the present type of aircraft. The crystal-gazing embraces guessing at results of new developments which are still in their early stages, and also guessing at the world conditions which may exist in the 'seventies and which have their impact on tourism, travel habits and the money which can be expended by the travelling public.
Britain's pattern of civil aviation divides broadly into three sections. There is the long haul, straddling the world; there is the medium haul over Europe; and there is the short haul, which comprises the short journeys to Europe, and our domestic requirements for aircraft. It is on the medium and short haul that I should like to speak briefly to-night, in relation to which decisions are both urgent and overdue. The long haul of British Overseas Airways I leave out of

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my remarks, because they have a fine fleet, their future is already decided, and is largely tied up in the success of the Concord. On the medium and short haul a vital national interest is in jeopardy, and every week's delay in decision is time lost for Britain and given to our competitors. I should like to interpose here words which I think will convince your Lordships of the importance of short and medium hauls. Last year that system carried 7 million passengers. It had a revenue of £100 million, of which £30 million was earned overseas.
May I give a brief summary of the essential needs for the short and medium haul if we are to remain competitive and are not to be outmoded and short of capacity in the early 'seventies, when the existing types of aircraft—Vanguards, Comets, Viscounts—are all phased out. The short-haul requirement for British European Airways, and for private enterprise firms as well, has been broadly met by a new edition of a 100-seater aircraft called the BAC 1–11, and 18 have been ordered for £32 million, with an option on a further six. So I think we can say that the short haul is looked after.
It is for the medium haul, the vital European medium haul, that the need remains unsatisfied. That need is, broadly speaking, for a 180–200 seater aircraft by 1970–71. Thirty will be needed by B.E.A., worth about £120 million, as a starting order, so your Lordships will see that it is no small order that we are discussing. Looking at the way the medium-haul need for 1970–71 onwards is to be satisfied, one looks at once at the Government's dilemma. There is a project for what is known as the air bus—the Anglo-French-German aircraft—a 300-seater, but it would not be in operation before 1975. I believe that there was a meeting on the Continent to-day about that.
The point I should like to drive home, and I trust that the Government will not counter it, is that while B.E.A. are not averse to that air bus it does not fulfil the requirement between 1970 and 1980 for a 180–200 seater. Also, as I say, it will not be in operation until 1975, when I believe the demand for that aircraft may be very small. A distinguished economist named Mr. Wheatcroft recently carried out on behalf of Rolls Royce a
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survey of likely needs of aircraft in the 'seventies. His conclusion was that only a very limited number of aircraft seating more than 200 people would be required in Europe for a great many years. I believe that B.E.A. would require about six of those, for a quite different role from that of the medium haul aircraft. Therefore, we must agree that the air bus will not satisfy the need for the 1970s.
At once one asks: how can that need be satisfied? There is a British aircraft, designed by the British Aircraft Corporation, called the 2–11. It is a 200-seater, which is just right; and it is about 4 per cent. cheaper to operate than its American counterpart, which is obviously an advantage. It is as silent as the Vanguard, which is about the only type that can operate without a noise limitation. So here is a tremendous new development in this aircraft, one that must appeal to everyone in this country and must appeal to the world's markets—the silent aircraft of the future. That aircraft should command a world market. If the Government would give a decision now it could be in operation by 1971. The cost of development is, I believe, about £100 million—£50 million for the engines, £50 million for the airframe.
I understand that the Government say that there are not the national resources available for the development of the air bus, which I admit has a political aspect, as well as for the 2–11. I think that is the measure of the Government's dilemma. If the Government can say to-night that they have the resources both for the air bus, to which they seem rather wedded, and for the development of this splendid BAC 2–11, then I can sit down happy and most of your Lordships need not take part in this debate, because the problem will have been solved. But I understand that this is not so. The Government say that there are not the resources available for both, so they are faced with the need to look at alternative courses.
It seems to me that there are three alternative courses, assuming that there are resources available only for either the air bus or the BAC 1–11. The first is to withdraw from the air bus project, and give the priority of resources to the development of the 2–11. That would be a politically difficult decision for the

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Government to make. I am no great believer in the air bus as a substitute for the 2–11; in fact, it would not do. To fly an air bus of 300 or 400 people, say, to Paris is going to reduce the frequencies which the public can enjoy. With aircraft carrying up to 200 people there can be a better frequency than if there are one or two aircraft each carrying 400 people.
I shall not develop the question of safety. I am a little fearful, with the art in its present state, of putting 400 people in one aircraft. Many years ago I started to learn to fly, and I learned a very healthy respect for the law of gravity—a respect which has not diminished at all through many years of experience. I think that if God had meant us to fly he would have given us wings. We are all the time having to overcome gravity, and none of us who leaves the ground either as a pilot or a passenger, need ever forget that fact.
The second alternative would be to fill the gap by allowing British European Airways to buy an American aircraft, the Boeing 727, for delivery in about eighteen months. That would mean reversing the Government's present direction to British European Airways that they must buy British. The third course would be to force British European Airways, by the issue of a direction, to buy British aircraft which are not best economically for the Corporation—an enlarged Trident or a rebuilt VC 10; and even for those many millions of pounds would have to be spent on development costs. My real objection to that is that the Government would at once be called upon to fulfil the undertaking which they have given, to make good, by some form of subsidy to B.E.A., any penalty which the Government forced upon them by insisting on their having unsuitable aircraft. It would be a deplorable step to force B.E.A., after many years of successful economic operation, to become a customer of the begging, bowl. That is the worst alternative.
In considering these alternatives I would draw the Minister's attention to the £100 million which is reported to be the development cost of the 2–11. I think it is unfair in an argument to load all that cost upon an initial order. It could be spread widely, on the assumption
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that there are going to be other orders beyond that of B.E.A. I remember so well (at that time I was a member of the Board of B.E.A.) when the Trident was being developed, and there was great reluctance on the part of Rolls Royce to develop the Spey engine. Terms were agreed between the Government, the Corporation and Rolls. That engine was developed and is now a world winner. The demand is tremendous and cannot be satisfied. Who is to say that the new engines and the new airframe of the 2–11 would not equally be world winners? Therefore, I do not think one should turn down the 2–11 simply because the whole of the £100 million is loaded on the first order.
I put in order of preference the various alternatives to fill this need which I trust I have made clear to your Lordships. My first choice would be to have both the 2–11 and the air bus, if the resources can be stretched. If they cannot, my second preference would be the 2–11 and no air bus. My third alternative would be the American 727 to fill the gap, and the air bus. My last alternative—and the worst of all of them—would be to force B.E.A. to buy uneconomic British aircraft and also have the air bus.
These alternatives must have been under active consideration (that terrible Whitehall phrase!) for a very long time—too long, I am afraid. The decision is a pressing one. It is urgent, and it is overdue. Three Departments of Her Majesty's Government are concerned: the Treasury, the Board of Trade and the Ministry of Technology. It is open talk among those who know anything of the air world that there are differences between the Departments within the Government as to whether the 2–11 or the air bus should be developed. When the new structure for the Ministry of Technology was debated in your Lordships' House, some of us, including myself, saw dangers in the divided responsibility between the Board of Trade, responsible for aircraft operation, and the Ministry of Technology, responsible for selecting the type. We foresaw this dichotomy of responsibility; and I am afraid that, through this indecision, we are to-day seeing the results of that divided responsibility.

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I hope the Minister will say that I am wrong and will be able to speak tonight with a voice representing the collective Government view. I hope to hear tonight whether the Government quarrel in any serious way with my picture, which I have tried to paint fairly, and with the alternatives I have put before your Lordships. I hope to hear that a decision has been reached, or that the Government are on the brink of a decision—because I repeat, in conclusion, that every week counts. So serious is the need for a decision that, speaking for myself, even if it were the wrong decision I should prefer it to be taken rather than for there to be no decision at all. I beg to move for Papers.
6.43 p.m.
EARL JELLICOE: My Lords, I am grateful to my noble friend for initiating this debate, for the typically pungent and informed way in which he has put his case and for his pugnacity in pursuing his Motion after our long discussion on the Common Market. I should myself welcome a wide-ranging debate on the aviation industry and on civil aviation. There is much that needs our examination. There is the new Whitehall set-up for aviation, to which my noble friend referred. How is it in fact creaking along? There is our airport policy. Have we a national airport policy? There is our whole approach to co-operation in these matters with. Europe.
On that point I should like to say two things. I personally believe in this collaboration. If that technological community which the Prime Minister has recently discovered is to be really meaningful, it should extend to all the advanced forms of technology—computers, atomic energy and so on, and most emphatically, of course, to aerospace. This is widely accepted. But to preach collaboration is one thing; actually to achieve it and to make a commercial success of it—and this is the rub, especially with civil aircraft—is another thing. This whole area is one to which a great deal of careful and critical thought might well be given—more, I suspect, than has yet been given. On another occasion I should like to give your Lordships my layman's views on it. However, my noble friend has deliberately drawn the area of discussion this evening fairly tight, and I shall follow him in confining almost all of my remarks to the
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two projects to which he has particularly addressed himself, the BAC. 2–11 and the air bus.
Before turning to them I should like to put a couple of brief questions to the noble Lord who will be replying, one on a national project and one on an international project. Can the noble Lord, when he replies, give us a progress report, however brief, on Handley Page's admirable Jetstream? In particular, can he confirm the report which I noticed in the Daily Telegraph to-day that the United States Air Force may be on the point of placing a very important order for this aircraft?
Can the noble Lord also answer three specific questions which I should like to put to him about the long-haul aircraft (if my noble friend Lord Salisbury will forgive me for that phrase), the Concord? I gather that this great and greatly expensive project is going well, but on three matters I have some disquiet. In the first place—and this is very much a case of the pot calling the kettle black—there is, I have heard, a degree of weight escalation with the Concord. How significant is this, and how are the firms coping with the weight reduction programme on the prototypes? Secondly, there is the question of sonic boom. If the Concord were not allowed to operate supersonically over land, we know that its market would be almost halved. Very important commercial consequences would flow from that. But the Government, by their own admission, are still very much in the dark on this very vital issue. The Minister of State said in another place a month or so ago:
"…it will be necessary to have a more complete evaluation, particularly by tests conducted over cities."—[OFFICIAL REPORT, Commons, 3/2/67, col. 1017.]
He added:
"…this problem of sonic boom is one about which decisions will soon have to be reached."—[Col. 1020.]
"Soon", he said. That was in early February. What is now the position, three months later, in early May, on this particular problem?
Finally, what about the actual production of the aircraft? The noble Lord, Lord Shackleton, was blandly reassuring about this when we quizzed him on the Concord on February 20 last in answer to an Unstarred Question by my noble friend

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Lord Kinnoull. But in the British Aircraft Corporation Newsletter, which came out at almost the same time, the chairman of B.O.A.C., Sir Giles Guthrie, was reported as expressing anxiety over the lack of Government decisions on production.
"Within the past two weeks"—
these are Sir Giles Guthrie's words—
"I have advised the Government that production of the Concord"—
and by that he explained that he meant the actual production models and not the prototypes—
"should start".
My question to the noble Lord simply is: has it? This is given some extra point by the American President's decision to proceed with the American SST.
My noble friend has made a very strong case indeed for the BAC. 2–11, to which I should now like to turn. As he has said, B.E.A. are keen to buy it, and the views of B.E.A.—one of our great industries, and one of our great earners of foreign currency, as my noble friend has explained—should command the Government's careful respect and attention. They have costed the project extremely carefully, and although I gather that they do not entirely accept the makers' full claims, they are confident that it will be substantially cheaper to operate—some 4 per cent. per seat mile, I believe—than its nearest competitor, the Boeing 720–200 series. Apart from this, as my noble friend has said, the Rolls Royce engine with which it would be armed would be extremely quiet. According to their calculations the other possible British types would be much more expensive to operate. This, of course, would entail substantial operating subsidies.
The Minister in another place has accepted that B.E.A. requires interim aircraft. He apparently regards the BAC. 2–11 as an interim aircraft. I would only suggest that he is wrong here, and I think I should carry my noble friend with me in that. Both B.E.A. and other European operators are going to require aircraft of this type for a very long time to come. air bus or no. It would, in fact, be complementary to the air bus and fill a definite requirement from the early 1970s
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right into the 1980s. In any event, as my noble friend has said, B.E.A. have stated their requirements very clearly.
The Government are naturally worried about the considerable research and development cost involved here. I hope the noble Lord can expand on these points when he comes to reply. My noble friend has pointed out that it is unfair—or might well be thought unfair—to load all the research and development on to this particular aircraft. He has alluded to its export potential. In another place the Minister of State poured very cold water on the export possibilities of this aircraft. Our study—that is, of the export potential—he said
"does not yet give us any great cause for enthusiasm".
May I put these questions to the noble Lord who will be replying? What does that little word "yet" mean? Does it mean that the Government are still studying an export market for this aircraft? If so, how far have they taken this study? How can they explain this pessimism if B.E.A. have done their sums right and this aircraft will, in fact, be substantially more economical to operate that any of its rivals? Would the noble Lord not agree that in aviation it is not always the early bird that scoops the pool? Time and time again the great American aircraft manufacturers have stood back and let others, often ourselves, do the pioneering work with new aircraft concepts and then have stepped in and creamed off the market. I should be very grateful if the noble Lord who is to reply would deal with those points.
But, my Lords, in probing the Government intentions on the BAC. 2–11 I am not arguing that we should jettison the project for the European air bus, the "Eurobus" as it is now termed across the Channel. I believe that an aircraft of this sort in the 300-seater range—give or take a dozen more or less—is bound to come. The major European airlines, including B.E.A., have all stated a definite requirement for it—a requirement, I think, in rather larger numbers possibly than my noble friend has suggested. I personally believe that it will be required, just as the 200-seater will be required. The two types, in my view, are complementary and not mutually exclusive. We can be sure of one thing: whether or not we

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in Europe, or in England, build this air- craft, the Americans (and possibly the Russians) will certainly build one. Lock-heeds already have a project; and the great new combine of McDonnell and Douglas are studying this actively. If we are going to make a success of it we should take the plunge very soon.
It is not very easy, my Lords, to discuss this project sensibly when, at this very moment possibly, the Ministers concerned, French, British and German, are discussing it across the Channel. But I believe it is a project of great promise. The requirement is clearly there; it is well within the technical capabilities of the European aviation industry and it offers the possibility of a partnership in the development of a major civil aircraft not merely on the Anglo-French plane but also on the wider basis of Anglo- French-German partnership. It is not unimportant to bring the Germans in here. I trust, therefore, that, subject to three conditions, we shall learn to-day or tomorrow that the Governments concerned have taken a firm decision to proceed with the air bus.
But the conditions in my view are crucial. The first is the recognition of the need for speed. I believe that if the three Governments act quickly it could come into operation before 1975, the date given by my noble friend. The second requirement is that the Governments should be able to deliver the goods; namely, the market. It would be absurd if they embarked on the great investment needed to develop this aircraft only to find at the end of the day that their national airlines preferred the American product. What assurance can the noble Lord give us that at least the national airlines of the potential consortium, Lufthansa, Air France, Air Inter, and B.E.A. will take the air bus if the Governments decide to develop it? Finally there is the power plant. The choice is between the American engine, the Pratt and Whitney, and the Rolls Royce engine, the RB 207. Some of the potential operators would have a preference for the American engine because the same engine is already going into the Boeing 747s that they are buying. That is understandable. Equally so, in my view, is the British Government's reported insistence on the acceptance of the Rolls Royce engine. After all, this air bus would hardly deserve the title of "Eurobus" if it had American engines. All in all, my
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personal view is that we should continue to insist on the Rolls Royce engine for this aircraft if it is built—that is, unless the smaller version of the Rolls Royce engine goes in the BAC 2–11 and there is neither the capacity nor the financial resources to develop both.
My Lords, those are my summarised views. I will not detain your Lordships because we have had rather a long day already; but I should like to mention two further aspects of the BAC. 2–11 complex of problems, which appear to me to have weight. In the first place, they highlight one of the difficulties which exist at the moment, the imbalance in Europe on the air engine side. On the one hand, we have in Rolls Royce and Bristol Siddeley a huge capacity; on the other hand, we have an advanced air engine industry in France, but a small one by comparison with that here. This means that for any major project there are always overwhelming claims for putting British engines into the aircraft. That, in turn, means that there is a strong—and natural—pressure from the other side of the Channel that the French should take the lead in the airframe. This is a difficult problem because, unless we are very careful, it could soon lead us to a position in which our airframe manufacturers are taking second place, are merely becoming sub-contractors.
On the airframe side, the French take the lead already in the Jaguar; they may take the lead in the Anglo-French variable geometry aircraft; and they could take the lead in the air bus if the Rolls Royce engine goes into it, as I hope it will. This is a serious problem. I do not pretend to know the answer to it. I have ideas; but this is not the time for them. I hope that the Government are fully seized of the situation which could be developing as a result of what in itself is a very fortunate thing, the international strength of the British air engine industry.
The second matter to which I would briefly allude is the political importance of these decisions. Like my noble friend, I hope that the Government can tell us that they are, at least, sympathetic with the development of both of these important projects. I hope they will give careful weight to what my noble friend has said about the 2–11. Equally so, I hope they will be fully aware of

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the damage which would be done to nascent European co-operation in aviation matters if we were, at this rather late stage of the game, to back out of the air bus project. I do not view this in political terms alone. I believe that technologically a lot is at stake in Europe.
Be that as it may, my Lords, I should like, in my final words, to endorse what has been said by my noble friend: that whatever decision the Government reach on the BAC. 2–11, they owe B.E.A. an early decision. B.E.A. cannot be kept hanging round any longer for a decision in this crucial era. I would remind your Lordships that only ten weeks ago, on February 20, the noble Lord, Lord Shackleton, confirmed that the Government had taken a firm decision that B.E.A. should adopt British aircraft rather than American. I was not surprised to hear this, as it was entirely in line with what the Government said last summer. But only a month later, Mr. Stonehouse told another place that the Boeing 727 offered one of the possibilities by which the B.E.A.'s requirements could be met. I suppose that with this Government one should not be unduly surprised if the firm decisions of February melt sometimes, like snow, by the Ides of March. But what we deserve to know now, in May, is what firm decision the Government have taken or are proposing to take, on this matter. Can the noble Lord tell us? I shall await his reply with much interest.
7.2 p.m.
EARL AMHERST: My Lords, I should like to join the noble Earl, Lord Jellicoe, in his praise for the way in which the noble Lord, Lord Balfour of Inchrye, initiated this debate—a debate, if I may say so, which has come none too soon. Before I go on, I think that it would be proper for me to tell the House that as I have now left the services of the British European Airways Corporation I do not appear as a spokesman for either of the Corporations, or, indeed, for any other air company, and that I have no interest to disclose.
Like the noble Lord who opened the debate, I propose to confine my remarks to the short-haul, and if my remarks duplicate or perhaps amplify some of the things already said, I must offer my apologies. But I hope to be able to
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approach the matter in a slightly different way. It may be useful to consider what are the markets for the British manufacturer of short-haul aircraft. In the first instance, I think it must be the operators in the United Kingdom and, depending on the quality of the end product, delivery dates and general experience of the U.K. operators, sales to the rest of Europe and to the short-haul operators in the rest of the world should follow. It might, however, be useful and wise to enter a caveat not to count too much on the U.S.A., Canada and South America as markets, as with the exception of the very fine sales record for those excellent aircraft, the Vickers Viscount and the BAC. 1–11, these countries have for many years bought mostly American, and have similarly tooled and equipped themselves for repairs and maintenance. Therefore, unless the British manufacturer comes up with something really startling, they are unlikely to change their tune.
In any case, I think that everywhere, including the United Kingdom, British industry will have to face continuous and fierce foreign competition, notably American. If the British manufacturer is to keep his end up, he will have to see to it that he can, and does, exercise intense, energetic and effective sales effort. We might perhaps look at our immediate customers. Catering as it does for the large majority of regular scheduled services in the United Kingdom and in Europe, I think it is correct to say that B.E.A. is the largest British customer for short-haul aircraft. That is not to say that the independent companies do not also provide a considerable demand. They do, but B.E.A. is the biggest customer. Their combined experience with a new type of aircraft could have a telling effect on the sales in the rest of the world.
According to my information, the present position is as follows. The Vickers Viscount, which remains a first-class aircraft, has largely been replaced with the BAC. 1–11. Aircraft which will require replacement in the immediate future are the Vanguards and the Comet IVs. What I mean by "the immediate future" is around the 1970s. By that time, the delivery of the BAC. 1–11 500 series should have been completed, thereby enabling B.E.A. to replace a large number of its Vanguard fleet for passenger-carrying work.

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The reason why Vanguards need to be replaced is mainly because they belong to the turbo-prop type of aircraft which, in the international field, and indeed on some of the internal U.K. routes, is becoming more and more non-competitive, largely for the reason that the travelling public is tending increasingly to regard propellers as old-fashioned and not "with it". They demand full jets. The status symbol, whatever that is, may have something to do with it. This is not to say that the Vanguards will entirely disappear from the scene by the 1970s, because they will probably be used for freighting. But they will certainly not be carrying the number of passengers that they are carrying to-day.
My Lords, the reason for the replacement of the Comet IV is that by 1970 the capacity of that aircraft will not be sufficient to cater for the increase in demand which it is now estimated will be the order of the day. They could be serious losers, even on the high density routes. It should be remembered that, splendid aircraft though they are, the Comets have never been cheap to operate.
What are the offers? The choice of equipment in the short-haul category seems to be the VC 10, modified for short-haul operations; the Trident 3; the Boeing 727–200; the BAC. 2–11, and the air bus. The VC 10, even if modified, is said to be hopelessly expensive to operate over short-haul routes, and on this count alone would seem to be ruled out of court. It must be remembered that this aircraft was originally designed and built for long-haul and, as your Lordships know, machinery seldom works well if it is changed about to meet a demand for which it was not designed. The Trident 3, while considerably less expensive to operate than the VC 10, is estimated as being likely to be a very high cost aeroplane.
The seat-mile cost of the Boeing 727–200 series, with a slightly larger capacity, is said to be about 5 per cent. lower than the Trident 3. But this is an American aircraft, and I should think there is considerable doubt that the British Treasury would countenance the expenditure of dollars necessary to buy it, quite apart from the political rumpus which would surely erupt if the British State Corporations were allowed to go further "American" than they have
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already done. So it seems that the Boeing is a non-starter.
The seat-mile cost of the BAC. 2–11 is reported to be likely to be at least 10 per cent. lower than the Trident 3 and about 5 per cent. lower than the Boeing. The planned capacity of about 190 seats is said to be just about right for the early 1970s. As the noble Lord has already said, I am told that the BAC. 2–11 is expected to be an exceptionally quiet aircraft, possibly the quietest yet, an aspect which could well make it an attractive proposition as the question of aircraft noise becomes more and more acute.
Last on my list comes the air bus, which I believe is to be the result of a tripartite effort involving the British, the French and the Germans. Not a great deal seems to be known about the project yet, other than that it is said to have a capacity of some 300 seats, which I am told is considered far too big for commercial successful operations on short-haul in Europe, even up to the late 1970s. Whether this aircraft is to be powered by the new Rolls Royce engine RB 207, for which I believe there is a tremendous sales potential, has still to be resolved, as indeed, according to a recent newspaper report, is the division of the development cost as between the partners. Unless these questions—and there may be others—are reasonably quickly resolved, the delivery dates may go back and back, even beyond the 'seventies. According to present estimates, it looks as if the development cost will come out something like this: the Trident 3, £15 million; the BAC. 2–11, £50 million for the airframe and £50 million for the engines—a total of £100 million. The British share in the development of the air bus is so far said to be probably around £100 million. The full cost will be very much more.
To sum up, the choice seems to narrow down to the BAC. 2–11 or the air bus. My information points to the BAC. 2–11 as best filling the Bill. If the Government would allow B.E.A. to place an order for this aircraft now, I am told that it could be ready for delivery in the early 'seventies. The air bus seems at the moment to be a project for which a number of important questions remain to be resolved, not the least of which is how it is to be powered, delivery dates,

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final capacity and the split-up of the production cost between the partners.
I should like therefore to ask the noble Lord who is to reply four questions, of which I have given him prior notice. They are: first, are B.E.A. and/or such independent companies as may wish to do so, to be given governmental permission to place an order now for the BAC. 2–11 or must they accept the air bus and wait its production? Secondly, should B.E.A. and others be permitted to place an order now for the BAC. 2–11, will the Treasury accept making payment for the development costs without delay, so that the delivery in the early 'seventies will not be held up? Thirdly, does the decision rest on Common Market politics or on the reasoning of commercial airline operation? Fourthly, if the decision favours the air bus and so results in the exclusion of the production of BAC. 2–11 will the British share of the production fully take up the British manufacturing effort, including staffs and personnel, which would otherwise have been occupied in the production of BAC. 2–11?
7.14 p.m.
LORD OGMORE: My Lords, perhaps your Lordships will excuse my intervening at this late hour. It had been my intention to put my name down earlier but, owing to the way in which the debate has been going backwards and forwards with great velocity, I was not sure whether I should be able to be present. I should like to say a few words in support of the noble Lord, Lord Balfour of Inchrye. First, I should like to thank him, on behalf of my noble friends and myself, for putting down this Motion. I would also congratulate my noble friend Lord Amherst on his speech. I am glad that he is now able to speak in your Lordships' House, because he has a vast experience of aviation over many years. Not only that: he has something which is not always joined with that, an up-to-date experience. He has been able to give us the benefit of that to-night. His analysis of the problem, by taking all the aircraft, then winnowing them out, was impressive.
The trouble is that aircraft manufacturers have a very limited number of customers. I do not think that there is any other industry which has so few.
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In the old days horse-breeders did not depend on the cavalry; firms who made railway engines did not depend on the engineering department of the War Office; the motor car manufacturers did not depend on orders for armoured fighting vehicles. But, because the size of fleets are so small, the aircraft manufacturers have to depend largely either on the military requirements of this country or on Government subsidy. I suppose that B.E.A. has only some 70 aircraft. When I went into this a few years ago, I found that the total number of civil aircraft in the world is about 2,000, and I notice that the estimate of need by I.A.T.A. for long-haul supersonic airliners is between 200 and 350.
We have to remember that aircraft firms are extremely important to the economy of the country and cannot be regarded like the manufacturers of other products. As military requirements are getting less and less, it means that the aircraft firms are more and more dependent on Government subsidy. The noble Lord, Lord Balfour of Inchrye, has limited the debate to B.E.A.'s need for medium-haul and short-haul aircraft, but I hope, with the noble Earl, Lord Jellicoe, that at some time we may have a wider debate, because there are a number of important questions that I should like to put to the Government in the hope of getting answers.
One of the difficulties that the noble Lord and I foresaw when the Ministry of Aviation was destroyed or put into liquidation, is that there is no Ministry solely concerned with aviation, particularly with civil aviation. There are two Ministries concerned, both of which have a large number of other pressing problems upon their desks. I feel that it was a great mistake to do away with the Ministry of Civil Aviation. We are seeing some of the results of that decision and we shall see more as time goes on. One problem that is now being wrangled over by the Ministries concerned is where the third Airport for London should go, whether at Stansted, in the middle of Essex, or at some other place in the South-East of England. I will not advocate any particular place, because I shall be held to be a supporter of a certain site. But this is the sort of decision which should be taken immediately.

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This is a question between the BAC. 2–11 and the 300-seater air bus. Like the noble Earl, Lord Jellicoe, I cannot see these as competitors, as alternatives. I think that we must go for the aircraft that B.E.A. want. If we were a board of directors, sitting around the table, and not wrangling Government Departments, I am perfectly certain that having heard what we have heard to-night we should say that we would go for the BAC. 2–11. It is British, and it is going to be a first-class machine, by a tried maker, B.A.C., with a first-class engine from Rolls Royce, the best engine makers in the world. It is the size B.E.A. want—a 180-seater. It can come into operation at the time they want. There does not seem to me to be any argument. If, for the sake of General de Gaulle and the Germans, we build a big air bus carrying 300 or more, we shall produce an aircraft that no airline either wants or will ever use—one, by the way, that has hardly got off the drawing board. If it is necessary for our friendship with Europe, well and good. But it is not something that we should impose on B.E.A. They are a commercial undertaking; they have to carry passengers and make a profit. They want an aircraft which can meet their needs.
We have seen these monsters before. There was the Brabazon, which was an enormous machine. That was too big for the time. Other smaller machines caught up with it and passed it. The Brabazon cost, I think, £12 million, which was a lot of money in those days, and, so far as I am aware, it never carried a passenger. There were the Princess aircraft on the Solent. I see that they are now being scrapped. How many millions they cost, I do not know. But they were to carry 200 or 300 people. I went in one of them, and it was like going into a cathedral. They never flew with passengers. I would not mind betting that this will happen with the air bus. It will be found that it is another aerial white elephant like the huge aircraft of the past.
There seems to be something in Government Departments: every now and again somebody gets a rush of blood to the head and decides that we must have these monsters. I think that their mothers must have been frightened by a whale at some time. As a matter of fact, what
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is wanted is an aircraft not much bigger than those in service now.
Then there are other problems. Have the present divided Ministry and the officials contemplated the effect of trying to land 300 seaters at London Airport or —
LORD FERRIER: Turnhouse.
LORD OGMORE: Well. they would not get into Turnhouse; they would have to come in backwards. It is difficult to get into Turnhouse at all. But what about Manchester and these other places? Have these problems been contemplated? If so, what arrangements are being made about them?
I entirely agree that this is a decision that must he taken here and now. But I do not give the latitude so generously given by the noble Earl, Lord Jellicoe, and the noble Lord, Lord Balfour of Inchrye. I would urge the Government to go for the BAC. 2–11 and treat the air bus, as I am sure it will be, as a big mirage and not as a practical flying aircraft.
7.22 p.m.
THE EARL OF KINNOULL: My Lords, when I saw my noble friend's Motion on the Order Paper I hoped very much that it had been framed primarily to discuss the urgent problem facing the Government over their policy for short-haul aircraft projects. I am glad that my hopes have been more than fulfilled. I should like to confine my few remarks, as other noble Lords have done, to the two British projects in this field; namely, the European air bus and the BAC. 2–11.
What worries me about the Government's immediate policy of the short-haul aircraft is that certain fundamental assessments and conclusions which are normally common ground between Government, manufacturer and operator appear at present to be very much in dispute. May I start with the assessment of future passenger traffic requirements? It is, I think, agreed by all parties that in Europe air passenger traffic is rising on average 12 per cent. a year, and in America something like 20 per cent. a year. To cater for this increase, it is also agreed that the present aircraft in service, which are designed to carry between 90 and 135 people, will hardly be adequate to cope with the increasing volume of traffic within the next five years, and certainly not within ten years.

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It is on this point that the Government and their advisers, on the one hand, and the manufacturers and airline operators and their advisers, on the other, appear to disagree.
Here perhaps I should make it perfectly clear that it seems to be not only B.E.A. who differ from the Government, but also the other airlines, both in Europe and in America. The Government claim, as we have heard, that within the next six to seven years the prime need for the world market will be the 250 to 300 seater aircraft, and that the 180 seater, although required possibly between now and say 1973, will command only a limited stopgap demand during this interim period until the larger aircraft come into service.
The Minister responsible, as my noble friend Lord Jellicoe has already pointed out, has gone on record as saying in another place on March 21 that the 250 to 300 seater European air bus, if it receives the go ahead, will have a committed market of 100 aircraft before the project even begins production, a potential European market of 300 aircraft, and a potential world market of between 800 and 1,000 aircraft. I understand that both BAC., who cover a world-wide requirement, and B.E.A. have formed a very different view. They have formed the view, as I understand it, from two independent studies, that the prime demand over the next ten to fifteen years will be for the 180 seater, with a world market potential of between 1,500 and 2,000 aircraft, and that the 250 to 300 seater, although important, will not be required in anything like the large numbers suggested. Their argument, as I understand it, is simply that the 300 seater air bus will be needed for peak periods of the day, but that for the remaining 80 per cent. of the time the 180 seater will be quite large enough to provide a fast and frequent service: and it is the fast and frequent services that the airline operators consider so important.
It is my information—and I may say it is only a whisper—that the independent study reports on the European air bus—and I particularly have in mind the Wheatcroft study—have shown a very disturbing picture of the potential market of the European air bus. These studies say that the air bus is already two to
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three years behind the American version, and that when produced it will be more expensive. Due to this, it seems to have little hope of competing in America with the American versions; and in Europe its immediate potential is something in the region of a mere 30 aircraft.
As this figure seems in such variance to the Government's statements, perhaps the noble Lord when he comes to reply will advise the House what the Wheat-croft report and the BAC. report have actually said on the potential air bus market. And would the noble Lord also give us, at the same time, the Government breakdown figures about the 100 air buses that they have claimed will be already committed should the project proceed? I presume that this figure is based on orders being placed jointly by B.E.A., Air France and Lufthansa.
If one accepts the argument that there will be a need for the 300 seater air bus, and an even greater need for the 180 seater aircraft, one sees at once, despite the Government's view, an immensely exciting opportunity available for the all-British BAC. 2–11 project. It has the chance, if developed, of grabbing a slice of the world market which, as I have said already, has been forecast at between 1,500 and 2,000 aircraft. This BAC. 2–11, although still admittedly only in its specification stage, has, I believe, an immense advantage over other new aircraft. It comes from the same stable as its very successful elder brother, the 1–11. As the House will know, the 1–11 is an outstanding aircraft, and it is the only British aircraft since the Viscount to have broken into the tough American market, where the "buy American" policy operates so rigidly. The 1–11, I am told, has a present sale figure in the United States alone amounting to 64 aircraft, at a figure of 73 million dollars. Its present export sales throughout the world total 129 aircraft, and it is with 16 overseas airline companies. Performance is superb and (I think this is an interesting point), it seems that the foreign airline companies themselves are urging the development of the 2–11.
Why do they do this? For the very simple reason that its only rival at the present time in the 180-seater range appears to be the Boeing 727. Admittedly, this aircraft is already flying, and has a three to four year advantage over the

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BAC. 2–11. But it has a number of serious economic drawbacks. It has been criticised for being very noisy—a most important factor to-day. It has been criticised for a poor safety record, and a bad airfield performance, and poor economics; and, perhaps most important of all, it seats only 155 passengers and has come to the limit of its development.
Weighing up both the Boeing and the 2–11, it is my belief that if the Government announced the development of the BAC. 2–11 to-morrow, option orders for it would immediately be placed by a considerable number of overseas companies. In view of such potential, one is forced to ask the Government whether the British aircraft industry would be making the best use of its existing resources if they ignored this development. There is, after all, a possibility, at a conservative figure, of over £1,000 million-worth of exports in this project. One is forced again to ask the Government what will be left for the key B.A.C. design team if this project is scrapped. Will this be yet another example of accelerating the brain-drain to America? Yet another question comes to mind. What will happen to the employees of B.A.C., the 12,000 men who could so profitably he employed in this project? Will they become gradually redundant?
Having said that, and described the immense potential of the 2–11, one finds, I have noticed, on further research, that its future in fact rests not so much with a Government development contract for the airframe, but almost entirely on a decision by Rolls Royce. They hold the key to whether the project ever gets off the ground at all, because the 2–11 requires the development of the new technology engine, known as the RB. 2–11; and no existing engine, I am told on good authority, would meet its requirements. But Rolls Royce have said—and I do not think there is any dispute about this—that they have only the resources to develop one engine at a time, and if they concentrate on the 2–11 engine they will be unable to develop and tender for the larger 50,000 lb. engine known as the RB. 207, required for the European air bus. This dilemma is increased, of course, because at this time Rolls Royce are no doubt keeping their eye not only on the 2–11 project and the European air bus project,
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but also on winning a contract against Pratt & Whitney for the American air bus.
But the plot appears to thicken here, because the Pratt & Whitney Company, who are already supplying the JT 9D engine, as I understand it, for the "Jumbo-jets", are saying that both the American air bus and the European air bus should fit the same engine and so rationalise their future maintenance. Perhaps the noble Lord could tell us whether this American engine is seriously being considered by our European partners for the air bus. The answer, of course, to suit all projects would be for Rolls Royce to persuade both the American and the European air bus projects in their specifications to accept the smaller engine, the 30,000 lb. engine, which would also suit the BAC. 2–11. If this could he agreed it would not only have the advantage of rationalisation of the European air bus and the 2–11 but would bring Rolls Royce, I suggest, immense gain.
I believe that there is yet another possibility, and that is for the Lockheed air bus to accept three of the smaller engines. If this should happen, the European air bus specification may still insist that the larger engine should be fitted. If this were the case, where would Rolls Royce's loyalty lie? Would the Government be prepared to participate in an air bus if the British engine was not fitted? Perhaps the noble Lord could comment on this point later. The Rolls Royce dilemma is, I believe, very great. At best they have within their grasp a contract for all three projects—the American and the European air bus and the 2–11; at worst, they may win only the contract for the European air bus, with their bigger engine. If this should be the case, I believe that for the price of a ticket into the Common Market this would be a great tragedy for the British aircraft industry and a disastrous omen for its future.
7.34 p.m.
LORD FERRIER: My Lords, because of a word used by the noble Lord, Lord Balfour of Inchrye, I am tempted to intervene briefly in this debate. The word is "frequency". This was touched on by the noble Lord, Lord Ogmore, in his references to these large aircraft. I wish to speak particularly about the needs of the internal air services in this country. The Concord, for instance, is of little interest

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indeed to me, as it is of little interest to the average man. What about the potential for intermediate internal airports in this country—airports like Carlisle Airport, and airports like those in the West country? What about the services for outlying airfields in Scotland, especially the Islands? What is being done about the (for want of a better word) Dakota replacement?
To anyone who has used Australian air services, to anyone who is conscious of the short-haul potential in this country, to anyone who knows Scotland's needs, no matter how adverse airfield conditions may be the factors of diversity, frequency and reliability are important. Plenty of people—and I refer to what Lord Amherst said—would much rather see a propeller driven aircraft than no aircraft at all. It is important, to my mind, that for the needs of the country in this lowlier role, a really economical, reliable "workhorse" should not be overlooked.
7.36 p.m.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR COMMONWEALTH AFFAIRS (LORD BESWICK): My Lords, the noble Lord, Lord Balfour of Inchrye, made a stimulating speech, and we have had a useful discussion on the points he has raised. The noble Earl, Lord Jellicoe, and other noble Lords who followed him, asked a considerable number of questions in what I might call medium-haul speeches. Frankly, I cannot attempt at this late hour to answer all the questions put to me, but if there are any other items of information I can give, possibly I may be allowed to write to the noble Lords concerned.
All speakers have emphasised that urgency is the essential factor behind the need to take decisions on Britain's next family of new aircraft. Of course, it is always easier to demand bold decisions when one has no executive responsibility, and when one is not spending one's own money. Nevertheless, I agree that the sooner we can see the way forward to the new, bigger medium-haul aircraft, the better it will be both for our operators and for the aircraft industry. Since it is B.E.A.'s re-equipment problem that has been highlighted particularly, may I set down for the Record the general background,
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as I see it. Until June, 1966, B.E.A. of its own accord had always preferred to buy and fly British. The famous partnership of B.E.A. and Vickers, with the great personalities of Sholto Douglas and George Edwards dominating the scene, and based on the remarkable Viscount series of aircraft, must go down as one of the most successful and profitable periods in our aviation experience.
However, last June the Minister of Aviation was asked to approve a purchase of 18 Boeing 707–200 and 23 Boeing 737 aircraft, at a total cost of little less than £100 million. The Minister was unable to give his approval to this proposed investment, and the majority of people in this country supported him; and as I understand it, from what has been said this evening, there is no one in this Chamber who seriously demands that we should contemplate the expenditure of that amount of money in the American market. What the then Minister said on August 2 was:
"B.E.A. will buy British. The Government will take steps to ensure that B.E.A. is able to operate as a fully commercial undertaking with the fleet it acquires."
In the light of this decision, B.E.A. prepared fresh proposals and sought approval to invest in BAC. 1–11–500 series to meet part of their requirements for new aircraft. This request was approved in December, and B.E.A. have now ordered the 18 BAC. 1–11–500s, with an option on a further six aircraft. This is the substitute for the Boeing 737 in B.E.A.'s earlier plans.
In February, B.E.A. submitted a request for investment approval for the purchase of 30 BAC. 2–11 to fulfil their remaining requirements as an alternative to the rejected Boeing 727—part of their original proposal. I am asked by the noble Earl, Lord Amhurst whether, in the event of B.E.A. or any other airline wishing to place an order now for the BAC. 2–11, they would require Her Majesty's Government's permission to do so. The theoretical answer, I suppose, is "No". If any company is prepared to pay the economic price for an aircraft and the aircraft constructor is prepared to build the machine, then the Government would be unlikely to intervene. But, of course, the question is academic. Such large sums of money are involved in

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research and development of modern aircraft, that inevitably some Government finance is required. And if the Government have to provide money, and money of this order, then they have an obligation to ensure that the nation's resources are utilised in the most effective way.
What is now being considered jointly by the Corporation and the Government is the best possible combination, or, to use the modern jargon, the best possible mix of aircraft. The sums that are now being worked out—and I mean now, for the experts from the Ministries and the Corporations have been hard at work in the last few days—concern four intermediate sized aircraft, the BAC. 2–11, the Trident 3B, the VC 10 and the Boeing 727. In addition, of course, they take into account the projected air bus. Whichever aircraft B.E.A. decides to buy will complement the air bus when this larger machine comes into service, and I agree with what has been said by the noble Lord, Lord Balfour of Inchrye, and the noble Lord, Lord Jellicoe, that it is misleading to think that the choice is simply between, say. the BAC. 2–11 and the air bus, as far as B.E.A. is concerned. Of course from the Government's point of view there are obvious financial, engineering and technical problems, as was suggested by the noble Lord who went into the question of the aircraft engine problem, and particularly is this a problem within the time scale which B.E.A. envisage. Nevertheless, the comparative facts and figures about these four machines are being established as firmly as is feasible.
I am asked about possible subventions to the Corporation in the event of their choosing an aircraft other than the most economical but which makes a sensible element in a "mix" which takes into account all the factors relating to the Corporation, to our national resources and to the international markets. The economics of the various alternatives do not pose a simple problem. Of course, B.E.A.'s particular requirement is one factor, the development costs of the selective mix is another factor, the prospects of a wider market than the British Corporation are also important. The attraction of the BAC. 2–11 to B.E.A. lies in its ability to meet B.E.A.'s needs instead of the Boeing 727. This one factor cannot be judged in isolation from the large development costs which would be
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involved, and the Government must consider the financial aspects of B.E.A.'s re-equipment over the whole field of both the Corporation's prospects with a particular fleet, the launching costs to be borne and the prospects for their recovery. What precise financial agreements are agreed upon and whether by capital reconstruction or otherwise, can only be decided in the context of eventual decisions on the re-equipment programme. For example, if support were given to the construction of a particular aircraft and its individual unit costs were brought down, there would clearly be a less strong case for direct financial assistance to the Corporation.
The noble Earl, Lord Jellicoe, spoke of the advantages of European collaboration, and I thought the noble Lord, Lord Balfour of Inchrye, and the noble Earl, Lord Amherst, were a little critical of this collaboration. Some people, I suspect, have come round to the European idea because of this very factor of the imperative need for collaboration on such technological projects requiring huge sums of "R and D" expenditure and which depend on an assured large market for any hope of economic solvency. If I had time I should like to refer again to the comments in the Plowden Report on this question of a large base market. Noble Lords will remember that after recording that the U.S.A. had 70 per cent. of world exports in the Western world as against our 14 per cent., it said that in spite of the scale of American exports their home market is nine times larger than their export sales. This against our ratio of 3½ to 1. Obviously we have to take into account this kind of situation, and there are certainly great advantages in getting as wide a base as possible for the air bus project.
As the House will know, since the initiative taken by the United Kingdom Government and the decision in 1965 to set up a joint Anglo-French working party, there has now evolved the idea of an industrial consortium of Hawker Siddeley Aviation, Sud Aviation and a German air bus working group comprised of a number of German firms. We are now at a point at which Governments have to make another important contribution, and the meeting taking place this very day—I expect it is over by now, for they have probably arranged their affairs

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rather better than we have in this House this afternoon—is for the purpose of reaching a judgment on the case for investment in this project. Clearly I cannot this evening say anything more about what that decision may or may not have been.
The possible prize is an attractive one. It is estimated that the market for an aircraft of this kind in Europe alone is between 100 and 200 in the 1970s, while the world market could be 700 to 800. Last February the French, German and British Governments agreed that a purchase by the respective national airlines—Air France, Air Inter, Lufthansa and B.E.A.—was necessary for the launching of this European venture. If such commitments can be established, and they can cover up to 100 aircraft, then the basis for success could firmly be laid. I was asked about the engine, and I agree that this is a relevant point. I wish we had an afternoon or an evening which we could devote to this fascinating problem.
I am afraid that I cannot answer all the questions which the noble Earl put to me. It was agreed last February that if the Rolls Royce RB.207 engine were chosen for the European air bus, the French and Germans would each take a share of the launching costs of this engine. Meanwhile, Rolls Royce are discussing with Lockheeds the possibility of their participation in the proposed Lockheed air bus. Rolls Royce have on offer their RB.211 engine of about 30,000 lb. thrust for a three-engine air bus configuration, and the RB.207 engine of about 50,000 lb. thrust—a three-stage engine of which the noble Earl spoke, for a twin-engine air bus configuration. One decision in this problem is locked in with another, and I hope I shall be excused if I do not say any more about this side of the matter, because frankly I am unable to do so this evening.
THE EARL OF KINNOULL: My Lords, would the noble Lord allow me to interrupt for one moment? I think he mentioned a potential figure for the air bus of 600 to 700 on the world market. I think I am right in saying that on March 21 the figure was quoted at 800 to 1,000.
LORD BESWICK: My Lords, what I actually said was 700 to 800, but if
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some people have gone to 1,000 there is not much in it in discussing this sort of matter.
I was asked by the noble Earl, Lord Jellicoe, what we are doing with our French partners in connection with the sonic boom problem with the Concord. The French have a test programme using the Mirage 4 and we share their results; there is an informal working group studying this problem. Also relevant to this, and extremely interesting I think, is the newly established tripartite official group, with the French, ourselves and the United States studying the data available to us, and with an impending meeting for the specific purpose of studying the results of the tests carried out at Edwards Airfield with the supersonic B-70 bomber. The noble Earl reminded your Lordships that we ourselves were proposing to carry out tests in this country similar to those over Oklahoma City. There have been certain legal difficulties in the way of these tests, but I understand that a statement about our future programme is due to be made reasonably shortly.
The noble Earl also asked about the situation if there is a prohibition of overland flying of the Concord aircraft. As I think I have already stated in this House, if overland flying is prohibited in this way it does not mean to say the Concord will be an uneconomic aircraft to fly. And there will be certain incidental competitive advantages as between our machine and the American in so far as their sonic boom problem with the larger aircraft will be more serious than ours.
Doubt was cast by the noble Lord, Lord Balfour of Inchrye, on the advisability of developing these large civil aircraft, especially if powered by only two engines. I think he would probably agree that more than two engines are difficult to justify to-day, on the basis of available accident statistics, or recently available accident statistics. Economics, too, tend to support the advisability of a twin-engined aircraft. I must confess that, with him, I personally have my doubts, and presumably at some point there will have to be serious thought about how many people we can put in the air at any one time in one aircraft.
We have been talking this evening about planes with a capacity of 300 to

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400 people. The Americans are talking about 800 or 900 passengers. I can well imagine, without wishing to raise any scares, that if there is an accident to an aircraft of this size, involving 700 or 800 people, we shall have the sort of public debate stimulated by what occurred after the mishap to the very large oil tanker. Up to that point, operating economics alone appear to have entered into calculations; but it then became clear that there were wider public considerations which should be taken into account. However, for the time being manufacturers and operators are expected to observe the general regulations for air safety, and of course the public licensing authorities, not least our own admirable Air Registration Board, will no doubt have these considerations in mind.
The noble Lord, Lord Ferrier, asked about replacement for the Dakota. I should have thought the competitive Handley Page machine and the HS 748, as a Dakota replacement are certainly selling very well. There are a number of other sturdy British aircraft also selling in world markets. I was asked by the noble Earl, Lord Jellicoe, about the Jetstream, and whether the report in this morning's Press could be confirmed. I understand that this report, like others from that Daily Telegraph stable, is not entirely noted for its accuracy. But although to say that we have achieved the military sale there is a little premature, I can say that the civil version of the Jetstream is selling very well in the American market.
The noble Lord, Lord Balfour of Inchrye, ended by criticising what he described as the dichotomy of the national direction in these affairs; and the noble Lord, Lord Ogmore, also called attention to this aspect. I will not go into that problem this evening. We require more time. I absolutely agree with what the noble Earl, Lord Jellicoe, said about the advisability of having a debate on this matter at some future occasion. I would only say this: because you have a problem within one Department you do not necessarily make it any easier; you still have the divergent considerations to be reconciled, and usually within the Government machine, as most noble Lords in this House this evening will know, the reconciliation takes place in a Government
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Committee, whether one Minister is involved or two.
I would end by thanking all noble Lords who have taken part, who have given us their informed opinions. I am all in favour of these issues being ventilated fully and in time—by which I mean before the purchases are made, and not at an earlier hour of the evening. I ventured recently to express the personal view that had we seen in this country since the war full, informed, public discussion of future aircraft procurement, both civil and military, we might well have saved ourselves money running into nine figures. I will certainly endeavour to see that what has been said this evening is studied most carefully by those responsible.
7.56 p.m.
LORD BALFOUR OF INCHRYE: My Lords, in asking your Lordships' permission to withdraw my Motion, may I be allowed to thank all noble Lords who, no doubt at some personal inconvenience, waited here and have taken part in this debate. I should also like to thank the noble Lord, Lord Beswick, both personally and in his capacity as a Minister, for the courteous reply he has given to the debate. He has thrown some light upon the problems. We are glad to hear that the problem is realised acutely by Her Majesty's Government. I very much agree with the noble Earl, Lord Jellicoe: this is a fascinating, wide subject, and I hope that before the House adjourns for the Summer Recess we shall have a further, perhaps more leisurely, opportunity of covering this and other questions in an even wider way. In asking permission to withdraw the Motion, I once more express my thanks to the Minister and to all noble Lords who took part.
Motion for Papers, by leave, withdrawn.

GREATER LONDON COUNCIL (MONEY) (No. 2) BILL
  PORT OF LONDON BILL
    UNIVERSITY OF ASTON IN BIRMINGHAM BILL
    Brought from the Commons; read 1a, and referred to the Examiners.
BATH UNIVERSITY OF TECHNOLOGY BILL [H.L.]
  NEWCASTLE-UNDER-LYME BURGESSES' LANDS BILL [H.L.]
  Returned from the Commons, agreed to.
EAST KILBRIDE BURGH BILL
Returned from the Commons, with the Amendment agreed to.
  GAS COUNCIL HEAQUARTERS
  GAS COUNCIL HEAQUARTERS
  PRINCES RISBOROUGH— CHINNOR RAIL LINE
  PRINCES RISBOROUGH— CHINNOR RAIL LINE