Sitting of 3 December 1968

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  ADVOCATES' WIDOWS AND ORPHAN'S FUND ORDER CONFIRMATION BILL
  Considered; to be read the Third time Tomorrow.
ORAL ANSWERS TO QUESTIONS
  PUBLIC BUILDING AND WORKS

    Palace of Westminster
    1. Mr. Boyd-Carpenterasked the Minister of Public Building and Works why he spent £140,000 on work in the Palace of Westminster this summer.
    The Minister of Public Building and Works (Mr. Robert Mellish): Because it is more economical, and more convenient to hon. Members, for as much as possible of the annual programme of essential maintenance and other approved work to be carried out during the Summer Recess.
    Mr. Boyd-Carpenter: Did not this work also include such additional features as putting television annunciators into private rooms? Does he justify spending this large sum of money on this Palace when, for example, the school programme has been cut back?
    Mr. Mellish: With respect, the right hon. Gentleman is asking the wrong Minister. I did not put in these television annunciators because I thought that they would be a good idea. I was instructed to do so by the House of Commons Services Committee, upon which the right hon. Gentleman's Front Bench is represented.
    Mr. John Smith: Is the right hon. Gentleman aware that, in a Written
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    Answer to me yesterday, he said that over the past five years nearly £3½ million has been spent on and in this building? Would it not be better if we debated and settled the question of a new Parliamentary building before continuing to tinker with this one?
    Mr. Mellish: That is anticipating what is to come. I shall be making a great statement at the end of Questions. Let us hope that the hon. Gentleman will support me in what I say.
    Mr. William Hamilton: Will my right hon. Friend accept the assurance that he will get all possible support from this side of the House in whatever he does to improve the working conditions of hon. Members?
    Mr. Mellish: I am obliged for that. It looks as if I shall need some support.

    Employment Exchange, Rugby
    Mr. William Priceasked the Minister of Public Building and Works whether he will give an estimate of the cost of the proposed extensions to the employment exchange in Rugby.
    Mr. Mellish: About £35,000 including the site.
    Mr. Price: Is my right hon. Friend aware that that Answer will give a lot of satisfaction to my constituents? Will he say whether it includes the new Social Security offices which it is planned to put into that building?
    Mr. Mellish: Yes, Sir.

    Building Licensing
    Mr. R. W. Elliottasked the Minister of Public Building and Works what further studies he has made of the overall effect of the building licensing procedure contained the Building Control Act, 1966, and the Regulations made thereunder; and whether he will make a statement.
    Mr. Tom Boardmanasked the Minister of Public Building and Works when he proposes to introduce legislation to repeal the Building Control Act, 1966.
    Mr. Mellish: After considering the prospective demand on the industry, I suspended building licensing from 20th November, 1968, for an indefinite period. I do not propose to introduce legislation

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    to repeal the Building Control Act, 1966, because it may have to be used again.
    Mr. Elliott: As in the last three years there has been just a tiny amount of building work which has been refused a licence out of an enormous potential amount, would not the right hon. Gentleman agree that the whole licensing procedure is a bureaucratic nuisance and that it wastes industry's time as well as a lot of public money?
    Mr. Mellish: I would not agree with that. The reasons for the Act coming into being were fully debated in 1966. I do not go back on what was said then. As Minister of the day, however, I saw that they were not needed at that moment, and I withdrew them. I should have thought that there would be excitement and delight among right hon. and hon. Gentlemen opposite.
    Mr. Boardman: If licensing played any significant part in economic demand management, why is the right hon. Gentleman now suspending it? It it played a part, why suspend it now? If it did not play a part, why not repeal the whole Act?
    Mr. Mellish: The hon. Gentleman is getting confused with his own Question. The reasons why the Act came into being were debated in 1966. As newly in charge of the Department, I decided, in the light of events as I saw them at that moment, that they were not necessary, arid I suspended them.
    Mr. Chichester-Clark: As the right hon. Gentleman has had time to think about this since I last raised it with him, will he now evaluate what, in the Prime Minister's words, was the direct impact on the balance of payments which we were promised that this Measure would have?
    Mr. Mellish: Perhaps the hon. Gentleman would care to ask the Prime Minister. I can assure him that my right hon. Friend is capable of answering any Questions that the hon. Gentleman puts to him.

    Building and Civil Engineering Industry (Pay and Conditions)
    Mr. R. W. Elliottasked the Minister of Public Building and Works whether he is aware of the concern in the con-
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    struction industry at the delay by the National Board for Prices and Incomes in producing their reports on the wage structures of the building and civil engineering industries; and what action he has taken to expedite the report.
    Mr. Boyd-Carpenterasked the Minister of Public Building and Works what further representations he has received from both sides of the construction industry regarding the reference of the wage structures of the building and civil engineering industries to the National Board for Prices and Incomes; and what reply he has sent.
    Mr. Mellish: The Reports have now been published, and as to the next steps I have nothing to add to the statements by myself on 6th November [Vol. 772, c. 895]; by my right hon. Friend the First Secretary on 15th November [Vol. 773, c. 761]; by the Under-Secretary of State for Employment and Productivity on 28th November [Vol. 774, c. 185.]
    Mr. Elliott: Is the Minister not aware of the annoyance caused in that the Government wasted six months before making the reference?
    Mr. Mellish: Oh, yes. I know of the concern in the industry, and I am aware that it is disturbed about the delay. The Report is now to hand. I am sure that it has been read, and there are discussions going on between both sides of the industry and the Government on this very important matter.
    Mr. Boyd-Carpenter: Is the Minister aware that the Government have created this situation by the delay of a year? Will he now give an assurance that they will not make the situation worse by any further intervention?
    Mr. Mellish: I can assure the right hon. Gentleman that there will be no delay in making certain decisions known. My right hon. Friend, the First Secretary, will no doubt make a statement to the House at the appropriate time.
    Mr. Chichester-Clark: Apart from the Government's utterly represensible delays in the matter which have caused much of the trouble, may I ask whether it is true that the Prices and Incomes Board's computer broke down in the white heat of the technological revolution?
    Mr. Mellish: I have no idea what happened to the P.I.B. machinery. All I know is that the ultimate result is before both sides of industry and there are important discussions going on and we shall hear the results of these as soon as possible.

    Mann Committee (Reports)
    Mr. Rossiasked the Minister of Public Building and Works whether he will now publish the second and third Reports of the Mann Committee; and whether he will make a statement.
    Mr. Peter Millsasked the Minister of Public Building and Works whether he will now make a statement on his policy regarding his Department's direct labour force, in the light of the Reports of the Mann Committee.
    Mr. Mellish: A joint examination of the work of selected depôts has just been completed, and I am discussing with the trade unions the results of this examination and the further steps which should now be taken. It would be premature for me to make any further statement, or to publish the Reports at this stage.
    Mr. Rossi: When will the House be told what the third Report of the Mann Committee contains? Will the Minister confirm or deny that he is considering making up to half of his Department's direct labour force redundant?
    Mr. Mellish: The last part is not true. The Mann Committee reported to me as Minister and I regarded that information as confidential. I have acted upon sample surveys taken by the Mann Committee by establishing an inquiry into one of my important depôts. Based upon the result of that inquiry, in which I am taking the trade unions with me step by step, I shall come to certain decisions. When that is done, I will inform the House. But it must be for me to decide.
    Mr. Mills: This is not very satisfactory. Surely the Minister will confirm that it seems likely that this Report will show that there is a 25 per cent. difference in productivity between direct labour and private enterprise, and therefore we need a full statement.
    Mr. Mellish: The Mann Committee took sample surveys only and came to certain conclusions. I was not prepared
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    to accept the Report of the Mann Committee at face value. This had to be tested and proved. Therefore, I set up my own investigation over a wide area of my Ministry's activities, in conjunction with the trade unions. Based on the results of that inquiry, I will be in a stronger position to say whether the Mann Committee was right. It does not follow that, because the Mann Committee has issued a report, it is right.
    Mr. Hunter: Will my right hon. Friend say whether he has had representations from M.P.B.W. workers in Rosyth dockyard on the question of redundancies, and can he give an assurance that everything possible will be done to preserve jobs in this sector, bearing in mind that it is a development area?
    Mr. Mellish: I understand this. This is why I am handling it in the way that I have described. We are dealing with men's livelihoods. Some men have been working for my Ministry for 30 to 40 years. We cannot glibly say that we shall sack 25 per cent. I am not that kind of Minister.
    Mr. Chichester-Clark: Is the Minister aware that in March he said that 50 per cent. of the maintenance was done by his direct labour department and in July that 40 per cent. was done by his direct labour department? Does that mean that there has alreday been a run-down, or is there some other reason?
    Mr. Mellish: My Department's record on maintenance is very good. The exact proportion, whether it is 60 per or 50 per cent., I cannot give off the cuff. All I can say is that it varies. A considerable proportion is already done by contractors, and some of those are very inefficient.

    Selective Employment Tax
    Mr. Peter Millsasked the Minister of Public Building and Works whether he will place in the Library a copy of his public correspondence with the President of the National Federation of Building Trades Employers regarding the increase in Selective Employment Tax and certain firm price building contracts.
    Mr. Cleggasked the Minister of Public Building and Works what representations he has received from the National Federation of Building Trades

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    Employers regarding the Government's decision not to reimburse the extra cost of the increased rate of Selective Employment Tax to those contractors whose firm price contracts were adversely affected by the increase; and what reply he has sent.
    Mr. Mellish: Copies of my correspondence with the President of the National Federation of Building Trades Employers on the Government's decision not to reimburse any of the increased rate of Selective Employment Tax which effected firm price building contracts have been placed in the Library.
    Mr. Mills: Does the Minister agree that this correspondence shows that S.E.T. is seriously affecting the industry? Will he now tell us what he has achieved for the industry rather than about representations and what he said on their behalf?
    Mr. Mellish: The industry's relationship with my Ministry is very good. Output is going up. S.E.T. does not seem to have made any difference.
    Mr. Clegg: Does the Minister agree that it would take a genius to keep up with the tax changes introduced by the Government, that it is difficult for those estimating to take into account what the Government will do, and that this puts the whole business of firm price contracts at risk?
    Mr. Mellish: It is obvious that the hon. Gentleman is not a genius, because he does not understand what is going on.
    Mr. Costainasked the Minister of Public Building and Works what evidence his Department has submitted regarding the effect of Selective Employment Tax on the construction industry to the Reddaway Inquiry; and whether he will publish it.
    Mr. Mellish: I have nothing to add to the answer I gave to the hon. Members for Chigwell (Mr. Biggs-Davison) and for Hornsey (Mr. Rossi) on 29th April, 1968.—[Vol. 763. c. 767.]
    Mr. Costain: As no progress has been made, can some indication be given to the House when the Report is likely to be produced and when the Report on the construction industry will be dealt with?
    Mr. Mellish: The industry is not making these representations to me and
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    it is not complaining at present. The Reddaway Committee is in being to receive the industry's point of view. I take it for granted that the industry has written to the Reddaway Committee. If I can find out when the Report will come forward I will let the hon. Gentleman and the House know.
    Mr. Speed: Does the Minister think it sensible that the construction industry should still be treated as a service industry rather than a manufacturing industry? He keeps talking about output from the industry.
    Mr. Mellish: I have great respect for the industry. A great part is manufacturing and another part should be in another category. This has been an anomaly which I have discussed with the Chancellor of the Exchequer. This is why the Reddaway Committee is considering the matter.

    Construction Industry (Capital Investment)
    Mr. Costainasked the Minister of Public Building and Works whether he will now make a further statement on his policy on capital investment in plant and machinery on construction sites in the construction industry.
    Mr. Mellish: I have nothing to add to the reply which I gave to the hon. Member on 17th June.—[Vol. 766, c. 687.]
    Mr. Costain: Is the Minister aware that the Board of Trade is still refusing to pay grants on winter building equipment such as wood scaffolding and shuttering? Will he use his influence to get these items through to make the industry more efficient?
    Mr. Mellish: I want to be helpful—[Interruption.]—yes, I do. Whether the Board of Trade is entitled by law to impose any lower limit for administrative or financial reasons has been the subject of litigation. I understand that the matter is now under appeal, so it is, therefore, sub judice.

    British Standard Time
    Mr. Joplingasked the Minister of Public Building and Works whether he will make a statement on the subject of the lighting of building sites after the

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    change to all year round British Standard Time.
    Mr. Mellish: However one sets the clock, at the height of winter it is impossible for a building craftsman—particularly in an indoor trade—to work a full day without artificial light for part of the time. One of the main features of my Ministry's winter building campaign has been to persuade contractors to invest in efficient site lighting equipment to improve their productivity. British Standard Time merely emphasises the need.
    Mr. Jopling: Is the Minister aware that British Standard Time is causing work to be lost in the most productive first hours of the day—a statement with which he agreed in his speech at Bristol? Is he also aware that lighting is impossible on many sites such as motorways and those operated by small firms, where it is impossible to have lighting in all circumstances?
    Mr. Mellish: The hon. Gentleman knows that before British Standard Time was introduced, the industry, in common with others, was asked for its point of view. Marginally, the construction industry came down in favour of the introduction of B.S.T.
    Mr. Jopling: It did not.
    Mr. Mellish: It is no use the hon. Gentleman saying that it did not, because it did. We have a list of all those who approved it. My right hon. Friend the Home Secretary has said that there will be a review at the end of this winter and I should expect the industry's views to be passed to him and to the House.
    Mr. Chichester-Clark: Does not the present situation mean that construction workers arrive at 8 a.m., and either stand around in the dark for an hour doing nothing or work in possibly dangerous or icy conditions, or they arrive later and thus help to swell the traffic jams?
    Mr. Mellish: What I find extraordinary is that these remarks should come from the hon. Gentleman and others behind him, yet the industry, which has a close relationship with the Ministry and knows where to make complaints, has not made representations on this subject.

    Caerphilly Castle
    Mr. Fred Evansasked the Minister of Public Building and Works what amount of public money has been spent on Caerphilly Castle since it was taken over by his Department.
    Mr. Mellish: Up to 31st October, 1968, £130,649.
    Mr. Evans: Will my right hon. Friend accept that the people of Caerphilly are profoundly grateful for the restoration of this magnificent castle, which is situated in the heart of the town and is a source of great civic pride? Will he, therefore, consider entering into arrangements with the local authority to enable the residents in that area to have free access to their castle?
    Mr. Mellish: I am obliged to my hon. Friend for his remarks about my ancient monuments division. I think that it has done and is doing a magnificent job. Caerphilly is another example of its work. Caerphilly Castle is rather different from any other castle that I have seen in that, as my hon. Friend says, it is situated in the heart of the town. I am willing to discuss with the local authority whether we can come to some arrangement about the townsfolk having special entry.
    Mr. Arnold Shaw: Is my right hon. Friend aware of the dedication of the men employed on this work and on other ancient monuments within the purview of his Ministry? Will my right hon. Friend note also that these men are all employed as direct labour? Will he, from time to time, at least hand out some sort of praise to these people who are doing a first-rate job of work?
    Mr. Mellish: I am grateful to both my hon. Friends for giving me an opportunity once again to say that this branch of my Ministry is respected and much admired by the vast majority of people in this country for the wonderful job it does.

    Building and Civil Engineering Industries National Consultative Council
    Mr. Cleggasked the Minister of Public Building and Works whether he will ensure that the functions of the National Consultative Council for the Building and Civil Engineering Industries,

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    sponsored by his department, do not overlap with those of the Economic Development Committee for the Building and Civil Engineering Industries; and whether he will make a statement.
    Mr. Mellish: Yes Sir, there is in fact a clear distinction between them. The N.C.C. considers problems which concern the Government and industry jointly. The E.D.C.s are independent bodies whose purpose is to promote efficiency and to forecast supply and demand.
    Mr. Clegg: I thank the right hon. Gentleman for the old world courtesy of his reply. Will he consider looking at this matter a little more deeply, because people are represented on both committees, and perhaps some costs could be saved if the functions could be combined.
    Mr. Mellish: When I became Minister I found that my consultative machinery was very bad. As far as I could judge, it did nothing except meet and have a cup of tea. I reorganised the machinery. We now try to do an effective job, which the industry is asking us to do, and the industry itself has welcomed the changes that I have made.

    Wimbledon Common
    Mr. Hugh Jenkinsasked the Minister of Public Building and Works whether the Conservator of Wimbledon Common, appointed by him under Section 12 of the Wimbledon and Putney Commons Act, 1871, was present at the meeting of the Conservators which approved the tipping of soil and other materials on part of Wimbledon Common near the top of Roehampton Lane; and whether his appointee agreed with this decision of the Conservators.
    Mr. Mellish: This tipping of soil on Wimbledon Common was accepted by the Conservators in accordance with their obligations under the Greater London Council (General Powers) Act, 1966. The site for the tipping was agreed by the Conservators at a meeting from which the Conservator appointed by me was unavoidably absent.
    Mr. Jenkins: Is my right hon. Friend aware that my hope is that if his representative had been present he would have opposed this proposal? Is my right hon. Friend further aware that the Conservators had failed in their duty to safe-
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    guard the common? Will my right hon. Friend ask them to see what can be done to repair the severe damage done by this irresponsible tipping on Wimbledon Common? Is my right hon. Friend further aware——
    Mr. Speaker: Order. That is enough to be aware of.
    Mr. Mellish: My appointee is not a delegate, and does not need to come back to me for instructions. Secondly, as I understand the General Powers Act, the Conservators' discretion is limited to agreeing to the position of the tipping. They could not absolve themselves of the responsibility of agreeing to tipping of some kind, and the position was the only question at issue.
    Mr. Boyd-Carpenter: Is the right hon. Gentleman aware that this tipping has done a great deal of damage to the Common, and also to the rare plants on it? Is the right hon. Gentleman further aware that many of us think it is his duty to ensure that the Conservators appointed by him protect the interests of the public?
    Mr. Mellish: If there is anything that I can do to help, I shall. There is one particular individual whom we appointed. I am afraid that he was not there, for other reasons, but I am told that if he had been he would have voted against it, but the proposal would still have been carried.
    Mr. Jenkins: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible opportunity.

    Public Offices, Hartlepool
    Mr. Leadbitterasked the Minister of Public Building and Works if he will take steps to integrate and recite the various buildings used by the department of Social Services, the Department of Employment and Productivity and Her Majesty's Inspector of Taxes at Hartlepool, having regard to the comprehensive central area redevelopment in the town and the need to reduce the inconvenience to the public and to improve conditions for the staffs of the present offices.
    Mr. Mellish: My Ministry is planning to erect a new building on a site in Surtees Street, to provide an integrated local

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    office for the Department of Health and Social Security. The Department of Employment and Productivity and the Inland Revenue Tax Office are already accommodated in a satisfactory Crown Building near the proposed Civic Centre.
    Mr. Leadbitter: Does my right hon. Friend realise that I appreciate his cooperation, and that of his officers? In view of the amalgamation of the Hartlepools and redistribution of boundaries, will my right hon. Friend make available to me an opportunity for another discussion, so that the fullest amount of integration, which I am sure he desires, may be carried out in the end?
    Mr. Mellish: I shall be prepared to see my hon. Friend at any time on any subject.

    Building Contractors (Statistical Information)
    Mr. Gordon Campbellasked the Minister of Public Building and Works what proposals he has for reducing the amount of statistical information required by his Department to he submitted by building contractors; and whether he will make a statement.
    Mr. Mellish: None, Sir. The information collected by my Ministry is kept to the minimum and is barely adequate for the many purposes for which it is needed.
    Mr. Campbell: Why is it that so many figures are required from the building industry, in some cases the same figures by three different Government Departments, as is made clear in Appendix 7 of the Estimates Committee's Report?
    Mr. Mellish: I accept what the hon. Gentleman says, that there is duplication. The Government's statistical services are being more fully integrated so that such duplication is minimised, and the construction industry will share in this reorganisation.
    Mr. English: Would not my right hon. Friend agree that the statistics produced by industry in general, including the building industry, are far fewer than those produced in many other advanced industrial nations, such as the United States of America?
    Mr. Mellish: I would not know. I am not qualified to talk about the posi-
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    tion in other countries. We get a lot of information from industry. I understand that there are fears that too much is being asked of them. I say to hon. Gentlemen opposite in particular, who continually press me for more information, that the only way to get it is to ask other people for it.
    Mr. Costain: Does the right hon. Gentleman realise that industry will appreciate anything he does to cut down the amount of statistics required, particularly by co-ordinating them from other Government Departments? The more he asks for, the more inaccurate it gets.

    Public Building Programme (Estimates Committee's Report)
    Mr. Gordon Campbellasked the Minister of Public Building and Works whether he will now make a statement on his policy regarding the recommendations of the Fourth Report of the Estimates Committee of the House of Commons entitled, The Public Building Programme in the United Kingdom.
    Mr. Mellish: I would ask the hon. Member to await the publication of the Departmental Observations on the Report.
    Mr. Campbell: Is the right hon. Gentleman carrying out a complete reappraisal of the annual accounting procedures for building programmes, as recommended by the Committee in its paragraph 71?
    Mr. Mellish: I cannot answer that off the cuff, but I am prepared to write to the hon. Gentleman and give him full details of what my Department is doing in that sphere. The observations to which I referred will be published early in the New Year, because they concern other Government Departments as well, and have far-reaching implications.
    Mrs. Ewing: Has the right hon. Gentleman made a start on implementing Recommendation No. 4 of the Report. to the effect that
    "A regular check on the amount of space occupied by the staff of Government departments should be carried out in as many as possible of the larger centres of Government activity outside London"?
    Mr. Mellish: Our record of staff dispersal is better than that of any previous Government.

    Building Work (R.I.B.A. Survey)
    Mr. Tom Boardmanasked the Minister of Public Building and Works what consideration he has given to the representations of the Royal Institute of British Architects regarding the value of building work entering the production thawing stage; and what action he has taken in that regard.
    Mr. Waddingtonasked the Minister of Public Building and Works whether he will now make a statement on the level of design work for building entering the production drawing stage, details of which he has received.
    Mr. Mellish: The latest R.I.B.A. survey showed that work in the drawing offices of private architects fell by about 12 per cent. between the first and second quarters of 1968. Work in local authority drawing offices fell by 2 per cent. in the four months to the end of May, 1968, compared with the four months to the end of January. There are no equivalent indicators for other public authorities, civil engineers and contractors. These figures are not conclusive evidence of trends in the industry, and the consensus of other indicators suggests reasonable prospects for 1969.
    Mr. Boardman: Is it not most disturbing that the R.I.B.A. survey shows that the figures have dropped substantially be low anything since 1954?
    Mr. Mellish: The trouble is that these surveys are not really conclusive, in the sense that they are concerned only with private architects, and the work given to them by public bodies by the use of outside consultants. The same survey shows a small increase during the second quarter in new commissions with a marked rise in private work other than housing, of 11 per cent., and this continued a trend evident for the last nine months.
    Mr. Waddington: Why does the Ministry confuse the issue by giving local authority figures in four-monthly periods, and private industry figures for each quarter? As I understand it, that is what the Minister said. Surely in this context the estimates of building work in 1969 are irrelevant? The fall in the level of design work this year is disturbing, and is likely to be reflected in the
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    amount of building, not in 1969, but in 1970.
    Mr. Mellish: I have answered the Questions put down by both hon. Members, in the form which I think is proper. The fact that the Answer does not suit the hon. Gentleman is not of too much concern to me. This industry constantly complains about future trends. The Confederation of British Industry has said that there will be a fairly strong rise in investment in building over the next 12 months, and the Board of Trade's investment intention survey also points to a strong recovery in private investment in 1969.

    Building Operatives (Output)
    Mr. Silvesterasked the Minister of Public Building and Works what estimate he has made of the increase in output of building operatives employed by contractors in Great Britain in 1968.
    Mr. Mellish: I have not yet estimated the increase in output per operative in 1968, but I think it likely that it will be higher than the long-term trend of 4 per cent. for the second year running.
    Mr. Silvester: Would the Minister say, therefore, why he felt that it was necessary for his right hon. Friends to obstruct an interim increase of 3·7 per cent. which is less than his estimate for the building trade operatives' increase in October?
    Mr. Mellish: I suggest that the hon. Member reads the P.I.B. Report. If he does he will get some information there. Some of the increase each year is the result of better management, more mechanisation, bigger contracts, better tendering procedures, and so on. It is not necessarily a measure of an increase in the productivity of labour.
    Mr. Heffer: Does not my right hon. Friend agree that the estimate of his Department seems to be different from the estimate of the P.I.B.? Will he indicate why there is a difference between the two estimates of output and productivity in the building industry?
    Mr. Mellish: The figures that I have given up to last year have been published year by year since 1945. The output of the building and construction industries has risen every year. This year it will

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    rise by another 4 per cent., I think, and I expect it to rise next year by between 4 per cent. and 5 per cent. This happens to be the view that the Department holds, and we have said so to the P.I.B.

    Maintenance Work (Committee's Report)
    Mr. Silvesterasked the Minister of Public Building and Works whether he will now make a statement on the Report of the Winterbottom Committee on training for, and the carrying out of, maintenance work.
    Mr. Mellish: This Report is now being printed and will be published in January.
    Mr. Silvester: As a result of the publication of this Report, is it intended to publish later a simple booklet for the guidance of smaller firms, as was at one time suggested as a result of the activities of the Committee?
    Mr. Mellish: When I publish the Report I am willing and prepared not only to give it wide circulation but also to break down that part which concerns special aspects of the industry, and to do all that I can to bring home to those interested the important conclusions of the Report.

    House of Commons (Annunciators)
    Dr. Bennettasked the Minister of Public Building and Works how many closed-circuit television sets have been installed in the Commons part of the Palace of Westminster as annunciators of business in the debating Chamber; and at what cost to public funds.
    Mr. Mellish: 387 sets have been installed at a cost of about £20,000.
    Dr. Bennett: I am sure that the whole House is most impressed by that figure, but how many machines did the 387 sets replace? Secondly, as the figure is approaching a ratio of one per Member, how many sets are for the use of Ministers, and perhaps in even smaller rooms?
    Mr. Mellish: The hon. Member was not here at the beginning of Question Time when I said—and I repeat it, because it is worth repeating—that I did
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    not put these sets in because I liked doing it but because I was instructed to do so by the Services Committee of this House, of which several hon. Members opposite are very prominent members.
    Mr. C. Pannell: Is my right hon. Friend aware that this matter is not something within the discretion of his Department; neither is it in the discretion of the Government? This is a conscious act of a Committee of the Legislature—a Select Committee of this House—and he should not be held accountable in this place for such expenditure.
    Mr. Mellish: I could not have said that better myself.
    Mr. Chichester-Clark: Is it not nevertheless within the Minister's competence to see that some of these television sets work—because an awful lot do not?
    Mr. Mellish: Incidentally, they are provided by a private enterprise firm. I think that I shall get my directly employed labour to have a look at them.
    Mr. Hugh Jenkins: Is my right hon. Friend aware that these sets are so wired that they could be used for a closed circuit transmission of the proceedings of this House? Will he see that they are used for this purpose?
    Mr. Mellish: That possibility frightens the life out of me. The old machine annunciators were virtually worn out. I understand that when the Services Committee considered the matter it was told that it would be cheaper to replace them by a television system than by a modern type of machine system. The present television system also provides much more flexibility in operation.
    Mr. Boyd-Carpenter: Will the right hon. Gentleman make it clear, notwithstanding his earlier Answer, that responsibility for recommending expenditure lies solely with Ministers and that he is not entitled to shelter behind the recommendations of a Select Committee?
    Mr. Mellish: With respect to the right hon. Gentleman, he was part of this new democratic procedure of the Services Committee. The first that I knew about the television sets was when I received instructions from Mr. Speaker to put them in.

    Metrication Board
    Mr. Speedasked the Minister of Public Building and Works if he will announce the name of his Department's representative on the Metrication Board.
    Mr. Chichester-Clarkasked the Minister of Public Building and Works whether his Department will be represented on the Metrication Board.
    Mr. Mellish: My right hon. Friend the Minister of Technology is considering the membership of the Metrication Board. the interests of the construction industry will be well represented.
    Mr. Speed: Does not the Minister agree that the construction industry is already in great difficulty due to the delay in setting up this Board, which has a four-year programme in which to work? Will he bring pressure to bear upon his right hon. Friend to get this Board set up as soon as possible?
    Mr. Mellish: The construction industry will be one of the first to go metric. It has a fine record. I agree that it is important that the Board should be set up, and we want the best people on it. I can give an assurance that the construction industry will be well and truly represented on it.
    Mr. Chichester-Clark: Can the Minister give an assurance that the decision to go metric was not taken without a feasibility study, and that if so his Department took part in it?
    Mr. Mellish: In what we have done we have carried the industry with us. It has taken the initiative. My Ministry will be going metric in its design work next year. I pay tribute to the industry for playing an important and progressive part in this matter.

    Construction Industry (Output)
    Mr. Chichester-Clarkasked the Minister of Public Building and Works what estimate he has made of the effects upon the construction industry of the economic measures announced by Her Majesty's Government on Friday, 22nd November.
    Mr. Blakerasked the Minister of Public Building and Works whether he
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    will now make a further statement about the output of the construction industry in 1969.
    Mr. Mellish: It is too early to estimate the effect of the measures on output in 1969 but it may be to put the increase nearer 4 per cent. than 5 per cent. The effect on construction costs will I think be very small.
    Mr. Chichester-Clark: Cannot the Minister give us any idea of the effect of bridging finance and loans to builders? Will he take this opportunity publicly to deny the suggestion that the price of houses might be raised by as much as £80, and give his own estimate?
    Mr. Mellish: I would not give an estimate about the price of houses off the cuff. It would have to be carefully considered before any such estimate was made. The view of my Ministry is that there may be a small increase in the cost of construction of about per cent. overall, due to the increases in Purchase Tax and the new deposits on imports.
    Mr. Heffer: Will my right hon. Friend draw the attention of his right hon. Friend the President of the Board of Trade to the fact that import deposits on plywood and other timbers may have a very bad effect on the building industry? Is he aware that, while many of us on this side of the House are in favour of import controls, we think that they should be selective and intelligent controls, and that the imposition of import deposits on plywood in particular is not likely to be very helpful to the construction industry?
    Mr. Mellish: There is to be a debate on this matter and I assume that in Committee there will be a chance for Amendments to be put down to the Bill to exempt various commodities from its provisions. As I understand it, raw and sawn timber will be exempt from import deposits but planed plywood and particle board will be subject to the deposits. What the overall effect will be I cannot say, except that I have had no representations from the timber people, although the Board of Trade probably has had.
    Mr. Gordon Campbell: What estimate has the Minister made of the effect of

    1235
    these economic measures upon the construction industry in Scotland?
    Mr. Mellish: Without notice I cannot make an estimate. I have said that there will be a small increase in the cost of construction of about ¼ per cent. overall. How much applies to Scotland I have not a clue.

    Direct Labour
    Mr. Rossiasked the Minister of Public Building and Works what is his policy regarding the employment of building workers by public bodies by direct labour on London building sites; and if he will make a statement.
    Mr. Grantasked the Minister of Public Building and Works what is his policy regarding the employment of building workers by public bodies by direct labour; and whether he will make a statement.
    Mr. Mellish: It is a management responsibility to make the most advantageous arrangements. So far as my own Department is concerned, I consider that there is a place for both directly employed labour and contractors.
    Mr. Rossi: Can the Minister state what place he considers the Southwark direct labour department has in view of the fact that it has overspent nearly £1 million on the North Peckham development site, for which the Minister himself is partly responsible?
    Mr. Mellish: The hon. Member is asking the wrong Minister the wrong question at the wrong time. Otherwise he is in order. He should address his question to my right hon. Friend the Minister of Housing and Local Government.
    Mr. Manuel: Is my right hon. Friend aware that quite a campaign is being waged on this question by Aims of Industry, which is reflected in the questions being put by hon. Members opposite?
    Mr. Mellish: I know about Aims of Industry, of course. It is always opposed to direct labour. The tragedy in this argument is that, by imputation, nothing is good about directly employed labour and everything is good about contractors
    1236
    —when the truth is that there is a bit of bad about both.
    Mr. Ashton: Is my right hon. Friend aware that the public works department in Sheffield has made a profit of £14 million in the last 12 years and that the Department asked Aims of Industry and Mr. Malcolm Hoppé to investigate their hooks, and that when they did, they found nothing wrong and had to accept that this was genuine profit obtained by tendering in competition with private enterprise?
    Mr. Mellish: I accept that and I think that it confirms what I said, that there is a great deal of good about directly employed labour, where—this is the key—management is efficient.
    Mr. Chichester-Clark: I agree with the right hon. Gentleman that he is the wrong Minister in the wrong place at the wrong time. Why, if he cannot be questioned on this matter, did he make a public statement in The Times on this subject in October?
    Mr. Mellish: I did not make a public statement on that matter. The question which his hon. Friend asked related to the period when I was a Parliamentary Secretary to the Ministry of Housing and I referred the whole matter to the National Building Agency. That is the only part that I played in that. I am now the Minister of Public Building and Works—and a darned sight better Minister than some of them on that side would be.

    Lambeth Bridge House (Office Cleaning)
    Mr. Straussasked the Minister of Public Building and Works if he is satisfied that the firms he employs to do the office cleaning at Lambeth Bridge House act in conformity with the Fair Wages Resolution; and if he will make a statement.
    Mr. Mellish: Compliance with the Fair Wages Resolution passed by this House on the 14th October, 1946, is a condition of our contract for the cleaning of Lambeth Bridge House. I have not received any complaints or representations.
    Mr. Strauss: Is my right hon. Friend aware that, according to what appears

    1237
    to be sound information, at least one of the firms is not operating the Fair Wages Resolution? If I give him particulars, will he look into that?
    Mr. Mellish: I certainly will and I will have the matter thoroughly investigated: I give my right hon. Friend that assurance.

    Builders (Registration)
    Mr. Moreasked the Minister of Public Building and Works whether he will request the sub-committee of the National Consultative Council, currently studying the registration of builders, to take into account the Phelps Brown Committee's Report.
    Mr. Mellish: I have no doubt that the independent inquiry when set up will consider all relevant matter in the Report of the Phelps Brown Committee.
    Mr. More: Why, apart from a statement by the Minister's colleague the Secretary of State for Employment and Productivity, have we not had a statement of Government policy in this matter? Could not the "darned better Minister" himself, in view of the fact that he commissioned this Report jointly, make a public statement for the benefit of this sub-committee?
    Mr. Mellish: For the very simple reason that, when Phelps Brown issued the Report, we did the proper thing and supplied it to the industry—both employers and unions. Up to a week or so ago, we had not received any official replies. In a matter like this, it would be wrong for the Government to state a policy without having carried the industry with them.

    Whitehall Redevelopment Plan
    Mr. C. Pannellasked the Minister of Public Building and Works whether he will make an early statement on the progress of the Whitehall Redevelopment Plan, that is to say the Martin and Buchanan proposal; and whether the statement made in the House on 1st November, 1965, still remains the policy of Her Majesty's Government.
    Mr. Sandysasked the Minister of Public Building and Works whether he will make a statement on the progress of the Whitehall Redevelopment Plan.
    Mr. John Smithasked the Minister of Public Building and Works whether he will make a statement about the Whitehall Plan.
    Mr. Mellish: With permission I will answer these Questions at the end of Question Time, because the Answer is long.

  COAL

    Stocks
    Mr. Eadieasked the Minister of Power what estimate he has made of the reduction in coal stocks during the coming winter, giving the figures for distributed and undistributed stocks, respectively.
    The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): Depending on weather conditions, coal stocks might fall by about 6 million tons this winter, made up of a fall of perhaps 2½ million tons in undistributed stocks, and a fall of 3½ million tons in distributed stocks.
    Mr. Eadie: Is my hon. Friend aware that many miners would be happy if the coal stocks were reduced? Does he agree that, if the policy of the T.U.C. to hold an independent inquiry into the fuel and power industry were carried out, many more miners would be satisfied?
    Mr. Freeson: I would agree, of course, that, if we could get the coal stocks reduced, the miners and the economy itself would benefit. This is a question of expanding and holding the market, in which, of course, we are interested and the N.C.B. is very active.

    Mining Industry (Manpower)
    Mr. Eadieasked the Minister of Power what estimate he has made of wastage of manpower in the mining industry in 1969.
    Mr. Freeson: While it is not possible to make a precise estimate, I expect that in 1969, wastage from all causes other than redundancy will be rather lower than the figure of about 45,000 estimated by the N.C.B. for 1968.
    Mr. Eadie: I thank my hon. Friend for that reply. Is he aware—he probably is—that the figures which he has given

    1239
    make nonsense of the estimate in the fuel and power White Paper? Is this not a further example of how the White Paper should be entirely scrapped and replaced with fresh estimates?
    Mr. Freeson: It is fair to say that the figure of 35,000 men, to which my hon. Friend refers, was spread over a number of years. We expect that, in the later years of the period covered by the White Paper estimates, we will come closer to the original 35,000 men than we have done this year.

  NIGERIA
  Mr. Barnesasked the Prime Minister if he will make a statement on his recent discussion with Chief Enahoro about the supply of arms to Nigeria.
  The Prime Minister (Mr. Harold Wilson): My discussion with Chief Enahoro on 8th November provided an opportunity for a review of all aspects of the Nigerian war but the details must of course remain confidential.
  Mr. Barnes: What would be the Government's attitude if, for example, Canada were to seek an internationally-agreed arms embargo through the United Nations or, indeed, if Canada were to take the lead in trying to interpose a peace-keeping force? Would the British Government fully support such moves?
  The Prime Minister: This is a hypothetical question, but we have made clear our attitude. Indeed, it was I who raised with the former Prime Minister of Canada the idea of a Commonwealth peace-keeping force for this purpose, including Canadian and British units, but the discussions with Chief Enahoro were principally on the possibility of urgent moves towards a cease-fire, and also on the relief question.
  Mr. Hugh Fraser: Would the right hon. Gentleman, in view of the disaster which continues in Nigeria, not consider approaching, when he talks to Chief Enahoro or others, the idea of something like the Aburi agreement, which was signed and agreed but which everyone has reneged upon, and which would make possible an early settlement of this question?
  The Prime Minister: I agree with the right hon. Gentleman's description of this tragedy, and also about the need for an agreement which will be honoured, but he will know the very great patience with which not only the Emperor of Ethiopia but the O.A.U. has pursued an agreement. Yet still the agreement is eluding both parties, and still there is no agreement to get relief supplies, either by the land route or by daylight flights, into Biafra.
  Mr. Philip Noel-Baker: Has my right hon. Friend seen the report by Mr. Andrew Brewin, of the Canadian House of Commons, who has just returned from the Biafran front, and who makes a powerful case for a Commonwealth initiative in the United Nations to end the war and stop the supply of arms to all parties?
  The Prime Minister: I have seen a report by a Member of the Canadian Parliament, although I am not certain whether it was the same member to whom my right hon. Friend refers. However, on a Commonwealth initiative, there have been many initiatives taken by Britain, by other Commonwealth countries, by the O.A.U., and by the Emperor of Ethiopia. All of them have been designed to get a cease-fire, to get guarantees against genocide or recriminations after the cease-fire and to get the relief supplies flying. So far, we have been prevented, because of the intransigence of those on the spot, from getting this done.
  Mr. Heath: We recognise the many demands which have been made to secure these objectives, but will the Prime Minister consider whether the time has come to take a further initiative—and perhaps for the Government to take it themselves—first of all to try, with other countries, to get a limitation on arms going to the two countries, at least to Nigeria and Biafra, and particularly private arms; and, secondly, whether the British Government could not be responsible themselves for flying in food supplies without their being inspected by the Federal Government? Would the right hon. Gentleman consider these two initiatives?
  The Prime Minister: These are important questions, but the right hon. Gentleman has the suggestion in the wrong

  1241
  form. On the first, it is, of course, the almost total inability to control private arms shipments which has caused the difficulty all along. The problem is to get both sides to agree to a cease-fire. A limitation of arms would not, of itself, achieve that, and recent shipments to Biafra have of course prolonged the misery and the agony. On the relief side, we made it clear from the beginning that we are prepared to make Royal Air Force Transport Command planes available for both sides. I believe that it may be done under the Red Cross. Unfortunately, we can get no agreement for the daylight flights which are necessary to supplement the very limited facilities provided by night flights.
  Mr. Grimond: As one of the reasons advanced by Her Majesty's Government for the continuing supply of arms to Nigeria was that we would thereby have greater influence with the Nigerian Government, and as it appears from the Prime Minister's answers to questions that we have so far unfortunately had none, will he now agree to stop the supply of arms?
  The Prime Minister: The right hon. Gentleman must be responsible for his own deductions. We have certainly had greater influence than any other country in getting, for example, the Hunt Mission, which made powerful proposals for getting relief supplies to a starving population. That was not unimportant. Because of the concern of this House and all of us to prevent genocide, massacres and undisciplined action, we have a military observer at the battlefront reporting all the time, together with other observers, on what is happening. As for our influence, we have got the Nigerian Government to agree to a reasonable cease-fire and to relief flights, but these have been vetoed by Colonel Ojukwu on his side.
  Mr. Winnick: Despite what has been said so far, is my right hon. Friend aware that many people in Britain would like to see more done by way of supplies for the millions of people in Biafra who will die unless these supplies reach them? What is to prevent us from trying to get some sort of agreement for arms embargoes with countries which are supplying arms to either side now? Is my right hon. Friend aware that some people are
  1242
  saying that Russia, France, Portugal and ourselves have got blood on our hands because we have been sending arms?
  The Prime Minister: What my hon. Friend said was, I thought, perfectly fair when he began by concentrating on relief supplies. It was we who, through the Hunt Mission, arranged to have opened a land supply route. That is still not open, because Colonel Ojukwu has refused to let relief go through by that route. As for air supplies, I very much doubt that, even if we could get the daylight flights which the Biafrans are refusing to have, we would get enough supplies through to avoid starvation. This is a very serious matter, but, here again, while the Federal authorities have agreed to the daylight flights, they have been rejected by Colonel Ojukwu.
  Sir Alec Douglas-Home: Is it not a fact that there is really only one airfield which is essential to getting food supplies into Biafran territory? Is the right hon. Gentleman saying that access to this is now being refused by Colonel Ojukwu? If so, will he make another effort to see whether these food supplies can be flown in under British Government supervision?
  The Prime Minister: The right hon. Gentleman will be aware of the repeated initiatives which we have taken, including the recent one, in this matter. The International Committee of the Red Cross—and I shall be discussing this matter with a representative of the Red Cross this evening—is convinced that night flights alone cannot now meet the need in the rebel-held area for food and medical supplies. The Federal Government have agreed to daylight flights, but Colonel Ojukwu has still to be persuaded to agree. I have expressed the view that, even if he does, it may be inadequate, in the period in the New Year, when there will be need to fly in massive amounts of carbohydrates as well as proteins which are so much needed at the present time?
  Mr. James Johnson: In view of the difficulty of securing a collective embargo on arms supplies to Nigeria—in view, for example, of the behaviour of the French—is it not also fiction to talk about getting in such large quantities of food and medical supplies in daylight when an offer to supply these goods has been made but has been refused by Colonel Ojukwu? Is it not a question of having to accept that these are the facts of life?
  The Prime Minister: Arms supplies to Eastern Nigeria have undoubtedly prolonged the agony and the danger of starvation. That is so, from wherever the arms may come. To answer my hon. Friend's remarks about food and medical supplies, very many organisations in this country, including Her Majesty's Government, have made supplies available. The tragedy has been all along the inability to fly these supplies in in large enough quantities. I have stated clearly what the inhibitions are. It is a question of the daylight flights having so far been refused. We recognise, of course, that if we could open the land corridor—it could be opened and the Federal authorities are prepared to open it; international organisations and the Hunt Mission confirmed that it could be used—we could certainly transform the situation from the point of view of the question of starvation.

  COMMONWEALTH PRIME MINISTERS' MEETING
  Mr. Tilneyasked the Prime Minister whether he will propose the formation of a small Commonwealth peace-keeping force at the forthcoming meeting of Commonwealth Prime Ministers.
  The Prime Minister: I would refer the hon. Gentleman to the reply which I gave to a similar Question by my hon. Friend the Member for Rowley Regis and Tipton (Mr. Archer) on 22nd October.—[Vol. 770, c. 1085–6.]
  Mr. Tilney: Is not a peace-keeping force urgently needed to stop the carnage in Nigeria? Would the right hon. Gentleman bear in mind that more than half the United Nations force in Cyprus, who have done such a wonderful job, is British and that if in the future we concentrate on Episkopi the other Sovereign Base Area at Dhekelia would make a first-class Commonwealth force base?
  The Prime Minister: I agree with the tribute which the hon. Gentleman paid to what has been achieved in Cyprus, not least by the British Services out there. His question, however, refers to a standing Commonwealth peace-keeping force. We have made clear our willingness to participate in a peace-keeping force in Nigeria. The arguments against a permanent peace-keeping force would be much more difficult to overcome, because one could
  1244
  never envisage the peculiar circumstances in which it might have to be used.
  Mr. Tilneyasked the Prime Minister whether at the forthcoming meeting of Commonwealth Prime Ministers he will propose the adoption of a Commonwealth flag.
  The Prime Minister: I would prefer to wait until there is evidence of some general interest in such an emblem in the Commonwealth.
  Mr. Tilney: Since it is not easy to find either the money or the site on which to erect 28 flagpoles in other cities—that is, except in Parliament Square—would the right hon. Gentleman bear in mind that a simple flag could represent all the colours of the spectrum?
  The Prime Minister: It would not exactly be a simple flag if it had to represent all the colours. In addition to the usual practice of displaying flags in Parliament Square, I would be happy to invite the hon. Gentleman in a month's time to Marlborough House, where there is no difficulty in accommodating even the flags of all the 28 Sovereign Commonwealth countries.
  Mr. Hugh Jenkins: Would not my right hon. Friend consider the possibility of such a flag, based on the tie of the Commonwealth Parliamentary Association?
  The Prime Minister: I would require notice of that question.

  PRIME MINISTER (SPEECH)
  Mr. Blakerasked the Prime Minister if he will place in the Library a copy of his public speech at the Guildhall on 11th November about the country's economic situation.
  The Prime Minister: I did so, Sir, on 12th November. The hon. Gentleman will know I so informed the House in reply to a Question by my hon. Friend the Member for Bothwell (Mr. James Hamilton) the following day.—[Vol. 773, c. 110.]
  Mr. Blaker: Does the right hon. Gentleman recall that he paid a well-deserved tribute to the way in which shipping, insurance and banking had regularly contributed positively to our balance

  1245
  of payments. In recognition of that contribution, would he agree that the time has come to relieve them of Selective Employment Tax?
  The Prime Minister: I certainly paid that tribute. Indeed, their contribution to our invisible earnings has increased considerably, particularly in the last year, for reasons which hon. Members will understand, and particularly as a consequence of devaluation. However, I would not have felt that S.E.T. was inhibiting them from making what is now a record contribution——
  Mr. C. Pannell: On a point of order. I wish to point out, Mr. Speaker, that the hon. Member for Maidstone (Mr. John Wells) has been standing at the Bar of the House for the last ten minutes munching apples. Now he has entered the Chamber and is making an exhibition of himself. I do not know whether you have noticed this, Mr. Speaker. I would be obliged if you would do something about it.
  Mr. Speaker: I will deal with that point of order it the end of Questions.
  The Prime Minister: Before that point of order. I was saying that I was not aware that S.E.T. was preventing this record achievement of invisible earnings. It is worth pointing out that, as a proportion of our trade earnings, as a proportion of visible exports, invisibles are now less than they were some years ago.
  Mr. Alfred Morris: Further to the point of order raised by my right hon. Friend the Member for Leeds, West (Mr. C. Pannell), may 1 remind you, Mr. Speaker, if you intend to deal with his point of order at the end of Question Time, that the hon. Member for Maidstone (Mr. John Wells) will have finished his apple?
  Mr. Speaker: Order. We must get on.
  Later——
  Mr. Speaker: If I did not deal with the point of order when it was raised by the right hon. Gentleman the Member for Leeds, West (Mr. C. Pannell) it was because Mr. Speaker is probably more aware than any hon. Member how keen hon. Members are to get Questions on the Order Paper, and how anxious they are to get them answered. This is why the
  1246
  Chair is always putting on pressure at Question Time to enable as many hon. Gentlemen as possible, who have taken great pains to work out Questions, to have the opportunity to put them.
  On the issue itself, I understand that two centuries ago Parliament was a place where hon. Members brought in oranges, to eat. That custom has disappeared during the years. I do not think that its disappearance has in any way taken from the dignity of the House and, indeed, may have added to it. I have no power to interfere with an hon. Gentleman's masticatory habits, but I would impress on the House that the dignity of the House of Commons, which every hon. Member prizes, is in the hands of every hon. Member. Mr. John Hynd—on a point of order.
  Mr. John Hynd——
  Mr. Wyatt: On a point of order——
  Mr. Hynd: Mr. Speaker——
  Mr. Wyatt: On a point of order——
  Mr. Speaker: Order. The mere repeating of "On a point of order" does not entitle the hon. Member for Bosworth (Mr. Wyatt) to take precedence over the hon. Gentleman whom I had called. Mr. John Hynd.
  Mr. John Hynd: Referring to your Ruling, Mr. Speaker, can you enlighten the House whether it is equally in order for an hon. Member to indulge in liquid refreshment in the Chambers.
  Mr. Speaker: This shows the danger of any departure from the decorum of the House, which most hon. Members are anxious to preserve.
  Mr. Wyatt: On a point of order, Mr. Speaker. May I remind you that in 1945 or 1946 an hon. Member on this side was eating an orange and was ordered by your predecessor to desist from the practice? Is that not a useful precedent which, with respect, you might consider following today?
  Mr. Speaker: It is one that I must certainly look at.
  Sir A. V. Harvey: Further to the point of order, Mr. Speaker. You may not remember, but on that occasion it was the present Lord Boothby, then Mr. Boothby,

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  who sat here, and objected to pips going down his neck.
  Mr. Speaker: After the interlude, back to the business of the day.

  PRESIDENT-ELECT OF THE UNITED STATES (MEETING)
  Mr. Gresham Cookeasked the Prime Minister when he now plans to have a meeting with the President-elect of the United States of America.
  The Prime Minister: I have at present nothing to add to the Answer I gave on 7th November to a Question by my hon. Friend the Member for Ealing, North (Mr. Molloy).—[Vol. 772, c. 1076–8.]
  Mr. Gresham Cooke: Will the right hon. Gentleman consent to be photographed with Mr. Nixon, as he refused some years ago in so being? Will he press on the President-elect the fact that probably the best service he could do for Europe would be to give a lead on the question of international liquidity by either recommending a European integrated currency or possibly by revaluing gold?
  The Prime Minister: I certainly have no recollection of refusing to be photographed with Mr. Nixon. At a time when he was not of the eminence of today, I remember, as Leader of the Opposition, calling on him at his hotel. There was no difficulty, as far as I recall, about photographs being taken. If the hon. Gentleman has information which is better than mine, I hope that he will send me the details.
  To answer the second part of his supplementary question, the whole House will agree about the importance of further moves towards international liquidity. We look forward to discussing these questions with the new President after his inauguration on the same intimate basis as we discussed matters in the past with his predecessors.
  Mr. John Fraser: When the Prime Minister meets the President, will he discuss with him matters of common concern inside N.A.T.O., and particularly the affront to democracy now taking place in Greece? Will he discuss concerted ways of getting early restoration of
  1248
  democracy in that country, and throw it out of the alliance if democracy is not restored there?
  The Prime Minister: I think that it would be inconceivable if I were to meet the President of the United States without discussing all matters of relevance in the N.A.T.O. field, both military and political, which are disturbing the effectiveness of the alliance.
  Mr. Thorpe: Since the economic crisis of a few days ago could recur in a matter of months owing to the present unsatisfactory international monetary system, is there any reason why we should have to wait for the inauguration of the new President before top-level talks between representatives of our Treasury and the American Government begin? Should not these start straight away?
  The Prime Minister: This is a matter for American constitutional conventions rather than for anything affecting this House, but the right hon. Gentleman will be aware of the initiatives taken over the past four years by two Chancellors of the Exchequer on this side, and the fact that great progress has been made, although that progress has been blocked on a number of occasions by those who did not see the need for international monetary co-operation. We have also been able to build on the work of the right hon. Gentleman the Member for Barnet (Mr. Maudling), and taken it further. We would like to take it further still, and we hope that the new situation will provide the opportunity.

WHITEHALL REDEVELOPMENT PLAN
The Minister of Public Building and Works (Mr. R. J. Mellish): With permission, I will now answer Questions Nos. 37, 38 and 42.
Since the statement about the Whitehall Redevelopment Plan by my right hon. Friend the Member for Leeds, West (Mr. C. Pannell) on 3rd November, 1965, there have been a number of developments:
Studies have been made of the requirements to be met in a new Parliamentary building on part of the Bridge Street/Richmond Terrace site, and the Select

1249
Committee on House of Commons Services has made proposals in its Fourth Report for the 1967–68 Session. It is necessary that this House should consider these proposals, and I hope that an opportunity for this will be found soon. The preparation of detailed requirements and the completion of the architectural arrangements can then be undertaken.
Studies have been carried out into requirements for Government offices on the remainder of the Bridge Street/Richmond Terrace site, and a brief prepared providing also for shops, restaurants and other public facilities. The Ministry is investigating further the advantages of open-plan offices, and, meanwhile, preparing plans which will be submitted in due course to the Royal Fine Art Commission and the planning authorities, and then displayed in this House.
The programme envisages demolition work starting early in 1970 between Richmond Terrace and Derby Gate, and proceeding in stages with a view to completing the Government offices and associated development by 1975.
As stated in the House on 16th July, 1968, all three of the former Metropolitan Police Headquarters buildings will be demolished in the course of this redevelopment.
No plans or programme have yet been made for the future of the Foreign Office site.
Following the public inquiry in May, 1966, into the future of the site between Broad Sanctuary and Great George Street, my Ministry is preparing in collaboration with other site owners and interested authorities a joint brief for a comprehensive redevelopment.
A joint study is now in hand between my Ministry, the Ministry of Transport, the Greater London Council and the Westminster City Council, with the assistance of consultants, to investigate in more detail proposals for dealing with north-south traffic, including a riverside road tunnel, and the problem of east-west traffic, as the proposal for widening the Horseferry Road route, would be too costly. I expect to have a report on these further studies next spring.
The House will see, from what I have said, that the working out of detailed proposals is proceeding within the broad
1250
framework agreed following the Martin-Buchanan Reports.
Mr. C. Pannell: Is the Minister aware that it is now more than three years since the last statement was made from the Treasury Bench on the Martin-Buchanan proposals? We are grateful to him for the statement he has just made, but is he aware, and, if so, will he bring it to the notice of his right hon. Friend the Leader of the House, that the time for questions has now long passed and that the time is now, or in the immediate future, for action on this very important project, which includes not only the whole development of the centre of the capital of the Commonwealth but particularly the extension of this House and provision of the facilities which are so much needed by all hon. Members?
Mr. Mellish: I agree with my right hon. Friend that there has been an enormous delay. I hope very much that time will be found for a debate. When we have it, I hope that we shall get a decision by the House, so that we may get on with the work.
Mr. Sandys: Will the right hon. Gentleman ensure that when a debate takes place it will be wide enough for us to discuss all the aspects of the plan—this House, the Bridge Street plan, Parliament Square, and also the Foreign Office site?
Mr. Mellish: I give the right hon. Gentleman the assurance that when the debate takes place—and my right hon. Friend the Leader of the House assures me that he is alerted to the importance of this and we hope that it will be very early after the Christmas Recess—we shall have the terms of reference in such a fashion that the right hon. Member for Streatham (Mr. Sandys) can talk about anything.
Mr. John Smith: Is not this taking rather too narrow a view of the matter? Is the Minister aware that the Whitehall Plan proposes to dump 10,000 civil servants into the centre of Westminster? Is it realistic to get on with building plans before debating the questions of national and regional government, which may make those civil servants more necessary elsewhere?

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Secondly, in view of the large number of very important and much-loved public buildings which may be demolished, will the right hon. Gentleman have a proper public inquiry into the plan as a whole?
Mr. Mellish: I should have thought there had been enough inquiries into this plan to satisfy everyone. The hon. Member will be able to express his point of view when we have the debate. As to the number of civil servants who will find themselves in this precinct, at the moment civil servants are spread all around London. It is about time that we tried to get them together. That is one of the objects of the new buildings.
Mr. Batsford: Is the right hon. Gentle man aware that we on this side of the House welcome his assurance that before any final decision is made this House will have an opportunity to debate the question?
May I ask the right hon. Gentleman two further questions? First, does he agree that the present architectural form of New Palace Yard should remain entirely undisturbed? Secondly, in consultations with other bodies on the north-south traffic route, is his aim to establish a pedestrian precinct in Parliament Square?
Mr. Mellish: I am glad to have the hon. Member's support that the matter should be debated soon. If there is a Division we shall know exactly what hon. Members want us to do.
On the present architecture of this House, the hon. Member will know there have already been proposals to have other buildings put inside this Palace and that they have been rejected by the Services Committee. We shall see whether the House endorses that. Personally, I hope that it will.
In reply to the hon. Member's second question, a traffic feasibility study is going on, linked with the possibility of a tunnel by the river bank outside the Palace. Studies on whether this is a practicability are going on.
Mr. Thorpe: Is the right hon. Gentleman aware that the speed with which he delivered his answer and the lack of decibels which accompanied it made it difficult to follow what he was saying,
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particularly for older and deafer hon. Members such as myself? Is he aware that before there is any question of the commercial letting of offices or shops to which he alluded, or of satisfying the growing hunger of Ministers, no scheme will be satisfactory to hon. Members until every hon. and right hon. Member has proper office equipment and premises in which to do his job'?
Mr. Mellish: I know that the Liberal Party has many difficulties and problems, but I did not know that deafness was one. I read the statement rather quickly because there is another statement to be made for which the majority of hon. Members are waiting. I thought that it was in the interests of the House that I should read it in the way I did. We are looking forward to anything the right hon. Member may say when we have the debate.
Dr. David Kerr: Can my right hon. Friend assure the House that there is no overlap and perhaps no conflict between the work of his Ministry and the work of the Services Committee, and also whether there will be an opportunity to look at schemes other than the Martin-Buchanan scheme, in particular, the interesting work of Mr. Christopher Libby? Will he see that these proposals are available in the Library?
Mr. Mellish: When the debate is held, if I am fortunate to catch Mr. Speaker's eye, I shall refer to Mr. Libby's contributions. I hope that hon. Members will express their personal views on the facilities they want in the future.
Mr. Heffer: Will my right hon. Friend give an assurance that as it will be six years before the buildings across the road are demolished this will not be used as an excuse for holding up provision of better conditions for those who work in these obsolete buildings at present?
Mr. Mellish: I am glad that my hon. Friend has referred to conditions because the conditions, not only of hon. Members but for the staff of the House, are very bad indeed. It is about time that we made up our minds what we intended to do. Let us get on and do it.
Mr. Robert Cooke: Will the right hon. Gentleman make available to the House all full details of what he has announced

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today in the way of offices, shops and so forth in advance of the debate, so that we may have a full discussion? May I ask two detailed questions? Does he envisage demolition of the Norman Shaw part of the Scotland Yard complex and is it a fact that the Brydon Treasury building is not affected?
Mr. Mellish: It is our intention to demolish the Norman Shaw building. If the hon. Member has doubts about the wisdom of that, I ask him to look inside it, never mind the outside.
So far as demolition of offices is concerned, consideration of hon. Members' facilities will be taken care of by transferring them elsewhere if demolition takes place.
Mr. Howie: In regard to the architectural form of New Palace Yard, if a car park can have one, is it not time to refer to Barry's original scheme for building over New Palace Yard?
Mr. Mellish: That is a matter of opinion, but I hope that we shall not build inside the Palace. It will be a matter for hon. Members. Decent conditions for the staff will be the first consideration of building across the road in Bridge Street. The way to do that is by an archway under Bridge Street. We think this a good solution, but I hope that all hon. Members will read the Services Committee's Report before they make their comments.
Mrs. Anne Kerr: Has my right hon. Friend considered the idea of asking the House of Lords simply to move out of this building so that we can have modern office equipment and the staff of this House may have proper quarters in which to work and this place may become a real House of Commons, not a place for a lot of hangers-on?
Mr. Mellish: I have enough trouble at the moment without saying what we ought to do with the House of Lords. Let us have this debate first and clear away some of the arguments.
Mr. EnglishIs it not clear that the services required by hon. Members cannot be provided at reasonable cost unless the new House of Commons is built on the site from Bridge Street to the Ministry of Defence? Is this not to be done merely because the Foreign Office wants to use the site?
Mr. Mellish: That is a personal view, and we are all entitled to a personal view. Any suggestion that there should be a brand-new House of Commons, and that this one should be discarded, I, for one—I love this place and have been here for 22 years—would very much regret.

FALKLAND ISLANDS
The Minister of State, Foreign and Commonwealth Office (Mr. Fred Mulley): With your permission, Mr. Speaker, and that of the House, I wish to make a statement on the Falkland Islands.
My right hon. and noble Friend Lord Chalfont visited the Falkland Islands from 23rd to 28th of November to establish direct Ministerial contact with the people of the islands and to explain to them Her Majesty's Government's policy in their talks with the Argentine Government.
During his stay in the Colony, my right hon. and noble Friend was able to meet a large part of the island's population both in Stanley, the capital, and in the settlements, and he repeated to them the assurances that Ministers have given the House on many occasions this year, namely, that it is not the policy of Her Majesty's Government to transfer sovereignty over these islands against the wishes of the islanders.
My right hon. and noble Friend also had a number of meetings with the Islands' Executive Council, which was enlarged for the duration of his visit to include the unofficial members of the Islands' Legislative Council. On 25th November, the Executive Council told Lord Chalfont that in his meetings with the general public it would wish him to state, first, that he had discussed in detail with the Executive Council the present position reached in the talks with Argentina and the position which we hoped to reach soon; and, secondly, that the members of the Executive Council accepted that the British Government had been acting in good faith in the talks with Argentina and that the agreed position, if it is reached, would be fully in keeping with the promise that Her Majesty's Government would not transfer sovereignty against the wishes of the Falkland Islanders; and, accordingly.

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Lord Chalfont was able to give this additional assurance.
As my right hon. Friend the Foreign and Commonwealth Secretary explained to the House on 26th March last, following the United Nations General Assembly Resolution 2065 of December, 1965, we have had talks with Argentina with the object of securing
"a lasting and satisfactory mondus vivendi between these islands and Argentina".
In particular, we are concerned to restore and improve communications between the islands and the nearest mainland since this would be of great benefit to the islanders.
We have made clear throughout these discussions, as the House has been informed on many occasions, that no transfer of sovereignty can be made against the wishes of the Falkland Islanders.
I hope that it may shortly be possible to conclude the present stage of the discussions and their outcome will then be reported to the House.
Mr. Braine: Is it not the case that the real object of Lord Chalfont's mission was to tell the Falkland Islanders that if they retain their present status their future is bleak? Why has no account been taken of recent proposals which may well transform the economy of the islands?
Secondly, would the right hon. Gentleman explain the extraordinary statement attributed to Lord Chalfont, in Buenos Aires, that Britain and Argentina may make a joint effort to convince the islanders that a change of status would be convenient?
Lastly, in view of the unchanging wishes of the Falkland Islanders to remain British, and the support which those wishes have on both sides of the House and in this country, will the Government take the issue of sovereignty off the agenda of any further talks with the Argentine?
Mr. Mulley: My right hon. Friend's visit was made in response to suggestions in this House, on the one hand, and in the Falkland Islands from the Governor and the Executive Council, on the other, that a Minister should visit the islands. He is the first Minister who
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has made such a visit in the history of this Dependency. The purpose was to explain the position in the light of a good deal of confusion which has arisen and not to persuade the islanders or in any way to direct their views. Secondly, I have no information about the so-called attributed quotation in Buenos Aires.
On the third point, about taking sovereignty off the agenda, the purpose of the talks is to restore communications between the islands and Argentina. The absence of such arrangements at present is a very great hardship. We have the absurd situation of imports from Argentina going all the way up to Montivideo and 1,000 miles across the sea to the islands. The purpose is to improve communications and in that context we are prepared to talk about sovereignty—[HON. MEMBERS: "Why?"]—but only in the context—[HON. MEMBERS: "No."] With respect, the Government stand on this position. It is for the islanders to say and not for us.
Mr. Hamling: While welcoming my right hon. Friend's thrice-repeated assurance that the Government's policy is that independence will be maintained so long as the islanders want it, may I ask him to say whether the statement of Lord Chalfont, to which the hon. Member for Essex, South-East (Mr. Braine) referred, was a genuine statement or newspaper talk?
Further, is my right hon. Friend aware that there are great economic interests involved here and that some of us on this side of the House are not prepared to see the islands handed over to a Government who treat Left-wing parties like some hon. Members opposite would like to treat them?
Mr. Mulley: I give the assurance that the Government have no intention to transfer these islands to Argentina unless that is the express wish of the islanders.
On the question of the news leak, we say many times in the House that we are not responsible for what appears in newspapers. I have no knowledge of that. I cannot believe that it was said, because it would be totally at variance with many excellent statements which Lord Chalfont has made in Press conferences in Argentina and the Falkland Islands.
Mr. Clark Hutchison: Does the right hon. Gentleman realise that, although there may be no transfer of sovereignty, the spirit of the talks which Lord Chalfont had with the islanders has caused confusion and depression in the islands? What steps will the Government take to rectify the damage which they have done? Secondly, will a statement be made about the new seaweed project? Thirdly, may we be given an exact record of the discussions between Lord Chalfont and the Argentine Minister of Foreign Affairs and his officials?
Mr. Mulley: If I am to do justice to these questions, my answers must be a little long, and I hope that the House will forgive me for that.
On the first point, apart from creating confusion, I understand—and again I rely only on Press reports—that the hon. Gentleman sent a telegram to a trade union leader in the islands asking him to organise a petition and had a reply back from that gentleman, who is also a member of the Executive Council, saying that the Executive Council was satisfied with the assurances which it had received.
Lord Chalfont did not have any formal talks or negotiations in Argentina. As a matter of courtesy, he met the Foreign Minister. It would be inappropriate to circulate any record of talks following a dinner party.
We have known about the possibility—and I use that word advisedly—of seaweed developments for some months, but it was put to the Governor and others in the Falkland Islands that this was a fairly remote possibility. Only in July the Governor expressed his disappointment to Mr. Merton that even the prospect of a pilot scheme was remote. The dramatic developments of the last few days have been made known to us only through the courtesy of the B.B.C. and the newspapers.
Mr. Winnick: Is my right hon. Friend aware that his statement will be warmly welcomed by all those who have the interests of the people of the Falkland Islands genuinely at heart? Would he agree that this matter is like that concerning Rhodesia and Gibraltar and that what must be taken into account are the views of the majority of the people in any given Colony? If they wish
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to remain British it is only right and proper that they should do so.
Mr. Mulley: I am grateful to my hon. Friend. The situation is very similar to that in Gibraltar. While the people desire to retain their link with us, we are happy. But if the situation should change, as we have told the Gibraltarians, we accept that, too.
Sir Alec Douglas-Home: Would the right hon. Gentleman give the assurance that the sovereignty of the Falkland Islands is in no sense being used as a bargaining factor in the talks with the Argentine, and that it will not be so used in the talks which are to take place over the rest of this week? If he would give that assurance, the House might be satisfied. There is a feeling that sovereignty is being used in some sense as a bargaining factor, which would be totally wrong.
Mr. Mulley: I am willing to give the assurance in the form requested. Anyone with the remotest experience of diplomacy knows that it would be unwise to try to use it in a bargaining context when we attach the firm condition to it that it can be done only with the wishes of the islanders. We know, and I am sure that Argentina knows, the state of opinion in the Falkland Islands. The only purpose of the discussions and negotiations with Argentina is to try to improve the situation in terms of communications and facilities for the people in the islands.
Mr. Shinwell: In view of statements attributed to Lord Chalfont which have appeared in the Press over the past few days, apart from being mentioned in the House today, is it possible for my right hon. Friend to ask Lord Chalfont whether there is any truth in them? Why does my right hon. Friend dismiss this allegation as if it is of no consequence? Surely it is of considerable significance and has a bearing on the principle involved.
Mr. Mulley: Lord Chalfont, on his visit, was accompanied in every meeting, except for the confidential meetings with the Executive Council, by five journalists. A great deal has appeared in the newspapers about this matter. In the short time that Lord Chalfont has been back, I have not thought fit to ask him about

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every line in every newspaper. I cannot conceive that Lord Chalfont would make a statement of the kind—[HON. MEMBERS: "Ask him".] I will ask him, but I could not do so in between the question being asked and my answering it.
Mr. James Davidson: What, if any, concessions or undertakings have so far been given by the Argentine during the course of the talks? Will the Minister give an undertaking that before there is any question of a change in the sovereignty of the Falkland Islands the people there will be allowed to give an indication of their views through a referendum, as they were in Gibraltar?
Mr. Mulley: Any talk of a referendum is very premature, because we are all aware of opinion in the islands at present. As to the question of what concessions or other matters have been discussed, I cannot reveal the details of the negotiation until it is concluded, when I have undertaken that the result will be reported to the House.
Mr. Wyatt: Is my right hon. Friend aware that Lord Chalfont said some very odd things once in Zurich? What is worrying everybody is that Her Majesty's Government appear to be trying to persuade the islanders to hand their sovereignty over to Argentina, and nobody can understand why the Government are trying to do that.
Mr. Mulley: I take issue with my hon. Friend on what I thought were very unfair remarks about my right hon. and noble Friend. Anyone who thinks that the islanders have been pressured by Lord Chalfont completely misjudges the character of the islanders and Lord Chalfont. The islanders will not be pressured into taking a decision if they think that it is against their interests, and Lord Chalfont would not so seek to persuade them.
Sir A. V. Harvey: Why did the Government create doubts about the matter in the first place? Does the right hon. Gentleman recall that less than a year ago the Government admitted that negotiations were taking place with the Argentine for the supply of warships? Why at this late stage are we now being told that the talks are about communications? Why not tell us at the begin-
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ning what is taking place? Will the right hon. Gentleman consider publishing a White Paper, giving all the facts and all the things that Lord Chalfont has said?
Mr. Mulley: What I have said this afternoon follows almost word for word what my right hon. Friend the Secretary of State told the House in the middle of the night of 26th–27th March. I think that it would be appropriate to consider a White Paper when—I hope shortly—the present stage of discussions has been concluded.
Mr. Alfred Morris: Since the Falklanders have made it repeatedly and emphatically clear that they wish to remain British, could the matter be left in abeyance until the improbable date when they say that they have changed their minds?
Mr. Mulley: The matter cannot be left in abeyance—[HON. MEMBERS: "Why not?"] Because we want, if possible, to improve the islanders' position with regard to communications. It is not satisfactory for them to remain in an isolated position. The only port they can use is 1,000 miles away and the nearest mainland is less than 300 miles away. All communications have to go that very long way round, and travelling to school, and so on, is very difficult. We want to improve their position.
Mr. Sandys: Does the right hon. Gentleman realise that to leave in the air the alleged statement by Lord Chalfont about a joint duty of the Argentine and British Governments to convince the Falklanders that it is to their advantage to make a change would cause very serious anxiety and difficulty? Will the right hon. Gentleman ask his right hon. and noble Friend whether that statement was, in fact, made, so that the matter can be cleared up; and will he undertake to make a statement to the House tomorrow?
Mr. Mulley: I will put the point to my right hon. and noble Friend, and report accordingly to the House.
Miss Herbison: My right hon. Friend will be aware that, in spite of all the assurances given by Ministers from the Dispatch Box, there are still very grave fears among the people of the Falkland

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Islands that they will be handed over to Argentina. What further evidence do the Government want about the will of the people of the Falkland Islands? If they need any further evidence, why cannot they state forthwith that they will meet the will of the people of the islands to remain as they are, no matter what other discussions there are with Argentina to help them with communications, and so on?
Mr. Mulley: If I have not been able to make the Government's position clear in this respect, I do not know what the words in the English language mean. I should have thought that the words "there will be no transfer against the wishes of the islanders", are clear enough for everyone to comprehend.
That statement has been made not only today but many times, and was made in a remarkably clear and well-argued speech by my right hon. Friend the Secretary of State in March, the significance of which was that we had no more questions and trouble about the matter for a very long time after. I suggest to the House that the doubts and troubles do not come from the Government side of the House.
Mr. Birch: The right hon. Gentleman said that he had known for some months about the seawed project. Is not that a very important project, and would it not have altered the views expressed by Lord Chalfont about the weakness of the prospects of the Falkland economy if he had chosen to mention it?
Mr. Mulley: The position is not that I personally have known, but that the Government of the Falkland Islands have known about the possibility of the seaweed project for some months. There was correspondence between Mr. Merton and the Governor, but it was couched in terms of "maybe in five years, maybe in a much longer period" it would become an interesting project.
As I have told the House once already, the Governor told Mr. Merton by letter, I think it was in July, that he was very disappointed that even the possibility of a scheme was so remote. The right hon. Gentleman has been in business. Would he stake he whole of his future on an extremely vague undertaking of that
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kind? If it can become a real possibility, we naturally welcome anything that would increase the diversification of the economy of the islands.
Mr. Brooks: Will my right hon. Friend clarify why it is apparently so urgent to improve communications with the nearest mainland, which is the desert of Patagonia, where only a few Welshmen live? In view of the need to put the matter beyond doubt once and for all, does my right hon. Friend agree that the Constitutional Conference to be set up in the near future might have its terms of reference widened to include the problems of small dependent territories such as the Falkland Islands, and possibly consider their becoming constituencies of the United Kingdom and sending representatives to this House?
Mr. Mulley: The question of the terms of reference of the Constitutional Conference is not for me. My hon. Friend's suggestion is interesting, and no doubt he will convey it to my right hon. Friend the Prime Minister. I do not think that it would deal with the Falkland Islands situation in the coming weeks, when I hope to be able to report further to the House.
Mr. Peyton: Why cannot the right hon. Gentleman accept without qualification or reservation the remarks of his right hon. Friend the Member for Lanarkshire, North (Miss Herbison)? This would entirely satisfy most of us. Is the right hon. Gentleman aware that there is a deep suspicion, possibly born from the Government's record, that Lord Chalfont was sent on a very slippery mission, and that if he was not he made remarks which, perhaps unintentionally, gave very grave grounds for suspicion?
Mr. Mulley: I have undertaken to look at the question of the remarks about which complaint has been made. I cannot answer the question now, but I am certain that Lord Chalfont did not express that view. As to his mission, when we send a Minister—and Lord Chalfont is the Minister in the Foreign and Commonwealth Office with particular responsibility for that part of the world—in response to demands in the House and in the Colony, the House should be satisfied instead of making the kind of complaints we have heard.
Earl of Dalkeith: On a point of order. Is not this possibly a case where it might be for the convenience of the House if the Minister concerned, Lord Chalfont, could be invited to come to the Bar of the House and answer questions directly?
Mr. Speaker: Order. We should be going back a long way in history if we attempted that procedure.
Mr. Jay: Will the Minister at least say clearly now whether it is the fact that the great majority of these islanders wish to remain British?
Mr. Mulley: In present circumstances, I think that there is no question but that the wish of the islanders is to remain British.
Mr. Boyd-Carpenter: Is not the impression suggested by the hon. Member for Bosworth (Mr. Wyatt), that the Government are trying to push the islanders into Argentina really fortified by the fact that during five days Lord Chalfont did not think it necessary to refer to the seaweed scheme, with all its possibilities, but found time to tell the islanders that if they wanted aid from this country they must greatly increase their taxation?
Mr. Mulley: I should make this quite clear. There was no seaweed scheme when Lord Chalfont was in the Falkland Islands. The proposals which have recently been disclosed—I think that the gentleman who sponsors them says that they have a political motivation—were first made public not to the Government, but through the B.B.C. and the Press on Friday after Lord Chalfont had left the islands. The only discussion otherwise had been between Mr. Merton and the Governor, so that they were already seized of the situation, and they expressed their disappointment at the fact that the possibility of this coming to fruition seemed so remote. There was no scheme of the kind about which we now read in our newspapers in existence or within the knowledge of the Government at the time of Lord Chalfont's visit.
Mr. Paget: Can there be any doubt that the seaweed proposal, and, indeed, any other proposal for the development of these islands, would stand a very much better chance if there were communications and co-operation with Argentina than if there were not? Is that what Her
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Majesty's Government are attempting to provide?
Mr. Mulley: I think that improved communications, co-operation, and, for a small community of this kind, good relations with its neighbour, are matters of very great importance.
Mr. Turton: Does the Minister appreciate that to publish a White Paper after the negotiations have been concluded will be too late for the House? Will the Minister tell us, in particular, whether these talks are covering the Falkland Islands dependencies in Antarctica, where there are very rich mineral deposits?
Mr. Mulley: I can assure the right hon. Gentleman that no step will be taken before the House has been fully apprised of any conclusions that come from the current talks. In any case, as the House well knows, although it is clearly a remote possibility, any transfer of sovereignty could take place only with the consent of the House.
Mr. Heath: The Minister has declared that the Falkland Islanders have no wish whatever to give up British sovereignty. Is it therefore not plain, and does not the right hon. Gentleman recognise, that the great majority of the House are absolutely determined to support the Falkland Islanders in this view? Therefore, sovereignty cannot pass.
Does not the right hon. Gentleman recognise that there can be no point whatever in discussing sovereignty with Argentina and that it should be immediately taken off the agenda? Until this happens, there is bound to be the gravest suspicion about Her Majesty's Government's motives in discussing this matter at all.
Mr. Mulley: It is not as simple as that, as I should have thought the right hon. Gentleman would know. It is not a question of an agenda. It is a case of discussing the position in the light, on the one hand, of the United Nations resolution—[HON. MEMBERS: "Ah."] It was only through the United Nations resolution that we were able to get these talks going.
The very unsatisfactory situation as regards communications and relations with Argentina pertained throughout the administration of the Conservative Party,

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and nothing was done about it. We want to utilise this situation to reach the best understanding we can between the islanders and the Argentine Government. We have made it quite clear to the Argentine Government that, unless the Falkland Islanders so desire, we shall not transfer sovereignty. I have made it quite clear that we do not rule out the possibility that in the future the islanders may change their minds.
Hon. Members: Resign.
Mr. Speaker: Order. The islanders do not need any help from noise in the House.
Mr. Mulley: The simple proposition that I put to the House is that, while we stand fully behind the islanders if they desire to remain British, in a different set of circumstances in the future I would hope that whichever party was then in power would be prepared not to stand in their way if the islanders change their minds. At present, there is no question but that the islanders wish to stay British. This has been the clear position we have adopted in our talks with Argentina. The words that we could not consider any transfer of sovereignty against the wishes of the islanders are as clear and plain as words can be.
Mr. Mayhew: Have the islanders given any evidence to the Government that in some future circumstances they might wish not to be British any more? If they have given no suggestion along these lines, are they not entitled to resent the statement which came from the Minister?
Mr. Mulley: I do not think that there is any resentment. I think that there has been concern over a long period in the islands, because their economy is based largely on wool, the price of which has been falling in world markets, because they are so isolated, and because the possibilities for the islands' younger generation are so limited. It is this concern, rather than the question whether they remain British or otherwise, that has been exercising the islanders' minds.
Mr. Thorpe: Since the right hon. Gentleman's penultimate reply was somewhat equivocal, may we know whether the fact that a Colony many thousands of miles away from the United Kingdom wishes to remain associated with and part
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of the United Kingdom and Colonies is a matter which the Government treat with pride and gratification or with dismay?
Mr. Mulley: I think that it has been made clear from both sides of the House today that it is received with great satisfaction. I certainly pay my tribute to the islanders; I stand second to none in my admiration for the hard work of these people and for their loyalty to this country and to the Crown.
Mr. Blackburn: Is my right hon. Friend surprised that after all the words he has used there is still suspicion in the House? Why cannot he just say simply that the Falkland Islanders have stated that they want to remain loyal to this country and, therefore, there is no question of any transfer of sovereignty ever?
Mr. Mulley: I thought that is what I have said.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order—
Sir C. Osborne: On a point of order. Since you, Mr. Speaker chose the hon. Member for Chorley (Mr. Kenyon) and myself to go to the Falkland Islands less than two years ago, and as they raised two important points with us which have not been raised today, would you allow me now to put those matters to the Minister?
Mr. Speaker: I am grateful to the hon. Member for Louth (Sir C. Osborne) for refreshing my memory of that important delegation. We are delighted that he got back from the Falkland Islands. He may put his question.
Sir C. Osborne: The Falkland Islanders raised two questions with the hon. Member for Chorley and myself. Their economy is shrinking because the price of wool is falling and they are having great difficulty in keeping the young men in the islands. They want to know, first, whether Her Majesty's Government will give them some economic aid if they run into more difficulties, as we have given economic aid to the newly-independent countries in Africa and Asia.
We were pressurised in Buenos Aires by the British colony there, who said that they represent much greater industrial

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and financial interests than the Falkland Islanders. The islanders were frightened—this was the second matter they raised with us—that it was the British colony in Buenos Aires which was pressurising the Government into taking action. Will the Minister make a statement on these two issues?
Mr. Mulley: We give no aid to the islands at present because the need has not arisen. The average income per head in the islands is about £500, almost the same as that which obtains in the United Kingdom. The rates of tax are very low. I think that it is about 2s. in the £1 on £1,000 and the highest rate of tax is 5s. 9d. starting at £6,000. I should have thought that before the question of budgetary aid arose the islanders have some possibilities themselves.
On the question of capital aid, we have made it clear to the Executive Council that, if it puts forward specific and realistic schemes, we shall consider what can be done. But no such proposals have been made since the early 1950s, when there was an attempt which, unfortunately, failed to get an export of frozen mutton.
On the point about Her Majesty's Government being pressurised by Anglo-Argentinians in Buenos Aires, that is certainly not the case.
Mr. Sandys: On a point of order, Mr. Speaker, I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the inability of the Government to give an unequivocal assurance that, in their present discussions with the Argentine Government, they will make it absolutely clear that there is no qustion of renouncing sovereignty over the Falkland Islands."
Mr. Speaker: The right hon. Member for Streatham (Mr. Sandys) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter which he thinks should have urgent consideration, namely,
"the inability of the Government to give an unequivocal assurance that, in their present discussions with the Argentine Government, they will make it absolutely clear that there
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is no question of renouncing sovereignty over the Falkland Islands."
As the House knows, under the revised Standing Order No. 9, Mr. Speaker is directed to take into account the several factors set out in the Order but to give no reasons for his decision.
I have listened very carefully to what has just taken place, and I have given careful consideration to the representation that the right hon. Gentleman has made. But I have to rule that the right hon. Gentleman's submission does not fall within the provisions of the revised Standing Order and that, therefore, I cannot submit his application to the House.
Mr. Biggs-Davison: On a point of order, Mr. Speaker—
Mr. Speaker: Order. We have established quite a good precedent that, when Mr. Speaker makes the very difficult decision of ruling on Standing Order No. 9, that is the end of the discussion. I hope that the hon. Member for Chigwell (Mr. Biggs-Davison) will keep to that. Is it the same point of order?
Mr. Biggs-Davison: No, Mr. Speaker. It is a different one, having nothing to do with the application under Standing Order No. 9.
Since it appears that Lord Chalfont cannot be brought to the Bar of this House, and since it also appears from my researches that he cannot now be impeached, may I ask you whether the Leader of the House is not anxious to catch your eye for the purpose of informing the House when we may have the further statement which has been indicated by the Minister of State—[An HON. MEMBER: "Promised."]—promised by him, to clarify his disastrous diplomacy?
Mr. Speaker: That is a point for the Leader of the House and not for the Chair.
The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): Mr. Speaker, I think that my right hon. Friend the Minister of State said that he would have talks with his right hon. and noble Friend, Lord Chalfont, and that he would inform the House accordingly. I will see that that is done tomorrow.

ORDERS OF THE DAY

  CUSTOMS (IMPORT DEPOSITS) BILL
  Considered in Committee.
  [Mr. SYDNEY IRVING in the Chair]

Clause 1

  CHARGE OF IMPORT DEPOSITS
  4.25 p.m.
  Sir Peter Rawlinson: I beg to move Amendment No. 85, in page 1, line 14, after 'Kingdom', insert:
  'save for goods originating in and consigned from any member state of the European Free Trade Association or from the Republic of Ireland'.
  The Chairman (Mr. Sydney Irving): With this Amendment, I think that we might discuss Amendment No. 98, in page 1, line 14, after 'imported', insert:
  'excepting those from nations of the European Free Trade Area'.
  Amendment No. 35, in Clause 3, page 3, line 39, at end insert 'either (i)' and Amendment No. 42, in page 3, line 42, at end add:
  'or
  (ii) at the expiration of a period of three months unless the duty has prior thereto been approved by a resolution of the Council of the European Free Trade Association'.
  Sir P. Rawlinson: The purpose of the Amendment is to clarify the position which arises from the effects of Clause 1 and our treaty and convention obligations. I seek to exclude from these provisions the European Free Trade Area and the Irish Republic until it is clear that the inclusion of goods from those countries is not at the expense of a breach of our international agreements. It is right that the Committee should be given categorically the most authoritative advice that it can have, which is from the Law Officers of the Crown.
  This point was first raised in the economic debate on 25th November, in an intervention by my right hon. Friend the Member for Streatham (Mr. Sandys) to the Chancellor of the Exchequer. At
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  the time, the Chancellor did not appear able to give a full answer to the point. It is not surprising that Ministers cannot give sudden answers to legal points, but this must be a matter which was the subject of careful consideration before introducing the proposal. It must have been basic to the scheme to establish that it could be done within the framework of the Convention, otherwise it would suggest that this legislation has been very hastily conceived and ill-prepared.
  As I say, the Chancellor was not able on that occasion to give a full answer to the House. In winding up the debate, the Chief Secretary said that the Government had taken the best advice available to them and that there is no specific prohibition in the Convention. He added that the Government are entitled to take this action and that no question of illegality arises.
  When one examines the Convention and the Bill which ultimately has been produced, it is stating it a little high to say that there is no question of illegality. It may be that the advice that we shall receive from the Law Officers will be that, in their opinion, this is legal. But to say that no question of illegality arose surely was stating the case very high.
  When we came to Second Reading, on 28th November, the Financial Secretary said that it was not appropriate to discuss whether this was legal, because it was for the E.F.T.A. Ministers themselves to decide. In winding up that debate, the Minister of State said that the matter would be taken up within the E.F.T.A. Council. The indication was that Ministers were saying, "It is not for us, it is inappropriate somehow for the House of Commons, to examine this question". The proposition that the House should merely accept, on the ipse dixit of Treasury or economic affairs Ministers, that everything is perfectly all right is one which the House ought not to accept.
  My right hon. and hon. Friends and I have, therefore, requested the advice of the Law Officers so that we may have a categorical answer. The Attorney-General, as right hon. and hon. Members know, comes here in these circumstances not as a political Minister and not in his quasi-judicial rôle, but in his rôle as adviser to Parliament. I emphasise that it will be in this latter rôle that he will

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  answer the debate today. On 27th May, 1963, it was said in the House that
  "The Attorney-General, whoever he may be, is not only the legal adviser to the Crown and to the Government. He is also a servant of the House. It is from time to time his duty to advise the House on legal matters—a duty going beyond his responsibility to the Government and the Crown—and the hon. and learned Gentleman, like his predecessors, has frequently accepted this duty …"—[OFFICIAL REPORT, 27th May, 1963; Vol. 678, c. 993.]
  Those were the words of the present Prime Minister, when he was Leader of the Opposition, in speaking of what is generally accepted as the rôle of the Attorney-General.
  The question which we put to the adviser to the House, in his rôle as counsel to this Committee, is this: does Clause 1 unamended breach the E.F.T.A. Convention of 20th November, 1959, and the Agreement for a free trade area established between Great Britain and Ireland? The answer to that question will amount to an opinion in law on the construction of the Bill's provisions and the Articles of the Convention. However, before coming to those matters, I have another question to put.
  If it is the advice of the Law Officers that there is no breach, may we be told what argument will be advanced before the E.F.T.A. Council to establish that there is, prima facie, no breach? Further, turning, as it were, to the political Ministers, if that argument is presented to the Council and the Council rejects it, will the Government repeal the Bill? May we have their undertaking to that effect?
  The Long Title of the Bill tells us that its purpose is
  "To grant a new duty of customs repayable after a specified period."
  Next, subsection (1) provides that
  "there shall be charged on all goods imported into the United Kingdom a duty of customs, to be known as an import deposit. …"
  Again, I emphasise the words, "a duty of customs". Next, in subsection (3):
  "The import deposit chargeable on any goods shall be payable in addition to any other duty of customs.…"
  In the light of all those words, it is clear that there is here a duty of Customs about to be levied. It is said to be a duty of Customs, and the opening words
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  of subsection (3) specifically speak of it as
  "in addition to any other duty of customs".
  The Attorney-General will be well aware that the definition of such is
  "A duty charged upon commodities on their importation into a country".
  Thus, Parliament is asked to give power to levy an extra duty, and this is explicable only if it be extra to what is now levied or, alternatively, if it be a levy, burden or duty which did not exist hitherto. The question is: can that duty be levied without breaching the Convention?
  I turn now to the Convention. Article 1 establishes the association of nations
  "to be known as the European Free Trade Association, hereinafter referred to 'the Association'".
  Article 2 sets out the objectives, and Article 3 deals with the matters relevant to the advice which we wish to receive, namely, import duties. Article 3(1) provides that
  "Member States shall reduce and ultimately eliminate, in accordance with this Article, customs duties and any other charges with equivalent effect, except duties notified in accordance with Article 6. …"
  Paragraph 2(a) provides that
  "On and after each of the following dates, Member States shall not apply an import duty on any product at a level exceeding"—
  certain percentages, the levels of which have been altered since that date. There is specific provision there that Member States shall not apply an import duty. If the duty now proposed is an import duty, we want to know how it can be levied without breach of Article 3 of the Convention.
  Next, one must consider whether what is proposed is, because of its character and despite what is said in the Bill, not an import duty. Accordingly, it is necessary to turn to Article 6:
  "Member States shall not
  (a) apply directly or indirectly"—
  I emphasise the word "indirectly"—
  "to imported goods any fiscal charges in excess of those applied directly or indirectly to like domestic goods…"
  Paragraph 6 of the same Article, the definition paragraph, tells us that
  "fiscal charges' means revenue duties, internal taxes and other internal charges on goods".

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  The next question, therefore, is: if what is proposed is not an import duty, does it come within the terms of Article 6 and is it contrary thereto?
  I hope that the Committee will forgive me for putting the matter in this way. I do so so that we may have an authoritative reply from the Attorney-General. I turn next to Article 10:
  "Member States shall not introduce or intensify quantitative restrictions on imports of goods from the territory of other Member States".
  There is a plain prohibition there. On the question whether this is a quantitative restriction, one turns to Article 17(2):
  "Any products which have been exported from the territory of one Member State to the territory of another Member State and have not undergone any manufacturing process since exportation shall, when reimported into the territory of the first Member State, be admitted free of quantitative restrictions and measures with equivalent effect. They shall also be admitted free of customs duties and charges with equivalent effect…"
  Therefore, combining Articles 3, 6, 10 and 17, will the Attorney-General advise us under what provision it can be said that the Bill is not caught? If it is not an import duty, is it not caught under Articles 6, 10 and 17, or, alternatively, is it not caught under Article 3? I appreciate that, under the Convention, there is a complaints procedure, under Article 31, providing that any aggrieved member, because some objective of his has been frustrated, can refer the matter to the Council of E.F.T.A., which, by a majority, can arrange to examine the matter. The Council can then recommend certain sanctions and interim measures. That is the complaints procedure. That broadly is the form of the convention. I do not need to refer in detail to the Irish Agreement, save to say that Article 1 says:
  "After 1st July, 1966, the Government of the United Kingdom shall not apply any import duty to goods which, in accordance with Article 2, are regarded as originating in and consigned from the Republic of Ireland."
  In fact, the same doubt and query arises with that agreement as under the E.F.T.A. Convention.
  These, then, are my questions to the Attorney-General. Is he satisfied that, prima facie, on the wording of this Convention and having regard to the wording of the Bill and this Clause, there is no breach of the Convention? If so,
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  would he give his reasons, relating them to the particular Articles? If not, I am sure that he will say so. There is a difference between saying, "In our view there is no breach of the Convention," and saying, "We accept that there is or may be a breach, but we are confident that our E.F.T.A. partners will understand and excuse our position." This is the distinction, and this is what we wish to discover. We look to the Attorney-General's advice to interpret this to us.
  This, of course, is the legal issue. On the political issue, if there were and if there are sound legal doubts, it might be thought a cynical approach to an agreement and to one's partners to present them with a fait accompli by a Bill and then merely to rely on their mercy. I would therefore like the Attorney-General to tell us, as our adviser, whether or not the position of these duties is within or without the provisions of those Articles.
  The Attorney-General (Sir Elwyn Jones): In view of the most courteous way in which the right hon. and learned Member for Epsom (Sir T. Rawlinson) has invited me to address myself to the questions which he has raised, I am, of course, most happy to do so, as I hope the Committee has generally found me willing to do when it has been good enough to seek my advice. I have carefully considered the Articles in question in the Stockholm Convention which give rise to consideration in dealing with the question whether the Bill's proposal is legal within the terms of the Convention. As the right hon. and learned Gentleman said, Article 3 requires the abolition of Customs duties on goods qualifying for E.F.T.A. treatment by 31st December, 1966. The Article prohibits Customs duty and any other charges with equivalent effect. It prohibits such Customs duties on imports of goods eligible for area tariff treatment from other E.F.T.A. countries.
  The critical question, therefore, is whether import deposits of the type proposed in the Bill are Customs duties for the purposes of Article 3. I will deal first with the right hon. and learned Gentleman's first point, that they are so described in the Bill. This is a technicality which makes it possible to apply the machinery provisions of the Customs

  1275
  and Excise Act of 1952 to the collection and general control of the deposits, and it thus avoids the need for lengthy new legislation. The Committee will see that, by the terms of Clause 3(2), the Bill shall be construed as one with the Customs and Excise Act. This technicality avoids a massive Bill which would otherwise be necessary.
  4.45 p.m.
  However, I submit that this matter must be looked at in the E.F.T.A. context, which means that we must consider the substance of the matter as it affects imports of goods from E.F.T.A. countries. Import duties of the type which the Committee is discussing involve the temporary retention of funds which are reimbursable automatically after 180 days. I suggest that that is quite different from a Customs duty or charge with equivalent effect. To levy a duty or a charge is to take something without returning it, which is not what the Bill proposes. The fact that the importer—this point may be raised—may incur a loss of interest on his money does not alter the situation in that respect. This may be the consequences of the scheme in certain circumstances, but it would be stretching the meaning of words to say that any loss of interest would make the deposit a charge with equivalent effect to a Customs duty.
  Mr. Charles Doughty: The last line of Article 3(1) referring to Customs duty, or other charges, says:
  "Any such duty or other charges is hereinafter referred to as an 'import duty'."
  It is the import duties in the Bill and the Convention with which we are concerned.
  The Attorney-General: I thought that I had referred to duty and charge in seeking to distinguish between what the Bill does, which is to involve a temporary retention of funds, and a duty or charge which, in my understanding of the words in terms of Customs and Excise, means levying a duty or charge without returning it. That is a quite fundamental matter in approaching the meaning of the words in Article 3.
  As the right hon. Gentleman has said, Article 6 prohibits member States from applying, as is said in paragraph 1(a):
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  "… directly or indirectly to imported goods any fiscal charges in excess of those applied directly or indirectly to like domestic goods …".
  The question arises what the phrase "fiscal charges" means under the terms of the Convention. Fiscal charges are defined in paragraph 6(a) of Article 6 as meaning revenue duties, internal taxes and other internal charges on goods. In my view, import deposits are not revenue duties, nor are they taxes. They are not imposed for the purpose of raising revenue, and the money is to be automatically returnable. In my view, therefore, the import charge is neither a revenue duty nor an internal tax, nor any other form of internal charge on goods.
  Mr. John Hall: Does the right hon. and learned Gentleman not agree that the raising of money by the Government which they receive interest-free and which in turn has to be paid for by interest imposed on the deposit is equivalent to raising a tax?
  The Attorney-General: I do not accept that as a correct interpretation. The purpose of the import deposit is not directed to the raising of Revenue, even though to a small degree in certain circumstances that may be an incidental effect of what is proposed.
  Mr. Patrick Jenkin: Are we to treat as of no effect the preamble to the Bill, which includes the words:
  "… towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue …"
  The Attorney-General: I would like to consider that, but I suspect that there are various matters related to the administration of the scheme which require that provision which, in any event, is the normal form of words for this kind of Measure. I do not think, in the context of the E.F.T.A. Convention or the meaning of a fiscal charge, that it is relevant or helpful. The Committee should again consider Article 10 of the Convention—
  Mr. Ian Percival Mr. Ian Percival (Southport) rose—
  The Attorney-General: May I just continue. No doubt the hon. and learned Gentleman will catch your eye in due

  1277
  course, Mr. Irving, and he will then seek to deal further with the matter.
  I was drawing the Committee's attention to Article 10 of the Convention. That prohibits member States from introducing quantitative restrictions on imports of goods from the territory of other member States. The right hon. and learned Gentleman takes the view that that is not applicable because what is proposed is not the introduction of quantitative restrictions on imports of goods from the territory or other member States. I respectfully agree with him. Quantitative restrictions are defined in paragraph 11(a) of that Article as meaning:
  "… prohibitions or restrictions on imports from the territory of other Member States whether made effective through quotas, import licences or other measures with equivalent effect, including administrative measures and requirements restricting import;"
  Quotas and licensing systems impose definite quantitative limits to imports of particular goods or to imports of particular importers. Import deposits of the type proposed in the Bill have no such effect and they are, as I understand it, essentially a device for restricting credit in a selective way, with a generally discouraging effect upon imports as a whole over the short term. That is their purpose, and that is the reason why his device is being introduced. Import deposits, therefore, are not prohibited under Article 10 of the Convention. In my view, the Articles which need examination in order to consider whether we are in breach of the Convention establish that we are not.
  It may be said that, even though that may be so, what is proposed in the Bill is incompatible with the spirit of the Convention. I have looked carefully at that matter, and I would remind the House that the Convention itself, by Article 19, gives the right to Member States to take far more drastic measures in order to protect their balance of pay-merits than we have done by the terms of the Bill. Under Article 19 the stringent step of introducing quotas and licensing systems is permitted, and what my right hon. Friends have done by their proposal is—
  Mr. F. A. Burden: Will the right hon. and learned Gentleman tell the Committee under what conditions?
  The Attorney-General: Under what conditions what?
  Mr. Burden: Under what conditions quotas and other restrictions may be imposed.
  The Attorney-General: If the hon. Gentleman has the Convention before him he will see in paragraph 1 of Article 19:
  "Notwithstanding the provisions of Article 10, any Member State may, consistently with its other international obligations, introduce quantitative restrictions on imports for the purpose of safeguarding its balance of payments.
  2. Any Member State taking measures in accordance with paragraph 1 of this Article shall notify them to the Council …"
  There is then a procedure of notification and examination of the matter by the Council. The paragraph continues:
  "If the balance of payments difficulties persist for more than 18 months and the measures applied seriously disturb the operation of the Association, the Council shall examine the situation and may, taking into account the interests of all Member States by majority decision, devise special procedures to attenuate or compensate for the effect of such measures."
  So that where a member State introduces the stringent protective device of quotas and licensing schemes, that is permissible under the Convention, and action in regard to it is taken only in the event of the event of the continuance of what is done for a term of more than 18 months.
  Bearing in mind that provision in the Convention, therefore, I think that we are being unduly harsh upon ourselves if it is said against us that we are acting contrary to the spirit of the Convention.
  Happily, as my right hon. Friend the President of the Board of Trade has told the House, and as has been said to the Committee, the measures that are proposed are about to be discussed in the E.F.T.A. Official Council, and my right hon. Friends are confident, and from my knowledge of the matter so am I, that we will in due course be able to reach a full understanding with our partners in E.F.T.A. on this whole matter.
  As to the position under the Anglo-Irish Free Trade Area Agreement of 14th December, 1965, to which the right hon. and learned Gentleman referred, the language of the relevant provisions on Customs duties was taken directly, as I

  1279
  think he knows, from the E.F.T.A. Convention, and everything that I have said with regard to the position under the Convention applies equally to the Anglo-Irish Free Trade Area Agreement.
  I understand that we are also discussing Amendments Nos. 35 and 42 on Clause 3, and, if I may be permitted, I will say a brief word about those.
  5.0 p.m.
  Mr. Percival: It appears that the burden of the right hon. and learned Gentleman's argument is that this does not come within Articles 3 or 6 because this is not a charge; it is not a charge because it is repayable. On the face of it, it does not seem that anything can be repayable unless it has first been charged. I wonder whether there is any previous decision or interpretation which has escaped us on this side of the House. I am obliged to the Attorney-General for giving way, because I wish to know whether I have overlooked something so that I do not make a false point.
  The Attorney-General: I have never known a levy or charge in the fiscal history of any nation to be repayable. In the ordinary meaning of the language—
  Sir Gerald Nabarro: The Attorney-General has said that he has never known of a levy or charge which was repayable. That is manifest nonsense. We are doing this every day of our lives under the Customs Statutes. Goods are imported on drawback. When, subsequently, they are incorporated in manufactured goods for export, the amount of import duty is repaid.
  The Attorney-General: In this case the machinery of the import deposit requires the payment of an import deposit which is reimbursable automatically after the specified period of 180 days. In my submission, within the meaning of the language of the E.F.T.A. Convention, the levy of a duty or a charge contemplates the taking of money without returning it as a positive step of creating the most active difficulties for importers. This falls far short of the imposition of a duty or charge and, accordingly, is not caught by the language of the Convention.
  Mr. John Hall Mr. John Hall rose—
  The Attorney-General: May I finish what I was about to say?
  I had turned to Amendments Nos. 35 and 42. There is a suggestion that the scheme should be brought to an end after the period of three months unless it has previously been approved by a resolution of the E.F.T.A. Council. Article 31 of the Convention provides a procedure in the event of any member State wishing to complain of the action taken by another with adverse effect on its trade. As I have said, I am confident that the discussions which are about to take place will produce a satisfactory conclusion and that any Amendment of the kind which is proposed will prove, therefore, to be unnecessary and should be rejected.
  Mr. John Hall: The Attorney-General, presumably, does not agree that the terms of the Convention require that any partner to it who wishes to introduce a measure of this kind should consult the Council beforehand. Secondly, can he say whether our partners in E.F.T.A. have the same view of the legality of the Government's Measures as he has himself?
  The Attorney-General: In reply to the first point, the requirement of consultation certainly applies to Article 19 in relation to the introduction of quantitative restrictions in regard to quotas, but it does not apply to the measure that is proposed in the Bill, namely, the imposition of import deposits. There is, of course, no specific reference to import deposits in the Bill. In the Convention, there is certainly no specific prohibition of the use of import deposits and, as I have submitted, they are not contrary to either the letter or the spirit of the Convention.
  As to the hon. Member's second question, my right hon. Friend the President of the Board of Trade has indicated that the Ministers from the member States have shown a good deal of sympathy with the difficulties which the Government have had to face in dealing with this problem, and I have reason to feel that the legal anxieties which seem to be troubling right hon. and hon. Members opposite—I am quite sure, entirely in the public interest, to protect the interest of the country—will not be reflected so eagerly in the Ministers of the member States.
  Mr. Peter Emery: It seems to me that there are two specific arguments on the Amendment. One is the

  1281
  legal argument and the other the political argument, relating specifically to my Amendment No. 98. I will deal fairly briefly with the legal argument
  I am certain that the Attorney-General has tried to do everything in his power to clear our minds, but I am nearly as befuddled now as I was before he spoke. From his answer to the question of when a duty is not a duty, it would appear that it is not a duty when it is to the convenience of the Wilson Government to call it something else. The right hon. and learned Gentleman's argument that because the charge was repayable it could not be considered as a duty or tax, is obviously demolished in the matter of duty drawback, Selective Employment Tax and a number of other industrial arid tax factors about which we all know a great deal.
  I wonder, however, whether I can help the Attorney-General, as I should like to do. I would have been happier with his arguments had he based them on the balance of payments difficulty, on which ground it is possible and permissible to introduce quantitative restrictions. If the right hon. and learned Gentleman refers to paragraph 11(a) of Article 10 dealing with quantitative restrictions, he will see a definition. According to that article, "quantitative restrictions" means
  "prohibitions or restrictions on imports from the territory of other Member States whether made effective through quotas, import licences or other measures with equivalent effect, including administrative measures and requirements restricting import".
  In the debate on 28th November, the Financial Secretary said that
  "The Bill is intended to bring a selective pressure on liquidity affecting importers and to produce an immediate if marginal effect upon the total of our imports".—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 750–1.]
  The Attorney-General's case would be much stronger if he based it on that argument. I do not know whether this might be of assistance to him with his legal background.
  Mr. John Hall: Would my hon. Friend agree that what he has said strengthens the point which I made earlier that we should have consulted the E.F.T.A. Council beforehand?
  Mr. Emery: I am coming to that point. Perhaps my hon. Friend will allow me to make my speech. I sat through the
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  debates on Monday and Thursday of last week and heard every speech and was not able to catch the eye of the Chair. I do not intend to make on this Amendment the speech which I wished to make then.
  I tabled my Amendment excluding E.F.T.A. from the Bill for a basic reason. On the whole, our financial position and the position of sterling are based more than anything else on confidence in the Government and in the economic management of this country. Twice within four years the Government have broken the spirit, if not the letter of the E.F.T.A. Agreement. Article 14 of the E.F.T.A. Convention on public undertakings states:
  "Member States shall ensure the progressive elimination, during the period from 1st July, 1960, to 31st December, 1969, in the practices of public undertakings, of (a) measures the effect of which is to afford protection to domestic production …"
  Paragraph (b) deals with
  "trade discrimination on grounds of nationality in so far as it frustrates the benefits expected from the removal or absence of duties and quantative restrictions on trade …"
  Whether there is a let-out, there is no doubt that the Government have broken the spirit of the E.F.T.A. Agreement. If we want to build up confidence in sterling and our economic administration, breaching the spirit of agreements will have a very severe effect on our exports and the confidence in our economy of people with whom we do business.
  In the last week, I have had communications from Norway, Sweden and Portugal condemning this unilateral action, as it is described by them. I pointed out that at a meeting on Friday the President of the Board of Trade put forward his point of view. I realise that that was not a consultation but a statement of what was to be done. This is the interpretation put on our action by people in these three countries, not perhaps by the politicians, but by business people and bankers.
  5.15 p.m.
  Secondly, the Government are entirely wrong in believing that their measures will have the effect which they have in mind. Four years ago, when the import surcharge of 15 per cent. was imposed, members of the Treasury Bench were not occupying the positions which they are

  1283
  occupying now, but I can recall Minister after Minister saying that the import surcharge would have a considerable effect in reducing imports. It was suggested that it would probably save up to £300 million. The right hon. Member for Battersea, North (Mr. Jay), who was then President of the Board of Trade, will know of the detailed study made by Johnson and Margaret Henderson and their paper assessing the effect of the import surcharge. They state that the overall effect could never have been more than £150 million and probably would be only just above £100 million. The impact of the Government's present measures will be very much less.
  I objected most strongly to the speech made by the hon. Member for Ebbw Vale (Mr. Michael Foot). I warned him that I would mention this matter. He suggested that only he and some of his colleagues were patriotic in standing up to the demand that the Government took action. Apparently, anybody who criticised what was proposed was attempting to undermine Britain's position. That was a lot of crocodile tears. My desire to see us abide by the spirit of the E.F.T.A. agreement stems from the belief that by so doing we shall be standing up for our country a great deal more than by trying to find ways round it. It was apparent from the speech of the hon. Member for Ebbw Vale that he had not considered the long-term effects of the Government's proposals.
  I am convinced that the best way to ensure that British industry is truly competitive is to allow buyers to buy from whatever market they believe is most beneficial. Buyers buy abroad not for fun or pleasure but for good reasons.
  I refer to a study recently made by the Institute of Purchasing and Supply into the buying of machine tools. I accept that it was a limited investigation, but, because of its smallness, I think that it is all the more effective. Four pieces of evidence emerged from this inquiry: first, and most important, that people bought machine tools abroad and in Europe because they were not available in this country; secondly, that the performance of imported goods was more than marginally superior to the performance of anything which could be obtained in the United Kingdom; thirdly, that the ser-
  1284
  vice and delivery of the imported machine tools was considerably better than anything which British manufacturers could provide; and, fourthly, that the price was more favourable. If the hon. Gentleman believes—
  The Chairman: Order. The hon. Gentleman was good enough to say that he would not make a Second Reading speech. He is now beginning to do so.
  Mr. Emery: Thank you, Mr. Irving, for bringing me gently back to the paths of the Amendment. A 10 per cent. deposit, which is likely to mean in real terms 2 to 2¼ per cent. extra on the price—
  Mr. Burden: A 50 per cent. deposit.
  Mr. Emery: A 50 per cent. deposit. A 2¼ to 2½ per cent. increase in price will not affect the buyer who needs to go abroad to get the equipment necessary for his firm's operations. It would assist the Government to sustain the confidence of our trading partners and ensure that the E.F.T.A. nations do not take offence—because considerable offence is being taken by them in terms of the application to them of the provisions of the Bill.
  The last argument to which I want to refer was brought forward by the Financial Secretary to the Treasury. He made it clear that importers would not go to the wall and that the basis of the exercise was not merely a question of import saving but a degree of liquidity control.
  It is wrong for the Government to take these measures to impose a liquidity control on the economy. Many other ways are open to the Government to impose controls which do not affect E.F.T.A. and which do not put the E.F.T.A. Agreement in doubt. This Bill runs against the spirit of the E.F.T.A. Agreement, even if the Government can put forward a legal argument. That is why I strongly support the Amendment.
  Mr. David Weitzman: I listened with interest to the legal argument put forward by the right hon. and learned Member for Epsom (Sir R. Rawlinson). I also listened to my right hon. and learned Friend the Attorney-General. A simple answer was given by my right hon. and learned Friend to the argument of the

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  right hon. and learned Member for Epsom. Customs duty, which he suggested was forbidden under the E.F.T.A. Convention, remains a duty when it is repayable in certain circumstances. This import deposit is not a duty.
  The Bill sets out clearly in Clauses 1 and 2 that it is from the outset a sum which is a deposit and which is repayable. It remains so throughout. That is the distinction between the two. Whereas Customs duty may be forbidden under the provisions of the Convention, import deposits are not. That is the simple answer to the legal argument put forward by the right hon. and learned Member for Epsom.
  I do not pretend to be an expert on economics, and I do not remember ever having taken part in a debate on economic affairs, but I listened with interest to the remarks of the hon. Member for Honiton (Mr. Emery). I remember speeches made by leading members of the Opposition Front Bench in favour of this sort of deposit. Approving as they did of this kind of import deposit, it hardly lies in their mouths to condemn it now. The fact that they have put forward legal and other arguments today shows a Degree of hypocrisy on their part. At a time like this, when such a Measure as this is urgently needed, they would have done better to support it if they genuinely cared for the economic stability of the country.
  Mr. Peter Blaker: The hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) must have failed to notice that the remarks made by my right hon. Friends in the past concerning some sort of import credit restriction scheme have almost always related to the Italian scheme. The hon. and learned Member said that he was not well versed in economic affairs. If he had examined the details of that scheme he would have realised that it is totally different from the scheme that the Government are seeking to introduce. He would have realised that by no stretch of the imagination could it be regarded as having the inconsistency with international agreements which some hon. Members on this side of the Committee suspect to be the case with these import deposits.
  The Minister of State, Treasury (Mr. Dick Taverne): Is not the hon. Member aware of the remarks made by his right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) during the main economic debate, when he said that of all the various schemes proposed he thought that this was the best?
  Mr. Blaker: Yes. I am grateful to be able to clear up this point, because in his very next sentence my right hon. Friend asked whether this scheme was consistent with our E.F.T.A. and other international obligations. It is clear from that passage that he was not suggesting that we should adopt it whether or not it was legal.
  The hon. and learned Member for Stoke Newington and Hackney, North said that it was not a duty, but a few sentences later on he referred to it as a duty. That illustrates the intellectural acrobatics which hon. Members opposite are having to go through. The Attorney-General seemed to be arguing firstly that this is not a charge, and secondly that it does not have an effect equivalent to Customs duty. Some of my hon. Friends have pointed out that it is very difficult to distinguish it from other sorts of charges. Let us consider the other leg of that propostion. Does it not have an effect equivalent to Customs duty in the sense that it deters, and is intended to deter, imports?
  To take the line that the Attorney-General is to strain the argument. Like his right hon. Friends, he takes comfort in the fact that this scheme will be referred to the E.F.T.A. Council and he is confident that the consultations at the Council will have a satisfactory result. He seemed to think that the E.F.T.A. countries are content with this proposal. He must know that the Danish Finance Minister said last week that this was a case of Britain, for the second time, violating the E.F.T.A. Convention. He will also know that the Prime Minister of the Republic of Ireland had consultations with the British Prime Minister last week.
  If the Government are satisfied that both the E.F.T.A. countries and the Republic of Ireland are content with these proposals perhaps they will tell us. I hope that we shall have some comment from one of the political Ministers during the debate. Perhaps he will tell

  1287
  us whether any representations have been received from E.F.T.A. countries since the announcement of this proposal. Perhaps he will tell us something about the view expressed by the Prime Minister of the Republic of Ireland when he talked with our Prime Minister.
  I do not want to go further into the question of the legality of this proposal. What my hon. Friends and I fear is that when the matter is discussed with the Republic of Ireland and the E.F.T.A. Council those countries—all of them smaller than ourselves—will be browbeaten into accepting the situation with which they have been faced as a fait accompli, regardless of the question of legality. The Government should not get the reputation for sailing close to the wind. The difficulty with which the Committee followed the argument of the Attorney-General was very worrying. It suggested that he was putting forward a most ingenious but very complicated argument. The Government should not put themselves into a situation in which, when dealing with some of our closest allies, they have to go through incredible antics to persuade those countries that they are within the law.
  5.30 p.m.
  It is important to preserve our reputation for sticking to our agreements, whether they are comfortable or not. The Government may perhaps find these two agreements uncomfortable, but other countries find agreements uncomfortable. too, and we hope they stick to them. If so, why should not we.
  E.F.T.A. and the Republic of Ireland are important to us also in practical ways. The E.F.T.A. countries take almost as much by way of imports from us as the the whole of the Common Market countries. We shall need the help of the E.F.T.A. countries in future. When it again comes to negotiations to get into the Common Market, solidarity amongst the E.F.T.A. countries will be important. There is no doubt about the bitterness with which they received the 15 per cent. surcharge which the Government imposed in 1964. I fear that this measure will be taken by them as yet another reason for being cautious in their future dealings with this country.
  The way we treat the E.F.T.A. countries and the Republic of Ireland concern-
  1288
  ing these agreements goes wider than those countries alone. We had a good example at Question Time, when we had the statement about the Falkland Islands, of the trouble we get into when we acquire a reputation for playing fast and loose with obligations. I believe, even if it is strictly in accordance with the letter of our obligations, that this proposal will give us further trouble and will further spoil our reputation. Moreover, it will add fuel to the opponents of freer trade in all countries.
  To sum up, our behaviour now is giving us the reputation of being the exploiters of the fine print in our agreements. And to what purpose? The Government are doing this for what, on the repeated statements of the Financial Secretary on Second Reading, is a Measure which will have only marginal effect.
  [Sir MYER GALPERN in the Chair]
  Mr. John Page: The Committee listened with absolute fascination to the Attorney-General this afternoon—a kind of Parliamentary Blondin walking along a blazing tightrope, hopping first on one foot and then on the other. I congratulate the right hon. and learned Gentleman on his mental dexterity and the wizardry with which he has used a magnifying glass to find the small print which helped him to produce his case.
  Mr. Weitzman: Did the hon. Gentleman understand him?
  Mr. Page: I have always found it a matter of real congratulation to the Attorney-General that I understand him, because he speaks with remarkable clarity. He speaks slowly and in a pleasant voice, and I was able to follow the snakes and ladders of his argument. But I leave it to my hon. and learned Friends to refute it in any way. I was merely saying that it seemed a bit complicated.
  I should like to follow what was said by my hon. Friend the Member for Blackpool, South (Mr. Blaker). Is it really worth the money for us to bilk on our E.F.T.A. partners in this way? Having got away from the very poor reputation that we got after the 15 per cent. surcharge debate, I think that it

  1289
  would have been a wonderful opportunity for the Chancellor of the Exchequer if on Friday, 22nd November, he had been able to say, "This will apply to imports, but not to imports from the E.F.T.A.. countries."
  I now want to make a rather guarded apology to the President of the Board of Trade. I rang his office at 3 o'clock this afternoon. Owing to the short time available I spoke to the E.F.T.A. Information Department, and not, as I normally would, to his private office to ask to be put through. I asked, "Can you give me the figures of the value of goods from E.F.T.A. countries covered by the exempted list and those which are not?". After a moment's silence I was told, "No, we have not been asked about this". I said, "I do not mind hanging on. Will you find out for me, because I feel sure that the figures must have been worked out?". I hung an for a few minutes and was then told that the figures had not been worked out. I hope that we will hear from the Government, before they wind up, what is the approximate value of the goods which would be exempted out of the total imported from E.F.T.A. countries, because it is vitally important to the discussion.
  Having failed with the Board of Trade, at five minutes past three I got on to the House of Commons Library, and at quarter past I was given a rough breakdown which may be of interest to the House before the President, if he is to reply, gives us the full details. It will be interesting to see whether the Library guess, plus my own mathematics, work out at anything like the answer which I am sure the right hon. Gentleman will be able to give us. The total imports in 1967 from the E.F.T.A. countries amounted to £941 million. Of these food was 22·5 per cent., taking a monthly average. Putting that out on to the yearly figure I have made it £207 million. Manufactured goods represented 53·1 per cent., which I have made approximately £498 million. Then what are called crude materials, inedible—timber, pulp, wood, lumber and ore—21 per cent., which makes £198 million in a full year. It looks although about £400 million worth of imports from the E.F.T.A. countries would probably be exempted and about £500 million would have the
  1290
  duty deposit paid upon them. I should hardly think—[Interruption.] Some hon. Gentleman said that it is not duty. All I can say is that the short title of the Bill says:
  "A Bill to grant a new duty …"
  I do not know when a duty is not a duty if it is in the short title.
  Does the President feel that it is worth while alienating our E.F.T.A. friends for him to go along again in the very worn sackcloth and rather dusty ashes which his colleagues have had to use so often with our E.F.T.A. partners and ask them to make allowances for us? I should hardly think that in this instance the prize was worth while. I hope that the Government might, even at this stage, accept the Amendment standing in the name of my hon. Friend the Member for Honiton (Mr. Emery) and myself so that the right hon. Gentleman can hold himself up straight again when he meets our E.F.T.A. friends in future.
  Mr. Burden: International trade is not a matter of nice legal points. I see the Attorney-General nodding his head. I think that he made some nice legal points this afternoon. The right hon. and learned Gentleman described this as a device. He said that there was no reference in the Convention to import deposits. It is clear that this is a device, a very nice legal point, because the Government have asked, "How can we get round the restrictions laid upon us by the E.F.T.A. Convention, and get away with it?" The Attorney-General says that this is not a Customs duty, but, as my hon. Friend the Member for Harrow, West (Mr. John Page) said, the purpose of the Bill is to
  "Grant a new duty of customs repayable after a specified period."
  That does not make it any less a duty. Indeed, the Bill says at line 25:
  "The import deposit chargeable on any goods shall be payable in addition to any other duty of customs for the time being …"
  The right hon. and learned Gentleman has been treading a blazing tightrope, and not nearly as successfully as he had hoped. If we abide by the E.F.T.A. Treaty, we shall not take any steps which will artificially increase the price of goods from those imported into this country, but the whole purpose of the Bill is to do just that. The Bill is designed to increase the price of imported goods, and

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  to make it so difficult for importers to get their merchandise that imports are cut. This is contrary to the E.F.T.A. Convention.
  Article 6 of the Convention, which refers to fiscal charges imposed with the object of raising money, does not apply, says the Attorney-General, because the deposit is returnable in 180 days. It is an interest-free loan to the Government.
  I come back to the main point, which is that the Bill will restrict imports from our E.F.T.A. partners. The Attorney-General has done his best to prove that this is legal. Why is it that the right hon. and learned Gentleman did not convince the Financial Secretary to the Treasury and the Minister of State at the Board of Trade of that? On 28th November the Financial Secretary said:
  "It has been asked: is this scheme legal under E.F.T.A.? I think that there is some confusion of thought on this."—
  Not least on the Government's side—
  "Whether or not this scheme is legal under E.F.T.A. is a matter for the E.F.T.A. Ministers to decide. That has not yet been fully considered by them. I should not have thought it appropriate to have discussion in this House on this matter when the tribunal appropriate to decide it has not yet pronounced upon it."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 754.]
  That being so what confidence can we have in the Attorney-General's statement this afternoon that the Bill is legal?
  The Financial Secretary said that the Government had no authority to decide whether or not this was legal, that the matter had to be pronounced upon by the E.F.T.A. Council. It is extraordinary that this measure was never disclosed to the E.F.T.A. countries at any time. The Financial Secretary admitted that he was not in a position to decide whether it was legal, and if we are to take the hon. Gentleman's statement as being accurate, we can assume that no Member of the Government, either, is able to decide whether it is legal.
  In winding up the debate the Minister of State at the Treasury said:
  "I was asked about the legal effect under the E.F.T.A. Treaty. The decision as to whether or not the measure is contrary to the E.F.T.A. Treaty is not a matter for an international court. It is taken un within the E.F.T.A. Council, where it is decided in the normal way, and we have every confidence that we shall reach an understanding
  1292
  with our partners."—[OFFICIAL REPORT, 28th November, 1968; Vol. 744, c. 866.]
  There was no suggestion by the Minister of State that this had been discussed, and that the Government were convinced the measure was legal. The fact is that it is not within their compass to decide whether it is legal, and yet we have the Attorney-General telling us that it is.
  This is a most extraordinary situation, and I suggest that our E.F.T.A. partners have not yet had an opportunity to pronounce upon it. They will not be in a position to do so until the Council has met. I therefore ask the Government to withdraw the Bill until such time as it has been pronounced upon by the members of the E.F.T.A. Council.
  5.45 p.m.
  Mr. Doughty: I have the greatest sympathy for the Attorney-General in this matter. I know he will not mind if I take a totally different view from that which he announced. It is not uncommon for lawyers to disagree. They can always do so in a pleasant way, and I shall explain my disagreement with the right hon. and learned Gentleman.
  I said that I have some sympathy for the Attorney-General. The reason is that I believe the Government drafted the Bill rather hurriedly and conceived this idea without considering whether they were breaking the E.F.T.A. Agreement, or any other agreement. When the Chancellor of the Exchequer came down to the House and was asked about that, he did not have the answer ready. I am sure that if somebody in his office had asked, "Before we introduce this Measure, is there any international agreement which we might be accused of breaking?", somebody would have said, "Be careful at least about the E.F.T.A. Convention", but that did not happen. The Chancellor came down to the House and made the announcement, which no doubt was necessary in view of the balance of payments position, but that is another matter.
  After the matter was raised in the House and brought to the Chancellor's attention, the issue was, for the first time, referred to the Attorney-General, who was put on the spot.
  Mr. Burden: And a very hot one, too.
  Mr. Doughty: The Attorney-General had to try to get the Government out of

  1293
  a great legal difficulty in which they found themselves.
  The Chief Secretary to the Treasury (Mr. John Diamond): Shocking.
  Sir G. Nabarro: What is shocking about that?
  Mr. Diamond: I used the word "shocking" because of the suggestion that my right hon. and learned Friend adjusts his advice for the convenience of the Government when he is advising the House.
  Mr. Doughty: I am not suggesting anything of the sort. I began by saying that I took a different view from that taken by the Attorney-General. I take a different view of the law. If I had thought the Attorney-General had done anything of that sort, I should have used different language at the beginning of my speech.
  Mr. Diamond: On that assurance, perhaps I might withdraw the word "shocking".
  Mr. Doughty: I am happy to accept that and shall make no further reference to it.
  I propose to refute a number of matters referred to by the Attorney-General. It is true that when we have a balance of payments problem, we can, under Article 19, take certain actions, and those actions might be a great deal more serious than those proposed in the Bill. But to say that we could have done something else does not excuse what we are doing here. That is, therefore, a matter which is referred to in the Bill. The action which we are entitled to take—and, by implication, we cannot take any other—is referred to in Article 19.
  If we had gone to the E.F.T.A. countries and told them that, because of our balance of payments position, we proposed to take action under Article 19, it may be that they would willingly have agreed to that less severe action. Whether they would agree to this action is a different and hypothetical question.
  When I say that there is no justification under the E.F.T.A. Convention for taking this action, I refer, first, to Article 2 which sets out the objectives of the Convention:
  "The objectives of the Association shall be:
  (a) to promote in the Area of the Association and in each Member State a sustained expansion of economic activity, full employ-
  1294
  ment, increased productivity and the rational use of resources, financial stability and continuous improvement in living standards."
  In order to carry that out, the question of import duties is a vital one.
  Article 3 has been read by my right hon. and learned Friend the Member for Epsom (Sir P. Rawlinson), so I will not weary the House with it again, but it says clearly:
  "Any such duty or other charge is hereinafter referred to as an 'import duty'",
  and import duties are expressly forbidden under the Convention, except under the provisions of Article 19 to which I have referred already.
  To say that this is not an import duty within the meaning of that Article is contrary to the words used by the right hon. and hon. Gentlemen who have put their names to the Bill. Presumably, they chose the wording, because it is their Bill. It is a Government Bill, and they are Government Ministers. The Bill is entitled:
  "A Bill to grant a new duty of customs repayable after a specified period."
  What is a "duty of customs" but an import duty? It is that and nothing else.
  Further on in the Preamble to the Bill, one sees the phrase,
  "… and grant unto Your Majesty the duties hereinafter mentioned",
  and in Clause 1(3), one sees a reference to,
  "The import deposit chargeable on any goods shall be payable in addition to any other duty of customs for the time being chargeable."
  Then, in paragraph 9 of Schedule 2, one sees a reference to the Customs and Excise Act. It is nothing else but an import charge—
  Mr. Weitzman: The hon. and learned Gentleman knows perfectly well that, in construing the effect of legislation, one has to have regard to the words used Is he not neglecting the words in Clause 1(2),
  "An import deposit shall become repayable …"
  Mr. Doughty: I am not neglecting them, because an import deposit is defined as an import duty repayable after a specific period. I have put the horse before the cart. The hon. and learned

  1295
  Gentleman is putting the cart before the horse. The horse pulling this into existence is an import duty. What happens to an import duty to make it an import deposit is a quite different matter which can be referred to afterwards. The hon. and learned Gentleman's suggestion does not hold water.
  Therefore, we are committing an act which we are not allowed to do, apparently, under the E.F.T.A. Convention. We have proposed this import duty without any right to do it. If I am right, we have broken an agreement. If we have not, we have sailed so close to the wind that we may be accused of it. Whether it is necessary for our balance of payments is another matter. When we enter into international agreements which put obligations and limitations on our power in this House to pass Bills in breach of those agreements, we shall be held in the future to have broken them. We shall be accused all over the world of making agreements and breaking them when it suits us. The mere fact of necessity is no excuse. If we have to break an agreement because our balance of payments requires it, that is no excuse. This country must keep its word throughout the world. I hope that the House will accept the Amendment.
  Mr. Percival: I am sure that the Committee appreciates the Attorney-General's courtesy and good will in responding so readily to the invitation to give the Committee the benefit of his advice, even though he introduced a sour note at the end of his speech. Hon. Members on all sides of the House regard it as important that, when we make agreements with other countries, we keep them. It is a necessary corollary to that that, if we propose some new measure, we should see whether it can be done as a matter of law and we ought to do it beforehand, because it dictates our whole approach to the matter.
  There may be occasions when we want to pass an unlawful measure having regard to the terms of an agreement, but, having discovered that fact, I hope that we shall then go to our partners and say "We have to introduce a Measure which is in breach of our agreement. Will you agree to our doing it?".
  1296
  That is one approach. The other is that which the Government are proposing, which is trying to slide out of it by saying that it is not a breach. Whether or not it is a breach is a matter which must be clarified. For that reason, I hope that the Attorney-General will reconsider what he has said. If we could hear a more convincing argument, I am sure that we on this side of the Committee would consider changing our attitude.
  I agree with him and disagree with my hon. Friend the Member for Honiton (Mr. Emery) about Article 10. I think that this is not a quantitative restriction, and there is no question of a breach of that which might have been justified under Article 19. That is a complete red herring.
  I agree with him and disagree with my Gentleman, too, when he says that this is a breach of Article 3, or Article 6, or nothing. I accept that. As I understand it, in his opinion, the reason why it is not a breach of Article 6 or Article 3 is that it is not a charge. One does not even have to get it within the definition of "duties". "Duties" are defined in Article 3 as
  "… customs duties and any other charges with equivalent effect".
  I think that the Attorney-General would advise us that, if what we are doing here is imposing a charge, we are in breach of Article 3, Article 6 or both. That is how I understand his argument, and I hope that he is with me at the moment.
  The Attorney-General The Attorney-General indicated assent.
  Mr. Percival: I am glad to see that the right hon. and learned Gentleman agrees. It comes down, therefore, to whether what we are doing here is levying a charge.
  Reference has been made to the Bill several times, and it will bear repetition. The Attorney-General said that this was not in the nature of a revenue-raising exercise. I hope that I do not do him an injustice if I say that, when he was referred to the Preamble, he appeared to be a little surprised at what he said. It says that we,
  "… towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and grant unto Your Majesty the duties hereinafter mentioned".

  1297
  It says that we are raising revenue for Her Majesty. It goes on in Clause 1:
  "… there shall be charged on all goods … a duty of customs"
  The word to which 1 draw attention is not that drawn attention to by my hon. and learned Friend the Member for Surrey, East (Mr. Doughty), but the word "charged".
  This word appears all the way through. In line 25, we read
  "The import deposit chargeable on any goods shall be payable in addition …"
  Over the page are the words
  "… the charge of import deposits …"
  I ask the Attorney-General and the Committee to consider very carefully this point. If he is right that this import deposit is not a charge, what sort of mockery is the Bill? It is not right for the Committee to try to get out of it by saying that this is a technical device. We cannot have a Bill in these terms and then seek to say that it is not a charge, despite what we have called it all the way through.
  Even if that were a tenable argument, and one could say, "Never mind all the references to charges," is there any meaning in the right hon. and learned Gentleman's submission that one can say that it is not a charge because it is returnable? How can something be returnable unless it is charged? This money, like any other duty—that is why it is called a duty—is being charged. A charge means that someone must pay; that is what they will have to do if the Bill becomes law. If that is not a charge in the ordinary meaning of words, I shall be extremely surprised.
  I therefore hope that, before the end of this debate, the Attorney-General will draw our attention to any support which there may be for his proposition, or give us the benefit of his further advice upon it after he has reconsidered it.
  Mr. John Biffen: I have listened fascinated to the legal eloquence with which my hon. and learned Friend the Member for Southport (Mr. Percival) has destroyed a good deal of the Attorney-General's argument and I crave the latter's indulgence if I offer the comments of a mere layman. The part of the right hon. and learned Gentleman's speech to which I took some mild exception was
  1298
  his suggestion that this Bill does not infringe the spirit of the Stockholm Convention. I do not for a moment pretend to be able to hold my own in any legalistic argument about whether it "can be deemed to be held to be consistent" with the finest print of that Convention, but it is, possibly, a little offensive to our E.F.T.A. partners to suggest that this action does not offend the spirit of E.F.T.A.
  I had the privilege to be in Stockholm a few weeks ago when the British Trade Week was being held. It was pointed out to me then what a terrific market Sweden is for the United Kingdom. On that point, it seemed that there was a good deal to be said for the proposition that the European Free Trade Area was one of the fastest growing exporting markets for this country. It is a characteristic of this kind of trade that it will be dominated to an extent by rising trade in manufactured goods, the very goods which attract deposits under the Bill.
  Article 2 of the Convention makes clear the desire for free trade. My hon. Friend the Member for Honiton (Mr. Emery) established by his quotation from the Financial Secretary's speech that the purpose of the Bill is to provide some harassment of free trade. When the Convention was signed in 1960, those were the halcyon days when the world seemed to be moving towards freer trade; we were on the threshold of discussions on the Kennedy Round and had seen the beginning of the E.E.C. negotiations. Little wonder that, in that part of the Convention dealing with balance of payments difficulties and the harassments to trade which would be permissible, it is provided that consultations shall take place before they come into force, and the harassments listed are quantitative restrictions on trade.
  We have had a good deal of unhappy experience since then to show that there are many other more refined ways of harassing trade than the old fashioned idea of quantitative restriction. I would like to elaborate on one or two. Article 6 wisely anticipated one, the manipulation of internal excise duties, but there are also health regulations which can be operated to bring about a restrictive consequence, and there is also the manipulation of Government purchasing to that

  1299
  end. These are all areas well-known to our trading partners.
  Therefore, when we plead that, somehow or other, we are not breaking the spirit of the Convention because we have found some new refinement—the prior deposits scheme—we are adding a great deal of insult to injury. As has been said, these are our trading allies. As a nation with a vested interest in free trade, we presumably hope to develop those areas of activity where we can trade carelessly and without restraint. Surely, the lesson to be learned from this is that if we engage in a certain amount of cleverness in trade harassment, we shall be engaging in a war of cleverness in which we shall be outwitted.
  Mr. Michael Alison: I want to support what my hon. Friend the Member for Oswestry (Mr. Biffen) has said. The Government are following the familiar pattern of the villain of Scripture, who digged a pit, and then fell into it. One of the more sinister reasons why our E.F.T.A. partners are not making the running in pointing out the iniquity of this Bill, but are leaving it to the Conservative Opposition, is precisely that they are learning from the expert cracksmen how to open the safe themselves.
  Under the E.F.T.A. Convention, we have an extremely good bargain. I do not know whether the President of the Board of Trade has seen the article in last week's British Industry Weekly, headed, "Britain's £100 Million E.F.T.A. Bonus." It related to the study, which I believe will be published in January next year, of how trade among the E.F.T.A. partners has surged up as a result of the agreement, and above all of how the principal beneficiary, of all the E.F.T.A. partners, of that surging trade created through the Free Trade Area has been the United Kingdom.
  The actual figures are that our own bonus, the actual increase in British exports up to 1965 alone as a result of our membership of E.F.T.A. has been £100 million, against an increase in imports of only £25 million. The list given in the article of various commodities traded among the E.F.T.A. partners gives repeated evidence that Britain has nearly always done the best. One example is plastics, in which Britain has made a 5 per cent. gain in exports, having benefited
  1300
  most with Norway. In electrical machinery, Britain and Sweden have benefited most, with Britain's exports up and imports static in relation to E.F.T.A.. In the textile trade, Britain has benefited most in absolute terms. In motor cars, British exports' share of the E.F.T.A. market have risen from 12 per cent. to 18 per cent. between 1959 and 1966. In clothing, again Britain is the major beneficiary, along with Sweden.
  Do the Government really believe that our E.F.T.A. partners, many of whom have unfavourable balances with us, will be anything but delighted at having handed to them a perfect protectionist instrument which Her Majesty's Government have fashioned for them? The Government have demonstrated to the whole world that the change is of the most pristine purity in terms of the Convention and of our moral obligation to E.F.T.A. Of course they keep quiet—they only want the Government to show them that what they do is perfectly reasonable, and then they can do the same. The more the Government establish that what they do is entirely fair, reasonable moral and legal, the more cause there is for fear.
  The slightest deliberalisation of trade must be a nightmare to the President of the Board of Trade, because he knows that Mr. Catherwood has argued most cogently that we have a greater interest than probably any other country in trade liberalisation. We now have a Republican Government in America; France is in difficulty; there may be difficulties for Germany from Japanese competition, we have the present international monetary situation. The whole trend is towards deliberalising world trade, yet here is Britain, which has most to lose, playing this particular card at this moment. Nothing could be more lunatic—and, above all, to do it to our E.F.T.A. partners, who have everything to gain by using this instrument against us—
  Mr. John Pardoe: The hon. Gentleman is attacking the de-liberalising of world trade, and I agree with him, but how does he square that attack with the remarks of his right hon. Friends who support the Italian scheme, which I think is a deliberate attempt to deliberalise trade?
  Mr. Alison: The hon. Gentleman will appreciate that the Italian scheme did not

  1301
  involve the payment of the six months deposit, which is what we are now arguing about. We are talking about this freezing of liquidity which is described as a selective squeeze on the liquidity of importers. That is where it differs from the Italian scheme.
  Mr. Catherwood was right in saying recently that Britain's balance of payments gap will only be closed, or the improvement will only come about, not through a restriction on imports, with all the consequential tendencies for world trade to contract and be de-liberalised, but through an upsurge and expansion of world trade. The nature of our position is such that, on the whole, our imports are relatively inelastic—a lot of them represent food and raw materials which we must always have in certain quantities.
  Given an increase in world trade on the whole, there is more likelihood of our exports going up and our imports remaining steady than the other way round. We benefit in logic and by our structural position by an increase in world trade. What the Government should not now be doing is introducing into the world trade situation a deliberalising measure arid, above all, giving to our E.F.T.A. partners the answer on a plate. If our E.F.T.A. partners adopt the Government's case and say that they can do the same, we shall be the losers.
  Sir John Foster: It has been pointed out that to impose any brake on world trade is contrary to the spirit of the E.F.T.A. Convention, and Article 19 provides the conditions justifying stringent measures when there is a balance of payments crisis. The legal argument can be fitted into the spirit of the E.F.T.A. Convention in this way, but the Attorney-General advanced a very interesting argument. He said, "It is called a duty in the Bill, but it is not really a duty. It has been called a duty for technical reasons." The technical reason is that the Act of 1968 requires it to be called a duty for the purposes of the Ways and Means Resolution.
  6.15 p.m.
  There are many occasions in ordinary life and in law where a certain rule lays down that such-and-such will happen in certain cases. The person, in
  1302
  this case, says to the Attorney-General, "Look—it is a duty." "No," the Attorney-General replies, "It is not really a duty." There are cases both ways. In some cases a person will say, "You cannot be heard to say that it is not a duty, because you have called it a duty," but there are other cases where a person can say, "It is quite true that I have called it a duty, but it is not really a duty—therefore it is not a duty."
  I submit that in this case it falls the other way because of the spirit of the E.F.T.A. Convention. The argument about whether it is a duty or not really a duty is nicely balanced, but here the balance falls right down against the Attorney-General, because he has called it a duty. In deciding whether he is bound by what he has called it, one has to look at the spirit of the E.F.T.A. Convention, and that says that we shall not put trammels on world trade; that we shall not impose duties or charges.
  Let us look at the word "charge". The Attorney-General says that it is called a charge and, as my hon. and learned Friend the Member for Southport (Mr. Percival) has so cogently pointed out, it is called a charge all the way through the Bill. Is it a charge? The Attorney-General says, "No, it is called a charge, but it is not really a charge because it is refundable." The argument is much more "dicey"—if I may use the word—for the Attorney-General, because it is very doubtful indeed whether a charge does not become a charge when it is refundable. Deposits on bottles of bitter lemon are usually called deposits on the bottle because they are refundable and I do not think that the grocer calls that a charge but, in most cases, where a charge is refundable it is still a charge.
  My hon. Friend the Member for Harrow, West (Mr. John Page) very kindly said of the Attorney-General that he was courteous and that he talked slowly and clearly, but I would remind the right hon. and learned Gentleman that it was said of one Attorney-General that he was courteous, that he was slow, that he was always wrong. Therefore, let the Attorney-General beware of my hon. Friend.
  The Attorney-General's case falls rather on the side of the Income Tax case in which a property company used to deduct the interest it had to pay on its developments. Up to a point, the tax

  1303
  inspectors said, "Yes, you have to pay interest, so it is deductible". After a year or two the inspector looked at the published accounts and saw that in order to present a more attractive picture to the shareholders the company had capitalised the interest and had said that the interest, for the purpose of the accounts of shareholders was not a revenue deduction but was capitalised. The courts, when I last left the Bar—they may have reversed their decision since, as it was some years ago—had said, "If you call it a capital expenditure, it is a capital expenditure. It does not matter that you say that it is not really a capital expenditure although you have called it so". I think that it was known as the Chancery Lane case.
  I do not care whether or not the decision has been reversed, because my view is that the test is, if it is contrary to the spirit of the E.F.T.A. Convention, can you be heard to say, "Although I call it a duty, it is not really a duty"? Then those concerned with the E.F.T.A. Convention see that this Measure is obviously meant to catch not only duties and charges but everything of the sort that puts a kind of brake or impediment on foreign trade.
  That is what destroys the Attorney-General's legal argument which, in vacuo might have held water. It might have been said, "I call a cat a dog, but it is not really a dog, it is still a cat". The Dogs Act of 1906 gave an example of that because, in Section 7, it is said:
  "the expression cattle' includes horses …"
  The Temporary Chairman (Sir Myer Galpern): Order. The hon. and learned Member is straying and must come back to the Amendment.
  Sir J. Foster: I was trying to give an example of the way in which the Attorney-General might, in certain circumstances, have said that poultry does not include cattle.
  The right hon. and learned Gentleman has not satisfied the Committee. To say, "It is not really that because call it that for technical reasons", it is so near that one is entitled to go outside the strict wording to see what the E.F.T.A. Convention provides. The E.F.T.A. Ministers may say, "It is a breach, but we shall forgive you", or they may say, in the case of an indulgent Government, that it
  1304
  is not a breach at all. I hope that they will say that, but that does not stop the wrongness of introducing a Bill not knowing exactly what the E.F.T.A. Ministers will say.
  Mr. John Peyton: My hon. and learned Friend the Member for Northwich (Sir J. Foster) has been exceedingly merciful to the Attorney-General. It appeared that the Attorney-General this afternoon was answering the quite simple question, when is an import duty not an import duty? He conveniently forgot, or glossed over, the words in the Bill which have already been mentioned. I refer to only one instance, which says:
  "The import deposit chargeable on any goods shall be payable in addition to any other duty of customs."
  The plain meaning of those words surely is that the import duty is to be regarded as just another form of customs duty. Those words cannot be read in any other way. Although I would not put myself forward against such an authority as my hon. and learned Friend, I nevertheless would have said that the Attorney-General, in his legal argument, stands stripped of any authority more profound than that of Humpty-Dumpty, who said that a word means exactly
  "just what I choose it to mean".
  The Attorney-General: What I endeavoured to say was that a payment which is repayable unconditionally and automatically after the efflux ion of a given period of time—and that is the arrangement—ab initio is not a charge within the meaning of the E.F.T.A. Agreement. That is the point on which I advised the Committee and, in my view, it is a valid point.
  Mr. Peyton: I listened to every word the Attorney-General said and, with great respect for his office and himself, I find myself unable to accept that argument. I go back to the speech—as one would expect, a very cogent and courteous speech—made by my right hon. and learned Friend the Member for Epsom (Sir P. Rawlinson). At one point he menacingly reminded the Attorney-General that, in making the speech he was to make, it was his duty to advise not only the Government but the House of Commons. I felt quite unable to echo the remark of my hon. and learned Friend the Member for Southport (Mr. Percival), who thanked the Attorney-General. I

  1305
  feel no gratitude to him for the advice we had this afternoon, although I felt some sympathy with him in the awkward predicament in which he was placed.
  I want to say a word or two about the second argument used by the Attorney-General on whether this was in breach of the spirit of the E.F.T.A. Agreement. It seems that the Government have been singularly inept, unprepared and clumsy in their approach to E.F.T.A. about whom they should have been warned because we have already trodden pretty firmly on E.F.T.A.'s toes. I entirely agree with my hon. Friends the Members for Barkston Ash (Mr. Alison) and Oswestry (Mr. Biffen). The Attorney-General this afternoon, in riding lightly off the argument, said that our friends—indeed, they are friends—will forgive us out of pity for our difficulties, for having cheated once more. This is a disgraceful position for any British Government to have got themselves into. It is impossible not to feel some sympathy with the right hon. and learned Gentleman in the acute embarrassment he was in this afternoon.
  I remind the Committee of some words which were spoken by the Financial Secretary to the Treasury on 28th November. The Committee will recall this quotation from the Second Reading debate when we discussed what the Government had done and our relations with E.F.T.A. The Financial Secretary used these words, which seem extraordinary:
  "On the other hand, I do not want to let any words fall which appear to prejudge the completely free discussion and decision of this matter by the E.F.T.A. Ministers themselves."—[OFFICIAL REPORT, 28th November. 1968; Vol. 774, c. 755.]
  In other words, discussions here would be very embarrassing because it could be that our partners in E.F.T.A., out of charity and kindness, would not wish to make this point. Therefore, we would be adding to the embarrassment of the Government if we unnecessarily called attention to the fact that they were cheating. I do not think the House of Commons should put up with that sort of thing. We should protest most strongly against it.
  I do not want to take up the time of the Committee further because I am conscious that some of my hon. Friends who have far greater authority than I have
  1306
  wish to speak. I appreciate particularly what my hon. and learned Friend the Member for Northwich said. The Government have put the House of Commons and the country into an embarrassing and shameful position which the Attorney-General has done nothing this afternoon to alleviate.
  Sir Douglas Glover: We have had a very interesting debate. I have a great deal of sympathy for the Attorney-General. I agree with my hon. Friend the Member for Harrow, West (Mr. John Page) that the Attorney-General speaks slowly and with great charm, but, I regret to say, very often I cannot agree with him. It seems that the Government are turning the E.F.T.A. Convention into a scrap of paper like the Treaty which Germany had with Belgium before 1914.
  This is the second or third occasion on which we have been in breach of the E.F.T.A. Convention, if not in law, certainly in the spirit of the Convention. E.F.T.A. people are our friends, but I think that a great many of them may be saying, "Lord protect us from our friends and put us in the hands of our enemies". The way in which Britain has behaved in this matter seems deplorable. What worries me is that all the things the Government have said have implied that the Opposition is wrong in raising this matter of legality and the spirit of E.F.T.A. and that we should allow all this to go through silently in the night. It implies that the Government are not criticising the Opposition but have guilty consciences. They knew perfectly well that they were sailing very close to the E.F.T.A. wind when they decided to do this.
  If the President of the Board of Trade considers that consultation with our E.F.T.A. friends took place on the Friday afternoon when, more or less at the same time, the Chancellor of the Exchequer was making a categorical announcement in the House about the Government proposals, I should not have thought that that was giving our partners any chance to put forward their views.
  6.30 p.m.
  The Government say further that we should not argue about this matter on the Floor of the House because it might affect what happens when the E.F.T.A. partners meet to consider whether we

  1307
  are in breach of the Convention. This is standing honesty and integrity on its head. If the Government have made a mistake and if they know that they will not be able to refute the arguments likely to be put to them by their E.F.T.A. friends, they should, if they are honest, withdraw the Bill until they have cleared it with E.F.T.A. To proceed contrary to that after all the arguments put forward by hon. and learned Members is asking for trouble. It spoils, not the Government's name—I could not care tuppence about the Government—but Britain's name in international conferences and affairs, makes their word less credible and makes people more worried about whether they can accept Britain's word when they sign their name to a convention or treaty.
  If, as appears, that is the position, the Government have been very ill advised in bringing this Measure before us in the form of a Bill until they have cleared it with E.F.T.A., and I still think that they should do that today.
  Mr. Tom Boardman: On the legal point, I am at a loss to follow the distinction between a tax or duty and what is proposed here, which is to take from someone something to which he would otherwise be entitled, namely, the income on a sum of money which he has been forced to leave in the Government's hands. I do not see the distinction between that and taking apples off a tree, which is the illustration used in many legal circles. The tree is left, but it cannot be said that the owner has not been deprived of something. Clearly, this is a charge and a duty, as the Bill provides. My hon. and learned Friend the Member for Northwich (Sir J. Foster) referred to the bottle deposit but I would make the point that in that case the person has the use of the bottle during the period concerned. But here the person paying the deposit receives nothing.
  The legal point has been widely argued. If this is not contrary to the spirit of the E.F.T.A. agreement, would it not be equally consistent with the spirit of that agreement if the Government decided to make interest-free loans to those who export measured against the value of the exports sent out? The Attorney-General might well say that this would be a subsidy, but for his argument to be consis-
  1308
  tent he could not say that. But it is beyond dispute that that would be against the spirit of the E.F.T.A. agreement.
  For those reasons, it is deplorable to put this measure forward as neither a duty nor a charge.
  The President of the Board of Trade (Mr. Anthony Crosland): Most hon. Members will be relieved to know that I am not a lawyer. I am quite incompetent to take part in the legal arguments exchanged across the Committee. But I am authorised by the Attorney-General to say that he, having listened to all the points which have been made, is not disposed to alter the legal advice which he tendered to the Committee earlier. A number of political points have been made and addressed more to me than to my right hon. and learned Friend. Perhaps I could deal with those.
  A number of hon. Members opposite raised the point about possible consultation. Perhaps I could correct the hon. Member for Ormskirk (Sir D. Glover) on one point. When I intervened in the speech of the Leader of the Opposition on Monday last week, I did not claim that there had been consultation in any proper sense of the term. I was merely rebutting the statement which he had made that the matter had not even been discussed. I would not claim that there had been genuine consultation in the sense which hon. Members opposite and myself would attach to the word. But I wonder whether it is seriously suggested that in a case like this there could have been real consultation as to whether we should have introduced this Measure.
  Perhaps I could put to the Committee the circumstances of the case. This decision was announced the week before last. That was a week of intense international monetary crisis when the Finance Ministers of the Group of Ten were meeting in Bonn. I cannot think that it is seriously suggested that during that week Her Majesty's Government, before taking a decision, should have gone to the other E.F.T.A. Governments which happened to be assembled at the Ministerial Council in Vienna, and said, "We should like to consult you, first, about whether we should do anything to restrain our imports and, secondly, if we are to do something, which of the possible measures you would prefer". Is it

  1309
  suggested that we should have had with them a consultation which, if it were to be real, would have taken, with their advisers, two or three days, the result of which would certainly have leaked?
  I suggest that true consultation, which I am not pretending occurred, on a matter like this is no more possible than true prior consultation on, say, tax changes or exchange rate changes. Not one of the E.F.T.A. Ministers has criticised us for not consulting in this way. Article 19 of the E.F.T.A. Convention, which refers to quantitative restrictions, which in some sense are legal, does not suggest that there should be consultation before they are imposed. It suggests only that they should be notified to the Ministerial Council. To have proper prior consultation in those circumstances would be a derogation of the sovereignty of any British Government, which was never envisaged when the E.F.T.A. Convention was drawn up and which would never be accepted by either side of the Committee.
  Mr. Biffen: I am interested in the right hon. Gentleman's comment about the difficulties arising from the international monetary crisis, but does he recollect that the Chancellor of the Exchequer argued that the package was not related to the international monetary crisis and that it was, to some extent, a coincidence that the two came together? Surely the question of import deposits was considered by the Government long before the international monetary crisis blew up. Was not that the time when consultations should have been considered?
  Mr. Crosland: Clearly the hon. Gentleman did not hear the speech of my right hon. Friend the Chancellor of the Exchequer, who made it clear that, on the one hand, these measures were not determined as a result of the Bonn meeting of the Group of Ten but that, on the other hand, they were linked to the international monetary crisis.
  The second point which was raised concerned the spirit of the E.F.T.A. agreement. I hope that I am as anxious as any of the critics to maintain and enhance the spirit of E.F.T.A. Some of the language used by, for example, the hon. Member for Yeovil (Mr. Peyton) is quite inappropriate to these discussions and wholly out of line with any language
  1310
  used by any of the other E.F.T.A. Ministers.
  We must all form our own judgment about the spirit of E.F.T.A.; I cannot claim unique accuracy for mine. I can only report my impression—and, after all, I was at the Ministerial Council—that the E.F.T.A. reaction was not as it has been painted today by hon Members opposite. There was a general recognition that we had to do something to restrain our imports and that of the possible measures open to us we had chosen the one least damaging to E.F.T.A. trade. As far as I remember, during the whole of that afternoon, the question of legality was not mentioned in the Ministerial Council. I can only give my impression as honestly as I can that what has been said about the threat to the spirit of E.F.T.A. today is not in accordance with the facts.
  The next question raised was: should E.F.T.A. have been excluded from the operation of the import deposit scheme? This is the object of Amendment No. 98, in the name of the hon. Member for Honiton (Mr. Emery). I put it to the Committee that whatever international repercussions there are from the scheme as a whole, with E.F.T.A. in, would be as nothing to the international repercussions if we were to make this a positively discriminatory scheme. Successive British Governments, like almost all Governments of advanced countries in the world, have long been committed to the principle that, if they had to do something about imports, they would do it in a non-discriminatory way. I assure the Committee that any attempt to exclude E.F.T.A. would make the international repercussions of the scheme ten times worse than they can possibly be as it now stands.
  I was asked what representations had been received. I assure the hon. Member for Worcestershire, South (Sir G. Nabarro) that I have read, as he heard reported on the radio, I think, the very critical speech by the Danish Finance Minister. We have, in addition, as the Committee knows, received representations from the Prime Minister of Ireland. Apart from those, no representations have been received since the Vienna Conference from any other E.F.T.A. country. All the other E.F.T.A. countries are satisfied that we should now follow the normal procedure in these matters, that is, that the question

  1311
  should go to the E.F.T.A. Official Council for its consideration in the weeks and months ahead.
  Sir Arthur Vere Harvey: The right hon. Gentleman explains away the E.F.T.A. countries, but will he say what representations have been received from the Government of Malta, a Government to which we are giving great support, which they most certainly require?
  Mr. Crosland: As this was a debate about E.F.T.A., I replied in terms of the E.F.T.A. countries. I understand that representations have been received from the Government of Malta, but I cannot say off-hand what they are. If their nature is not known, or if no announcement has been made, I shall discover what I can and write to the hon. Gentleman.
  For me, this debate has had an unreal quality. Its tone and atmosphere has been strikingly different from the tone and atmosphere of the debate which took place in the E.F.T.A. Ministerial Council. I am sure that the motive of those who have spoken has been a genuinely patriotic motive. I do not question that, despite some of the excessively violent language used. I end by expressing my personal judgment that the repercussions in E.F.T.A. will be not one-tenth as serious or damaging to this country, to E.F.T.A. or the spirit of E.F.T.A. as some of the more violent speeches from the benches opposite today have suggested.
  Sir P. Rawlinson: When the Minister, in winding up, refers to patriotism in those terms, I become suspicious. These Amendments were put down because it was the duty of the Opposition to press them. They were put down because it appeared to us that the Government had prepared this scheme ill-advisedly, without proper consultation and without recognition of the legal issues and the responsibilities and liabilities of this country under the Convention.
  None of my right hon. and hon. Friends would wish to do anything which might damage or cause difficulty for Britain, but it is the duty of the House of Commons to examine closely the legislation which is put before it.
  The right hon. Gentleman spoke of the urgency and agony of the crisis. I am sure that that was so and there was not time for consultation, but I remind him that,
  1312
  at the time of the European negotiations which were led by my right hon. Friend the Leader of the Opposition, there was conference and consultation with the E.F.T.A. countries in the 24 hours before an announcement was made in the House. However, perhaps because of the urgency and agony of the situation, the effect which the scheme would have under the E.F.T.A. Convention was not closely thought out, and, with the greatest respect to the right hon. Gentleman, the expression upon the Chancellor of the Exchequer's face when he had to meet that question revealed that in all the matters which he had to take into account his advisers had not gone into the point and had not considered the real legal position under the Convention.
  I listened with care to the Attorney-General, who was invited to come here and give his advice as adviser to the House. I regret that, at the end of it, he introduced, by tone if not by word, the suggestion of some reflection on the patriotism of those who have raised the question.
  The Attorney-General: If any such inference could have been drawn from what I said, I certainly did not intend it, and I withdraw it. I detected a slight element of party faction at one point in some of the speeches which I heard.
  6.45 p.m.
  Sir P. Rawlinson: With respect, I was the only one who had spoken at that stage, and I had not introduced the matter in terms of party faction. I made clear that what we wanted was advice. We wanted to hear the argument. I tell the right hon. and learned Gentleman categorically that, having listened to his argument—I am not alone in this—I cannot for the life of me see that it can be sustained. Knowing the Attorney-General's considerable powers of advocacy, I am certain that, if he had had to argue his case before the Revenue Court, with the judge able to interrupt, he would have had a far more difficult time than he had here in advising the House of Commons in Committee.
  My right hon. and hon. Friends have discussed the detail of the argument, subjecting it to close analysis. It comes down to this: call it what one will, this is a duty, as it is described in the Bill. The right hon. and learned Gentleman

  1313
  may recite that it is not. He may try to explain it away. Although I accept that in his own mind he has explained it away, on his view of the law, by saying that the provisions are so drafted for a purely technical reason, we remain unconvinced. On 26th November, the Financial Secretary to the Treasury—perhaps it was at an early hour in the morning; I am not sure—flatly referred to it as a customs charge. We find his words in column 264 of the OFFICIAL REPORT. In reality, that is what it is, and that is what economics Ministers know perfectly well it is.
  The Attorney-General was forced to examine the matter at a time when the Bill was coming before the House. I regret to say that I and, I think, some of
  my right hon. and hon. Friends totally disagree with the argument which he has put to us. I accept the Attorney-General's advice as advice which he gives to the House, but other circumstances and issues still remain. I strongly suspect that Ministers did not go to the Attorney-General for advice earlier on. I believe that this point took them by surprise. Because of this revelation, once again, of the incompetence of the present Administration, I advise my hon. and right hon. Friends to vote for the Amendment.
  Question put, That the Amendment be made:—
  The Committee divided: Ayes 181, Noes 256.

  Division No. 17.]

  AYES

  [6.48 p.m.

  Alison, Michael (Barkston Ash)

  Gilmour, Sir John (Fife, E.)

  Mawby, Ray

  Allason, James (Hemel Hempstead)

  Glover, Sir Douglas

  Maxwell-Hyslop, R. J.

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

  Godber, Rt. Hn. J. B.

  Mills, Peter (Torrington)

  Baker, Kenneth (Acton)

  Goodhew, Victor

  Mills, Stratton (Belfast, N.)

  Baker, W. H. K. (Banff)

  Gower, Raymond

  Miscampbell, Norman

  Beamish, Col. Sir Tufton

  Grant-Ferris, R.

  Mitchell, David (Basingstoke)

  Bell, Ronald

  Grieve, Percy

  Monro, Hector

  Bennett, Sir Frederic (Torquay)

  Grimond, Rt. Hn. J.

  Montgomery, Fergus

  Bennett, Dr. Reginald (Gos. & Fhm)

  Hall, John (Wycombe)

  More, Jasper

  Berry, Hn. Anthony

  Hall-Davis, A. G. F.

  Morgan, Geraint (Denbigh)

  Biffen, John

  Hamilton, Lord (Fermanagh)

  Morrison, Charles (Devizes)

  Biggs-Davison, John

  Hamilton, Michael (Salisbury)

  Munro-Lucas-Tooth, Sir Hugh

  Birch, Rt. Hn. Nigel

  Harris, Frederic (Croydon, N.W.)

  Murton, Oscar

  Black, Sir Cyril

  Harrison, Brian (Maldon)

  Naharro, Sir Gerald

  Blaker, Peter

  Harrison, Col, Sir Harwood (Eye)

  Neave, Airey

  Boardman, Tom (Leicester, S.W.)

  Harvey, Sir Arthur Vere

  Nott, John

  Boyd-Carpenter, Rt. Hn. John

  Harvie Anderson, Miss

  Onslow, Cranley

  Boyle, Rt. Hn. Sir Edward

  Hastings, Stephen

  Orr, Capt. L. P. S.

  Brewis, John

  Hawkins, Paul

  Orr-Ewing, Sir Ian

  Brinton, Sir Tatton

  Heald, Rt. Hn. Sir Lionel

  Osborne, Sir Cyril (Louth)

  Brown, Sir Edward (Bath)

  Heath, Rt. Hn. Edward

  Page, Graham (Crosby)

  Bruce-Gardyne, J.

  Heseltine, Michael

  Page, John (Harrow, W.)

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

  Higgins, Terence L.

  Pardoe, John

  Buck, Antony (Colchester)

  Hiley, Joseph

  Percival, Ian

  Bullus, Sir Eric

  Hill, J. E. B.

  Peyton, John

  Burden, F. A.

  Hirst, Geoffrey

  Powell, Rt. Hn. J. Enoch

  Campbell, B. (Oldham, W.)

  Holland, Philip

  Price, David (Eastleigh)

  Clark, Henry

  Hordern, Peter

  Prior, J. M. L.

  Clegg, Walter

  Hornby, Richard

  Pym, Francis

  Cooke, Robert

  Howell, David (Guildford)

  Quennell, Miss J. M.

  Cooper-Key, Sir Neill

  Hutchison, Michael Clark

  Rawlinson, Rt. Hn. Sir Peter

  Cordle, John

  Iremonger, T. L.

  Rees-Davies, W. R.

  Corfield, F. V.

  Irvine, Bryant Godman (Rye)

  Renton, Rt. Hn. Sir David

  Costain, A. P.

  Jenkin, Patrick (Woodford)

  Rhys Williams, Sir Brandon

  Cunningham, Sir Knox

  Jennings, J. C. (Burton)

  Ridley, Hn. Nicholas

  Currie, G. B. H.

  Johnson Smith, G. (E. Grinstead)

  Ridsdale, Julian

  Dalkeith, Earl of

  Joseph, Rt. Hn. Sir Keith

  Rossi, Hugh (Hornsey)

  Dance, James

  Kaberry, Sir Donald

  Russell, Sir Ronald

  Davidson, James (Aberdeenshire, W.)

  Kerby, Capt. Henry

  Sandys, Rt. Hn. D.

  d'Avigdor-Goldsmid, Sir Henry

  Lancaster, Col. C. G.

  Scott-Hopkins, James

  Dean, Paul

  Legge-Bourke, Sir Harry

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

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

  Lewis, Kenneth (Rutland)

  Smith, Dudley (W'wick & L'mington)

  Digby, Simon Wingfield

  Lubbock, Eric

  Smith, John (London & W'minster)

  Doughty, Charles

  MacArthur, Ian

  Speed, Keith

  Drayson, G. B.

  Mackenzie, Alasdair (Ross & Crom'ty)

  Staunton, Keith

  Eden, Sir John

  Maclean, Sir Fitzroy

  Steel, David (Roxburgh)

  Elliot, Capt. Walter (Carshalton)

  Macmillan, Maurice (Farnham)

  Stodart, Anthony

  Emery, Peter

  McNair-Wilson, Patrick

  Stoddart-Scott, Col. Sir M.

  Eyre, Reginald

  Maddan, Martin

  Summers, Sir Spencer

  Farr, John

  Maginnis, John E.

  Tapsell, Peter

  Fletcher-Cooke, Charles

  Marten, Neil

  Taylor, Sir Charles (Eastbourne)

  Fortescue, Tim

  Maude, Angus

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

  Foster, Sir John

  Maudling, Rt. Hn. Reginald

  Temple, John M.

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

  Thatcher, Mrs. Margaret

  Thorpe, Rt. Hn. Jeremy

  Ward, Dame Irene

  Wolrige-Gordon, Patrick

  Turton, Rt. Hn. R. H.

  Webster, David

  Wood, Rt. Hn. Richard

  van Straubenzee, W. R.

  Wells, John (Maidstone)

  Woodnutt, Mark

  Vaughan-Morgan, Rt. Hn. Sir John

  Whitelaw, Rt. Hn. William

  Wright, Esmond

  Waddington, David

  Williams, Donald (Dudley)

  Wainwright, Richard (Colne Valley)

  Wills, Sir Gerald (Bridgwater)

  TELLERS FOR THE AYES:

  Walker-Smith, Rt. Hn. Sir Derek

  Wilson, Geoffrey (Truro)

  Mr. R. W. Elliott and

  Wall, Patrick

  Winstanley, Dr. M. P.

  Mr. Timothy Kitson.

  NOES

  Abse, Leo

  Fletcher, Rt. Hn. Sir Eric (Islington, E.)

  McKay, Mrs. Margaret

  Albu, Austen

  Fletcher, Ted (Darlington)

  Mackenzie, Gregor (Rutherglen)

  Allaun, Frank (Salford, E.)

  Foley, Maurice

  Mackie, John

  Alldritt, Walter

  Foot, Rt. Hn. Sir Dingle Ipswich)

  Mackintosh, John P.

  Allen, Scholefield

  Foot, Michael (Ebbw Vale)

  Maclennan, Robert

  Anderson, Donald

  Forrester, John

  McMillan, Tom (Glasgow, C.)

  Archer, Peter

  Fowler, Gerry

  McNamara, J. Kevin

  Ashton, Joe (Bassetlaw)

  Fraser, John (Norwood)

  MacPherson, Malcolm

  Atkins, Ronald (Preston, N.)

  Freeson, Reginald

  Mahon, Peter (Preston, S.)

  Atkinson, Norman (Tottenham)

  Gardner, Tony

  Mahon, Simon (Bootle)

  Bacon, Rt. Hn. Alice

  Garrett, W. E.

  Manuel, Archie

  Bagier, Gordon A. T.

  Ginsburg, David

  Mapp, Charles

  Barnes, Michael

  Gordon Walker, Rt. Hn. P. C.

  Marks, Kenneth

  Beaney, Alan

  Gray, Dr. Hugh (Yarmouth)

  Marsh, Rt. Hn. Richard

  Bence, Cyril

  Greenwood, Rt. Hn. Anthony

  Mason, Rt. Hn. Roy

  Bennett, James (G'gow, Bridgeton)

  Grey, Charles (Durham)

  Mellish, Rt. Hn. Robert

  Bidwell, Sydney

  Griffiths, David (Rother Valley)

  Mendelson, John

  Binns, John

  Griffiths, Eddie (Brightside)

  Mikardo, Ian

  Bishop, E. S.

  Hamilton, James (Bothwell)

  Millan, Bruce

  Blackburn, F.

  Hamilton, William (Fife, W.)

  Miller, Dr. M. S.

  Boardman, H. (Leigh)

  Hamling, William

  Milne, Edward (Blyth)

  Booth, Albert

  Hannan, William

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

  Boston, Terence

  Harper, Joseph

  Morgan, Elystan (Cardiganshire)

  Boyden, James

  Harrison, Walter (Wakefield)

  Morris, Alfred (Wythenshawe)

  Braddock, Mrs. E. M.

  Hart, Rt. Hn. Judith

  Morris, Charles R. (Openshaw)

  Bray, Dr. Jeremy

  Haseldine, Norman

  Morris, John (Aberavon)

  Brooks, Edwin

  Hattersley, Roy

  Moyle, Roland

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

  Hazell, Bert

  Mulley, Rt. Hn. Frederick

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

  Healey, Rt. Hn. Denis

  Murray, Albert

  Buchan, Norman

  Heffer, Eric S.

  Neal, Harold

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

  Newens, Stan

  Butler, Herbert (Hackney, C.)

  Henig, Stanley

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

  Callaghan, Rt. Hn. James

  Herbison, Rt. Hn. Margaret

  Norwood, Christopher

  Cant, R. B.

  Hobden, Dennis

  Oakes, Gordon

  Carmichael, Neil

  Horner, John

  O'Malley, Brian

  Carter-Jones, Lewis

  Howarth, Harry (Wellingborough)

  Oram, Albert E.

  Coe, Denis

  Howie, W.

  Orbach, Maurice

  Coleman, Donald

  Hoy, James

  Orme, Stanley

  Conlan, Bernard

  Hughes, Emrys (Ayrshire, S.)

  Oswald, Thomas

  Corbet, Mrs. Freda

  Hughes, Hector (Aberdeen, N.)

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

  Cradclock, George (Bradford, S.)

  Hughes, Roy (Newport)

  Owen, Will (Morpeth)

  Crawshaw, Richard

  Hunter, Adam

  Padley, Walter

  Crosland, Rt. Hn. Anthony

  Hynd, John

  Paget, R. T.

  Cullen, Mrs. Alice

  Irvine, Sir Arthur (Edge Hill)

  Palmer, Arthur

  Dalyell, Tam

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

  Pannell, Rt. Hn. Charles

  Darling, Rt. Hn. George

  Jackson, Peter M. (High Peak)

  Park, Trevor

  Davidson, Arthur (Accrington)

  Jay, Rt. Hn. Douglas

  Parker, John (Dagenham)

  Davies, Ednyfed Hudson (Conway)

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

  Parkyn, Brian (Bedford)

  Davies, G. Elfed (Rhondda, E.)

  Jenkins, Hugh (Putney)

  Pavitt, Laurence

  Davies, Dr. Ernest (Stretford)

  Jenkins, Rt. Hn. Roy (Stetchford)

  Pearson, Arthur (Pontypridd)

  Davies, Ifor (Gower)

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

  Peart, Rt. Hn. Fred

  Davies, S. O. (Merthyr)

  Jones, J. Idwal (Wrexham)

  Pentland, Norman

  Delargy, Hugh

  Jones, T. Alec (Rhondda, West)

  Perry, Ernest G. (Battersea, S.)

  Dell, Edmund

  Kenyon, Clifford

  Perry, George H. (Nottingham, S.)

  Dempsey, James

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

  Prentice, Rt. Hn. R. E.

  Dewar, Donald

  Kerr, Dr. David (W'worth, Central)

  Price, Christopher (Perry Barr)

  Diamond, Rt. Hn. John

  Lawson, George

  Price, Thomas (Westhoughton)

  Dickens, James

  Leadhitter, Ted

  Price, William (Rugby)

  Dobson, Ray

  Ledger, Ron

  Probert, Arthur

  Doig, Peter

  Lee, Rt. Hn. Frederick (Newton)

  Randall, Harry

  Dunn, James A.

  Le, John (Reading)

  Rees, Merlyn

  Dunnett, Jack

  Lever, Harold (Cheetham)

  Roberts, Albert (Normanton)

  Dunwoody, Mrs. Gwyneth (Exeter)

  Lever, L. M. (Ardwick)

  Roberts, Gwilym (Bedfordshire, S.)

  Eadie, Alex

  Lewis, Arthur (W. Ham, N.)

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

  Edwards, Robert (Bilston)

  Lewis, Ron (Carlisle)

  Rodgers, William (Stockton)

  Edwards, William (Merioneth)

  Lomas, Kenneth

  Roebuck, Roy

  Ellis, John

  Loughlin, Charles

  Rogers, George (Kensington, N.)

  English, Michael

  Lyons, Edward (Bradford, E.)

  Roes, Rt. Hn. William

  Ennals, David

  McBride, Neil

  Rowlands, E.

  Evans, Fred (Caerphilly)

  McCann, John

  Shaw, Arnold (Ilford, S.)

  Ewing, Mrs. Winifred

  MacColl, James

  Sheldon, Robert

  Fernyhough, E.

  Macdonald, A. H.

  Shinwell, Rt. Hn. E.

  Finch, Harold

  McGuire, Michael

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

  1316

  1317

  Silkin, Rt. Hn. John (Deptford)

  Varley, Eric G.

  Williams, Alan Lee (Hornchurch)

  SKefffington, Arthur

  Wainwright, Edwin (Deame Valley)

  Williams, Clifford (Abertillery)

  Small, William

  Walker, Harold (Doncaster)

  Williams, Mrs. Shirley (Hitchin)

  Spriggs, Leslie

  Wallace, George

  Williams, W. T. (Warrington)

  Steele, Thomas (Dunbartonshire, W.)

  Watkins, David (Consett)

  Willis, Rt. Hn. George

  Stonehouse, Rt. Hn. John

  Watkins, Tudor (Brecon & Radnor)

  Wilson, William (Coventry, S.)

  Strauss, Rt. Hn. G. R.

  Weitzman, David

  Winnick, David

  Swain, Thomas

  Wellbeloved, James

  Woodburn, Rt. Hn. A.

  Swingler, Stephen

  Wells, William (Walsall, N.)

  Woof, Robert

  Symonds, J. B.

  Whitaker, Ben

  Wyatt, Woodrow

  Taverne, Dick

  Whitlock, William

  Tinn, James

  Wilkins, W. A.

  TELLERS FOR THE NOES:

  Tuck, Raphael

  Willey, Rt. Hn. Frederick

  Mr. loan L. Evans and

  Urwin, T. W.

  Williams, Alan (Swansea, W.)

  Mr. Ernest Armstrong.

  The Temporary Chairman (Sir Myer Galpern): The next Amendment is Amendment No. 1, with which it might he for the convenience of the Committee to take Amendment No. 2, in page 1, line 16, leave out 'fifty' and insert 'twenty-five'.
  [Mr. HARRY GOURLAY in the Chair]
  Mr. Peyton: I beg to move, Amendment No. 1, in page 1, line 16, leave out 'fifty' and insert 'thirty'.
  The charge that we on this side of the Committee make against the Measure is that it is vague, ill thought out and unpredictable in its effect. Because we believe it to be so full of those vices, we think that it would be a good thing if its immediate impact were lessened by the simple reduction from 50 to 30 per cent. This does not mean that we necessarily think that 30 per cent. would be a good thing.
  7.0 p.m.
  It is impossible not to admire the sagacity and dexterity of the Financial Secretary. On Second Reading he devoted no less than two-thirds of a column in HANSARD to the details of the Measure and thereafter skated on to talk of more joyous things such as the Opposition's Amendment, which gave him a good deal more joy than the Measure of which he was at least the foster-parent at that moment. I have never seen an example of anyone more ashamed of his own child than the Financial Secretary. One can always tell by the hon. Gentleman's attitude towards the subject he is discussing whether he is enthusiastic. When his enthusiasm is at a low ebb, he deals with the matter in hand very rapidly indeed. On that occasion the Bill received but scant attention from him.
  The Government are exceedingly vague about what is being done in the Bill. In
  1318
  moving the Second Reading of the Bill the Financial Secretary said this:
  "I shall leave the details of the Bill for more consideration as the debate develops".
  We greatly hope that the moment has now come when the hon. Gentleman will be able to open his mind and that his mind will have more in it as to the effects of the Bill than it evidently had on Second Reading. He said later:
  "I do not know exactly, or even within a wide range, what the effect will be … I am hoping that there will be a significant and marginal effect in terms of imports themselves."
  It is impossible to read the hon. Gentleman's speech without concluding that the Government, in putting forward this hotch-potch Measure, have no idea whether it will have a serious effect or none. This gives us ground for great concern. It would at least appear to us that the Government have given little thought to the effects of the Measure upon those wretched people who have to conduct businesses in Britain and who trade overseas.
  I have often wished that Ministers, particularly of this Administration, but I have wished it of others, could be obliged to take part in the business of trade so that they could feel at first hand the impact of the Measures they promulgate. It would not be such a bad thing if this practice were to be extended to the Treasury and other Government Departments, particularly the Customs and Excise.
  I am sorry to quote the words of the Financial Secretary so often, but we have not got very much Government literature on this subject. Later in his Second Reading speech he said this:
  "… there will be no one who cannot find the money."
  It could be, in these circumstances of squeeze, that many people conducting businesses, and not all of them small,

  1319
  find their resources stretched to the utmost and who, even if they can find the money, will not wish to undertake greater and more expensive commitments.
  Still later in his Second Reading speech the hon. Gentleman
  "repudiated the possibility of"
  the Bill's
  "bringing many businesses, small, medium or large, to bankruptcy."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 750–2.]
  I would like to know the measure of the hon. Gentleman's confidence in that repudiation. Does he consider that the Bill will have only a marginal effect? We should like to know how slight the margin is. We warn the Financial Secretary that some margins can be oppressive and that, added to some of the other burdens which have been put upon businesses, this will bear harshly indeed.
  How much though has gone into the organisation and the method of operation of this scheme? As to precedents and general design—
  The Deputy Chairman (Mr. Gourlay): Order. I must ask the hon. Gentleman to address his remarks to the Amendment which is to leave out "fifty" and insert "thirty".
  Mr. Peyton: I am sorry, Mr. Gourlay. I have failed to make my argument clear. The whole point of this, if I may repeat words I used at the very beginning of my speech, is that the Bill is a vague, ill-thought-out hotch-potch. Therefore, with great respect, I think that I am entitled to argue that it would be less vicious in its effect if it had an experimental period, at, say, 30 per cent. rather than the proposed 50 per cent. With respect, 1 do not believe that I have strayed very far from that point, but I will certainly do my best to comply with your requirement.
  The only people whose convenience has been consulted are the Commissioners of Customs and Excise. I do not know whether the Financial Secretary has seen the first letter in today's Financial Times. It is from a Mr. Arditti, an accountant, who writes:
  "Whether or no this is convenient for Customs and Excise is not relevant. It would suit the business man who is forced to lend huge sums of money free of interest."
  That is the alternative method which the correspondent suggests.
  The Financial Secretary to the Treasury (Mr. Harold Lever): I am listening attentively and am anxious to answer every point, but I am not clear what the point is that the hon. Gentleman is making. He has read part of a letter which I regret has not yet come to my attention. I do not know what the complaint is.
  Mr. Peyton: I will willingly give the Financial Secretary my copy. I read the letter only to indicate the indignation of business men and the feeling that their suggested methods have not been considered but only the suggestions and convenience of the Commissioners of Customs and Excise have been considered.
  I am also very concerned as to how the Government reached their conclusions about what should be in and what should be out of the Bill. The Financial Secretary made it clear that £3,000 million would be inside the Bill whereas about £6,000 million would be excluded. I wonder how some of these decisions have been arrived at. I cannot see why all food should be excluded. Britain is suffering at the moment from a considerable glut of imports of so-called Cheddar cheese.
  Sir G. Nabarro: And bacon.
  Mr. Peyton: I agree. Perhaps the Financial Secretary can explain the justification for excluding caviar.
  The Deputy Chairman (Mr. Gourlay): Order. We are not debating what should be in the Bill and what should not. We are discussing whether it should be "thirty" or "fifty".
  Mr. Peyton: I am sorry, Mr. Gourlay. I am endeavouring to suggest that the Bill has been ill-thought-out. I seek to illustrate that point. Because it has been ill-thought-out, I suggest that the percentage should be reduced from 50 to 30. I am sorry if I have appeared to transgress your Ruling, but, with respect, I do not think I have done so.
  I am not going into any of these points in detail. I am asking what thought has been given, for instance, to goods which are required to fulfil Government defence contracts. What thought has been given, for instance, to finished specialised steels

  1321
  which are not available in this country? As the Bill stands, these matters have evidently not received any or adequate thought. That is the point which I wish to ram home to the Financial Secretary and the Government.
  One might ask what about goods imported by one person for re-export by another. The Bill makes—
  The Deputy Chairman (Mr. Gourlay): Order. The hon. Member must come to the subject of the Amendment, which is whether the rate should be 30 per cent. or 50 per cent. So far, he has made very little reference to the Amendment.
  Mr. Peyton: I would not, of course, wish to argue at length with the Chair, Mr. Gourlay, but I think, with respect, that the alteration of that rate from 50 per cent. to 30 per cent. raises almost every issue which is relevant to the Bill.
  The Deputy Chairman: Order. I thought that the Amendment was perfectly clear. The hon. Member cannot make a Second Reading speech on it.
  Mr. Peyton: I have made most of the detailed points I wished to make and I am obliged to you for your Ruling, Mr. Gourlay. I nevertheless suggest that the points which I have dealt with are evidence of my charges that the Bill is vague and will be unpredictable in operation, that it has little consideration for the impact that it will have on business men and that inclusions and exclusions are haphazard and ill-thought-out.
  Believing those charges to be justified, I suggest to the Government that they should—quite exceptionally, of course—show a measure of modesty and that before honouring the nation with this Measure, which is untested, untried and unpredictable, they should reduce its impact for an experimental period. I would be content to withdraw my Amendment if they would substitute one of their own and say that they would make the rate 30 per cent. for the first six months while they see how it works. I suspect, however, that the Government are probably not of that reasonable frame of mind and do not feel sufficiently strong in morale at present to make concessions anywhere, otherwise they would have to run all along the line.
  1322
  I believe that despite the rebukes which you have administered to me during my speech, Mr. Gourlay, I have made in outline, and very briefly, a case for suggesting that the Bill is clumsy, ill-prepared and vague and that its impact could properly be reduced, at least for a trial period, from 50 per cent. to 30 per cent.
  7.15 p.m.
  Mr. Pardoe: I wish to associate my remarks, brief as they will be, with some—rather few—of the remarks of the hon. Member for Yeovil (Mr. Peyton) and to link with his Amendment my Amendment No. 2 to reduce the 50 per cent. deposit to 25 per cent. I do not quarrel very much with the hon. Gentleman about the odd 5 per cent. I thought that the intention of our two Amendments was the same but, having heard the hon. Member's speech, I am not so sure that they are.
  I have re-read my Second Reading speech. I was rather happy with it and I shall not make it again. The Government have been at pains, so far in these debates, to minimise the effects of the Bill, and I am not very surprised. I am rather reminded of the girl who had to tell the vicar that she had had an illegitimate child, and said, "Well, it was a very small one, Vicar". The Government's motto seems to have been that if we have to have a bastard, let it be a small one. I am trying to help them and to make it a little smaller.
  I wish to use my Amendment as a probing Amendment to elicit from the Financial Secretary exactly why the rate of 50 per cent. was fixed, what effect he thinks that rate will have and how its effect would be changed by my Amendment to reduce it to 25 per cent. I asked the hon. Gentleman when we debated the Ways and Means Resolution the exact value of the imports to which the deposits were being applied, but I got no very satisfactory answer. I have not seen any satisfactory answer to the question since.
  I would very much like to know from the Financial Secretary—I hope that he can give the figure in reply—what assessment the Government have made of the value that the 50 per cent. will be. What will it build up to in six months? What is the highest point at which it will be

  1323
  and what difference would it make, for instance, if my Amendment were enacted?
  I put down the Amendment to elicit further information. We in the House of Commons cannot support a Measure the effects of which we do not know. I am still incredibly vague, and I believe that the Government, too, are vague, about the full effects of the Bill. I hasten to say that it would not be a good Bill even with my Amendment or the Amendment of the hon. Member for Yeovil. I made it clear in my speech on the Ways and Means Resolution and on Second Reading that I am against protection and against this form of it. I would be about half as much against the Bill if my Amendment were carried, but only half as much.
  Sir G. Nabarro: What, I think, my hon. Friend the Member for Yeovil (Mr. Peyton) was saying—and I express it in different terms—was that rather than drop the fully-clothed importer into the deep end of the bath, he would drop him in three-fifths of the way along the bath from the shallow end to the deep end measured in that direction. The hon. Member for Cornwall, North (Mr. Pardoe), however, would drop him halfway along the bath from the shallow end to the deep end.
  I support my hon. Friend the Member for Yeovil, because we are now embarked on a path which, in my judgment, has an unpredictable ending. We do not know where this kind of dubious device of extracting large sums of money from legitimate importers will lead us. One thing which is perfectly certain is that we cannot constrain imports without, in the medium term and the long term, detrimentally affecting our exports, because all trade is a two-way affair and if we take this kind of discriminatory action against imports, it invites reciprocity.
  A number of hon. Members have said that they have not been able to gauge what the arithmetical or financial effects would be. I do not find that particularly difficult, and I want to dwell on what would be the financial implication of making the rate 30 per cent. instead of 50 per cent., because that is the nub of the matter.
  1324
  As I understand it, the 50 per cent. import deposit applies to £2,800 million worth of imports per annum. As the import deposit applies for a period of six months, it cuts that figure in half, to £1,400 million. As it is only for a period of six months, however, and at the rate of 50 per cent., the amount of money extracted from importers at any one time is £700 million. If imports continued at the same level it would remain fairly constant at £700 million, subject only to certain seasonal variation. If that £700 million is quantified for interest purposes at the rate of 10 per cent.—not 8 per cent., but 10 per cent. because of the difficulties of borrowing—it would mean an additional charge on primary importers of the order of £70 million per annum.
  Mr. Harold Lever: Did the hon. Member say 7 per cent.?
  Sir G. Nabarro: I said 10 per cent. I am taking it at 10 per cent. because, whereas preferential borrowers from banks getting a preferential rate of 7 per cent. may be able to borrow at 8 per cent., an importer would not be able to borrow at 8 per cent., in view of the Treasury instruction that facilities should not be granted to importers to meet this deposit. Therefore, I am afraid that importers, in order to get their goods, will have to resort to dubious methods of raising short-term loans and will probably have to pay 10 per cent., a usurious rate, for the purpose of bringing their goods into the country.
  I believe that the Financial Secretary in his reply will say that the figures which I am employing are approximately correct, and they are all dreadfully inflationary. No one on the Government Front Bench has yet contradicted this statement. The combined effect of £250 million of additional indirect taxation in the Chancellor's package and this 50 per cent. import deposit is all dreadfully inflationary. If the Amendment in the name of my hon. Friend the Member for Yeovil were carried, it would diminish the inflationary effect of the import deposit scheme by 40 per cent., from the 50 per cent. level to the 30 per cent. level, which is the purpose of the Amendment.

  1325
  There could be no better example of the inflationary effect of the import deposit proposals and the increase in indirect taxation, notably the petrol duty, than the announcement this morning from the Road Haulage Association that their charges are to be increased by Is. in the £. That means that goods brought into the country under the import deposit scheme, whether through the port of Liverpool, the port of Southampton, the port of Bristol or any one of 20 other ports, will all be carried to their inland destinations at a higher rate by 5 per cent. on account of the increased road haulage charge.
  Mr. Harold Lever: I am anxious to answer the questions raised by all hon. Members. Will the hon. Gentleman assist me by explaining how the increased charge for road haulage relates to the Amendment, so that I may be in order in replying to him?
  Sir G. Nabarro: I used the words "combined effect". I am skating on very thin ice, but that is characteristic. I cannot talk about this in isolation from the rest of the package, and I apologise. The fact is chat the combined effect of the £250 million additional taxation plus this inflationary proposal for deposits on imports together add a sum of money to the cost of living approximately equivalent to the rise we have suffered since the devaluation of sterling.
  I quantify the import deposit proposal of 50 per cent. as approximately 6d. in the £ on retail prices. I quantify the extra taxation charges at 6d. in the £. The two together are 1s. in the £. and the rise since devaluation before these charges was also Is. in the £. We are now consciously putting an extra 6d. in the £ on the cost of living by the import deposit proposal. If my hon. Friend's intentions were brought to fruition, God bless his noble ideals, the 6d. would become 3⅗d., thereby softening the inflationary effect of the proposals, dropping the clothed importer in the bath three-fifths of the way between the shallow end and the deep end.
  With that metaphorical allusion I conclude that this is a commendable proposition, which I hope will command the respect of the Committee. It is not obstructionist in character, and when the
  1326
  Financial Secretary replies I want him to be particularly careful to confirm all my figures.
  Mr. Harold Lever Mr. Harold Lever indicated assent.
  Sir G. Nabarro: I am glad that the hon. Gentleman is nodding assent. I do not like to see him wriggling; he is as good at mental arithmetic as I am. I want to be able to confirm the figures in order to reinforce the proposition which I put to the Committee, which is that the import deposit scheme is highly inflationary in character, and the inflationary influences ought to be slightly diminished in accord with the proposition of my hon. Friend the Member for Yeovil.
  Mr. J. T. Price: I have listened with my usual rapt attention to the rumbustious discourse of the hon. Member for Worcestershire, South (Sir G. Nabarro). His interesting curtain lecture on simple arithmetic has helped. so far as it goes. I have not yet checked up his calculations. I, too, am quite good at mental arithmetic; at one period in a previous existence I had to deal with Lloyd's underwriters, and it was necessary to be able to do mental arithmetic in order to deal with those gentlemen.
  What the hon. Gentleman has put to the Committee is interesting, but it is only part of the story. I am prepared to concede, as a matter of logic and fair reasoning, that if this measure results merely in borrowing at fancy rates on the black market it will have failed. We on this side of the Committee are intelligent people not without business knowledge. Hon. Gentlemen with City connections who speak with great authority must not assume that we on this side of the Committee have no business experience. Some of us have considerable business experience, but we do not boast about it as do hon. Gentlemen on occasions like this. They try to create the impression that we on this side who support the Government, and sometimes are critical of the Government, do so purely as theoreticians. I speak for myself, not as spokesman of a group, cabal or little clique. I have not necessarily always supported the Government. If I think that the Government are wrong I will stand up here and tell them so.
  Mr. Michael Shaw: Will the hon. Gentleman take it from us that it is the fact that he is so often alone in his remarks that has caused us regret.
  Mr. Price: I am grateful for the implied compliment, if it is a compliment. I am not looking for a compliment, I am trying to get at the truth of the matter.
  The hon. Member for Yeovil (Mr. Peyton), addressed us engagingly, and his hon. Friend the Member for Worcestershire, South dotted the i's and crossed the t's in what he had to say, much of it out of order—
  Sir G. Nabarro: On a point of order. Would you, Sir, cause the withdrawal of that stigmatising reference to the Chair.
  The Deputy Chairman (Mr. Gourlay): Certainly not. I think that the hon. Member for Westhoughton (Mr. J. T. Price) should finish his remarks on this aspect of his speech.
  7.30 p.m.
  Mr. Price: If I have said anything out of place, certainly I will withdraw it and do all that I can to restore peace and amity. I have always taken it for granted that, if an hon. Member was called to order on a number of occasions in the course of his speech, it was in order to refer to the fact that he was partly out of order. However, this is a matter of record. It will appear in the OFFICIAL REPORT tomorrow. As I say, if it will restore peace, I withdraw my remarks.
  In spite of the arithmetic presented to us so vigorously by the hon. Member for Worcestershire, South, the fact is that he misses the whole object of the exercise. It may be that he wishes to do it for the purposes of his argument. The object of the exercise is to put a brake on imports of goods which we do not need and cannot afford.
  I hope that the inflationary consequences which have been so dogmatically predicted by the hon. Gentleman do not prove to be right. The hon. Gentleman often vies with Gipsy Petulengro by making all sorts of diabolical forecasts. I have never been able to understand why the editors of Old Moore's Almanack do not engage him as a script writer. He is always the prophet of doom when a proposal comes before the House which
  1328
  he does not like. I hope that he will be proved quite wrong in the forecasts that he has made.
  These restrictions require a deposit of 50 per cent. of the value of goods to be imported, subject to the exemption list. I should regret it very much if it resulted in the requirement of large financing. On the contrary, I hope that the effect will be to put a very heavy brake on the flood of imports unrequited by a corresponding number of exports.
  In the past, right hon. and hon. Gentlemen opposite have pleaded with the Government to stop the import of all kinds of foodstuffs which they say that the British farmer could provide if he were given a little more encouragement. Our farmers have done pretty well out of the Annual Price Review, but right hon. and hon. Gentlemen opposite say that, if they had a bigger cut, they would produce better results. I cannot deal with that now, of course. If I do, I shall commit the error of judgment which the hon. Member for Yeovil committed a few moments ago—
  Mr. Peyton: I want to felicitate the hon. Gentleman on his very long and free run.
  Mr. Price: That is a matter for the Chair entirely, and I do not wish to take advantage of the Chair. I always try to keep in order.
  I am astonished that intelligent hon. Members, some of them of very long standing, can put forward seriously as a pure debating point the idea that they expect the same number of imports to flood through British ports as a consequence of this Measure as we have been complaining about in Lancashire for so long. We hope that this legislation will have a salutary effect on people whose chief interests lie in the import of all kinds of goods that we do not need and cannot afford. Many of the people have no commercial interest in them except from the point of view of the commission that they earn. I hope that the hon. Member for Worcestershire, South will be wrong in his forecast and that 10 per cent. finance will not be required to the extent that he believes.
  Mr. Gourlay, I ought to apologise to you for straying a little off the mark. I hope that my comments have put the

  1329
  arguments in a better perspective than that left by the hon. Member for Worcestershire, South.
  Mr. Patrick McNair-Wilson: We all appreciate the problems which the Government now face with the economic situation which they have created. They find a situation where they have an extremely unfavourable balance of payments which they feel that they have to try and correct. Earlier today, the President of the Board of Trade explained that, while the Measure that we are discussing now was only marginally related to the discussions which took place in Bonn, the fact is that this Bill obviously has been put together in great haste.
  The burden of the Amendment is to seek from the Financial Secretary an assurance that 50 per cent. is the figure which should be imposed rather than 60, 25 or 30 per cent.
  I want to make a plea for the small traders who are hurt severely by this Measure. I have a letter from a constituent who imports material from the United States for sail-making. Of course, he was not consulted by anyone when this Measure was considered, and he had goods in transit at the time that it was introduced. However, we have another Amendment to deal with that position.
  By taking what I believe to be an arbitrary figure of 50 per cent. without considering in detail what its effects would be, the Government have created a situation for British industry and commerce where we shall see a substantial rise in costs. My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) was careful to point out the very substantial increases of costs which would result from this Measure as well as from others. In a sense, it is not dissimilar from the Selective Employment Tax. It is one of those additional burdens which have to be carried.
  Many companies import machinery and use it to help them export—and, by so doing, help our balance of payments. Such a company is now at a substantial disadvantage. Why should it be expected to find 50 per cent.? Why has it been decided that that is the figure which will correct the situation?
  1330
  Taking the matter a stage further, I come to the developing countries of the Commonwealth which are selling goods to Britain. I have in mind Jamaica, which I happen to know very well. We hear a lot about the problem of people from Commonwealth countries coming to live in Britain. Surely the way to help solve that problem is for Britain to allow such countries to develop their industries. The Jamaican Government are anxious to export, and they are already selling Jamaican fashions to the shops of Britain. The 50 per cent. deposit imposes a severe brake on the development of the economy of such a country.
  This Amendment seeks to ensure that the Financial Secretary explains clearly what it was decided that 50 per cent. was the correct figure. If he cannot do that, I urge him to consider the Amendment. We know the balance of payments and other problems of the Government, but I believe that we should not hammer the small companies in trying to put them right.
  Mr. Emery: I support the Amendment standing in the name of my hon. Friend the Member for Yeovil (Mr. Peyton) because it is a matter of principle with me to support anything which decreases limitation on the freedom of trade.
  I want to follow up the important point made by my hon. Friend the Member for New Forest (Mr. McNair-Wilson) concerning the small importer. On Second Reading the Financial Secretary gave the impression that, on the whole, he did not think that any small firm would go to the wall because it found it impossible to meet the financial effect of the Bill. I would appreciate it if the hon. Gentleman could take this point further in reply. I should like to quote one example. I do not want to give the name of the firm, although I could do so in correspondence if the hon. Gentleman required it. I am not referring to the type of importation mentioned by the hon. Member for Westhoughton (Mr. J. T. Price), namely, goods that we do not need and cannot afford. I refer to goods being imported for industry for specific purposes.
  In this case the importer has a working capital of £30,000 and his turnover is just below £400,000 a year. In

  1331
  the first full year he will have had about £100,000 on free loan to the Government after six months. To be fair, it will have been working up in steps to that figure in the first six months. With his capital resources, if this man has to go out and borrow that money he will find, taking 10 per cent.—I am doing it in round figures—
  Mr. J. T. Price: Why 10 per cent.?
  Mr. Emery: I am asked: why 10 per cent.? The main reason is because of the Government's instruction that they wish the banks to decrease their ordinary lending. Therefore, the importer will not be able to get from his bank manager, in the way he would normally expect, the type of assistance he will require, which will be about £100,000. Also because of the size of his business, it may be considered in normal credit terms to be something of a risk. Therefore, he will have to go to markets charging 1 or 2 per cent. above the Bank Rate. The point is that this man is likely to find himself having to meet a position of £7,500 for interest payments. If it is less than 10 per cent. it will be scaled down. I do not wish to annoy the Committee. I should like my example to be relevant. Let us assume it is only 1 per cent. above Bank Rate and it is down to about £6,000. If the normal net back is at a rate of 5 per cent., he is therefore attempting to obtain from his turnover—and he has to pay all his expenses, staff and everything else—£20,000 a year. This is a successful business doing a service for industry.
  Many industrial undertakings—Leyland's is a good example—which purposely do not get into this specialist import sphere, use this type of person because of his specific contacts in the world in the areas in which Leyland's happen to be interested. This man will find himself having to meet an extra bill of between £6,000 and £7,500 on a figure of £20,000. I wonder whether I would lend him money on that. How will he be able to make it unless I extend the loan for a period of two to three years in the hope that he will pay it back from profits later. That being the case, it will cost him even more.
  7.45 p.m.
  It was said that the 15 per cent. surcharge was pretty rough justice. I sug-
  1332
  gest that this is so rough that the suggestions made by the Financial Secretary on Second Reading, concerning the small importer, are highly misleading. I suggest that a number of these people will find the situation very difficult to cope with. The Amendment put forward by my hon. Friend the Member for Yeovil makes considerable sense. I should like the figure to be nil, but if the Government insist on this proposal, let us decrease it. For that reason, I shall be delighted to support my hon. Friend in the Lobby.
  Mr. John Smith: I am not inflexibly opposed to this Measure. I just think that it is unworkable and that its effects are unpredictable. If we are to do something which is probably impossible and possibly undesirable, then the less we do of it the better.
  As it is the Government are asking importers to put up fresh working capital equivalent to a quarter of their turnover, since the deposit is for six months at the rate of 50 per cent. This is by far the easiest sum that we have been asked to do; it is fresh working capital equivalent to 25 per cent. of an importer's turnover. We hear that this is not to come from the banks. There has been a good deal of muddled thinking about this. Some of the time we are told that it will be a highly selective and powerful pressure on liquidity because the deposits are not to come from the banks. The rest of the time we are told that no importer is to worry much about it because it will be easy to borrow the money. So far as it is met by borrowing from the banks, it will be a general pressure on liquidity. Therefore the less successful it is in restraining imports, the less selective a squeeze it will be and the more it will squeeze the economy as a whole, including exports.
  I do not in fact think that those who are lucky enough to borrow money will have to pay high rates; but if we assume that they cannot borrow the money at all then we must recognise it is a very heavy burden. The sum involved over the country as a whole is £600 million or £700 million, but it comes from relatively few firms.
  I have a letter from a firm in my constituency of which I have never heard—[HON. MEMBERS: "Shame."] A great

  1333
  deal goes on in my constituency. Although I have never heard of this firm, it will have to provide a continuous interest-free loan to the Government of the sterling equivalent of one million dollars, because its business is entirely concerned with imports from the United States. What is it importing? Is it importing candy floss! The letter says:
  "If the banks are precluded from lending money for this purpose we shall he forced out of business."
  This firm—and we must move by examples—imports lifting equipment for heavy pressure vessels and the principal equipment for oil drilling and prospecting rigs in the North Sea. We do not wish to keep out any of those things. They are things which cannot be produced here, in some cases because they are subject to patents. They have to be imported through certain people because these people have exclusive agencies.
  These are things which I daresay have not been thought of. If we are to embark on a Measure whose effects are as unpredictable as this, would not it be better to start with something less violent than obliging firms to raise fresh working capital and lend it free to the Government, equivalent to 25 per cent. of their annual turnover?
  Mr. Michael Shaw: I support the Amendment, and I rise to speak principally because of something said by the hon. Member for Westhoughton (Mr. J. T. Price). He said that it was his hope that this Measure would stop the flood of imports of unnecessary goods. As far as I can see, that is not the belief of the Government. I certainly hope that it is not, and I trust that in due course the Financial Secretary will confirm that.
  If that were the result of this Measure, I believe that it could be very harmful. If there is a sudden stop of a flood of imports by means of a temporary Measure, it means, in effect, that the Government are applying a Measure which will completely cut across developing trades and stifle them, and put them out of business forever. I believe that that is the last thing we want, because in the long-term we want trade of all sorts to continue to expand.
  Mr. J. T. Price: I am familiar with the classical argument of free trade as distinct from protection. All I say is that
  1334
  if this Measure is harsh, it is pallid in comparison with those taken by some of our trading partners when they have balance of payments problems. The hon. Member for the Cities of London and Westminster (Mr. John Smith) is a considerable authority on financial matters. He knows that when the Australians have balance of payments problems, as they have had on many occasions, they do not play about with devices like this. They just clap on physical controls and close the ports, much to our discomfort on many occasions. Would the hon. Gentleman like the Government to do that?
  Mr. Shaw: I am grateful to the hon. Gentleman, because that opens up an even greater area of disagreement between himself and his Front Bench, and it is therefore all the more important for the Financial Secretary to make the matter clear.
  I believe that there is great doubt about what will be the effect of this legislation, and on re-reading the speeches of Ministers I have come to the conclusion that they themselves are in doubt about it. I believe that in many cases the effect will be very small, and that people will find their way around this quite easily. On the other hand, I believe that there will be certain cases where this Measure will hit very hard. It will be a blunt instrument. As my hon. Friend the Member for the New Forest (Mr. McNair-Wilson) and others have said, it will hit the smaller companies. Because of the uncertainty, there is real merit in the Amendment. Let us take this thing gradually, to see what the effect is, before putting on the full impact, if that is justified.
  Mr. Harold Lever: There seems to be some confusion in the minds of the Opposition. They suppose that because the Government cannot predict, or pretend to predict, with exactness what will be the consequence of what they do, they are entitled to describe this Measure as impracticable. The hon. Member for the Cities of London and Westminster (Mr. John Smith), on no evidence, asserted that the scheme would prove unworkable. I do not know what he means by unworkable. It will work in the sense that its intention will be effective, namely, that it will collect a 50 per cent. deposit on the appropriate imports. I can put the hon. Gentleman's mind at rest if he

  1335
  feels that that will not happen. We have every reason to believe that it will. It will be workable in the sense that we want it to work, namely, to collect a deposit of 50 per cent. on the appropriate goods.
  Hon. Gentlemen opposite must not make debating points on a serious issue of this kind, points in which they cannot seriously believe. They cannot seek to impale me on juvenile argumentative forks of saying that I cannot predict what it will be, it may be very grave, or it may be nothing at all, and they want me to commit myself either to saying that something major and injurious will result from the 50 per cent. deposit, or something so trifling that it was not worth bringing in the Bill.
  When I discussed this on Second Reading I made it clear, and my hon. and learned Friend the Minister of State at the Treasury reinforced this in his reply, that what we expected to happen was not a major cut-down of imports but a significant and useful marginal effect, the exact amount of which could not be determined. The effect could not be determined, not because we did not give enough thought to it, but because, in the nature of things, one cannot determine in advance what will be the precise effect of a precise level of deposit upon our imports.
  I have no doubt that that consideration was in the minds of those distinguished Members of the Tory Party who were enthusiastic for a Measure of this kind until we brought it about. The right hon. Member for Barnet (Mr. Maudling) has no greater powers of prediction than I have on this matter, nor has the Leader of the Opposition, nor have the other numerous Tories who were anxious to have this Measure. It does not imply idleness, so I can only say that those hon. Gentlemen opposite who rose, one after the other, from the Opposition benches and wanted this 50 per cent. applied, not reduced, to an even wider range of goods, including food, also presumably did not know what would be the consequence. It is a juvenile argument, if I may say so with respect to the Opposition. When one puts on a tariff, one does not know with any precision what will be the effect, but with a new deposit scheme of this kind it was in-
  1336
  evitable that there would be a fairly wide range within which one could not guess the effect.
  As my hon. Friend the Member for Westhoughton (Mr. J. T. Price), who seems to be the only Member to take this point as a premise to his argument, said, this is not a scheme intended to encourage imports. It is intended to have a marginal and useful effect on imports, without causing serious disruption or dislocation to anybody, but still to have that marginal effect in reducing an import bill which is high in relation to our exports.
  It is suggested that we ought to try a lower rate than 50 per cent. Why did we pick on 50 per cent.? The hon. Member for Worcestershire, South (Sir G. Nabarro), with immense arithmetical acumen—and others have followed closely on his heels—has come to the conclusion that when the scheme has reached its maximum we shall be taking the equivalent of one quarter of the annual turnover of a firm exclusively dependent on imports, or one quarter of the import turnover of any firm, and this will result, on the calculation of an 8 per cent. interest rate of borrowing, in the equivalent of 2 per cent. of the costs of that firm.
  The whole point of the scheme in marginally discouraging the importer is to make him think twice, particularly in the area of over-ordering. When someone is deciding on the orders he will give, we want to get a deposit of a size which, while not crippling anyone, will cause him to query whether the import is basic to his business, and whether he must have it. We want a deposit which will be sufficiently discouraging to keep imports to the necessary minimum, and we are confident that this figure will have that effect.
  8.0 p.m.
  I am asked why the rate should be 50 per cent. instead of 30 per cent. I shall not content myself by asking, in reply, why it should be 30 per cent. rather than 50 per cent. The answer is that 50 per cent., as calculated in the manner initiated by the hon. Member for Worcestershire, South shows that, on the turnover we would expect to have, a liquidity effect at the rate of £100 million a month, roughly, from non-bank sources, namely,

  1337
  a sum building up to £600 million in the course of the next six months. If we had a lower rate we would have proportionately a smaller sum of money.
  Mr. Emery: I was considerably distressed by one point made by the Financial Secretary. He suggested that the rate was imposed to ensure that ordering would be kept to a minimum. is he suggesting that industry should get away from the economic order quantity, thereby increasing industrial costs even more?
  Mr. Lever: I am sorry to have caused the hon. Member unnecessary distress. I shall spell out my arguments in more detail so that he will apprehend them. When I said that it would keep orders to a minimum, I did not mean that firms should order the minimum in relation to some abstract need; I meant the minimum in relation to the needs of the firm, taking into account the obvious point that he has made that, in certain circumstances, a larger quantity is compatible with efficiency and the needs of the firm.
  I was making the point that if an import house was bringing in foreign motor cars, in envisaging its import schedule over the months ahead, instead of taking a rather generous view and erring on the over-optimistic side in respect of the stock it should take it would have second thoughts and try to keep down its order in the future to the minimum required for the legitimate and necessary purposes of its business.
  This scheme will act as a marginal discouragement to what might be called anticipatory buying when firms are making up their minds about their import schedules.
  Mr. John Smith: This is a new point in our discussions and a very good and interesting one. But is it not clear that those who, in the past, have been in a position to stock up are still in a position to do so? The people who will be squeezed are those without the money to stock up. They will have to resort to other means of getting it, or will have to cut their orders because they have not got it.
  Mr. Lever: That intervention was on a less sophisticated level than one would have expected from the hon. Member.
  1338
  If a man uses his cash in the form of an interest-free deposit the economic and financial pressure is the same as if he went out to borrow the money. In one case he pays interest in order to stock up and in the other he forgoes interest in order to indulge in the luxury of stocking up. In any case this marginal pressure tends to affect decision-making on import ordering. It is not a harsh pressure but a reasonable and gentle pressure, which will marginally improve the import situation.
  Why should the rate be fixed at 50 per cent.? As far as good judgment can go, we believe that we should begin the scheme, at any rate, on the basis that we shall get a liquidity effect of approximately £100 million a month. We have taken power in the Bill to reduce that liquidity effect if we find, as the £100 million a month builds up, that it should be moderated. We have taken power not to increase the rate but to decrease it.
  We believe that for an immediate impact £100 million a month is a good starting point, but we are ready to see the effects of that liquidity pressure, month by month or even week by week, always having in our hands the right to reduce the rate.
  Mr. Pardoe: Can the hon. Gentleman relate that £100 million a month, in terms of the liquidity which he is removing, to the increase that he would expect in total bank lending each month during that period? If the £600 million or £700 million figure is the top level, what would that be as a proportion of bank lending to industry?
  Mr. Lever: Speaking without notice, I believe that the total amount of bank lending is about £5,000 million and that the last reduction in the ceiling amounted, in total bank lending, to £100 million. The trouble about the bank lending ceiling is that it has no direct impact upon non-bank liquidity—the liquidity of private companies and individuals outside the banking system.
  We believe that it will be desirable and helpful in judging the amount of liquidity required to have regard to the general strategy, which is to move our balance of payments into surplus. This is an intermediate measure to speed up the process of moving into surplus.

  1339
  I want to make one other point relating to the fears which have been expressed that some people may be driven into bankruptcy, or that small firms will be specially hit by this Measure. The answer is that all firms will be affected only in relation to non-exempted imports. All firms will have to find deposits strictly in relation to their turnover. The bigger the turnover, the bigger the deposit. The smaller the firm, the smaller the turnover, presumably, and the smaller the deposit. All firms, big, medium and small, will not be paying away the money; they will be depositing it with the customs.
  Mr. Burden Mr. Burden rose—
  Mr. Lever: I hope that the hon. Member will let me finish this point. I promise him that he will get his impetuous urge to question me gratified before I am finished. All firms, large, medium or small, will pay this to the customs. It may be paid into any name they designate. Those who are named will get the money back. if a firm names its bank—the bank which has paid it the money—the bank will get that money back. Every person who is subjected to this deposit liability will have in his possession a gilt-edged, guaranteed, six-months' Government obligation, and it is not conceivable that any firm which is not wholly incompetent will allow itself to be ruined rather than to make the necessary financial arrangements.
  Hon. Members must bear in mind that this scheme ruins nobody. They must not argue, as has been argued, that because it ruins nobody it will have no effect. It is not intended to ruin anybody, and it will not ruin anybody. No firm need to go into bankruptcy because of the relatively modest amount of interest charged that it will have to pay in procuring the necessary finance, and it is inconceivable that any firm will be without the finance.
  I have dealt with the availability of finance; it is equally available to the small, medium and large firm. This is a selective import deposit on certain goods and not on others but, as between all importers and some classes of goods, there is an equal effect, so that when firms market their goods the additional burden of this import deposit on them will be exactly the same as it is on all their
  1340
  competitors. The notion that this will ruin them in relation to their competitors because of the interest charge—because their competitors will be paying the same interest charge—or because they cannot lay their hands on the money, is entirely unjustified.
  Mr. Burden: I apologise for not having been present throughout the debate. It is not true to say that small firms will not be affected more than bigger firms. Some small firms live entirely on imports. Some big firms are in the same position. There is also a spreadover. But a small importer with a small liquidity will find it far more difficult to cover the money that he has to find to pay the import charge.
  Mr. Lever: It is not the size of the firm that will determine the amount of the deposit; it is the size of the import turnover in non-exempted goods. It does net necessarily have an impact on liquidity. It has an impact of a more diffuse character on the liquidity which exists in the country and which, for the reasons I have given, will be available to all firms, small, medium and large, because a direct Government security will be available to the lenders—
  Mr. John Smith: I do not want to be a bore, but surely the Government must make up their minds whether this is intended to squeeze imports or the economy. Everything that the hon. Gentleman has said—that these firms will be able to get the money at the drop of a hat—shows that it is nothing more than a general squeeze on the economy. Which is it meant to be?
  Mr. Lever: The hon. Member must not present me with these simpliste either/or propositions. The answer is that It will do both. The hon. Member seems to think that doing one excludes doing the other—[An HON. MEMBER: "You said that."]—I have said nothing of the kind. If the hon. Member does not mind the boredom of reading my Second Reading speech, he will find that I explained then that it will do both these things. It will, on the one hand, bring a marginal pressure of the kind I have described again today on importers, calculated, because of the 50 per cent. deposit, to induce them to get their import needs down to the minimum which they

  1341
  believe essential for their business. The second effect of the deposit is that it will produce a general liquidity off-take from the non-banking centre of our economy. I made all that clear on Second Reading, but I am happy to repeat it.
  It is not a crime, however, to have regard to the liquidity situation in one's country, nor is it foolish to suppose that some withdrawal of liquidity would also be desirable in speeding up the process of bringing our exports into surplus against our imports—
  Mr. Tom Boardman: The import deposit, the hon. Gentleman says, will not hit the small or medium firm any more than the large firm, but he does not appear to recognise that many small firms with small capital and limited liquidity are marketing vast quantities of goods and they will not be exempt. How will they overcome this cost?
  Mr. Lever: I will try again. I have obviously been very incompetent in explaining this on Second Reading and, twice, today. The size of the firm is irrelevant. The amount of its personal liquidity does not mean that it cannot find the money for these deposits—
  Sir G. Nabarro Sir G. Nabarro rose—
  Mr. Lever: I will not give way and allow the hon. Member to interject a question within a question before I have replied. I will be happy to answer any of his questions after that.
  The small firm which has not got at its own command the money to pay the deposit may be paid—
  Sir J. Foster: What about the interest?
  Mr. Lever: I will deal with the interest. I have already tried to do so, but I will try again. I will deal first with the capital and then with the interest, which seems to be a less acute question, since the questioner remained seated and did not get up, like the hon. Member for Worcestershire, South.
  The small firm can go to any banking or finance house and ask it to advance the deposit in the firm's name to the Customs. That finance or banking house, or firm, or individual, will have 100 per cent security—
  Mr. Tom Boardman Mr. Tom Boardman indicated dissent.
  Mr. Lever: It is no good the hon. Member shaking his head. What I am saying is the fact. What he is shaking his head about is his fantasy.
  Finance houses will be able to deposit this money with the Customs and the finance house will then enjoy a 100 per cent. Government obligation, repayable in six months. That is the fact; anything else is fantasy. If the hon. Gentleman questions that fact, I will give way to him again.
  Mr. Tom Boardman: I do not want to get on to the next Amendment, but perhaps the hon. Gentleman will say something about the degree of security which is obtained by a non-negotiable document. Second, what about the interest by which the deposit will be discounted by a substantial amount?
  8.15 p.m.
  Mr. Lever: The hon. Member appears to be satisfied about the security of the capital. If not, I will have to take him aside afterwards and go into it in greater detail. As to the interest charged—I do not know whether the hon and learned Member for Middleton and Prestwich (Sir J. Foster) has just arrived or whether he has heard me deal with the point before—that is a relatively small matter. It comes to about 2½ per cent. on turnover, and while this scheme is in force, it will be an outgoing common to every other trader in that line of business.
  Therefore, if I am an importer of wheelbarrows or tin whistles, I will have an additional interest charge—if I am doing £ 1 million turnover, even at 10 per cent.—of about £25,000 a year. That is not insupportable on £1 million turnover. Moreover, I will do that turnover in the confident knowledge that every other importer of tin whistles has the same 2½ per cent. addition to his charges, which he can presumably pass on, or which, if he cannot pass it on, because of the marginal increase in prices, will produce a marginal reduction in imports.
  Again, I say that the object of this scheme is not to encourage imports. Some hon. Members speak as if criticism is justified because the scheme does not actually produce a positive encouragement to imports. That is not the intention of the scheme. It is to impose a

  1343
  marginal additional burden on imports, combined with a selective pressure on liquidity.
  Sir J. Foster: But the hon. Member does not deal with the firm which does not have £25,000. It is as simple as that. A firm which is teetering will not be able to pay that interest. The hon. Gentleman must admit that that is a fact.
  Mr. Lever: I must confess that the number of firms importing to the tune of £1 million a year which are teetering and are without £25,000 must be singularly small. The answer is that the hon. and learned Gentleman's argument could equally apply if we said that a purchase tax charge placed on firms was liable to bankrupt then because they had not the additional working capital—[An HON. MEMBER: "That is not the same thing."] But it is precisely the same thing. The additional working capital for wholesalers and other who have to meet the charge.
  Mr. Burden: With respect, the hon. Member knows that he is out of step here. Wholesalers and manufacturers collect the purchase tax long before they pay it to the Inland Revenue.
  Mr. Lever: We can take other cases of duty. That is not always so, but, so as not to get into side points unduly, I would say that there are many impositions of taxation which impose a 2½ per cent. on turnover burden, such as the much greater burden in tobacco and liquor duties, where bond does not altogether cover it and shop keepers must carry stock, and we are not harried there with ridiculous suggestions that a 2½ per cent. burden shared by every competitor of the business concern is calculated to drive it to bankruptcy.
  The answer is that this is intended to, and will, produce a marginal—only a marginal, not a seriously disruptive—effect on any trader of any size dealing with imports. Therefore, the Committee would be well advised, I think, to accept the Treasury's broad judgment that 50 per cent. is how we should start. We will watch it carefully. Perhaps hon. Members have failed to realise that we have taken the power not to increase this but to reduce it. We will watch it very closely to see what the effects are as this £100 million a month starts to come back.
  Sir Keith Joseph: After listening to the hon. Gentleman, I suggest that my hon. Friends would be wise to invite us to vote on the Amendment. The Financial Secretary asked us to desist from seeking to impale him on juvenile argumentative forks. We on this side ask him to depart and to desist from the juvenile habit of misrepresenting his political protagonists. My right hon. Friends the Members for Barnet (Mr. Maudling) and Enfield, West (Mr. lain Macleod), who spoke of some sort of restraint on import credit, were referring to an Italian system, which as the hon. Member knows, is a world away from the much tougher and tighter scheme which the Government has seen fit to introduce.
  The hon. Gentleman has at this stage defended the choice of 50 per cent. deposit with his usual lucidity, within his own assumptions, but we on this side question the Government's strategy and we question the Bill. We dislike the Government's strategy, because we think that what the country needs is not stifling with marginal increases of protection and marginal increases of bureaucracy, but a great increase in incentives and competition and a great reduction in public expenditure.
  It is all very well for the Financial Secretary to speak of the limitless credit available to businessmen and importers big and small. There will be credit—suppliers' credit, bank credit, credits through various brokers, and even from the reserves of individual importing companies. Large firms of importers will be able to tan these funds, but what the hon. Gentleman totally fails to touch on is the lack of sophistication of the small importer in the credit field. It may well be that there will shortly be consultants in finding the money for deposits. It may well be that the infinite flexibility and variety of our capital market will in a few months enable small importers to cope with the deposits. But, in the immediate future, many small importers face—and the Financial Secretary must understand that we learn this from our constituents—a real danger to the survival of their businesses. There is the credit, but they are not, in the short term, sophisticated enough to collect the money for the deposit.

  1345
  We fear that within a bad strategy and with a bad Bill all that will be achieved will be a marginal reduction in imports, a marginal reduction in stocks of imports, which will be more than offset by a surge of imports when the provision in the Bill is brought to an end. The Measure does no more than apply a short-term palliative to the problems of our economy, and in that we believe that it is damaging to the public interest because there are not the reserve funds available for investment by companies.
  We dislike the strategy and we dislike the Bill. The Financial Secretary admits, as he cannot but admit, that the 50 per cent. is a perfectly arbitrary figure chosen within an area of great imposition to achieve what he rightly admits is only a marginal change. My hon. Friend the Member for Yeovil (Mr. Peyton) has just as much right to pick on 30 per cent. as the Government have to pick on 50 per cent., and I very much hope that he will press the issue to a Division.
  Mr. Peyton: Encouraged by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), I will in a very few moments suggest that we should divide. Before doing that, I would endorse his advice to the Financial Secretary, who is exceedingly skilful in answering a case which he is not invited to answer. The hon. Gentleman used the words "idle" and "inefficient". No one has said that he is idle or inefficient; in fact, most of us believe that he is very energetic and immensely efficient. We do not extend the same
  compliment to all his colleagues. We think that of him, but when we say that this measure is unpredictable in its effect, we do not state it as advice but as a fact. Particularly, we do not agree about the effect on the small business being unpredictable. As the Financial Secretary himself has admitted some unpredictability, we say that at least for an interim period, until the way the Bill works is seen more clearly, it would be sensible to make the rate 30 per cent. rather than 50 per cent.
  Mr. Harold Lever: Let me make it quite clear, so that it does not go abroad from here, that I said that it was unpredictable in its effect on small businesses. What I did say was that one cannot predict with any exactness the effect on the total volume of our imports.
  Mr. Peyton: I entirely accept that. I did not in any way wish to misinterpret the hon. Gentleman, but he admitted that over the general field there was a certain unpredictability. One accepts that as being so, and the Government would even now be more modest if they selected the lower starting point of 30 per cent. rather than 50 per cent. But as we are obviously in very severe difficulty when it comes to convincing the Government of either rectitude or discretion, we must accept that the only thing we can now decently do is to divide the Committee.
  Question put, That the Amendment be made:—
  The Committee divided: Ayes 174, Noes 252.

  Division No. 18.]

  AYES

  [8.24 p.m.

  Alison, Michael (Barkston Ash)

  Bullus, Sir Eric

  Errington, Sir Eric

  Allason, James (Hernel Hempstead)

  Burden, F. A.

  Farr, John

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

  Campbell, B. (Oldham, W.)

  Fletcher-Cooke, Charles

  Awdry, Daniel

  Clegg, Walter

  Fortescue, Tim

  Baker, Kenneth (Acton)

  Cooke, Robert

  Foster, Sir John

  Baker, W. H. K. (Banff)

  Cooper-Key, Sir Neill

  Gibson-Watt, David

  Beamish, Col. Sir Tufton

  Cordle, John

  Gilmour, Sir John (Fife, E.)

  Bennett, Sir Frederic (Torquay)

  Corfield, F. V.

  Glover, Sir Douglas

  Bennett, Dr. Reginald (Gos. & Fhm)

  Costain, A. P.

  Godber, Rt. Hn. J. B.

  Berry, Hn. Anthony

  Cunningham, Sir Knox

  Goodhew, Victor

  Biffen, John

  Currie, G. B. H.

  Gower, Raymond

  Biggs-Davison, John

  Dalkeith, Earl of

  Grieve, Percy

  Black, Sir Cyril

  Dance, James

  Griffiths, Eldon (Bury St. Edmunds)

  Blaker, Peter

  Davidson, James (Aberdeenshire, W.)

  Hall, John (Wycombe)

  Boardman, Tom (Leicester, S.W.)

  d'Avigdor-Goldsmid, Sir Henry

  Hall-Davis, A. G. F.

  Body, Richard

  Dean, Paul

  Hamilton, Lord (Fermanagh)

  Boyd-Carpenter, Rt. Hn. John

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

  Hamilton, Michael (Salisbury)

  Boyle, Rt. Hn. Sir Edward

  Digby, Simon Wingfield

  Harris, Frederic (Croydon, N. W.)

  Brewis, John

  Doughty, Charles

  Harrison, Brian (Maldon)

  Brinton, Sir Tatton

  Drayson, G. B.

  Harrison, Col. Sir Harwood (Eye)

  Bromley-Davenport, Lt.-Col. Sir Walter

  Eden, Sir John

  Harvie Anderson, Miss

  Brown, Sir Edward (Bath)

  Elliot, Capt. Walter (Carshalton)

  Hastings, Stephen

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

  Elliott, R. W. (N'c'tle-upon-Tyne, N.)

  Hawkins, Paul

  Buck, Antony, (Colchester)

  Emery, Peter

  Hay, John

  Heald, Rt. Hn. Sir Lionel

  Miscampbell, Norman

  Stainton, Keith

  Heath, Rt. Hn. Edward

  Mitchell, David (Basingstoke)

  Steel, David (Roxburgh)

  Heseltine, Michael

  Monro, Hector

  Stodart, Anthony

  Higgins, Terence L.

  Montgomery, Fergus

  Stoddart-Scott, Col. Sir M.

  More, Jasper

  Summers, Sir Spencer

  Hiley, Joseph

  Morgan, Geraint (Denbigh)

  Tapsell, Peter

  Hill, J. E. B.

  Morrison, Charles (Devizes)

  Taylor, Sir Charles (Eastbourne)

  Hirst, Geoffrey

  Munro-Lucas-Tooth, Sir Hugh

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

  Holland, Philip

  Murton, Oscar

  Taylor, Frank (Moss Side)

  Hordern, Peter

  Nabarro, Sir Gerald

  Temple, John M.

  Howell, David (Guildford)

  Nott, John

  Thatcher, Mrs. Margaret

  Hutchison, Michael Clark

  Onslow, Cranley

  Turton, Rt. Hn. R. H.

  Iremonger, T. L.

  Orr, Capt. L. P. S.

  van Straubenzee, W. R.

  Irvine, Bryant Godman (Rye)

  Orr-Ewing, Sir Ian

  Vaughan-Morgan, Rt. Hn. Sir John

  Jenkin, Patrick (Woodford)

  Osborne, Sir Cyril (Louth)

  Vickers, Dame Joan

  Jennings, J. C. (Burton)

  Page, Graham (Crosby)

  Waddington, David

  Joseph, Rt. Hn. Sir Keith

  Page, John (Harrow, W.)

  Wainwright, Richard (Colne Valley)

  Kaberry, Sir Donald

  Pardoe, John

  Walker-Smith, Rt. Hn. Sir Derek

  Kerby, Capt. Henry

  Percival, Ian

  Wall, Patrick

  Kershaw, Anthony

  Peyton, John

  Ward, Dame Irene

  Kitson, Timothy

  Powell, Rt. Hn. J. Enoch

  Webster, David

  Lancaster, Col. C. G.

  Price, David (Eastleigh)

  Wells, John (Maidstone)

  Legge-Bourke, Sir Harry

  Prior, J. M. L.

  Whitelaw, Rt. Hn. William

  Lewis, Kenneth (Rutland)

  Pym, Francis

  Williams, Donald (Dudley)

  Lubbock, Eric

  Quennell, Miss J. M.

  Wills, Sir Gerald (Bridgwater)

  MacArthur, Ian

  Renton, Rt. Hn. Sir David

  Wilson, Geoffrey (Truro)

  McNair-Wilson, Patrick

  Rhys Williams, Sir Brandon

  Winstanley, Dr. M. P.

  Maclean, Sir Fitzroy

  Ridley, Hn. Nicholas

  Wolrige-Gordon, Patrick

  Macmillan, Maurice (Farnham)

  Ridsdale, Julian

  Wood, Rt. Hn. Richard

  Maddan, Martin

  Rossi, Hugh (Hornsey)

  Woodnutt, Mark

  Maginnis, John E.

  Russell, Sir Ronald

  Wright, Esmond

  Marten, Neil

  Scott-Hopkins, James

  Maude, Angus

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

  TELLERS FOR THE AYES:

  Maxwell-Hyslop, R. J.

  Smith, Dudley (W'wick & L'mington)

  Mr. Anthony Royle and

  Mills, Peter (Torrington)

  Smith, John (London & W'minster)

  Mr. Reginald Eyre.

  Mills, Stratton (Belfast, N.)

  Speed, Keith

  NOES

  Abse, Leo

  Davies, Ednyfed Hudson (Conway)

  Hamilton, William (Fife, W.)

  Albu, Austen

  Davies, G. Elfed (Rhondda, E.)

  Hamling, William

  Allaun, Frank (Salford, E.)

  Davies, Dr. Ernest (Stretford)

  Hannan, William

  Alldritt, Walter

  Davies, Harold (Leek)

  Harrison, Walter (Wakefield)

  Allen, Scholefield

  Davies, Ifor (Gower)

  Hart, Rt. Hn. Judith

  Anderson, Donald

  Davies, S. O. (Merthyr)

  Haseldine, Norman

  Archer, Peter

  Delargy, Hugh

  Hattersley, Roy

  Ashley, Jack

  Dell, Edmund

  Hazell, Bert

  Ashton, Joe (Bassetlaw)

  Dempsey, James

  Healey, Rt. Hn. Denis

  Atkins, Ronald (Preston, N.)

  Dewar, Donald

  Heffer, Eric S.

  Atkinson, Norman (Tottenham)

  Diamond, Rt. Hn. John

  Henig, Stanley

  Bacon, Rt. Hn. Alice

  Dickens, James

  Herbison, Rt. Hn. Margaret

  Bagier, Gordon A. T.

  Dobson, Ray

  Hilton, W. S.

  Barnes, Michael

  Doig, Peter

  Hobden, Dennis

  Beaney, Alan

  Dunn, James A.

  Howarth, Harry (Wellingborough)

  Bence, Cyril

  Dunnett, Jack

  Howie, W.

  Bidwell, Sydney

  Dunwoody, Mrs. Gwyneth (Exeter)

  Hoy, James

  Binns, John

  Eadie, Alex

  Hughes, Emrys (Ayrshire, S.)

  Bishop, E. S.

  Edwards, William (Merioneth)

  Hughes, Roy (Newport)

  Blackburn, F.

  Ellis, John

  Hunter, Adam

  Boardman, H. (Leigh)

  English, Michael

  Hynd, John

  Booth, Albert

  Ennals, David

  Irvine, Sir Arthur (Edge Hill)

  Boston, Terence

  Evans, Fred (Caerphilly)

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

  Boyden, James

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

  Jackson, Peter M. (High Peak)

  Braddock, Mrs. E. M.

  Fernyhough, E.

  Jay, Rt. Hn. Douglas

  Bray, Dr. Jeremy

  Finch, Harold

  Jeger, George (Goole)

  Brooks, Edwin

  Fletcher, Rt. Hn. Sir Eric (Islington, E.)

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

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

  Fletcher, Ted (Darlington)

  Jenkins, Hugh (Putney)

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

  Foley, Maurice

  Jenkins, Rt. Hn. Roy (Stechford)

  Buchan, Norman

  Foot, Michael (Ebbw Vale)

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

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

  Forrester, John

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

  Callaghan, Rt. Hn. James

  Jones, J. Idwal (Wrexham)

  Cant, R. B.

  Fowler, Gerry

  Jones, T. Alec (Rhondda, West)

  Carmichael, Neil

  Fraser, John (Norwood)

  Kelley, Richard

  Carter-Jones, Lewis

  Freeson, Reginald

  Kenyon, Clifford

  Coe, Denis

  Gardner, Tony

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

  Coleman, Donald

  Ginsburg, David

  Kerr, Dr. David (W'worth, Central)

  Conlan, Bernard

  Gordon Walker, Rt. Hn. P. C.

  Lawson, George

  Corbet, Mrs. Freda

  Gray, Dr. Hugh (Yarmouth)

  Leadbitter, Ted

  Craddock, George (Bradford, S.)

  Greenwood, Rt. Hn. Anthony

  Ledger, Ron

  Crawshaw, Richard

  Grey, Charles (Durham)

  Lee, Rt. Hn. Frederick (Newton)

  Crosland, Rt. Hn. Anthony

  Griffiths, David (Rother Valley)

  Lee, John (Reading)

  Cullen, Mrs. Alice

  Griffiths, Eddie (Brightside)

  Lever, Harold (Cheetham)

  Dalyell, Tam

  Griffiths, Will (Exchange)

  Lever, L. M. (Ardwick)

  Davidson, Arthur (Accrington)

  Hamilton, James (Bothwell)

  1348

  1349

  Lewis, Arthur (W. Ham, N.)

  Oakes, Gordon

  Silverman, Julius

  Lewis, Ron (Carlisle)

  O'Malley, Brian

  Skeffington, Arthur

  Lomas, Kenneth

  Oram, Albert E.

  Small, William

  Loughlin, Charles

  Orbach, Maurice

  Snow, Julian

  Lyons, Edward (Bradford, E.)

  Orme, Stanley

  Spriggs, Leslie

  Mabon, Dr. J. Dickson

  Oswald, Thomas

  Steele, Thomas (Dunbartonshire, W.)

  McBride, Neil

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

  Stonehouse, Rt. Hn. John

  McCann, John

  Owen, Will (Morpeth)

  Strauss, Rt. Hn. G. R.

  MacColl, James

  Padley, Walter

  Summerskill, Hn. Dr. Shirley

  Macdonald, A. H.

  Page, Derek (King's Lynn)

  Swain, Thomas

  McGuire, Michael

  Palmer, Arthur

  Swingler, Stephen

  McKay, Mrs, Margaret

  Pannell, Rt. Hn. Charles

  Symonds, J. B.

  Mackenzie, Gregor (Rutherglen)

  Park, Trevor

  Taverne, Dick

  Mackintosh, John P.

  Parker, John (Dagenham)

  Tinn, James

  Maclennan, Robert

  Parkyn, Brian (Bedford)

  Urwin, T. W.

  McMillan, Tom (Glasgow, C.)

  Pavitt, Laurence

  Varley, Eric G.

  McNamara, J. Kevin

  Pearson, Arthur (Pontypridd)

  Wainwright, Edwin (Dearne Valley)

  MacPherson, Malcolm

  Peart, Rt. Hn. Fred

  Walker, Harold (Doncaster)

  Mahon, Peter (Preston, S.)

  Pentland, Norman

  Wallace, George

  Mahon, Simon (Bootle)

  Perry, George H. (Nottingham, S.)

  Watkins, David (Consett)

  Manuel, Archie

  Prentice, Rt. Hn. R. E.

  Watkins, Tudor (Brecon & Radnor)

  Mapp, Charles

  Price, Christopher (Perry Barr)

  Weitzman, David

  Marks, Kenneth

  Price, Thomas (Westhoughton)

  Wells, William (Walsall, N.)

  Marsh, Rt. Hn. Richard

  Price, William (Rugby)

  Whitaker, Ben

  Mellish, Rt. Hn. Robert

  Probert, Arthur

  Whitlock, William

  Mendelson, John

  Randall, Harry

  Wilkins, W. A.

  Mikardo, Ian

  Rees, Merlyn

  Willey, Rt. Hn. Frederick

  Millan, Bruce

  Roberts, Albert (Normanton)

  Williams, Alan (Swansea, W.)

  Miller, Dr. M. S.

  Roberts, Gwilym (Bedfordshire, S.)

  Williams, Alan Lee (Hornchurch)

  Milne, Edward (Blyth)

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

  Williams, Clifford (Abertillery)

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

  Rodgers, William (Stockton)

  Williams, Mrs. Shirley (Hitch'n)

  Morgan, Elystan (Cardiganshire)

  Roebuck, Roy

  Williams, W. T. (Warrington)

  Morris, Alfred (Wythenshawe)

  Rogers, George (Kensington, N.)

  Wilson, William (Coventry, S.)

  Morris, Charles R. (Openshaw)

  Rose, Paul

  Winnick, David

  Moyle, Roland

  Ross, Rt. Hn. William

  Woodburn, Rt. Hn. A.

  Mulley, Rt. Hn. Frederick

  Rowlands, E.

  Woof, Robert

  Murray, Albert

  Shaw, Arnold (Ilford, S.)

  Wyatt, Woodrow

  Neal, Harold

  Sheldon, Robert

  Newens, Stan

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

  TELLERS FOR THE NOES:

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

  Silkin, Rt. Hn. John (Deptford)

  Mr. Joseph Harper and

  Norwood, Christopher

  Silkin, Hn. S. C. (Dulwich)

  Mr. Ernest Armstrong.

  Mr. John Page: I beg to move Amendment No. 4, in page 1, line 17, at end insert:
  (2) The Commissioners shall in every case issue a receipt of an import deposit to the person by whom it was paid, which receipt shall be equally acceptable as a negotiable instrument as is a warehouseman's warrant issued by an authorised warehouseman.
  The Deputy Chairman (Mr. Gourlay): With this Amendment it will be convenient to discuss Amendment No. 10, in line 22, at end insert:
  'or to any assignee of that person where notice of such assignment has been given in writing to the Commissioners'.
  Amendment No. 81, in line 22, leave out:
  'by the Commissioners to that person'
  and insert:
  'shall be made by the Commissioners to that person or to his assignee and when so made'.
  Amendment No. 82, in line 24, at end insert:
  (3) For the purposes of this section an assignee shall be the person to whom the person who has paid the import deposit has assigned the right to repayment thereof and shall include the assignee of an assignee.
  1350
  (4) Written notice of an assignment shall he given to the Commissioner not less than seven days before the date on which the relevant repayment is due to be made.
  Amendment No. 14, in page 2, line 46, leave out subsection (10).
  Amendment No. 83, in Clause 2, page 3, line 32, at end add:
  When an assignee (as defined in section 1 of this Act satisfies the Commissioners that if he had imported the goods upon which the import deposit has been paid he would have been entitled to remission of such import deposit under the provisions of Schedule 2 to this Act the Commissioners shall forthwith repay the import deposit to such assignee but such repayment may be subject to such conditions and restrictions as the Commissioners may think fit to impose for the purpose of securing that the goods are disposed of or used in a way qualifying for remission.
  Mr. John Page: This is a small and rather detailed Amendment but one which has real importance and significance. It deals with the receipt given by the Commissioners for the duty deposited for the period of 180 days. Nowhere in the Bill or in the Customs and Excise instructions on the scheme—that is, Notice No. 481—is any mention made of a receipt, how

  1351
  it is to be given, or what form it shall take.
  I have twice inquired of the Customs and Excise Department of the Board of Trade about this receipt. I congratulate the Department on its extreme courtesy and remarkable calmness under fire. I imagine that the number of inquiries from importers must be great. On the occasions when I and when friends of mine have spoken to the Department, those responsible have been calm, efficient and helpful.
  I understand that at present no receipt is given for this deposited duty. I find this surprising, because I am not in the habit of putting down £5,000 or £5 million, or whatever one has to put down nowadays under such schemes, without obtaining a receipt. However, the practice apparently is that an importer goes to the Customs and Excise taking with him two copies of Form 139 which have to be deposited with the Collector concerned. Form 139 is difficult and badly worded. This matter should be considered over the next year or however long the new imposition is in force.
  If the importer, or the person making the deposit, who can be someone else, wishes to have an acknowledgment that the deposit has been left, he can produce a third copy of Form 139, which is then stamped with the Collector's office stamp. I was courteously informed by the Customs and Excise Department that this is considered to be, not a receipt, but an acknowledgment.
  When goods are left with an accredited warehouseman in present circumstances, and even in the good old days pre-22nd November, the importer or the person who caused the goods to be left with the warehouseman is given a receipt or a certificate, and this is considered to be negotiable. I want confirmation that the receipt acknowledgment which the Customs and Excise gives to an importer will be equally negotiable.
  Although, after the Second Reading and the debate on the last two sets of Amendments, there may be a sense of déjà vu about it, I am jolly well going ahead to consider the objects of this scheme and to put the matter in its full context. First, is it the Government's intention to ruin a number of small im-
  1352
  porters? Certainly not, we have been told, but if it happens, that is too bad. I assure the Minister that a good many small importing firms are extremely worried.
  Is it the object to put up the basic price of imported goods by 2 to 2½ per cent.? I understand that the answer to that question is, "Yes". [An HON. MEMBER: "More."] I hear one of my hon. Friends say "More", and that may well be so. Many of the non-exempted goods are raw materials, certain kinds of steel, for example, or, in the industry in which I have an interest, synthetic rubber. These basic raw materials for manufacturers will go to one factory for fabrication, perhaps to another for further fabrication, next to a third for assembly into whatever the finished article may be, a motor car, domestic appliance, television set, and so forth. Then the articles will go to the public. When the 2½ per cent. basic increase is taken into account at the retail end, it will mean a rise of about 6 per cent. in the price of the component within the finished article which is sold.
  If the imported article is, say, a Japanese transistor radio—
  The Deputy Chairman (Mr. Gourlay): Order. The hon. Gentleman must address his remarks to the Amendment, which deals with the receipt given for the deposit and would require that that receipt shall be acceptable as a negotiable instrument. His present observations are somewhat wide of the Amendment.
  Mr. Page: I accept your reproof, Mr. Gourlay. You have been sitting in your place, and I missed the last Amendment, for a reason which I could not avoid, so I shall try to be particularly gentle with you, though I think it important that the background should be fully realised.
  8.45 p.m.
  I come now to a critical point in my argument, the question of the reduction of the amount of cash in circulation. If the Customs receipt is negotiable, it may be used as a collateral for a further loan from a foreign bank or merchant bank to provide the cash needed to pay the duty deposit. I cannot believe that it is the Government's intention to drive the importer to borrow more foreign currency.

  1353
  The Minister of State has said—I think that it was on Second Reading—that there are quite a lot of advantages. If the money is lent to us, we have more foreign currency brought into the country for six months. I see the force of that argument, but the interest rates may be very high. Though it may be nice for the Treasury to have that cash in hand for six months, it may have to pay 4 or 5 per cent. on the total at the end of the period across the exchanges to the foreign lender.
  [Mr. GURDEN in the Chair]
  While there is no statutory authority that warehousemen's certificates and warranties may be used as collateral for security, there is judicial authority, with many cases on record, recognising the commercial procedure of using such warranties for collateral at banks. Moreover, by specific exclusion under the Bill of Sale Act, 1878, whereby such warranties became valid without central registration, there is a tacit recognition that in the general course of business those warranties are acceptable for collateral.
  That is the nub of the point I am trying to make, and I hope that we shall have confirmation from the Minister of State that what I have just said applies to the receipts and acknowledgments given by the Customs and Excise. I hope that he will tell the Committee that he will look into the whole question of the form in which the receipt is given.
  What is the maximum time that an importer may have to make some kind of deposit? People say that it is 180 days, and that is what it would be generally thought to be, except by experts, such as there are in the Committee. In fact, by the time the Bill becomes an Act it might be about 200 days, by the use of the bond procedure which was permitted under the previous Order.
  The fact that the time that the bond was held by the Customs is not deducted from the 180 days is small-minded, mean, tricky, vicious, vindictive, dishonourable and altogether typical of the present Government.
  Mr. Kenneth Baker: The Amendments are meant to be helpful, and therefore I hope that they may be accepted by the Government. The whole purpose of the six Amendments is to help
  1354
  the importer to find the money to pay the deposit. We are trying to create negotiable documents, which is our way of trying to meet the suggestions made by the Financial Secretary on Second Reading.
  The hon. Gentleman spoke at length about the ingenuity of the London capital market and of financiers to find a way to produce the money required for these deposits. I agree with him. The London capital market is the most sophisticated in the world. It still works very well, even after four years of Socialism. There is no doubt that it will find ways of raising this money.
  There are many ways of raising it. Anyone opening his newspaper on Monday morning this week will have seen the advertisements from estate agents, for example, offering to lend money on a sale and leaseback basis. This is one way of helping importers faced with finding the deposit. Other ways have been suggested. The most obvious way, which has been overlooked by the Government, is that many large companies tend to be flush with cash at the moment because their dividends have been restrained and, on the whole, wages have been restrained. One of the features of the balance sheet of many large companies is a preponderance of cash. These are two obvious ways in which importers will find the money.
  We suggest a third way—by making the receipt of the warehouseman discountable. As the Financial Secretary said, one cannot get a better security than a receipt which has the Government's name to it payable in six months. This is gilt edged and quite acceptable. The Financial Secretary said that only a quarter of an hour ago. We ask that these gilt-edged guarantees, the 100 per cent. securities, should be negotiable documents, which means very simply that it can be passed from hand to hand and is just like a bill of exchange. To use the analogy of the Financial Secretary, it is like the tins of salmon which are moved round and round, and eventually they will be cash. This will certainly ease the situation of importers, large and small, in finding the deposit. It is a sophisticated financial device, but one which we should create.
  Incidentally—and here I anticipate the reply of the Minister of State because he is probably as unfamiliar with the workings of the London money market as the

  1355
  Chief Secretary was with of the workings of the Foreign Exchange market—if it is a negotiable and discountable document, it does not increase the credit base. I suspect that is one of the arguments which he will adduce in trying to defeat our Amendment. It simply makes it very much easier for importers to raise the money. Such a Bill could be discounted in the London money market and it would be a very good Bill indeed.
  These are constructive Amendments. They are not aimed at trying to undermine the Government's strategy, mid-term or long-term. I hope that the Government will be reasonable and will accept them.
  Mr. Tom Boardman: I wish to take up what my hon. Friend the Member for Acton (Mr. Kenneth Baker) said about the need for negotiability. The Government seem to have completely overlooked the commercial necessity of providing some form of security if the necessary liquidity is to be found. I am sorry that the Financial Secretary is not present, because when we were debating the last Amendment he made light of this problem and suggested that it presented no difficulty for firms, small or large, in finding the necessary cash.
  The Clause provides that the deposit shall be repaid to the person who paid it. That does not mean that it must be paid by the importer, as the Financial Secretary agreed; it can be paid by a merchant bank which can have it repaid to it. If we overlook the large burden of interest rates and the trouble with the discount rate, this is practicable. But it will not always happen in that way. Often, a person may wish to import and to use his own resources and pay for the goods himself in the expectation that he will complete the order and get the money back.
  There are such things, even under the Labour Government, as death, bankruptcy and liquidation. What will happen if an importer, having put down a deposit and having received the goods, is killed, or goes bankrupt, or goes into liquidation? These deposits are not negotiable. In practice, what will probably happen, and what is happening today, is that many small firms which have not managed to tap these resources, some of them
  1356
  overseas perhaps, at high rates of interest, will go to their bank manager and say, "Will you please help us out?". Despite the difficulties which they now suffer, the banks are trying to co-operate, but on a short-term basis. They agree to help until the importer can find a more permanent source of finance.
  Once the bank has put down the deposit, however—even if the bank puts it down itself and, therefore, has the receipt made in its name—renegotiation will be impossible because the importer could not go to somebody like a merchant bank and say, "The bank has loaned me £X to get me out of the awful mess caused by the Government, but only for one month. Can you help me when I have to refund it?" because the repayment cannot be endorsed across to the merchant bank. It is not a negotiable document. The purpose of the Amendment is to make it negotiable.
  I make no argument about whether the Amendment of my hon. Friend the Member for Harrow, West (Mr. John Page) concerning warehousemen's receipts, or whatever they are called, is better than the Amendment of myself and my hon. Friend the Member for Acton. The documents must, however, be in a form which can be negotiated if we are to avoid all the difficulties for these small importers, who will have a big job to make ends meet and to survive the next year or so.
  Although the Financial Secretary later went back on his argument, he implied that the size of the deposit would depend on the size of the firm; it would hit the large firm harder than a small one, on whom the load would be less. What, clearly, was not recognised is that a very large number of importing agents import millions of Es worth of goods on very small margins, possibly of 2½ per cent. If they are financed in the way that the City can arrange these things, their margins might very often be even smaller. If those firms have to provide deposits on imports of, say, £2½ million, they might have to find interest of up to or over £100.000.
  Amendment 83 deals with the slightly different point of the remission of duty when the exporter is not the importer. Under the Bill, I understand, the duty will be remitted to the importer under certain conditions. One of the conditions

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  which an importer has to meet in the majority of cases is that he exports either all the imports or a proportion of them.
  What the Bill does not provide is that the duty will be remitted, although the exporter is not himself the importer. No doubt, the Minister of State will put me right if I have misunderstood the point, but as the Bill is drafted, to get remission of duty, the importer must satisfy the commissioner that the goods will be used for export by him. In practice, in the majority of these operations, somebody imports a raw material which is not excluded from the schedule.
  9.0 p.m.
  For instance, finished leather is not excluded from the Schedule. Finished leather is imported by firms which have been established in the trade of leather importers for generations, and which have expert knowledge of markets and leathers. At the moment of import they do not know to whom the leather will go; some will go for home consumption and some for export. The purpose of the Amendment is to provide that the importer can sign the import receipt to a purchaser, a manufacturer-exporter, so that the manufacturer-exporter can, with that receipt, on satisfying the Commissioner of the quantity which he is exporting, reclaim the deposit paid for the material. It is on a slightly different but very important point.
  I emphasise that by quoting from a letter which I have received from a well-known firm of shoe manufacturers which is a leader in the export market:
  "On checking with the local customs officer today, we understand that some relief from this measure could be obtained by us if we became our own importers. The amount would be calculated on a percentage basis from historical records of what we normally re-export in the form of shoes."
  The first point is that the firm can only get the deposit back if they become their own importers. The letter continues:
  "It will not be easy for us to suddenly become importers of leathers, as this we con-skier to be the function of agents in this country who have to stand by deliveries with regard to grades, quality, selections etc.
  From inquiries we have made it is obvious that some of the smaller agents or importers, who are without financial backing, will find it impossible to make these deposits and it would appear that the onus to do so in order to obtain adequate supplies will be on us.
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  Whichever way it is done in order to maintain supplies, it will, in our opinion, mean increases in the prices of our raw materials of something in the order of 4 per cent."
  That is the problem of a company with a large export trade, and it is precisely the sort of case which has inspired the Amendment.
  Amendments Nos. 81 and 82, which support my hon. Friend's Amendment No. 4, are in order to make the receipt for the deposit in the form of a negotiable document. Amendment No. 83 is on a different point, to enable the firm which does not itself import to be in a position to reclaim the deposit on that portion of the goods which is re-exported.
  If the Government have a genuine interest in trying to avoid the bankruptcy and liquidation of small firms and in encouraging increased export trade, they will accept the Amendments, or at any rate, the principles behind them.
  Sir J. Foster: The necessity for the Amendment is that Clause 1(2) does not allow for the import deposits to be either assignable or negotiable. Is the Minister able to say whether the scheme under Clause 1(2) which I am about to put forward will work? The importer tells a bank that he must find £100,000 for a deposit. The bank agrees to pay the deposit for him. The Government then owe the bank £100,000. The difficulty which the Amendment is designed to overcome is that the owing is not represented by a document saying, "H.M.G. owe the XY bank £100,000". I agree that the credit base would not be extended by the Amendment, but could the bank take the form of acknowledgment for the deposit referred to by my hon. Friend the Member for Harrow, West (Mr. John Page), and write an order saying, "Please pay to the blank account the sum of £100,000"?
  It is assumed that, as in the City of London, there are names which can be relied upon not to go back on their word. That is the whole basis of credit in the City of London. It occurred to me that a signed order to the Government with the name of the account not filled in might satisfy Clause 1(2).
  Obviously the Commissioners will not press £100,000 into the hands of the XY Bank. When the 180 days terminate, the Commissioners will pay it into the

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  bank account of the person paying the deposit. On the 180th day, the Customs could not say, "But the account named is not your account; it is just a number." Again, ex hypothesi, the person who signed the order to H.M. Customs saying, "Please pay £100,000" will not write another order to get the money himself.
  I would have thought that the Commissioners had to obey the order of the person who paid the deposit. They must pay the account designated by the person who pays the deposit. They will not have a lot of detectives going round saying, "This is not your account. We are not really paying the person who paid the deposit, because here is his signature properly sealed, and so on."
  Would the Minister of State hazard an opinion as to whether that kind of document might not get a certain amount of assignability and negotiability? Let us assume that the XY Bank hands it to AB, who is willing to discount it. Let us say that he works on a 6 per cent. discount and gives the bank £94,000, expecting to get £100,000 on the 180th day. The person making the deposit writes into the Customs merely filling up the number of the account, saying, "I will leave it blank so that AB can pass it down the line and anyone can fill in the account name." When the Customs get it on the 179th day, surely they are bound to pay at the order of the person who made the deposit? I do not see how they can refuse.
  Can the Minister of State comment on that? It is relevant, because it throws some light on the need for the Amendment. The hon. and learned Gentleman may say that such a scheme will not work at all. In that event, the Amendment is all the more necessary from our point of view.
  Mr. John Nott: My hon. Friend the Member for Harrow, West (Mr. John Page) has raised an interesting point. Customs and Excise Form 139 which, with a stamp, is the form which the importer can receive from the Customs and Excise if he so desires, could be used as collateral for a loan from a bank. Indeed, it would be open to the person who has received Form 139 to assign it to a bank so that it could be used as collateral for a loan.
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  But I do not see how Form 139 could possibly be deemed to be a negotiable instrument. I understand the definition of a negotiable instrument to be something which has an inherent title embodied in it so that, without any kind of assignment whatsoever, as a piece of paper it gives title to whomsoever holds it at any point of time, whether a Treasury bill, a bill of exchange, or a bearer bond as opposed to registered stock. I do not see that this is a negotiable instrument. But Form 139 would, to any banker who desired to accept it as collateral, be acceptable as such, and the banker could ask that the title to it should be assigned to him to provide proper security.
  If this is right—it may not be—it seems that the interesting point in the Amendment revolves around the rate of interest. If the Customs issued a receipt for the imported item which said "Customs and Excise promise to pay after 180 days" a particular sum, this would command Government rates of interest or quasi Government rates of interest, because it would in effect be a Government guarantee to repay after 180 days. If it was a receipt whereby a Government agency promised to repay, it is probable that the importer could borrow against the security of that receipt at a highly favourable rate of interest, whereas he could only borrow against Form 139 at the going market rate or at what the banker thought to be the credit rating of the importer if the security of the Government was not involved, but it was purely the security of the person to whom Form 139 had been made out by the Customs.
  This may or may not be right. Therefore, the important point is: do the Government wish to help the financing of these import deposits or do they wish to inhibit them? If they wish to help the financing of these import deposits it seems perfectly reasonable for the Customs and Excise to issue a receipt which will enable the importer to borrow against it at Government rates of interest. If the Government do not wish to help, it merely allows Form 139 to be issued and for it to be used as collateral against a loan. I wonder whether the Minister of State could clarify this point when he answers the debate.
  Mr. Charles Fletcher-Cooke: We owe a debt to my hon. Friend the Member for Harrow, West (Mr. John Page) for starting this interesting debate. It became clear as the debate progressed, particularly from the flood of light that my hon. Friend managed to throw on the practice of the Customs and Excise, that, whatever else might be right or wrong, we need a proper receipt for these deposits from the Customs and Excise as a matter of course, not merely on demand. It is absurd in a commercial and mercantile country that the Customs and Excise should not automatically give a properly authenticated receipt for the deposit of what will be large sums of money in many cases, that it should only be obtainable on request and that, even in those circumstances, it should not be considered a receipt.
  9.15 p.m.
  Then comes the interesting problem, raised by various Amendments, as to what is or should be the status of this receipt. My hon. Friend the Member for Harrow, West suggested that it should be made a negotiable instrument, and he parallels this with the warehousemen's warrant, which has never been made a negotiable instrument, but which has been accepted as such in commercial circles ever since it was excluded from any possibility of operation as a bill of sale by the Bill of Sale Act. My hon. Friend asks that the Government should proclaim it a negotiable instrument, and thus make the right to the deposit returnable to whoever produces the negotiable instrument, even though no notice has been given to the Customs and Excise that the receipt has been transferred. As my hon. Friend the Member for St. Ives (Mr. Nott) said, that is the difference between negotiability and assignability. The assignabality arises only when notice is given to the debtor, but with a negotiable instrument no such notice is required.
  I think the Minister of State will say that negotiability would have the effect of monetising these receipts. If they are negotiable in this way, it will mean that they will become monetised, and this will increase the velocity of credit and thus increase its base. I fear that that is what we shall be told, and that one of the object; of the Bill is to decrease the credit base rather than to increase it.
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  I do not think that that objection would arise, or arise in any material way, if these receipts were made assignable, because that would not materially increase the velocity of their movement, and it would, as so many of my hon. Friends have said, enable some very important credit to be obtained which I do not think will be obtainable under present circumstances, in the sense that, as I read the Bill, Customs and Excise are only obliged, and perhaps only entitled, to pay to the person who originally made the deposit.
  I should very much like to hear from the Minister of State whether he accepts the modifications to that obligation proposed by my hon. and learned Friend the Member for Northwich (Sir J. Foster), who suggested that that obligation and that privilege of repaying only to the person who made the deposit could somehow be modified by the instructions of that person to pay to somebody else or to someone else's account, whether numbered or named. As I read it, there is no possibility of that in the Bill as drafted.
  We say that because we think these should be made assignable, that does not really arise. They should be made assignable for the many examples given by my hon. Friend the Members for Acton (Mr. Kenneth Baker) and Leicester, South-West (Mr. Tom Boardman). I think perhaps the most vivid is the case of the importer who may himself have paid the deposit in the first instance, thinking that he would be able to afford to be out of his own money before the six months, and be able to weather that storm, but who, after a month, having paid his deposit, finds that he is desperately short of working cash, perhaps not for reasons connected with importing at all, but for other reasons, and wishes to take his receipt to a bank or to some other person and say, "This is very good security. I want to assign this to you, in return for your letting me have my deposit sufficiently discounted".
  For the life of me, I cannot see why that cannot be done in just the same way as it would be done in the case of an ordinary commercial document. Why should not this document of title be assignable and thus enable the importer to get the money that he needs so desperately?

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  If it is not assignable—if the payment has to be made to the importer after the six months are up—the bank, or whoever it is, will charge the importer a very much higher rate of interest, because during those five remaining months the importer may go bankrupt. If he goes bankrupt, the money will go into the general pool and the person who has left the money will have no preferential claim on whatever is left from the bankrupt's estate. It therefore seems to be quite wrong to leave this monopoly repayment in the hands of the importer because money will be very tight. I know that the Government want it to be tight but, as we heard in answer to the last Amendment, they do not want it to be so tight that it will bankrupt many small traders.
  In the example that I have given, unless after a month or so of having his money on deposit the trader can get money on reasonable terms he will go bankrupt, and he will be able to get it on reasonable terms only if he can assign, in the proper legal sense of the word, the document of title to his deposit. It is not possible to elaborate the case. It seems so reasonable, on commercial grounds, that I shall wait with interest to hear why the Minister of State says that it cannot be done—if he has to say that. If he were going to accept one or more of our moderate Amendments I feel that he would have risen earlier.
  I come finally to the Amendment on a somewhat different subject—Amendment 83. That was the one on which my hon. Friend the Member for Leicester, South-West spoke so cogently. That tries to prevent a distortion of our export trade by widening the import privilege or the import allowance—if I may so phrase it—in the case where the importer is not the same person as the exporter but when the article imported is genuinely and demonstrably included in the exported article, albeit exported by someone else.
  If this Amendment or one on the same lines is not accepted, we fear that the course of trade will be enormously distorted, because it will be in the interest of importers to identify themselves with export businesses of which they may have very little knowledge, and which they
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  may have very little skill in dealing with. This will lead to all sorts of impromptus and tergiversations in order to get the benefit of a very reasonable drawback and one which in other circumstances has always been extended in the cases envisaged in Amendment No. 83.
  The Minister of State will know that an Amendment to like effect appears as an Amendment to the Chancellor's Amendment at the end of the Schedule. This point is raised now in the form of a preliminary canter. If the Minister of State cannot tell us tonight I hope that he will tell us tomorrow, or whenever it comes up, that this reasonable suggestion has been adopted, because the alternatives—if he considers what may happen if the Amendment is not adopted—are very serious.
  Therefore, I hope that he will tell us that the Customs and Excise will pay the import deposit back to persons to whom, they have had notice, the certificate has been assigned. I hope that he will see that a proper form of certificate is automatically issued and that he will view favourably the suggestion in Amendment No. 83 that the export privilege should be assignable—this is another aspect of assignability—and not restricted to the named importer, in which case it might be of very little value to the importer, the exporter or the country.
  The Minister of State, Treasury (Mr. Dick Taverne): There are some points raised by the hon. Member for Harrow, West (Mr. John Page) and one raised in one other speech with which I do not intend to deal now, if the Committee will excuse me. The hon. Member for Harrow, West discussed briefly what goods should or should not be exempt. Of course, we will have ample opportunity to discuss this on the Schedule. He also went into a tirade about the inequity, as he saw it, of making the maximum time before repayment 200 days. That also arises on another group of Amendments and would be better discussed then.
  Issues arise over the very interesting Amendment No. 83, forcefully moved by the hon. Member for Leicester, South-West (Mr. Tom Boardman), which, as the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) recognised,

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  fall to be considered when we discuss the problems of re-exports under the Second Schedule. I shall certainly consider with care all that he has said, and the particular difficulties which arise and how far they can or cannot be met in terms of the Government Amendment, at that stage of the Bill.
  Apart from these issues, a number of very important points have been brought forward. First is the question of the form on which the name of the person concerned will be entered and how far this can be left blank. Subsection (2) of Clause 1 provides that the import deposit is repayable to the person named on the entry as having paid it. This does not necessarily mean the importer. It would, of course, be impossible to restrict it to the importer, if we had wished to do so in any event, because, in many cases, duties will be paid by forwarding agents and it would have caused unreasonable inconvenience if we had refused this facility for the import de posit.
  We shall not always know who the importer is, so an importer can arrange for the deposit to be paid for him by someone else and can assign to that person at the time of payment the right to receive the repayment. But somone must be named. One cannot say that the repayment must be made to a particular account. There is no reason why the bank should not be named if that is the arrangement which the importer has reached. If a receipt for the deposit payment is asked for, that person can hold the receipt. How far this is collateral or not is a question which shows a wrong approach. As the Clause stands, this receipt, if requested, would be evidence of credit-worthiness and could be used by someone in need of money to show his credit-worthiness and obtain that money.
  Sir J. Foster: If the hon. and learned Gentleman meant to dismiss my scheme on the grounds that one cannot leave the name out, I would point out that that was not my suggestion. The name at the bottom would be A.B., the person who paid the deposit. It would be a mandate on the certificate telling the Customs to pay account No. N.61, say. I challenge the hon. and learned Member to say that that is not a valid mandate.
  9.30 p.m.
  Mr. Taverne: The only obligation of the Customs is to pay the person named—
  Sir J. Foster: is the Minister of State suggesting that the Customs will go round with £100,000 in notes? He cannot be. The Customs have to pay into an account. The hon. and learned Gentleman cannot mean that the Customs go round with the notes. If he does—God help him.
  Mr. Taverne: The Customs pay the person named, and as I understand it there is no reason why they should not pay the person named in the form in which he asks to be paid. If it is paid for someone else it can also be assigned to that person at the time of payment—
  Mr. John Page Mr. John Page rose—
  Mr. Taverne: I will give way in a moment, but let us just go on to what actually happens now. The hon. Member for Harrow, West (Mr. John Page) is quite right in saying that form C139 is the form on which a stamp can be placed by the Customs if the importer or the person named wishes to have a receipt. I will certainly see that the form is looked at in order to find out whether it is possible to improve on it, but that is what happens now.
  A receipt will be issued, if desired, through Form C139. It is the intention to convert the lower part of C139 into a payable order, and to send that to the address originally filled in. That is the shape that Form C139 can take—
  Mr. Nott: I understood the point made by my hon. and learned Friend the Member for Northwich (Sir J. Foster) to be that either the money can be paid in to the account of the depositor at, say, Barclays Bank, or the depositor can give an instruction that the money be paid to Barclays Bank. Those are quite separate things. Can a depositor give instructions at the time of paying the deposit that he wishes it to be repaid to someone else? That is the important point.
  Mr. Taverne: If that is the form it takes, in effect what is happening is that one is getting an assignable document, which is the point that I intended to deal with later.
  Mr. Boardman: Does the Minister of State say that the document itself will be evidence of credit? The document itself is no more evidence of credit than is a share certificate in someone else's name. To be shown a share certificate in a person's name is no evidence of his credit, unless it can be transferred. One does not advance large sums of money until one has security for it. The person having the share certificate may owe £1 million elsewhere, so the certificate itself is no evidence of credit.
  Mr. Taverne: It is certainly evidence of creditworthiness to the extent that it is clear that at the end of 180 days he will receive from the Customs the sum received as deposit.
  Mr. John Page: We are delighted to see that one of the four Board of Trade Ministers has at last joined him in his lonely moment on guard, because this is essentially a Board of Trade matter. I understand the hon. and learned Gentleman to have said that something could be written at the bottom of form C 139. For the sake of clarity, would he repeat that statement? It did not come across to me?
  Mr. Taverne: The intention is to convert the lower part of form C 139 into a payable order and to send that to the address originally filled in.
  The substantial question raised by this Amendment is whether or not this should become a negotiable instrument.
  Mr. Patrick Jenkin: I do not know whether I am being unduly obtuse, but I have totally failed to understand the effect of what the hon. and learned Gentleman has told the Committee. Is this a form which will be sent to the person who has paid the deposit so that the money still belongs to that person? There is no possibility of his having to charge it or assign it? Is that the effect?
  Mr. Taverne: This is not something which makes it into an assignable document. The actual issue before the Committee is whether or not (a) this should be a negotiable document and (b) whether there are advantages in making it assignable. The hon. Member for Acton (Mr. Kenneth Baker) said that he anticipated the answer I would give, but I do not think he has anticipated entirely correctly. It is very much part of this scheme to
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  restrict credit. That is the whole purpose about which the Financial Secretary spoke earlier. This is on top of the restriction of lowering the bank ceiling. There is £600 million worth of deposits which will build up and which in themselves in so far as they are not composed of money lent from abroad go to restrict the amount of liquidity available in the economy.
  To some extent making this negotiable would tend to defeat the intention of the scheme in that respect because the importer through the return for his deposit will be provided as is the intention of the Amendment with a marketable security which at an appropriate rate of discount he could use to put himself in funds. Quite apart from the question of the velocity of turnover of credit to which the hon. and learned Member for Darwen referred there is a further answer which I must give to the hon. Member for Acton. If this happens it is bound to reduce to some extent the effect of the scheme on the liquidity of the economy because what would be created in effect would be a negotiable instrument payable by the Customs which is the equivalent of a gilt-edged security so the funds would be drawn almost entirely into the market for import deposits at the expense of public sector debt and that would be bound to have some effect on liquidity. The whole purpose of the scheme is twofold. One part of the main purpose is to reduce the amount of liquidity.
  The alternative was put forward by the hon. and learned Member for Darwen that these certificates should be made assignable even if they were not negotiable. The difference between the two points in practice will not be very great because if notice is given these documents will be negotiable. They can be sold, they will have the same effect although to a lesser degree and this is less objectionable than making them fully negotiable when notice is given to the Customs.
  Mr. Nott: I understand the argument of the hon. and learned Member but surely it only expands the amount of liquidity in the system at any time if this particular type of receipt can be used as a collateral against loans from the Bank of England. If it is just a promise to pay by the Government and the banking system cannot borrow against it from

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  the Bank of England I do not think it will expand the credit base at all. Only if the banks can use it as part of their liquidity ratio that it expands the credit base.
  Mr. Taverne: I do not think the hon. Member can deny that this is bound to have effect on the public sector debt and in this respect it is bound to have an effect on liquidity as a whole. These are some of the reasons why, somewhat reluctantly, I must oppose these Amendments. I understand the motives of hon. Members who have put them forward, but it is our major purpose to see that liquidity is restricted and this is something which will have a major effect on the economy and an interim effect on imports, quite apart from the particular deterrent effects it will have on individual importers. For these reasons I must ask the Committee not to vote for these Amendments.
  Mr. Fletcher-Cooke: The Minister of State has been somewhat obscure on the crucial issue as to the degree of assignability of these receipts. As I understand it, though I may have got it wrong, there is what might be called a degree of assignability permitted at the beginning of the six months; there is total assignability permitted at the end of the six months, because, to quote the Minister's words, which I took down, there is "no reason why it should not be assigned at the time of the payment"; but there is no assignability allowed between the two.
  It is just between the two—the beginning and the end—that there needs to be assignability. It is just in those cases where the importer needs to replenish the capital of which he may have exhausted himself, thinking that he would be able to ride out the six months but finding that he cannot. It is clear, particularly from the intervention of my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) that, unless these receipts are assignable in the sense that a good title to this repayment can be transferred from the original payer to a third person, they are not much use to the person wishing to borrow money. This much has emerged from this somewhat obscure debate.
  Mr. John Page: I seek knowledge, which I am sure will be helpful to those on the Treasury Bench. Any form of
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  receipt which is given, if it ultimately becomes a receipt, could be used as collateral if there were a lender prepared to consider it. Is it fully understood that the Minister of State said that it must not be used? By making it a nonnegotiable document the Minister of State said that it must not be negotiated.
  Mr. Fletcher-Cooke: I do not think that that Minister of State forbade people to lend money on the security of these receipts. I say that in the commercial world such a receipt would not be much use as security in the circumstances of a borrower of doubtful credit. This is a great imposition on the small trader, who will not be able to assign the debt which is owing to him by the Government during the period in which it is maturing. It is a monstrous interference with the normal course of business and finance that a debt cannot he assigned if it is desired to be assigned. It is an innovation in our financial arrangements. I do not think that it would happen very frequently.
  I do not think it was right of the Minister to say that there is not much difference between negotiability and assignability. There is all the difference in the world. A negotiable instrument is monetised. A debt that can be assigned is not monetised, because the velocity is infinitely less, but it is a great convenience and a great reassurance to the trader.
  Unless the Minister of State can give an assurance that he will reconsider this, as I think he should, I suggest to my hon. Friends that we in due course recognise that the Government, having given great and smooth words to small traders when we were dealing with the last group of Amendments, now show their true spots, because they are perverting the normal course of trade and finance in such a way as to say that the man who really needs his credit desperately while what is owing to him is maturing, cannot get it. For these, amongst other reasons, I suggest that in due course we divide.
  9.45 p.m.
  Mr. Taverne: I take the hon. and learned Gentleman's last point, that there is a difference between assignability and negotiability, and that the effect on liquidity is much less in the

  1371
  case of assignment. Without any undertaking that we shall meet the point which the hon. and learned Gentleman made, I give the assurance that I shall look at the question of assignment again.
  Mr. Tom Boardman: In view of that assurance, I shall not press the point which I had intended to make, but I ask the Minister of State to bear in mind that a document showing that someone is entitled to money is no assurance or guarantee whatever to another person lending money unless he is guaranteed that it is not also available to cover borrowing elsewhere.
  Will the hon. and learned Gentleman read what was said by the Financial Secretary on the earlier Amendments, when he gave bland assurances that the small importer had no cause for concern, that liquidity was all right, and the cash would be there? There is a stark contrast between that speech and what the hon. and learned Gentleman has said in reply to these Amendments. I welcome the assurance that he will look at the matter again.
  Mr. John Page: In the last minute and a half, the Minister of State went a long way to help us on this Amendment. He has told us that, after the points which have been raised in the debate, he is prepared to look again at the question of the assignability of the receipt and give us his second thoughts, presumably on Report, if not before if he can find a way of bringing the matter up for discussion. That being so, the position is somewhat altered.
  May I have an assurance also on the form of the receipt? The hon. and learned Gentleman said that he would look at the receipt carefully, but I understood from the Board of Trade that it did not regard the present form with the stamp as a receipt. There must be a proper receipt automatically given. Unless such a receipt is available, import depositors are put in a difficult position. An acknowledgment for an interest-free loan for six months is not enough. A proper receipt on an appropriate form should be given.
  Will the Minister of State also discuss with his right hon. Friend at the Board of Trade whether better instructions can
  1372
  be given immediately, as from tomorrow morning at 10 o'clock, to the Commissioners on the kind of receipt or acknowledgment which they give to depositors of cash? Such a receipt is vital to all concerned in the commercial and importing world. Perhaps the hon. and learned Gentleman will comment on these other questions.
  Mr. Taverne: We shall look at the form again, and, as I said, part of it would be altered. That will be the form to be retained by the Customs, which will then automatically become the order for payment. The form will, therefore, be altered, and I can look also to see whether a receipt could be incorporated which could be handed to the importer.
  Mr. Page: The tear-off "gift coupon" at the bottom of the form is in no way a receipt. This is a convenience. I take it that the Minister will look at the receipt and the assignability again. With those undertakings, I beg leave to withdraw the Amendment.
  9.30 p.m.
  Mr. Robert Sheldon: There is the very important point that when we were discussing the whole purpose of the Bill one of the arguments in its favour was the reduction of liquidity. If my hon. and learned Friend now makes the documents negotiable we shall create a new kind of bank note, which will completely destroy that purpose of the Bill.
  Mr. Taverne: I do not know whether my hon. Friend was present when I made this point. I said that I could not meet the Amendment on making the documents negotiable, but that I would look at the question of assignability, which does not have such a great effect on liquidity as creating a new negotiable instrument would have.
  Amendment negatived.
  The Temporary Chairman (Mr. Gurden): The next Amendment selected is Amendment No. 6, with which we may discuss Amendments No. 97, in page 1, line 19, leave out from 'paid' to complete' in line 23 and insert:
  'in the form of a warrant issued by the Commissioners dated for payment 180 days after the receipt of the import deposit and issued on the receipt of the import deposit as proof by the Commissioners of the'.

  1373
  No. 11, in page 1, line 24, at end insert:
  (3) Any such payment by the Commissioners shall be, at the request of that person, by way of a post-dated warrant made payable to that person aid sent to him prior to the date on which the import deposit becomes repayable. The date of the post-dated cheque shall be the date on which the import deposit becomes repayable.
  and No. 12, in page 1, line 24, at end insert:
  (3) There shall be issued to the person paying the import deposit, if he so wishes, sterling certificates of deposit maturing six months from the date of issue, of value equivalent to the nearest £50,000 to the import deposit paid; and whenever, such sterling certificates of deposit are issued, payment by the Commissioners under subsection (2) above shall be made to the bearer of such certificates upon their maturity.
  Mr. Patrick Jenkin: I beg to move Amendment No. 6, in page 1, line 18, after 'repayable', insert:
  'forthwith and without demand having been made'.
  We very much appreciated the Minister of State's readiness to look again at the question of assignment, and I move the Amendment without prejudice to the question of assignability.
  The Amendment is directed to a different point—the intention that the money should be repaid on the 180th day. Its purpose is to place on record in the Bill clearly and unequivocally that it is the duty of the Customs and Excise to repay the deposit automatically on the due date. I have no doubt that the Minister will say that that is the Government's intention. If so, let it be clearly stated in the Bill.
  The Financial Secretary has made great play of his belief that the money market will be able to provide the credit necessary to pay the deposits, and that credit will be available even to the smallest importer. It is clear that in some cases it will be more appropriate that it should be the lender who pays the deposit and is the person named in the document. Any doubt as to the certainty and immediacy of repayment on the 180th day is bound to make it much more difficult to obtain loans.
  There is apprehension in business circles on this point. Those who have tried to obtain repayment of import duty in the past have experienced long and
  1374
  exasperating delays. In some cases they have not been able to obtain repayment for up to nine months. It will be of value to them in giving them confidence in the operation of the scheme if the Bill contains the words in the Amendment.
  The mills of the Customs and Excise may grind very small, but they grind exceedingly slow. It would utterly defeat the purpose, which is that importers should obtain the credit in order to make their imports, and would merely increase the cost of the scheme to the importer, if the repayment were not made on the due date. Therefore, the Amendment is essential. It in no way detracts from the Government's intention; it merely implements it, and dots the i's and crosses the t's.
  I shall leave it to my hon. Friends the Members for Honiton (Mr. Emery) and Yeovil (Mr. Peyton) to advance the arguments in greater detail on how the object of the other two Amendments should be achieved. However, on the last Amendment, the Minister of State said that, even without assignability, the document which the Customs and Excise would issue would have the effect of a warrant payable in the forms set out in Amendment No. 97. It may well be that the hon. and learned Gentleman will be able to meet that, too, without prejudice to the question of assignability. Whether the more elaborate suggestion of my hon. Friend the Member for Yeovil—that it should be sterling certificates of deposit—is acceptable is rather more doubtful, but no doubt the Minister of State will wish to comment on that.
  As to the immediacy and the automaticity of the repayment, let it be stated firmly and unequivocally in the Bill.
  Mr. Emery: In view of what the Minister of State said on the last Amendment, I hope that my Amendment will be acceptable to the Government.
  Instead of the elaborate procedure in subsection (2), Amendment No. 97 simplifies the matter and tells the Commissioners what they will do. Their responsibility to repay the money 180 days after the receipt of the import deposit is made definite by instructing them to issue a warrant to repay the money 180 days from receipt of the import deposit.

  1375
  From a purely administrative point of view, that is something which the Government must welcome. It stops them having to issue a receipt. It stops them having to file the receipt. It stops them having to take action later to issue a cheque and to have that cheque put in an envelope, posted and crossed off. It meets the point of Amendment 6 that payment shall be made on the day that it is due. The Government must know that, unless they are willing to send out some cheques way before the date on which they are due, they will not available for payment into banks exactly 180 days after the deposit has been received. That difficulty can be overcome by accepting my Amendment.
  It is obvious that a warrant could be assigned. In a legal sense, one can always argue about what is an assignment and what is negotiability. All I ask the Minister to do is to follow the criteria which he expounded on the last Amendment so that the warrant may be assigned. This would simplify the procedure in every way and make for greater efficiency in operating the scheme.
  10.0 p.m.
  I am against the scheme, but if we are to have it, let us have it operating sensibly. Let us, as the Opposition, try to ensure that the Government make some sense of it. I must not pursue that line too strongly in case the Government feel that something is hidden in my Amendment when it is not. It is purely an administrative convenience to simplify the procedure and to ensure that the person having made the deposit can have in his possession as a receipt a warrant which is encashable 180 days after the deposit has been made. If that does not make business sense to the Government, we will never get anything out of them.
  Therefore, in the most serious plea that I can make to the Minister of State, I hope that he will accept the principle, if not the wording, of the Amendment. I am not necessarily a Parliamentary draftsman. If the hon. and learned Gentleman assures us that he will deal with the matter on Report, I am willing to accept his assurance. What we want is the principle. I believe that it makes sense. It is what industry, commerce and the small trader would like and I
  1376
  am certain that it would be sensible for the Civil Service, because it would be bound to cut down a considerable amount of its work.
  [MR. SYDNEY IRVING in the Chair]
  Mr. Michael Shaw: I support as strongly as I can both the Amendment moved by my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) and Amendment No. 97 of my hon. Friend the Member for Honiton (Mr. Emery). It is essential to have certainty about the time of repayment of the deposit. Here again we come down in particular to the smaller company.
  During the last few years of almost continuous credit squeeze, time and time again one has seen the smaller companies faced with additional demands for cash resources in one way or another because of the greatly extended credit which has been taken generally by trade, working on very narrow margins between their bank balance and their limit with the bank, having to budget carefully every month to keep within the limit. If even Government money which is owed to them on a specific date cannot be guaranted to them on that date, there will be trouble in many businesses.
  A typical example has been the switching over of the Selective Employment Tax to computer repayments. They have not been coming through on the dates specified but many companies have relied on receiving the money on a given date. When it has not come through by the end of the month, they have had to do a lot of explaining to their bank managers. Those sums, however, are nothing like the amounts which could be paid by way of import deposits.
  Mr. Emery: Would my hon. Friend continue his argument by saying that where repayment has not come by the automatic procedure and somebody then has to claim for it, the repayment does not appear in 24 or 48 hours but is delayed sometimes for weeks or months? That is something that we could avoid by the Amendment.
  Mr. Shaw: There are all sorts of possibilities which could lead to embarrassment, particularly for the smaller firm. What we must provide—the right is built

  1377
  into the Bill, and we are trying to protect that right—is that the money comes automatically into the hands of those who have paid the deposit at the time when it has been promised. I therefore wholeheartedly support these Amendments and plead with the Minister of State to give them the utmost sympathetic consideration.
  Mr. Nott: There are four possible ways in which the money can be repaid. First. there is the method which, I understand, exists as the Bill is drafted, that form C139 can be used as evidence of the creditworthiness of the importer. Secondly, the Minister of State has said that he will consider whether something can be worked into that procedure to enable Form C139 to have some assignability so that it can be lodged as collateral security and the persons lending the money will know that they are entitled to receive payment when it is due.
  Thirdly, there is the system under the Amendment, namely, a form of certificate of deposit under which a document would be created payable forthwith on the due date. The objection of the Minister of State to this will be one objection which he had to the so-called negotiable instrument referred to in a previous Amendment, namely, that if a certificate of deposit is created, money will be drawn out of the market which would otherwise be lent to the Government. I think that this would be an admirable solution, and I can think of nothing better than a system which would divert money on the gilt-edged market which is now being lent to the Government to finance the private sector.
  Mr. Michael Shaw: There is one other argument, the question of what happens if the date of repayment is short.
  Mr. Nott: In that case there is a fourth alternative, and that is the suggestion that the document should be a full-blooded negotiable instrument, the same as a Treasury Bill, to count as part of the liquidity of the banks, which could be lodged as collateral with the Bank of England and would therefore expand the credit base.
  In replying on the previous Amendment the Minister of State implied that a negotiable instrument was unacceptable to the Treasury as it would increase liquidity in
  1378
  the economy. In my view the certificate of deposit does not increase liquidity in the economy, since it cannot be lodged as collateral with the banks. When last year the Chief Secretary to the Treasury introduced the Clause in the Finance Bill on certificates of deposit he made it clear that this was an acceptable development because the sterling certificate of deposit does not expand the credit base.
  The only possible objection by the Treasury is that money which would otherwise be lent to the Government might now be diverted into certificates of deposit and, in effect, lent to the private sector. I fully support the Amendment, because this is a highly desirable objective. The Government are able to borrow money on the gilt-edged market far too freely, and I fully support any Amendment which would prevent them doing so.
  Mr. Alison: I wish to elaborate on Amendment 12, dealing with sterling certificates of deposit. It follows on logically from the series of Amendments to which the Minister of State has already directed his mind. In the proposal for sterling certificates of deposit we are putting before the Minister of State an idea which already bears the imprimatur of the Government's approval, since it was a feature of the 1968 Finance Bill.
  If the form of words relating to the sterling certificate of deposit is accepted, this is what I understand will happen, the deposit will come to the Customs and Excise with his deposit of £50,000. I mention this sum since it is the minimum sum for which a sterling certificate of deposit is available. On receiving the £50,000, the Customs and Excise will make available through the banking system a sterling certificate of deposit for the equivalent amount. I ask the Minister of State to bear in mind that when the importer has deposited his £50,000 with Customs and Excise and Customs and Excise have, through the banking system made available to him a sterling certificate of deposit, from the Government's point of view that £50,000 is now tied up and the liquidity has to that extent been immobilised or frozen. The advantage of the sterling certificate of deposit from this moment on is that, while the Government remain in the position of having had this amount of liquidity immobilised, the individual importer, because he is holding a recognised and

  1379
  authorised bearer negotiable instrument, can walk out into the market, discount it and get his own money back. But he will only get it back from another saver, so that there is thereby no extra liquidity injected into the system.
  I hope that the Minister of State will bear in mind that this is a perfectly reasonable proposal which ensures that the same amount of liquidity is frozen but that the saving effect is achieved by people who want to save and not people who have been forced to save. There will always be some companies which have liquid funds against a Bill coming in and which are happy to buy these certificates of deposit off the individual importer. It leads to a freezing of the market and the most rational use of resources. In addition, the Government's purpose in securing the freezing of liquidity remains intact.
  I want to remind the Minister of State of two key comments of his hon. Friend the Financial Secretary about the idea behind the sterling certificate of deposit. On Second Reading, he said:
  "… what is intended to happen, is that a man who really must have the import will go to the inconvenience and modest expense required to obtain finance."
  All that the Financial Secretary envisaged for the importer was some inconvenience and modest expense. I suggest that a sterling certificate of deposit amply meets those criteria. It is moderately inconvenient because he has to discount it and suffer the modest expense of losing the interest on the money if he discounts it before it matures.
  The Financial Secretary's other comment was to make it clear that the idea was not to immobilise importers and make it impossible for them to obtain their finance. He said:
  "It will, of course, be said that people can borrow to cover the deposits that are required and that they may borrow at home and abroad. This was perfectly well taken into account and foreseen by the Government. If people borrow at home, they will be mopping up liquidity which would be available to finance other consumption."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 752–60.]
  That is what happens with the sterling certificate of deposit. He recognises that people can borrow from other people and is happy that they should do it.
  1380
  All that we propose in the sterling certificate of deposit is that there is an open, above board and recognised fashion by which the person who wants to save at a given moment is able to do so and the person who wants his liquidity at a given moment is able to do so by discounting these certificates.
  I want the Minister of State to confirm categorically that it is the aim and object of the Government not to immobilise the funds in the hands of importers but merely to make it more inconvenient for them. We want to be sure that he is not trying simply to force importers to lodge millions of £s worth of their assets for six months.
  As we understand the scheme, the Government intend that there should be a reasonable let out. These sterling certificates of deposit will have that effect. I hope that the Minister of State will not tell us, as he tried to do on the basis of the assignable instruments which we discussed earlier, that sterling certificates of deposit are in danger of adding to the liquidity of the system.
  The recent issue of "The Barclays Bank Review", dealing with this question of liquidity and sterling certificates of deposit, said:
  "They will not be eligible at the Bank of England as security or as margin for advances to the discount market. The bank will neither discount nor purchase C.D.s either on its own initiative or, if they are tendered to it, on the initiative of the discount market. The Bank of England will not regard C.D.s held by clearing banks as liquid assets for the purpose of the agreed liquidity ratio."
  It is clear that not only do the sterling certificates effectively tie up liquidity as the Government wish for six months, although they tie it up in the hands of those who want it tied up, but at the same time they have no effect on the liquid basis of the joint stock banks or of the wider banking system. The Government cannot disallow this proposal on the basis of adding to liquidity.
  The Minister of State must bear in mind that the Government are squeezing importers more severely in reality than they claim to be doing in their overt statement. The Chancellor, on Friday, 22nd November, when he announced these Measures, said two things which do not marry up. He told us that the joint stock banks, the London clearing banks and the Scottish banks would have

  1381
  to reduce their advances by £100 million. He went on, almost in the same breath, as we have been reminded by the Minister of State this evening, to point out that the deposits required by the Customs and Excise would run at the rate of £100 million a month. He is taking £100 million out of bank credit, on the one hand, and is trying to press £600 million into bank credit, on the other. It will not in fact fit into that source of credit. The Financial Secretary said that there is no intention of making life unbearable, so why are we not to be given the sort of let out provided by C.D.S?
  I remind the Minister of State that the squeeze on the banks will be more severe than he pretends. Barclays Bank says that it proposes to call in up to £50 million worth of advances in response to the Chancellor's squeeze, and they represent merely a quarter of the advances of the London clearing banks. I believe that overall their restrictions will run into £200 million. I believe that the Government must give some flexibility and the c.d.s should do that without harm to the scheme. May we have a positive and constructive reply?
  Mr. A. G. F. Hall-Davis: My hon. Friends have spoken mainly about the financial aspects of these Amendments. Briefly, I should like to refer to the administrative aspects.
  We have heard that the purpose of the enactment is to mop up liquidity and to restrict credit. I hope that the Minister of State will make it clear that the object of the Bill is not to mop up manpower. We have enough people engaged in a form of bureaucratic occupation in the economy at present as a result of the various statutes of this Government. It would be a great pity if this number was further increased unnecessarily by the method of operation of the Bill.
  We had an interesting exchange on this point on Second Reading. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin), with his usual acumen, referred to the Prime Minister's undertaking that future Bills should include any forecasts of changes in the non-industrial and industrial staff in Government Departments. This drew from the Minister of State, who I under-
  1382
  stand will be replying, the fact that some 250 members of the Customs and Excise would be drawn into the operation of the Bill. I do not suppose that I could draw the Minister of State into giving an estimate of the number of staff in the private sector who would be drawn into the operation of the Bill who were not previously required for this type of activity, but I suspect it may be very large.
  I think it likely that many firms and offices not normally concerned with import documentation will feel the administrative impact of the Bill. This is another reason why, wherever possible, the administrative aspects should be made simple. I suggest that if Amendment No. 6 is accepted it might help companies and enterprises to decide what system of documentation to initiate to ensure that their credit, extended for the Government, is not for one day longer than it need be. This might help them to devise a simpler system, without so many checks and counterchecks as will be necessary otherwise. I hope that not only when discussing this Amendment, but generally in the Bill, the Minister of State and his colleagues at the Treasury will pay attention to making the administrative burden on the private sector as light as possible. I hope that the Minister will consider this series of Amendments with that in mind as well as the financial aspects.
  Mr. Taverne: Perhaps I might refer, first, briefly to the question of the sterling certificates of deposit. On the last Amendment—and it is really with very much the same subject that the hon. Member for Barkston Ash (Mr. Alison) was concerned—I said that the main aim of the Government was to reduce liquidity, and that we would therefore look at the question of the assignments which would not necessarily have a great impact on liquidity as a way in which the question of borrowing could be dealt with, and the same would apply to the sterling certificates of deposit.
  The hon. Member for Honiton (Mr. Emery) should not read too much into what I have said. I have made it clear that I shall look at the question again with an oven mind. I have not committed the Government to implementing the kind of Amendment which was put

  1383
  forward. We have to look at the questions which have been raised in the debate. We also have to look at how this will affect the automatic payment of the deposits, with which Amendment No. 6 is concerned. It is the desire of all concerned that these payments should be made automatically, and we would not wish to introduce anything which would make it more difficult, or which would attract more manpower, to secure this automatic repayment. All these questions will have to be gone into.
  The objection to the form of the Amendment put forward by the hon. Member for Honiton is that again one is in the realm of negotiable instruments. This is something which I rejected, and it will not be in our review when we look at the question of assignments.
  The real question is whether one should insert words of the kind asked for by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin). There is no dispute about the aim. Hon. Gentlemen opposite and the Government want to ensure that these deposits are repaid on the dot, and that there is no delay. It is not like the cases in the past where there have been delays by Customs. There have been disputed cases. In this kind of case there will be no difficulty, or at least one cannot foresee any difficulty, in deciding when, and to whom, this particular deposit will be repayable. It is not like those other cases, as I think the hon. Member for Wanstead and Woodford appreciated, where there have been disputes and delays. As I read the Clause, I do not see that anything of value will be added if one inserts the words "forthwith and without demand" because it is clear that this will have to be repaid at the end of the 180 days.
  As I said to the Committee before, the repayment system is intended to be worked by means of control forms which will be filled up at the time the deposit is paid. The lower part of the form, C139, which bears the name and address of the person paying the deposit, will be converted by means of a special overprinting machine into a repayment document. It is in any event intended to make this into the repayment document. These forms will be filled in in date sequence, and repayment will be posted
  1384
  in time to reach the recipient by the 180th day.
  The trader will not need to apply for repayment. I can give a complete assurance to the Committee that there will be no such need. There will be automatic repayment, which will reach the person by the 180th day and the addition of the word "forthwith" might even add some uncertainty, because even last week there was some discussion about what it meant. It would be much better to leave the wording as it stands, with the clear obligation that repayment must be made after 180 days.
  Mr. Emery: I must press the hon. and learned Gentleman on this point so that he can help the Committee. If, due to Government error, repayment is not made available to the company after 180 days, will the Government undertake to be responsible for the interest on the money due to their error, when the money is not received by the person making the deposit?
  Mr. Taverne: I shall consider the question whether provision should be made if repayment is late. I do not think that the hon. Member is worried about its being one day late. If the scheme and the law are to be complied with, there will have to be repayment by the Government after the 180 days and there is every intention that this will be part of the automatic process. The care that we must exercise in considering the question of assignment is to see that this automatic process is not interfered with. I agree that it is vital that this period of 180 days shall not even be a period of 181 days.
  Mr. John Wells: In cases where a unit is assigned to a third person, will the 180 days apply to the third person without any fault or fail?
  Mr. Taverne: I do not believe that the hon. Member was present when we discussed the last series of Amendments. The question of assignment is one which we shall re-examine. No specific undertaking has been given that we shall provide for assignment, but we must ensure that the automatic principle is not infringed.
  Mr. Alison: Are we to understand by the Minister's helpful indication that he

  1385
  will again consider the question of assignment and, by implication, negotiability? Do we understand that the Government accept in principle that the concept of the burden of lending to the Government being transferred from shoulders which do not wish to bear it, namely, the importer, to shoulders which may be willing to bear it, the intermediate lender, has been accepted, and that this principle will
  1386
  be followed through, provided that it does not lead to extra liquidity?
  Mr. Taverne: I do not go back on anything that was said by my hon. Friend the Financial Secretary. This is a form of credit selection which works through the importer, and in the first place it is the importer who will have to find the money.
  Sir D. Glover: I do not know about my hon. Friends, but I thought that that reply was most unsatisfactory. I thought that the hon. and learned Gentleman would thank my hon. Friend the Member for Honiton (Mr. Emery) for his Amendment and accept it without any further argument. I cannot see why he has to say that he will take it back and consider the question of negotiability. So long as the Government do not increase credit rates it does not make a ha'p'orth of difference to the Government whether the deposit is paid to a third or fourth party at the end of six months.
  If the Amendment were accepted it would cut down 75 per cent. of the administration. It would make it far easier for people to organise this scheme. Some hon. Members have talked about depositors with £50,000, but the sort of people that I visualise will get into serious trouble over these import deposits. After listening to the Government we would be far wiser to call them credit deposits. It is really a credit deposit, since it has little to do with imports. The importers who will face serious difficulty are not those who can put down £10,000, £50,000 or £100,000, but the small manufacturer importing one component, a replacement for his machinery, on which he would have to put down £1,000 or £2,000. He has no creditability at all. He will be prepared, because he has to have that component, to sell his £1,000 deposit for £900 or even £800. He will not have that creditability to borrow that money on the open market.
  10.30 p.m.
  But if the Chancellor would allow this to be a negotiable security, the difficulty would be removed. The Government do not seem to appreciate that, if the money has to be paid to the original depositor, people who do not know much about the small firms will not help to finance the deposit. By allowing a negotiable bond to be arranged, the Government would overcome the Customs administration and this great difficulty for small people. The Minister of State gave us little assurance that the Government were seized of the urgency of this problem and would deal with it before Report.
  Mr. Nott: The Minister of State dealt very lightly with the possibility of the payment arriving a day late, which is conceivable when we know that the mails cannot be relied upon. Therefore, when considering the form and the assignability on it, he must give the depositor the option of getting his money back by a banker's payment, so that he knows he will get it on the due date and will not have to rely on the mail. Sums of £100,000 or £200,000 may be involved and it is not good enough to hope that the mail will arrive on the due date.
  Mr. Emery: The Minister of State dealt with my points in cavalier fashion. He entirely set aside the efficiency point, of ensuring that there are not two sets of documents issued by the Commissioners, one being the warrant. If he wants to hold the increase in the Civil Service to 250, he must accept my Amendment immediately.
  I was most concerned that he seemed to misunderstand the fact that a day late, on £600 million, could mean an expense of £120,000 or £130,000. That may not mean very much to the Minister, but it certainly does to industry and commerce, and particularly to the small firm.
  If the Government are so sincere and so desolate, and do not want to see anything go wrong, if they want to be sure that payment shall be on the correct date, why do they not give an undertaking that if payment is late they will be responsible for paying the consequent interest? If they mean all they say, let them put their faith in the efficiency of their administration, and say: "If anything goes wrong, we must pay the cost." Why must industry always have to pay the cost—why must it always be the importer? The Minister should give the Committee a much fuller answer than we have so far had.
  Mr. A. P. Costain: Is not the right answer to give a Post-dated order at the time the deposit is made? Would not that meet the problem?
  Mr. Emery: That is really what my Amendment seeks.
  Mr. G. B. Drayson: I am astonished that the Minister of State should even suggest that these payments

  1389
  might be late. When he was talking about automatic repayment, he said: "This is something which will hive to be gone into". Is he telling the House that the Bill has been brought before us without the Government having gone into the question of how repayment is to be made?
  Mr. Taverne: I do not know whether the hon. Gentleman was present during our debate on the previous group of Amendments, but the point was made that we would look at the question of whether or not these receipts should be made assignable. On automatic repayment, I said that we would like to look at the possibility of assigning the receipts. As the scheme stands, there is no doubt that the repayment will be automatic.
  Mr. Drayson: The chance of a person receiving his repayment late can be guarded against by making certain that the documents arrive several days, if not weeks, early, and bear the date on which repayment is due. If payment is made in the form of post-dated cheques, there is no question of their arriving late. I am sorry if I misunderstood the hon. and learned Gentleman on the question of automatic payment.
  Mr. Patrick Jenkin: We have had a good debate on this series of Amendments, and perhaps we should draw it to a close. I say at once that the Minister has gone some way to meeting some of the points we have made. We particularly note his unequivocal statement about the date and the immediacy of repayment, and the fact that the deposits will be repaid without demand. I have no doubt that traders will take comfort from what he has said.
  In passing, I point out that lie said that it would have to be repaid. The words in the Bill are "become repayable", and a number of people have thought that this might be one of those things known to the law as debitum in praesenti solvendum nunquam, which I translate as money which is owed but which never is actually paid. It is therefore right that we should have had the reply we got on that point.
  The Minister of State paid scant respect to the varied points made by my hon. Friends the Members for Honiton (Mr. Emery) and Barkston Ash (Mr. Alison). It is perfectly clear that the Amendment tabled by my hon. Friend the Member for Honiton does not enter into the realms of negotiability at all, but deals purely with the question of assignability. The Minister has said that he will look at that point, but he might perfectly well have said that he would examine it in relation to this particular form of machinery. My hon. Friend made clear that he looked on this Amendment primarily as machinery to simplify administration.
  As to the argument about certificates of deposit, my hon. Friend the Member for Barkston Ash made a very convincing case which went a long way to meet any reasonable objection the Government might have. While recognising that the Minister of State has gone some way, we nevertheless regard these matters of sufficient importance as to advise my hon. Friends to put down a marker and to vote for this Amendment.
  Question put, That that Amendment be made:—
  The Committee divided: Ayes 164, Noes 232.

  Division No. 19.]

  AYES

  [10.41 p.m.

  Alison, Michael (Barkston Ash)

  Boyd-Carpenter, Rt. Hn. John

  Dance, James

  Allason, James (Hemel Hempstead)

  Brewis, John

  Davidson, James (Aberdeenshire, W.)

  Astor, John

  Brinton, Sir Tatton

  d'Avigdor-Goldsmid, Sir Henry

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

  Bromley-Davenport, Lt.-Col. Sir Walter

  Dean, Paul

  Awdry, Daniel

  Brown, Sir Edward (Bath)

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

  Baker, Kenneth (Acton)

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

  Digby, Simon Wingfield

  Baker, W. H. K. (Banff)

  Buck, Antony (Colchester)

  Donnelly, Desmond

  Beamish, Col. Sir Tufton

  Bullus, Sir Eric

  Doughty, Charles

  Bennett, Sir Frederic (Torquay)

  Burden, F. A.

  Drayson, G. B.

  Bennett, Dr. Reginald (Got. & Fhm)

  Campbell, B. (Oldham, W.)

  Eden, Sir John

  Berry, Hn. Anthony

  Carlisle, Mark

  Elliot, Capt. Walter (Carshalton)

  Biffen, John

  Clegg, Walter

  Emery, Peter

  Biggs-Davison, John

  Cooke, Robert

  Errington, Sir Eric

  Birch, Rt. Hn. Nigel

  Cooper-Key, Sir Neill

  Eyre, Reginald

  Black Sir Cyril

  Corfield, F. V.

  Farr, John

  Blaker, Peter

  Costain, A. P.

  Fletcher-Cooke, Charles

  Boardman, Tom (Leicester, S.W.)

  Currie, G. B. H.

  Fortescue, Tim

  Body, Richard

  Dalkeith, Earl of

  Foster, Sir John

  Gibson-Watt, David

  Maddan, Martin

  Scott, Nicholas

  Gilmour, Sir John (Fife, E.)

  Maginnis, John E.

  Scott-Hopkins, James

  Glover, Sir Douglas

  Marten, Neil

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

  Godber, Rt. Hn. J. B.

  Maude, Angus

  Smith, Dudley (W'wick & L'mington)

  Gower, Raymond

  Maxwell-Hyslop, R. J.

  Smith, John (London & W'minster)

  Grieve, Percy

  Mills, Peter (Torrington)

  Speed, Keith

  Griffiths, Eldon (Bury St. Edmunds)

  Mills, Stratton (Belfast, N.)

  Stainton, Keith

  Hall, John (Wycombe)

  Miscampbell, Norman

  Steel, David (Roxburgh)

  Hall-Davis, A. G. F.

  Mitchell, David (Basingstoke)

  Stodart, Anthony

  Hamilton, Lord (Fermanagh)

  Montgomery, Fergus

  Stoddart-Scott, Col. Sir M.

  Hamilton, Michael (Salisbury)

  More, Jasper

  Summers, Sir Spencer

  Harrison, Brian (Maldon)

  Morgan, Geraint (Denbigh)

  Taylor, Sir Charles (Eastbourne)

  Harvie Anderson, Miss

  Morrison, Charles (Devizes)

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

  Hawkins, Paul

  Munro-Lucas-Tooth, Sir Hugh

  Temple, John M.

  Hay, John

  Murton, Oscar

  Thatcher, Mrs. Margaret

  Heald, Rt. Hn. Sir Lionel

  Nabarro, Sir Gerald

  Thorpe, Rt. Hn. Jeremy

  Heseltine, Michael

  Nott, John

  Tilney, John

  Higgins, Terence L.

  Onslow, Cranley

  van Straubenzee, W. P.

  Hiley, Joseph

  Orr, Capt. L. P. S.

  Vaughan-Morgan, Rt. Hn. Sir John

  Hill, J. E. B.

  Osborn, John (Hallam)

  Vickers, Dame Joan

  Holland, Philip

  Page, Graham (Crosby)

  Waddington, David

  Hordern, Peter

  Page, John (Harrow, W.)

  Walker-Smith, Rt. Hn. Sir Derek

  Hornby, Richard

  Pardoe, John

  Wall, Patrick

  Howell, David (Guildford)

  Peel, John

  Walters, Dennis

  Hutchison, Michael Clark

  Ward, Dame Irene

  Iremonger, T. L.

  Percival, Ian

  Weatherill, Bernard

  Jenkin, Patrick (Woodford)

  Peyton, John

  Webster, David

  Joseph, Rt. Hn. Sir Keith

  Pike, Miss Mervyn

  Wells, John (Maidstone)

  Kershaw, Anthony

  Price, David (Eastleigh)

  Whitelaw, Rt. Hn. William

  Kitson, Timothy

  Prior, J. M. L.

  Williams, Donald (Dudley)

  Lancaster, Col. C. G.

  Pym, Francis

  Wilson, Geoffrey (Truro)

  Legge-Bourke, Sir Harry

  Quennell, Miss J. M.

  Winstanley, Dr. M. P.

  Lewis, Kenneth (Rutland)

  Renton, Rt. Hn. Sir David

  Wolrige-Gordon, Patrick

  Lubbock, Eric

  Rhys Williams, Sir Brandon

  Woodnutt, Mark

  McNair-Wilson, Patrick

  Ridley, Hn. Nicholas

  Wright, Esmond

  MacArthur, Ian

  Ridsdale, Julian

  TELLERS FOR THE AYES:

  Maclean, Sir Fitzroy

  Royle, Anthony

  Mr. R. W. Elliott and

  Macmillan, Maurice (Farnham)

  Russell, Sir Ronald

  Mr. Hector Munro

  NOES

  Abse, Leo

  Davies, Ifor (Gower)

  Hamilton, James (Bothwell)

  Albu, Austen

  Delargy, Hugh

  Hamling, William

  Allaun, Frank (Salford, E.)

  Dell, Edmund

  Hannan, William

  Alldritt, Walter

  Dempsey, James

  Harper, Joseph

  Allen, Scholefield

  Dewar, Donald

  Harrison, Walter (Wakefield)

  Anderson, Donald

  Diamond, Rt. Hn. John

  Hart, Rt. Hn. Judith

  Atkins, Ronald (Preston, N.)

  Dickens, James

  Haseldine, Norman

  Atkinson, Norman (Tottenham)

  Dobson, Ray

  Hattersley, Roy

  Bagier, Gordon A. T.

  Doig, Peter

  Hazeil, Bert

  Barnes, Michael

  Dunn, James A.

  Hefter, Eric S.

  Bence, Cyril

  Dunnett, Jack

  Henig, Stanley

  Bidwell, Sydney

  Dunwoody, Mrs. Gwyneth (Exeter)

  Herbison, Rt. Hn. Margaret

  Binns, John

  Eadie, Alex

  Hilton, W. S.

  Bishop, E. S.

  Edelman, Maurice

  Hobden, Dennis

  Blackburn, F.

  Edwards, Robert (Bilston)

  Horner, John

  Boardman, H. (Leigh)

  Edwards, William (Merioneth)

  Howarth, Harry (Wellingborough)

  Booth, Albert

  Ellis, John

  Hoy, James

  Boston, Terence

  English, Michael

  Hughes, Emrys (Ayrshire, S.)

  Boyden, James

  Ennals, David

  Hughes, Roy (Newport)

  Braddock, Mrs. E. M.

  Ensor, David

  Hunter, Adam

  Bray, Dr. Jeremy

  Evans, Fred (Caerphilly)

  Hynd, John

  Brooks, Edwin

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

  Irvine, Sir Arthur (Edge Hill)

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

  Ewing, Mrs. Winifred

  Jackson, Peter M. (High Peak)

  Buchan, Norman

  Faulds, Andrew

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

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

  Fernyhough, E.

  Jenkins, Hugh (Putney)

  Callaghan, Rt. Hn. James

  Fitch, Alan (Wigan)

  Jenkins, Rt. Hn. Roy (Stechford)

  Cant, R. B.

  Fletcher, Rt. Hn. Sir Eric (Islington, E.)

  Johnson, Carol (Lewisham, S.)

  Carter-Jones, Lewis

  Fletcher, Ted (Darlington)

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

  Chapman, Donald

  Foley, Maurice

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

  Coe, Denis

  Foot, Michael (Ebbw Vale)

  Jones, J. Idwal (Wrexham)

  Coleman, Donald

  Forrester, John

  Jones, T. Alec (Rhondda, West)

  Conlan, Bernard

  Fowler, Gerry

  Kenyon, Clifford

  Corbet, Mrs. Freda

  Fraser, John (Norwood)

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

  Crawshaw, Richard

  Freeson, Reginald

  Kerr, Dr. David (W'worth, Central)

  Crosland, Rt. Hn. Anthony

  Gardner, Tony

  Lawson, George

  Cullen, Mrs. Alice

  Garrett, W. E.

  Leadbitter, Ted

  Dalyell, Tam

  Gordon Walker, Rt. Hn. P. C.

  Lee, Rt. Hn. Frederick (Newton)

  Davidson, Arthur (Accrington)

  Gray, Dr. Hugh (Yarmouth)

  Lever, Harold (Cheetham)

  Davies, Ednyfed Hudson (Conway)

  Greenwood, Rt. Hn. Anthony

  Lever, L. M. (Ardwick)

  Davies, G. Elfed (Rhondda, E.)

  Gregory, Arnold

  Lewis, Arthur (W. Ham, N.)

  Davies, Dr. Ernest (Stretford)

  Grey, Charles (Durham)

  Lewis, Ron (Carlisle)

  Davies, Harold (Leek)

  Griffiths, Eddie (Brightside)

  Lomas, Kenneth

  Griffiths, Will (Exchange)

  Loughlin, Charles

  1392

  1393

  Lyon, Alexander W. (York)

  Oakes, Gordon

  Snow, Julian

  Lyons, Edward (Bradford, E.)

  O'Malley, Brian

  Spriggs, Leslie

  Mabon, Dr. J. Dickson

  Oram, Albert E.

  Steele, Thomas (Dunbartonshire, W.)

  McBride, Neil

  Orme, Stanley

  Stonehouse, Rt. Hn. John

  McCann, John

  Oswald, Thomas

  Strauss, Rt. Hn. G. R.

  MacColl, James

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

  Summerskill, Hn. Dr. Shirley

  Macdonald, A. H.

  Owen, Will (Morpeth)

  Swain, Thomas

  McGuire, Michael

  Page, Derek (King's Lynn)

  Swingler, Stephen

  McKay, Mrs. Margaret

  Palmer, Arthur

  Taverne, Dick

  Mackenzie, Gregor (Rutherglen)

  Pannell, Rt. Hn. Charles

  Tinn, James

  Mackintosh, John P.

  Park, Trevor

  Urwin, T. W.

  Maclennan, Robert

  Parker, John (Dagenham)

  Varley, Eric G.

  McMillan, Tom (Glasgow, C.)

  Parkyn, Brian (Bedford)

  Walker, Harold (Doncaster)

  MacPherson, Malcolm

  Pavitt, Laurence

  Wallace, George

  Mahon, Peer (Preston, S.)

  Peart, Rt. Hn. Fred

  Watkins, David (Consett)

  Mahon, Simon (Bootle)

  Pentland, Norman

  Watkins, Tudor (Brecon & Radnor)

  Manuel, Archie

  Perry, George H. (Nottingham, S.)

  Weitzman, David

  Mapp, Charles

  Prentice, Rt. Hn. R. E.

  Wells, William (Walsall, N.)

  Marks, Kenneth

  Price, Christopher (Perry Barr)

  Whitaker, Ben

  Marsh, Rt. Hn. Richard

  Price, William (Rugby)

  Whitlock, William

  Mulish, Rt. Hn. Robert

  Probert, Arthur

  Wilkins, W. A.

  Mondelson, John

  Rees, Merlyn

  Willey, Rt. Hn. Frederick

  Mikardo, Ian

  Richard, Ivor

  Williams, Alan (Swansea, W.)

  Millan, Bruce

  Roberts, Albert (Normanton)

  Williams, Alan Lee (Hornchurch)

  Milne, Edward (Blyth)

  Roberts, Gwilym (Bedfordshire, S.)

  Williams, Clifford (Abertillery)

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

  Rodgers, William (Stockton)

  Williams, W. T. (Warrington)

  Morgan, Elystan (Cardigarshire)

  Roebuck, Roy

  Wilson, Rt. Hn. Harold (Huyton)

  Morris, Alfred (Wythenshawe)

  Rose, Paul

  Wilson, William (Coventry, S.)

  Morris, Charles R. (Openshaw)

  Ross, Rt. Hn. William

  Winnick, David

  Moyle, Roland

  Rowlands, E.

  Woodburn, Rt. Hn. A.

  Mulley, Rt. Hn. Frederick

  Shaw, Arnold (Ilford, S.)

  Woof, Robert

  Murray, Albert

  Sheldon, Robert

  Wyatt, Woodrow

  Neal, Harold

  Silkin, Rt. Hn. John (Deptford)

  Newens, Stan

  Silkin, Hn. S. C. (Dulwich)

  TELLERS FOR THE NOES:

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

  Silverman, Julius

  Mr. Ernest Armstrong and

  Norwood, Christopher

  Skeffington, Arthur

  Dr. M. S. Miller.

  Mr. John Smith: I beg to move Amendment No. 7, in page 1, line 19, leave out '180' and insert '90'.
  The Chairman: With this Amendment we may discuss the following three further Amendments:
  No. 8, in page 1, line 19, after 'days' insert:
  ', or such shorter period as the Treasury may by order made by statutory instrument provide'.
  No. 9, in page 1, line 20, after 'paid', insert:
  ', or a bond for the deposit given'.
  No. 80, in page 1, line 20, after 'paid', insert:
  'or on the 27th November 1969 (whichever shall be the earlier)'.
  If the Committee wishes, we may have a Division on Amendment No. 9.
  Mr. John Smith: I am still in as much of a fog about the exact aim of the Bill as I expect you are, Mr. Irving. I suspect that the Treasury bunch are in the position which I have sometimes been in as a banker—they do not know for certain what they are doing, but they think that they know how to do it. We have been told by the Chancellor himself that this is to be a selective squeeze against importers. When we ask, with
  1394
  some anxiety, whether some importing firms will go bankrupt—as they certainly should if it is that sort of squeeze—we are told that they will be able to borrow easily against deposit receipts. That has been said several times, including today.
  When we ask whether the deposit receipts are to be assignable or negotiable so that importers can in fact borrow against them, we are told "No"—we must remember that the scheme is intended to restrain the liquidity of importers. We are told that importers will be encouraged to borrow abroad but how can they if they cannot give a security over their deposit receipts. Form 139 is no evidence of creditworthiness; it merely means that a man has assets, excellent assets, no doubt, but he may have enormous liabilities as well.
  Even if the receipts were absolutely freely negotiable, which we are told they are not to be, this would still be a squeeze because it would convert cash into money at six months. It has been correctly said already that, whatever happens to them, these deposit receipts will not be in the nature of bank bills. They would be, if they were freely negotiable, simply in the nature of trade bills, so it would still be a squeeze of a sort.
  The Chairman: Order. I am having difficulty in relating what the hon. Gentleman is saying to the Amendments. I understand that the one he is moving refers to a question of shortening the period.
  Mr. J. Smith: It is going to be all right, Mr. Irving. because 90 days, which is the period that I seek to insert, is the period of a trade bill or bank bill, to which I am perhaps too gradually, coming.
  Even if the squeeze is applied with full rigour—if the whole £600 million or £700 million comes straight out of the pockets of the importers and goes straight into the Bank of England and remains there, and there is no borrowing against it, it will still not withdraw cash from the system for very long. It will simply help the Government over their next funding operation. Therefore, it should be accepted that the receipts can be borrowed against. Now if money is to be borrowed it is much better that it should be borrowed against something with a currency of 90 days than 180 days. Ninety days is a well-known, commonly accepted period for the financing of imports; 180 days is not.
  It is true that one can get a credit for 180 days through an acceptance house, by arranging that one's 90 day bill will be renewed. Nevertheless, a six-month period is a very tiresome thing, and a 90-day period is absolutely acceptable in all circles all over the world. Such a thing fits perfectly into our financial system.
  An additional reason for making the Amendment has emerged from our discussions. We have in effect been trying today to devise a new financial instrument, and that is very difficult. It cannot be done in one afternoon. It would probably take a Bill of its own, and a lot of case law. For example, we have been talking about the making of payments late.
  What would the Minister say about the idea of paying a bill of exchange a day late? There was talk of posting cheques to people, and that at a time when the Government had introduced, to their great credit, the Giro system, which is an up-to-date and flexible method of making payment. The whole
  1396
  discussion about payment was steam-age stuff. The Government had much better accept that the deposit receipts should in effect be 90-day trade bills of exchange. They will then be a form of squeeze on importers that everybody understands and which will not take a moment of explanation. They will be absorbed into the system, but will be a squeeze nevertheless. The Government will in this way also have what in their rather split way, they want—a simultaneous general squeeze on liquidity.
  It is for that reason that I propose that we leave out 180 and insert 90. In case that is too categorical and unacceptable, I have also put down Amendment No. 8, to enable the Government to shorten the period from 180 days should they ever wish to do so. If we are to have this completely untried expedient, it is very foolish for the Government to tie their hands as to the period and to leave themselves no flexibility. They have a flexibility with the rate, but it would be as well to have flexibility with the period as well, so that they can either reduce the impact of the scheme or, if it appears desirable, can make these deposit receipts conformable to the existing financial system, which depends on the 90-day bill.
  11 p.m.
  Mr. McNair-Wilson: I support my hon. Friend for the Cities of London and Westminster (Mr. John Smith). We put down this Amendment because so far we have had an unconvincing answer from the Financial Secretary on the reasons for the 50 per cent. deposit. He was unable to satisfy us as to why that figure was arrived at.
  We are now in the presence of another situation where the Government will have to give us a clear indication of why they have settled on 180 days and not another period. I fear that we are making slow progress with this Bill, but this is largely due to the Government's intransigence.
  We are assured that there is no intention of ruining companies, and here is a reasonable Amendment suggesting that we should try, to some extent at least, to lessen the burden on import companies. We are asking the Government to realise that this sensible Amendment will make it possible for a number of small

  1397
  companies who will be hit by this legislation to find the money more easily and to pay interest over a shorter period. If we can look at the 90 days in the concept of keeping down costs to the people of this country, if we can keep down interest, we shall help to solve this problem. This is important to many companies with goods in transit. I know that a later Amendment covers this point, but many companies will find themselves with goods on the high seas for which they will have to pay a deposit. If they could have this relief it would go a long way to mitigating their situation.
  A small company which is an importer of high capital cost goods is, as the Bill stands, likely to have to find large sums of money. If we can get the Government to accept this Amendment, so that they have to find the money only for 90 days instead of 180, we would go some way towards meeting a valid point.
  Mr. Tom Boardman: I support this Amendment for the reasons given by my hon. Friends the Members for the Cities of London and Westminster (Mr. John Smith) and the New Forest (Mr. McNair-Wilson). I support it, too, because of what we have been told tonight about the problems which will face importers, particularly small ones, of raising capital. I shall confine myself to Amendment No. 80 which is in my name and is being discussed at the same time. This puts a term on the period for repayment, to provide that it shall be after 90 days, as I hope, or 180 days as the Bill stands. or 27th November, 1969, whichever shall be the earlier.
  I recognise that this involves the problem that large sums of money might be flooded into the economy on 27th November, 1969, if all the import deposits that have been paid over the preceding six months are then repayable. I recognise that this is a problem, but it is not one of our seeking.
  First, however, I query the position under the Bill as drafted. Clause 3(4) causes me confusion. It states that
  "Duty under section 1 of this Act shall cease to be in force at the expiration of a period of one year beginning with the date on which this Act is passed".
  We were told this afternoon that no duty was imposed by the Bill. It was, only,
  1398
  a question of money being loaned to the Government interest-free. Does the fact that duty ceases to be in force mean that all deposits will be automatically repaid on that day, or what does it mean?
  To be consistent with the argument put to us earlier by the Attorney-General that import deposits are not a duty, when the duty ceases to be in force the lending of the deposits must automatically terminate and the deposits must forthwith be repaid. If that is the correct interpretation, as it appears to me to be the logical one, my Amendment is quite unnecessary and I will not take further time to debate it. My interpretation is that the duty ceases to be in force because it would be repaid on the day stated in Clause 3 (4), but on the assumption that I may be wrong, I press the Amendment for other reasons.
  I ask the Committee to consider the problem that will arise when deposits are paid by a number of firms over a period towards the end of the life of this short-term Bill or when it is suddenly brought to an end, either on the date provided in Clause 3 (4) or as provided in a subsequent Measure.
  Money which has been deposited by firms on the preceding day will be stuck in the Government vaults free of interest for a further 180 days. Firms which, by good luck or for other reasons, have deposited the money on the day after it ceases to he in force, will not have to give a deposit. Therefore, there will be two types of importer. For six months, one importer will have deposited a large sum of money which will not earn anything for him, whereas his next-door neighbour, who happened by chance to import the goods or get them released a day later, will not be faced with that burden. That is monstrously wrong and it will make for unbalanced competition between the two.
  I ask the Minister, in replying, to give an assurance about this. I hope that he will go so far as to accept Amendment No. 80, which would set a terminal date for the repayment of all deposits. Otherwise, how will he play fairly with those two categories of people? It will distort competition and result in unfairness, and so I hope that the Government will consider carefully the point made in the Amendment.
  Mr. Edward M. Taylor: My hon. Friends who have

  1399
  spoken to the Amendment have concentrated on the effect which the Amendment will have on small importers. The reason for my intervention is one which you, Mr. Gourlay, will appreciate, and that is the effect of the Amendment on large heavy industries. There is a concentration of heavy industry in Scotland. There is an important ship-building industry and an important engineering industry, and I feel that the Government cannot have considered the effect of the 180 days on industries the reorganisation of which is being given every encouragement and incentive by the Government.
  I know that you, Mr. Gourlay, have a special interest in ship-building. The Government have introduced a Bill and have published the Geddes Report giving industry encouragement to go ahead with a major programme of reorganisation, involving substantial capital spending and the importing of substantial quantities of machinery. The importation of machinery is not a matter of choice. It is not a matter of considering the purchase of a German, Italian or American machine when there is a perfectly good British equivalent. The industries are so large and involve such substantial sums of money that certain machines can be bought only abroad. Unless there is the freedom and facility to import such foreign machines, the prosperity and capital reorganisation of the industry insisted on by Government Ministers will be held back. Machines like the Schichau Monopol and the Sicomat, which have an important part to play in shipbuilding reorganisation, cost a great deal of money. The payment of a deposit of 50 per cent, for 180 days could seriously affect the liquidity of shipyards, and the liquid position of the shipbuilding industry is serious.
  Substantial numbers of orders have fortunately been received in some areas. Employment is guaranteed for a certain period, but not on a profitable basis. One shipyard in Scotland is faced with a liquidity problem, which hon. Members representing the Fife area have been fighting strenuously. I hope that the Government will support the Amendment—
  Mr. Diamond: I have been listening carefully to the hon. Gentleman, but I
  1400
  still do not know which Amendment he is speaking to. Several Amendments are being discussed. Would he be kind enough to say to which Amendment he is speaking?
  Mr. Taylor: I suggest to the Minister that when I am speaking of such an important industry as the shipbuilding industry he should not make such an intervention. The Minister well knows that the Amendment to which I am speaking is the one relating to 180 or 90 days. This could be life or death to the shipyards, and an intervention asking what Amendment I refer to will not be received very graciously in places where industrialists are wondering where the money to pay the import deposits will come from. This kind of attitude causes resentment on the part of industrialists when they are faced with a serious problem. I hope that the Minister will give serious attention to the effect of the Amendment on the shipbuilding and engineering industries which are facing reconstruction. Have the Government considered this?
  In every measure imposing import duties since 1932 special regard has been had, and exemption has been given, to the shipbuilding industry. The Bill gives exemption only for components of ships and not for machinery imported for a major reconstruction. It might be sensible if the Government said that they wanted to discourage this kind of spending and to stop shipyards buying foreign machines. But they do not say that. They have introduced another Shipbuilding Industry Bill which encourages firms to do it and provides some of the cash for it. Now the Government come forward with a policy providing exactly the reverse. They have two policies put forward by two Ministers which conflict with each other.
  11.15 p.m.
  In replying to the Amendment on whether the period should be 90 or 180 days, perhaps we could be told whether any calculation has been made of the cost of 180 days to the shipbuilding industry, at present engaged in a massive programme of reorganisation. At present, the industry is in a desperately ill-equipped state, with most of its money tied up in contracts. It has a very real problem to find cash. Has the industry been consulted about the effect that 180

  1401
  days will have upon it? Has anyone outside been asked to estimate it? Have the Government considered the relative effects of 180 and 90 days on Scottish industry generally?
  We have heard how the Government's proposal will affect the financial institutions in the City of London, and certainly they are important. Anything which interferes with the natural movement of money is important to the country. We have heard about the likely effect on small importers and on agriculture. But surely it is clear that the major effect of this kind of Measure will be on heavy industries which are engaged on reorganisation and require to import substantial amounts of foreign machinery which they cannot obtain at home. Industry in Scotland is basically heavy industry. In some cases, it is declining; in others, it is reorganising. What will be the relative effects in Scotland, and what will be the effects on the United Kingdom generally?
  So often, the Government bring forward Measures without thinking about the effect of them on different industries and different parts of the country. We had an outstanding example with the Selective Employment Tax, and we know the effect that that has had on Scotland. This Measure should be considered in the same light: will it have the same effect throughout the country?
  I hope that this part of the Bill will not have a seriously adverse effect on the shipbuilding industry and that it will not discriminate against Scotland, where so many of our people are employed in heavy industries. My fear is that it will have both results and, for that reason, I am solidly behind my hon. Friends in supporting this Amendment.
  Mr. A. G. F. Hall-Davis: I want to address my remarks specifically to Amendment No. 8, and I start with the very strong point made by my hon. Friend the Member for Cities of London and Westminster (Mr. John Smith) that this is a new procedure and must be, to a large degree, a leap in the dark.
  There has been much discussion on the basis that, in terms of restricting the volume of imports, it may have little
  1402
  effect. But at this stage of the Bill, we should consider its provisions in the light of what should be done if we find that it bites very deeply into imports.
  It is certain that it will bite progressively. The first deposits will be found more readily, but, as the weeks go by, importers will have increasing difficulty in finding the deposits. It has been suggested that those dealing with imported goods entirely will have 25 per cent. of their annual turnover locked up at the end of the relevant period.
  Let us consider that it does bite deeply and perhaps sufficiently deeply to be disruptive of our commercial and industrial activities; or, perhaps, if hon. Members think that is unlikely, let us consider what I think is a more probable eventuality, but at least one which the Chief Secretary would be prepared to consider. Let us suppose that the British people overcome the handicaps of an incompetent Government and that the economy comes back on course smartly in the next few months. In that event, what would be the best way of relaxing the impact of these levies? Would it be better to reduce the percentage of value deposited, or would it be better to shorten the period?
  In Clause 1(11) the Government have given themselves full flexibility as to the percentage on deposit and the categories of goods. I suggest—I hope constructively, like my hon. Friends have done—that he should give reasons why, in either of the circumstances to which I have referred, a reduction in the period of deposit would be preferable to a reduction in the percentage. I think there would be more impact on the level of imports from a 50 per cent. deposit for three months than from a 25 per cent. deposit for six months.
  There will be a critical percentage below which overseas exporters will extend credit in the form of deferred payment for the whole of the six months because they will look on it as merely deferring the profit element of their price. In addition, if we have a deferment of payment by overseas exporters to us, it will result in a short-term benefit to our balance of payments, but it will not reduce imports and it will not help us to reduce the fearsome amount of overseas debt.

  1403
  I hope the Chief Secretary will pay more attention in his arguments and considerations to a true improvement in the balance of payments rather than a temporary influx of hot money or a deferment of payments overseas. That is what we should be aiming at. A reduction in the period rather than in the percentage will help towards an early winding up of the scheme; at least, so it seems to me.
  If one is not going to chop it off suddenly, and it may not be desirable to do this, there are reasons of administrative convenience for reducing the period rather than reducing the percentage. The Government have given themselves the flexibility in subsection (11), and I believe that by tabling this Amendment No. 8 my hon. Friends have drawn attention wisely to the desirability of having the same flexibility in terms of the time for which the deposits would be held. The Government would be well advised in their own interest to give themselves this flexibility in respect of this Amendment.
  Mr. Fletcher-Cooke: May I refer to Amendment No. 9, if I dare, and ask the Chief Secretary to consider whether the Government are really taking gracefully the percentage they had to concede over the Ways and Means Resolution.
  Amendment No. 9 seeks to insert into the subsection the provision that the beginning of the period of 180 days should start either on the day on which the deposit was paid
  "or a bond for the deposit given."
  The Chief Secretary will recollect that the House triumphantly enforced, if that is not too strong a word, its right to guard most jealously the powers of the Executive under the Provisional Collection of Taxes Act concerning the Ways and Means Resolution. It was conceded that for the deposits required on the day after the Ways and Means Resolution was passed, the duty need not be paid, but that a bond was acceptable in lieu. From the way that the subsection is now drafted, it looks as if the Government are, in practice, concerning all material things, trying to claw back what the House insisted upon. I do not think that this is right. It means that those importers who took advantage of the vigi-
  1404
  lance of the House and on that day deposited a bond instead of paying the money will be without their money for about 200 or 210 days, according to the date of receipt of the Royal Assent, which was not what the House intended when it extracted from the Government the admission that a bond was a suitable alternative.
  A bond costs money, very often. An importer would have to get security from a reputable bank. A small man would need an indemnity from a person of substance, for which he would have to pay. So that, for the period from the passage of the Ways and Means Resolution until the Royal Assent to the Bill, such an importer will be paying something for those days to get his goods out of the warehouse. If the Bill is left unamended, he will have to pay a further full amount of 180 days of interest. Therefore, such a man who took advantage of the vigilance of the House, as he was entitled to do, will be prejudiced to the extent of having to pay interest on money, or charges for a bond, not for 90 days as we hoped, not for 180 days as the Government pretend, but for something over 200 days. This is wrong. Therefore, I hope that the Chief Secretary will accept Amendment No. 9, which I regard as a symbol of the importance of the House of Commons over the raising of taxes and revenue.
  Mr. John Biffen: My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) has spoken very cogently about the reasons why the Government should accept Amendment No. 9 and so vindicate the watchfulness of the House.
  I will speak briefly to Amendment No. 7. I do so on very much broader grounds than those indicated by my hon. and learned Friend. We are being asked to pass this legislation against a developing background of very tight general credit conditions. The totality and extent of that may not have been apparent on Second Reading, but I believe that it is more apparent now, particularly after the remarks of Mr. Robarts and the clearing banks about the significance that they saw in the totality of the Government's proposal.
  If this Measure is being enacted against the background of a general credit

  1405
  squeeze, it invalidates the argument for various aspects of the credit squeeze, and also highlights the immense unfairness that can derive to certain people who are caught by the particular credit squeeze conducted against the background of a general credit squeeze.
  11.30 p.m.
  There are many reasons why we should be suspicious of the Government's attitude. Perhaps the brief exchange between my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) and the Chief Secretary a few moments ago indicated the casual attitude of the Government to matters which are deeply felt on this side of the House, and by people outside the House whose interests are affected.
  I ask the Committee to reflect on the words of the Financial Secretary during the Second Reading of the Bill, when he said:
  "The most that will happen here, and what is intended to happen, is that a man who really must have the import will go to the inconvenience and modest expense required to obtain finance."—[OFFICIAL REPORT, 28th November. 1968; Vol. 744, c. 760.]
  Anybody who believes that those calm words will assuage the fears of those who read this morning's statement by Mr. Robarts and the clearing banks is a born optimist.
  We know that in as much as this Measure bites it will bite particularly severely on that element of the business community which always finds trading difficulties in periods of particularly tight credit, namely, the small business community. If one wanted to make a catalogue of thoughtless and foolish activities by this Government against any one section of the community, that catalogue would be longest in respect of the small business community, and, if only as some penance for their past misdeeds, the Government should be prepared to accept the Amendment.
  Sir J. Foster: I propose to speak briefly to Amendment No. 9, and to remind the Chief Secretary that on a previous Amendment the Financial Secretary said that the position would be the same for people importing the same kind of goods. Because of the way in which the Bill is drafted, a person who imported goods before the Bill became law will have to pay more. As my hon. and
  1406
  learned Friend the Member for Darwen (Mr. Fletcher-Cooke) said, a person who imported goods on 27th November will have paid for a bond, he will pay the deposit, and he will then have to pay the interest for 180 days from the day on which he paid the deposit, plus the cost of the bond. That is contrary to the assurance given by the Financial Secretary that the position would be the same for everybody.
  It is no use the Chief Secretary saying that the man should have foreseen this and paid the deposit on 27th November. The whole point of the argument is that he could not pay the deposit. He could only give security, and therefore, as the Bill is drafted, Customs and Excise could not say that the deposit had been paid on 27th November. Surely the right hon. Gentleman will agree that it is unfair on those importers who happened to be importing goods between 27th November and when the Bill became law that they should pay more than those importers who imported after the Bill became law?
  I do not know whether the right hon. Gentleman was in the House at the time, but it is within the recollection of my hon. Friends that the Financial Secretary said several times—because he got rather impatient with us as he thought we were rather dumb—that the position would be the same for all importers. Because of the way the Bill is drafted, a person who imports goods from 27th November to when the Bill became law will have to pay the cost of the bond—£X. He will have to pay the interest on the money he borrows for 180 days, plus £X, and he will be at a disadvantage compared with those who imported after the Bill became law.
  I hope the Chief Secretary will assure us that the position will be the same for all importers. If the hon. Gentleman meant all importers of the same kind, I think that that is rather a specious answer. If the hon. Gentleman meant that that was the position for all importers who imported on the same day, the assurance was worth nothing. For those reasons I hope that the Chief Secretary will look at Amendment No. 9 again and explain why—if he wants to retain the Bill in its present form—he thinks it fair that importers of goods between 27th November and the date when the

  1407
  Bill became law should pay more than importers of the same kind of goods after the Bill became law.
  Mr. Peyton: I feel sure that the Committee is grateful to you, Mr. Gourlay, for having in your wisdom permitted a fairly wide-ranging debate on the Amendments, although this may have been confusing to the Chief Secretary, who was rather unwisely led—perhaps he was not the first—to under-rate the Parliamentary skill and strength of conviction of my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor). The Committee was happy to see my hon. Friend winning that brief but heated exchange.
  I want only to go back to the point raised by my hon. Friend the Member for Oswestry (Mr. Biffen) and to refer to the general background against which the Amendment was moved. We always regret the doctrinaire approach of the Treasury, the Board of Trade, and the customs and excise authorities to these problems. They say that it will be the same for everybody. The inconvenience of borrowing money and the cost of borrowing money are waved aside, and the impact upon the individual firm is forgotten. The Government are playing a game which might be called the game of the last straw. We have a camel, and we go on and on and on piling straws on its back, and at some time, somehow, that almost invincible, almost unconquerable camel will fall down; one of its vertebrae will give way. The only point of real and vibrating interest to me is the question whether there will be a cheer or a sigh from the Treasury when that happens.
  Mr. John Smith: Surely this situation is much more like the story of the donkey. A man had a donkey and was training it to live without food, and just as the donkey was getting used to this it died.
  Mr. Peyton: That modesty which I have been endeavouring to advocate to the Treasury Bench leads me to say "Thank you very much" to my hon. Friend. I do not think that I can usefully add to what he has so eloquently said. I hope that the Treasury will at some time learn something about camels and donkeys, and I also hope that those
  1408
  who advise the present incumbents of the Treasury Bench will begin to learn some degree of the modesty which they evidently cannot teach their masters.
  Mr. Diamond: I owe it to the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) to explain something which he has completely misunderstood. Those who have known over many years how I conduct my Committee work will have no difficulty, I hope, in accepting what I am about to say. Your predecessor in the Chair, Mr. Gourlay, called a number of Amendments and said that there would, if necessary, be a Division on Amendment No. 9, the only one which is "top-hatted", that is, which has the name of a Member of the Opposition Front Bench attached to it. I naturally thought that this was the main Amendment. Until the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) spoke, no one referred to that Amendment; I thought that it would not be moved and that I would not have to reply to it.
  I have listened to every speech, and I listened with care and patience to the hon. Member for Cathcart, who was speaking about shipbuilding, which is dealt with in the Schedule, where there is a number of relevant exceptions, which would be discussed when we reached the Schedule. I was, therefore, honestly wondering which Amendment the hon. Member was speaking about, and when he said "this Amendment" I naturally asked "Which?". He did not follow me, so I got up to make it clear—
  Sir J. Foster: I thought that my hon. Friend had mentioned the 90 or 180 days question before he referred to shipbuilding. If that is in HANSARD, the right hon. Gentleman will agree that he is wrong, and if it is not, I will agree that I am wrong. I believe that it is a simple mishearing.
  Mr. Diamond: That may be so, but I am not accusing the hon. Member for Cathcart; I am simply explaining why I asked which Amendment it was.
  The essential point in Amendment No. 7 is a reduction from 180 to 90 days, which, as the hon. Member for the Cities of London and Westminster (Mr. John Smith) said, is a familiar period. But that does not alter the fact that the Government feel that, with the other

  1409
  elements of the scheme, we need 180 days to make a sufficient impact in both respects which have been discussed time and again on Second Reading and in Committee. Therefore, I can hold out no hope that we shall reduce the period.
  On the following Amendment, a number of hon. Members kindly suggested that the Treasury should take power to alter the period by Statutory Instrument if we changed our minds in future. I am grateful for that suggestion, but so satisfied are we that this part of the scheme must be maintained that we are not seeking that power and must reject that suggestion.
  The Committee will appreciate that there are four major elements in this scheme, on three of which powers are taken in the Bill, and, if Amendments are accepted, Orders will be laid before the House under which a reduction can take place in those three aspects of the Bill.
  11.45 p.m.
  As to the fourth aspect, we are not even asking for power to reduce that period of 180 days, so satisfied are we that we do not need it by itself. Obviously, if power to reduce the whole scheme is taken, that will have its effect on the period for which deposits are payable but, by itself, we are satisfied that this power will not be needed, and, indeed, it is an essential part that there shall be what I might call an orderly repayment.
  Mr. Graham Page: Do I understand correctly from the right hon. Gentleman that if power is exercised under Clause 3(4) to terminate the whole of the Act, the deposits will thereupon become repayable? If not, they will be held illegally, because there will then be no Act in operation authorising the Government to hold them.
  Mr. Diamond: That is not what I am advised. I take the point, and in fact an hon. Gentleman has mentioned it in this very debate. I am advised that the effect of the subsection is that the deposits will be repayable, notwithstanding the scheme has ceased to be in force, 180 days after they have been paid. That is the intention, that is the proposal, and that is the effect, I am advised, of that subsection.
  Mr. Graham Page Mr. Graham Page rose—
  Mr. Diamond: We are in Committee and I shall give way again if the hon. Gentleman wishes to pursue the debate—it must be for him—but I have answered him, I think, very clearly. No Amendment has been tabled on that point. I have been asked about it now by two hon. Gentlemen, and I hope that I have given a very clear answer. The effect and the intention go hand in hand. If the whole scheme comes to an end under that subsection, deposits are repayable 180 days after they have been paid, and not before, and certainly not on the cessation of the scheme, just as, if the Act continues for a year in the normal way, the deposits will be repayable 180 days after they have been paid.
  The fourth Amendment seeks to make all the repayments on a certain day. The hon. Member for Leicestershire, South-West (Mr. Boardman) wanted a terminal date. He put the case, which the Government feel is overwhelmingly true, in better language than I myself could have used. He said that he recognised that this would have the danger of large sums flooding into the economy. That is the situation. That is why it is essential that there should be orderly repayment, and that is why I am sorry I cannot accept the Amendment, or anything approaching it, or any variant of it. There has to be orderly repayment, and that means 180 days after each deposit has been paid.
  Amendment 9 stands out on its own, and my answer is that in this part of the Bill, as in any other part, a deposit will be repaid 180 days after the cash has been paid. The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) put the case very fairly—and he was supported by his hon. and learned Friend the Member for Northwich (Sir J. Foster)—not that the importer would be out of the deposit on the goods for more than six months but that he would be out of that money and might, in addition, be out of further money, and the further money would be the premium he paid, if such were paid, on obtaining the bond. As the hon. and learned Member for Darwen was the first to admit, it does not necessarily follow that in every case payment is made for a bond. A bond may be given for any consideration between the banker and his customer. One could

  1411
  not possibly know without inquiry. In some cases a bond is given without any additional cost to the borrower, the giver of the bond. In other cases a premium may have been paid.
  I have tried to find what sort of premium each person has paid. One can only get a line on what the market is and what it might be for a variety of importers. The figures I have been given go down to as far as a small fraction of 1 per cent. I cannot say what they go up to. I have already dealt with cases in which some ay have paid nothing at all. Either the bond giver has paid nothing or a fraction of 1 per cent., or conceivably at the highest, he might have paid a half of 1 per cent. I cannot see that the market is such that he would have to pay more than that.
  The question is, should that be taken into consideration somehow or other and inquiries be made from the depositor of the bond whether he paid anything and whether this should be taken specially into consideration. This is a very small sum. In some cases—I do not know in exactly how many—the security has taken the form of cash. That, of course, would be 100 per cent. cash. In those cases where cash has been paid we are certainly prepared to treat that cash as having been paid under the Act, although it was not. That is to say, repayment will take place 180 days after the cash has been paid.
  The alternative would be to treat that cash has having been a security and to say when the Act comes into force, "Here is a cheque for £X, being your security. Now give me a cheque for the identical amount for the deposit." That would be an unnecessary and slightly ridiculous exercise, so we are prepared to accept that where cash was paid as a security the date on which it was paid is the first of the 180 days.
  Sir J. Foster: The right hon. Gentleman said, first, 100 per cent. cash and then he referred to "cash". I imagine that if a proposition was paid in cash that also would be counted in the importer's favour.
  Mr. Diamond: I thought that I said, "I imagine 100 per cent." If I did not
  1412
  perhaps the hon. and learned Gentleman will allow me to insert "I imagine 100 per cent." because, as he rightly said, the principle is cash and so far as I am aware security in cash would have to be 100 per cent. to be adequate security.
  Sir J. Foster: It is not clear from what the right hon Gentleman said whether he means that it is 100 per cent. or part bond, part cash.
  Mr. Diamond: I am grateful to the hon. and learned Gentleman who has great capacity in these matters. If it is part bond and part cash, it comes within the principle I have enunciated. Whatever cash is paid, the date on which it becomes repayable is 180 days and the amount is automatically repaid.
  I hope that I have answered the various points which have been raised. I recognise that on this major Amendment there is due cause of anxiety. I have discussed with my hon. Friend the Financial Secretary the statement he made. Unfortunately, I was not here to hear it. My hon. Friend assures me that there is nothing in what he said which is inconsistent with what I am now saying. It would hardly be possible, as between two close Treasury colleagues, that such an inconsistency could ever arise. At all events, my hon. Friend tells me that, and as I was not here I am glad to hear it. That is the point which the Government are putting to the Committee and I hope that it will be found acceptable.
  Mr. Patrick Jenkin: I should have liked to have been able to say that we welcome the Chief Secretary to our deliberations on the Bill. He has delivered himself of the characteristic speech in which he has said "No" in rapid succession to four successive Amendments. Therefore, I feel that our welcome must be tinged with a good deal of regret.
  We have had a number of powerful speeches, notable those by my hon. Friends the Members for Cities of London and Westminster (Mr. John Smith), Glasgow, Cathcart (Mr. Peyton), arguing that the period of 180 days should be reduced to 90. The very valuable point was made that the Treasury should take power to cut the period by Order. My hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) raised doubts as to the effect

  1413
  of Clause 3. Perhaps we shall be able to deal with that point when we reach that Clause and have a brief debate on the Question, "That the Clause stand part of the Bill". I share the doubts expressed by my hon. Friend the Member for Crosby (Mr. Graham Page) as to whether the Chief Secretary has had proper advice as to what the effect will be if the scheme is terminated prematurely under Clause 3(4).
  I believe that the whole House will agree that the point of principle which was alluded to by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) and which is raised by Amendment No. 9 is perhaps the most serious issue which the Committee faces on this group of Amendments. I regarded the Chief Secretary's rejection of the case made by my hon. and learned Friend as very disappointing. Our case is that the Government tried to operate the scheme from 27th November on the footing that cash would immediately be payable by way of deposit. Thanks to the vigilance of a number of my hon. Friends and hon. and learned Friends, that was found not to be possible. Indeed, the headlines in the evening papers on the day of the debate—I see that the Financial Secretary is recollecting the occasion with pleasure—pointed out that the scheme on that footing was not legal, that the Government had no power to demand cash, and that under the Provisional Collection of Taxes Act, 1968, until the Bill becomes law the only operation of the Money Resolution is that they could demand security.
  Whether it had to be squeezed out of the Financial Secretary or whether he saw the point, it having been put to him, and acceded with good grace, I leave history to judge. I gained the impression that the Financial Secretary, once he was seized on the point, conceded it fairly rapidly.
  Towards the end of his speech the Chief Secretary suggested that nothing that the Financial Secretary said in the debate on the morning of 26th November committed the Government. Omitting a very long parenthetical phrase thrown in by the Financial Secretary, I quote this from his speech:
  "… the scheme will be operated so that from the passing of this Ways and Means Motion, this duty of Customs will be im-
  1414
  posed in a way that provided that security is given to the satisfaction of the Customs … that will suffice to cover the period between the passing of this Motion and the legislation."—[OFFICIAL REPORT, 26th November, 1968; Vol, 774, c. 262–63.]
  I understood that to mean, and on a proper interpretation of the words it could only mean, that the period of 180 days should run from 27th November or such later date as a bond was taken, and that the bond was all that could be demanded before the date on which the Bill became law.
  12 p.m.
  The Government cannot have it both ways, as they are trying to do. They are trying to operate this scheme, in a sense, retrospectively, back-dated to 27th November. They must accept the consequence that the period should run from the date when the bond is given, the date when the import is made and the goods are entered for warehousing.
  I cannot accept that the Chief Secretary has made a valuable concession, saying that the Government are graciously pleased to regard cash paid as security as qualifying for the 180-day period. As one of my hon. Friends said sotto voce at the time, "I should jolly well hope so". But we are demanding more than that. The Government must face the consequence of their election that the scheme should operate from before the date when the Bill comes into effect. As a matter of honour, the period of 180 days should run from the date when the bond is first given, and they cannot demand that the security should, in effect, go over for 200, 210 or, perhaps. 220 days. That would be utterly unconscionable.
  I ask my right hon. and hon. Friends to express their strongly held views on this matter by dividing on Amendment No. 9.
  Amendment negatived.
  Amendment No. 9 proposed: In page 1, line 20, after 'paid', insert—
  'or a bond for the deposit given'.—[Sir K. Joseph.]
  Question put, That the Amendment be made:—
  The Committee divided: Ayes 113, Noes 163.

  Division No. 20.]

  AYES

  [12.03 a.m.

  Alison, Michael (Barkston Ash)

  Harvie Anderson, Miss

  Peyton, John

  Allason, James (Hemel Hempstead)

  Hawkins, Paul

  Pike, Miss Mervyn

  Baker, Kenneth (Acton)

  Hay, John

  Price, David (Eastleigh)

  Baker, W. H. K. (Banff)

  Heseltine, Michael

  Prior, J. M. L.

  Biffen, John

  Higgins, Terence L.

  Pym, Francis

  Black, Sir Cyril

  Hiley, Joseph

  Rhys Williams, Sir Brandon

  Blaker, Peter

  Hill, J. E. B.

  Ridley, Hn. Nicholas

  Boardman, Tom (Leicester, S.W.)

  Holland, Philip

  Rossi, Hugh (Hornsey)

  Boyle, Rt. Hn. Sir Edward

  Hordern, Peter

  Royle, Anthony

  Brewis, John

  Howell, David (Guildford)

  Russell, Sir Ronald

  Brinton, Sir Tatton

  Hutchison, Michael Clark

  Sandys, Rt. Hn. D.

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

  Jenkin, Patrick (Woodford)

  Scott, Nicholas

  Burden, F. A.

  Joseph, Rt. Hn. Sir Keith

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

  Campbell, B. (Oldham, W.)

  Kershaw, Anthony

  Smith, John (London & W'minster)

  Carlisle, Mark

  Kitson, Timothy

  Stainton, Keith

  Clegg, Walter

  Legge-Bourke, Sir Harry

  Steel, David (Roxburgh)

  Cooke, Robert

  Lubbock, Eric

  Stodart, Anthony

  Cooper-Key, Sir Neill

  MacArthur, Ian

  Stoddart-Scott, Col. Sir M.

  Dalkeith, Earl of

  Macmillan, Maurice (Farnham)

  Taylor, Sir Charles (Eastbourne)

  Davidson, James (Aberdeenshire, W.)

  McNair-Wilson, Patrick

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

  d'Avigdor-Goldsmid, Sir Henry

  Maddan, Martin

  Thorpe, Rt. Hn. Jeremy

  Drayson, G. B.

  Maginnis, John E.

  Tilney, John

  Eden, Sir John

  Maxwell-Hyslop, R. J.

  van Straubenzee, W. R.

  Elliott, R. W. (N'c'tle-upon-Tyne, N.)

  Mills, Peter (Torrington)

  Waddington, David

  Emery, Peter

  Miscampbell, Norman

  Walters, Dennis

  Errington, Sir Eric

  Mitchell, David (Basingstoke)

  Ward, Dame Irene

  Eyre, Reginald

  Monro, Hector

  Webster, David

  Farr, John

  Montgomery, Fergus

  Wells, John (Maidstone)

  Fletcher-Cooke, Charles

  More, Jasper

  Whitelaw, Rt. Hn. William

  Fortescue, Tim

  Murton, Oscar

  Williams, Donald (Dudley)

  Foster, Sir John

  Nabarro, Sir Gerald

  Wilson, Geoffrey (Truro)

  Gibson-Watt, David

  Nott, John

  Winstanley, Dr. M. P.

  Gilmour, Sir John (Fife, E.)

  Onslow, Cranley

  Wolrige-Gordon, Patrick

  Glover, Sir Douglas

  Osborn, John (Hallam)

  Woodnutt, Mark

  Grant-Ferris, R.

  Page, Graham (Crosby)

  Wright, Esmond

  Hall, John (Wycombe)

  Page, John (Harrow, W.)

  Hall-Davis, A. G. F.

  Particle, John

  TELLERS FOR THE AYES:

  Hamilton, Lord (Fermanagh)

  Peel, John

  Mr. Bernard Weatherill and

  Hamilton, Michael (Salisbury)

  Percival, Ian

  Mr. Humphrey Atkins.

  NOES

  Allaun, Frank (Salford, E.)

  Edwards, William (Merioneth)

  Jackson, Peter M. (High Peak)

  Alldritt, Walter

  Ellis, John

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

  Anderson, Donald

  English, Michael

  Jenkins, Hugh (Putney)

  Armstrong, Ernest

  Ennals, David

  Jenkins, Rt. Hn. Roy (Stechford)

  Atkins, Ronald (Preston, N.)

  Ensor, David

  Johnson, Carol (Lewisham, S.)

  Atkinson, Norman (Tottenham)

  Evans, Fred (Caerphilly)

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

  Bacon, Rt. Hn. Alice

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

  Jones, J. Idwal (Wrexham)

  Bagier, Gordon A. T.

  Ewing, Mrs. Winifred

  Jones, T. Alec (Rhondda, West)

  Barnes, Michael

  Fernyhough, E.

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

  Bennett, James (G'gow, Bridgeton)

  Fletcher, Ted (Darlington)

  Lawson, George

  Bidwell, Sydney

  Foley, Maurice

  Lee, Rt. Hn. Frederick (Newton)

  Binns, John

  Foot, Michael (Ebbw Vale)

  Lever, Harold (Cheetham)

  Bishop, E. S.

  Forrester, John

  Loughlin, Charles

  Booth, Albert

  Fowler, Gerry

  Lyon, Alexander W. (York)

  Bray, Dr. Jeremy

  Fraser, John (Norwood)

  Lyons, Edward (Bradford, E.)

  Brooks, Edwin

  Freeson, Reginald

  Mabon, Dr. J. Dickson

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

  Gardner, Tony

  McBride, Neil

  Buchan, Norman

  Gregory, Arnold

  McCann, John

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

  Grey, Charles (Durham)

  MacColl, James

  Cant, R. B.

  Griffiths, Eddie (Brightside)

  Macdonald, A. H.

  Chapman, Donald

  Griffiths, Will (Exchange)

  McGuire, Michael

  Coe, Denis

  Hamilton, James (Bothwell)

  McKay, Mrs. Margaret

  Coleman, Donald

  Hamling, William

  Mackenzie, Gregor (Rutherglen)

  Conlan, Bernard

  Hannan, William

  Mackintosh, John P.

  Crawshaw, Richard

  Harper, Joseph

  Maclennan, Robert

  Crosland, Rt. Hn. Anthony

  Harrison, Walter (Wakefield)

  McNamara, J. Kevin

  Dalyell, Tam

  Haseldine, Norman

  MacPherson, Malcolm

  Davidson, Arthur (Accrington)

  Hattersley, Roy

  Mahon, Simon (Bootle)

  Davies, Dr. Ernest (Stretford)

  Healey, Rt. Hn. Denis

  Manuel, Archie

  Davies, Harold (Leek)

  Henig, Stanley

  Marks, Kenneth

  Dell, Edmund

  Herbison, Rt. Hn. Margaret

  Marsh, Rt. Hn. Richard

  Dempsey, James

  Hilton, W. S.

  Mikardo, Ian

  Dewar, Donald

  Horner, John

  Millan, Bruce

  Diamond, Rt. Hn. John

  Howie, W.

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

  Dobson, Ray

  Hoy, James

  Morgan, Elystan (Cardiganshire)

  Doig, Peter

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Morris, Charles R. (Openshaw)

  Dunnett, Jack

  Hunter, Adam

  Moyle, Roland

  Dunwoody, Mrs. Gwyneth (Exeter)

  Irvine, Sir Arthur (Edge Hill)

  Mulley, Rt. Hn. Frederick

  Eadie, Alex

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

  Neal, Harold

  Edwards, Robert (Bilston)

  1416

  1417

  Newens, Stan

  Price, Christopher (Perry Barr)

  Varley, Eric G.

  Norwood, Christopher

  Rees, Merlyn

  Wainwright, Edwin (Dearne Valley)

  Oakes, Gordon

  Richard, Ivor

  Walker, Harold (Doncaster)

  Ogden, Eric

  Roberts, Gwilym (Bedfordshire, S.)

  Wallace, George

  O'Malley, Brian

  Rose, Paul

  Watkins, David (Consett)

  Oram, Albert E.

  Ross, Rt. Hn. William

  Whitaker, Ben

  Orme, Stanley

  Rowlands, E.

  Whitlock, William

  Oswald, Thomas

  Sheldon, Robert

  Williams, Alan Lee (Hornchurch)

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

  Silkin, Rt. Hn. John (Deptford)

  Williams, Clifford (Abertillery)

  Page, Derek (King's Lynn)

  Silkin, Hn. S. C. (Dulwich)

  Wilson, Rt. Hn. Harold (Huyton)

  Palmer, Arthur

  Silverman, Julius

  Wilson, William (Coventry, S.)

  Parker, John (Dagenham)

  Skeffington, Arthur

  Winnick, David

  Parkyn, Brian (Bedford)

  Swingler, Stephen

  Wyatt, Woodrow

  Pavitt, Laurence

  Taverne, Dick

  TELLERS FOR THE NOES:

  Peart, Rt. Hn. Fred

  Tinn, James

  Mr. Alan Fitch and

  Pentland, Norman

  Urwin, T. W.

  Dr. M. S. Miller.

  Mr. Diamond: I beg to move Amendment No. 16, in page 3 line 4, at end insert:
  'subject to annulment in pursuance of a resolution of the Commons House of Parliament'.
  The Temporary Chairman (Mr. Gurden): With this we are discussing Amendments 17, 18, 26, 31, 32, 39 and 41:
  In page 3, line 4, at end insert:
  '(which shall be laid before Parliament and shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament)'.
  In page 3, line 11, at end insert:
  Any such order shall be subject to an affirmative resolution passed by both Houses of Parliament.
  In Clause 2, page 3, line 25, at end insert:
  '(which shall be laid before Parliament and shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament)
  In page 3, line 25, at end insert:
  'subject to annulment in pursuance of a resolution of the Commons House of Parliament'.
  In Clause 3, page 3, line 42, leave out from 'may' to end of line and insert:
  'appoint by order in a statutory instrument laid before the Commons House of Parliament'.
  In page 3, line 42, after 'instrument', insert:
  '(which shall be laid before Parliament)'.
  In page 3, line 42, at end insert:
  Any such order shall be subject to an affirmative resolution passed by both Houses of Parliament.
  Mr. Diamond: I am speaking to three Amendments which together provide almost exactly for what the hon. Member for Crosby (Mr. Graham Page) is proposing in his Amendments which we are discussing at the same time. They provide for Orders to be laid under three
  1418
  separate Clauses. The first is one reducing the rate of import deposit; the second is adding to the Schedule of exempt goods and the third is shortening the life of the Scheme.
  All three propose that there should be Orders laid before this House. The first two propose that the Orders should be subject to negative Resolution and the third, as was proposed by the hon. Member for Crosby, says that it shall not be subject to any Resolution, either affirmative or negative. These are sensible proposals and we are grateful to the hon. Member for Crosby for suggesting them. The Government put them down in words almost identical to his and for the same purpose. There is one tiny technical difference with which I shall not bother the House.
  12.15 a.m.
  Mr. Graham Page: I am grateful to the Government for accepting two and a half out of my three Amendments. They were put down before the Government's Amendments. Therefore, I am thankful to the Government for adopting them. The Bill as drafted completely ignored Parliamentary control over Statutory Instruments made by the Treasury. To that extent, it was wrong. It did not even provide for the Statutory Instruments to be laid before the House, let alone be discussed by the House.
  The first two Statutory Instruments, in Clause 1(11) and Clause 2(4), both deal with reductions in duty. Therefore, had they come under the Import Duties Act, 1958, they would have been subject to annulment. We accept the Government's wording of the Amendments in those two cases.
  I am not so sure that the Government are right in the case of Clause 3(4). My Amendment provided for the Statutory

  1419
  Instrument which is to bring the Act to an end to be laid before Parliament. By the Government's Amendment, it has to be
  "laid before the Commons House of Parliament".
  This is rather more than a matter of reduction in duty. It is the end of an Act. In those circumstances, it would be right to lay it before both Houses—that is, before Parliament—and not treat it merely as a reduction in duty or, as the Chief Secretary said on the last Amendment, the end of a scheme and lay it merely before the Commons.
  I ask the right hon. Gentleman to look at this again. I think that the right form for subsection (4) of Clause 3 would be to have the Statutory Instrument laid before Parliament.
  Mr. Diamond: I think that the proposal before the Committee is a sensible one, but, of course, I will look at the matter.
  Amendment agreed to.
  Question proposed, That the Clause, as amended, stand part of the Bill.
  Mr. Harold Lever: I wish to speak briefly to deal particularly with a point on which I thought that the Committee would wish to be informed at the earliest possible date—that is, the question of assignability, which was dealt with earlier by my hon. and learned Friend the Minister of State. We have considered the matter most earnestly and we have come to the conclusion that it would not be desirable to accept the Amendment.
  As my hon. and learned Friend undertook to have the matter considered, we thought it desirable that I should take the opportunity on this Question to say that we have given it very anxious consideration since the matter was discussed. I wanted to inform the Committee at the earliest point of time that we could not accept an Amendment, because the fact is that assignability or negotiability in any form would marginally tend to diminish the liquidity effect, not because it creates a new credit base, but because it adds to the mobility of the document. It would, as it were, search out possibly inactive pools of liquidity.
  For example, somebody holding gilt-edged securities would find that he would
  1420
  be offered one of these documents, or might be offered one, if they were assignable. He would sell the gilt-edged securities and could create liquidity in that case, because he would sell the gilt-edged securities and he would take as his investment instead the assignment of the document. It is fairly obvious that there would be this marginal additional tendency because of the mobility—I will not go into the abstract question of velocity—that would arise.
  Although the decision goes as I have explained, my lingering sympathies, as Gladstone once said, remain in the other direction. I and my hon. and learned Friend the Minister of State would have liked to make this concession but, for the reason I have given, it becomes exceedingly difficult to accept.
  Moreover, although I hate to come with a purely administrative argument, one must have some regard to the administration. When it comes to assignability, it is perfectly obvious that the Customs would have to set up a system for dealing with this question. As a document is assignable, presumably it could be assignable several times.
  Mr. Patrick Jenkin: Why?
  Mr. Lever: Because, if it is assignable, presumably the man who has it assigned to him would be able to assign it, too. If a document is by its nature assignable, the assignee can assign as well as the original assignor.
  There is nothing to stop us making a Statute giving it an unusual and unique characteristic of assignability, but even that would add considerably to the administrative burdens. The Customs would have notice of an assignment. It would be their duty to check, in some form for which we would have to make statutory provision, that the assignor had executed the assignment, and that they were therefore free when the date came to make the payment to the person to whom it had been assigned. Although this sounds no great burden, it is a great burden if it is applied over the tens of thousands of cases. The result would be to add to the administrative complications and perhaps even jeopardise what is dear to the hearts of both sides of the Committee, namely, the urgency of ensuring that on the due date repayment is made.

  1421
  For the practical reason which I gave originally and for the administrative reason, which must carry some weight, this suggestion, although it has been carefully and sympathetically considered, cannot be accepted. I thought I should inform the Committee of this at the earliest moment, so that hon. Members may reflect on the matter and take whatever course of action they think is useful.
  Mr. Alison: The Financial Secretary said that one disadvantage of the proposal which he is now disallowing is that it would search out pools of liquidity. May I remind him that on Second Reading he said that if people borrow at home they will be mopping up liquidity which would otherwise be available to finance other consumption or other expenditures. Which is he doing?
  Mr. Lever: Both is the short answer. In the first instance when the deposit is paid no doubt it will mop up liquidity, but if the document is made assignable and mobile it will tend to activate ultimately pools of liquid resources not in fact active. May I give an example of how it might occur, if it is not tedious to the House. This is not an idle objection on our part.
  Supposing that I finance a transaction for an importer and I get the deposit in my name and am content that my money is so invested. My money, which otherwise would have been active, will now become tied up in the deposit financing the import. It is not assignable. If it were to be made assignable, and I wanted to use my money again, I might go to the holder of short dated gilt-edged who is entirely content to hold his short dated gift-edged, and persuade him to sell his gilt-edged and get the cash back on the assignment of this document from me. That could happen, and the effect would be that the person with money in short dated gilt-edged would be induced to become liquid only because I was able to assign to him the equivalent of his gilt-edged security in the form of this document. There would thus be the marginal danger and effect of activating funds which otherwise would remain tied up.
  Mr. Alison: Will the Financial Secretary agree that this would not be the case with a sterling certificate of deposit, which is a perfectly authorised negotiable
  1422
  bearer security which the Bank of England can recall, so that this situation would not arise?
  Mr. Lever: The sterling certificate of deposit would be more dangerous for this purpose. It would be negotiable, that is to say, assignable plus, and it would be a bearer document if it followed the existing sterling certificate of deposit; so it would have something worse than assignability. It would have bearer assignability in a form which would be tantamount to money, and money would almost be created in the form of certificates of deposit.
  Mr. Nott: It is only if the Government buy the gilt-edged security that additional money is sought out. If the gilt-edged security is bought by someone in the private sector, the argument of the Financial Secretary is completely invalid. It is, after all, in the Financial Secretary's hands whether or not the Government buy the security.
  Mr. Lever: I hope that the Committee will not seek to lead me into an indiscreet answer on the Government's open market and gilt-edged buying policy. It is a very interesting subject, but I must content myself by saying that even supposing the Government sometimes supported the market, which I will not necessarily admit, that would be enough to justify my argument. Let us suppose that nine times out of ten the effect was the innocent one put forward by the hon. Member for St. Ives (Mr. Nott) in which somebody else bought the gilt-edged security, and in only one case in ten the Government bought the security, there would be that marginal activation where none had existed. It would bring new liquidity into activity. I think the hon. Gentleman will concede that, to make his point overwhelming, he would have to ask the Government to abstain from supporting the gilt-edged market—[Interruption.] It is obvious from that reaction that there are a few gilt-edged holders on the benches opposite—
  The Temporary Chairman (Mr. Gurden): Order. I hope that this discussion will not go on too long. This Amendment is not in the Clause as it stands. I allowed a passing reference to it as an explanation of what went on before. The Amendment was not

  1423
  accepted and is, therefore, not in the Clause at the moment.
  Mr. Harold Lever: If you please, Mr. Gurden. I will pass from that immediately and deal briefly with the cost of the bond and my words in connection with it.
  I emphasise that, when I said that importers would be affected equally, it was plain that I was dealing with the interest point, and the interest will be the same for all importers. They will have 180 days' interest to pay on the deposit, wherever they make it. I am surprised that the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) should have any doubt about what my undertaking meant in relation to the taking of a bond. It was clear that we were discussing the problem of whether the Customs, under the guise of taking security, should exclusively take cash, which right hon. and hon. Members opposite thought was illegal. I took their point and accepted that they should not. There was no question in anyone's mind about the length of time of holding the cash. That was far from our thoughts. We were on a very important constitutional point. I was grateful to hon. and learned Gentlemen opposite for raising the point and, without pain, when I thought that it was right, I took it upon myself to give that undertaking.
  If the hon. Gentleman will read my words, it is plain that there was no consideration or discussion of the date of holding of the cash thereafter. We were on the very narrow and important point of whether, in the guise of taking security, the Customs should be entitled, in advance of the Act, to take cash.
  Mr. Patrick Jenkin: I hope that he will equally accept that when, that afternoon, the point was put to me, would the 180 days run, I had no doubt in my mind that that was what the Financial Secretary intended. He now says that he did not, but I submit that the words that I read suggest that it could have been either way.
  Mr. Harold Lever: I listened to the words, and I hope that the hon. Gentleman will reflect on this. The words struck me and everyone in the Govern-
  1424
  ment as confirming what I have just said. I can assure the hon. Gentleman that, if he looks at them again, he will come to the same conclusion.
  In those circumstances, I hope that I have not troubled the Committee unduly in explaining this matter and that right hon. and hon. Gentlemen will see fit to accept the Clause.
  Mr. John Page: I am sure that my right hon. and hon. Friends are as disappointed as I am at this quick reaction—not necessarily the speed of it, but what has come from it.
  The Financial Secretary mentioned "the innocent one". The Minister of State at the Treasury was left without a P.P.S. for the whole of this important debate until the last 10 minutes, when the Minister of State at the Board of Trade came in. Hurried messages were being passed to the hon. and learned Gentleman which he had to read at the Dispatch Box.
  It is very disappointing, and the Financial Secretary showed this by the way he rose to the fly that he was offered, about other Treasury Ministers being present to hear the very cogent arguments of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke).
  Mr. Harold Lever: I have heard about them.
  Mr. Page: That is not the same as hearing them first-hand from my hon. and learned Friend.
  There is nothing that we can say except that we are extremely disappointed with the hon. Gentleman's answer.
  12.30 a.m.
  Mr. Kenneth Baker: I, too, would like to thank the Financial Secretary for coming here at this late hour and making an authoritative statement on the Government's policy on the negotiability and assignability of these deposits.
  Earlier we debated this question for nearly three hours and we on this side of the Committee were misled by the statements from the Government Front Bench. Indeed, if only we had had the statement from the Financial Secretary three hours ago we would be three hours nearer to getting this Bill.
  Mr. Burden: I should like the Financial Secretary to give a little further explanation about the matter referred to by the Minister of State, Treasury in the debate on 28th November, when he said:
  "My hon. Friend the Member for Heywood and Royton asked whether the 50 per cent. deposit would be 50 per cent. net of cash discount or gross. It will be 50 per cent. of the value of the goods, and for this purpose value is as defined in the Customs and Excise Act, which is the value of the goods on a sale in the open market, and not necessarily the price paid by the importer for them."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, cc. 866–7.]
  This is a serious matter, as I am sure the Financial Secretary will agree. It could lead to a dispute as to whether the price on the invoice was the amount that was to be charged to Customs Duty or whether some amount higher than that on the invoice would be charged. There might well be a dispute about this, and the Customs authorities would apparently have a right arbitrarily to set a higher figure than the price paid by the importer for the goods. This could delay the importer getting the goods for a considerable period and he might suffer loss as a result. Indeed, if fashion merchandise were involved, a considerable delay could result in the merchandise losing a lot of its value. I am sure that the Committee would like to know in what circumstances the Customs authorities would exercise this right.
  Mr. Harold Lever: This is not a novel point. The same situation arises in relation to import duties. Import duties are normally levied on the invoices, but under a ruling in a recent case in the High Court it has been made plain that the appropriate value is the value as defined by my hon. Friend the Minister of State; I do not wish to repeat his words which have already been read out.
  This has caused no difficulties about tariffs and import duties where the same formula is applied, and I do not apprehend that it will cause any difficulties in this case either. It is a perfectly familiar situation with which the Customs deal every week.
  The Customs are not entitled to fix the price arbitrarily. They have got to fix the price according to the market price. Where there is some significant deviation from the price on the invoice, there may be special company dealings where that
  1426
  remedy is necessary, but in general, it has worked without any difficulty at all.
  The only time that there has been litigation in the history of this matter was the case of a merchant banker of strong views and radical principles who litigated the matter with the Customs and he triumphed and established the principle which has been read out by the hon. Member for Gillingham (Mr. Burden).
  Mr. Keith Stainton: This is concerned with 50 per cent. of the value of the import, whereas the general run of import tariffs is probably of the order of 20 per cent. Therefore, there is a material difference in discussing this point in relation to valuation.
  Mr. Lever: That is so, but the principle is the same. I would think that the principle is the same for Purchase Tax, too. The duty and the Purchase Tax together often exceed 50 per cent. Therefore, the point is not really novel. It is one that has never caused any difficulty and, apart from the solitary and determined merchant banker who won his case and established this principle, we have not had any litigation on the subject of which I am aware.
  Question put and agreed to.
  Clause, as amended, ordered to stand part of the Bill.
  [Mr. HARRY GOURLAY in the Chair]

Clause 2

  EXEMPTIONS AND RELIEFS
  Mr. McNair-Wilson: I beg to move Amendment No. 20, in page 3, line 17, leave out 'fifty' and insert 'one hundred'.
  The Deputy Chairman (Mr. Gourlay): With this Amendment it will be convenient to take Amendment No. 21, in page 3, line 17, leave out 'fifty' and insert 'five hundred', and Amendment No. 22, in page 3, line 17, leave out 'fifty', and insert 'two hundred and fifty'.
  Mr. McNair-Wilson: The reason for introducing this Amendment at the beginning of Clause 2 is because it deals with exemptions and reliefs, and this will eventually take us on to the schedules.

  1427
  The first part of the Clause contains a suggestion by the Government for exempting goods which are imported, provided that their value does not exceed £50. In my estimation it is hard to see why the Government have put in that figure, because it is almost meaningless, unless it is to prevent people bringing in personal gifts of one kind or another. However, it cannot be that, because subsection (2) covers any personal effects of people coming into this country.
  Here is an opportunity for the Government to take a really sensible step in the right direction towards helping those whose case I have been pleading all evening—the small importers. We have, unfortunately, and even at this late hour, faced a Treasury Bench which has been completely intransigent against some very moderate suggestions put out from this side of the Committee. I think that here is an opportunity for them to mend their ways and to genuinely help the small importers.
  I will give one example. One problem is that many small importers are responsible for maintenance contracts to equipment which has already been imported and which has to continue to be serviced tinder a legal contract. This can apply to firms selling motor cars, typewriters, or whatever. If the Government were prepared to extend the £50 to £100, or to whatever figure I can persuade the Minister to accept, I believe that we shall make life substantially easier for these small importers who have to bring in parts to service pieces of equipment.
  Several of my constituents have written to me on this point. At the moment they are legally bound, by an undertaking entered into when the equipment was sold, to service and maintain it. They now find that, under the Bill, they will have to put down money to bring in parts which are not for sale, but for which, in a sense, they have already contracted with their customers. Clearly £50 is a figure which is totaly irrelevant in this context. As I pointed out, I do not understand why the Government bothered to put £50 in. Here is a genuine case of hardship affecting quite a large number of small businesses in this country. Therefore, I ask the Government to look with favour on what I feel certain is a most reasonable Amendment.
  Mr. Biffen: I should like to support the Amendment so ably moved by my hon. Friend the Member for New Forest (Mr. McNair-Wilson), and to advance an argument slightly different from his, which concerned the small business. My concern is that a great deal of the imports in respect of certain engineering products are spares and replacements for imported machinery which has already been installed here. The importation of spares is inevitable. Nothing that the Measure does will in any way deflect imports of that kind. Many of the spare parts will cost relatively small sums, but in many instances they will cost more than £50.
  By raising the figure to the limit suggested in the Amendment moved by my hon. Friend, or perhaps even more acceptable, to show how generous I am, to the limit suggested in the Liberal Amendment, we could facilitate the continuance of a highly essential trade. If the Government were to make this gesture and raise the limit they would show that they were not entirely prejudiced and doctrinaire in their approach to the Bill.
  Mr. Pardoe: My Amendment seeks to increase the figure to £500, primarily for administrative reasons. It seems ridiculous to fiddle around with every minor import, and I should like the Minister to tell us what proportion of these entries would be below the figure which the Government have put in the Bill, and which would be below the figure I have suggested. I am not tied to £500, even though I have put it in the Amendment. I put down that figure to enable us to have a debate, and I am open to other suggestions.
  There is a strong argument for raising the limit in respect of spare parts, and my figure is more reasonable than the one suggested by the Government. My figure will simplify the administration of the scheme at the ports of entry. I remain to be convinced by the Government that that would not be the case.
  Mr. Burden: I hope that the Minister will reconsider this, because it is necessary to ensure that people who use imported machinery to manufacture exports are not hampered in getting spare parts for that machinery. I am sure the Minister will realise that great damage

  1429
  will be done to the Government's strategy if manufacturers are not able to obtain the necessary spares from abroad.
  If the Minister agrees to alter the figure in the Bill, this will be the first occasion on which the Government Front Bench has given way, and I suggest that this is the occasion on which the Minister could well do so.
  Mr. Emery: I hope that the Minister will go one stage further than has been suggested in the excellent speeches of my hon. Friends, particularly that of my hon. Friend the Member for New Forest (Mr. McNair-Wilson). Can the Minister give the House some figures of what will be involved in terms of loss of revenue or loss of income if the £50 limit is increased to £100?
  He must have some views on the matter, otherwise he must have picked a figure out of the sky. If the sums of £50 and £100 are not convenient, would the Minister consider £75 and £250? The Committee has a right to ask the Government why it should be £50. It is a very small amount for imports. What do the Government see as the loss if the Amendment should be carried?
  Mr. David Webster: thought that my hon. Friend would put against that not only the loss on revenue or income but also the change in the cost of collection. I hope that the Minister will give us those figures.
  12.45 a.m.
  Mr. Taverne: The £50 figure is not totally irrelevant. Although it accounts only for a tiny proportion of the total amount of imports it accounts for a considerable proportion of the number of entries. The figure is only 0·3 per cent. in terms of total value but it is about 16 per cent. in terms of the entries which are made for items worth less than £50.
  I was asked if I could give similar figures for the higher amounts involved in the Amendments. I can give those only for £100. If the exemption were extended to £100 it would affect 1·1 per cent. of the total value of imports and 28 per cent. of the entries. On the face of it this would make it an attractive proposition, to argue that this affects only a small amount of the total value vet a considerable proportion of the number
  1430
  of entries, and therefore why should we not extend the amount beyond £100?
  The difficulty about this is the difficulty involved in circumventing the deposit scheme by splitting consignments into small amounts. There is no doubt that this would be done because it is being done with the £50 limit. Consignments of wine are already being split into amounts which bring them under the £50 limit. We chose that limit because at that level there are extra forwarding charges to be paid if extra entries are to be made, and the savings which would result from not having to pay the deposit would more or less be offset by the extra expense incurred by the additional entries.
  In the case of the higher limit it becomes eminently worth while to split consignments into many different lots and in this way a much bigger inroad into the scheme would be made than simply 1·1 per cent. of the total value.
  Mr. John Smith: Is it not possible to do exactly the same thing as we do in the exemption from stamp duty in respect of dealings in property of low value, namely, that a person signs a declaration that it is not part of a larger transaction?
  Mr. Taverne: There are all sorts of administrative difficulties and it is important that we should keep the administration to a minimum. We do not want to employ more people than necessary, and in order to keep the administration to a minimum it is important to avoid these complications.
  There would be major inroads into the scheme if large consignments were to be split in a way in which it would pay importers to split them. Therefore the limit is set rather lower than the Government and the Committee as a whole would like to see.
  Mr. Hall-Davis: I find it difficult to believe the caution and addiction to the minutiae of procedures should reach the point that we have just heard from the Minister of State. We can only contrast the concern of hon. Members on this side of the Committee to keep industry operating smoothly and efficiently with the concern of the Minister to make sure that not even 1·1 per cent. should become 1·5 per cent. or 0·3 per cent., even taking his present estimate, could perhaps

  1431
  become 1·5 per cent. It is incredible that the hon. and learned Gentleman should have made no mention of the importance of spares and replacements arriving in this country rapidly. With industry becoming increasingly heavily capitalised, with production lines at the mercy of a small breakdown in a single stage of the production flow, it is essential that a spare or replacement part should be flown into this country over the weekend and put into operation at the shortest possible notice.
  I ask the hon. and learned Gentleman—although with very little confidence, in view of his previous attitude—to do some mathematics about how many breakdowns in major plants need to be prolonged for an extra 24 or 48 hours for the national interest to be damaged far more than by the possibility of another 0·5 per cent. of imports escaping the levy.
  On the same theme, I turn to his question of splitting the consignments. He said that an advantage of the £50 limit was that if one exceeded it, it imposed the expense of an additional entry, and that therefore there was a double deterrent. I believe that the deterent of sending off two or twenty packages instead of one is so great that, even if it were tried a time or two, it would be rapidly abandoned.
  The Minister of State does not understand how industry works. Industry is not a grocer's shop, bundling up its products in brown paper bags and sticking a label on them. Industry is used to despatching its goods in batches of 20, 50, 1,000 or 5,000. This is particularly so if it is overseas industry, for whom we are only part of the market: they will not change their routines just to escape a levy at this sort of level.
  Some bright spark might try it once or twice, but this will not make serious inroads. We have many times drawn attention to the disproportionate difficulties which the small business will suffer under the Bill. In this situation, there is an opportunity of giving some relief to the truly small operator. There is no question of its being rejected on grounds of equity, for there is no equity in this Measure, especially towards the small businesses.
  1432
  We must thank the Minister of State at least for giving us the available figures. Would anyone say that the possibility of excluding 28 per cent. of the entries—and the fiddling 28 per cent.—which are going to cause the trouble, is not worth lifting the exemption on this vast sum by 0·8 per cent., and even running the risk that it might lift by another 0·2 or 0·3 per cent. because of split consignments?
  If the Minister of State cannot accept the Amendment in the interests of industrial efficiency, of the firms doing the repair work, and of trying to keep the administration down to a minimum, could he not at least give himself a flexible power to vary the limit up to £100, and, if he found this leading to widespread abuse, to bring it back down to £50. At least then industry will have the satisfaction of knowing that the Government made an attempt to accommodate them. The only conclusion one can draw from the reply of the Minister of State, if he does not heed the arguments, is that not only do the Government attach overriding importance to their credit squeeze, but do so at the expense of industrial efficiency and the continuation of smooth production at major plants. That is what they may well be imperilling.
  Mr. Pardoe: The Minister of State gave some very telling figures of the effect this change would have if we increased the amount of £100, for instance. Could he say whether those figures cover all imports or only those which are to be affected by this import deposit? The list of exemptions in the Schedule covers very large bulk deliveries, such as foods and raw materials. That means that his figures may be even more telling if they are only applied to the imports which the Bill affects.
  I fully accept the argument put far-ward by the Conservative Front Bench that the mere act of splitting these parcels is in itself a deterrent to imports. If the purpose is to stop people from importing, or making it difficult, the whole business of having to split consignments into small parcels is a brake on imports. I therefore believe that the Minister does not have a very strong case here. I hope that he will look at the case again and, in particular, give an answer to the statistical questions I have raised.
  Mr. Taverne: The answer is that the 16 per cent. and the 0·3 per cent. are on the chargeable imports involved. Hon. Members have not faced the reality of the arguments, because they have treated it purely as a matter of the 1·1 per cent. If the limit were £100, there would be an inroad of far more than 1·1 per cent. The Customs are in a position to judge, and they find that even with the £50 limit there is a good deal of splitting already going on, and it would be very much greater if the limit were raised to such an extent that the disadvantage of the forwarding charges would no longer be there to offset the advantages in not having to pay the deposit.
  Mr. Burden: The hon. and learned Gentleman says that there is evidence that they are already splitting. How long has this been running, and what evidence is there in the Customs already that goods have been split and sent overseas in this short time just to circumvent these regulations?
  Mr. Taverne: The fact that it is already visible in the short time of the scheme when the limit is as low as £50 strengthens the view that there would be a major difficulty if the figure was raised. When we come to the great difficulties that importers are said to have to encounter, the fact is that most articles are dutiable in any case. If the amount of the deposit which would have to be found were £100 instead of £50, one would have to weigh the marginal further inconvenience of finding the deposit in such cases where duty has to be found in any event compared with the inroads which it would make in the scheme. This leads to me think that the Committee
  would be well advised not to raise the limit.
  1.0 a.m.
  Mr. Stainton: I feel forced to protest at what the Minister of State said. I think he is obliged to quote the increased cost of freightage when parcels are broken up against the potential saving of imports. if we take the £50 limit, of which there is so much evidence of splitting, a rate of interest of 10 per cent., presupposes a saving of £2½. I wager that shipping freight anywhere in Europe, let alone as far as Hong Kong, would exceed that cost. Unless the Minister of State addresses himelf specifically to this point, I am afraid that he will find a very dissatisfied business public in the country.
  [Mr. SYDNEY IRVING, in the Chair]
  Sir K. Joseph: We would like to give the Government a chance to reconsider their answer to this batch of Amendments. If the Minister of State would tell us that they would do that, we would welcome another 24 hours after which they could come back to give us their considered answer. My hon. Friends would welcome that evidence of an open mind on a point which would add a disproportionate inconvenience to a large number of businessmen for an utterly marginal benefit to the Government scheme and would consider withdrawing the Amendment. If not, I am sure they would wish to divide against the Government point of view.
  Hon. Members: Answer.
  Question put, That that Amendment be made:
  The Committee divided: Ayes 105, Noes 147.

  Division No. 21.]

  AYES

  [1.2 a.m.

  Alison, Michael (Barkston Ash)

  Cooke, Robert

  Hall-Davis, A. G. F.

  Allason, James (Hemel Hempstead)

  Dalkeith, Earl of

  Hamilton, Michael (Salisbury)

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

  d'Avigdor-Goldsmid, Sir Henry

  Harvie Anderson, Miss

  Baker, Kenneth (Acton)

  Drayson, G. B.

  Hawkins, Paul

  Baker, W. H. K. (Banff)

  Eden, Sir John

  Heseltine, Michael

  Biffen, John

  Elliott, R. W. (N'c'tle-upon-Tyne, N.)

  Higgins, Terence L.

  Black, Sir Cyril

  Emery, Peter

  Hiley, Joseph

  Blaker, Peter

  Errington, Sir Eric

  Hill, J. E. B.

  Boardman, Tom (Leicester, S.W.)

  Eyre, Reginald

  Holland, Philip

  Farr, John

  Hordern, Peter

  Boyle, Rt. Hn. Sir Edward

  Fletcher-Cooke, Charles

  Howell, David (Guildford)

  Brewis, John

  Fortescue, Tim

  Hutchison, Michael Clark

  Brinton, Sir Talton

  Foster, Sir John

  Jenkin, Patrick (Woodford)

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

  Gibson-Watt, David

  Joseph, Rt. Hn. Sir Keith

  Burden, F. A.

  Gilmour, Sir John (Fife, E.)

  Kershaw, Anthony

  Campbell, B. (Oldham, W.)

  Glover, Sir Douglas

  Kitson, Timothy

  Carlisle, Mark

  Grant-Ferris, R.

  Legge-Bourke, Sir Harry

  Clegg, Walter

  Hall, John (Wycombe)

  Lubbock, Eric

  Peel, John

  Taylor, Sir Charles (Eastbourne)

  MacArthur, Ian

  Percival, Ian

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

  McNair-Wilson, Patrick

  Peyton, John

  Tilney, John

  Macmillan, Maurice (Farnham)

  Pike, Miss Mervyn

  van Straubenzee, W. R.

  Maddan, Martin

  Price, David (Eastleigh)

  Waddington, David

  Maginnis, John E.

  Prior, J. M. L.

  Walters, Dennis

  Maxwell-Hyslop, R. J.

  Pym, Francis

  Ward, Dame Irene

  Mills, Peter (Torrington)

  Rhys Williams, Sir Brandon

  Webster, David

  Miscamphell, Norman

  Ridley, Hn. Nicholas

  Whitelaw, Rt. Hn. William

  Mitchell, David (Basingstoke)

  Royle, Anthony

  Williams, Donald (Dudley)

  Montgomery, Fergus

  Russell, Sir Ronald

  Wilson, Geoffrey (Truro)

  More, Jasper

  Sandys, Rt. Hn. D.

  Winstanley, Dr. M. P.

  Murton, Oscar

  Scott, Nicholas

  Wolrige-Gordon, Patrick

  Nott, John

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

  Woodnutt, Mark

  Onslow, Cranley

  Smith, John (London & W'minster)

  Wright, Esmond

  Osborn, John (Hallam)

  Stainton, Keith

  Page, Graham (Crosby)

  Steel, David (Roxburgh)

  TELLERS FOR THE AYES:

  Page, John (Harrow, W.)

  Stodart, Anthony

  Mr. Hector Monro and

  Pardoe, John

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

  Mr. Bernard Weatherill.

  NOES

  Alldritt, Walter

  Fraser, John (Norwood)

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

  Anderson, Donald

  Freeson, Reginald

  Morgan, Elystan (Cardiganshire)

  Armstrong, Ernest

  Gardner, Tony

  Morris, Charles R. (Openshaw)

  Atkins, Ronald (Preston, N.)

  Griffiths, Eddie (Brightside)

  Moyle, Roland

  Atkinson, Norman (Tottenham)

  Griffiths, Will (Exchange)

  Murray, Albert

  Bacon, Rt. Hn. Alice

  Hamilton, James (Bothwell)

  Newens, Stan

  Bagier, Gordon A. T.

  Hamling, William

  Norwood, Christopher

  Barnes, Michael

  Hannan, William

  Ogden, Eric

  Bennett, James (G'gow, Bridgeton)

  Harrison, Walter (Wakefield)

  O'Malley, Brian

  Bidwell, Sydney

  Haseldine, Norman

  Oram, Albert E.

  Binns, John

  Hattersley, Roy

  Orme, Stanley

  Bishop, E. S.

  Hilton, W. S.

  Oswald, Thomas

  Booth, Albert

  Horner, John

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

  Bray, Dr. Jeremy

  Howie, W.

  Page, Derek (King's Lynn)

  Brooks, Edwin

  Hoy, James

  Palmer, Arthur

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

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Parkyn, Brian (Bedford)

  Buchan, Norman

  Hunter, Adam

  Pavitt, Laurence

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

  Irvine, Sir Arthur (Edge Hill)

  Peart, Rt. Hn. Fred

  Cant, R. B.

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

  Pentland, Norman

  Chapman, Donald

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

  Price, Christopher (Perry Barr)

  Coe, Denis

  Jenkins, Hugh (Putney)

  Price, William (Rugby)

  Coleman, Donald

  Johnson, Carol (Lewisham, S.)

  Rees, Merlyn

  Conlan, Bernard

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

  Richard, Ivor

  Crawshaw, Richard

  Jones, J. Idwal (Wrexham)

  Roberts, Gwilym (Bedfordshire, S.)

  Dalyell, Tam

  Jones, T. Alec (Rhondda, West)

  Rodgers, William (Stockton)

  Davidson, Arthur (Accrington)

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

  Rose, Paul

  Davies, Dr. Ernest (Stretford)

  Lawson, George

  Rowlands, E. (Cardiff, N.)

  Davies, Harold (Leek)

  Lever, Harold (Cheetham)

  Sheldon, Robert

  Dell, Edmund

  Loughlin, Charles

  Silkin, Rt. Hn. John (Deptford)

  Dempsey, James

  Lyon, Alexander W. (York)

  Silkin, Hn. S. C. (Dulwich)

  Dewar, Donald

  Lyons, Edward (Bradford, E.)

  Silverman, Julius

  Diamond, Rt. Hn. John

  Mabon, Dr. J. Dickson

  Skeffington, Arthur

  Dobson, Ray

  McBride, Neil

  Swingler, Stephen

  Doig, Peter

  McCann, John

  Taverne, Dick

  Dunnett, Jack

  MacColl, James

  Tinn, James,

  Dunwoody, Mrs. Gwyneth (Exeter)

  Macdonald, A. H.

  Urwin, T. W.

  Eadie, Alex

  McGuire, Michael

  Wainwright, Edwin (Dearne Valley)

  Edwards, Robert (Bilston)

  McKay, Mrs. Margaret

  Walker, Harold (Doncaster)

  Edwards, William (Merioneth)

  Mackenzie, Gregor (Rutherglen)

  Wallace, George

  Ellis, John

  Mackintosh, John P.

  Watkins, David (Consett)

  English, Michael

  Maclennan, Robert

  Whitaker, Ben

  Ennals, David

  McNamara, J. Kevin

  Williams, Alan Lee (Hornchurch)

  Ensor, David

  MacPherson, Malcolm

  Williams, Clifford (Abertillery)

  Evans, Fred (Caerphilly)

  Mahon, Simon (Bootle)

  Wilson, William (Coventry, S.)

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

  Manuel, Archie

  Winnick, David

  Fernyhough, E.

  Marks, Kenneth

  Wyatt, Woodrow

  Fitch, Alan (Wigan)

  Marsh, Rt. Hn. Richard

  Fletcher, Ted (Darlington)

  Mikardo, Ian

  TELLERS FOR THE NOES:

  Foot, Michael (Ebbw Vale)

  Millan, Bruce

  Mr. Charles Grey and

  Forrester, John

  Miller, Dr. M. S.

  Mr. Joseph Harper.

  Fowler, Gerry

  Mr. Michael Shaw: I beg to move Amendment No. 101, in page 3, line 21, at end insert:
  (3)(a) No import deposit shall be payable in respect of goods which it is shown to the satisfaction of the Commissioners are entered
  1436
  in the name of a company if it is neither a holding company nor a subsidiary of another body corporate and its turnover does not exceed £500,000;
  (b) the said turnover is to be calculated as though sub-paragraph 13A(2) of Schedule 2 to the Companies Act 1967 applied and relates

  1437
  to the annual accounts made up to a date within the year ended 27th November 1968;
  (c) any such exemption shall not be granted to such a company to the extent that the goods which it imports under this Act exceed £500,000.
  In recent months, the plight of small companies has been brought much more to the attention of the House and the general public, thanks in large measure to my hon. Friend the Member for Croydon, North-East (Mr. Weatherill). This Amendment is designed to give exemption to smaller importing companies, providing that, if a company during its last financial year had a turnover of less than £500,000, it may import up to £500,000 worth of goods before becoming liable to pay import deposits.
  We are not wedded to the figure of £500,000. If Ministers are prepared to meet us in any way, we shall do our best to fall in with them. There is, however, a wide variety of view as to what constitutes a small company. The C.B.I., for example, feels that an Amendment of this kind would be appropriately directed to a figure of £1 million turnover. Under the Companies Act, 1967, it was felt that the appropriate smallness for the purpose of exemption related to turnover was indicated by a limit of £50,000 turnover. Our Amendment falls just about halfway between the two. As I say, we are not wedded to a particular figure. Our concern is for the strong point of principle involved.
  For a concern predominantly engaged in purchasing and merchanting, £500,000 worth of goods imported and sold sets a reasonable and small limit. Indeed, if that were the total turnover of sales, the figure of purchases, even if wholly from abroad, would be less. If the goods were used for manufacture within the company, the amount of foreign goods brought in comprised in the total turnover of less than £500.000 would be considerably less still.
  1.15 a.m.
  The Amendment stands on two legs. The first is the limit itself, on which we are prepared to agree any reasonable figure. The second is the leg of principle. Is it agreed between the two sides of the Committee that there should be some sort of exemption for the small company? We hold that there
  1438
  should be. [AN HON. MEMBER: "Why?"] Because, over the last four years, in Bill after Bill the incidence of burden has pressed particularly hard upon the smaller company, and we are anxious to rectify that as much as we can. We are not convinced by the Financial Secretary's statement on 28th November that
  "The most that will happen here, and what is intended to happen, is that a man who really must have the import will go to the inconvenience and modest expense required to obtain finance."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 760.]
  It will not be easy for all small companies to obtain that finance if they cannot go to their banks. We heard earlier tonight about their difficulties in not being able to use the documents as negotiable instruments. There is clearly a limitation for the company that is not large and does not have the strong financial standing that itself will be a sufficient guarantee to the would-be lender. Private companies do not have the sort of strength by which they can persuade bankers to lend them money without security.
  Apart from the changes in the taxation system, which have fallen very heavily on close companies, that problem of obtaining additional substantial finance has continually bedevilled many small companies. It is not enough simply to consider the new burden that the Bill will place on the small company; we must look at the problem against the general background of financial difficulty. There are the present restrictions on credit, which have been in existence for far too long, and there is the threat of an added squeeze superimposed on already difficult conditions.
  There is another burden that bears particularly hard on small companies. If they are growing, virile companies they are continually expanding, mainly on bank money which tides them over a period of expansion until they can consolidate. This inevitably means that during a time of squeeze they temporarily finance themselves in the hope that the squeeze will ease off, as has always happened in the past, that the policy will be successful and a period of easier credit will lie ahead. The Government have given indications time and again that their policies have been working

  1439
  and that better times were ahead. Therefore, the companies' hope was legitimate. They have worked very close to their margins, and therefore a sudden additional squeeze, such as seems to be coming upon them, bears all the harder. Those are the sort of difficulties that face such companies.
  The final difficulty is that of still further extended credit by their customers. I am sure that further extensions of credit in the trade generally will take place if there is a tighter squeeze in the months ahead. This affects the small manufacturer more stringently than others.
  All those general considerations must be taken into account when considering the additional burden being placed on such companies by the Bill. The small company deserves a break—and more. It deserves practical acknowledgment by the Government that its difficulties are recognised, as is the vital rôle that such companies play in our economy and in the future well-being of this country.
  Mr. Harold Lever: May I congratulate the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) on what, as far as I know, is his first appearance on the Opposition Front Bench. He argued his case with deep earnestness and as much plausibility as the terms of his Amendment permitted. The Amendment combines a high degree of impractibility with a high degree of undesirability.
  Let us examine the tedious detail, not of the drafting, but of the practicality of what the hon. Member proposes. He proposes, in effect, that companies with a turnover not exceeding £500,000 should be exempted from the import deposit. How are we to know whether a company is going to have a turnover of only £500,000? He does not want us to go through the books of a company afterwards, so at the time of importation we will be admitting goods free of duty on the say-so of the importer alone. One can look at the turnover in the year of exemption, but the hon. Member is faced with a serious difficulty. The importers would come in and assure me earnestly that they did not expect to have a turnover of more than £500,000, but then they might have a turnover of several million pounds. Then the bird is flown, the goods are imported and there is
  1440
  nothing we can do about it. The Act will have expired by the end of a year.
  The hon. Member does not argue that it is possible to do what his Amendment purports to do: to exempt firms who, after the deposit scheme comes into force, have a turnover of only £500,000. He is driven to go back to the past and not to rely on the present.
  Mr. Nott: I wonder if the Financial Secretary was going to suggest that companies might wish to split turnover?
  Mr. Lever: I will come to that proposition in a moment. Let us first deal with this point: what the hon. Member wanted us to do in his speech he does not propose in his Amendment. If we followed the Amendment, a firm which imported £500,000 or less last year would be exempt. He is driven to rely on what has happened so far and not on what happens in the period of the scheme. So all a firm which has imported £100 million of goods has to do is to prove that it did not turn over more than £500,000 this year. It would be in a splendid position and could do £100 million in the following year since every competitor of any size would be paying the deposit. It would mean channelling the import trade of this country through the small firms. This ingenious arrangement evades the real problem of relating the deposit to what is happening now. It simply means that any importer who had the good fortune not to import £500,000 last year will have freedom to import more this year. To do what he says he knows is impossible, so the hon. Member does something quite different. He gives unrelated exemption irrespective of the amount imported, provided that the company did not import more than £500,000 last year.
  Mr. Shaw: What about (c).
  Mr. Lever: The hon. Member wants (c) to mean that in some way exemption is not granted to a company whose goods imported exceed £500,000. But the exemption will already have been granted, the bird will have flown, the deposit will not have been paid, the Act will have expired and the Customs Commissioners will be left lamenting and without the millions of pounds of deposit which was to produce all the desirable results that my right hon. Friend the Chancellor of the Exchequer has foreshadowed for the

  1441
  benefit of our country and of our economy. Therefore, ingenious as it is, the Amendment cannot assist us.
  For lose reasons, the hon. Member is on the horns of a dilemma. He has either to use past experience, which is irrelevant, or, if he attempts to use the relevant experience, rely on an ample supply of crystal balls available for the Customs which will enable it to predict with certitude what the company's turnover will be as it commences to import at the beginning of the year. Without those crystal balls, the Customs will be facing considerable difficulties in operating the Amendments proposed by the hon. Gentleman.
  Mr. Michael Shaw: The Financial Secretary has highlighted, very wittily, the problems involved in any Amendment of this nature. What he has not answered is whether he is sympathetic towards any sort of exemption for small companies.
  Mr. Lever: The hon. Member is trying to lure me to do what I never do, certainly not since I have had the privilege of addressing the House of Commons as Minister, and that is to stray from the due order which you, Mr. Irving, so jealously preserve. I can deal only with the Amendment which is before the Committee. I have told the Committee the effects of it, although, if the hon. Member wishes, and if you, Mr. Irvine, do not think that I am straying too wide, I would like to join him in expressing the deepest sympathy with small companies in every difficulty they face.
  I am, in fact, looking personally into some of their tax difficulties with very real sympathy. I am very anxious to help them. I absolutely take the hon. Gentleman's point that the small companies form a vital part of the entrepreneurial atmosphere of the free enterprise section of the economy. I do not want to discourage them in any way. I think that they can all hold their own but, unhappily, for the reasons I have outlined, it would not be desirable to accept the Amendment.
  With all the sympathy which I share with the hon. Member and with hon. Members opposite for all small companies, in all difficulties, of all kinds,
  1442
  nevertheless I must advise the Committee to reject the Amendment.
  Mr. Robert Cooke: Before the Committee comes to a decision, I should like to join the Financial Secretary in expressing sympathy for small companies. My hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) was trying to make their position possible under the existing conditions of squeeze. He particularly mentioned close companies which find it difficult in present circumstances—perhaps at any time—to get finance for expansion.
  Without giving away any trade secrets, I would like to raise with the Financial Secretary the case which he has already been sent by a constituent of mine concerning a small family company which has discovered a piece of equipment manufactured abroad but which is manufactured in only two foreign lands, one some way from this country and one in Europe, one of our most deadly European competitors.
  The company has managed to get the exclusive franchise in the United States of America, Canada and South Africa for this foreign machine, which it wishes to export to those countries. Indeed, the potential export to the United States is, on reasonable estimates, something like 110 million dollars. That is something not to be sniffed at if we can grasp the opportunity.
  My constituent assures me, however, that because of the import deposit on his trade in similar machinery, he will have to find between £50,000 and £60,000 to put down as deposit. This, he say, he simply cannot afford. It will result in the cancellation of all his plans and arrangements for the United States of America and South Africa, and he is quite certain that the whole of the trade which he had hoped to make with those countries—export trade, earning dollars for Britain—must be abandoned, and our European competitor will seize the opportunity.
  1.30 a.m.
  I know that I must not go into too much detail, but the Amendment is aimed at helping the small companies and the Financial Secretary said that he was anxious to help. I have no doubt that he will be out of order in telling me how he proposes to help cases such as

  1443
  the one I raise, but I hope you, Mr. Irving, will allow him to say a few more friendly words to show that he has not closed his mind to finding a way at a later stage of helping companies such as this.
  Mr. Lever: This is a matter which the hon. Member should examine when we come to the Schedules of exemptions; it is not entirely appropriate to this Amendment. May I take this opportunity of insisting that my sympathy for small companies does not derogate from my sympathy for large companies, in appropriate cases, where the difficulties of small companies need sympathy and the difficulties of large companies need sympathy.
  Mr. Michael Shaw: I will gladly reconsider the words of the hon. Gentleman, particularly those expressing what I believe to be his sincere sympathy for the small company. I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Mr. J. Bruce-Gardyne: I beg to move Amendment No. 78, in page 3, line 24, at end insert:
  (4) No import deposit shall he payable in respect of goods or materials imported exclusively for the purpose of incorporation as components in manufactured articles which would themselves require to be wholly imported in the event of non-availability of the imported components.
  The Chairman: With this Amendment we may also discuss Amendment No. 79, page 3, line 24, at end insert:
  (4) No import deposit shall be payable in respect of goods or materials imported exclusively for the purpose of incorporation as components in articles manufactured under a licensing agreement entered into before 22nd November 1968 and containing a guaranteed minimum royalty payment clause which will operate during the period of operation of this Act, in any case where manufacture cannot take place without the import of the said goods or materials.
  Amendment No. 114, in page 3, line 24, at end insert:
  (4) No import deposit shall be payable in respect of goods or materials which are imported wholly and exclusively for the manufacture in the United Kingdom of other goods or materials of a type, kind or description currently imported into the United Kingdom.
  and Amendment No. 115, in page 3, line 24, at end insert:
  (4) No import deposit shall be payable in respect of goods or materials being goods or
  1444
  materials controlled by patents which prohibit their manufacture in the United Kingdom, and also being goods or materials which are imported wholly and exclusively for the manufacture in the United Kingdom of other goods or materials of a type, kind or description currently imported into the United Kingdom.
  Mr. Bruce-Gardyne: The four Amendments have one point in common, that they are all concerned with exemptions designed to provide the possibility of import substitution. The distinction between them is that Amendment No. 78 has the effect of giving exemption for the import of components not available in the United Kingdom to be incorporated into finished articles which would in turn have to be imported if the components were not available.
  Amendment No. 79 is effectively the same as No. 78, but it is confined to cases where, if the importer of the components were unable to import the components, he would he penalised under a royalty agreement applying to the finished goods for his inability to manufacture the finished goods.
  Amendment No. 114, in the name of my hon. Friend the Member for Barkston Ash (Mr. Alison) and myself, is the widest of the four and would give exemption for machines imported for the purpose of manufacturing goods in substitution for goods currently imported.
  Amendment No. 115 is a narrower version of No. 114 in that it is confined to machines imported for the purpose of import substitution, machines which cannot be manufactured in this country because their manufacture is protected by patents.
  It is arguable that this sort of legislation should be left severely alone on the grounds that so much unconsidered, ill-prepared, half-baked and entirely deleterious legislation comes from the hands of this Government that the best thing to do is to leave it to wreak the full damage so as to expose the idiocy of the Government who are responsible for it. On the other hand, we have to consider the interests of our constituents, and it is with the interests of one firm in mind that I have drafted the first two of these Amendments.
  I can explain the case simply by describing the circumstances of the firm. It is a small engineering firm in my constituency manufacturing, among other

  1445
  items, machinery for the jute industry. It has just started this year to manufacture a high-speed cock winder for the jute industry under licence from the Belgian patent holders.
  The firm is making arrangements to have all the bought-in components manufactured in the United Kingdom, but, meantime, it is faced with the necessity to import electric motors and switchgear from Belgium. There are no motors and switchgear of this type currently available in this country for incorporation in these high-speed cock winders.
  The cost of the imports of the electric motors and switchgear runs at £1,500 a month.. In other words, unless they are exempted from the provisions of the Bill, it would be obliged to find a deposit of £750 a month. It happens that the firm is right up against its overdraft limits, and I understand that it has no way of finding the £750 a month for this purpose.
  Unless it is granted an exemption, it will have to cease to manufacture these high-speed cock winders. Already it has sold two machines to Turkey and one to Mexico, and it estimates that there is a marker for some £100,000 to £150,000 worth of exports available for the machines in Pakistan alone.
  No doubt I shall be told that, in a later Amendment in the Chancellor's name, in so far as these machines are exported, the components might be exempted from the import deposit, anyway. But this would not help the firm, because it could not find the residual deposit which would still be required for components required for machines intended for home delivery. The truth is that, if it is prevented by the import deposit scheme from importing these components, it is possible that it may lose these extremely valuable export markets. In addition, it will also lose the markets for this revolutionary machine at home. Some Dundee manufacturers have ordered these machines. I am assured that, if they cannot obtain them from a local manufacturer, they will purchase them from Belgium. The effect of that will be that, instead of our facing a bill of £100 a time for imported components for the machines, each machine will cost £1,040 to our balance of payments to import from Belgium.
  1446
  We are told that the object of the Bill is to reduce the total cost of our imports. If that is so, it is hard to imagine anything which could be less sensibly designed for the purpose.
  I come, then, to Amendment 79, because, under the terms of the firm's agreement with the Belgian patentees of the finished machine, it has an obligation to pay £5,000 on 1st April of next year as its minimum guaranteed payment for machines which, if it is not allowed to import components, it will not be able to produce. The effect of having to pay this £5,000 guarantee will be that because the company is running on a very tight financial margin it will have to cut down its investment and modernisation programmes and will be forced to abandon, perhaps for some years and perhaps for ever, the prospect of manufacturing these high-speed cock winders in future.
  I do not wish to say very much about the other two Amendments which are much broader, as I think their intention is very clear. As I say, it is a matter of enabling firms to import machinery which is not available in this country and which can then be used for the manufacture of goods which are currently imported into the United Kingdom.
  But, as to Amendment No. 115, I suggest that it is a little absurd that manufacturers who wish to develop the production of goods which are currently imported into this country but who are dependent upon machinery or machine tools imported from abroad in order to produce those goods, who cannot obtain the machines in this country because they are covered by patent arrangements which make it impossible for the machines to be manufactured in this country, should be debarred or discouraged from importing those machines by this grotesque and absurd measure.
  I hope I have said enough to explain the purpose of the Amendments. I do not regard their wording as in any sense sacrosanct, and if the Minister of State were able to say that he accepts their sense but rejects the wording I should be delighted; I hope that he would then consider the wording and suggest wording which the Government could accept, so long as the sense is retained.
  Mr. John Hall: I am grateful to my hon. Friend for having

  1447
  tabled these Amendments. Curiously enough, I have a case very similar to the case which my hon. Friend recounted to the Committee, which is met by at least three of the four Amendments. I have to declare a personal interest because I am chairman of the company I have in mind. For this reason, perhaps I know in considerable detail the problems affecting the company.
  It is a company which imports partly finished goods which are its raw materials. It cannot get these partly finished goods in this country; they have to be imported. The company will face a deposit charge of something like £250,000 over six months from the date on which the Bill comes into force. Although, under the guidance given by the Chancellor, it can have facilities to meet the deposit charge for the first few weeks, this will be useless for meeting a deposit charge amounting to £250,000 over six months. It will have considerable difficulty in obtaining finance from other sources. If it is unable to pay the deposit, it will have to cease importing and cease manufacturing. There is no alternative.
  The tragedy is that it is an expanding company. It is building up an export business from the fully manufactured goods that it finishes in this country, exporting to those parts of the Commonwealth which were the old Colonial Empire. It can build up a business which it is estimated might be worth anything from £500,000 to £1 million in the next few years. Because of the pressure on the banks to restrict their lending, the company will be in a position of having drastically to reduce its scale of operations and perhaps close down altogether. As the factory is in a development area, giving employment where it is needed, it would be a tragic matter and not one which was intended by the Government in bringing forward the Bill.
  1.45 a.m.
  I am sure that this is only one of many cases. It comes about by the fact that the Government have selected in their list of exclusions in Schedule I basic raw materials which must have been culled in the days of the 19th century. Many companies today import a number of semi-processed goods which are the raw materials that they finish. A great
  1448
  part of our export trade is made up of companies importing semi-processed goods which are re-exported in a finished state, having had used on them the particular skills for which this country is notable throughout the world. I hope that whoever is to reply will give special consideration to the cases mentioned by my hon. Friend and myself, cases which no doubt can be duplicated by hon. Members in all parts of the Committee.
  Mr. Drayson: I am grateful to my hon. Friend for having moved these four Amendments.
  Amendment No. 114 covers an aspect of one of the problems of a firm in my constituency which I had hoped to raise on the Schedules to the Bill. That Amendment deals with the import of goods or materials which are imported wholly and exclusively for manufacture in the United Kingdom. I will give the Minister details about the case that I have in mind in the hope that he might be able to consider such cases, and, when we come to the Schedules, it might be possible for the Government to put forward Amendments that would cover them.
  The mill to which 1 refer imports its yarn from Austria. That yarn consists of about 50 per cent. Australian wool and about 50 per cent. I.C.I. Terylene which has been exported from the United Kingdom to Austria. The Australian wool makes its way to the United Kingdom via Austria where it meets the I.C.I. Terylene which has been exported from the United Kingdom. The Australian wool and the Terylene are spun together and the resulting yarn arrives in the United Kingdom where it is woven into tropical suitings, of which about 98 per cent. is exported.
  This firm has been weaving cloth for over 100 years, it employs over 100 people, and its turnover, on the export side, amounts, after finishing processes, to £1 million a year. It is faced with immediate difficulties. It has a consignment of this yarn at Hull docks and it is called upon to pay a deposit at the moment of £40,000 for £80,000 worth of yarn. This seems wholly unfair to a company that is exporting material which consists of 50 per cent. Terylene which has been sent from the United Kingdom to Austria to be spun with the

  1449
  Australian wool, simply because the yarn is not produced here at the present time. The firm tells me that it will be only too pleased to get its requirements of yarn in the United Kingdom and then make 100 per cent. export of its tropical suitings, for which there is no market in this country.
  Some years ago the company made the decision, when it was supplying 95 per cent. of the home trade with its products, to switch to exports, and in a period of 12 months it switched over to 95 per cent. for export. It is to be congratulated on its remarkable achievement. However, it is now faced with considerable difficulties.
  I hope that I have sufficiently outlined the problem so that the Minister will have an opportunity of giving sympathetic consideration to the case. I shall raise it again when we get to the Schedule. but it may well be covered by the Amendment.
  Sir Harry Legge-Bourke: One has to relate the Clause to the Schedule—and we discussed the principle underlying the Schedule on the Order the other day—but there are two examples in the Schedule of semifinished products which are exempt. The first is woven fabrics of jute, and the second is pearls, synthetic and natural, precious and semi-precious stones and precious metals not fully manufactured. I cannot see the logic of upholding those exemptions and turning down the Amendments.
  The partially manufactured products which would be covered are those which are essential to the companies concerned. Very often they cannot be obtained in this country, and the object of the Amendments is to make sure that those materials which are essential to complete a manufacture in this country, but which cannot be obtained here, are exempt. If it is possible in the Schedule as it stands for the Government to put in semi-finished products anyway, why cannot they accept the Amendments, which do not infringe the principle embodied in the Schedule?
  Mr. David Mitchell: I wish to draw attention to a problem which arises in my constituency, and which is not covered by the Schedule. A
  1450
  firm in my constituency exports diamond drills for drilling through rock in various parts of the world. The drills become battered beyond imagination in use, and have to be re-imported here when that happens. The diamonds are then picked out of the battered piece of metal, put on to a new metal base, and re-exported. So far as I can see this will not be covered, and I ask the Minister to ensure that it is, by putting forward an Amendment to the Schedule when we reach it.
  Mr. Biffen: The jute industry and those activities ancillary to it can count themselves lucky to have so fluent and cogent an advocate as my hon. Friend the Member for South Angus (Mr. Bruce- Gardyne).
  The point which occurs to me relates to the machine tool industry, and a development which we have seen in the British machine tool industry over recent years. It is one which is welcomed by both sides of industry. I am referring to the development of certain lines of machine tool manufacture and certain sophisticated designs as a result of American investment and partnerships in association with British machine tool companies. The obvious case is Herbert-Ingersoll, which has a very sophisticated line of machine tools now being installed at Daventry. That is one example of the trend which is in wide evidence.
  These are imports of parts, very often from the American partner, which are essential to the build up in this country of machine tool designs which hitherto have not been manufactured here. Once the designs are manufactured in this country, it will mean that we shall no longer need to import them from North America or from our Western European competitors. Developments of this kind are put in some jeopardy by the Bill, and I am sure that the Minister will be anxious to assure the House that that kind of importation will be allowed to continue, and will not be harassed in any way.
  Mr. Taverne: Many points have been made forcefully about encouraging import substitution and avoiding dislocation. Reference was made to this by the hon. Members for Oswestry (Mr. Biffen), South Angus (Mr. Bruce-Gardyne), and others. To some extent the question that arises here, and in particular the kind of problem raised by the hon. Member for

  1451
  Skipton (Mr. Drayson), can be fully discussed when we come to the Government Amendments to the Second Schedule. The other questions on the Schedule will be discussed at a later stage. My objections to the Amendments are not ones which relate to the Schedule; they are inherent in this kind of Amendment.
  The question posed by the Amendments is: how do we verify the facts on which the exemption from import deposits would be based? It is very important that the test for the customs as to whether or not a deposit is payable should be a clear one. If it is not clear—if there is elaborate argument about whether or not the goods fall within the exempted case, and elaborate inquiries have to be made to see whether these are the kind of goods which get an exemption, the result would be that time was taken on inquiries, there was congestion at the docks, and all sorts of difficulties arising which interfered with the importation of these and other goods.
  If we look at the kind of matters raised in Amendment 114, which is the widest one, we see that the difficulty is not a matter of drafting; it is inherent in this kind of Amendment. The facts which would have to be established are not necessarily self-evident at the time when the application for exemption is made. Are these goods of a type currently being imported into the United Kingdom? In some cases it would be clear, but in many cases it would not necessarily be clear straight away. Are these goods of a type which are wholly and exclusively imported for the manufacture of goods of that type? These questions cannot be clearly determined, and if they have to be examined by the customs authorities many delays will occur.
  On the point raised by the hon. Member for Oswestry (Mr. Biffen) it may be difficult to establish the kind of facts which he outlined. This difficulty is inherent, to a lesser extent, in the other Amendments. The acceptance of the first Amendment would make a major inroad into one of the central purposes of the whole scheme—the restriction of credit. Being drafted in such wide terms it would mean that the amount of credit being affected by the scheme would be much less than it would if this exemption were excluded.
  1452
  Amendment No. 115 is not quite as wide, but the same sorts of question arise as to whether these are materials of the type currently imported into the United Kingdom and whether they are imported wholly and exclusively for the manufacture in the United Kingdom of these types of goods.
  With Amendment No. 78 one is in greater difficulty, because it does not refer to similar finished goods currently being imported; it refers to manufactured articles which would require to be wholly imported in the event of the non-availability of the imported components. Are they necessary? Who will decide whether they are? These are clearly the kind of questions which would lead to endless arguments, confusion and congestion at the docks.
  On Amendment No. 79, many of the matters are more easily verifiable. This would not apply to all, because we should have to decide, again, whether manufacture could not take place without the import of the said goods or materials. On the other hand, it would be possible to establish whether a licensing agreement had been entered into before 22nd November.
  2.0 a.m.
  But there is a further difficulty here, which also arises over the next group of Amendments, namely, what to do about prior contracts. I do not want to go into that argument, but either one exempts all prior contracts and goods in transit or one does not exempt them at all. But there is no case for taking one form of prior contract alone, that of a licence agreement. I do not want to anticipate our next debate, but the general difficulty which exists in its strongest form in Amendment 114 also applies to all the other Amendments.
  Mr. Bruce-Gardyne: The Government are knowingly and consciously encouraging the import of goods costing £1,040 each to the balance of payments in place of goods costing £100 each, but in the circumstances of this fatuous legislation, this is a consequence which we must probably face, since additional complications would arise under the Amendments. It proves once and for all that, when we are trying to handle the legislative programme of this Government, the best thing to do is let it alone and allow it

  1453
  to do the maximum possible damage to the economy.
  Amendment negatived.
  Amendment made: No. 31, in page 3, line 25, at end insert—
  'subject to annulment in pursuance of a resolution of the Commons House of Parliament'.—[Mr. Taverne.]
  The Chairman: We come now to Amendment No. 28, in page 3, line 30, at end insert—
  (6) No import deposit shall be payable in respect of goods which it is shown to the satisfaction of the Commissioners were already in transit on 22nd November 1968 or were the subject of a contract dated prior to 22nd November 1968.
  with which we may also discuss Amendment No 96, in page 3, line 17, at end insert—
  "(2) No import deposit shall be payable on any goods delivered as part of a contract entered into before 22nd November 1968."
  Mr. Emery: It would probably be convenient for the Committee if I move the second Amendment at this stage. I beg to move in page 3, line 17, at end insert—
  "(2) No import deposit shall be payable on any goods delivered as part of a contract entered into before 22nd November 1968."
  This covers the same point as Amendment No. 28. Both, as the Minister said earlier, deal with prior contracts and goods in transit. We have had arguments on these lines before. I moved similar Amendments in our debate on the 15 per cent. surcharge. There is a difference of approach between both sides of the House in how we would deal with these matters in this type of legislation.
  I do not want to be railroaded into a debate on how prior contracts may be affected by taxation, because these are not the same as or even slightly similar to those affected by this type of legislation. We believe that any contract given by any person purchasing in industry is of major importance. We ought to do all we can to ensure that sanctity of contract is preserved, because on that rests the confidence of people in industry and commerce.
  An importer may be under a contractual obligation to supply goods at a given price. He is acting independently, although in some aspects he is acting as an agent for industry. I have already
  1454
  referred to A.E.C., which farms out to specialists certain of its contractual imports. Those are usually obtained for the company on fixed term contract. This Bill means that the importer will not be able to hand on any of the 2½ per cent. increase which the Financial Secretary glibly suggested could easily be absorbed by the importer. The strength of the hon. Gentleman's argument was that all importers will be in exactly the same position, but if the importer already has a firm contract, he has to meet that 2½ per cent., and that seems to me to be entirely wrong. If it is suggested that the major company should make allowances for this legislation, that is a possibility, but again it means that industry is being asked to up its prices generally, because its estimates are carefully and closely worked out.
  Goods in transit are normally covered by a purchase order or a contract. The Amendment covering contract is fair enough and definite enough to cover them, and should be considered by the Government. Again, we see an aspect of retrospection in this legislation. People who have made commercial judgments about the pricing of components for industry and have acted as the law allowed—and this is not a matter of tax we have been nearly told by a Law Officer earlier today that it is not a duty—and suddenly we have retrospective action which must increase the price of the product, process or component. This type of legislation ought to be discouraged.
  The strange thing is that in this House, whichever party is in Opposition, we always have loud and long—and I hope my speech will not be of the latter type—speeches about retrospective legislation. It is right that those speeches should be made, but what worries me that that more and more the aspect of retrospection has been creeping into the type of legislation that we have been getting from the Government. We have had it even in the recent mines and quarries Measure, and here we have it once again. The Financial Secretary can shake his head, but in the present case it means that retrospective legislation will increase the prices of goods contracted for some times months before, or even last year.
  At this late hour there are a number of other problems one could argue about. I should perhaps declare an interest in

  1455
  the Institute of Purchasing and Supply. It has made only one major objection to this Bill. It has always felt that free trade is the best method of obtaining efficiency, but it feels strongly about this aspect of sanctity of contract. On this more than on anything else it would urge the Government to give way.
  How much do the Government believe they would lose if they gave way? Have they any idea? I have attempted to make some estimates. I urge the Government to consider this matter because I do not believe that the amount lost would be significant. If it is not large or significant, for goodness sake instead of having this type of objectionable legislation let us back up the general approach on the sanctity of contract and allow those which are already in existence for the transit of goods to stand.
  [Mr. HARRY GOURLAY in the Chair]
  Mr. Burden: I add my voice to that of my hon. Friend the Member for Honiton (Mr. Emery). In the Second Reading debate I raised this point about contracts which have been entered into. Already many firms have entered into contracts which will not mature until some months ahead. This raises a very important problem for firms which as a result of this legislation will not be able to take delivery of goods which they have ordered because of the 50 per cent. deposit. Not only will that do the firms concerned considerable harm but they may find themselves liable to prosecution for not carrying out contracts they have entered and subject to heavy damages, and also because they are unable to honour the contracts for sales in this country of the merchandise they intend to import they may be faced with claims for damages because of non-delivery to customers here. This would place them in a serious position.
  At one moment the Government say that these people will have no difficulty in getting the money for the deposit and at another moment they say that the whole operation is intended to make it impossible for people to get credit and it is to mop up liquidity. If there are only some who cannot honour contracts because of Government action the Government should consider insulating those who cannot meet their obligations and who might be subjected to legal penalties
  1456
  against the hazard which the Government have created.
  If these circumstances arise, there will be representations by companies overseas which have been let down by British firms which have been unable to meet their obligations because of Government action. Other countries may take retaliatory action against us. British exporters to countries where we have fallen down on our obligations will suffer, as will the Government.
  2.15 a.m.
  Mr. Blaker: In rejecting an earlier Amendment the Minister of State said that one of his grounds for doing so was that no clear test would be available of whether the goods should be exempted. That argument is not available to him in this case, because there will be clear documentary evidence in any imaginable cases the Commissioners will have to consider. What is more, the Amendment contains the words
  "to the satisfaction of the Commissioners".
  If the Commissioners are not satisfied with the documentary evidence available to them, there will be no exemption. The hon. and learned Gentleman may argue that the acceptance of Amendment No. 28 would create more work. This argument is not valid either, in view of what he said when rejecting the suggestion that the minimum exemption limit should be raised above £50.
  Hon. Members have received particulars of many cases, from constituents and elsewhere, illustrating contracts which cannot be cancelled and which were finalised before the relevant date. I have received details of three, all of which indicate the stupidity of the Bill as framed. One is the case of an importer of machinery to manufacture macaroni which would compete with macaroni which will be imported free of deposit. Another case concerns machinery specially made in Germany to produce glass fibre which is intended to increase the sales of the importing country by between 300 and 400 per cent. The cases of which I have received details concern goods not available here and where importers foresee difficulties arising in the availability of credit.
  In the cases we are considering ex hypothesi no purpose will be served by reducing imports, because the goods have

  1457
  already been ordered. The only purpose that can be served is to reduce credit. That purpose will be served only at the cost of injustice. If the matter of reducing the availability of credit is so much in the Government's mind, can they not find another method of doing it without causing injustice and without once again, as they have so often done in the last four years, badly affecting business morale by subjecting business to shocks which no reasonable businessman could be expected to foresee? It is becoming such a hazardous business to be in commerce that it must have an adverse effect on our economy.
  I have one example here which shows how lunatic the proposed arrangement is. A wine shipper has in Bordeaux, Burgundy and Germany stocks of wine which he wholly paid for seven or eight years ago. He is now informed that, if he imports this wine during the currency of the Bill, the import deposit will have to be paid. No purpose in restriction of imports will be served by subjecting these imports to the deposit. They have already been paid for 100 per cent. In this case the Bill will work contrary to the Government's intention, since this gentleman will not import his wine. He will leave it there, even if this means some deterioration in quality, and that wine, which would have been imported without cost to the balance of payments will be replaced by other wine for which we shall have to pay.
  Mr. John Hall: We are now at the hour of the morning when it is reputed that human vitality is at its lowest. Certainly, my vitality is pretty low. I only hope that the Minister's vitality is even lower and that he may be driven to accepting his first Amendment today.
  The Amendment is particularly relevant to a case which has been brought to my attention. All who have spoken so far have given examples of the way in which the Bill adversely affects many British companies. The case to which I refer is that of a large printing company which, some time ago, became concerned at the lack of printing facilities in England, especially for coloured brochures, most of which work is now being done on the Continent. More and more companies are now having their printing crone abroad, especially the print-
  1458
  ing of travel brochures, which come in duty-free and are, moreover, exempted under Schedule 1 and come in without payment of the deposit.
  Because of its concern and its wish to play a part in saving some of the import cost which must be met in the printing of brochures abroad, this company looked about for a suitable photogravure machine which would do the job. Naturally, it looked for a British machine first but could not find one of the right size and quality or offered at the delivery date it wanted. Eighteen months ago, therefore, it bought a machine from a Continental country, and that machine is now coming up for delivery.
  The machine costs £200,000. The company will have to pay £100,000 for the privilege of bringing in a machine intended to save the strain on our balance of payments through the cost of putting printing work overseas. When it placed the order, the company thought that it was playing a part in helping to produce a favourable balance of payments. It noted that the Economic Development Council which had made a survey of the printing industry, especially in relation to exports and imports of printing work, had pointed out that, whereas in 1958 imports of trade catalogues and advertising material totalled only £782,000, that figure had risen to £5·8 million in 1967, and it was running in the first six months of this year at nearly £3·7 million, so that it would be over £7 millions for the full year.
  Here is a company which is trying to meet an obvious need. It placed an order 18 months ago for a machine, but, because of this Bill, it faces the problem of finding £100,000 for the deposit. How will it manage? The banks have said that they are not allowed to provide facilities save for a very short time. If it is able to raise the money in other ways, its expansion and capital development programmes in other directions will have to be stopped.
  This kind of thing strikes the average businessman as sheer lunacy. It is a severe discouragement to businesses all over the country which, despite all the impediments and handicaps put in their way by the Government, have still been trying to play their part in developing our markets overseas and reducing our adverse balance of payments. Yet as

  1459
  soon as they set about it, they are clobbered by a stupid Measure of this kind.
  Sir D. Glover: I congratulate my hon. Friend the Member for Honiton (Mr. Emery), who, par excellence, has shown that he is not only a free enterpriser but a businessman who understands the implications of the Bill. Many of his Amendments, taken together, form a coherent whole of what he rightly thinks needs to be done to help the business and industry community if the Bill is not to be a disaster.
  In a television programme when the latest crisis occurred, Mr. Hyman of Viyella, who is not looked upon as one of the most backward members of the industrial community, said that it is completely impossible for industrialists in this country to plan an efficient system of production, because every time they work out their programme for an efficient system they wake up the next morning to find that the Government have introduced a Measure that destroys the whole of their plan.
  The Amendment tries to remove that disturbance in industrialists' plans, which they have made months ahead, before the Bill was introduced. If it is accepted, a good deal of that planning will continue in a normal, fruitful way. People will be able to honour their commitments and carry on increasing their efficiency. But, if it is not accepted, a great number of probably some of the most efficient industrialists in the country, who have entered into commitments for machinery and so on from abroad, will have the whole of their plans and forecasts of profitability and production thrown into the melting pot because of the Government's arbitrary action in doing things without any consultation and without considering its effect on the business community.
  My hon. Friend would probably lose some of his antagonism to the Government's action, and would perhaps not press the Amendment so far, if the Government had been much more forthcoming about the negotiability of the 50 per cent. deposit. Industrialists who have entered into commitments and arranged the whole of their finances for a long period, and now find that under the Bill everything is thrown into the discard,
  1460
  would probably be able to get out of a good deal of that difficulty if, possibly at a slight discount, they could get rid of their liability for the 50 per cent. deposit. The Government have been very lukewarm about accepting any idea of negotiability. Do not they realise that unless the Amendment is accepted they are throwing an enormous spanner not into the works of inefficient industrialists or inefficient companies but into some of the most efficient industries in the country, which, because they are efficient, have worked out their affairs on a financial knife edge.
  A totally different situation is created by the Government's arbitrary decision. As Mr. Hyman said, it is impossible to expect British industry to improve its productivity, efficiency or export performance unless it can feel that it can plan for a long period ahead knowing that the Government will not spoil all its planning.
  It is rather frightening that the party opposite, which is supposed to be the party of planning, acts like a bull in a china shop in most of our affairs. That is what they are doing here.
  My hon. Friend has tried in a very small way to remove some of the worst anomalies that the Bill will create. I hope that the Minister will say, perhaps not that he will accept the Amendment, but that between now and Report he will produce something that will have the same effect. If the Government do not do so they will create more disturbance than they have any idea of at present in the fabric of our industrial life.
  2.30 a.m.
  Mr. Drayson: These Amendments draw attention to an objectionable aspect of the Bill—the retrospective legislation. I want to return to the question of the importation of yarn from overseas. In every case, contracts for goods now arriving at the docks will have been placed many months if not years ago. As my hon. Friend the Member for Ormskirk (Sir D. Glover) has said, firms operating on close budgets will have made their financial arrangements for many months ahead and the 50 per cent. deposit can put all their plans out of action.
  I will quote from a letter I received from another firm in my constituency:
  "We import a certain amount of yarn from the Continent because it is impossible to get

  1461
  deliveries in the United Kingdom. The yarn is used for materials that we then export. This infamous deposit will probably mean that we cannot get this yarn and that we will therefore lose our export business in this type of cloth."
  I hope that by the time we get to the Schedule the Government will have had another look at the question of including yarns and more semi-processed materials in the Schedule, because I have given two examples tonight of export business built up against considerable competition from Japan and other countries which will be in jeopardy if firms operating on small budgets are unable to find 50 per cent. deposits and therefore have to stop this type of manufacture.
  The Board of Trade have all the relative figures of the amount of yarn imported, what types of yarn they are, whether they are available in this country. They will know that invariably they are not, and that firms importing these materials only do so because they cannot get them in the home market.
  I hope that by the time we get to a later stage, the Government will make these items free of deposit.
  Mr. Taverne: I intend to restrict my answer to points directly relevant to the prior deposit. Without disrespect to the points raised by the hon. Member for Wycombe (Mr. John Hall), much of what he said was against the whole principle of credit restriction and that if a firm manages to raise £100,000 for this it will not have it for other purposes.
  I am concerned with the case raised by the hon. Member for Honiton (Mr. Emery) about prior contract for goods in transit. He asked whether it would affect the scheme. Of course it would, because many contracts have been entered and many shipments may take something like three months to arrive. This is particularly true of goods from Australia, Hong-kong or Japan, sent by sea. In the course of the 12 months Scheme it would make a considerable difference if goods which take three months to arrive were exempt from the scope of the Scheme. It would seem to discriminate against our near neighbours if goods in transit from distant parts were exempt whereas the goods from our near neighbours were not.
  1462
  The important answer to the major point is that it has been the standard practice not only of this Government, but of previous Governments that where there has been a change in customs duties, they should apply from a fixed operative date without exception. This has not only been the practice of the present Government. It was also the custom of other Governments. This argument in relation to Customs duties applies equally to this deposit—
  Sir D. Glover: Is it now accepted that this is a Customs duty? The Attorney-General spent half an hour this afternoon convincing us that it was not.
  Mr. Taverne: Had the hon. Member waited to the end of my sentence, he would have seen that I said that this is a practice which relates to Customs duties and it is also something which should be applied in the case of the deposits. [An HON. MEMBER: "Why?"] Because exactly the same arguments apply. If hon. Members opposite do not see this, they do not understand the effect of what they are proposing.
  If Customs duties are raised in the middle of a contract being fulfilled, goods which have been paid for become more expensive and a worse deal results for the buyers of the goods. Exactly the same sort of principles apply. It has always been necessary to provide certainty, uniformity and a precise point in time from which the new measures would operate.
  Mr. James Allason: I understand the hon. and learned Gentleman to suggest that the duty should be passed on to the customers. Is he suggesting, therefore, that when goods which are imported are already invoiced to other customers, those other customers should find the deposit?
  Mr. Taverne: As we discussed earlier in the evening, the person who pays the deposit is not necessarily the importer, but in many cases he will be. The argument applies to the extent that every time a duty is raised, someone will have his bargain affected for the worse by the imposition of that duty in the course of the contract. No argument could ever then be raised that the increase in the tariff or whatever it might be, or the increase in interest rate, should not

  1463
  operate on goods in transit or a contract already concluded. Precisely the same arguments apply here.
  Mr. John Hall: I am sorry to interrupt the hon. and learned Gentleman; I know that it is troublesome to have to keep bobbing up and down. Would he not realise, however, that there is a difference between the deposits and the raising of a tariff? In the raising of a tariff, there is one additional sum to be met, generally not very high, on a particular transaction. In this case, there is an additional charge for the interest to be paid on the money raised, but, above all, in many cases it is necessary to find a very large sum of money, the difficulty thus caused being quite different from that produced by the raising of a tariff.
  Mr. Taverne: The raising of a tariff may be by much more than the interest payments which now have to be paid by those who find the deposit.
  Mr. Burden Mr. Burden rose—
  Mr. Taverne: I am sorry, I must finish the point. I cannot deal with several interruptions at the same time. If the tariff is raised, it may be raised by much more than the interest payments which have to be found in this case. As to the raising of the deposit, I find it hard to believe that firms which have fixed contracts will find it impossible to raise money for the deposits which they are required to find.
  The hon. Member said that in this case, the difficulties about uncertainty would not arise. I think that it was the hon. Member for Blackpool, South (Mr. Blaker) who said that the certainty argument which I deployed on the last batch of Amendments could not arise here. I think that he is wrong, because there may be many arguments about when, for example, the transit began. It might be difficult in certain cases, when goods do not come here by a direct route, to decide when they started to be goods in transit.
  There might be considerable difficulty in deciding on what date the contract was concluded. If the contract is concluded, as often happens in commercial transactions, by exchanges of letters, there are often many arguments at the Bar to decide which of two large con-
  1464
  corns has been the more unbusinesslike in its correspondence, the outcome turning on the precise date on which the contract took effect as a result of correspondence between the parties.
  The test of certainty which is so important to the whole smooth operation, and to importers, is one which again would suffer if arguments arose as to whether or not goods were actually in transit at the time when the scheme was launched, and whether or not the date of the contract was before or after the scheme.
  There is also the further point of fairness. A number of hon. Members have said that it was grossly unfair to put this burden on those who had already signed a contract, but fairness requires that importers should be treated alike. Importers will be competing against each other in the market, and hon. Members opposite are suggesting that if, owing to some chance, one lot of importers had signed their contracts earlier, or had got their goods in transit earlier, they should escape the deposit, whereas other importers should pay the deposit because a contract date fell on the wrong side of the line. Goods which arrive in this country after the operative date should compete with each other on an equal footing, and it would have an unfair and distorting effect on competition if this Amendment were carried. Hon. Members are proposing to apply an entirely different standard to import deposits from the standard imposed in the past where the same principles have applied. These are standards which they themselves have always found it necessary to impose, and they are standards which should be imposed here, so as to work fairly between importers, in order to provide the certainty and uniformity which would enable the scheme to work smoothly and also because this is the pattern which has been followed by successive Governments.
  Mr. Burden: The hon. and learned Gentleman has been subjected to a great deal of strain but he must not get testy; if he does all he will do is to prolong operations. He was on two very bad points when he made his speech. In endeavouring to explain the charges, he said that tariff rates were much higher than the interest payment on import deposits. This is complete and absolute

  1465
  nonsense. The importers have to pay not only the interest rates, they have to find 50 per cent. more than the cost of the goods. This is far greater than any normal tariff increase. Whereas firms can take a risk on a normal increase in tariffs, which moves between close lines, the import deposit imposes an increase of 50 per cent. on the cost of the goods to the importers, which must be laid out for six months, and many of them are in no position to do this.
  The hon. and learned Gentleman said that we must bring about equity between importers, and that it would be unfair if buyers who had placed their contracts considerably before the date were allowed to bring in goods without having to pay the import deposit. This again is an extraordinary argument. Anyone who places an order now does so fully aware of what the total cost will be. People who placed their orders before the Bill was introduced thought that the merchandise which they were buying would cost them, in effect, a third less.
  If it is a question of equity, the Minister of State has got himself into a muddle and cannot know what equity is. I suggest that the only reason why he has got himself into a muddle is that he has begun to lose his temper. If he can keep calm and discuss the matter rationally, he will not repeat such nonsensical statements.
  2.45 a.m.
  Sir K. Joseph: The Government face a really difficult dilemma here. Obviously they do not want to impose totally unpredictable costs on our businessmen. My hon. Friend the Member for Gillingham (Mr. Burden) spelt out precisely what damage this arbitrary Act will do to all sorts of businessmen, and clearly the Government do not desire that.
  I regret having to compare Her Majesty's Government to South American States, but I believe that when South American States have imposed protective measures of this sort, we have appealed to them, often successfully, to allow cargoes that were already on the way to be exempt. By the standards of some of those States, the Government are being very savage in the impact that they are making on our businessmen.
  The Government's excuse, which may be a very powerful one, is that they could
  1466
  not afford to do this because the volume of exemption would be too heavy. But the Minister gave us no details. He claimed that there would be a large amount of money involved that would escape. But when we recognise that we are dealing with only a third of our total import bill, and if we discount for a moment the proportion of that third which is on long sea voyage or on long order, there must be only a relatively small amount of the total import bill which would be affected if there were some sort of exemption as proposed in this set of Amendments. I hope that the hon. and learned Gentleman will give the Committee an idea of the volume of the loss to the Government if they were to meet the case being put to them.
  They say, secondly, that it would not be practicable to decide when the date of origin, either of the voyage, taking the transit test, or of the order, taking the goods contractually committed, was applied. Surely there must be administrative criteria which could be adopted here. I imagine that the date of the bill of lading could be taken as conclusive evidence, and I am sure there are other means by which the courts or the Customs can decide when an order or a voyage begins.
  The Government are shifting uneasily in their use of the key words "Customs duties". When it suits them to argue that these deposits are Custom duties, they so argue. When it suits them to deny that they are Customs duties, they so deny. The hon. and learned Gentleman is saying that, just because a Customs duty may be changed overnight and the importer has to bear the brunt, he should bear the brunt when the deposit is imposed. But, in substance, it is a quite different and new animal, by which an importer had no reason to expect any sort of change.
  The Minister must seize in his mind the scale of what is required here. As my hon. Friends have said, this is a 50 per cent. extra cash demand on the importer. It is true that it is repayable and that the ultimate cost is only the loss of interest. But, in terms of cash flow, it is a savage demand to be imposed unpredictably on the importer. We ask the Minister of State to look again at these Amendments which have been discussed so trenchantly by my hon. Friend the Member for Honiton (Mr. Emery) and to tell us in particular how

  1467
  much of the total import trade might escape if these Amendments were accepted.
  Mr. Taverne: I cannot tell the hon. Member exactly or even roughly what volume of trade is involved, because, as he realises, this involves knowledge which we do not possess of a number of uncertainties. One does not know what the contract date is. One would not know this about goods coming into this country. One does not know when the transit began. It is not good enough to say that one can simply make the bill of lading conclusive evidence. What about goods in transit which did not come by ship? What about the time that they were loaded on to a train? What about those which came overland? There are many difficulties about transit which are not soluble in such a way as to make it absolutely certain which goods are exempt and which are not.
  Mr. Patrick Jenkin: Why is it that we cannot apply in this case the test for goods in transit under the Sale of Goods Act, 1893, which I have always understood from my earliest legal days at the university, to be an absolutely clear and categorical test, and that different rules apply when the property passes? Why cannot those workable and well-established rules apply in a case like this?
  Mr. Taverne: Under the Sale of Goods Act a great deal of litigation has to take place to determine when the transit started. These issues frequently have to be decided by court of law. It would be fatal to turn the Customs into a judicial body which would have to spend a great deal of time resolving this kind of dispute.
  Mr. Patrick Jenkin Mr. Patrick Jenkin indicated assent.
  Mr. Taverne: The hon. Member nods. He realises that this is something which one must avoid. If inquiry has to be made elaborately into each individual case, exactly the same objections arise as arose in the case of the last Amendments.
  I used the analogy of Customs duty. It seems to me that this is a good analogy. If hon. Members do not like that analogy, there are all sorts of other eventualities which can arise in the course
  1468
  of a contract which can adversely affect the different parties to that contract. There could be an increase in the price of raw materials or an increase in transit rates. There are different ways in which parties to a contract can by subsequent events be prejudiced. This is merely one of the ways in which existing contracts can be affected.
  Mr. Emery: The inadequacy of the replies from the Treasury Bench shows that the Minister has no real understanding or experience of how industry works. It is not true that on a fixed price contract the factors which he has just referred to will alter the contract or the price. To say that it is difficult for a director of supplies or a purchasing officer to establish the date when a contract was made or an order was given is not true. The Minister is concocting arguments to shoot down our case. They are arguments which do not stand up to proper examination.
  It is exactly the same sort of commercial judgment which was applied when the Financial Secretary to the Treasury was speaking earlier. He gave us a lot of "guff", and we are getting exactly the same sort of "guff" now. I feel so strongly about this matter that I do not feel inclined to withdraw the Amendment.
  Amendment negatived.
  The Deputy Chairman (Mr. Gourlay): The next Amendment is No. 29 with which Amendment No. 25, in page 3, line 24, at end add—
  (4) No import deposit shall be payable in respect of goods or materials which, on or before 22nd November 1968, were the subject of temporary exemption from import duty by Treasury order, on the grounds that they were goods or materials not made in the United Kingdom or the Commonwealth or that the supply available from these sources was not substantial having regard to the existing United Kingdom demand.
  Amendment No. 30, in line 30, at end insert—
  (6) No import deposit shall be payable in respect of goods which are already subject to Board of Trade import licensing control or quotas.
  and Amendment No. 104, in line 30, at end insert—
  (6) No import deposit shall be payable in respect of goods covered by a temporary ex-emption order made under the Import Duties Act 1958.
  have also been selected.
  Mr. Patrick Jenkin: I beg to move Amendment No. 29, in page 3, line 30, at end insert—
  (6) No import deposit shall be payable in respect of goods referred to in section 6 of the Import Duties Act 1958.
  It is interesting to see how far our debates now are following almost exactly the chronology of the debates on the Finance Bill of autumn and winter, 1964. I find that on 1st December, at about 11 o'clock at night, we discussed goods in transit and we followed on to deal with goods subject to temporary duty exemptions. In one respect we are less fortunate. It is now three o'clock in the morning. In another respect I hope that we shall be as fortunate. I do not know whether the Financial Secretary will be replying. No doubt he will see that his predecessor, the hon. and learned Member for Derby, North (Mr. MacDermot) made some concessions to the Committee when the matter was dealt with four years ago. I confidently look forward, therefore, to hearing what further concessions the Financial Secretary is prepared to make on this occasion.
  These Amendments deal with particular categories of imported goods where, for one reason or another, special circumstances exist which warrant the exclusion of those goods from the import deposit scheme.
  The three Amendments refer to three different categories of goods, and I will briefly describe them.
  Amendment No. 29 deals with goods subject to the temporary exemption procedure under Section 6 of the Import Duties Act, 1958. The Committee will remember that this Section replaced the old Safeguarding of Industries Act, 1921, when key industry duty disappeared in 1958 and the Section 6 procedure took its place. This relates to special categories of goods which in 1921, and again in 1958, it was felt required on occasions special protection in order that the industries could become established here. The first group includes aircraft, machinery, optical and scientific instruments, measuring and checking instruments, a lot of organic chemicals, principally dyestuffs and organic intermediates, and so on.
  The second group, covered by Amendment No. 104, relates to a much more general category of exemptions under
  1470
  Section 3(6) and Section 13 of the Import Duties Act, 1958. This deals with cases where the Treasury can make orders, on the Board of Trade's recommendation, to exempt particular goods from import duty for a prescribed period. Applicants for duty exemption under this head are successful if the Board of Trade is satisfied that the United Kingdom or Commonwealth production is nil or negligible. The temporary exemption system applies mostly to chemicals, many of which require further processing. The goods temporarily exempt from duty are listed under tariff headings. I make this point to indicate that there is no question of uncertainty. It would be very easy for importers and the Customs to identify the tariff headings for the goods covered by a temporary exemption order which could, therefore, easily be made free from the import deposit.
  The third category, covered by Amendment No. 30, is a rather different one. These are goods already subject to Board of Trade import licensing control. The Minister of State to the Board of Trade—I am glad to see him here—will know that the categories principally covered are goods imported from Iron Curtain countries. These are countries with which we have bi-lateral trade agreements where maximum quantities are laid down. This, therefore, is closely linked with the volume of exports that we can make to those countries. It would seem, on that ground, that this category must be excluded from the import deposit. If goods covered by these agreements are kept out, the inevitable result will be that exports will fall as well.
  3.0 a.m.
  The other two, the Import Duties Act cases, are based on the proposition that manufactured goods which are for any reason temporarily exempt from import duty are by definition those goods which are not available in this country, or at any rate not available in sufficient quantities, and which therefore have to be imported. They are goods which, if the manufacture based on them is to continue, will have to continue to be imported. The only effect of the import deposit will be to add extra costs.
  Those two categories and the licensing category are all groups of goods in respect of which there will be two separate

  1471
  forms of Government control—either scrutiny by the Board of Trade and exemption plus the import deposit, in the other case, the bilateral trade agreements and the licensing system, plus the import deposit. A point which one might make in relation to the licensing one is that these goods come mostly from Iron Curtain countries. These are not goods for which the exporter will be able to provide any extra credit, and therefore this gateway will not be open to the importer.
  Those all seem to be cogent reasons why these categories of goods should be exempt, and in this context I was interested to read what the Permanent Secretary to the Board of Trade, Sir Antony Part, said to the Session of G.A.T.T. only last Friday when he had to make reference—unhappy man—to the fact that this import deposit scheme had been introduced. He assured those who were listening to him that the scheme was
  "designed to do as little damage as possible to international trade".
  Sir Antony is a highly respected civil servant, and if those words are to be taken at their face value the Government must meet the case of these goods which have to be imported, because, by definition, they are not available in this country.
  Here are categories which are easily and readily definable, where none of the problems of uncertainty exists, and where there seem to be the most cogent reasons why they should be exempted from this deposit scheme. If the pledge to G.A.T.T. is to be fulfilled, it is essential that the Amendments should be accepted.
  Mr. Alison: I should like to say a few words on Amendment No. 25, which I admit is an exploratory Amendment. Perhaps I could draw the Financial Secretary's attention to an announcement in the Board of Trade Journal, curiously enough on the very day that the Chancellor of the Exchequer announced the import deposit scheme. Under the heading,
  "Applications for temporary exemption from import duty",
  the announcement said:
  "The Board of Trade are considering applications for the temporary exemption from import duty of the materials listed below on the grounds that these materials are not made in this country or the Com-
  1472
  monwealth or the supply available from these sources is not substantial having regard to the existing United Kingdom demand."
  Further down the announcement there is appended a substantial list of almost unpronouncable commodities and articles.
  The significant point is that those materials do not appear in the Schedule to the Bill. Are we to understand that goods which enjoy a temporary exemption from the normal customs duty, on the grounds proposed by the Board of Trade advertisement, automatically qualify for exemption from import deposit charges? This may be one reason why the list is not included in the Bill. if that is not so, do we understand that the Government have in mind that before the announcement by the Chancellor goods which were being considered for temporary exemption from normal import duty are now being reconsidered for inclusion not only in the normal import duty but in import deposits as well?
  If the Government and the Board of Trade have decided that certain categories of goods which are not available in this country are to be imported free of duty it follows naturally that the Government should automatically include such goods in the list of exemptions. I hope that the Financial Secretary can reassure us that all goods which have hitherto been exempted from import duty will be included, in the form of words I have suggested, in the arrangements that he has made for certain categories of goods.
  Mr. Harold Lever: This group of Amendments recalls to me some of the semantic excitement that occurred at the beginning of our debate about the difference between the duty of Customs and Customs duty. There was some scepticism among hon. Members opposite when we explained that duty of Customs was not necessarily the same thing as a protective duty in relation to our E.F.T.A. and Irish obligations.
  This emerges clearly from this group of Amendments. I will deal first with Amendment No. 29, which would exempt from import deposits goods which may be exempted from import duty under Section 6 of the Import Duties Act, 1958. The list covers aircraft, machinery, optical and scientific instruments, various organic products, articles for testing or

  1473
  examination, and certain non-commercial importations for scientific research.
  I should mention that the issue of Treasury directions giving this exemption for machinery has been suspended since the autumn of 1967. The Bill already propose to exempt certain non-commercial importations for scientific research, and substantially to exempt aircraft and parts and spares for overseas services, following the precedent of the previous Measure, so we have already met part of this demand. It was thought that the balance of national advantage lay in exempting these items.
  An exemption of all the goods covered by Section 6 of the 1958 Act would be much too wide. The criterion for exemption under that Section is protective, and this is the point that I intended to make about the semantic aspects of a duty of Customs. This is not a protective Measure; it is a Measure calculated to produce a marginal reduction in imports and a selective pressure upon liquidity. It is not a protective Measure, in that we do not set as a criterion the requirement that the goods must be such as can be made in this country.
  The intention of the Measure is concerned with credit and a marginal pressure on imports, but irrespective of the availability of British-made goods comparable to the goods affected. If we were to give this protective flavour—and this is what the Opposition are inviting us to do—the Opposition must see that this would be in direct conflict with their earnest representations earlier not to offend the spirit of G.A.T.T. and the E.F.T.A. Convention. We have taken their representations very much to heart in framing the proposal, and if we yielded to their argument in this case we would be offending the spirit of the E.F.T.A. Convention and G.A.T.T. We should be vulnerable to the criticisms which the Opposition were then wrongly making, in accusing us of breaking the principle of these agreements.
  Mr. Patrick Jenkin: I find this argument very abstruse. The Amendment would remove the goods in question from the import deposit, and would therefore, to that extent, reduce the protection which the scheme will, to the extent that it keeps out imports, have for British industry. The fact that these goods are
  1474
  already, by definition, exempt from import duty, and that the protective element of the duty is non-existent, does not seem to make the extension of that exemption to cover the import deposit as well as the import duty give the Bill a protective effect. I do not understand the argument, perhaps because it is ten past three in the morning.
  Mr. Lever: When there is an exemption from duty under this power, that exemption is based upon the non-availability domestically of these goods, so it is not a protective duty which is removed, because there is nothing to protect. If, for example, there were a duty on Zanzibar spice not producible in this country, even with a 100 per cent. tariff, then if there is a tariff on its importation, that is not a protective duty. It is rather like the Customs duty on whisky, even though in the form of a tariff.
  There is no point in keeping that on, and the Clause enables us to take it off, if we are satisfied that the goods are not available domestically, but if, in selecting our list of exemptions, we take that into account and establish it as a criterion, this becomes not a general pressure on imports but a selective pressure of a protective kind—that is to say, we are showing that we are not applying this pressure to goods except where we can make the goods ourselves in competition with the foreigner.
  I can assure the hon. Gentleman that it would be very ill-regarded by E.F.T.A. and G.A.T.T. if we were to apply what are in effect protectionist criteria, that is to say, exempting goods where there is no domestic production challenging foreign importation and not exempting those which we can make at home, and the import deposit would act as a protective duty. I hope that this point goes over, even at this hour.
  For this reason, we cannot accept the criteria of the Amendments. But I offer this consolation: the Government have taken power in the Bill—this might be an inducement to hon. Members to enact it speedily—to make further exemptions, though not to remove any. We shall certainly look at the whole area of exemptions—this will have to be my answer on the Schedule, later—and what is the best package we can get up for using the exempting power by Order. I

  1475
  cannot promise any particular exemptions under the Clause, but I can promise that they will be candidates for early and urgent consideration. I hope that, with that crumb of comfort, and my argument for not giving this flavour which would be ill-regarded by our E.F.T.A., G.A.T.T. and Irish friends, the hon. Member will feel able to dispose of these Amendments.
  Mr. Jenkin: The hon. Member piles such layers of jam on the crumbs which he offers us that they become irresistible. I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Question proposed, That the Clause, as amended, stand part of the Bill.
  3.15 a.m.
  Mr. Alison: We have in the Financial Secretary in these few declining moments of debate, a self-admitted friend of the small company, and of the large company and, I have no doubt, of the medium company as well—
  Mr. Harold Lever: Where appropriate.
  Mr. Alison: Yes, where appropriate. He exudes a certain avuncular—indeed, paternal—regard for companies of all kinds. I now invite him to look at a problem which will face the small company, and the small close company in particular.
  This difficulty will arise because of the problem, which I know the hon. Gentleman appreciates, of the small company getting its share of such bank credit as may be available after the invitation of his right hon. Friend the Chancellor of the Exchequer to the banks to restrict finances really begins to bite. He will know that small companies—and I have in mind the example of a small wine company, in which I have no interest at all to declare—will have to begin generating internal funds in anticipation of having to pay deposits.
  If the small company is a small close company, the Financial Secretary will appreciate that its necessity to generate and retain within itself more funds for the possible payment of deposits will present it with an embarrassment, in that the notorious and extremely disagreeable Section 77 of the Finance Act,
  1476
  1965, makes it necessary for small close companies—or, indeed, any close companies—to distribute a certain proportion of their income, the undistributed portion incurring Corporation Tax, Income Tax and Surtax.
  I know that the hon. Gentleman can give no more than a general undertaking now, but may we take it that, when the next Finance Bill comes round, he will bear in mind the fact that something will have to be done for small companies which are, as a result of the Bill, forced to retain more money and so will not be able to distribute it because they have to save up for the necessity to meet import deposits? Perhaps he could give some assurance that an extra undistributed with that object in mind would not be treated in that way in terms of the Finance Act, 1965. I know that the Financial Secretary looks forward with eager anticipation to the Finance Bill, 1969, but I can say that with such an assurance a lot of close companies would regard the Bill with a great deal more equanimity.
  Mr. Blaker: I have two questions to ask, and the first relates to the machinery available for the settlement of disputes. The Clause provides for exemptions and reliefs, and as soon as one does that one opens the way to differences of opinion between companies and individuals and the Customs about whether, for example, a particular article is entitled to relief.
  Section 260 of the Customs and Excise Act, 1952, provides machinery for the settlement of disputes which involves approval of the settlement by a referee in certain cases or by the High Court in other cases. The Bill declares that it is to be construed as one with the 1952 Act so, on the face of it, one might suppose that the dispute procedure laid down in that Act is available for all tax disputes which could arise under the Bill, but there is room to doubt whether that disputes procedure will be available, at any rate in a satisfactory way, in connection with goods entered for warehousing.
  Clause 1(8) alters the date on which the incidence of duty operates in respect of that class of goods, and the ordinary rule in previous Acts in relation to ordinary Customs duties is that it is

  1477
  ascertained at the date of removal from the warehouse. Clause 1(8) alters that rule, and says that the incidence of duty shall be ascertained at the time when the goods are entered for warehousing. It therefore creates a new position in respect of that category of goods.
  I suppose it might be argued that since the incidence of duty is now to be decided at the time the goods entered the warehouse, it will mean that the matter has been settled at that time, which usually will be when the goods enter the country, and that the possibility of making an appeal after entry to the warehouse is before the date described in Section 260 of the Act of 1952, that is to say the date of delivery of the imported goods from the Customs charge. I should like to have an assurance that the disputes machinery of the 1952 Act will he available in all cases from now on in relation to imports deposits in relation to goods in the warehouse.
  Clause 2(2) says:
  "No import deposit shall be payable, in the case of a person entering the United Kingdom, in respect of any of his personal effects."
  I should like to know whether the expression "personal effects" includes household effects. In my recollection of the law—which is rather dim now—there used to be a distinction between the two categories of personal, on one hand, and household, on the other. I can visualise cases arising of people arriving in this country with household effects—for example, members of the Armed Forces posted back to this country during the currency of this Bill—bringing with them their household effects and not merely their clothing, watches and that sort of thing. As I read the Bill, unless "personal effects" can safely be taken to include household goods, those people and categories such as the numerous people who will be attracted to this country by the high rates of tax under this Government, will be caught for import deposit on household effects. I cannot think that that is the intention of the Government.
  Mr. Harold Lever: Although one tries to keep the debate as light-hearted as possible, I hope that the hon. Member for Barkston Ash (Mr. Alison) will believe that my remarks about small com-
  1478
  panies were made in all sincerity. I certainly take the point he made, that a company ought to be allowed if it needs it for import deposits, to retain profits in the business and not be forced to distribute them. I venture the opinion that the clear requirements of the business of an importer would include the necessity to finance to some extent his import deposits. If he so used his cash, I should have thought he would have the clearest case for resisting distribution of those profits if he wished to use them for import deposit purposes.
  I cannot help mischievously adding that it would be a case where he could avoid paying Income Tax and Surtax on them for a year and have the money in cash form afterwards exempt. So, far from being a loser tax-wise, he would have a modest advantage which I would not begrudge him.
  Mr. Michael Shaw: If this is in fact a deposit, is it therefore a charge against income?
  Mr. Lever: I think that the hon. Gentleman could not have followed the argument advanced by the hon. Member for Barkston Ash as closely as I have. The hon. Member for Barkston Ash asked: if a close company has to find money for these deposits, will that be taken into account in assessing what percentage of the profits it is reasonable to retain in the business? I have said that it is obvious that if an importing company finds the deposits from profits nobody could reasonably demand that it should pay those deposits away in dividends. What could be more essential for the business of an importer than to find the deposits? I have also said that, far from losing this, they even gain a rather unusual advantage.
  On the disputes procedure, I think that there has to be difference from the normal practice, because with dutiable goods the practice is to allow the goods to go into bonded warehouses and not to fall liable to duty until they are taken out, but it would seriously affect the deposit scheme if we allowed the same procedure here. So the deposit becomes payable, not when the goods are taken out of the warehouse, but when they are entered into the warehouse. I think that otherwise the machinery is adequate to deal with

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  disputes in the same way as in any other part of the Customs area.
  As to household effects, subsection (2) wholly exempts from the deposit personal effects of people arriving in the United Kingdom. Passengers' baggage is not required to be entered with Customs. Section 28 of the Customs and Excise Act, 1952, arranges this convenience. However valuable it may be, it would be impracticable to cover it in the import deposit scheme, under which repayment is to be made to a person named on a Customs entry. Household effects which are conveyed as freight, however, have to be entered and it is not impracticable to apply the deposit scheme to them.
  Mr. Patrick Jenkin: Oh, no.
  Mr. Lever: There is an existing duty exemption for used household effects under the Customs Duty (Personal Reliefs) No. 3 Order, 1968, which was made under Section 7 of the Finance Act, 1968. Household effects which qualify for that exemption will ipso facto qualify for the exemption from import deposit. So any existing second-hand household effects which are relievable from duty will be relievable from this Customs duty. This is what the hon. Member for Blackpool, South (Mr. Blaker) wanted, I think. The cry of pain from the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) was premature. There is no reason why the deposit should not apply to new household effects which bear ordinary duty in the ordinary way. I gather that the hon. Member for Blackpool, South is satisfied.
  Dr. M. P. Winstanley: Will the Financial Secretary clarify his explanation of subsection (2), which says:
  "No import deposit shall be payable, in the case of a person entering the United Kingdom, in respect of any of his personal effects, whether or not carried with him or contained in his accompanied baggage."
  What about goods
  "whether or not carried with him or contained in his accompanied baggage"
  which are not personal effects? It is a double definition. What are personal effects, and what are household goods?
  Mr. Lever: I shall not attempt at this late hour, without notice, to give an exhaustive legal definition of a very interesting area of Customs law. I shall be happy to write to the hon. Gentleman. What a man carries in his bag with him would be regarded as his personal effects. A man may have personal effects apart from any travelling with him. They are already dealt with by existing duty law and are exempt from duty in the case I have mentioned. The hon. Gentleman is engaged in an unnecessary, niggling anxiety. I am not complaining about that. I think he is troubling himself unnecessarily. I shall be very happy to write to him setting out more comprehensively the technical legal definitions which he seeks.
  Question put and agreed to.
  Clause, as amended, ordered to stand part of the Bill.

Clause 3

  SHORT TITLE, INTERPRETATION, EXTENT AND DURATION
  3.30 a.m.
  Mr. Nott: I beg to move Amendment No. 37, in page 3, line 40, leave out 'one year' and insert 'six months'.
  On 28th November, referring to the import deposits, the Financial Secretary said:
  "They are temporary in impact and in intention, the idea being to make a sharp immediate assistance to our export-import ratio, to give time for the major strategy, which is to bring our exports and imports into balance—and, indeed, in surplus—to take effect."—OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 751.]
  I put down this Amendment because I thought it surprising that the Government were not expecting the balance of payments to break even, or, to use the hon. Gentleman's words, to break into surplus, within six months from the time the Bill comes into effect. If the Government wish the Bill to be temporary, if they see that it could have certain disadvantages in international trade, and if they favour the liberalisation of trade, they should provide that Clause 1 shall cease to have force after six months, not a year.

  1481
  The Treasury may, under subsection (4), reduce the period by Order, but that is not satisfactory. It would be far better to provide for a duration of six months on a proper statutory basis.
  Mr. Harold Lever: I repeat that this is temporary in intention and in impact. One of the Amendments proposed by the hon. Gentleman would be too temporary even for as good a liberal trade man as I am, since it would give us only one day after the Royal Assent. One might wonder whether our labours were worthwhile if that were to happen. However, we are now discussing his more modest proposal that the period should be six months.
  I hope that we shall exercise our power to shorten the period. I hope that the situation will warrant it, but I should not like to commit the Government. If we were to err and find that we wanted it for another two months, we should be troubling hon. Members at these rather unusual hours of the night to examine the whole question again. I think it reasonable to make it 12 months, with power to shorten the period if circumstances warrant.
  I hope that the hon. Gentleman feels that that is not too dusty an answer and will ask leave to withdraw his Amendment.
  Mr. Emery: Let the Financial Secretary cast his mind back to the understandings we were given on the temporary nature of the 15 per cent. surcharge. It was "temporary" at 15 per cent. for one year and then "temporary" again for another year at 10 per cent. That is a long time to be temporary.
  The Amendment is an attempt to tie the Government's hands. They may not like it, but it is no bad thing to do in this legislation. I only hope that industry realises that, when the Government speak of something as temporary, its duration is all too often very ill-defined. It is a pity that we cannot be more specific.
  Mr. Harold Lever: I am not entirely clear what the hon. Gentleman's argument is about. We have undertaken that it shall be temporary in the most practical way open to Parliament by making it available for 12 months. If the hon.
  1482
  Gentleman wants to tie our hands so that we shall not renew it after 12 months, there is no means of so doing. If there were, it would not be accomplished by making the period six months. I cannot see that making it six months ties our hands to doing it for 12 months.
  Mr. Emery: It will be within the powers of the Government to prolong it if they wish. We all know that. There is no reason why that should not be said, although it is perhaps an unfriendly thing to say. It seems to me that there is a benefit in reducing it. It is certainly much nearer my concept of "temporary" to have six months instead of 12.—[An HON. MEMBER: They will renew it again.]—That may be so, but I am for having as short a time as possible, and the Amendment seems to me much nearer to "temporary" than any other we have seen.
  Mr. Nott: My pleasure at having the Amendment selected was only increased by my surprise at its selection.
  I think that the Financial Secretary did not quite take my point, which was that as it is temporary and the Government have predicted that they will be in surplus within six months anyway—
  Mr. Harold Lever: Good surplus.
  Mr. Nott: It would be evidence of their confidence in their balance of payments surplus if they brought in the Bill for six months instead of a year.
  But I do not wish to pursue the matter, and I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Amendment made: No. 32, in page 3, line 42, leave out from 'may' to end of line and insert:
  'appoint by order in a statutory instrument laid before the Commons House of Parliament'—[Mr. Harold Lever.]
  Question proposed, That the Clause, as amended, stand part of the Bill.
  Mr. Tom Boardman: I should like clarification of subsection (4), which says:
  "Duty under section 1 of this Act shall cease to be in force at the expiration of a period of one year …".
  This is a point that I raised on an earlier Amendment, when the Chief Secretary

  1483
  said that it would be dealt with when we reached this stage.
  It is my contention that the only power the Commissioners have to retain the money is the authority under Section 1. Once the duty ceases to be in force, it must follow that the right to retain the deposit must also cease. It is the retention of the deposit—the use of the money—that is the burden placed on the importer, and it is that which must automatically terminate.
  I have tried to find a source for the words
  "Duty … shall cease to be in force"
  because they are somewhat unusual, quite apart from hardly being grammatical. I could find no authority, but noticed in several Customs Acts such words as
  "the provisions shall cease to have effect"
  on a certain date, and they meant that all duties automatically ceased on that date. They are hardly a precedent for the wording here. I stress the point as being of considerable importance, because importers place their contracts a long way ahead, as the Financial Secretary knows, and they wish to know whether or not contracts they are placing for after next November will have the burden of the 50 per cent. deposit.
  There has been warning that this point would be raised, and I hope that we can be informed about the view expressed, perhaps with some lack of assurance, by the Chief Secretary as to interpretation.
  Mr. Percival: This point needs to be cleared up. For quite a long time, the courts which have had to interpret the laws we pass, have started from the premise that Parliament means what it says, but this is fast becoming a legal fiction. This is evident from the opinion expressed by the Attorney-General that, although we say this is a duty, it will not be one, and that it is a legal fiction.
  It would be a good thing to go back to saying once again what we mean. The Chief Secretary says that what this means is that no duty will be chargeable after the expiry of one year, but that apart from that, everything else remains in force. I suggest that we should say that, either by saying:
  "The duty under section 1 of this Act shall cease to be chargeable …",
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  thus adopting the words of Clause 1, or by saying that the provision of Clause 1(1) shall cease to be in force, adopting the terminology of the Statute of which this is part. But what have we said?—
  "The duty under section 1 of this Act shall cease to be in force"
  I cannot get hold of the concept of a duty being enforced. A duty is something chargeable and payable; and, once it has been charged and paid, that is that. That is a closely reasoned and short point. If the Attorney-General is right in saying that, although we call this a duty, it is not really a duty but a power to extract a deposit and hold it until the Bill says it is repayable, we should read subsection (4) by substituting for the word "duty" the words:
  "The power given in section 1 of the Act to collect a deposit and hold it until the time for repayment comes shall cease to be in force …".
  That will have a different effect from that which the Attorney-General says is intended. If we mean what the Government and the Chief Secretary say, let us take the opportunity to say in simple terms what we mean, instead of using an ungrammatical and unintelligible phrase.
  Mr. Harold Lever: I find this subsection crystal clear. It says that the duty
  "… shall cease to be in force at the expiration of a period of one year beginning with the date on which this Act is passed, or at such earlier time as the Treasury may by order in a statutory instrument appoint".
  Let us remove from our minds any arguments about what is or is not a duty. For the purposes of interpreting this Clause, this is a duty.
  Mr. Percival Mr. Percival indicated dissent.
  Mr. Lever: The hon. and learned Member shakes his head, but the Bill says that it is a duty.
  Mr. Percival: I do not think we can have it both ways. If the Attorney-General's argument is right, and we must accept that it is, we cannot for one purpose call it a duty and for another purpose say that it is not.
  Mr. Lever: I took the hon. and learned Gentleman's point the first time. The Attorney-General did not say that this duty was not a duty for the purposes of the Bill, since the Bill specifically

  1485
  refers to the deposits as duty. If the Bill calls a duty a dog's tail, it would have been for the purposes of statutory interpretation, a dog's tail. [An HON. MEMBER: "Or a dog's dinner."] Or a dog's dinner, but no such irreverent description was applied to this deposit scheme.
  3.45 a.m.
  In English law, therefore, this is a duty for the purpose of applying the Customs Collection Acts, and so on. It is not a duty within the meaning of a trade convention with G.A.T.T. or E.F.T.A.—it is quite another matter—because the definition of a duty for those purposes is quite different from the requirements of a statute. All that a Statute requires is that something should be defined as a duty for it to become a duty. In order for it be a duty within the meaning of E.F.T.A. and G.A.T.T., it must be of a special kind. That is what this duty or deposit is not. It is not a duty within the meaning of G.A.T.T. and E.F.T.A.
  Mr. Percival: Fantastic.
  Mr. Lever: The hon. and learned Gentleman finds it fantastic. Something can be a duty for the purpose of English revenue law which is not a duty for the purpose of trade conventions, which have totally different purposes in mind in defining their duties.
  For example, we were dealing with a point concerning non-protective duties, which are duties for the purpose of our revenue law but are not duties for the purpose of G.A.T.T. and E.F.T.A. In other words, duties on goods which are applied impartially to home and over-sea products are not duties for G.A.T.T. and E.F.T.A. when there is no home production. Therefore, the duty is remittable under Section 6, which we were discussing earlier. However, that is a matter of no concern to the courts, because when they construe this they will construe duty as being the duty imposed by the Bill.
  It is plain that what happens is that the right to impose this duty ends 12 months from the date, but any duty which has been collected—i.e., any deposit which has been collected—will be collected in accordance with the terms of the Act, which will have been in force
  1486
  at the date of collection, and effluxion of 180 days will make it returnable. Any other interpretation would be preposterous, because it would set the Customs the obligation to collect the duty on the three-hundred and sixty-third, three-hundred and sixty-fourth or three-hundred and sixty-fifth day to hold it for 24 hours, which is preposterous.
  What my right hon. Friend said was, as is usual with him, crystal clear and common sense in that it provides for the appropriate operation of the Act and the appropriate termination of the Act in 12 months from its receiving Royal Assent. I hope that although the hon. and learned Member for Southport (Mr. Percival) is not entirely satisfied, he is sufficiently satisfied to dispose of this matter.
  Mr. Percival: As the hon. Gentleman has said, I am not entirely satisfied with something which is silly. If what he has said is right and is what is intended, why not change one word to say what is intended—
  "Duty … shall cease to be chargeable"?
  We will have said in simple terminology what we mean. Here is a chance to do it. For goodness sake, why not do it?
  Mr. Lever: Would not the hon. and learned Gentleman equally be able to argue that it was ambiguous if we changed
  "cease to be in force"
  to
  "cease to be chargeable"?
  I cannot see that one is clearer than the other.
  Mr. Percival Mr. Percival indicated dissent.
  Mr. Lever: The hon. and learned Gentleman does not agree, but we have authority for saying that
  "cease to be in force"
  will have the meaning explained by my right hon. Friend. I do not know why the Committee wants more than that.
  Sir K. Joseph: The Financial Secretary is justified in his self-confidence in nearly every case, because he is very quick and adept, but would he contemplate that perhaps my hon. and learned Friends have a point of substance here? Would he not undertake, at this late hour, to have another look at this? We have

  1487
  Report stage ahead. Surely, nothing would be lost by the Government having another look at this.
  Mr. Lever: I will certainly do that. In order to save further debate that does not seem unreasonable. I am asked to embody the purport of what my right hon. Friend said in unambiguous words. If these words are in the slightest degree ambiguous I will look at them and, if they need to be changed, changed they will be. I do not at the moment see any need for change, but I will do what the right hon. Gentleman has suggested.
  Mr. Tom Boardman: Would the Financial Secretary have in mind that further Amendments provide circumstances in which duty can become payable, and I think great confusion in interpretation would be caused by the Clause as it stands. Perhaps the Financial Secretary will bear this in mind when looking again at the Clause.
  Question put and agreed to.
  Clause ordered to stand part of the Bill.
  To report Progress and ask leave to sit again.—[Mr. Harold Lever.]
  Committee report Progress; to sit again this day.

  AGRICULTURE (SPRING TRAPS) (SCOTLAND) BILL
  Order for Second Reading read.
  Motion made, and Question put (pursuant to Standing Order No. 62 (Public Bills relating exclusively to Scotland)), That the Bill be committed to a Scottish Standing Committee.—[Mr. McBride.]
  Question agreed to.
  Bill (deemed to have been read a Second time) committed to a Scottish Standing Committee.

  FACTORIES (FIRE PREVENTION SERVICES)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. McBride.]
  3.52 a.m.
  Mr. John Horner: I would wish my words to have been heard by a Minister from the Home Department, but I understand that my hon. Friends from the Department of Employment and Productivity is to reply. I wish to stress the importance of the better employment of operational members of local authority fire brigades. I am delighted to see the Joint Under-Secretary of State for Scotland in his place; it is relevant that he should hear what I have to say. I shall be referring to the work of the Factory Inspectorate, and it is thought appropriate that the Department of Employment and Productivity should handle this matter.
  I suggest that the 25,000 or so operational firemen in the local authority fire brigades of England and Wales could be more usefully employed. Nothing I say is to be regarded as detracting one iota from my great respect, after many years of personal knowledge, for the work of the Factory Inspectors for which my hon. Friend is responsible. Their devotion to duty, and the enormous amount and high quality of the work done by factory inspectors in the course of a year is worthy of the highest praise.
  The work of factory inspectors could be supplemented and supported to their benefit. In the legislation which has been put through the House in recent years dealing with safety at work and from fire in workplaces, shops and offices, we have witnessed what is known in the fire service as stable-door legislation.
  The 1961 Factory Act was passed after a number of disastrous fires in special circumstances affecting factory workers where lives were lost. One was the notorious Keighley fire, where women workers in a woollen mill were obliged, due to the absence of proper means of escape, to jump from windows into a canal. Then we had the Shops and Offices Act, which followed some disastrous fires involving loss of life in large multiple stores. These pieces of legislation placed additional duties on the

  1489
  operational fire service in respect of inspection and ensuring that proper means of escape and alarm in case of fire were maintained. Although, in the precise terms of the legislation, it was the then Ministry of Labour which had primary responsibility, if the fire authorities so wished, it could devolve upon the operational fire service. Therefore, nothing that I say tonight will detract from the admiration that I have for the fully trained and very efficient fire prevention services, which are branches of the local authority fire brigades.
  I am proposing that the work of the fire prevention officers, of which there are some 2,000, should be supplemented and much improved, and that the coordination which has grown up over recent years between the factory inspectors and fire prevention officers of the local authority fire brigades should be extended by making greater use of the operational firemen. When I say that, I am not referring to firemen in rank, but those men whose job it is to put out fires when the fire prevention provisions have broken down.
  It might be argued that we have all the inspectors that we want, and that there is no need for what I am proposing. However, I am in no two minds about it. Fire losses run at something like £100 million a year, and that sum represents only the compensation paid by insurance companies in respect of losses directly involved in fires. The indirect fire losses are not capable of precise calculation, involving as they do the loss of trade, of export markets, and of employment, and the restoration of equipment, machinery and factories destroyed, as well as the sad loss of life.
  The responsibility for fire prevention is spread over a number of Government Departments, including the Home Office and the Department of Employment and Productivity. In the local authorities, it is spread over a proliferation of local authority departments, involving city engineers, architects, public health officers, building inspectors, weights and measures inspectors, and sanitary departments. In the recent fire in Glasgow which cost the lives of about 20 people, the responsibility for fire prevention fell upon the department under the aegis of the Master of Works of Glasgow.
  1490
  My proposal is simply that the 25,000 operational ranks—the men who wait to go to fires—should be employed to supplement the very good work which is being done by the two Departments represented by my hon. Friends on the Front Bench.
  The Under-Secretary of State for Scotland (Mr. Norman Buchan): It might be of value to my hon. Friend to know that I have asked the Scottish Central Fire Brigades Advisory Council at its next meeting, which is a week on Friday, to look at this very question—the possibility of the use of operational personnel on fire prevention duties. I thought my hon. Friend would be glad to know this.
  Mr. Horner: I am delighted to hear this news. It supports my opening remarks that if we had a Minister from the Home Department here I might have truncated my speech even further. I am delighted to hear what the Under-Secretary has said. I know that he will not mind, therefore, if I draw my remarks to a close. Perhaps he will be kind enough to convey to the Central Fire Brigades Advisory Council in Scotland the points that I am going to make.
  First, is my suggestion practicable? Can we bring men out of fire stations to do this work? I say that it is wholly practicable. Every fire appliance is equipped with short-wave radio. It will be possible to equip firemen with personal radio sets, if that should be necessary, as with the police. It is easy to evolve a system whereby firemen and their appliances can be on ready call, as quickly available as though they were in their fire stations, with the advanced means of communication that are in existence, and doing this sort of good housekeeping work, seeing that after the factory inspector has been through the building and the fire prevention officer has made his report there is a constant follow-up inspection and that the regulations are carried out, instead of waiting the inevitable long period until there is a further visit from the fire prevention officer or the factory inspector.
  I could give many examples of where, after a fire has been put out, the operational firemen have discovered in the ruins much of the evidence which has confirmed their misgivings and suspicions while fighting the fire that the

  1491
  recommendations of the fire prevention officer or the factory inspector had fallen into disuse, although they may have been adhered to for a time. We cannot legislate for carelessness or stupidity. We can only do our best to see that the recommendations are adhered to as closely as possible. That means careful and constant surveillance. It means having available on the spot a number of properly trained people, and my suggestion is that those men are available.
  This is not my idea. It is the idea of the firemen themselves. It is wholly praiseworthy that these suggestions come from the firemen's own organisation, from the Fire Brigades Union. At a time when trade unions are under attack from many quarters, it ought to be noted that here is a trade union which wants its members to be more fully employed, which believes that at a time when fire losses are running at such astronomical figures, with a grave drain on our economic resources, they are employed on tasks which are not the most socially useful. They think that it is a criminal misuse of manpower that they should be required to do work in fire stations which is nothing to do with the operational job or fire prevention work; I refer to the menial chores which are commonplace in many fire stations today.
  We have 25,000 men, many of them young, intelligent, keen and disciplined. I believe that it is not beyond the limit of the joint intelligence of the two Departments which are represented on the Government Front Bench to see that the willingness and anxiety expressed by these men to be used for these purposes should be fully exploited, especially at a time when we are all concerned at the growing loss of property and life from fire. Government Departments should understand this urgent demand which is being expressed in so many ways. The Under-Secretary of State to the Scottish Office has referred to the Scottish Central Fire Brigades Advisory Council. I hope that the House will give support to the expression which has come from the Fire Service.
  4.5 a.m.
  The Under-Secretary of State for Employment and Productivity (Mr. E. Fernyhough): I am grateful to my hon.
  1492
  Friend for drawing attention tonight to a matter which I know has troubled many people recently. It is natural that the calamitous fire in Glasgow should have aroused strong Parliamentary and public feelings of horror and anxiety. I have, of course, long been aware of my hon. Friend's personal interest in this subject and of his very great experience of it. I appreciate the tribute which he paid to the factory inspectors, and I will see that his compliments are passed on to them.
  Perhaps I can begin by outlining briefly the present responsibilities of my right hon. Friend, the Secretary of State for Employment and Productivity, for fire precautions. These are limited to premises which are subject to the Factories Act, 1961, and the Offices, Shops and Railway Premises Act, 1963.
  The fire provisions of the Factories Act deal with the following subjects:
  First, means of escape in case of fire; secondly, instruction of workers as to the means of escape; thirdly, means for fighting fire; fourthly, fire alarms; and fifthly, safety provisions mainly of a structural kind.
  As regards means of escape, certain factories, chiefly those in which more than 20 people are employed, are required by the Act to have a certificate of the fire authority that they are
  "provided with such means of escape in case of fire for the persons employed in the factory as may reasonably be required in the circumstances of the case."
  Except as regards means of escape, fire authorities have no statutory responsibilities in relation to the fire provisions of the Act. Inspection in relation to the other matters fall solely to the factory inspectorate, but the Act does allow the factory inspector to authorise a fire brigade officer—with the consent of the authority maintaining the brigade—to enter factories for the purpose of reporting to him on any matter falling within his duties relating to fire.
  Although certification falls to the fire authority, the enforcement of the means of escape provisions remains a matter for the factory inspector. If, for example, the means of escape are not properly maintained or are obstructed, it is for the factory inspector to see that the necessary corrective action is taken and to prosecute where appropriate.

  1493
  The fire provisions of the Offices, Shops and Railway Premises Act are modelled upon, and follow closely, those of the Factories Act. Since the Glasgow fire there has been some criticism—not all of it very well informed—about the position with regard to means of escape certification. By the end of 1967 about 84 per cent. of the factories concerned had been dealt with. It is doubtful whether the percentage figure is likely to increase much beyond the present level. It will certainly never be possible to achieve a 100 per cent. certification, because there will always be new factories coming along and factories where changes in processes and premises invalidate the existing certificates, which, in consequence, require amendment.
  On the Offices, Shops and Railway Premises side, the position is that at the end of December, 1967 fire certificates were in force for about 40,000—just under 29 per cent.—of the 140,000 office and shop premises, and for 231–9·8 per cent.—of the 2,377 railway premises known to be subject to the certification requirements.
  Mr. Horner: I do not want to argue about statistics, but the Chief Inspector of Fire Services issues an annual report, and his report for 1967 gives figures which do not by any means marry up with those given by my hon. Friend. He ends his report by saying that the fire authorities still have a large and continuing task, and he refers to a figure of 670,000 registered shops and office premises, of which 112,000 have been inspected.
  Mr. Fernyhough: I shall not try to convince my hon. Friend that the figures I have given are correct. I promise that tomorrow I shall have them checked and write to my hon. Friend. If I am wrong, I shall apologise.
  I was saying that it would be wrong to countenance suggestions that the existing arrangements for the enforcement of the statutory fire provisions and the giving of advice on precautions in factories are inadequate though, no doubt, they are capable of improvement.
  It is certainly not the case, as appears to be suggested in some quarters, that the Factory Inspectorate is unable to find time to take its fire duties seriously enough. It is true that the Inspectorate
  1494
  is under great pressure and its resources are very stretched. But its members do, in fact, give the most meticulous attention to fire matters in the course of their inspections. Any serious deficiencies revealed at a general inspection are noted for follow-up action to ensure that corrective action has been taken. They do not wait until the next general inspection. The blocking of means of escape, or the absence of a fire alarm, would certainly fall within the category of defects calling for a check visit.
  Ever since the Factories Act came into force the inspection of factory premises prior to the issue of means of escape certificates has been a major preoccupation for the fire authorities. Before a certificate is issued a thorough survey of premises is needed from the point of view of conditions of use, structure, and the number of employees.
  This can be a time-consuming task, and it is, therefore, to the credit of fire authorities generally that, as I have already explained, at the end of 1967, the latest date for which figures are available, about 84 per cent. of factories liable to certification had, in fact, received certificates. It is true, however, that a certificate can easily be invalidated if, subsequently, there are significant changes of use, new building, or bad maintenance. It is, therefore, important to maintain an adequate rate of follow-up inspections to check on the current state of fire precautions in particular buildings.
  The full-time fire prevention staffs of fire authorities are frequently too busy to undertake a comprehensive programme of re-inspections themselves, but they usually make a point of doing so in the case of premises offering the largest and most hazardous risks, at least once a year. For the rest, fire authorities are increasingly coming to rely on the operational fire-fighting personnel of the brigades for work of this kind.
  I know that this is a matter which arouses strong feelings; some feel that station personnel should be employed not on what they would regard as menial tasks, cleaning fire stations, polishing, and so on, but, when not engaged on fire-fighting duties, on more appropriate work such as fire prevention inspection. My right hon. Friend the Secretary of State for the Home Department feels

  1495
  that this is a worthwhile use of manpower so long as it is geared to the level of expertise attained by the personnel concerned and provided the standard of operational fire cover is not adversely affected.
  Her Majesty's inspectors of fire services, therefore, when asked for their views on this matter, usually advise fire authorities, subject to these safeguards, to make the maximum possible use of operational personnel in this field, and the practice may therefore be expected to increase. It does, incidentally, fulfil a secondary purpose of enabling fire authorities to secure information to help them in fire fighting. I must emphasise, however, that this is a matter entirely for the fire authorities concerned, and the central Government have no power to intervene.
  The powers conferred on fire authorities under the Factories Act to enable them to carry out the duties of certification are generally regarded as adequate. In particular, an officer of the fire authority may enter a factory where people are employed at all reasonable times to ascertain whether the requirements relating to means of escape are being complied with.
  Co-operation between officers of fire authorities and the appropriate factory inspectors is usually very close, and it is common practice for useful information to be freely exchanged. Thus, it is entirely open for a fire prevention officer to draw to the attention of the factory inspector anything which seems to him to constitute a fire or explosion hazard arising out of the particular use of a building, and this form of co-operation is widespread.
  Factory inspectors may authorise fire brigade officers to inspect factories as to the observance of the fire provisions of the Factories Act and to report their findings to the inspector for his further action. We leave it to our local inspectorate to decide the extent to which this power should be used. The power is widely used particularly in Scotland and in London. At the present time no less than 2,288 fire brigade officers are authorised to visit factories and to report to district inspectors of factories on fire matters.
  1496
  I am aware that some fire brigades are concerned because their local fire authorities have delegated their duties as to means of escape certification under the Factories Act (as well as duties under the Offices, Shops and Railway Premises Act) to local authority departments other than the brigade—for example, the Architects' Department in Inner London and the Master of Works in Glasgow. This again is not a matter in which my right hon. Friend can intervene.
  I would not pretend for one moment that the statistics I have detailed do not leave room for improvement. My hon. Friend will know that any differences between us are ones of means and not ends. I want to see the total number of accidents and fatalities brought down as much as he does. He will know, however, that at the present moment we are considering comments on our First Consultative Document for new safety, health and welfare legislation to replace both the Factories Act and the Offices, Shops and Railway Premises Act, and clearly it would be impossible for me to comment at this stage on the likely form of legislation which we shall ultimately adopt. Moreover, the future organisation of the fire service is under consideration by a committee set up by my right hon. Friends the Home Secretary and the Secretary of State for Scotland under the chairmanship of Sir Ronald Holroyd.
  My hon. Friend will also appreciate that I cannot comment on the Glasgow incident as this is to be a subject of a formal inquiry under the Fatal Accidents Inquiries (Scotland) Act, 1895.
  I appreciate that it is not possible for me to reply to all the issues that my hon. Friend has raised. Some of them are outside the scope of the Ministry that I represent an dare more matters for the attention of my right hon. Friend the Home Secretary. I will, however, gladly give my hon. Friend the assurance that I will see that the Home Secretary's attention is drawn to the many points that he has raised. I am sure that in giving consideration to them the Home Secretary will, where he thinks it will be helpful, act upon them.
  Question put and agreed to.
  Adjourned accordingly at twenty minutes past Four o'clock a.m.

PUBLIC BUILDING AND WORKS
  Houses (Condensation)
  Houses (Condensation)
  Royal Aircraft Establishment (Assistance to Construction Industry)
  Royal Aircraft Establishment (Assistance to Construction Industry)
  Construction Programme (Phelps Brown Recommendations)
  Construction Programme (Phelps Brown Recommendations)
  Registration of Builders (Inquiry)
  Registration of Builders (Inquiry)
  Office Building, Kew
  Office Building, Kew
  House of Commons (Clock Tower)
  House of Commons (Clock Tower)
  Ronan Point Flats (Tribunal's Findings)
  Ronan Point Flats (Tribunal's Findings)
COAL
  Durham (Production)
  Durham (Production)
  Concentration Depots
  Concentration Depots
GAS
  North Sea Gas (Conversion Cost)
  North Sea Gas (Conversion Cost)
  Prices
  Prices
MINISTRY OF POWER
  British Steel Corporation (Capital Expenditure)
  British Steel Corporation (Capital Expenditure)
HOUSING
  System Built Flats (Earth Tremors)
  System Built Flats (Earth Tremors)
  Rent Reductions
  Rent Reductions
  Collective Ground Rents
  Collective Ground Rents
  Rent Rebate Schemes
  Rent Rebate Schemes
  New Town Housing (Rents)
  New Town Housing (Rents)
LOCAL GOVERNMENT
  Sports Projects (Loan Sanction)
  Sports Projects (Loan Sanction)
  Firbeck Colliery (Closure)
  Firbeck Colliery (Closure)
  Rate Support Grants
  Rate Support Grants
NATIONAL FINANCE
  Plant and Machinery (Expenditure)
  Plant and Machinery (Expenditure)
  Estate Duty (Agricultural Property)
  Estate Duty (Agricultural Property)
  Currency Speculation
  Currency Speculation
  Exchange Control
  Exchange Control
  Imports (Duty-Free Entry)
  Imports (Duty-Free Entry)
  Higher Education (Company Contributions)
  Higher Education (Company Contributions)
  Nationalised Industries (Capital Debt)
  Nationalised Industries (Capital Debt)
  Land Disposal (Government Departments)
  Land Disposal (Government Departments)
  International Monetary Fund Team
  International Monetary Fund Team
  Production (Annual Growth)
  Production (Annual Growth)
  Import Deposit Scheme
  Import Deposit Scheme
  Revenue Yield (Estimates)
  Revenue Yield (Estimates)
  Loan Repayments
  Loan Repayments
  Corporation Tax (Relief)
  Corporation Tax (Relief)
  Rhodesian Stamps (Customs Investigations)
  Rhodesian Stamps (Customs Investigations)
  Local Authority Subsidies (Scotland)
  Local Authority Subsidies (Scotland)
  Employment
  Employment
  Personal Saving
  Personal Saving
  Regional Employment Premium
  Regional Employment Premium
  Government Expenditure (Representations)
  Government Expenditure (Representations)
  Credit (Unsolicited Appeals)
  Credit (Unsolicited Appeals)
  Petrol Duty
  Petrol Duty
  Taxation (Residential Qualifications)
  Taxation (Residential Qualifications)
EMPLOYMENT AND PRODUCTIVITY
  Phelps Brown Committee
  Phelps Brown Committee
  Disabled Persons (Wales)
  Disabled Persons (Wales)
  Bacon Curing Industry (Pay)
  Bacon Curing Industry (Pay)
  Kirkham-Fleetwood Line
  Kirkham-Fleetwood Line
  Royal Commission on Trades Unions and Employers' Associations
  Royal Commission on Trades Unions and Employers' Associations
  Productivity Agreements
  Productivity Agreements
HOME DEPARTMENT
  Emergencies (Planning and Preparation Responsibilities)
  Emergencies (Planning and Preparation Responsibilities)
  Commonwealth Immigrants (Dependants)
  Commonwealth Immigrants (Dependants)
  Experiments on Live Animals
  Experiments on Live Animals
BOARD OF TRADE
  Take-over Bids
  Take-over Bids
  Plant and Machinery (Imports)
  Plant and Machinery (Imports)
  Service Industry Projects (Assistance)
  Service Industry Projects (Assistance)
CIVIL SERVICE
  Development Areas (Government Offices)
  Development Areas (Government Offices)
  Pensions Increase Bill
  Pensions Increase Bill
SCOTLAND
  Family Planning Advice
  Family Planning Advice
  Scottish Transport Group
  Scottish Transport Group
  After Care Licences (Releases)
  After Care Licences (Releases)
  General Teaching Council
  General Teaching Council
  Smoke Control Areas
  Smoke Control Areas
  Croft Houses (Financial Aid)
  Croft Houses (Financial Aid)
  Rates (Lanarkshire)
  Rates (Lanarkshire)
  Police Witnesses
  Police Witnesses
  Greater Glasgow Transportation Plan
  Greater Glasgow Transportation Plan
  Foxes (Stock Losses)
  Foxes (Stock Losses)
  Stornoway—Kyle of Lochalsh Service
  Stornoway—Kyle of Lochalsh Service
  Farm Amalgamation Scheme
  Farm Amalgamation Scheme
  Scottish Roads Board
  Scottish Roads Board
  Rate Support Grants
  Rate Support Grants
  Roads and Bridges (Highlands)
  Roads and Bridges (Highlands)
  Alcoholism (Deaths)
  Alcoholism (Deaths)
TRANSPORT
  Channel Tunnel (Finance)
  Channel Tunnel (Finance)
  Motor Vehicle Insurance
  Motor Vehicle Insurance
ROADS
  North West (Priorities)
  North West (Priorities)
  A122-A11 Junction
  A122-A11 Junction
  Proposed D-Ring Road, London
  Proposed D-Ring Road, London
RAILWAYS
  Darlington-Richmond Line (Closure)
  Darlington-Richmond Line (Closure)
FOREIGN AND COMMONWEALTH AFFAIRS
  Falkland Islands
  Falkland Islands
  INTERNATIONAL DEVELOPMENT ASSOCIATION
  INTERNATIONAL DEVELOPMENT ASSOCIATION
  CHANCELLOR OF THE EXCHEQUER (SPEECH)
  CHANCELLOR OF THE EXCHEQUER (SPEECH)
  RHODESIA
  RHODESIA
  PRIME MINISTER (OFFICIAL PATRONAGE)
  PRIME MINISTER (OFFICIAL PATRONAGE)
  INDIA AND SEYCHELLES (PRIME MINISTER'S VISIT)
  INDIA AND SEYCHELLES (PRIME MINISTER'S VISIT)
  EMPLOYMENT AND DEVELOPMENT, NORTHERN REGION
  EMPLOYMENT AND DEVELOPMENT, NORTHERN REGION
  FOREIGN EXCHANGE (ADVICE)
  FOREIGN EXCHANGE (ADVICE)
  NIGERIA
  NIGERIA
  LAW OFFICERS (REMUNERATION)
  LAW OFFICERS (REMUNERATION)
  WEST GERMAN AMBASSADOR (DISCUSSIONS)
  WEST GERMAN AMBASSADOR (DISCUSSIONS)
  MR. ANTHONY GREY
  MR. ANTHONY GREY
  FEDERAL GERMAN REPUBLIC (VISIT)
  FEDERAL GERMAN REPUBLIC (VISIT)
  ECONOMIC POLICY (TRADES UNION CONGRESS)
  ECONOMIC POLICY (TRADES UNION CONGRESS)
  SPORT (SCOTTISH DEVELOPMENT)
  SPORT (SCOTTISH DEVELOPMENT)
  BUILDING REGULATIONS (DEPARTMENTAL RESPONSIBILITY)
  BUILDING REGULATIONS (DEPARTMENTAL RESPONSIBILITY)
  WELSH FARMING ASSOCIATIONS (REPRESENTATIONS)
  WELSH FARMING ASSOCIATIONS (REPRESENTATIONS)
  CABINET OFFICE (STAFF)
  CABINET OFFICE (STAFF)
  GOVERNMENT POLICY (ANNOUNCEMENTS)
  GOVERNMENT POLICY (ANNOUNCEMENTS)
  DISTRICT PROBATE REGISTRY, LEICESTER
  DISTRICT PROBATE REGISTRY, LEICESTER
AGRICULTURE, FISHERIES AND FOOD
  Stupefying Bait Trials, Bedfordshire
  Stupefying Bait Trials, Bedfordshire
  Farm Amalgamation Scheme
  Farm Amalgamation Scheme
  European Economic Community Arrangements
  European Economic Community Arrangements
  Output
  Output
EDUCATION AND SCIENCE
  Republic of Ireland Students (United Kingdom Universities)
  Republic of Ireland Students (United Kingdom Universities)
  Nursery Schools, Durham
  Nursery Schools, Durham
MINISTRY OF DEFENCE
  Clyde Submarine Base
  Clyde Submarine Base
  Nuclear Submarine Reactors (Accident Safety Procedures)
  Nuclear Submarine Reactors (Accident Safety Procedures)
  Falkland Islands
  Falkland Islands
  Junior Servicemen (Release and Discharge)
  Junior Servicemen (Release and Discharge)
OVERSEAS DEVELOPMENT
  Overseas Service Aid Scheme
  Overseas Service Aid Scheme
  Airfield Development
  Airfield Development
POST OFFICE
  Canteens (Scotland)
  Canteens (Scotland)
  Newspaper Advertisement (Cost)
  Newspaper Advertisement (Cost)
  Posts and Telecommunications
  Posts and Telecommunications
TELEPHONE SERVICE
  Shared Telephone Lines, Hamilton
  Shared Telephone Lines, Hamilton
WIRELESS AND TELEVISION
  B.B.C. Services, Scotland
  B.B.C. Services, Scotland
HOSPITALS
  Nuneaton
  Nuneaton
  Methedrine (Hospital Pharmacies)
  Methedrine (Hospital Pharmacies)
  Coventry Hospital, Wallsgrave and George Eliot Hospital, Nuneaton
  Coventry Hospital, Wallsgrave and George Eliot Hospital, Nuneaton
  Local Hospital Services (Reorganisation)
  Local Hospital Services (Reorganisation)
  Wallingford Hospital Services (Reorganisation)
  Wallingford Hospital Services (Reorganisation)
SOCIAL SERVICES
  Prescription Medicines (Suppliers)
  Prescription Medicines (Suppliers)
  Coloured Immigrants, Harrow
  Coloured Immigrants, Harrow
  Disabled Drivers Allowance
  Disabled Drivers Allowance
  Prescription Charges
  Prescription Charges
  Dispensing (Doctors in Rural Areas)
  Dispensing (Doctors in Rural Areas)
  Influenza Vaccine
  Influenza Vaccine
  Chloromycetin
  Chloromycetin
ECONOMIC AFFAIRS
  Employment, Scotland and Northern England
  Employment, Scotland and Northern England
TECHNOLOGY
  Atomic Energy Authority, Culham (Plasma Physics)
  Atomic Energy Authority, Culham (Plasma Physics)
WALES
  Rent Assessments, Monmouthshire
  Rent Assessments, Monmouthshire
  Afforestation
  Afforestation

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR Oil the Woolsack.
Prayers—Read by the Lord Bishop of Leicester.
The Earl of Chichester—Took the Oath.

RAIL CLOSURES: LEWES-UCKFIELD LINE
LORD TEVIOT: 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:

(1) how many times trains have been diverted via Lewes and Uckfield for any reason in the last seven years;

(2) which alternative route to Brighton will British Railways use after the closure of the Lewes-Uckfield line;

(3) how many passengers travel daily on lines from which traffic might, in an emergency, have to be diverted on to the Lewes-Uckfield line.]

THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR DEFENCE, R.A.F. (LORD WINTER-BOTTOM): My Lords, I regret that the British Railways Board have told the Ministry that they do not keep their records in a way which would enable me to answer the first of the noble Lord's three questions. In reply to the second question, this line is not electrified, and cannot therefore be readily used as a diversionary route for the London-Brighton electric service. The two recognised alternative routes one via Horsham and Littlehampton, and the second via Wivelsfield, Cooksbridge. and Lewes, will continue to be available. In these circumstances, the answer to the third question is, "None".
LORD TEVIOT: My Lords, I thank the Minister for his reply. In view of the fact that the population is increasing rapidly, does he not think it would be best to keep an alternative route, bearing in mind that it is not electrified, regardless of the extra capital expenditure involved?
LORD WINTERBOTTOM: My Lords, the whole change of philosophy in our attitude to the railway system is that the Government must have regard to the profitability of the rail network. The noble Lord is quite correct in saying that there is a growth in population: and the line from Uckfield to Hurst Green is being retained and supported by a social subsidy. But there is no such justification for retaining the Lewes-Uckfield section.
LORD TEVIOT: My Lords, when the noble Lord refers in his reply to the alternative Horsham-Arundel line, does he appreciate that it is a very long way from Brighton and also that the Hayward's Heath-Cooksbridge-Lewes line could be quite useless because it sometimes becomes flooded between Hayward's Heath and Three Bridges? Would he bear in mind that these two lines are not satisfactory alternatives?
LORD WINTER BOTTOM: My Lords, I accept the fact that one of these two diversions is a very long one, but it would be used only on occasions of "acts of God". The other triangle is quite short and would not cause major inconvenience.
BARONESS EMMET OF AMBERLEY: My Lords, may I ask the Minister whether consideration has been given to the fact that Uckfield has a growing population; that people would like to get to the sea, as well as to London, and that if this short line is removed this will no longer be possible? Will the Minister bear in mind that all round Uckfield the population is increasing very fast? Would it not be wise to keep this line in good order in case the pressure becomes such that in due course it will have to be reopened?
LORD WINTERBOTTOM: My Lords, as regards the first point in the supplementary question, arrangements are being made for additional bus services, as the noble Baroness may remember from our previous exchange on this matter. On the question of the retention of ownership, I think this an interesting point, and perhaps the noble Baroness would consider putting down an Unstarred Question so that we might discuss the matter.
LORD LEATHERLAND: My Lords, will my noble friend bear in mind that, in most cases where a railway line is closed and complaints from the public immediately arise it is a fact that when the railway line was open very few people used it?
LORD WINTERBOTTOM: My Lords, my noble friend is helpful in reminding the House of this fact.

CONCORDE AIRCRAFT FLIGHT PROGRAMME
2.38 p.m.
LORD TREFGARNE: 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 announced French cuts in their contribution to the Concorde programme will affect the timing of the first flight of the Toulouse-built prototype; when they now expect that flight to take place; and when they now expect the Concorde to receive its Public Transport Certificate of Airworthiness.]
LORD BESWICK: My Lords, the cut announced by the French Government of 60 million francs in the Concorde budget for 1969 is essentially a rephasing of payments and is not intended to reduce or slow down the actual programme of work next year. In any case 60 million francs represents less than 10 per cent. of the French budgetary provision for 1969. First flight remains planned for January next year, and certification of airworthiness for autumn 1972.
LORD TREFGARNE: My Lords, as always, I am grateful to the noble Lord for his reply. Can he say whether there is any truth in the article in the Sunday Express last Sunday in which it was suggested that the British aircraft might now fly first on Christmas Day? Secondly, can he say in which particular areas of manufacture the French cuts will have effect? Can he say which particular parts of the aircraft are going to be affected; and how is it that a re-phasing of payments cannot affect the date of the first fight or the date of the production of the prototype, since, presumably, the suppliers are not going to supply the goods until they are paid for?
LORD BESWICK: My Lords, first may I say that I am grateful for the noble Lord's gratitude. The noble Lord referred to an article in the Sunday Express. I put the same question to the people concerned and I was told that it was a lot of nonsense—the article, that is. As for the latter part of the noble Lord's supplementary question, there is no particular part of the work which is being

5
held up; it is wholly a question of re-phasing the payment. I am told that the limiting factor is not a question of finance but a question of the technical work being done.

VETERAN CAR RUN AND TRAFFIC INCONVENIENCE
LORD SORENSEN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what advice they have given to the appropriate local authorities and police in respect of considerable inconveniences caused to motorists during such events as the annual race of veteran cars from London to Brighton; whether they are aware that preference is given to the passage of those cars over those drivers who wish more speedily to reach their destinations; and whether the A.A. and R.A.C. can be advised to affix warning notices of the veteran car race on London roads converging on the main London-Brighton road.]
LORD WINTERBOTTOM: My Lords, my right honourable friend the Minister of Transport has appointed the R.A.C. as the appropriate authority for authorising all rallies (including the Veteran Car Run) which pass through more than one police area. For all such events the arrangements are worked out by the R.A.C. in consultation with the police to ensure the minimum inconvenience to other road users. In respect of the Veteran Car Run the route for the competitors is signposted as well as alternative routes for other drivers. The route is not closed to other motorists, but the police do regulate other traffic to assist the veteran cars. While my right honourable friend recognises that not everyone is interested in rallies, veteran or otherwise, the Veteran Car Run is one event which has attracted very few complaints in recent years. For many people it is an enjoyable event.
LORD SORENSEN: My Lords, does my noble friend appreciate that while I, and I am sure everyone in this House, have no desire at all to prevent the running of this very entertaining event,
6
nevertheless a great deal of inconvenience is caused to other drivers? My own experience is that a journey which normally takes a certain time took an hour more on the day that I went, causing me to arrive at my destination for a special appointment three-quarters of an hour later. That is also the experience of a number of others—parsons, doctors and businessmen—who want to reach their destinations in normal time. And will my noble friend take heed that the notices are quite inadequate for this purpose?
LORD WENTERBOTTOM: My Lords, the Veteran Car Rally takes place once a year, it is watched by three-quarters of a million people and in the recent period only one complaint has been received.
LORD LINDGREN: My Lords, is my noble friend aware of the historical background of this event, which is of particulare interest to Members on this side of the House?
LORD WINTER BOTTOM: My Lords, I am not certain that I altogether agree with my noble friend. It is the anniversary of the abolition of the gentlemen with the red flag.
LORD CHESHAM: My Lords, is the noble Lord aware that this event is not, as it is inaccurately described in two places in the Question, a race? Is the noble Lord further aware that I had anticipated that the noble Lord, Lord Sorensen had put down this Question because of some personal experience; and could the Minister say why the noble Lord should pick on this event, as against the multifarious number of carnivals, processions and demonstrations taking place on the public roads? Is the noble Lord aware that the R.A.C., who promote this event, as well as acting as the Government's agent erect a mass of notices giving warnings and alternative routes—the noble Lord, Lord Sorensen, shakes his head—which should satisfy the noble Lord if only he went to look for them? Finally, is the Minister aware that the A.A. would not have any interest in this rally, because it is promoted by the R.A.C.?
LORD WINTERBOTTOM: My Lords, as regards the penultimate point raised by the noble Lord, that is my information.
LORD MONTAGU OF BEAULIEU: My Lords, in view of the obvious ignorance of the noble Lord, Lord Sorensen, would the Minister convey to the noble

7
Lord that he can come down to Brighton with me next Saturday so that he can see for himself?
LORD SORENSEN: My Lords, is the noble Lord aware that I was on the rally—that is why I complained?
LORD STRATHCARRON: My Lords, is the noble Lord aware how much competitors appreciate the help of the police, and that without this help many of us would not get up the hills at all?

GOVERNMENT STATEMENTS
LORD BESWICK: My Lords, my noble friend Lord Winterbottom will be repeating a Statement on the Whitehall Redevelopment Plan at a convenient moment after half past three o'clock. Subsequently, my noble friend Lord Chalfont will make a Statement on the Falkland Islands.

HOUSE OF LORDS OFFICES
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I beg to move that the First Report from the Select Committee be now considered.
Moved accordingly, and, on Question, Motion agreed to.
The Committee's Report was as follows:
1. APPOINTMENT OF SUB-COMMITTEES
(a) Administration. The administration Committee was appointed as follows:

E. Listowel, (Chairman)

M. Salisbury,

E. St. Aldwyn,

V. Simonds,

L. Amulree,

L. Beswick,

L. Denham,

L. Henley,

L. Strang,

B. Swanborough,

with the Clerk of the Parliaments.
With power to co-opt further Lords.
(b) Library. The Sub-Committee on the Library was appointed as follows:

V. Simonds,

L. Amulree,

L. Burden,

L. Carrington,

L. Champion,

L. Chorley,

L. Reid,

B. Wootton of Abinger,

with the Clerk of the Parliaments.
With power to co-opt further Lords and to appoint its own Chairman.
(c) Refreshment Department, The Sub-Committee on the Refreshment Department was appointed as follows:

E. St. Aldwyn,

V. Goschen,

L. Amulree,

L. Beswick,

L. Champion,

L. Sainsbury,

L. Shepherd,

L. Strang,

B. Swanborough,

with the Clerk of the Parliaments.
With power to co-opt further Lords and to appoint its own Chairman.
(d) House of Lords Estimates. The Sub-Committee on the Estimates was appointed as follows:

E. Listowel, (Chairman)

E. St. Aldwyn,

L. Amulree,

L. Beswick,

with the Clerk of the Parliaments.
2. REVISED SCALES OF PAY
The Committee authorised the revised scales of salary under D.E.O. (68) (Pay) No. 14 to the Assistant Clerks of the Records with effect from the 1st January, 1968, and the 1st January, 1969.
The Committee also sanctioned the application of the following Establishment Circulars:—

(a) D.E.O. (68) (Pay) No. 20—Central Pay Increase;

(b) D.E.O. (68) (Pay) No. 27—Pay of the Higher Civil Service;

to analogous grades of the staff of the House of Lords.
3. PARLIAMENT OFFICE AND LIBRARY
The Committee authorised the employment of an additional Senior Personal Secretary in the Parliament Office from the 25th November to the 31st December 1968.
The Committee also sanctioned the regrading to Office Assistants of the three posts of Record Office Assistant with effect from the 1st December, 1968.
4. HANSARD REPORTING STAFF
The Committee authorised the employment of two temporary Reporters on the 19th and 20th November. 1968. for assisting in the editing and reporting of Debates.
5. DEPARTMENT OF THE LORD GREAT CHAMBERLAIN AND SERJEANT-AT-ARMS
The Committee authorised the payment of temporary assistance in the Office of the Lord Great Chamberlain and Serjeant-at-Arms.
6. ESTIMATES
The Estimate for the House of Lords for 1969–70 was laid before the Committee and approved.
7. SUPERANNUATION
The Committee sanctioned the payment of the following Superannuation Awards under the Superannuation Act 1965:—

(a) Pension and Additional Allowance to Mr. William Day. B.E.M., the Principal Doorkeeper on his retirement from the 17th January, 1969;

(b) Revised Pension and Additional Allowance to Mr. Stanley Cole, Attendant, who retired on the 13th October, 1968;

(c) Supplementary Death Gratuity under S. 4(2) Superannuation Act 1965 to the legal personal representative of the late William John Baines. Doorkeeper, who died on the 3rd November, 1968.

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

SEA FISHERIES BILL
2.48 p.m.
LORD HILTON OF UPTON: My Lords, I beg to move that this Bill be read a second time. On July 8 my noble friend Lord Beswick, who will reply to points made in this debate, repeated a Statement about the deep sea fishing industry which had been made by my right honourable friend in another place. This Bill implements the assurances of continued support for the deep sea fishing fleet contained in the Statement and goes on to make a number of valuable provisions on matters such as the conservation and policing of fisheries.
First in importance is the new basis of subsidy to be introduced for the deep sea fleet. This will not be set out in the Bill, but without the repeals effected by Clause 1 we should be unable to change the basis of subsidy at this time. As soon as this Bill becomes law, the Fishery Ministers intend to make a new subsidy scheme, which will require an Affirmative Resolution. The scheme will take account both of fluctuations in the industry's profitability and of the need to encourage efficiency. There will be a total sum available for distribution. Its amount each year will be £2 million, adjusted upwards or downwards by reference to the operating profits of the industry in a previous period. The details of this upward or downward adjustment were in last July's announce
10
ment, and perhaps I need not repeat the somewhat complicated arithmetic. The details of the distribution will go into the scheme which, as I have said, will be coming before your Lordships. As the Minister said at the time, the new arrangements will reward those with the greatest efficiency.
What I have been saying so far refers to the deep sea fleet. So far as concerns the white fish subsidy for inshore vessels and the herring subsidy, we shall continue the arrangements for annual review of the level of expenditure. The automatic reduction in subsidy which Clause 1 repeals has been a feature of the deep sea arrangements only, but Clause 1 will incidentally ensure that the powers to assist the inshore industry continue for the same minimum period of five years to which the new assurance to the deep sea fleet relate. Clause 2 makes minor changes to ensure that our subsidy schemes will not be out of order if they treat fish products in the same way as fish, or transshipment in the same way as landing. This latter provision will particularly help inshore vessels who can sometimes sell to a foreign buyer without having to land the catch on the quay in this country at all.
I ought to remind the House that since the July announcement the Government have reimposed the 10 per cent. tariff on frozen fish fillets from EFTA countries. This is the ordinary rate of duty which we took off in stages when EFTA was formed. This, however, was a conditional concession, and we have followed the agreed procedure in reimposing the duty. We shall, of course, continue to watch the import position carefully. There will be renewed talks with exporting countries in 1969.
Most of the rest of the Bill is designed to allow us to play our part in international fisheries conventions, to which we belong. First, it will enable us to ratify and implement the Convention on the Conduct of Fishing Operations in the North Atlantic—more commonly referred to as the Policing Convention. The Convention reflects closely the North Sea Convention of 1882, embodied in the Sea Fisheries Act of 1883. The 1883 Act is repealed and the relevant provisions are re-enacted in the present Bill with suitable modifications to meet to-day's

11
conditions. I am aware that from time to time concern is expressed about the activities of foreign fishermen within our fishing limits. As the 1883 Act formed, with the Fisheries Limits Act 1964, the basis of the régime within our limits, the Bill sets out in up-to-date terms the rules for foreign vessels within our waters. At the same time it strengthens them in a number of ways. I have no doubt that noble Lords will agree that these steps in international co-operation and the measures proposed to give adequate protection to our fishermen within our limits are important and timely. They are certainly welcome to our industry, who recognise the importance of international rules for conservation and for conduct on the fishing grounds. I hope, too, that noble Lords will welcome the measures in the earlier clauses of the Bill as assuring continued support to this important British industry. I beg to move.
Moved, That the Bill be now read 2ª.—(Lord Hilton of Upton.)
2.53 p.m.
LORD NUGENT OF GUILDFORD: My Lords, I thank the noble Lord, Lord Hilton of Upton, for describing to us this Bill, to which I wish to say a qualified word of welcome, because the fact is that although the measures are good, so far as they go, I fear they will not be sufficient to meet the needs of this very hard-pressed industry. This seems to me to be an interim measure. The new subsidy scheme which the noble Lord has described and which will be introduced under the Bill was described to us in outline in the summer, and this, plus the imposition of the 10 per cent. import duty, will undoubtedly keep the industry alive for the time being. But I do not think that this can be regarded as a longterm solution to, in particular, the problems of the distant water fleets.
The distant water fleets, or the deep sea fishermen, as they are sometimes called, catch by far the greater part of our fish supply, and it is because the industry is, to my mind, in a pretty disturbing condition that I should like to say a word or two about why I feel this measure cannot be regarded as more than an interim measure and why the Government should be giving thought to how they can go further in order to put the industry on a more secure basis.
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The gravity of the financial position of the distant water fleets is such that last year, 1967, over the fleet as a whole the average loss was over £18 per day per vessel. No port or section of the fleet made a profit, after allowing for depreciation. Landings of fish were up, but gross returns were down, with greatly increased quantities of fish surplus to human consumption requirements and, therefore, being sold at very low prices for conversion to fishmeal in the fishmeal factories. This year, 1968, prices have been running even lower, and I feel that the results may be correspondingly worse.
The distant water fleet is a fleet which ten years ago was making a good profit and required no help from anybody. It is, therefore, a picture of this fishing fleet, which, as I have said, provides the large part of the fish supply of this country, running rapidly downhill over the last ten years. The fleet itself is shrinking in numbers. Over the last two years it has shrunk by some 26 vessels, from a total of 189 down to 163. if I may just fill in the background, it is reckoned that if we had to become entirely dependent on imported fish for our fish supplies it would cost us as a nation an additional £40 million per annum. So it is a substantial item in the national economy.
I believe that this is a most disturbing picture. As I say, it has not come about overnight. It is nobody's fault in particular. It is due to a combination of circumstances which has adversely affected the fleet as a whole, and this fleet in particular, more especially in recent years. I can remember that in 1953, when it was my privilege to conduct through the other place the 1953 Sea Fisheries Act, the distant water fleets were robustly independent, making a good profit, fully able to build new vessels and to look after themselves. All we had to do then was to provide for the near middle water fleets and inshore fleets, which were both in trouble.
In the last fifteen years, and particularly in the last ten years, two factors have progressively undermined the economy of the distant water vessels. The first is the increasing and excessive subsidies which have been granted by foreign Governments to their fleets in order to

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assist imports of fish into this country; and the second, the progressive exclusion of our distant water fleets from their traditional fishing grounds. This, I am sure your Lordships will remember, was started by Iceland with the establishment of a 12-mile barrier of territorial waters round their coast, and it has now been extended and has become generally the rule of the sea. The effect of this has been that the traditional fishing grounds which our fishermen have developed over the last generation or two have progressively been closed to these distant water vessels. As a result, they now have to go further and they tend to catch less, having, of course, more unproductive time when they are steaming to and from their fishing grounds. Nothing can be done about the territorial waters now—this has now become international law and we just have to accept it—but the other factor, the subsidising of imports, is, I submit, something which the Government can do something about; indeed, they are doing something about it in the imposition of a 10 per cent. import duty. This is very welcome so far as it goes, but I am going to suggest that they will have to go further.
A further progression of difficulties has also come upon the industry, first in the rapid development of the fish freezing plants. This, although it is of great advantage in many ways in conveying fish in better condition on to our table, has the disadvantage that surpluses tend to become cumulative and therefore further depress the market, not only in this country but of course in all the other fishing countries. Secondly, there is the progressive closure of the European markets to imported fish. I think I am right in saying that our market in this country is the last open market in Europe to imported fish. This of course inevitably greatly increases the pressure upon it. Thirdly—something to which I have already referred—there is the startling increase in subsidies given by foreign Governments to assist their fishing industries.
I should like to mention just two examples to give your Lordships a picture of the measure of the subsidies. Iceland is one of the principal fishing nations which export fish in this market. When this country devalued by 14 per cent. last year, in order to preserve her com
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petitive position in our market Iceland proceeded to devalue by 25 per cent. Now, not content with that, in order further to improve her competitive position here she has devalued again, by 35 per cent. more. Norway is another example. Norway is a very great fishing nation. Government assistance to the fishing industry in Norway has increased from £6 million per annum last year to £14 million per annum this year, and the subsidy we are giving to our fleet is an average of £2 million a year with a maximum of £4 million. I mention these examples to indicate the measure of the subsidy which foreign countries are giving in order to push their imports into this market. In a way, of course, it is of benefit to the housewife in enabling her to gel cheap fish, but on the other hand it is completely ruining our own fishing industry. I think these facts put in perspective the measures which the Government are now putting before us.
In my view, the Government's very welcome measure of a 10 per cent. import tariff is going to have only a very limited effect. It will have some effect, certainly, but only a very limited effect, in the face of these massive subsidies which these important fishery nations are putting behind their industries in order to make sure that their exports continue to get into this market. These are my reasons for saying that I believe that this measure, valuable though it is, can be regarded as only an interim measure.
I should like, if I may, to suggest the kind of long-term solution which I feel we shall be driven to adopt for the fishing industry if we want it to continue to serve the nation's interests. This means protecting the home market for our own fishery industry. I believe, regrettable though this is, that this is really the only way in which we can secure an economic, profitable fishing industry here. This is indeed what all the other European countries have already done. I would say, on the other hand, that I feel it is most regrettable that we should have found ourselves step by step pushed into the position—and this has been done by all Governments—of subsidising first one section of the fishing industry and then another. Here is an industry which, above all, is an industry of enterprise and courage, where men must take great risks and exert great skill in order to

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bring their catch safely home. The last thing we should wish to do is to make them in any way dependent on Government subsidies, with the inevitable tendency that they come back again to ask for more when they are in difficulties. This is bound to undermine the very spirit on which this really splendid industry has traditionally worked.
In the light of these considerations, I should like to ask the noble Lord, Lord Beswick, who I understand is to reply, three questions which I think are germane to the issue I am putting. What steps are the Government taking to work out a long-term policy for the industry? Are the Government considering setting up another Commission similar to the Fleck Commission to take an overall look at the industry and decide what to do now? It will be nearly ten years since the Fleck Commission was originally set up. Is there to be another Commission to decide what should be done to put the industry in a strong and healthy position? Secondly, will the Government consider an import control system which will effectively limit imports—unless there is a serious shortage here, when of course imports should be allowed? Have they considered a variable import levy, for instance, starting at 10 per cent. and, if necessary, being raised if it does not seem to be sufficient to obtain the right balance?
The point I make to noble Lords on the Government Bench is this. If the other countries in Western Europe are all able to protect their markets effectively, cannot we follow suit? We shall see later this week the Customs (Import Duties) Bill which the Government are bringing before Parliament, by which the Government intend to limit imports in another field. Is it not possible to find some flexibility within the system which would enable us to do what other countries seem to do so succesfully for their own markets? Thirdly, have the Government considered following the policy of the E.E.C. for their fishing industries, which I understand is now in course of development? Are they considering this as a possible solution to give stability to the fishing industry here?
There is one further general point on the Government's general policy which the noble Lord, Lord Hilton of Upton,
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did not mention. It is generally known, I think, that the Industrial Reorganisation Corporation has been brought in to discuss a merger between three of the biggest fishery companies. As the Monopolies Commission prohibited an amalgamation between two of the big companies two years ago, there must be some initial doubt about any move of this kind by the I.R.C. If it was considered to be against the interests of the economy to amalgamate two companies, it would seem, prima facie, to be even more against the general interest to amalgamate three. However, my Lords, I do not oppose this matter on principle. Indeed. I welcome an investigation into the pros and cons of such a merger. It might be financially and industrially advantageous to the fishing industry. But I would suggest that what would be objectionable would be if the Government encouraged the I.R.C. to use public money which they have available to sugar the pill of the merger; that is to say, if what was achieved was an indirect form of subsidy to the industry on a discriminatory basis, because it would help only the three firms concerned while those firms which remained outside the amalgamation would not of course have the benefit.
It is, of course, common knowledge that the industry is short of finance for rebuilding the existing fleet and that what is needed is fewer vessels of modern design. I know that there is criticism in some quarters that the industry is old-fashioned and inefficient. But I am sure that the noble Lord, Lord Beswick, in replying, will agree with me that it would not be justified to make this general criticism against the industry, either on the catching side or on the marketing side. In both sections some highly efficient work is being done. But I am not going to say that there are not some old-fashioned fisheries still operating on the catching side; nor are all sides of the fishery business entirely up to date in their marketing, in matching the needs of the day to put their product on the market in the most attractive form for the housewife.
What is the Government's view on fleet replacement? Do they want to see some new conventional trawlers built? Do they want to see some modern stern fishers with deep freezing? Do they want to see some modern factory ships with deep

17
freezing? All these are, of course, very expensive items, all with high standards of amenity and safety in order to make them attractive and safe for the crews who are operating. Do the Government really think that these measures will provide the money needed by the fishery industry to rebuild and modernise itself on this sort of scale? I suppose each factory ship costs between £1 million and £2 million, and stern fishers certainly cost about £500,000 each. I earnestly hope that the Government will give further thought to finding some means of securing the home market for our own fishing industry so that the industry then gets a fair return, both for the owners and for the fishermen, and makes enough money for rebuilding and modernisation on the lines we want. I hope the noble Lord, Lord Beswick, will have something helpful to say in his reply.
As I have said, the Bill itself is unexceptionable. It is primarily an enabling Bill for the main subsidy measures, as the noble Lord, Lord Hilton of Upton, has told us, and we shall not have before us the details of the scheme until the Government lay the Order and the scheme is before the House, With regard to the design of the subsidy, to which the noble Lord, Lord Hilton of Upton, briefly referred, this is related to the added value of the operation of each vessel. That seems to be a sound basis, because it puts the right incentive on efficiency and success in operation. Where there is success in fishing there will be an additional subsidy, and if it is necessary to have a subsidy that is the best form in which to have it. I understand that the details of the scheme are now being worked out with the industry. I hope the noble Lord will be able to tell us that the industry is in agreement with those details and also broadly in agreement with the Scheme.
May I refer briefly to Clause 4? This would enable the White Fish Authority to impose a higher levy. The White Fish Authority raise a levy from the industry in order to finance their operation, and the Authority do much good work, but my impression is that the industry is so hard pressed at the moment that an increased levy now would go very badly indeed. I trust the Government and the Authority will have second thoughts about the imposition of a higher levy at the present time. The remaining clauses,
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Nos. 5 to 14, deal with conservation and policing and are unexceptionable. They give me the opportunity of congratulating Her Majesty's Government on taking the lead in drawing up the new Convention on the conduct of fishing operations in the North Atlantic and getting the agreement, by signature, of all the 18 countries which fish the North Atlantic. I hope this will be on the record, for the benefit of all those who have worked so hard to bring this about. I have asked the Government to go much further because I believe the industry is in a dangerously weak position. However, I commend the Bill as a useful, although interim, measure, and I hope the noble Lord, Lord Beswick, will have something reassuring to say about the intentions of the Government for what I regard as the long-term solution for this hard-pressed industry.
3.15 p.m.
LORD AIREDALE: My Lords, I have only one point to make, but I am sorry to say that I am making it for the fourth time. There has been a mass of legislation about sea fishing subsidies and the law is in state of chaos. This can be exemplified by my reminding your Lordships of the Scheme laid before the House on the day before we rose for the Recess—the White Fish and Herring Subsidies Scheme, said to be made
"in exercise of the powers conferred…by section 5 of the White Fish and Herring Industries Act 1953 (as amended by section 2 of the White Fish and Herring Industries Act 1957 and by section 37 of, and paragraph 18 of Schedule 2 to, the Sea Fish Industry Act 1962), section 3 of the White Fish and Herring Industries Act 1957 (as amended by section 37 of, and paragraph 22 of Schedule 2 to, the Sea Fish Industry Act 1962), and sections 1 and 2 of the Sea Fish Industry Act 1962,…"
Each time I make this point the Government hold out a very promising carrot. On the last occasion I was told that a consolidating measure had actually been drafted by the Law Commission and would be introduced in this Session. I did not find it in the Queen's Speech, but I dare say consolidating measures do not find their way into the Queen's Speech. All I ask is whether this consolidating measure is really going to be introduced now, and will it help the Government to find out how to introduce it if I threaten that if it is not done I shall be making this speech for the fifth time?
LORD STRATHCLYDE: My Lords, I wonder whether, in his reply, the noble Lord could say something about the distribution of fish. My noble friend Lord Nugent of Guildford has indicated that one cause among many why this industry requires help is that a proportion of the catch has to be sent to be made into fish manure, for which the industry gets a very low price. I find it strange that this should happen when, at least in my part of the country, there is a constant cry from the housewives that they cannot get fish. Yet there seems to be a surplus which is used for making fish manure. It would appear that there is something at fault in this regard.
3.18 p.m.
LORD BESWICK: My Lords, perhaps I might first try to answer the question put by the noble Lord, Lord Airedale. I am not quite certain whether he meant his promised (or threatened) fifth speech to be a carrot or a stick; but he has a point in regard to consolidation. There is a need for consolidation, and as soon as this Bill is passed I hope that we can make progress with the promised Consolidation Bill. It would have been introduced before this, but the decision of policy incorporated in the present Bill was taken in the course of last Session, and obviously it seems best to amend first and then consolidate afterwards. I am afraid this means that the interests of the fishing industry have come before those of your Lordships' House, or the laudable quest for tidiness on the part of the noble Lord, Lord Airedale, but I trust that I shall have his sympathy. I hope that he will be patient just this once, and I promise him that there will be a Consolidation Bill.
I should explain that not only was it necessary to bring in the numerous minor amendments to be found in Schedule 1 and the repeals in Schedule 2 to the present Bill that make consolidation more simple, and therefore I hope more effective, but I ought also to say that at Committee stage I shall bring before your Lordships a number of Amendments to this Bill. They will be only of a minor or of a drafting nature, and should not detain us, but they should make the process of consolidation easier once we have passed this Bill.
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Turning to the remarks made by the noble Lord, Lord Nugent, I thank him—as I find I usually do—both for the welcome he has given to this Bill and for the constructive comments he has made. I am not certain that I shall be able to answer all his questions. Some of the points I should like to look at again, but I appreciate that he has put his comments in a most constructive way. I do not quite agree with him when he over-uses, as I think, this word "interim". Certainly this is part of what we hope will be a constructive development of the industry; it is a part, it is a step, but I hope he will think that the tend to which he has fairly called our attention might now be reversed.
First, there is this incentive to efficiency which is built into the proposed scheme. As he said, although a fall in the profitability of the fleet as a whole will tend to increase the total available for distribution that total will then be shared out on the basis of a formula which will favour the most efficient units in the fleet. I agree with him that there are efficient units now, and there are some which are possibly less efficient, but so far the less efficient and the more efficient have been rewarded equally. From now on there will be an incentive for the efficient unit.
I accept what he says about the capital involved, but, as he knows, the White Fish Authority is put in funds by the Government to make grants. This does help the building of new vessels and the modernisation of existing vessels. I ought also to refer again, I think, to the calculations which will be involved in the distribution of the total. Briefly, they involve taking the earnings from fishing and subtracting all operating costs, except for labour and one other item, which I think is relevant to what he has been saying. In other words, we shall find out for each vessel its profits plus wages. The subsidy will be an instrument for encouraging investment expenditure likely to increase the added value whilst discouraging uneconomic costs. The reason for excluding labour from operating costs is obviously because we do not wish to give an incentive to lower safety standards. The other item to which I referred and which should be treated in the same way as labour costs is the cost of

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training. We intend to provide that a progressive owner who spends money on training sea-going labour should not find that these costs reduce his added value and thus his share of the total subsidy.
Another reason why I think we can say that we hope that the trend to which the noble Lord called our attention, quite fairly, may be reversed is this possibility of a basic reorganisation of the fleet. I think that not only in the Press but in the July Statement which I repeated in this House reference was made to the study of the structure of the industry which is being made by the I.R.C. Some of the possibilities have been ventilated in the Press, but the I.R.C. have not yet completed their discussions or submitted any firm proposals, and it would be quite inappropriate, as I ant sure the noble Lord would agree, if I were to say more, except to emphasise that the Government wish to see an improvement in the structure of the industry.
I was asked about the relationship of any possible recommendations made by the I.R.C. and the attitude of the Monopolies Commission. Again, until the I.R.C. have finalised their proposals and put them before the Government it is clearly difficult for me to say what our attitude will be. The proposals will need to be considered by, among others, an inter-departmental mergers panel in the light of Government policy generally; and having regard to objections made by the Monopolies Commission in 1966 to the proposed merger of the Ross Group and Associated Fisheries I hope the noble Lord will think that this is a reasonable attitude to adopt. Let us look to see what they put forward, hearing in mind the philosophy of the Monopolies Commission and also our need and desire to see a much more efficient structure for this important industry.
The noble Lord also asked me about import control. I make no complaint at all that the noble Lord underlined the contribution which a liberal import policy has made to the problems of this industry. It was right for him—indeed I go so far as to be indiscreet and say it was probably useful of the noble Lord—to publicise that the United Kingdom is unique in this respect, certainly in Europe, in the way in which our ports
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are open at all times to the landing of fish, whether directly from catching vessels, irrespective of nationality, or as commercial imports. The fact that we have a 10 per cent. duty now on wet fish and once again on frozen fillet; from all non-Commonwealth supplier:, certainly does not make us an illiberal country in this respect.
I am sorry that I cannot add much more to what my noble friend Lord Hilton of Upton has already said in his opening Second Reading speech. There will be talks. They are part of the outcome of the recent EFTA Ministerial meeting in Vienna, when it was agreed that the representatives of countries directly concerned with imports of frozen fish fillets should meet again in February or March, 1969
"to renew their efforts to find a mutually acceptable solution to the problem".
I add this, however. When the EFTA Convention was negotiated in 1959, a 10-year period was set for the arrangements on frozen fish fillets. That is the arrangement under which the duty was first taken off and has now been reimposed. The negotiators left the régime after the first ten years to their successors, so obviously we are going to have this very much in mind when we have these talks in February or March. The House, I think, will not expect me to say anything about what I consider will be the outcome of these future talks.
I simply add this to the noble Lord and his colleagues who sit on the opposite Bench. I am not quite sure what room for negotiation they think we have. They will recall that we are negotiating within the Treaty of EFTA, and they wore in power when EFTA was set up. Therefore we must, of course, have the Convention in mind. I add again that in these discussions in 1969 we shall have to try to make the most satisfactory arrangements possible, and what the noble Lord has said will certainly be borne in mind. I was also asked about distribution of fish. It does not strictly come within the limits of this Bill, but I will see if I can, either at Committee stage or by letter, say anything useful to the noble Lord.
On Question, Bill read 2ª, and committed to a Committee of the Whole House.

FUGITIVE OFFENDERS (UNITED KINGDOM DEPENDENCIES) ORDER 1968
3.27 p.m.
THE MINISTER OF STATE, HOME OFFICE (LORD STONHAM): My Lords, I beg to move that the Fugitive Offenders (United Kingdom Dependencies) Order 1968, a draft of which was laid before this House on November 5, be approved. Your Lordships will remember that the Fugitive Offenders Act 1967 governs the return of offenders from the United Kingdom to other Commonwealth countries. For these purposes an "offender" is a person who is accused of, or is alleged to be unlawfully at large after conviction of, an offence which is a returnable offence under Section 3 of the Act; and "Commonwealth countries" means both the independent countries of the Commonwealth and the dependencies of the United Kingdom. Under the Act, our dependencies are deemed to include not only the Colonies proper, but the Associated States of the West Indies and the countries in which Her Majesty has jurisdiction or over which she extends protection.
In the case of the Colonies proper and the Associated States the provisions of the Act apply automatically. The return of offenders to the independent countries of the Commonwealth is, however, dependent on those countries being designated under Section 2(1) of the Act, and this has been done by the Fugitive Offenders (Designated Commonwealth Countries) Order 1967, supplemented by two similar Orders in Council in 1968 relating respectively to Mauritius and Swaziland on those countries' gaining their independence. Similarly, for the provisions of the Act to apply to the return of offenders from the United Kingdom to a protectorate or a protected State, an Order in Council is required to be made under Section 2(2)(c) of the Act specifying the country concerned. Article I of the draft Order in Council now before the House thus applies the provisions of the Act to the return of offenders to the British Solomon Islands Protectorate, Brunei, the New Hebrides and Tonga.
In relation to Brunei, the New Hebrides and Tonga, however, the references in the 1967 Act to "The
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Governor" are inappropriate, and Article 2 of the Order therefore provides for the modification of these references. Article 3 takes account of the fact that the New Hebrides are a condominium, and this section therefore provides that a person shall be returned there only if he is liable to be tried, or has been convicted, by the High Court of the Western Pacific or by the Joint Court.
I am sure your Lordships will be interested to learn that provision for the return of fugitives to the United Kingdom has been or will be made in the law of each of these countries and territories I have mentioned. The Fugitive Offenders (British Solomon Islands Protectorate) Order 1967 came into operation on January 1 of this year and the Fugitive Offenders (New Hebrides) Order 1968 on July 19, 1968. Both Brunei and Tonga have signified their intention of enacting laws similar to the 1967 Act. My Lords, I hope that with this brief explanation of the purposes of this simple but important Order you will give it your unanimous approval. I beg to move.
Moved, That the Draft Fugitive Offenders (United Kingdom Dependencies) Order 1968, laid before the House on November 5 last, be approved.—(Lord Stonham.)
On Question, Motion agreed to.

THE FALKLAND ISLANDS
3.33 p.m.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD CHALFONT): My Lords, with the leave of the House I should like to make a Statement on the Falkland Islands. My right honourable friend the Minister of State is making a similar Statement in another place.
I visited the Falkland Islands from November 23–28 to establish direct ministerial contact with the people of the Islands and to explain to them Her Majesty's Government's policy in their talks with the Argentine Government. During my stay in the Colony, I was able to meet a large part of the Islands' population both in Stanley, the capital, and in the settlements, and I repeated to them the assurances that have been given in both Houses on many occasions this year; namely, that it is not the policy

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of Her Majesty's Government to transfer sovereignty over these Islands against the wishes of the Islanders.
I also had a number of meetings with the Islands' Executive Council which was enlarged for the duration of my visit to include the unofficial members of the Islands' Legislative Council. On November 25 the Executive Council told me that in my meetings with the general public they would wish me to state first, that I had discussed in detail with the Executive Council the present position reached in the talks with Argentina and the position which we hoped to reach soon, and, second, that the members of the Executive Council accepted that the British Government had been acting in good faith in the talks with Argentina, and that the agreed position, if it is reached, would be fully in keeping with the promise that Her Majesty's Government would not transfer sovereignty against the wishes of the Falkland Islanders; and accordingly I was able to give this additional assurance.
As my right honourable friend the Foreign and Commonwealth Secretary explained in another place on March 26 last, and as I have explained in your Lordships' House, following the United Nations General Assembly Resolution 2065 of December, 1965, we have had talks with Argentina with the object of securing
"a lasting and satisfactory modus vivendi between these Islands and Argentina."
In particular we are concerned to restore and improve communications between the Islands and the nearest mainland, since this would be of great benefit to the Islanders.
We have made clear throughout these discussions, as the House has been informed on many occasions, that no transfer of sovereignty can be made against the wishes of the Falkland Islanders.
I hope it may shortly be possible to conclude the present stage of the discussions whose outcome will then be reported to the House.
3.36 p.m.
LORD CARRINGTON: My Lords, may I first of all apologise to the noble Lord for not having been here when he began his Statement? But perhaps I might ask the Chief Whip whether, on
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another occasion, he would get right the order in which the Statements are to be made, because he said that the Statement on Whitehall was coming first and then the Statement by the noble Lord, Lord Chalfont. While I am making a few complaints, perhaps I might suggest that on the next occasion is an open secret, as we know, that we are given a copy of Statements in advance) I might have a copy of the Statement and not the "Notes for Supplementaries" with which the noble Lord has been supplied. Useful though these tray be, they are not perhaps so definitive as the original Statement.
I must thank the noble Lord for having made the Statement. But is he aware (there is nothing personal in this at all) that his activities and the motives of Her Majesty's Government are very suspect and cause grave concern to a large number of people and not only those of us who sit on this side of the House? Will he say whether the statement made by the Foreign Secretary in January, 1966, that sovereignty was not negotiable with the Argentine, still stands? Can he tell the House whether, in point of fact, he did discuss the question of sovereignty with the Argentine Government on his recent trip?
May I also ask him whether he or Her Majesty's Government have brought any economic pressure on the Falkland Islands; and whether he said, as is reported, that Britain would no longer be able to continue to defend the Islands? Will he further give an undertaking that no pressure, whether economic or of any other kind, will be brought to influence the Falkland Islanders with regard to their status as British subjects? Finally, is he aware that a transfer of the sovereignty of the Falkland Island s without the express and free wish of the people of those Islands is totally unacceptable, and that we on this site shall oppose any proposal to the bitter end?
LORD CHALFONT: My Lords, perhaps I might, in turn, apologise on behalf of this side of the House if it should be any fault of ours that the noble Lord was not here at the beginning of the Statement. I am surprised that he should look a gift horse so firmly in the mouth as to complain about having a copy of the notes of supplementaries. However, I apologise that there was this confusion.

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May I answer in order the points which the noble Lord has made? First of all, I am sorry if noble Lords opposite believe that the motives of Her Majesty's Government in this matter are suspect. I can only repeat that they are not. We have acted in good faith, and I can only repeat what I said in my opening Statement: that I have now explained to the Executive Council of the Falkland Islands the details of our discussions. I have taken them fully into the confidence of the Government, and they have said in return, and have authorised me to say to their Islanders, that they believe that the British Government is acting in good faith. I am sorry, therefore, if noble Lords opposite do not agree.
On the question of the negotiability of sovereignty, I can only say again that, in pursuance of the United Nations resolution we are discussing the matter of sovereignty with the Argentine Government. We have made no secret about this.
SEVERAL NOBLE LORDS: Why?
LORD CHALFONT: My Lords, I can only repeat that there will be no transfer of sovereignty against the wishes of the Islanders. We have no doubt about our legal title to the sovereignty, and I think the best way in which I can reassure the House, as I hoped to reassure the people of the Falkland Islands, is to say that their wishes in this matter are paramount. There has been no economic pressure brought to bear upon the Falkland Islands to cause them to change their minds about anything. If at any time in the future the people of the Falkland Islands wish to change their minds about this matter for any reason at all, we shall not stand in their way.
The noble Lord referred to some alleged report that I had said that Great Britain could no longer defend the Falkland Islands. I am not entirely sure where he read this report, but I am glad to take this opportunity to deny it categorically. I did in fact say that so long as the sovereignty of the Falkland Islands resided with Britain their defence was our responsibility, and that responsibility we should discharge.
To take up the last point made by the noble Lord, when he said that his side
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of the House would oppose any transfer of sovereignty against the expressed wishes of the Islanders, there has indeed been no pressure of any kind. I can assure him that there will be no need for noble Lords opposite to resist this, because, as I have said three times in my opening Statement—and perhaps I may say it again for the fourth time to-day, and for the umpteenth time in the course of this discussion—it is not the policy of Her Majesty's Government to transfer sovereignty of these Islands against the wishes of the Islanders.
3.42 p.m.
LORD OGMORE: My Lords, I am grateful to the noble Lord for making that Statement, and I would only hope that if on toe next occasion the Opposition Front Bench have a copy of the Supplementary Notes, we may have the same privilege. However, I make no complaint of that to-day. I should like to draw the noble Lord's attention to one fact about the Statement: that while he has given a full explanation to the Executive Council of the Falkland Islands, he has not given any full explanation to this House, and we are very much in the dark as to what is the nature of these conversations. Is it not a fact that the declaration, the resolution by the United Nations, plus the visit to the Argentine and to the Falkland Islands by the noble Lord in themselves are pressure brought upon the Falkland Islanders? Can he undertake, not only that there will be no transfer of sovereignty against the wishes of the Falkland Islanders but that no pressure of any kind will be brought to bear upon them to this end—either subtle pressure or obvious pressure?
For example, are the present Government doing all they can to develop the Falkland Islands? The noble Lord will remember that he has had a letter from Alginate Industries Limited offering a big plan for the development of the Falkland Islands, and it is said by the Managing Director, Mr. Merton, that he has not had a reply from the noble Lord to his letter. This, if true, does not indicate any great desire on the part of the noble Lord to put the Falkland Islands into a position where they are able to maintain their economy in a proper and flourishing manner.
LORD CHALFONT: My Lords, may I take up first the comment that although I have made a full explanation to the Government of the Falkland Islands I have not made it to your Lordships' House? I think the difference is that if I were to make in your Lordships' House a statement of the details, it would be a public statement. The statement I made to the Government of the Falkland Islands was made under the oath of secrecy which members of that Government take. I regret that it should sometimes be necessary to carry out diplomacy in secret or to carry out diplomacy confidentally, but I am afraid it is necessary, and it would certainly not be in the interests of intelligent foreign policy always to conduct diplomacy in public. There has not been, and I can assure the noble Lord there will not be, any pressure of any kind, whether direct or indirect, on the Falkland Islanders to change their mind.
May I take this opportunity to reply to what was implied in the noble Lord's question but put more explicity in the question of the noble Lord, Lord Carrington, and to say that I do not agree that my visit to Argentina can be taken in any way to be pressure on the Falkland Islanders. My visit to the Minister of Foreign Affairs in Buenos Aires was purely a courtesy visit, paid as I spent a night in Buenos Aires on my way home, and I can assure the noble Lord that no negotiations of substance at all were entered into with him or with the Argentine Government by me.
So far as the question about Alginate Industries is concerned, I think this might be an opportunity to put this matter in its proper perspective. I have received a letter from the managing director of this organisation. I received it in Chile the day before I left for the Falkland Islands, and perhaps it is not surprising, therefore, that he has not yet received a reply. Secondly, I think it should be made clear that the same firm were in touch with the Government of the Falkland Islands long before they were in touch with me. Therefore, to say that the Falkland Islanders, as has been suggested, have been kept in ignorance is very wide of the mark. May I make another point? It is that when this firm contacted the Governor of the Falkland Islands to tell him about this scheme, they indicated that it was not likely to take place in the
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near future. In fact, they said that their supplies of seaweed—for the information of your Lordships' House, this is a firm that processes seaweed and makes industrial products from it—would be sufficient to make it unnecessary for them to go outside Europe for their supplier, for at least another five or ten years. The Governor of the Falkland Islands therefore replied to this letter saying that he was sorry that there did not seem to be anything but a remote possibility of even a pilot scheme for this kind of industry. I think it important to put all this in context and to acquaint your Lordships' House of the position, in view of same of the reports that have appeared in the Press.
THE MARQUESS OF SALISBURY: My Lords, I am sure we are all extremely grateful to the noble Lord for the explicit assurances he has given to-day. It will do a great deal, I am confident, to relieve the minds of many people in this country. I have one question and it is about, not the negotiations, but the talks with the Argentine Government. I wanted just one item of explanation. First of all, the noble Lord, as I understood it, said that there were talks and that the subject of sovereignty was mentioned. Then afterwards he said that the visit was merely one of courtesy and that there were no negotiations. I do not quite see how those two fit in together.
LORD CHALFONT: My Lords, may I thank the noble Marquess for the comment that he made upon my original Statement. I am glad he thinks that this will go far to reassure the Horse and the people of this country. I think that it has also gone a good way to reassure the people of the Falkland Islands. Perhaps I could explain where I think the misunderstanding has arisen about talks, negotiations and courtesy calls. We have for some time been engaged in talks with the Government of Argentina at the official level in pursuance of the United Nations resolution. However, when I myself passed through Buenos Aires two days ago on my way from the Falkland Islands I contented myself with paying a courtesy call upon the Foreign Minister, and I did not pursue those negotiations.
LORD CONESFORD: My Lords, may I ask the noble Lorfd whether he can clear up one point? Do the Government

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interpret the resolution of the United Nations as requesting them to transfer sovereignty in these islands, even if the Argentine has no legal claim of any kind to have that sovereignty transferred? If they do not so interpret the resolution of the United Nations, why are they discussing the transfer of sovereignty? If, on the other hand, they do so interpret the request of the United Nations, is it not the fact that such a request of the United Nations has no basis whatsoever in the Charter?
LORD CHALFONT: My Lords, I think I can best answer that somewhat involved question by saying that we do not interpret the United Nations resolution as a requirement to us to hand over sovereignty in any circumstances at all. The United Nations resolution requires us to engage in discussions with the Argentine Government about this question, taking into consideration the interests of the people of the Islands. That is what we are doing.
BARONESS HORSBRUGH: My Lords, can the noble Lord say whether Her Majesty's Government have made it quite clear to the Argentine that in no circumstances whatsoever has the Argentine any right over the Falkland Islands?
LORD CHALFONT: My Lords, I think that this is ranging rather far. In the talks with the Argentine Government we have made clear what I have made clear publicly in your Lordships' House, that whatever may be the basis of these discussions there can be no question of transferring sovereignty against the wishes of the Falkland Islanders.
LORD CACCIA: My Lords, while wishing to join with what the noble Marquess has said about the good effect that these statements by the Minister should have, may I ask him one further question? Perhaps this illustrates the difficulty of the United Nations. Would not much the simplest statement to make have been that these Islands will not be transferred to the Argentine Government and that this issue does not arise? If, instead, the Minister says that they will not be transferred against the wishes of the Islanders, is not this a different statement altogether and putting the onus on the Islanders? Surely the onus is on the British Government to say that
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this is not transferable territory and that we do not accept the legal claims of the Argentine Government.
LORD CHALFONT: My Lords, I must confess that I am surprised to hear such a suggestion coming from a distinguished diplomat with the record of the noble Lord, Lord Caccia. To say that in diplomacy we should use the word "never" I take to be a very doubtful proposition indeed. I must make it clear that if a time were to come when the Falkland Islanders themselves were to decide that their interests lay in some change, then we certainly should not want to stand in their way. This is precisely the point of view which we have taken over Gibraltar. Simply to say, when a sovereign State has made a claim of this kind and when we have been required by the United Nations to discuss it, that we will never transfer sovereignty would not be a very intelligent form of diplomacy. We have throughout made it clear that we have no doubt about our legal title to the sovereignty over the Islands.
LORD CARRINGTON: My Lords, the difficulty—and I do not think I accept what my noble friend Lord Salisbury says—is that what the noble Lord, Lord Chalfont, says will not, I think, reassure people, because he has not this afternoon said anything different from what he has said before. He has before made the pledge about the wishes of the Islanders. The only thing different he has said today is that no pressure is being brought upon them. But he and I know that there is still a very great deal of disquiet, and the reason is that we do not know what is happening. We do not know what is going on, or what the Government are saying to the Argentine Government; we do not know what the noble Lord said to the Executive Council. The sooner he can make public what he is doing, the more we shall believe what he says. But until what is being done is made public, I am very sorry to say that I do not believe your Lordships will be entirely reassured with what the Government are doing.
LORD CHALFONT: My Lords, I am. sorry to hear the noble Lord say that. As I said in the original Statement, I hope that it soon may be possible to conclude the present stage of the discussions so

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that they can be reported to the House. I am sorry to hear the noble Lord say that there is still a great deal of disquiet about this matter. It may be that these doubts will not be fully cleared up until a public statement can be made. I would remind him that I was able, under the oath of secrecy, to tell the Executive Council a good deal more than I have been able to tell your Lordships. I took them fully into our confidence. I would repeat that the Executive Council (and I imagine that they have the interests of the Falkland Islands as much at heart as anybody) accepted that the British Government have been acting in good faith in their talks with the Argentine. If I cannot reassure the House, I hope that the statement by the Government of the Falkland Islands will go some way to reassure them.
LORD CACCIA: My Lords, I should like to put one supplementary question, and say that I, too, am a little surprised that a Minister should not follow the line which we follow in Parliament. If there has been no request by the Falkland Islanders to be transferred, then any question of what would arise about their transfer against their wishes is a hypothetical question which does not arise.
LORD CHALFONT: My Lords, I think that we are getting a little wide of the mark. The noble Lord will know, from his long and distinguished experience of foreign affairs, that this kind of discussion between sovereign States does go on. We are engaged in these discussions, in pursuance of the United Nations resolutions, and what we have been able to do throughout is to make it absolutely clear that the wishes of the Islanders are paramount. I do not know what more reassurance and guarantee the noble Lord wants.
LORD BALFOUR OF INCHRYE: My Lords, I should like to ask one question on a somewhat different point. Can we have an assurance that Her Majesty's Government will, now and in the future, continue to give the Falkland Islands all the economic help necessary for the development of the Islands and also that if we are willing to give a large amount of aid to underdeveloped countries which have the most unfriendly relations with us that we shall be thoroughly generous to the Falkland Islanders in all schemes for
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their future development under the British Crown?
LORD CHALFONT: My Lords, I need hardly say to the noble Lord that Her Majesty's Government—indeed, British Governments of all corn plexions—have never failed to stand by their Colonies and dependent territories when they were in need, financially or otherwise, but I cannot enter into any commitments on this point beyond saying just that. However, I should like to point out to the House two statistics which may be relevant in considering the question of future aid. The first is that the per capita income in the Falkland Islands is £500 per head, only marginally smaller than the per capita income of the United Kingdom. The second statistic is that the highest rate of income tax in the Falkland Islands is 5s. 9d. in the pound, which is rather different from the highest rate of income tax in this country. I think that those two points may be relevant in considering the question of future aid.
LORD STRABOLGI: My Lords, I would ask my noble friend whether it is true that he is the first British Minister ever to have visited these Islands?
LORD CHALFONT: My Lords, yes, that indeed is the position. Throughout all the history of our contacts with the Falkland Islands a member of a Labour Administration was the first Minister to visit the Islands.
LORD MERRIVALE: My Lords, the noble Lord has said that there has been discussion between himself and the Argentine Government on the question of sovereignty. He has also said that there would be no transfer of sovereignty against the wishes of the Islanders. Can the noble Lord say what economic or communications "bait", if I may put it that way, has been put forward by the Argentine Government possibly to tempt the Islanders to transfer their sovereignty?
LORD CHALFONT: My Lords, let me make one thing clear. I have said that talks have been going on at an official level. I have not said that I have had negotiations with the Argentine Government. That should be made absolutely clear. So far as any "bait", as the noble Lord puts it, is concerned, it is an unfortunate way of phrasing the

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question. All I can say is that the Argentine Government have recently and publicly expressed their readiness to improve communications with the Islanders in various ways and I believe that an improvement of communications, an improvement in economic and cultural links between the mainland and the Falkland Islands could only be in the interests of the Islanders.
VISCOUNT DILHORNE: My Lords, from what the noble Lord said to the noble Lord, Lord Caccia, am I to understand that Her Majesty's Government are prepared to enter into negotiations for the transfer of any British territory without any request for that first having come from the inhabitants of the territory, and secondly without there being any legal claim whatsoever by the country which is seeking to acquire sovereignty? If there is thought by Her Majesty's Government to be any legal claim by the Argentine to this territory, could the noble Lord explain what it is? If there is no legal claim, does it mean that whenever there is a United Nations resolution the Government will be ready to enter into negotiations about the transfer of a territory? It all seems odd to me
LORD CHALFONT: My Lords, I am not surprised that it seems odd to the noble Viscount, if he thinks that that is what I said. I said nothing of the kind. I merely said that we had had a claim to sovereignty made by the Argentine Government which they believe to be a valid claim. We have said that we have no doubt about our legal title over the sovereignty of the Islands. But first of all, in pursuance of the United Nations resolution and, secondly, because we believe it to be in the best interests of the Islanders, we have entered into discussions about this matter. All I said in answer to the noble Lord, Lord Caccia, was that on any subject at all, whether it was to do with sovereignty or anything else, I as a Foreign Office Minister should be very careful about using the word "never".
LORD ROYLE: My Lords, I wonder whether my noble friend is aware of the fact that some of us on this side of the House are getting the impression that
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some noble Lords opposite are trying to place in the minds of the people of the Falkland Islands some doubts which do not exist.
LORD CHALFONT: My Lords, I am grateful to my noble friend for that intervention. I hope that everything we do—and I am sure this is true of both sides of the House—will be done in the hope that it will be in pursuance of the real and lasting interests of the people of the Falkland Islands.
LORD CONESFORD: My Lords, may I ask the noble Lord whether he can supplement the information that he has given to this extent? When he says that the Argentinians claim sovereignty over the Falkland Islands, does he mean simply that they say, "Sovereignty is ours", or have they given some particulars of the basis of their claim? If they have given any particulars of the basis of their claim, can they be made public?
LORD CHALFONT: My Lords, I think it would be wrong for me to make public anything that has not yet been made public, until we have completed this stage of the discussions. As I promised in my Statement, when we have done that—and I hope it will be soon—the full details will be made known to the House.

WHITEHALL REDEVELOPMENT PLAN
4.2 p.m.
LORD WINTERBOTTOM: My Lords, with the permission of the House, I will now repeat a Statement which has been made in another place by my right honourable friend the Minister of Public Building and Works. It is as follows:
"Since the Statement about the Whitehall Redevelopment Plan by my right honourable friend the Minister for Leeds, West, on 3rd November, 1965, there have been a number of developments. Studies have been made of the requirements to be met in a new Parliamentary building on part of the Bridge Street/Richmond Terrace site, and the Select Committee on House of Commons Services have made proposals in their Fourth Report for the 1967–68 Session. It is necessary that this House should consider these proposals, and I hope that an opportunity

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for this will be found soon. The preparation of detailed requirements and the completion of the architectural arrangements can then be undertaken.
"Studies have been carried out into requirements for Government offices on the remainder of the Bridge Street/ Richmond Terrace site, and a brief prepared providing also for shops, restaurants and other public facilities. The Minister is investigating further the advantages of open-plan offices, and meanwhile preparing plans which will be submitted in due course to the Royal Fine Art Commission and the planning authorities, and then displayed in this House. The programme envisages demolition work starting early in 1970 between Richmond Terrace and Derby Gate, and proceeding in stages with a view to completing the Government offices and associated development by 1975.
"As stated in the House on 16th July, 1968, all three of the former Metropolitan Police Headquarters buildings will be demolished in the course of this redevelopment. No plans or programme have yet been made for the future of the Foreign Office site. Following the public inquiry in May, 1966, into the future of the site between Broad Sanctuary and Great George Street, my Ministry is preparing in collaboration with other site owners and interested authorities a joint brief for a comprehensive redevelopment.
"A joint study is now in hand between my Ministry, the Ministry of Transport, the Greater London Council and the Westminster City Council, with the assistance of consultants, to investigate in more detail proposals for dealing with North-South traffic, including a riverside road tunnel, and the problem of East-West traffic, as the proposal for widening the Horseferry Road route would be too costly. I expect to have a report on these further studies next spring. The House will see, from what I have said, that the working out of detailed proposals is proceeding within the broad framework agreed following the Martin-Buchanan Reports."
EARL JELLICOE: My Lords, I am grateful to the noble Lord for repeating
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that Statement. It would seem that in the last three years, despite what is said in the last words of the Statement, extraordinarily little progress has been made in this matter. I noted what the noble Lord said about the development of the Parliamentary building on the Bridge Street site. Can he assure us that the views of this House will be take n into account in this matter, as well as the views of another place, because, greatly daring, I would venture to suggest that on these matters of æsthetic and architectural judgment our views are as valid as those of another place?
The Statement also said that these proposals fall within the broad framework of those put forward by Sir Leslie Martin and Professor Buchanan. I suggest that that is brought in rather as an afterthought. Indeed, I beg leave to doubt whether that is in fact the case, because I would remind your Lordships that Sir Leslie Martin had very definite ideas about the development of the Foreign Office site, and we now read that there are no plans and no programme for this. Is there anything more that the noble Lord can tell us about this particular and, to many of us, much-beloved building? Are we, in fact, "back to square one"? What is the position regarding the Foreign Office site?
In conclusion, may I just put this point to the noble Lord? Sir Leslie Martin produced a vast and comprehensive Report which had very considerable merit and was debated at some length in your Lordships' House about three years ago. Since then there have been new and sweeping proposals for the redevelopment of Piccadilly Circus and, indeed, of the Covent Garden area. I am not usually an advocate of delay, but on this occasion I should like to declare myself a Fabian. I would urge—and I put point seriously to the Government and to the planning authorities involved—that no really major change (though I except the Bridge Street site from this) in the development of this vastly important area of Central London should be given effect to until all these various major schemes have been properly brought together and considered together. I hope that the noble Lord will be able to give us some assurance along those lines.
LORD HENLEY: My Lords, we, too, welcome this Statement. I agree with the noble Earl, Lord Jellicoe, that three years is a very long time. On the other hand, it is so complex a problem that I am not surprised that even to get "back—and I hope we are not back—to square one" has taken us three years. I hope that the noble Lord on the Government Benches is going to say that we too are to have a debate, and that before we have that debate he will be able to put before us in good time those papers, plans and models without which we cannot make any useful contribution.
LORD ILFORD: My Lords, can the noble Lord say whether a final decision has been taken to destroy Richmond Terrace, with all its architectural merits and Parliamentary associations?
LORD SOMERS: My Lords, I speak rather in the fear that the new buildings are very likely, or more likely than not, to be in the current fashion of the concrete and glass box. May I ask the noble Lord whether there are any architects in the country who have other ideas than that, and whether he does not think that something a little more original would be suitable?
LORD WINTERBOTTOM: My Lords, I have a great deal of sympathy with what the noble Earl, Lord Jellicoe, and the noble Lord, Lord Henley, have said. I was, of course, repeating a Statement made in another place, and the words used were that "this House should consider these proposals", and that information will be given before another place discusses it. Quite obviously, the plans must be available for this House as well, and I am certain that my right honourable friend will note the wish of this House to discuss the development on the far side of Bridge Street. This is obviously rational and desirable.
The noble Earl has expressed an affection for the Foreign Office. I know only too well that he is not alone here. Perhaps that is a reason why no decision has been reached, although that is a thought which has only just come to me. All I can say is that no plans or programme have yet been made for the future of the Foreign Office site; so it stays where it is for the moment. On the question of delay (and this is a point
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which was also made by the noble Lord, Lord Henley), this redevelopment is not something we can rush. The only site of the three which is under discussion is the site between Richmond Terrace and Bridge Street. This scheme goes forward in stages and will be completed by 1975. No plans have been made for the Foreign Office site. Although the Broad Sanctuary site seems to be a blank space, it is a complicated development because there are other interests involved and, again, no plans have so far been made.
I would agree with those noble Lords who have suggested that we should hasten slowly and see what the overall picture is. I have substantial sympathy with the noble Lord, Lord Ilford, although I am afraid we are both losers. I, too, should like to retain the Richmond Terrace site, but unfortunately this has to go. The noble Lord, Lord Somers. made a point about "concrete and glass boxes". The design for this particular site will be subject to open competition among Commonwealth architects. The site is of Commonwealth interest, and of great importance. Let us hope that within the Commonwealth we find an architect of sufficient vision to provide something better than a straightforward egg-box.
LORD CARRINGTON: My Lords, may I ask whether it follows from what the noble Lord has just said that all these buildings will be let out to distinguished architects, or will the architects be Ministry of Works architects? May I also ask him whether, now that it has been decided that nothing will be done with the Foreign Office, at any rate for some little time, consideration can be given to cleaning it?
LORD WINTERBOTTOM: My Lords, I find myself in a difficult position, which I hope the noble Lord will appreciate. In fact, I know the answer to this question, but I am not authorised to give it. Perhaps he would be so kind as to put down a Question. This is an entirely different matter, and I could have said that this was another question; but I have not done so. There is an answer to this.
LORD CARRINGTON: An answer to which question?
LORD WINTERBOTTOM: To the question about the architect. I would be grateful if the noble Lord would put down another Question, when I would be glad to answer it. On the question of cleaning, there has been pressure to clean that building as well. Perhaps the noble Lord would ask another Question on that point at the same time.
4.12 p.m.
THE MARQUESS OF SALISBURY: My Lords, there is one question that I should like to ask, arising from the last statement by the noble Lord. He said there was a Commonwealth interest in this site. Is it a Commonwealth Government interest? I ask that because when New Zealand House was built many people were opposed to the particular building which was adopted, thinking it unsuitable for the site, but we were told at that time that the authorities planning London had no control over it. It was said that if the site was for a Commonwealth Government the Commonwealth Government had an absolutely free hand as to what was put up. I hope that that will not be so in this case.
LORD WINTERBOTTOM: My Lords, I think the noble Marquess has misunderstood the point. What he said about New Zealand House, which I did not know myself, was interesting, but, as regards this site, it will not be for a Commonwealth Government but for a Commonwealth architect. The competition will be thrown open to the whole Commonwealth to provide schemes to be considered for a building on this site.
LORD ILFORD: My Lords, will the noble Lord consider whether it is possible to provide the additional accommodation that is required on the site of the Bridge Street building between Richmond Terrace and Bridge Street, so as to avoid the destruction of Richmond Terrace?
LORD WINTERBOTTOM: My Lords, I agree with the noble Lord that this loss is unfortunate, but a decision has been reached. The site between Richmond Terrace and Bridge Street is to he cleared, and a new open-planned office block built upon it. But the whole area must go. We cannot, unfortunately, save Richmond Terrace, much as I myself should like to see it saved.
LORD LINDGREN: My Lords, my noble friend has repeatedly said that there will be a competition open to Commonwealth architects. I take it that included in "Commonwealth architects" are British architects.
LORD WINTERBOTTOM: My noble friend is quite right.
LORD CONESFORD: My Lords, may I ask the noble Lord one question on what he said about traffic? I think he referred to a tunnel. Do I understand that that takes the place of what I think was formerly proposed: that there should be a new physical separation or terrace between the Palace of Westminster and the river? Or does that terrace or new separation of the Palace of Westminster from the river still survive as a proposal, notwithstanding the proposal for a tunnel?
LORD WINTERBOTTOM: My Lords. I am afraid that I cannot answer that question. If we had plans we would see what is intended. We shall all agree, I think, that the Palace of Westminster is the greatest obstacle to a free traffic flow along the Thames, but we should not wish to alter that, I am certain.
EARL JELLICOE: My Lords, may I put two further supplementary questions to the noble Lord—the first a narrow one? The noble Lord told my noble Leader just now that if he were to put down a Question about the cleaning of the Foreign Office doubtless an Answer would be given. By the same taken, if I were to put down a Question about the cleaning of the Great George street building should I also receive a satisfactory Answer? That is the narrower question. The wider question—and I attach some importance to this—is that the noble Lord said that he, too, believed in hastening slowly. Am I right in taking that answer to mean that the Minister will use his influence—and he has quite definite authority here, if he chooses to exercise it—to see that the major plans for the redevelopment of Whitehall are considered in conjunction with those for Piccadilly and the Covent Garden area?
LORD WINTERBOTTOM: My Lords, as regards cleaning I can certain13 get the noble Earl an Answer, although I am no longer in a position to say whether

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it will be satisfactory. But London is being cleaned, and let us hope that the good work goes on. I should be most grateful if the noble Earl would ask me another Question on another day about the relationship between the Piccadilly development and this development. I cannot give him a satisfactory answer to-day.

MISCELLANEOUS FINANCIAL PROVISIONS BILL
4.16 p.m.
LORD BESWICK: My Lords, I beg to move the Second Reading of the Miscellaneous Financial Provisions Bill. This Bill has been carefully considered in another place, and your Lordships may think that there is not a great deal more that I can add to what is already known. Of course, if there are any particular questions I shall be glad to do what I can to answer them, either on this Second Reading or, as might be even more convenient, at the later Committee stage.
There are three clauses to the Bill. Clause I increases the maximum capital available to the Civil Contingencies Fund from £75 million to £125 million. Clause 2 makes provision for payments to the Governments of Northern Ireland and the Isle of Man out of revenues accruing to the United Kingdom Government under licences granted by the Minister for the exploration and the exploitation of oil resources in the United Kingdom's portion of the Continental Shelf. Clause 3 makes provision for the Industrial Reorganisation Corporation to borrow on the Eurocurrency market. It does not extend in total the borrowing powers of the Corporation, but it does make available to them facilities already enjoyed by certain other public corporations. It is held by Her Majesty's Government to be in the interests both of the I.R.C. and of the economy generally that these borrowing powers should be available. With that brief explanation of this very brief Bill, and with my repeated offer to try to answer questions either now or later, I hope your Lordships will now agree to this Second Reading. I beg to move.
Moved, That the Bill be now read 2ª.—(Lord Beswick.)
4.18 p.m.
LORD BROOKE OF CUMNOR: My Lords, this is the first occasion in your Lordships' House on which I have ventured to intervene on a Treasury subject. My only justification for doing so is that, in the capacity of Financial Secretary to the Treasury, I was responsible for introducing and piloting through another place the 1955 Bill that became the Act which is amended by Clause 1, the principal clause, of this Bill. My Bill was more miscellaneous and more comprehensive than this one, for it covered five wholly unrelated items, whereas this Bill covers only three. I say it was more comprehensive because, so far as I know, that Act for which I was responsible has survived unamended for 13 years. If my experience was any guide, a Miscellaneous Financial Provisions Bill gets into the legislative programme only when the Government of the day are not quite ready with more important Bills, and have Parliamentary time to fill up. No doubt this was why the Chief Secretary to the Treasury had the good luck to be able to introduce this Bill in another place a few weeks ago.
Following the probing undertaken in another place, I have no further questions to ask on Clauses 2 and 3, but I should like to dwell for a moment on Clause 1, which I think the noble Lord, Lord Beswick, will agree is the most important clause. The Civil Contingencies Fund enables the Government to produce money quickly for, broadly, two purposes: first, to meet unforseeable situations, such as grave flooding; and, secondly, to meet unforeseen situations, such as having under-estimated the expenditure likely to be incurred during the financial year on a particular service.
So far as I am aware, no one questions the need for adequate provision to meet the former, the unforseeable, situation; but it would make a mockery of Parliamentary control of finance if there were no effective limit to the amount available to the Government to meet situations that might have been foreseen but were not foreseen. I think, therefore, that I was acting on sound principle when in 1955 I was instrumental in reducing the top limit of the Civil Contingencies Fund from the rather extraordinary figure of £126½ million to £75 million, the amount at which it remains at the present time.

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I recollect that the Party opposite then criticised me for not reducing the limit to much below £75 million. Now that they are in power they are proposing to restore the limit, broadly, to the higher figure front which we in 1955 reduced it. Now that I am in Opposition I am not proposing to ridicule their proposal of £125 million—which just shows the difference between responsible Opposition and irresponsible Opposition.
I think, however, that the Government should explain more clearly why they believe £125 million is the right figure now. Frankly, I was not able to follow the explanation given by the Chief Secretary in another place. We should all, I am sure. agree that with the altered value of money it is not unreasonable to suggest that some other maximum limit than £75 million should be fixed low. But what should that figure be? The Chief Secretary said in another place on November 8:
"In 1955 the Fund was fixed at £75 million. In 1963 we adopted as a regular procedure a further batch of Supplementary Estimates, and it is now right to consider what should be a comparable figure, having regard to the circumstance r. not only of 1955 but also of 1963. Hawing regard to the size of the expenditure and to the additional hatch of Supplementary Estimates, the figure would be about £140 million, but I want to err, as usual, on the cautious side, and I am suggesting a figure of £125 million, which I hope will be acceptable to the House."—[OFFICIAL REPORT, Commons, col. 1225]
My Lords, I appreciate how the Chief Secretary reduced the theoretical figure of £140 million to an actual figure of £125 million, but I am unable to follow his arithmetic in deriving £140 million from £75 million. We all know that the size of Government expenditure has increased. The other consideration that he mentioned was the additional batch of Supplementary Estimates, now four a year instead of three a year. But having additional Supplementary Estimates each year surely lessens rather than increases the need for money in the Civil Contingencies Fund. Knowing the Treasury as I do, I have no doubt at all that this £140 million was reached by an accurate process of mathematical thought. I am merely suggesting that before this Bill leaves Parliamentary scrutiny, the mathematics of it should be explained. Possibly the noble Lord would prefer to do so on the Committee stage.
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I know that that justification for the very existence of such a fund as the Civil Contingencies Fund has been called in question in the past. I accept, as all Governments have accepted, that it is desirable, indeed necessary, that a fund of this sort should exist. If noble Lords care to look at the accounts of the Civil Contingency Fund which are published each year they will see that in 1966–67 the sums advanced from the Fund ranged from an amount of some £12,798,000 to the Transport Boards down to an ex gratia payment of £436 to a voter injured at a polling station and on to an item described as "equipage expenses incurred by" my noble and learned friend, Lord Dilhorne. Equipage, according to the dictionary, means
"a carriage with or without horses and the attendant servants".
As my noble and learned friend received only £54, I doubt whether he was able to obtain the attendant servants, or even the horses, or even a carriage.
VISCOUNT DILHORNE: My Lords, the noble Lord can rest assured that I have never been able to secure a horse that could carry me at anything like that figure.
LORD BROOKE OF CUMNOR: My Lords, I appreciate that. I cannot help thinking that the term "equipage" must have been related to one of the alternative meanings of the word. I quoted it only to show how wide is the variety of circumstances for which a Civil Contingencies Fund is desirable. I would assure the noble Lord, Lord Beswick, that I have no desire to delay the passage of this Bill to the Statute Book.
4.27 p.m.
LORD BESWICK: My Lords, I was a little surprised when the noble Lord started to tell us that this was his first intervention in a discussion on Treasury matters. It was not until later that I realised that what I had in mind were his very frequent interventions in another place. Then, when lie went on to say that he was going to deal with Clause 1, I had all the more reason to realise that his training in these matters came from when he was in a House which had rather more responsibility than do we for Supply matters. I had anticipated that I might have questions on Clause 3,

47
as I know there is a good deal of interest in the Euro-dollar and Eurocurrency; but I had not dreamt that I should be asked about Clause 1. However I will do my best to answer what the noble Lord has asked me about the case for the increase which is proposed and whether it will be enough.
The noble Lord gave us some uses of the Fund. Probably the most important nowadays is as a fund from which advances are drawn in anticipation of Parliament's willingness to pass Supplementary Estimates. It has to do this on a gross basis because savings on one Vote are not available to make up deficiencies on another, as the noble Lord, Lord Brooke, will know. Obviously, there is no way of telling in advance what will be required outside the scope of the Estimates that are submitted. But the potential call must clearly be related to the size of those Estimates. In the current year, Estimates totalled £8,700 million, rather more than three times as much as the proportion in 1955–56. On a simple arithmetical basis, that would require a Fund of the order of £225 million.
The introduction of Winter Supply as a regular basis in 1963–64 has taken pressure off the Fund in two ways. First, the cash it provides some six weeks or so earlier than the end of the March Consolidated Fund Act enables advances already made from the Fund to be repaid and the money turned over again if required. Secondly, it enables the Government to finance from Votes new expenditures which will arise in the last six weeks of the financial year, provided that these can be foreseen in the previous October, when the Winter Supplementary Estimates are prepared. It is difficult to quantify precisely the effect of these two factors, but when the present £75 million limit was fixed about 20 per cent. was used before the last quarter began, leaving some 80 per cent. for that quarter. On a similar basis now, a fund of £125 million may be expected to leave £100 million for the last quarter; but this now has only to last until the fund is replenished by repayments following the February Consolidated Fund Act. If, therefore, the calls on the Fund divide conveniently enough on either side of
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that Act, a £125 million fund with Winter Supply may be said to be equivalent to £225 million without it. At best, therefore, the figure which we are now suggesting should be about right and comparable with the 1955 figure for which the noble Lord himself was responsible. I hope that goes some way to fill in the gaps in the noble Lord's knowledge and that we may now pass the Second Reading of this Bill.
On Question, Bill read 2ª, and committed to a Committee of the Whole House.

ADMINISTRATION OF JUSTICE BILL [H.L.]
4.30 p.m.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD JESSEL in the Chair.]
Clauses 1 to 11 agreed to.
Clause 12 [Grant of certificate by trial judge]:
VISCOUNT DILHORNE VISCOUNT DILHORNE moved Amendment No. 1:
Page 6, line 40, leave out ("decision") and insert ("final judgment").
The noble and learned Viscount said: I beg to move the Amendment standing in my name. In the hope that it may relieve anxieties in certain parts of the Committee, may I say that this is the only Amendment standing in my name which I propose to move, despite the large number that there are on the Order Paper. The reason why I am not moving them is that the Amendments tabled in the name of the noble and learned Lord the Lord Chancellor substantially meet to my satisfaction, and I think to the satisfaction of my noble friends, the questions which were raised during the Second Reading.
I should like to thank the noble and learned Lord the Lord Chancellor for answering in correspondence one point on an earlier clause which has made it unnecessary for me to raise anything on that earlier clause; and also for the explanation which he sent me with regard to Part III of the Bill. I said that we should require a full explanation of Part III, but now that I have had such a full explanation I would not seek to occupy the time of the Committee by asking more on I hat point.
With regard to this Amendment, there is a small point which I think not wholly unimportant. It is this. Under this Part there will be what we lawyers call "leapfrog" proposals. Clause 12(1) provides that it shall apply, "Where the trial judge is satisfied". That seems to me to imply (particularly when you look at the definition of "trial judge"; a judge who is hearing the case and determining) that that determination will almost invariably end in judgment for one party or the other. The language here used is different. In line 40 you find a reference to "his decision in those proceedings"; and not to his "judgment" in those proceedings. It puzzles me to know why in this Bill (this is not the only place) despite the reference to the determination being by the trial judge or the commissioner appointed in lieu of a judge, the decision is the matter referred to and not the judgment.
I think that the Amendment which I have tabled is wrong in that I have suggested the words "final judgment". I think it ought to be "judgment" simpliciter. That would mean that the judgment given at the hearing would be subject to this "leapfrog" procedure. It would, as I understand it, rule out any "leapfrog" procedure in relation to interlocutory matters. I cannot help thinking that that is what is intended, but I am not at all clear; and I do not think it is very clear whether the words "decision in those proceedings" is of wider ambit than "judgment in those proceedings". If it is not "judgment" seems to me the preferable word to use. If you use the word "decision", it may cause some doubt.
I do not want to take up time pursuing this matter. I ask the noble and learned Lord the Lord Chancellor to look at it sympathetically. I can tell him that I ant not alone in feeling some
50
anxiety about the use of the word "decision" and the consequences that may ensue. It may be that he was thinking of a case where a demurrer was raised and that the decision was upon a point raised, say, upon the pleadings. I would apprehend that if the decision by a judge was that the statement of claim disclosed no cause of acion, that would be followed by judgment for the defendant. Then the "leapfrog" procedure would apply. If the judge did not take that course, the case would go on until judgment was given one way or another, and then again the "leapfrog" procedure might apply. I cannot see the need for the word "decision".
That is the only point I wish to raise. I do not know whether the noble and learned Lord the Lord Chancellor wishes to deal with it to-day, but I should be very content if he said that he would look at it. This is not meant to be a wrecking Amendment in any way. May I say "Thank you" to him for the trouble he has taken to meet the points of view expressed by me and by others during the Second Reading debate? I beg to move.
THE LORD CHANCELLOR: I think that there are really two separate points here. One is entirely a question of terminology and the other is the question whether interlocutory decisions should be excluded. On the question of terminology, one can argue about words for a long time. But regarding the words in the Bill, the word "decision" is used to refer to what the judge decides, upon which an order is drawn up. The word "judgment" is applied to that which in substance is usually a document, containing the reasons why he makes his decision. Because of that I suggest to the noble and learned Viscount that in line 40 on page 6 the word "decision" is right because that is what is referred to there. And so on page 7 in the second line:
"…it is expedient that an appeal should lie from that decision…"
So in line 19;
"…a point of law of general public importance is involved in that decision…"
When we come to line 20 it,
"relates wholly or mainly to the construction…and has been fully argued in the proceedings and fully considered in the judgment…"

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That is the place where he gives the reasons for his decision. The same thing, I suggest, applies in line 36, a
"period of fourteen days beginning with the date on which that judgment is given…
If a judge says, "Well, my decision is so-and-so, and I shall give my reasons in my judgment at a later date", it is often impossible adequately to advise clients whether or not to appeal until you know the reasons for his decision. That is why that date is, I suggest, quite properly taken from the date of the judgment. That is on the technical question of which word is appropriate to be used.
On the other question, it is not intended to exclude interlocutory decisions. As the noble and learned Viscount knows, in view of the opinions which he and other noble and learned Lords expressed on Second Reading, I had the advantage of discussing questions which arose with the other noble and learned Lords. I am sorry that the noble and learned Viscount was unable to be present. I think I am representing the general views properly if I say that it was generally felt that there was, in substance, a choice. Noble and learned Lords were apprehensive that there might be too many cases to which this procedure might be aplied and, broadly speaking, that that could be dealt with in one of two ways: either by making more strict the criteria or limiting the conditions governing the cases in question; or by leaving to the Appeal Committee of this House the last word as to whether in a particular case this procedure should he applied or not. I think the general feeling was—it is reflected in the Amendments which I have since put down—that there was no need to limit or restrict the cases further than they were already limited or restricted, provided that the last word was left with the Appeal Committee which my Amendments now do.
Of course, I quite agree that there would be few interlocutory cases in which a judge and the Appeal Committee itself would both think should be subject to this procedure. But there may be some (Donoghue v. Stevenson was a Scottish case) which were decided on a demurrer by way of interlocutory proceedings. The only one I can remember I was in myself; it was Michael Foot v. Lord
52
Kemsley, which also went to your Lordships' House, not as a case on the question whether a statement of claim disclosed a good cause of action but whether the defence constituted an arguable defence. In view of the decision of your Lordships' House, it never became necessary for the case to be heard. What the Court of Appeal, and subsequently your Lordships' House, were supposed to be considering was whether there was an arguable case. The Court of Appeal said that it was an arguable defence, and went on to say that as they had heard the law on both sides, it was unfortunate that they had to leave it to the trial judge. They might as well have said that it was a good defence. Your Lordships' House subsequently took the same course and expressed the same opinion.
Therefore, I should regret it if it were an object of this Amendment that those cases, though they may be few, should be deliberately excluded from the benefit of the "leapfrog" provisions, particularly having in mind that they are likely to be few and that this procedure will not he applied to them unless the judge is of the opinion that they should be and the Appeal Committee is of the same opinion. I am sorry that the noble and learned Viscount had no opportunity of discussing these matters with us but I understand that he had other engagements. I hope that having heard what I have said, and if the noble and learned Lords concur, he will consider withdrawing this Amendment.
VISCOUNT DILHORNE: I am grateful to the noble and learned Lord for what he has said. I do not entirely agree on the interpretation he places on the word "judgment", because often there can be a judgment delivered, in the sense of giving the reasons, ending up with the order that judgment be entered for the plaintiff for £X, £Y or £Z. The judgment is in the form of an order. The word can be used in both senses. I have raised this point because it did not seem to me clear, from the language used and in particular the conjunction of the reference of the decision to the trial judge, whether it was intended to apply to appeals from interlocutory orders, which might be made by persons who in no circumstances could be regarded as trial judges. Perhaps the noble and learned Lord will look at that. I do not want to

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take up time, but I think there is a difficulty between these two constructions.
I think that there would seldom be any "leapfrogging" in interlocutory proceedings. The noble and learned Lord referred to Donoghue v. Stevenson, which was a Scottish case. After the litigation came to this House, at the end of the day, when it went back for trial, the snail was not found in the ginger beer bottle and the question was whether the manufacturers would have been liable had the snail been there. That was an example which rather shows the danger of "leapfrogging", but I would not oppose that. I will gladly withdraw this Amendment, in the hope that the noble and learned Lord will look at the language of this subsection, because I think that the use of the words "trial judge" might lead to difficulties in the future.
LORD CHORLEY: I want to underwrite what the noble and learned Viscount has just said about the expression "trial judge". It is a long time since I practised at the Bar, but at that time there were a certain number of interlocutory cases which decided matters of great importance, and though there might be an appeal to the judge who would uphold the master, it could hardly be said that he was the trial judge. The noble and learned Lord quoted the Scottish case of Donoghue v. Stevenson. If I put some of my students on to research, I think that we could find a few others. I think it would be unfortunate if on a matter of construction these cases were excluded from this procedure. If a wider form of words could be found between now and the next stage, it would be very helpful.
VISCOUNT DILHORNE: I gave way to the noble Lord thinking that he was going to ask me a question. I would gladly give way to him at any time I could count on his supporting me.
LORD CHORLEY: I did not think I should be entitled to speak if the noble and learned Viscount had already withdrawn his Amendment. I had to get in while there was a chance.
VISCOUNT DILHORNE: I ask leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
4.46 p.m.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 3:
Page 7, line I, leave out from ("expedient") to ("and") in line 2 and insert ("to enable an application to be made for leave to appeal under this Part of this Act ").
The noble and learned Lord said: This is in the nature of a paving Amendment for the new clause to be inserted after Clause 12. Under the Bill as drafted, the decision to allow a case to go directly to the House of Lords rests with the trial judge. If he certifies, first, that the relevant conditions are fulfilled; secondly, that it is expedient that an appeal should lie direct to the House of Lords and, thirdly, that all parties consent to the grant of a certificate, the case will by-pass the Court of Appeal and go direct to the House of Lords. The Evershed Committee, for reasons which they gave, thought that the trial judge was the person to determine, these things, and added:
"there is no doubt that by so leaving it to the trial judge the greatest saving in costs is achieved. Moreover, the trial judge will necessarily be fully seized of all the facts and circumstances of the case and will therefore require no further or separate application to be made".
During the Second Reading debate a number of noble and learned Lords strongly urged that an application for a "leapfrog" certificate should be made to the Appeal Committee of the House of Lords instead of to the trial judge. Since the Second Reading debate there have been discussions with the Lords of Appeal which have made it possible for the Government to accept this suggestion. They agree that the final decision whether a case should go direct to the House of Lords should rest with the Appeal Committee, on the understanding that they would deal with the matter on the papers, without a hearing The trial judge would still have to give a certificate but it would simply show that in his view the case was a proper one in which an application might be made. The parties would be able to apply to the Appeal Committee accordingly and this Amendment effects the necessary alterations in Clause 12(1)(b). I beg to move.
LORD MORRIS OF BORTH-Y-GEST: May I raise one point with regard to this Amendment, only with the desire to help

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in regard to the wording? May I take this opportunity of associating myself with what the noble and learned Viscount, Lord Dilhorne, said in expressing our gratitude to the noble and learned Lord the Lord Chancellor for giving such careful consideration to all the points that have been raised? The point that I wish to put forward in regard to paragraph (b) is purely in regard to the language, because I am in entire agreement with the line which the noble and learned Lord is proposing.
The trial judge would hear an application and would have to be seized of three matters. First,
"that the relevant conditions are fulfilled in relation to his decision in those proceedings…"
that is in paragraph (a); second,
"that all the parties to the proceedings consent to the grant of a certificate under this section,…"
I think that these words, which appear in paragraph (c), are quite clear. But then the new paragraph (b) would read:
"that it is expedient to enable an application to be made for leave to appeal…"
The point I put for the consideration of the noble and learned Lord the Lord Chancellor is whether the trial judge would fully understand what he is asked to do under this new language. One judge may think, "I am asked to form a judgment as to whether I think it is expedient that the case should be heard by the House of Lords direct, assuming that the Appeal Committee approve." Another judge might think, under the present language, "All I am asked to do is just to be satisfied that it is expedient that an application should be made, without my applying my mind at all to the question whether I think it is expedient that an appeal should go direct to the House of Lords." It occurs to me that if the trial judge thought: "No, I do not think this is the sort of case that ought to go to the House of Lords", that might be an end of the matter.
I am not quite sure from the present language whether the intention is that the trial judge should still give his personal consideration to the question of whether it is expedient that there should be "leapfrogging" under paragraph (b), or whether all he has to consider under paragraph (b), in the new language, is
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whether it is reasonable to let the parties ask the House of Lords: because he might say: "Well. conditions (a) and (b) are satisfied, and if both parties want to apply to the House of Lords, by all means let them apply." I only put that point for the consideration of the Lord Chancellor, lest there be any room for doubt. If there is no room for doubt, I am only too happy.
THE LORD CHANCELLOR: There is no difference between us as to what is intended. If the trial judge thinks it is a case for granting leave, then that is that. It is intended that he shall give a certificate only if he is satisfied that the relevant conditions apply; that all parties consent and that it is expedient that "leapfrogging" should apply and not merely that there should be application for leave to appeal. I should like to consider between now and the Report stage whether there is any doubt—and if the noble and learned Lord, Lord Morris of Borth-y-Gest, feels that there is some doubt, I feel that there must be. I will consider the wording before the Report stage, and perhaps propose a further Amendment if I think it necessary to do so.
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 4:
Page 7, line 16, at beginning insert ("Subject to any Order in Council made under the following provisions of this section.").
The noble and learned Lord said: It may be convenient to consider with this Amendment Amendment No. 8. The purpose of both Amendments is to enable alterations to be made by Order in Council in the categories of points of law which must be involved in the trial judge's decision in order to fulfil the relevant conditions. As drafted, the Bill requires the point of law to relate wholly or mainly to the construction of a statutory provision or to be one covered by a previous decision. These provisions were recommended by the Evershed Committee (in paragraph 503 of their Report) as a first experimental step which should be reviewed after a period of three to five years. During the Second Reading debate it was suggested. notably by the noble and learned Viscount. Lord Dilhorne, and by the noble and learned Lord, Lord Denning, that the Bill was

57
drawn too widely and would let in a number of cases which were not suitable to go direct to the House of Lords.
As I have said, this point has since received consideration. We all recognise, I think, that this matter should be experimental. If, as the Government now propose, the Appeal Committee of your Lordships' House is given the final word, that Committee will be able to prevent any unsuitable cases from going direct to your Lordships' House. But experience may show that the categories of points of law in respect of which a leapfrog application can be made have been drawn too widely or too narrowly. It may be found, for example, that the Appeal Committee is being overburdened with applications to leapfrog in cases in which the point of law of general public importance is only a minor issue. It may, on the other hand, be found that the scheme is too restrictive, and that it would be desirable to extend it to points of law on common form contracts of insurance, bills of lading and such like.
In order to make it unnecessary to come back to Parliament for the scheme to be altered, the Amendments enable alterations in paragraphs (a) and (b) of Clause 12(3) to be made by Order in Council, subject to the Negative Resolution procedure. As these paragraphs merely define the categories of points of law of general public importance which must be involved in the trial judge's decision, it will not he possible for an Order in Council to bring within the scheme decisions which do not involve such points. I beg to move.
LORD WILBERFORCE: May I say a word on this Amendment, because it may have originated, in part, from a suggestion which I took the liberty of forwarding in writing to the noble and learned Lord the Lord Chancellor after the Second Reading. Personally, I am greatly obliged to the Lord Chancellor for its acceptance, at any rate in part. The only observation I would make at this stage is this. I wonder whether the power to alter by Order in Council which appears in Amendment No. 8 is not a little too narrowly drawn and whether one might not benefit from making it a little wider. As at present drawn, if noble Lords will look at Amendment No. 8 they will see that all that it does is to enable amend
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ments to be made in Clause 12(3)(a) and (b), either by amending those or adding fresh clauses: in other words, to tinker about, if I may be allowed to use that expression, with the relevant conditions. That, I think, is very useful.
The only thing I am wondering about is whether it might not be more useful if the power to amend by Order in Council applied to the mechanism for obtaining leave to appeal to the House of Lords, the details of which at present appear in Amendment No. 10. There is a certain amount of detail there that has been introduced since the Second Reading. I should have thought that it fell within the expression "experimental" as used in the Second Reading debate. Experience may show that some of the conditions and regulations there may be worth changing, and it would be simpler to do it by Order in Council rather than by a fresh Act of Parliament. I am not moving any Amendment. I am grateful to the extent to which the Order in Council procedure has been applied, but I just ask whether it might not be still more usefully extended in the direction I have suggested.
LORD DENNING: Some of us were nervous about the width of subsection (3)(a), or, in the earlier part, whether a point of general public importance was involved. If there is power, or if lower can be given, to amend it by Order in Council, I think that may meet the objections which we had before. It is unusual procedure, I believe, to have an Act of Parliament amended by Order in Council in this way, but perhaps in these exceptional circumstances it may be desirable so to do.
LORD CHORLEY: The noble and learned Lord, Lord Denning, has just commented on this unusual procedure. It seems to me that it is a very valuable introduction which might be extended to other areas. Everybody knows how difficult it is to get a new Bill through Parliament. The noble and learned Lord the Lord Chancellor has been remarkably successful during his incumbency of his office, and a tremendous amount law reform has taken place for which many of us have been hoping for a long time. If there were some sort of procedure, such as the new procedure which is brought in here, which could make

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matters more flexible and easy, I think it should be welcomed. I hope that this method will be borne in mind in connection with similar projects.
THE LORD CHANCELLOR: I was grateful to the noble and learned Lord, Lord Wilberforce, for his suggestion. It is possible, I suppose, that Parliament might have gone further. But Parliament is a little jealous of, in effect, allowing Ministers to alter Acts of Parliament by Orders subject only to the Negative Resolution procedure, and I thought that probably this would be as far as I should be allowed to go. But, encouraged by what your Lordships have said, I should like to think this over again before the next stage of the Bill.
On Question, Amendment agreed to.
LORD AIREDALE: Amendment No. 7 is a purely drafting Amendment, put forward in the interests of good grammar. I beg to move.
Amendment moved—
Page 7, line 26, after ("and") insert ("which").—(Lord Airedale.)
THE LORD CHANCELLOR: We are now in grammatical difficulties again. I must say that when I first looked at this Amendment I thought that the noble Lord, Lord Airedale, was right. But, as we all know, questions of construction and grammar are not all that easy. The Amendment is, I suppose, designed either to improve the clarity of Clause 12(3)(b) or to correct what the proposer regards as a grammatical error in it. It is not justified on either ground. The subject of the verb "was fully considered" in line 26 is "that point of law" in line 19. The relevant conditions are that the decision involves a point of law of general public importance that "that point of law" (a) relates to construction et cetera or (b) is one covered by a previous decision and was fully considered in the previous proceedings. Paragraph (b) is therefore grammatically correct and unambiguous. If the word "which" were inserted before "was fully considered", it would not improve the grammar and it might make the paragraph ambiguous. There might be a doubt which noun was the antecedent of "which"; that is to say, whether it was the point of law which must have been
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fully considered or the previous decision of the Court of Appeal or the House of Lords which must have been fully considered. Therefore, I would suggest that the Amendment is not necessary. The sentence is grammatically correct as it stands, and if you simply put in the word "which" it may itself raise a doubt which is not there as the sentence now stands. I hope that, with that explanation, the noble Lord may be prepared to reconsider this matter.
LORD AIREDALE: I entirely accept what the noble and learned Lord the Lord Chancellor says. I think the difficulty is simply the way in which the wording is set out on the printed page. If line 26 stopped at the word "proceedings", and the subsequent words started afresh on a new line, that would make the sentence perfectly easy to understand. It is the fact that line 26 does not end at the word "proceedings" but runs on which causes the difficulty here. I hope that perhaps that may be considered before the next stage. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR: I have already addressed your Lordships on Amendment No. 8. I beg to move.
Amendment moved—
Page 7, line 39, at end insert—
("( ) Her Majesty may by Order in Council amend subsection (3) of this section by altering, deleting, or substituting one or more new paragraphs for, either or both of paragraphs (a) and (b) of that subsection, or by adding one or more further paragraphs.
( ) Any Order in Council made under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.")—(The Lord Chancellor.)
On Question, Amendment agreed to.
On Question, Whether Clause 12, as amended, shall stand part of the Bill?
LORD CONESFORD: Before we pass from this important clause on which agreement has now been happily reached between the Law Lords and the noble and learned Lord the Lord Chancellor, on which I heartily congratulate him, I should like to remind the Committee of a great judgment of the Court of Appeal from which this reform springs. It was I given in 1933 in an appeal by the Inland

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Revenue and is reported under the title Board of Inland Revenue v. Haddock in Uncommon Law, which has an introduction by the late Lord Atkin. May I cite a few sentences from that celebrated judgment of the then Master of the Rolls:
"The point appears to be short and simple, but this court does not intend to consider it…Whatever our decision, it is certain that an indignant appeal against it will be directed to the supreme tribunal, the House of Lords, since the resources of the Crown are as inexhaustible as its impudence, and the blood of Mr. Haddock is evidently up".
From a subsequent part of the judgment, I should like to read a few further words:
"At the end of certain hotly contested cases, decided only by a majority in both the Court of Appeal and the House of Lords, the weary and impoverished litigant, adding up the number of judges who have voted for and against him in the various courts, has found that, per capita, His Majesty's judges were equally divided on the point in dispute. It is not surprising, then, if many appellants present themselves to that House in a reckless or at least a speculative mood, as a gambler who has backed a succession of losers still hopes to recover all by a wild wager on the final race. The Court of Appeal, to one in this mood, must represent a minor handicap taking place at 3.30. It is not desirable that our great tribunals be regarded in this light: but at present it is inevitable."
Later he goes on to foreshadow in essence the reform that is now being made:
"For all these reasons we recommend that either this Court or the House of Lords (as a Court of Appeal) be abolished; or, in the alternative, that the House of Lords retains its appellate functions as a specialist body for the settlement of questions of exceptional difficulty, such cases to be referred to them upon the order of a High Court judge. As for the present case, we decline to discuss it. It will go to the House of Lords in any event, so let it go at once."
As the Explanatory Memorandum to this Bill reminds us, this Part of this Bill is derived from the Evershed Committee's Report. The learned editor of the report I have just read, Alan Herbert, was a member of the Evershed Committee and that is no doubt how this reform comes into being. As on many other occasions, "A.P.H." was 35 years in advance of his time.
Clause 12, as amended, agreed to.
5.8 p.m.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 10:
After Clause 12, insert the following new clause:
Leave to appeal to House of Lords

"(1) Where in any proceedings the trial judge grants a certificate under section 12 of this Act, then, at any time within one month from the date on which that certificate is granted or such extended time as in any particular case the House of Lords may allow, any of the parties to the proceedings may make an application to the House of Lords under this section.

(2) Subject to the following provisions of this section, if on such an application it appears to the House of Lords to be expedient to do so, the House may grant leave for an appeal to be brought directly to the House; and where leave is granted under this section—

(a) no appeal from the decision of the trial judge to which the certificate relates shall lie to the Court of Appeal, but

(b) an appeal shall lie from that decision to the House of Lords.

(3) Applications under this section shall be determined without a hearing.

(4) Any order of the House of Lords which provides for applications under this section to be determined by a committee of the House—

(a) shall direct that the Committee shall consist of or include not less than three of the persons designated as Lords of Appeal in accordance with section 5 of the Appellate Jurisdiction Act 1876, and

(b) may direct that the decision of the committee on any such application shall be taken on behalf of the House.

(5) Without prejudice to subsection (2) of this section, no appeal shall lie to the C curt of Appeal from a decision of the trial judge in respect of which a certificate is granted under section 12 of this Act until—

(a) the time within which an application can be made under this section has expired, and

(b) where such an application is made, that application has been determined in accordance with the preceding provisions of this section."

The noble and learned Lord said: This is the new clause which provides for an application to be made to the Appeal Committee for leave to appeal directly to the House of Lords where the trial judge has given a leapfrog "certificate. It also ensures that the matter is dealt with cheaply, informally and expeditiously, so as to remove the objections which the Evershed Committee found to applications to the House itself. Subsection (1) provides that where the trial

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judge has granted a "leapfrog" certificate, either party may, within one month or such extended time as the House of Lords may allow, apply to the House for leave under subsection (2). The period of one month is the same as that prescribed by Standing Order II for applications for leave to appeal from the Court of Appeal to your Lordships' House. It is clearly desirable that some time limit should be laid down so that the parties may know their position. The subsection enables either party to apply for leave, because, although the application would normally be made by the would-be appellant, the other party might also wish to ensure that, in the event of an appeal, the case would go direct to your Lordships' House.
Subsection (2) enables the House, on an application under subsection (1), to grant leave for an appeal to be brought directly to the House if it considers it expedient to do so. The Appeal Committee will thus have a complete discretion to refuse an application in an unsuitable case. Subsection (3) requires applications to be determined without a hearing. An application for leave to appeal from the Court of Appeal to your Lordships' House is not cheap. The parties are always represented, or are usually represented, on the application; it is never decided on the documents alone. The Appeal Committee sit only when Lords of Appeal can be spared from the ordinary judicial business. This means there is a delay, usually of one or two months and sometimes considerably longer, before an application for leave to appeal can be heard. It is essential, therefore, that special arrangements should be made for the hearing of "leapfrog applications. The Bill provides for them to be determined without a hearing. The intention is that the applicant should be required by a Standing Order to lodge only the pleadings and the trial judge's judgment and certificate, with the requisite number of copies. The Appeal Committee would then deal with the application on the documents and its decision would be communicated in due course to the applicants.
Subsection (4) provides for "leapfrog" applications to be determined by a Committee of the House of Lords consisting
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of three Lords of Appeal, and for the decision of the Committee to be taken on behalf of the House so that the House does not have to meet formally to receive the Committee's reports. This is the procedure followed in the case of applications under Section 1 of the Administration of Justice Act 1960 for leave to appeal to your Lordships' House in a criminal matter, and the applications would, like an application under that Act, be determined by the Appeal Committee.
Subsection (5) prevents any appeal being brought to the Court of Appeal after the trial judge has granted a "leapfrog" certificate until the time for applying to the Appeal Committee for leave to appeal directly to the House of Lords has expired or until any application lodged within that time has been determined. A provision to this effect is necessary because otherwise the unsuccessful party who will have consented to the granting of a "leapfrog" certificate might change his mind and bring his appeal to the Court of Appeal. The successful party might then have to fight appeals in two courts when he would have preferred to go direct to the House of Lords. I beg to move.
LORD PARKER OF WADDINGTON: I rise merely to thank the noble and learned Lord the Lord Chancellor for moving this Amendment. I am afraid that 1 was not able to be here at Second Reading, but had I been here I should have been constrained to join some of your Lordships in voicing alarm at the idea of leaving the matter to the discretion of the trial judge. Judges vary enormously in their approach to matters, and when both parties consent and desire to appeal direct to the House of Lords it may be difficult for the trial judge to avoid granting the certificate; and under the Bill as it then stood the case would automatically not have gone to the Court of Appeal but direct to your Lordships. An important practical question would then arise that your Lordships' House, in its Judicial capacity, might have more cases thrust upon it than it wanted. Indeed, some people might be anxious to adopt this procedure in order, as it were, to "jump the queue of cases set down for hearing in the House of Lords. It seemed to me then, it seems to me now, that by far the best

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way would be to leave it under the control of your Lordships, provided that that could be done without unnecessary expense. This Amendment fully meets the points that certainly I, and others, had in mind, and I am truly grateful to the noble and learned Lord.
LORD DENNING: I should like to add one word of gratitude to the noble arid learned Lord the Lord Chancellor for this Amendment, particularly noticing that not only will the House of Lords keep complete control but also that it can be done most cheaply and expeditiously. In a way it will be following the precedent of the Supreme Court of the United States of America because there is to be no hearing: an application will be considered simply on the papers and can be dealt with at once, which will be a great advantage. Furthermore, the House itself can keep control of the number of cases and can see that only suitable cases take advantage of this procedure. This Amendment meets all our wishes, and I am most grateful for it.
LORD CHORLEY: As the only representative present of the law teaching profession, as opposed to those who make the law in the Court of Appeal and in this House, I should like to say a few words about this Amendment. It was suggested by the noble Lord, Lord Goodman (who I am sorry to see is not with us this afternoon), that it was agreed by all lawyers that there is no merit in having two appeal procedures. When he said that I could hardly believe my ears. We are accustomed to having interesting points of view put forward by the noble Lord, Lord Goodman, and I often find myself in agreement with them but this view was so extreme that I could not believe I had caught his words correctly. However, here it is, in the OFFICIAL REPORT.
The problem of whether there should be only one appeal is an old one, and one on which there can properly be two views. Right hack at the time of the great Judicature Act for a short time one appeal system was actually established by Act of Parliament, but there was such a strong feeling that it was not satisfactory that within a short time it was reversed, as indeed I pointed out to the noble Lord,
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Lord Goodman, who rather brushed me aside. Academic lawyers at least of the eminence of the noble Lord, Lord Goodman, have asked me to make it clear that we attach great importance o the two-tier system of judgments, because it is in that way that the law is effectively and properly made.
The attitude of the noble Lord, Lord Goodman, towards this—and it is a proper one—is that a tremendous amount of money is spent in this rather elaborate procedure, and from the point of view of a solicitor who has to advise clients that is a matter which properly ought always to be in his mind. But in the university law schools we are greatly concerned with getting a really well argued series of legal rules, not only so that we can teach them to our students but so that they can be effectively applied in practice in the courts. It is valuable to have a case well argued out in the Court of Appeal and for it then to go through another similar process, because frequently a really strong Court of Appeal may overlook a point which comes out on the second appeal in your Lordships' House. It is true that it is unfair that the expense should have to be borne by the litigant, but getting a first-class system of law is more important than saving a substantial sum of money.
I, and some of my colleagues in the law schools, were worried about certain weaknesses in the proposal in this Bill, which invents what I think we shall agree is a sensible system of ensuring that there shall still be a possibility of a discussion in the Court of Appeal, while at the same time avoiding expense when the case, at the lowest level, is already covered by some decision which is binding on the Court of Appeal and can be overruled only in your Lordships' i4ouse. The weakness in it, as the nob: e and learned Lord, the Lord Chief Justice, has pointed out—and it was pointed out on Second Reading—has now been overcome. I am quite sure this solution will be welcomed, not only by the members of the Appellate tribunal here this afternoon but also in the law schools, where, after all, a good deal of law is, in a sense, created in advance of its coming before the judicial tribunals of the country. I felt that I ought to intervene in order to make this matter clear from the point

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of view of myself and many of my colleagues.
On Question, Amendment agreed to.
Clause 13 [Effect of certificate under s. 12]:
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 13:
Leave out Clause 13 and insert the following new clause:
Appeal where leave granted
". In relation to any appeal which lies to the House of Lords by virtue of subsection (2) of section (Leave to appeal to House of Lords) of this Act—

(a) section 4 of the Appellate Jurisdiction Act 1876 (which provides for the bringing of appeals to the House of Lords by way of petition),

(b) section 5 of that Act (which regulates the composition of the House for the hearing and determination of appeals), and

(c) except in so far as those orders otherwise provide, any orders of the House of Lords made with respect to the matters specified in section 11 of that Act (which relates to the procedure on appeals),

shall have effect as they have effect in relation to appeals under that Act."
The noble and learned Lord said: This is a new clause, substantially the same as Clause 13(2) in the Bill but with modifications necessitated by the proposed new provisions for leave to appeal directly to the House of Lords. Most of it is still the same. I beg to move.
On Question, Amendment agreed to.
Clauses 14 to 18 agreed to.
Clause 19 [Orders for interim payment]:
5.20 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved Amendment No. 14:
Page 12, line 18, leave out ("and")
The noble Viscount said: The Committee may remember that on the Second Reading debate I raised the question of the powers of the Lands Tribunal to order an interim payment in the case of a disputed figure for compensation in compulsory purchase, either the sum itself or one of the subsidiary sums which arises under disturbance or injurious affection. The noble and learned Lord the Lord Chancellor said that this was not a matter for his Department but for another one—I think
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it is probably the Department for which the noble Lord, Lord Kennet, is the spokesman in this House. The fact remains that the noble and learned Lord is the Minister in charge of making rules for the Lands Tribunal, and if any rules were to be made which were cognate to the ones being made for the High Court and County Courts, under Clause 13, they would be made for the Lands Tribunal by the noble and learned Lord.
Surprisingly enough, the four Amendments down in my name on Clause 19 are meant to deal with the powers to make rules to give interim payments of compensation in these compulsory purchase cases. I think this matter is extremely obscure, and I may have drafted it wrongly, but I hope that the noble and learned Lord sees what I am trying to get at. I do not think there is much I can add to what I said on Second Reading. In the recommendations which led to the provisions in this clause itself in the courts it was made clear that sometimes these things are perfectly plain, that money would have to be paid, but that it takes quite a long time for a final decision to be reached. Exactly the same thing happens in the Lands Tribunal, except that it is almost certain there that money is going to be paid. How much is in dispute but some money will certainly have to be paid. Therefore I should have thought this is a very parallel situation to what the Bill itself covers.
The Lands Tribunal is subject to the same hazards on time as any other court, because a disputed case can go to the Court of Appeal and to the House of Lords. Not until all that is done will a plaintiff know whether or not the full compensation he is claiming is in fact recoverable. Equally, it may take a very long time to get the case on in the first place, and this may not necessarily be solely the fault of the claimant, who may, meanwhile, have lost his property because it has already been taken under a notice of entry. He might find it very difficult to raise the money to go anywhere else. It is perfectly true that he will get interest on the money as from the date when the property was taken, but that does not help him to find the money to move elsewhere meanwhile. Many people who are the unfortunate victims of compulsory purchase would like to do their best to carry on, if they are in business, with the sort

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of business they were in before. They would like new premises. If they cannot get the money it may be very difficult for them to do so, and this is very likely to increase the compensation payable, because instead of getting the compensation for a fairly simple move from one premises to another, the acquiring authority may have to pay for total extinction of that business, which is a much more expensive matter.
I thought that as we are experimenting under Clause 19 in this field, and as the noble and learned Lord is the person to make the rules, it was worth my while to put down these Amendments to see whether he might consider this as something now worth exploring. There is no necessity to make the rules under this Amendment. It is merely an empowering provision. It may be that if the noble and learned Lord wishes to discuss the matter further with the Minister of Housing and Local Government he will not make the rules yet. But we shall not have another opportunity such as this Bill in a hurry for Parliament to give the noble and learned Lord these powers, and I suggest that we should take it now. I beg to move.
THE LORD CHANCELLOR: The noble Viscount will no doubt agree that it is convenient to take Amendments Nos. 14, 15, 16, 17 and 28 altogether. When the noble Viscount raised this matter on Second Reading, I said that this looked more like a planning law than an administration of justice matter, but I said that I would go into it. There is at present no statutory basis for the making of advance payments of compensation for compulsory purchase. In general, compensation is paid when the conveyance of the land has been completed and agreement has been reached on the amount of compensation. Acquiring authorities can, however, make advance payments in appropriate cases. The extent to which local authorities do this is not known; but the Ministry of Transport regularly make advance payments of 90 per cent. of the amount agreed (or found by the District Valuer) in certain circumstances when they are requested to do so by the owner. These are (a), if entry is taken before completion; and (b), if the claimant needs the money to reinstate himself.
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The question of advance payments of compensation was discussed during the proceedings on the Town and Country Planning Bill. The noble Viscount will find that discussion in the OFFICAL REPORT of July 8, cols. 730 to 731, and July 29, cols. 133 to 136. The noble Lord, Lord Brooke of Cumnor, then moved Amendments which would have required authorities using the general vesting declaration procedure to make a 90 per cent. payment of compensation on or about the date of vesting. This was resisted by the Government on the ground that it should be left to acquiring authorities to exercise their discretion to make advance payments in appropriate cases. This was accepted by the Opposition on a Government undertaking to include a recommendation on advance payments in the circular to local authorities on the Act.
In any case, the noble Viscount's Amendment would deal with the question of advance payments only in cases coming before the Lands Tribunal, and I am told that the arguments against this proposal are as follows. First, it is not right to draw too close an anology between the Lands Tribunal and the courts. Only a minority of compensation cases go to the Lands Tribunal. If there is a case for advance payments in the land compensation field, it would be right to have some general basis far the making of such payments whether or not a case went to the Tribunal. The Government are in fact considering the general question of advance payments in the review of the compensation code to which Housing Ministers have referred on several occasions in the House, both in proceedings on the Town and Country Planning Bill and subsequently.
Secondly, to deal in isolation with the making of advance payments iii cases going to the Lands Tribunal might have the effect of bringing more cases before the Tribunal. It is wrong to take any measure which needlessly bring; cases before the Tribunal; and this is mother reason for looking at advance payments in compensation cases generally rather than solely in relation to cases before the Tribunal. For these reasons, the proposal to provide for rules to be made about interim payments in cases which go to the Lands Tribunal is, it is suggested, wrong. This does not mean that the Government are opposed to the

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idea of advance payments in compulsory purchase cases, but only that dealing with cases which go to the Lands Tribunal does not seem to be the right way to tackle the problem. I cannot expect the noble Viscount to take that in in any detail immediately—it is a rather carefully prepared statement. But perhaps he would be prepared to withdraw his Amendment at this stage and would be good enough to consider what I have said.
VISCOUNT COLVILLE OF CULROSS: I am very much obliged to the noble and learned Lord. I think I took in most of what he said, but I should, of course, like to read it in the OFFICIAL REPORT to-morrow. I am not certain that I understand the distinction apparently being drawn between the cases which do not go to the Tribunal and those which do. The whole point of my argument is that where you have a case where a man must have his money and the acquiring authority is not prepared to make an advance payment—some do not, although equally some do; I shall be dealing with one authority to-morrow that has done so—then the man has no option but to accept. He cannot go to the Tribunal, because he knows that if he does it will be months and possibly years before he gets any money at all. The cases which do not go to the Tribunal are those where the man gets his money straight away. It may be that he does not get the right amount, because he might have got more if he had gone to the statutory body to have his compensation properly determined. Sometimes he has to take less; he has this pressure put upon him. Therefore, I chose the cases which went to the Tribunal because those are the cases which take a long time.
The noble and learned Lord has said, in my experience rightly, that the money is paid on the conveyance. If the amount of compensation is not contested at the Lands Tribunal the conveyance takes place fairly soon, or it should do; therefore, the case for an advance payment is nothing like so necessary. I hope that the noble and learned Lord follows what I am saying. Perhaps he will consider this point also. I am certainly prepared to withdraw this Amendment at the
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moment. I had temporarily forgotten the discussion which took place about the vesting agreements under the Town and Country Planning Act 1968. Of course, this is a wider problem than that; this applies to all these cases. I should like an opportunity to study what has been said. Meanwhile, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 19 shall stand part of the Bill?
5.32 p.m.
VISCOUNT COLVILLE OF CULROSS: There are two small points that I want to raise on Clause 19, apart from the one which was the subject of those Amendments, and I shall be grateful for the help of the noble and learned Lord. There has been a little anxiety about the breadth of the powers to make rules under this clause which appear on the face of the Bill, and I think it would be most helpful if the noble and learned Lord could give a little detail about the sort of rules that he envisages may be made. I know it is subject to the Rules Committee; nevertheless I am sure that the Government have an idea upon the subject.
First of all, there are those who think that if you are not careful to make it clear in the rules that these interim payments are going to be made only where liability is not being contested and the dispute is about quantum, you will have the effect of causing confusion if, subsequently, the case goes in favour of the person who has been ordered to make the interim payment. If you go beyond the cases where liability is not being disputed, you may find that the interim payment will have to be paid back again at the end of the day. It may be that some matter of contributory negligence or some other defence is made good, and then the person who thinks that he has got a substantial sum under an interim payment finds that the court orders him to give it all back again. Then what happens? He may not have got it. He may have spent it by then, because it can be paid to him directly under this Bill. Endless difficulties will arise and I should be most interested to know what the rules will contain. I imagine that they will be to provide only for cases where liability is not disputed and where

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the disagreement is only on a matter of quantum.
The second problem that is envisaged under this clause as I understand it, is that some people may think that if you have a case, even where liability is not disputed and an interim payment is ordered, this may slow up the proceedings because the plaintiff will think, "Good!; I have got some money out of this; there is no need now to press on so urgently with the rest of the claim", and it may fall behind; therefore the whole course of the case will slow up and we shall have even longer delays than, unfortunately, sometimes occur in the law now. It may remove the incentive on the plain tiff's part to get on. I do not know whether this is a matter that can be covered by rules. If there is any force in what is said in this criticism, I can see that it is something that might be serious—at any rate something which should be guarded against. There it is. There are those two points, and if the noble and learned Lord can help on them it would be much appreciated.
THE LORD CHANCELLOR: Yes, it is intended in the first place that, subject to a qualification that I shall make in a moment, these interim payments should be confined by rules to the sort of cases envisaged by Lord Justice Winn's Committee; namely, in substance cases where the plaintiff is fairly certain to recover, such as where the defendant has admitted full liability. That is simple enough. The second is where he has obtained interlocutory judgments for damages to be assessed. That is simple enough. A third case is where if the action proceeded to trial the plaintiff would be bound to succeed wholly on the issue of liability without any discount for fault on his part or on the part of any person in respect of whose injury or death the plaintiff's claim arises. I apprehend that what that means really is the ordinary case where you have a passenger in a motor car and there is a collision between two motor cars. Nobody alleging any negligence on the part of the plaintiff, is it right that he should have to go on without a penny while the two drivers are fighting it out between themselves as to whether they are both to blame, and if so in what proportion, or only one? That is the sort of case.
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The only extension which I had in mind was this. The Winn Committee's consideration was limited to personal injury actions, and there may be other cases in which a power to order interim payments would be right. For example, the Law Commission have supported a proposal by one of Her Majesty's Judges that in an action for recovery of possession of land the court should have power to make an order for interim payments in respect of the defendant's use and occupation of the land pending the trial of the action. This deals with an old, known difficulty which is not really fair to the landlords. The defendant may, for instance, have filed a notice contending that a notice to quit served upon him by the plaintiff was invalid and therefore his tenancy has not been properly determined. The action may take a considerable time to come on for trial. In the meantime, it is obvious that, whatever the result of the action, the defendant will be liable to pay to the plaintiff for his use and occupation of the land. Either he has to pay the rent or the mesne profits. A court ought, therefore, to have power to order interim payments to be made by the defendant pending the trial of the action. It may be, too, that in an action for the price of work done the defendant may allege that part of the work was faulty or was not completed, and it is quite clear that if the defendant liable for the price of the remainder of the work the plantiff may suffer hardship if he cannot recover any of his money until the case has been heard.
It was thought right, on the whole, to leave this to rules to be made, but the intention is as I have stated. I agree that nothing would be more unsatisfactory, indeed obviously quite wron3, than to order interim payments to be made in circumstances in which it was not quite apparent that the plaintiff' must succeed, for then somebody might have to pay something back and, as the noble Viscount has said, he might not Lave it. But I have indicated the general intention, and hope that with those observations the noble Viscount will be prepared—
VISCOUNT COLVILLE OF CULROSS: There was my second point, the noble and learned Lord will remember, about what happens if the case dies temporarily upon the payment of the interim amount.
THE LORD CHANCELLOR: Yes, I have considered that. It is a question of psychology. But I cannot think that because an injured person who may be entitled to a large amount of damages is getting some interim payment on account, he may be any the less anxious to get the rest of it. I think that is a fallacious argument. I believe that, as a whole, the arguments in favour of this reform are right. I think that where a plaintiff must recover, it is a hardship that at the particular time, just after the accident, when he may most need financial assistance, he should not be able to get it. I do not think there is anything really in the second point which the noble Viscount has raised.
Clause 19 agreed to.
Clauses 20 to 25 agreed to.
Clause 26 [Superannuation benefits in respect of certain judicial offices]:
5.39 p.m.
LORD AIREDALE LORD AIREDALE moved Amendment No. 19:
Page 16, line 8, leave out (" with respect to ") and insert (" to maintain or increase ")
The noble Lord said: I listened to the speech of the noble and learned Lord the Lord Chancellor on Second Reading with regard to Clause 26, and I think I understand what is the purpose of the clause. It is to say that when the holders of judicial offices are transferred from one judicial office to another, any pension rights that they may have shall be safeguarded and maintained so that they shall have the transferability of the pensions which apply in so many other fields and which are so much to be desired. My complaint is that the actual wording of the clause is too wide. The Lord Chancellor may make rules "with respect to" the pensions payable. That surely would include power not only to maintain pensions but to abolish them, to reduce them, or to increase them.
I am simply putting forward the view that when the Executive comes to Parliament seeking powers, Parliament ought not to grant powers greater than the actual powers which are required. I am not for a moment suggesting that under this clause any Lord Chancellor would ever wish to reduce or to abolish any judge's pension rights, but as a general
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principle I simply put forward the view that if the Executive asks for powers greater than it seems to need, then it is the duty of Parliament to amend the Bill so as to reduce the powers to the powers which are in fact needed and sought.
Having said that, I am not too confident that the words that I seek to put in are the right words. I am fairly confident about the word "maintain". I think this is the main purpose, to maintain pension rights. I also included the word "increase". I am not sure whether there might be cases in which it was sought to increase pension rights. If that is not so, I should be very pleased at the next stage to move a similar Amendment leaving out the word "increase". I may have wrongly omitted to put in the word "create", because I think there may be cases in which it would be sought to create pension rights which did not already exist. I am uncertain about this, so I am on rather shaky ground. I am not sure that the words I seek to include are the right words, but I am fairly certain that the words I seek to leave out are too wide and that the words ought to be more limited than they are at the present. I beg to move.
THE LORD CHANCELLOR: The Government appreciate the admirable intentions of the noble Lord, Lord Airedale, in putting down this Amendment, but it would create some difficulties, which are these. The purpose is to secure that the powers conferred by Clause 26 shall never be used to lower anyone's pension. Although this is the last thing that any Government would do, I think it would be difficult for any Government to accept a provision that whatever happens no pension could ever be decreased. In any case, the words proposed do not add anything because a power to make rules "with respect to" something includes a power to make rules "to maintain or increase" it. The contrary, however, is not the case, and the power to make rules merely to maintain or increase superannuation benefits would not really be wide enough to achieve the aim of this clause. The aim of the clause is the creation of an administrative scheme under which service producing actual or contingent pension rights can be accumulated, and thus in certain circumstances to create rights which did not exist before. A power to

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"maintain or increase" existing rights would not be adequate for this purpose.
As the noble Lord knows, the sole object of this clause is to improve the position in relation to judicial pensions, particularly where at the moment they cannot be aggregated. Certainly no one, if this clause is passed, will be worse off in any circumstances than they are now. I hope that with that assurance the noble Lord may be prepared not to put the Amendment to a Division.
LORD AIREDALE: I was not dreaming, in any event, of putting this Amendment to a Division. I am very much obliged to the noble and learned Lord the Lord Chancellor for his reply, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.45 p.m.
THE LORD CHANCELLOR: I beg to move Amendment No. 20. This is a minor drafting Amendment. The purpose is to put it beyond doubt that the powers conferred by Clause 26 will enable the Lord Chancellor to make rules for the transfer of pensions where one of the offices is that of full-time salaried chairman or deputy chairman of quarter sessions, whenever the particular post was created. Such posts are created by local Acts from time to time (for example, by Part II of the Cheshire County Council Act 1968) and it should be clear that the Clause 26 powers extend to them as and when they may be so created. I beg to move.
Amendment moved—
Page 16, line 28, after ("enactment") insert ("(whether passed before or after this Act)").—(The Lord Chancellor.)
On Question, Amendment agreed to.
5.46 p.m.
LORD AIREDALE LORD AIREDALE moved Amendment No. 23:
Leave out Clause 26 and insert the following new clause:
Power to maintain or increase Superannuation benefits to or in respect of persons who have been employed in certain judicial offices.
". The Lord Chancellor or the Secretary of State (as the case may be) may with the consent of the Treasury make rules to maintain or increase the superannuation benefits payable to or in respect of persons who have been employed in two or more of such judicial offices as shall be specified therein."
The noble Lord said: When I was reading Clause 26 I remembered some words of the noble and learned Lord the Lord Chancellor quite a long time ago, early in the present Parliament, when he expressed the hope that we might be able to get the Statutes expressed in language that people could understand. I was not able to see that Clause 26 of this Bill came anywhere near to falling within that desirable objective. Clause 26 takes up very nearly two and a half pages of the General Statute Book. Its object, as we now know, is a very simple one: It is really to safeguard and maintain a very few pension rights of a very few holders of judicial offices.
Just look at Clause 26. First of all, look at the length of it. Look at the way the subsections are grouped together. Subsections (1) and (2) are very much the same. Subsections (2) and (5) are very much the same; they are lists of judicial offices. On Second Reading the noble and learned Viscount, Lord Colville of Culross, mentioned these lists and wondered whether they were complete. At first sight they are rather strane lists. They include, for instance, the Recor-der They include for instance the Recorders of Liverpool and Mar, chester, but the Recorder of Birmingham is no tincluded. I have no idea why. I cannot believe that the Recorder of Birmingham has been forgotten: it would be most unlikely. However, I wonder whether possibly some judicial office has been missed, has been left out, because, if it has, and Clause 26 is sought to be implemented in respect of that judicial office, the answer will be that nothing can be done without further legislation. When the Lori Chancellor of the time goes to the Cabinet to ask for Parliamentary time for further legislation for this purpose the answer is pretty certain to be that there are other and more pressing needs for Parliamentary time. I should have thought that if one could eliminate the specific list of judicial offices that would be a desirable thing, That is my criticism of subsections (2) and (5).
If we come to subsections (3) and (6), which are almost identical, I would say that they are almost incomprehensible. Then when one comes to subsection (7) one sees that that relates to the domestic financial affairs of the Cities of Liver

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pool and Manchester. I should not have thought it really necessary to have a subsection of a General Statute for this. I should have thought the proper place for this was in the next Private Bills to be promoted by these Cities. It could go in under "miscellaneous provisions". Surely in the interim an arrangement could be reached between the cities and the Treasury to tide over the interim period, because we are not discussing anything in the least contentious.
Then one comes to subsection (8), which is a definition subsection. Surely the whole purpose of a definition subsection is that on reading it one should know what the thing means that is being defined. I do not know whether anybody reading subsection (8), which purports to define what is meant by "judicial office remunerated out of central funds", can possibly get a clear idea of its meaning. Could not these pairs of subsections be put together by using the simple device of saying "The Lord Chancellor, or the Secretary of State (as the case may be)…"? Then they could share subsections (1) and (4), (2) and (5) and (3) and (6). That would just about halve the length of Clause 26.
I should like to go a little further. I should have thought that this subject matter was deserving of about five lines of the General Statute Book, and I have sought to draft a clause to replace Clause 26 occupying five lines. I hope that I have succeeded. I dare say that it will be said, and no doubt it has been said, that these provisions must be arrived at by reference to the Superannuation Act and that must lead to all this verbiage. But surely we can try to get away from this mass of verbiage to achieve such a very small and non-contentious purpose. I hope that it will be possible to get rid of Clause 26, with its extraordinary complexities, and to replace it with the new clause, which I venture to suggest is not at all complex and which any ordinary person, reading it, could understand. I am sure that the noble and learned Lord the Lord Chancellor will think this a worthy purpose. I beg to move.
THE LORD CHANCELLOR: I have a good deal of sympathy with the noble Lord, Lord Airedale, and I am quite prepared to have another look at this matter. I am told that the list which is set out in subsection (2) is much more open-ended
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than may at first sight appear. The offices in categories (a) to (g) have only one holder each; categories (h) and (i) (that is, chairmen and deputy chairmen of quarter sessions and stipendiary magistrates), have more than one and may be increased. These categories are therefore framed so as to be general in their application to posts of this kind. The Government drafting Amendment, at page 16, line 28, is designed to put that beyond doubt.
The Government are satisfied that the clause covers all the categories intended. The only office omitted is that of the Vice-Chancellor of the County Palatine of Lancaster who was excluded at the request of the Duchy of Lancaster. In that sense the clause is inevitably an interim provision. The Royal Commission on Assizes and Quarter Sessions may make a report involving far-reaching legislation affecting this or other aspects of judicial administration. The Government cannot, of course, anticipate that Report.
Finally, the powers conferred by Clause 26 have to be carefully knitted into the texture of the enactment relating to superannuation. I do not know why Superannuation Acts always seem to be so extremely complicated, and the object of Clause 26, although it appears in this Bill, is designed to put a new section into the Superannuation Act and therefore it has to fit in with the remainder of that Act. I do not like long and complicated provisions if one can possibly make them shorter and simpler. Therefore, if the noble Lord will withdraw his Amendment, I will certainly have another look at the matter to see whether it is possible to achieve the desired object in a shorter form.
LORD AIREDALE: I am very grateful indeed for that undertaking. I feel that it is almost an insult to the high offices of Lord Chancellor or Secretary of State that Parliament cannot trust implicity the holders of those offices to do the right thing with regard to judges' pensions. After all, they are answerable to Parliament for what they do, and this is only to be done with the consent of the Treasury, whose restraining band will be in evidence. Therefore, surely Parliament could trust any conceivable holder of the office of Lord Chancellor or Secretary of State to do the fair thing by

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judges' pensions without needing to hedge it about with two and a half pages of the General Statute Book. I am very grateful that this is to be reconsidered. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 26, as amended, agreed to.
Clause 27 [Further provisions as to pension rights and related matters]:
5.57 p.m.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 24:
Page 18, line 28, leave out from ("subsection") to end of line 36 and insert ("(4) (which specifies the offices to which that section applies), after paragraph (a) there shall be inserted the following paragraph:—
"(aa) chairman or deputy chairman of a court of quarter sessions where under any enactment (whether passed before or after this Act) a person may qualify for a pension by virtue of service in that office"").
The noble and learned Lord said: If it is convenient to the Committee, I should like to discuss with Amendment No. 24, Amendment No. 27. These two minor Amendments are designed to extend Clause 27(2) to cover the Chairman and any Deputy Chairman of Cheshire Quarter Sessions, and at the same time it is necessary to bring the subsection into line with the description of the chairmen and deputy chairmen of quarter sessions adopted in Clause 26. Part II of the Cheshire County Council Act 1968 provides that full-time salaried chairman and deputy chairman of the Cheshire Quarter Sessions may he appointed. Any chairman so appointed ought to be covered by Clause 27(2) just like the Kent deputy chairmen, but by inadvertence they were left out of the Bill as introduced. It is therefore desirable to extend the subsection in any case.
But although, if Cheshire were included by name, all existing full-time salaried chairmen and deputy chairmen would be covered, there may be new appointments created by local Acts between now and any legislation which may flow from the Report of the Royal Commission. The best course, therefore, is
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to make the provision a general one, on the same lines as the new "Section 39A (2)(h)" of the Superannuation Act 1965 created by Clause 26. The Amendment adds to the list of judicial offices set out in Section 3 of the 1967 Act the general category of pensionable chairmen and deputy chairmen of quarter sessions. The Amendment to Schedule 2 is consequential. The list set out in the 1967 Act already contains certain specific references to particular chairmen and deputy chairmen. The addition of the new general provision makes these particular provisions unnecessary, and they can accordingly be repealed. I beg to move.
On Question, Amendment agreed to.
Clause 27, as amended, agreed to.
Clauses 28 to 31 agreed to.
Clause 32 [Short title, extent and commencement]:
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 25:
Page 19, line 41, leave out ("Schedule") and insert ("Schedules 1 and").
The noble and learned Lord said: With the permission of the Committee, I should like to take with this Amendment No. 26. Amendment No. 25 is a paving Amendment to the insertion at the end of line 16, on page 21. As drafted, Schedule 1 to the Bill contains no reference to an enactment affecting Northern Ireland, but it is to be amended by inserting a reference to the Northern Ireland Act 1962. Consequently, the exceptions to the provision in Clause 32(3) that the Bill does not apply to Northern Ireland must be extended to include Schedule 1. Amendment No. 26 is a drafting Amendment, the object of which is to keep the list of enactments in Section 2(1) of the Northern Ireland Act 1962 complete. Section 2(1) specifies the cases in which no appeal will lie to the Court of Appeal in Northern Ireland. I beg to move.
On Question, Amendment agreed to.
Clause 32, as amended, agreed to.
Schedule 1 [Enactments amended]:
THE LORD CHANCELLOR: I dealt with Amendment No. 26 when moving Amendment No. 25. I beg to move.
Amendment moved—
Page 21, line 16, at end insert—

("The Northern Ireland Act 1962 (1962 c. 30).

In section 2(1), after paragraph (i) there shall be inserted the following paragraph:—

"(j) from a decision granting or refusing a certificate under section 12 of the Administration of Justice (No. 2) Act 1968"").

—(The Lord Chancellor.)
On Question, Amendment agreed to.
Schedule 1, as amended, agreed to.
Schedule 2 [Repeals]:
THE LORD CHANCELLOR: I explained Amendment No. 27 when moving Amendment No. 24. I beg to move.
Amendment moved—
Page 22, line 19, at end insert—

("1967 c. 28.

The Superannuation (Miscellaneous Provisions) Act 1967.

In section 3(4, subparagraphs (v), (ix), (xi) and (xii) of paragraph (a), and paragraph (b).")

—(The Lord Chancellor.)
On Question, Amendment agreed to.
Schedule 2, as amended, agreed to.
House resumed: Bill reported, with the Amendments.

THE HIGHWAY CODE
6.2 p.m.
LORD WINTERBOTTOM: My Lords, I beg to move that this House takes note of the paper entitled The Highway Code, a copy of which was laid before the House on the 30th of October, and approves the revised Highway Code contained in pages 4 to 44 thereof. The new edition of The Highway Code was announced in the Government's White Paper, Road Safety—A Fresh Approach, last year. The edition of the Code which many of us are now carrying unread in the glove-boxes of our cars was first published in 1959, and a new version is long overdue. Your Lordships will ex
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pect the new Code to be very different from the last one, and it is. It has been completely revised and re-written. Looking round at the contemporary traffic scene I imagine that most people feel that many of the features which we see have been with us for a considerable time. In fact, a great deal of what we accept as usual has arrived only within the last ten years. There have been changes in the way we use the roads; the recent rules for roundabouts are a good example. Since 1959 traffic engineering techniques have come into their own, and there is hardly any busy town which is without one-way streets, lane lines, direction arrows and the like. Certainly, it is a strange town which has no parking controls, whether by meters or by yellow lines. Three years ago a new system of traffic signs, based on Continental standards, was introduced.
The cars themselves have changed. Semaphore signals now begin to look quaintly old-fashioned, and hand and arm signals are rapidly dying out. We prefer to use direction indicators and keep our hand warm inside the car. We have recently seen new regulations on the standards of safety for tyres and, in particular, on the depth of the tread needed. My right honourable friend the Minister of Transport has required seat belts to be fitted as from the end of the year on all cars first registered since the beginning of 1965. We also have a new overall speed limit of 70 m.p.h., and we have seen the introduction of lower tailor-made speed limits on stretches of road where the accident record suggests they were needed.
The new Code takes account of all this new material. Since the Code is a basic book of advice and information for all road users, it is right that it should hold as much up-to-date information as possible. Your Lordships will see that the new Code has 150 rules, compared with 94 in the previous Code. Something like one-third of the text and all the illustrations are new material. There was another important reason for rewriting the Code. It was discovered by the Road Research Laboratory that some road users could not properly understand the existing Code. It used too many long words; some of its phrases were so elastic as to mean anything or nothing, and in parts it was so concise that the not-so-bright

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road users could not possibly follow all the thought that had been packed into it. The present Code therefore tries to spell things out and to explain step by step. Unfortunately, this makes the text very much longer in places, but we think it is clearer and more easily understood. We have also explained technical terms, whenever we cannot avoid them altogether.
The new Code has been prepared by the Ministry of Transport. It takes account of a great many suggestions made over the years by ordinary members of the public, and more recently has benefited greatly from comments made by some 60 outside organisations which were specially invited to give their views. We are very grateful to everyone who helped in this way. There has been some criticism that the new Code is too long overdue, and I would agree with that. The present pace of change in road and traffic conditions means that we need to keep the Code up to date very briskly; probably at least every five years.
There have also been criticisms, particularly in another place, about the way the Code is revised. It has been said that it is not fair to Parliament that there is no opportunity to debate the Code, either in detail or in principle, until an occasion such as this. In particular, amendments suggested by your Lordships or by Members of another place cannot be considered on their merits by the Minister, since the Code cannot be amended while it is being approved. My right honourable friend the Minister of Transport agrees that these are justified points, and said last night in another place that when the next version of the Code is produced, possibly within the next two years, he proposes to circulate a draft as a Green Paper so that Parliament may have a chance to discuss the draft and to suggest amendments which the Minister can then consider. The Minister would then, after weighing up all the suggestions, bring a revised version forward for approval. Noble Lords may well have their own views on the procedure for revising the Code, and I should be interested to hear them either this afternoon or, after reflection, later.
Your Lordships will see that the Code is divided into six main sections. They
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are: "The Road User on Foot", "The Road User on Wheels", "Motorway Driving", "Extra Rules for Cyclists". "The Road User and Animals", and "The Road User and Railway Level Crossings". That is almost the same as the basic pattern of the 1959 Code, except that the level crossing section is entirely new. During the revision it was suggested that the section for drivers should come first, and this was, in fact, fully considered. But even in this motorised age there are more than three times as many pedestrians as theme are people with driving licences—53 million as against 17 million. Forty per cent., or about 35,000 of the people who are killed and seriously injured on the roads each year are pedestrians, and learning to use the roads properly on foot is the first essential task for road safety. The section for pedestrians has therefore been kept first.
The advice for pedestrians in the present Code is sound and well tested. Very little has been basically changed in the new Code, but six rules—Nos. 3, 4, 9, 11, 12 and 19—are new. Rule 8, which gives advice on how to cross the road from behind a parked vehicle, deals with a serious hazard which accounts for nearly one-quarter of the pedestrians who are killed or seriously injured. I should, too, draw your Lordships' attention, particularly now that we are in winter, to Rule 4, which encourages pedestrians to wear or carry something white or light-coloured or reflective at night. Rule 11, which advises crossing the road near a lighted street lamp if possible, is also new. The point behind Rules 4 and 11 is that the accident risk in darkness is just about double the accident risk in daylight; so road-users should not only try to see more clearly in the dark (this applies particularly, of course, to car drivers) but, as pedestrians, should also try to give other road-users a better chance to see them. Hence the advice about crossing in lighted places or wearing or carrying something white or light-coloured or reflective. Rule 19 is also new. The signals shown here are those which will be used at the Pelican pedestrian crossings which my right honourable friend announced in another place on July 25 last. We hope to see them coming into use in 1969; that is, after this Code has been published.

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The section for the road-user on wheels has been drastically changed. It is more than twice the size of the equivalent section of the 1959 Code. This reflects the increasing importance of good road behaviour by drivers on our increasingly congested roads, and it reflects, too, the measures which have been taken over the last ten years to improve safety and keep traffic moving. Rule 31 in this section introduces the routine mirror-signal-manœuvre which drivers should use when they are overtaking, turning, slowing down or stopping. It may seem to many of us an obvious little drill. It is, and anyone who has been taught driving properly will of course use it automatically. But there are still many people who do not know it or use it, and we therefore thought it best to put it in the Code.
My right honourable friend the Minister particularly sought the views of outside bodies on two rules in this section. The first of these was Rule 35, which deals with separation distances—that is, of course, the gaps which are left between vehicles travelling on the road. This, as your Lordships know, is very important. There would be far fewer multiple collisons, especially on motorways, if drivers kept safe distances apart. The Minister wished to consider whether the separation distances should be shown in yards for each mile per hour of speed, or one car length for every ten miles per hour, or in some other way. Opinions were evenly divided: but a yard is a standard length and car lengths can vary, so my right honourable; friend concluded that it was better to advise a gap of one yard for each mile per hour of speed as a normal working rule. But your Lordships will notice that the illustration of stopping distances on the back of the Code shows distances in feet and in average car lengths. I hope, therefore, that this will suit both camps—those who can reckon distances in yards and feet without any help and those who need something more actual, like cars on the road, to help them with their reckoning.
Rule 95 was the other rule on which the views of outside bodies were specially sought. Your Lordships will see that the rule says that the flashing of headlamps has the same meaning as sounding the horn—to let another road-user know that you are there. This may be a dis
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appointment to some. There has been considerable discussion about the advantages of having an approved code of headlamp signals. This is still going on in many places, and different views are, as we know, passionately held. But the general feeling of those that my right honourable friend consulted was against a special code and came down in favour of the proposition that the flashing of headlamps does no more than show other people that you are there. Rule 95 therefore maintains that line.
My Lords, there are other important additions in the section dealing with drivers. They deal with safety for pedestrians. Rule 39, for example, makes clear that the young and the elderly pedestrians are particularly at risk. Rule 41—and this is interesting, I think—picks out a particular current problem of child casualties near parked ice-cream vans. The special investigations made by the Ministry's road safety units show that the children are most often hurt when they have bought their ice-cream and are moving away from the van. They are so interested in the ice-cream that they forget the traffic. Rule 46 explains the significance of the flashing amber signal which drivers will see at the new Pelican crossings.
Rules 88 to 94, dealing with headlamps, are also very important. As I have already mentioned, the accident risk in darkness is almost twice that for daylight. It is therefore essential that drivers should, first, have lights which work and are properly adjusted; and second, should use their lamps sensibly and when they are needed. Rule 92, which insists on the use of headlamps on all roads where there is no street lighting, is in line with new regulations which my right honourable friend has proposed. Rule 91, about using dipped headlamps in built-up areas, is also necessary. Far too many drivers drive on sidelights alone. This is dangerous, because it often means that the drivers cannot see as well as they might, and it gives pedestrians and other drivers a much slimmer chance of correctly judging their speed or how far away they are.
The section on the road-user and railway level crossings is completely new. As your Lordships will see, there are many kinds of railway level crossings in this country and the Code gives advice

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on how to cope with all of them—crossings with gates or full barriers, open level crossings with or without warning lights and automatic half-barrier level crossings. The advice on automatic half-barriers in Rules 147 to 150 adopts recommendations of the court of inquiry into the accident at Hixon. My right honourable friend has announced that work is going ahead on the design of a new model of automatic half-barrier crossing, and this will include changes in the wording of the notice shown in the illustration on pages 32 and 33. Some other work is going ahead on modifications of existing crossings. For example, box junction markings and double white lines are being introduced. We carefully considered whether the Code should show a new crossing; but to wait for this—for the designer is still at work on the subject—would have held up the introduction of the Code, which many people feel has already been too long in appearing, for at least some months more. In any case, there are 200 crossings of the present design in use daily. On balance, it seemed better to show existing crossings, since this is the situation which drivers have to face, and to get the Code out for the benefit of the millions of drivers who need to use the other advice in it. But my right honourable friend is fully aware of the potential need for amendments and publicity when new-style crossings begin to come into use.
Your Lordships will observe (and, I hope, welcome) a shift in emphasis in the signals given on pages 34 and 35. Direction indicators signals are by far the most normal way of signalling now on the roads: arm signals are subsidiary. The Code therefore shows direction indicator signals and the meaning for them. The section on the law's demands has also been revised and brought up to date. It is not part of the Code proper which your Lordships are asked to approve, but it is traditionally included so that the road-user can see the most important parts of the law which affect him on the road. It is a quick guide for his convenience. If he wants the full story he must, of course, refer to the appropriate Acts and regulations.
My Lords, the new Code will have the same status as the present Code. We shall be maintaining the arrangements for
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giving free copies of the Code to, for example, learner drivers and children enrolling in the National Cycling Proficiency Scheme. If your Lordships approve the Code to-day and if it is similarly approved in another place we will go ahead with arrangements for bulk printing and distribution. We expect that at least 6 million copies of the new Code will be needed during 1969. Some 10 million of the last edition were sold, and 14 million issued free. The Code must have just about the largest distribution of any publication after the Bible, which is, of course, appropriate, since it is the road-user's "bible". It will not therefore be possible to have the Code on sale for some weeks, but we expect it will be available publicly in the first half of next February.
I now commend the Code to the House. One of our current road safety problems is how to keep up the momentum of the savings we have achieved with the introduction of the breath test. One way we can do this is by studying and learning the Code, and following its advice every time we use the roads. As my right honourable friend's introduction on page 2 says:
"The Code is not theory. It's a mine of practical, down-to-earth advice. It's a pocket life-saver".
I commend it to the House. I beg to move.
Moved, That this House approves the code contained in pages 4 to 44 of The Highway Code, laid before the House on the 30th of October last.—(Lord Winterbottom.)
6.20 p.m.
LORD NUGENT OF GUILDFORD: My Lords, may I thank the noble Lord, Lord Winterbottom, for his interesting and lucid discussion of the Code and in particular for the trouble he has taken to draw our attention to some of the most important points in it. I feel that he arid his noble friends on the Front Bench must have heard with some relief of the other place passing the Code last night. I understand that on the first attempt of the Minister of Transport to carry the Order through another place he was "apprehended for careless driving". However, he seems to have learned his lesson, to have conducted the measure 'with all necessary care this time

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and to have got it safely through. No doubt it will be dealt with in a similar way here tonight; it certainly has a welcome from me.
I should also like to welcome another matter to which the noble Lord has referred; namely, the intention of the Minister again to revise the Code within the next couple of years to bring it into line with the International Convention. May I particularly welcome the new procedure described by the Minister and by the noble Lord, Lord Winterbottom, tonight, by which a Green Paper is to be published which can then be debated in both Houses. This debate will serve as a guide to the Minister and will enable him to take into account the views of both Houses as well as all the other advice he will receive before finally drafting his Order and putting it before the House. I am sure that this is a helpful and wise move and I welcome it.
I should like to congratulate the experts at the Ministry of Transport who have obviously done a tremendous job of work in composing this new Code. I had the privilege of introducing the last one nine years ago, and I can remember the intensity of the preparatory work on that occasion. This time it would appear to be even greater. I think it is worth saying that if everybody obeyed the simple rules in the Code—and they are simple rules; as the noble Lord, Lord Winterbottom, said, they are simply common sense—the appalling toll of killed and maimed on the road would end tomorrow. This would certainly be so. If only we could get everybody, drivers and pedestrians, to read and obey the code—and, incidentally, I wonder how the noble Lord is going to get the pedestrians to observe their share of it—this terrible loss of life and limb would be avoided.
Of course, when you are engaged on the re-drafting of the Code—and I can well remember this happening to me ten years ago—because of the urgency felt by the Ministers and their advisers there is a great temptation to put too much into it. I feel that the Ministry of Transport have fallen straight into that temptation. As the noble Lord has told us, this new Code consists of 150 rules compared with the 94 rules in the old one. It is now running to 44 pages of rules and
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diagrams compared with 25 pages before. This is a very big increase; and if this is going to happen every five or ten years, the Code will be too big to lift much less to read. Inevitably, as each new draft comes out, we shall see the need for a whole mass of new features that we want to cater for, all seeming enormously urgent. I remember on the last redrafting saying that if we put in anything new, we must take out something old; that, somehow, we must try to keep the Code at the same length. We did not succeed; but we did not fail on quite such a massive scale as has happened this time.
The theory is that everybody should read this Code and know it; but, inevitably, however good the content, the longer it gets the less it will be read in the home. I would suggest to the noble Lord, Lord Winterbottom, and his advisers in the Ministry of Transport, and indeed to the Minister, that the Ministry really should start to think now on how it can be shortened because otherwise it will become so unwieldy as to defeat our own ends.
My Lords, I have three suggestions to make which might help in this particular field. First, there are some duplications in the rules. I daresay there are not many. I have not combed it through from start to finish but I have picked up a couple and I expect more can be found. For instance, Rule 32 is the same as Rule 111, and Rule 109 is the same as Rule 128. Therefore, one obvious suggestion is to cut out duplication. My second suggestion (and this is perhaps more difficult) is to avoid prolixity. The noble Lord told us that the Road Research Laboratory has found that not everybody can understand the old Code. I expect they will find that not everybody can understand the new one. This will be inevitable. But in trying to make the rules understandable they have made nearly all of them longer; more ideas, good in themselves, have gone into each rule and they have therefore tended to become longer and longer. I think one must exercise extreme self-control in drafting these rules to keep them as short as possible.
My Lords, my third point is a new thought, but it might have some value. In any case, I would suggest that it is worth considering. I would suggest that

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the rules should be differentiated into advisory and semi-mandatory and mandatory. I have marked a few rules which are obviously advisory. One, for example, is Rule 105, which says:
"Traffic travels faster on motorways than on ordinary roads, and you will need to sum up traffic situations more quickly. Using your mirror and concentrating all the time are doubly important on motorways."
That is sensible advice, but it is advice. Similarly, there is Rule 110 which says:
"Drive at a steady cruising speed within the limits of your vehicle, and do not break the speed limits for the motorways or for your vehicle. On wet or icy roads, or in fog, keep your speed down."
There is also Rule 111, which says:
"Driving for long distances may make you feel sleepy. To help prevent this, make sure there is plenty of fresh air in your vehicle, or stop at a service area, or turn off at an exit, and walk around for a while."
These really are all advisory rules offering very good advice; and any sensible person will follow that advice. Although I would suggest cutting out some of them, I am not suggesting that they all be cut out. Although there is a bit too much good advice here, most of the advisory rules probably should remain. But where they do remain in the Code I suggest that in the next draft they be printed in light or small type while the semi-mandatory and mandatory rules are printed in large and heavy type. The mandatory and semi-mandatory rules must be kept; they are all of immediate importance; they are the ones we want everybody to know. I throw it out as worth considering that we must do something to keep the length of the Code more manageable because I am quite certain that in the next Code, in five or ten years' time, there will be a whole lot of new features; enthusiasts will want to put in more and more and it will become completely unmanageable. I hope the noble Lord and his advisers will give some thought to economy so far as the length is concerned.
My Lords, there are three innovations to which I should like to refer and on which to offer congratulations. First, automatic signals. It has interested me to notice that automatic signals are now to become standard. We had a long debate about this ten years ago, and I thought then that in putting in hand signals we were being a bit old-
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fashioned. And of course events have proved that we were, and that we should have gone over completely to the automatic signals. Hand signals are anything but standard, and there is often confusion as to what they mean; whereas nowadays pretty well every motor car has automatic signals which are far more visible and eliminate any sort of ambiguity. So I welcome this, and I am sure that it is absolutely right.
Another section to which the noble Lord, Lord Winterbottom, referred is that on roundabouts. This has been very well done and I congratulate the drafters on the way in which it is set out; it is very clear. But I must make a point about roundabouts. I consider them a very inefficient form of dealing with intersections. All American traffic engineers—and they have had more years of experience than we have—would say the same. Roundabouts in towns are a great waste of space and do not facilitate traffic flow. Almost universally in America traffic lights are used as the control at intersections where there is much traffic moving. If there is too much traffic for lights to handle, there is a two-level interchange. I know that these things are very expensive but what happens at a congested roundabout is that these conventions inevitably break down. The roundabout gets full, and there is only one way to get round, if you are not going to sit for an hour watching the traffic going round solid, and that is to push in. That is what everybody does. Then they weave, and we get the various dangers and accidents which come from weaving. So I hope that the penny will drop at the Ministry of Transport. Although this is very good, so far as roundabouts go, they are not really very satisfactory traffic engineering features.
My Lords, the section on railway crossings was referred to very helpfully by the noble Lord who told us of the changes which are in view for the future. I think this is good, but I am also inclined to think that this aspect is getting a little out of perspective. Every one is very worried at the present time about the dangers presented by railway crossings, but in terms of the numbers killed and injured railway crossings are nothing like so dangerous as ordinary road crossings, and therefore this subject should not occupy too much space. I think it

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might be kept in perspective when the Ministry come to the next draft in two years' time.
One word about the section on lane discipline and overtaking. On this the Code has been expanded from nine rules in the old Code to 20 rules in the new Code. Here let me congratulate the inventor of the little rule, "Mirror—signal—manœuvre". I think this is first-rate and something which everyone can learn: "Donging" it in like that is first-rate, and I give full marks for that. I think it has become a little long, but I am so much in favour of giving more emphasis to lane discipline that I would almost forgive the extra length. In two weeks' time, when we come to discuss the Motion of my noble friend Lord Ferrier, I shall have a good deal more to say about lane discipline. It is one of the weakest features of traffic movement in this country, and I am quite certain that we ought to make mandatory offences with regard to weaving and bad lane discipline. On those matters the Code has done its best.
Two short points of criticism, my Lords. One was dealt with by the noble Lord, Lord Winterbottom—the complaint of the cyclists. In another place the Minister apologised for failure to consult, and I welcome that. The Cycling Council of Great Britain has taken grave umbrage to Rule 132 compared with Rule 60 in the existing Code. It found Rule 60 acceptable, but in the new drafting there is a change of emphasis about riding in single file. I am bound to say that to my eye it did not seem a very great change, but to the eyes of members of the Council it does. I hope that in the consultations which will take place on the draft for 1970 the noble Lord will see that this point is discussed with the Council. I think it is mainly a question of semantics: I do not think there is much substance in it.
The other point has a little more substance. It concerns Rule 139. The point has been made by the British Horse Society that Rule 138 advises that horsemen riding singly or leading a horse should keep to the left and that a led horse should be on the inside. This is accepted by the Society; but Rule 139 advises that where a horse is being led by a pedestrian the horse should not be
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led on the left of the road but on the right with the pedestrian on the outside of the horse—in other words, facing the traffic. The British Horse Society oppose this view. They consider the Minister has made a mistake and advance three reasons.
First, they think it confusing that some horses should be found on one side of the road and some on the other; and there, I think, they have a point. The second reason is that whether or not there is a footpath does not affect horses or ponies, since they must always go on the road. The third reason is that road users—that is to say, car drivers—should get used to expecting to find horses and ponies always on the same side of the road namely, the left hand side. They think that traffic coming at a horse will startle it more than traffic coming up behind the animal. I suggest that perhaps the Minister should consult the British Horse Society when making his re-draft for two years' time to see where the right balance lies. I think there must be a point about always having horses on the same side of the road. This would seem a point of safety for everybody. With those few comments, my Lords, I wish to welcome the Code and most earnestly hope that it will succeed in the objective of reducing the very serious loss of life and limb.
6.37 p.m.
THE EARL OF SHANNON: My Lords, this evening we are being asked to approve this Code of Practice for the use of the roads. As was pointed out by the noble Lord, Lord Winterbottom, there is probably no other book which affects so many of us in such a large way—or, if it does not, it certainly should do. I think that we must welcome any help that we are given to understand the increasingly complex business of using the roads, either with or without a vehicle. But I find myself echoing the main point made by the noble Lord, Lord Nugent of Guildford, about the size of the present draft. To-day the matter is more complex, and I think we might look back to the early days when driving tests were first introduced. At that time, perhaps, the major portion of the test was an inquiry into the proficiency of a person in controlling a piece of machinery. With modern mechanics and road legislation the ability to control a piece of

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machinery is a minor part of the test. So much more important now is knowledge of the law and the requirements from persons who use the roads.
This new edition of The Highway Code—and I should like to add my congratulations to those who produced it—is a great improvement on previous editions; although I agree with the noble Lord, Lord Nugent, that its length and complexity will probably mean that it will, to a great extent, defeat its object, in that the Code will not be read fully and learnt in its entirety. Although under the present procedure, which I am happy to hear is to be changed with the next draft, we are unable to make any amendments, I should like to add a few observations on some of the rules in this draft. They are by no means complete, and I am sure that other points will be picked up by noble Lords yet to speak.
Rule 19: one sign for pedestrian crossings has a red man and says, "Wait"; another has a green man and says, "Cross with care", and means, "You may go"; then we have a peculiar flashing green man which also means to wait. Why cannot we stick to the red one?
Rule 28: I am pleased to see that we are moving back to the standard wording which appeared in previous editions of The Highway Code, but which does not appear in the current edition. The present version is that when you move off into the traffic stream, you must do so "when it is safe to do so". The new draft goes back to the older wording, which was that you must move off in such a way that you do not cause other road traffic to change direction or speed. Admirable though this is, I think that it produces a difficult situation for bus drivers coming out from a bus stop. If traffic is heavy, they cannot possibly come out according to the rule. We all know what they do now. They are driven to do it. They just put on their flashers and come out regardless. I do not know whether we are right in allowing one class of road-users to do something which is considered highly reprehensible in others, but it seems to me that it is putting bus drivers coming out from a bus stop at a considerable disadvantage.
Rule 41: since Parliament allowed ice cream vans to play musical chimes to attract children (I think I am right in
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saying that they are the only people who are allowed to do this sort of thing by way of trade) it means that they are a potential hazard, as the noble Lord, Lord Winterhottom, has said, because of children crossing the road while intent on eating their ice cream. I think the noble Lord will agree that there is something wrong about the picture and the text. The text speaks of "behind a vehicle" and the picture shows a child coming out from in front of a vehicle.
Rule 46 now explains those amber flashing lights which used to figure on what I think I am right in saying are now the defunct Panda crossings. We had them for some considerable time but with no details in the then current Highway Code of what on earth all this meant. Now there is a new type of crossing. I did not catch what the noble Lord called it.
LORD WINTERBOTTOM: Pelican.
THE EARL OF SHANNON: I thank the noble Lord very much. This Pelican crossing figures in The Highway Code together with an explanation of what these flashing lights mean.
On Rule 56, I should like to echo what the noble Lord, Lord Nugent of Guildford, said about lane discipline. Possibly there is no other activity on the road that causes more frustration and Possibly more accidents than weaving from lane to lane. Perhaps we could emphasise this point more strongly in future editions by using heavier print.
Rule 61 deals with getting into the correct lane. We tend to put down beautiful painted arrows on the load, indicating which line you have to get into to turn right or left or to go ahead; but if the traffic is dense and you happen to be a stranger in the area, the arrows are covered up by ether traffic and you cannot see them until it is too late. It would be more helpful, as is done in many cases, to have a sign saying that there are arrows ahead.
I come to Rule 81. Some years ago, speaking in a similar debate in your Lordships' House, I pleaded strongly that where there is a constriction on traffic, it is more sensible to apply the rule that the traffic in the constriction has the right to get out before, you

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pile more in—in other words, traffic on the circle has the right of way. I do not claim any credit for its being in The Highway Code, but I think it is a wonderful coincidence and I am pleased to see that traffic on the circle has the right of way. Again echoing a point made by the noble Lord, Lord Nugent of Guildford, in that same debate I referred to roundabouts as "charming old relics".
In Rule 95 we have at last an authoritative statement on flashing headlights. It variously means, as at present used, "Come on; I am waiting", or "Look out; I am coming". Of course, if you misinterpret a signal that leads to disaster. Again may I suggest heavy print for that to rub it in.
On the question of signals, I am pleased to see that mechanical or electrical indicators are to take precedence over the old hand signals—though, unlike the noble Lord, Lord Winterbottom, I would say that the hand should be on the driving wheel driving the car and not just inside the car keeping warm. There is one signal, however, which I should like to think might be considered—it probably has been, but perhaps we could have a little assurance on this. There is only the ordinary slow-down or stopping signal for use when you stop to give way to pedestrians on a zebra crossing. Unfortunately pedestrian crossings are often at points where there is a right turn and some drivers—often drivers of large and visually obstructive vehicles—signal that they are slowing down for pedestrians by pulling out towards the middle of the road and giving a turn-right signal.
There is nothing more dangerous, because that implies that it is probably safe to come up on the inside. It does not, of course, mean that, but it is often taken to mean that; and if the vehicle stopping is a large and obstructive one, it is often too late for a following car to stop for the pedestrians crossing. I know that The Highway Code also says that you should not overtake at a pedestrian crossing, but this does happen. I wonder if there is any possibility of some form of hand signal to fill what is obviously a gap, so that people do not give the right-turn signal when they mean that they are giving way for pedestrians.
THE EARL OF CORK AND ORRERY: My Lords, may I ask a question, for clarification? The noble Earl referred to either the inside or outside lane. On which part of the road is this lorry making the wrong signal?
THE EARL OF SHANNON: To clarify that to my noble kinsman, I would point out that what I said was that very often zebra crossings are at places where there is a turning right, anyway, and the large, obstructive vehicle is often in the inside lane, when it ought to be in the outside lane or more towards the middle of the road. And then comes a turning right signal.
THE EARL OF CORK AND ORRERY: Which is the outside lane?
THE EARL OF SHANNON: The outside lane is the lane which is not the nearside lane.
THE EARL OF CORK AND ORRERY: The outside lane is the right-hand lane.
THE EARL OF SHANNON: I should like to make the suggestion that there should be some signals specifically for that purpose. There seems to be a requirement for it; otherwise people would not give these turning right signals when they really mean they are giving way to pedestrians.
I should like to see Rule 26 in heavy print:
"If you are giving hand signals, please give the correct signals."
So many people tend to have their own variations. I think I am right in saying that in the first edition of The Highway Code some ingenious authors or author produced a little skit on it which was known as: You Have Been Warned. It gave examples in the same style—not the signs that one should give, but the signs that are given. If your Lordships look back at that now, you will be surprised to find that all the signals given to-day were in that book, published some thirty years ago. The usual hand signal for, "I am turning right", is with the index finger, not with the palm extended. Very often the driver goes one better than that, and the index finger is waggled in a sort of admonitory fashion at other drivers. Often one does not know what it means. If I remember rightly, the funny little book that I have

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mentioned referred to the index finger sign as a sign saying, "That is the house where cook's mother lives"; and the one with the admonitory wagging of the finger as, "I am shaking the ash off my cigarette". I should like to see in heavy black print: "Please give the correct signals as shown, and not your own variations".
I now come to the subject of traffic signs. Surely, we have far too many. Then, having waded through pages of them, we are told at the bottom of page 43 that these are only a few examples and there may be many more variations of them. These new signs are much more logical than the old ones. We have lost the old torch—the torch of learning—which represented the school, and we now have the picture of children. This is much better. These signs again tend to follow a logical sequence. If you have not actually seen that one before, it is possible to work it out. But unfortunately you then come to what might be called the irregular verbs among them. If you see a picture of a pedestrian, it means that you are likely to meet a pedestrian. If you see a picture of a pedestrian with a line through him, it means that there are no pedestrians. But then you see a picture of a motor car, and that should mean "Motor cars only"; and a picture of a motor car with a line through it should mean "No motor cars". But it does not. The picture of a motor car without a line through it means no motor cars. That is not very logical.
Another small point is this. Is it necessary to have direction signs in anything up to about three or four different colours, depending on what sort of road you are on? There may be some good point in this, but I find it a little difficult to follow. Then there is the matter of the height of these signs. I do not know whether the Ministry have considered this point—I know that it does not actually come in The Highway Code—but many of our signs seem to be put up at the right height for horse-drawn vehicles of a bygone age. In many small motor cars nowadays you cannot see these signs. You have to crane up, if there happened to have been a heavy lorry in front of you so that you could not see it further back. I suggest that we put our signs a little too high for most modern cars.
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There now comes the point as to who puts up these warning signs. The classic example to-day is the triangular sign with a chap with a shovel shovelling earth, meaning that there are roadworks ahead. Pretty nearly every contractor who does anything near the roads now has these signs, and he just puts them up. All too often he puts them right across the job, and you come to the job as you are turning the corner and before you can see the sign. This is understandable, because very often if he puts the sign too far away somebody will forget it is there, and it may well be left there for weeks when the corn ractor has gone away. Contractors also make use of the "Keep left" sign or the "Keep right" sign, but unfortunately they usually seem to put up "Keep left" where it should be "Keep right"; also they often put the signs in places where it is physically impossible to comply with them. So often one sees "Keep left" signs where, if one did keep left, one would go straight across the pavement and into the chemist's shop. I think there should be some control of whoever puts up these signs, to make sure that they are taken away again. I am sorry to sound so critical on this subject. I think that, on the whole, The Highway Code, as produced, is a little long and complex—and it is 1ong and complex because it is about an increasingly complex subject—but, in spite of its little deficiencies, I think we should give it a wholehearted welcome.
6.57 p.m.
LORD FERRIER: My Lords, of any excuse for speaking on this Order is needed, the Report of the Special Orders Committee is sufficient to justify a few words. The facts are, of course, crystal clear. The first, as both the noble Lord, Lord Winterbottom, and the noble Lord, Lord Nugent, pointed out, is that I. new edition of The Highway Code is overdue; and the second is that the Government have chosen to put the draft before Parliament under this procedure. How I wish, with other noble Lords, that this one had had its Green Paper. With all its imperfections, it must go forward unless the Government withdraw it, which at one time I thought they should. But my view is to some extent modified by what the noble Lord, Lord Winterbottom, said: how he appreciated that

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a measure of improvement is well within reach, and perhaps it might be possible to have a second edition even under this format.
It is obvious that endless care and trouble have been taken over this work, and the Ministry of Transport are to be congratulated upon it. But it is pardonable to suggest that perhaps a wider area of consultation would have resulted in a booklet with (shall I say?) fewer imperfections, although they are imperfections of detail. The noble Lord, Lord Nugent, made the point about mandatory rules and advisory statements. But the adjourned debate in another place, and probably to-day's debate here, will be of service.
The importance of The Highway Code upon road traffic and road safety problems cannot be overrated. Indeed, the noble Lord, Lord Nugent, referred to the road safety problem and the accidents that arise on the roads as an appalling toll. I am sure that the noble Lord the Minister will accept that any criticism offered by us here is intended to be constructive. The Code's imperfections may be of detail, but the details are important. A number of them have already been referred to by speakers, and others doubtless will be referred to. One of them was mentioned by the noble Earl, Lord Shannon. It concerned the child running out from "behind" a vehicle. I am sure that the right words would have been "the blind side of the vehicle".
Take the photograph on page 20, in which I am particularly interested because I drove yesterday for some 340 miles, more than 100 in mist or fog, on the A.1 and roads further North. I believe that this illustration is not a particularly good one. Had the lorry got sidelights only? If it had, as it might easily have had, judging by what I saw yesterday, then they are invisible. A caption might improve it. I do not think I saw any instance of rank bad driving yesterday—perhaps only the most intrepid were on the road—but I was surprised by the number of heavy vehicles, particularly, that were being driven on sidelights only. I was also struck by the way in which, in middling light, the drivers of heavy vehicles were inclined to flash headlights at one if one was driving with dipped
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headlights and they felt that sidelights would do. I rather wish they would not, but that will come with time.
Another point which has already been mentioned is this question of the "outside" lane. It is most clearly set out in paragraph 114. The noble Earl, Lord Cork and Orrery, in his exchanges with the noble Earl, Lord Shannon, pointed out that "outside" might easily be altered to "offside", especially when referring to motorway driving. These and other points of criticism have been, and will be, developed and so I will go no further with detail. But the message, as I see it, is this. What a pity this handbook was not more widely discussed before its preparation had gone as far as it has gone. It is, of course, an absolutely essential handbook for the experienced, and it is complicated. But the fact is—and it struck me yesterday driving down the A.1 as it is to-day. and realising the enormous improvements that have taken place in the last two or three years—that driving is more complicated and it is inevitable that a fully comprehensive booklet of this kind will have to be lengthier than the old one, although I agree with the noble Lord. Lord Nugent, that there are here and there duplications which could be avoided.
The people of whom I think particularly are the learner drivers—and there are thousands on the waiting lists of the driving schools now—and the people who are addressing themselves to the problem of driving a mechanical projectile upon our roads. It really is a formidable book as it is at the moment, and I think of the remarks of one very experienced driver whom I know. Indeed, it is his profession to drive and he has teenage sons, one of whom has already taken his test and the other is a learner driver. His comments tempt me to suggest that if the Code goes through like this it could well be supplemented by a primer for the absolute beginner. It could be much briefer. So much of what is in this Code is hardly comprehensible to someone who has never driven. This is the point my friend made to me. It is all very well for all of us who are drivers to get the picture from the rules as they are worded to-day, but young people who have never driven find it difficult. It is possible that a shorter. cheaper handbook

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would be useful. It could be shorter by omitting the sections on pedestrians and motorway driving, for, after all, a learner driver is not allowed on a motorway. Perhaps the same applies to the level crossing sections if the signals are to be altered. These parts could be cut out in order to make a more comprehensible handbook for absolute beginners, so that when they are taking their lessons and coming up to the test they can grasp the full contents of The Highway Code.
For instance, I have mentioned the traffic signs and the road markings on pages 41, 42 and 43. They are extremely elaborate to memorise if one has never driven. I wonder whether such a primer could contain only basic signs, and perhaps only the very basic road markings. I should be interested to see whether the noble Lord considers my suggestion worth thinking over, and what would be the reaction of the Association of Motor Schools to such a suggestion. I feel it is a pity that the price of this booklet has to be as high as ls. 3d; t but, after all, ls. 3d. to-day is not worth much more than 6d. was in 1959. So, provided that adequate supplies are available without charge to all the officials (I think the noble Lord said that a large number are sent out) then I do not believe we can boggle at the price.
My Lords, those are my comments on pages 4 to 44. Perhaps it will not be going too wide if we turn to the following pages, because they are part of the book, although they are not covered by the Motion. With your Lordships' permission, I should like to say one or two short words about them. On pages 45 to 51, concerning drivers' responsibilities, I should like to develop the fact which is brought out in one of the rules: "Go slowly when driving past animals". That is Rule 49. I should have liked to see it say: "Go slowly when driving past or meeting animals". I should have liked to see these pages at the end of the book emphasise the fact that there is a big measure of responsibility upon drivers to be sensible with people who have animals. It is terrible to see how some people whizz past young riders on restive young racehorses and the like.
I believe it would be worth emphasising in these pages that a motorist really must be sensible. As a dog lover and
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a shooting man, I think it is terrifying how some motorists will drive at considerable speed past a party of shooters, who provide sufficient indication to the driver that there are bound to be dogs about. How that point can be embodied in these pages I do not know, but certainly in regard to horses the matter would be worth including. I say this on behalf of another noble Lord who expressed regret that he could not be here now. He asked me to make that point about the obligation on the driver when passing or meeting animals. Another suggestion he made is this. Although riders are not covered by The Highway Code, it might be worth reminding them that there are occasions when riding in poor light in the dark a horseman should carry—many do—a torch or some kind of light to indicate that he is on the road.
I end, my Lords, as I began, by regretting the procedure by which this important Code has been submitted without drawing on the resources of experience and judgment which exist in Parliament. But. I appreciate what the noble Lord, Lord Winterbottom, said, and I look forward to the debates which may follow, and indeed to the occasion when we come to debate road safety in a fortnight's time. There may well be other points brought out which could be embodied in a future edition of this booklet. But we must face the fact, as I said, that there is no practical alternative but that the House should let the Code go through as it stands, with the fervent hope that some of the points which have been dwelt on, both here and in another place, will before long be embodied in another edition.
THE EARL OF ENNISKILLEN: My Lords, before the noble Lord sits down may I ask him whether he is not in a little confusion on the question of the offside and nearside of lanes? It is all right to say "offside" and "nearside" on one and two lane roads, but it is not right to confuse the issue in that way when there are three-lane roads, when you must have "inside", "outside" and "centre", because if you merely say "offside" and you happen to be in the inside lane there will be two off-side lanes, and if you happen to be in the centre lane there will be only one offside.
LORD FERRIER: My Lords, I thank the noble Lord for his inquiry. What I said was in fact based on the result of questions that I have put to a number of people, in all walks of life. I have said to them, "In a three-lane, two-way highway, which is the outside lane?" and almost invariably the reply has been, "The one next to the pavement". This is the confusion to which I was referring, and that is why I did not say the "fast lane". From my own inquiries the position seemed to me to be a little odd, and is an indication of the complexity of some of these apparently simple problems, which can only be threshed out and a decision made one way or the other. I do not know which is right.
7.12 p.m.
LORD SOMERS: My Lords, in case any of your Lordships has the original list of speakers I hope it will not be thought that I am intervening in the wrong place. It was a pure accident that my name was left off the list. I had put my name down and I was told that I should come here. I apologise to the noble Lord, Lord Lucas of Chilworth. I agree with everything that has been said so far about The Highway Code, as to its great improvement on the current one, but I also agree that it is really rather a voluminous thing for a young learner driver to have to learn by heart. I think the suggestion made by my noble friend Lord Nugent of Guildford, that we should differentiate between the mandatory and the advisory rules, is an extremely good one. The mandatory rules should be put in one section by themselves, and the advisory ones could come afterwards.
I want to deal with just a few things in the Code itself which I feel could do with improvement in a future edition. In the first place, on page 6 there is reference to the X-ways or pedestrian signal-controlled crossings, as they are called. I must confess that I wish the Ministry of Transport did not pay so much attention to the Road Research Laboratory, because I feel sure that it was from there that the extraordinary idea originated of substituting a white cross for the green light with which we are all familiar. When that signal was first introduced it had no publicity whatsoever. I had to search for a long time before I found the official pamphlet
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on it. The Post Office did not have it, and I cannot remember where I eventually ran it to earth. But what was the idea of substituting this white cross for a green light? I can only say that on one occasion I saw a car pulled up in front of the white cross because the driver thought it meant that he must not go on. There was a queue of cars behind him, the drivers of which, needless to say, were all hooting furiously. I hear that the white cross is now to be superseded by the green light, and that is a great improvement.
As to pedestrians generally, I think that what has been said already about the necessity for pedestrians to carry either some light-coloured or reflecting articles on them when walking on roads at night is absolutely right. I believe it was the noble Lord, Lord Winterbottom, who suggested that, and I think it should be made mandatory.
I have recently been reading a most interesting book on railway accidents. It is an analysis of railway accidents from 1840 onwards, and shows just what we learned from each one and what improvements were made as a result. But one of the things that struck me was the fact that when a railway inspector said that the only way to prevent a certain accident was to introduce a particular mechanism, it was Practically always not less than nine years before the Government made that mechanism mandatory. I only hope that it will not be nine years before the Government decide to make it compulsory for road users on unlit roads to wear something reflective.
Turning to page 8, paragraph 33, I see that it says:
"Remember that there is a 30 m.p.h. speed limit where there are street lights, unless signs show otherwise."
I think it is high time that we dissociated speed limits from street lights. They have nothing whatever to do with each other. Sometimes there may be a 40 m.p.h. speed limit where there is street lighting, and in other places there may be a 30 m.p.h. limit where there is no street lighting. It seems to me that the only hope is to rely purely on the speed limit signs, and if the limit continues for a fairly long section of road it should invariably be marked with small repeater signs, as is done in some places at the moment.

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On page 11, paragraph 50 says:
"White lines on the road guide, warn, or give orders."
Then paragraph 57 says:
"When coming to junctions, obey any lane indication arrows marked on the road."
To deal with the first, perhaps we may turn for a moment to page 42, where the illustrations of those white lines are given. Some of these are mandatory; some are warning, some are merely for information. But they are not put in order. The first two are mandatory; the third is merely advisory; the fourth and the fifth are advisory; presumably, the sixth is a warning one—warning of a hazard ahead. What kind of a hazard? We have just heard about the ice cream van being an extreme hazard. The ice cream van does not stay still; it moves about, and one cannot move the road lines with it. Therefore it does not seem to me that this warning line of a hazard ahead can mean anything other than, probably, that there is a road junction in front of you, or a sharp bend. I think these signs should be grouped absolutely logically as mandatory, warning and advisory.
Compare paragraph 57 with the illustration just overleaf. It says
"When coming to junctions, obey any lane indication arrow marked on the road."
You will see that in the right-hand lane there is an arrow pointing to the right. Apparently you must obey that, and whatever happens if you are in that lane you must turn right. On the other hand, paragraph 61 says:
"…choose the left-hand lane when going to the left and the right-hand lane when going to the right; choose any lane when going straight on."
Therefore it seems to me that the arrow in the right-hand lane should be a double-headed one, as is the one in the left-hand lane.
I turn to paragraph 60 and other paragraphs dealing with this matter of inside and outside lanes. My attention was first drawn to this by my noble friend Lord Cork—I had not actually thought of it before. While to an experienced motorist the inside certainly does mean the left and the outside the right, to a learner driver that may not be so. If you have a dual carriageway with a reserve in the middle, obviously to him the inside lanes are going to be the ones on either side of the reserve, unless he has an extremely
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competent instructor who has toll him otherwise; and that is not, I regret to say, always the case. Therefore, it seems to me that throughout this Code it would be simpler to say "left-hand" or "right-hand" and not "inside" and "outside".
I turn to page 13, paragraph 53, on overtaking. I agree with what has been said by other noble Lords, that overtaking is probably the most dangerous thing one can do on the road. For this reason think that something a little more emphatic than what has been put n this paragraph should be given to the learner-driver. I believe that the instruction should be put in heavy print, so that the learner-driver may realise that when overtaking he does so at his own risk, and, what is more, that if he does it wrongly he is probably going to risk other people as well. On page 25, paragraph 113 (which deals with motorway driving) says:
"On a two-lane carriageway, drive in the left-hand lane except when overtaking."
But suppose the left-hand lane is occupied by a good deal of relatively slow-moving traffic, say 45 to 50 m.p.h., and you want to go at 60 to 65. It is quite wrong that you should keep dodging back every time you pass a vehicle into the inside lane and dodging out again. There is nothing more dangerous than dodging about from lane to lane. Therefore, if you feel you are going to be able to keep at a fairly high speed I think most certainly, you should stick to the fast lane, and therefore I think that paragraph is a mistake.
I turn to page 28 and the illustration. This shows an arrow indicating the lane. Quite frankly, I was completely puzzled by the arrow in the right-hand lane, I did not know whether it was inter ded to point downwards to the lane underneath it or whether it was pointing to the middle lane. I took this point, incidentally, to the Institute of Advanced Motorists and consulted the Director of Tests there, and he assured me that it was pointing to the middle lane, which is of course quite right, and slowing the lane you should be in. But I do not think that anybody going Inn the motorway for the first time world be aware of that. I think there should be something a little clearer than that, some signal implying, "Do not use the overtaking lane"; or perhaps "No overtaking" would be enough.

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I turn to page 33, the level crossing sign. You will see in the illustration there a small sign:
"In emergency or before crossing…phone signalman,"
And there is another small sign right over on the right-hand side of the road. Not many motorists have eyes which look in two directions at once, I am thankful to say. Therefore, I think that if there are to be two instructions one should be underneath the other, and both on the same side. Personally I think that instead of that notice:
"Another train is coming if lights continue to flash",
it would be better to have an electrically controlled signal which comes on if they continue to flash and says, "Stop", because anybody can recognise that at once.
Now I am looking at the signals illustrated on page 35. One is:
"I intend to move in to the left or turn left."
The signal that is given there is the vertical one, whereas in actual fact it ought to be a horizontal one: that is the recognised signal. The next one is:
"I intend to slow down or stop."
This was raised by the noble Earl Lord Shannon, but he left out one point which I feel should be considered by the Ministry. I think it is a great pity that we have abolished the old sign for "I am coming to a stop"—namely, holding the hand straight up. There could he a mechanical equivalent of that; say, three vertical red lights on the rear of your car which could be controlled from a push-button. I can remember quite well an occasion on which a signal was given by the driver of a car which I thought was just slowing up. There was a lot of traffic, so I could not see what was happening in front. I pulled in behind him; there was not room to overtake. Much to my amazement, within a second or two the door opened and out he got. Well, there I was, and I had to wait until there was room to back a little and then pass him. So it seems to me that a mechanical signal would be a great advantage. There is a great difference between slowing down and stopping. If one sees somebody giving that time before I found the official pamphlet
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meant, one is rather inclined to overtake him regardless.
Turning to page 37, your Lordships will see that the fourth row of signs is: "All motor vehicles prohibited", "Buses and Coaches prohibited", "Lorries prohibited", and one prohibiting cycles. As everything else that is prohibited has through it a cancelling stroke, surely these should have the same. They should all have a red stroke through them. One last criticism relates to the last sign on that page: "One Way". It would be safer for both pedestrians and motorists if one way streets were indicated when you enter them and on every lamp-post along them. While one gets periodic indications of the fact that one is in a one way street, it is seldom that one realises it until one sees traffic going over to the right. An improvement might be made in that respect.
Those are all merely details of signs. Most certainly one has to remember that this is much more a book for the beginner in driving than for the experienced motorist. Therefore I think that the language which is used should be as simple and as brief as possible. The application form for a first licence says, "Have you read the Highway Code?". You may have read only one or two pages of it, but you will still say, "Yes". That is not enough. On your driving test you should be asked quite a number of questions in relation to various parts of it, to see whether you have really studied it. But, apart from that, I think that this Code is a great improvement on the one which we have at present.
7.33 p.m.
LORD LUCAS OF CHILWORTH: My Lords, all the noble Lords who have already spoken have accepted the rightness and properness of the new draft Code, and I shall be no exception. However, like other speakers I find that it is a large bulk of reading. I looked up the definition of "Code". It is:
"A systematic collection or a digest of the laws of the country or those relating to a subject."
I honestly cannot feel that this booklet is either of those things. It is not a complete collection of laws and rules and regulations; neither is it a digest. I think that its very size will deter all but the most keen. In my view the Code

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should have been prepared as a digest containing the bare principles of good road conduct. Such a digest may have been more acceptable to all road-users. They may have read it and also they may have learned it. The learning of the bare essentials is important.
As a suggestion to counter that criticism, I think that the various sections contained in the Code could have been written quite separately, enlarged and put into quite good detail. In this manner a far wider distribution would probably have been effected, at far less cost. One envisages school children having their first introduction to road sense from the pedestrian section, which could probably have been produced in pamphlet form at a cost element of 2d. or 3d. In this way the various associations would have been more prepared to make a free distribution. Then, little by little, we could have moved on from school children, studying as pedestrians, to bicycling and so on. I think that the format lacks any kind of urgency. If your Lordships will look at Rule 102, which deals with the advance red warning triangle, you will see that it commences with the words, "If you carry an advance warning sign". There is no urgency whatsoever in that kind of message. This is repeated several times in phrases such as, "If you have a breakdown", and, "If you have to stop". I emphasise "If you have to". There should be some more positive direction. If we are to have red warning signs of the triangle type to prevent accidents, then there should be some element of compulsion in the way the rule is written.
I want to be brief on the rules. I do not like Rule 95 at all. Twenty years ago I was driving trucks for a living, and we had a quite simple light code. This has been in use for years, and suddenly there is a change from what has been a reasonably accepted practice and one which, so far as I am aware, has not contributed greatly to dangerous driving but to understanding of sensible road use by sensible road-users. It should not be changed overnight; or at any rate in only three months' time. In the section on motorway driving there is a description of lanes. We have already heard a great deal in regard to the confusion that is caused as to "who means what?" by "inside", "offside" and so
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on. Why cannot we be plain and simple and have "left" and "right"—always "left" or "right"—and "centre"? When we get to American standards and have six lanes in one direction on a carriageway, then we shall have to think up some new descriptions. In the meantime, I should have thought that just "left" and "right" would have been quite adequate.
If I may comment on the remark made by the noble Lord, Lord Somers, in connection with the lane arrows, I have always understood that the arrow means that you will turn in that direction. He described the picture in the draft Code booklet as showing an arrow that indicates a turning to the right. This direction sign not only is a vital safety factor but keeps all traffic moving. If by chance you get in the wrong lane, then I am sorry for you; you must go on—you cannot afford to change direction. That is where the mistakes occur. It is not the fault of a weaver on a motorway, but the fault of the man who causes the weaving. Lane discipline is, I think, most underplayed and underrated all through. I am sorry about that.
Taking the booklet as it is, I would comment perhaps adversely on the last section. It does not strictly come into the subject under debate, but with the permission of your Lordships I would say a few words on it. That is the section dealing with "The Law's Demands". A fortnight ago, after a very late debate in your Lordships' House, I drove back to Southampton and passed, and was passed by, very little traffic. Your Lordships will probably recall the occasion when we debated the reform of this House. We were all very late, and there was very little traffic at half-past one in the morning, but 19 vehicles that passed me or were passed by me, or approached me, had inadequate lighting; one sidelight, one tail light, no middle light, or perhaps just one middle light on a truck which made one think that it was a motorcycle. I am sorry to see this section of the booklet tucked away more or less as an afterthought.
I have tried very briefly to illustrate this lack of urgency that I see in the booklet. Admirable though it is to serve to-day's purpose, I think it could do so very much better if it had more punch, more drive, and far more urgency. I

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hope that for the future we can adopt the suggestion that I have made, or that which has been made by other noble Lords in a similar vein, for a primer or an elementary pamphlet or something of that nature. It could be quite short, quite concise. With great respect to road users of all kinds, I think it ought to be pictorial rather than written, because it seems to me that those newspapers which catch the eye have all the pictures on the front page, and that people learn by pictures and not by reading the editorials inside.
LORD FERRIER: My Lords, before the noble Lord sits down, may I ask him to define the truck driver's signal to which he referred, that is, the double flashed headlight to show that the over-taking vehicle can turn in. Is that the one to which he referred?
LORD LUCAS OF CHILWORTH: My Lords, the truck drivers' code of lights is really quite long, and as we have a written definition of headlight usage, I do not think this would be the place or the time to describe it. In essence a full headlight implies he is taking the right of way a flip on a headlight indicates that he will give you the right of way, and this signal repeated invariably means that there is a danger or a hazard, either when you are following or when you are approaching. Either when you are following a vehicle or a vehicle is approaching these signals mean precisely the same. They are the three basic signals.
7.43 p.m.
THE EARL OF CORK AND ORRERY: My Lords, may I very quickly add my small word of congratulation to those which have already been offered to those who have been responsible for compiling this slim and handsome volume. There is a great deal in it, and most of what is in it I like very much. I also like the cover, the general layout, the graphics, and I only wish I could say that I like the use of the typography inside. In saying this, I take up some of the points made by my noble friend Lord Nugent of Guildford and the noble Lord, Lord Lucas of Chilworth. They put it in slightly different ways, one talking about emphasis and the other about urgency, which really is the same thing.
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The whole of this little book, with two exceptions, is written with a steady dead level of lower case, all of one typeface. There is practically no use of black or heavy type, no use of red ink, except an occasional headline, and no use of block capitals. Far more emphasis could have been given to more important points by using a different type, and I think it would have added greatly to the weight and value of the book. Heavy black type is used on only two occasions, "If in doubt—do not overtake", and "Mirror—Signal—Manoeuvre", which occurs a number of times. My noble friend Lord Nugent has expressed admiration for that particular slogan, and I wish I could go along with him. I do not altogether admire this slogan, because I am all too conscious of being behind people who may or may not use their mirror, but who signal and instantly manoeuvre, greatly to my detriment. There are many drivers who think that as soon as they have switched on their indicators to show they are about to turn right are in some mysterious way entitled to do so. I should like to see this slogan worded as "Mirror—Signal—Manoeuvre if safe". It may sound a slightly hairsplitting argument, but perhaps the noble Lord, Lord Winterbottom, may think it is not.
I take up something that has been mentioned so far only by my noble friend Lord Ferrier, and that is this matter of sidelights in the fog, which appears on page 20. The photograph shows a situation perhaps as improbable as it is dangerous. As my noble friend has indicated, the lorry which is overtaking the car may or may not have its sidelights on, one simply cannot tell. I put this with some force. I feel that I have a certain right to do so, because it was just about a year ago, in fact December 11 last year, that I referred to this particular point of the use of sidelights in daylight fog by asking a Starred Question in your Lordships' House. By way of a supplementary question I asked the Minister who was replying—who was, need I say, none other than the noble Lord, Lord Winterbottom—this question:
"Does he appreciate, I wonder, that in spite of the instructions in The Highway Code the vast majority of motorists use only their sidelights in daylight fog, and that this practice is dangerous because it is misleading?" [OFFICIAL REPORT, 11/12/1967, col. 853.]

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I have done a little observation of my own on this point, both while driving along the road in daylight fog and by sitting deliberately in a lay-by and watching traffic coming towards me. I am fairly certain I am near enough accurate when I say that of all the cars that drive in fog in daylight, where it is necessary to have some kind of light, most use sidelights only. Of those that use sidelights only, three or four out of five become visible as they approach you from the fog before their sidelights become visible. In other words, the sidelights are, as the noble Lord perfectly correctly told me in answer to my Question, quite useless in fog. I said in raising my Question that sidelights are dangerous, and I say it again for this reason. The driver who puts his sidelights on puts them on for some reason, and that reason can only be that he thinks they can be seen. Well, if his car is seen before his sidelights, he is grossly deceiving himself. He thinks he can be seen sooner than he can, and it is that kind of thing that gives rise to the situation in the photograph where this lorry, perhaps with its sidelights on, is overtaking a man that can u he seen while he cannot. This action is dangerous, and I think it should be said to be so.
May I quote the noble Lord's reply to my remark. He said:
"I think that that is an interesting observation. I will see that that point of view is transmitted to my right honourable friend the Minister of Transnort."—[OFFICIAL REPORT, 11 /12/1967, col. 853.]
Perhaps the noble Lord would be kind enough to have another go.
Now I come to a matter which I skipped over because my noble friend Lord Somers had mentioned it, but I should like to add my support to what he said about the lines and lanes, and the instructions on pages 11 and 12. I base my criticism of this largely on the fact that the first sentence at the top of the page says that these "guide, warn, or give orders," and I think to say that and not to say which does which is ambiguous and misleading to somebody who does not know. It is all very well for us to say "We know": The Highway Code is written not for those who know but for those who do not know, and for those who think they know and do not, and I do not think they are going to
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find things very much use unless they are written with precision. My general attitude is that all instructions to motorists, whether printed in The Highway Code, or painted on a road, or stuck up on posts in the form of signs, should be simple, unambiguous, consistent and also necessary. I do not think I snail be seriously contradicted in those four requirements, although other noble Lords may have other ideas.
The next matter with which I want to deal is the question of the "inside" and "outside", "left-hand" and "right-hand". My noble kinsman, Lord Shannon, may have thought that I was being tiresome in trying to pin him down to a definition, and I was interested to see that his definition of "inside" and "outside" was precisely the same as stated by the Ministry of Transport in The Highway Code. But it has already emerged that there is some divergence of opinion as to which is the inside and which the outside. Let us get this absolutely clear. The Ministry of Transport has stated, not in so many words but by implication, that from now on the outside shall be deemed to be in the middle. This is a conception which is so totally novel that it will be very difficult to get it across to the uninstructed young motorist. I have never met anything, from an orange to a motorway, in which the inside is on the outside and the outside is in the middle. It cannot be done. I suggest that we should go straight back to Rule 60, where it says perfectly clearly that the inside is the left-hand lane, which I say is wrong, and the outside is the right-hand lane. Then one goes on to Rule 61 which says, "choose the left-hand lane", and in the next sentence it talks of "the right-hand lane," without any nonsense about inside or outside. I do not think we need offside or nearside, but I think that we all understand left and right. If anybody is confused about that he will not pass his driving test anyway, so we need not both about him.
I now turn to Rule 147, and may I add a little support to what was said by the noble Lord, Lord Somers, about the picture of the level crossing on pages 32 and 33. He drew attention to the notice which says "Another train is coming if lights continue to flash", and

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he suggested another electrical signal which might displace it or perhaps be used in conjunction with it. Motorists when driving cars are not required to read notices on the right of the road at all; and even if they were, it would be exceedingly difficult for them to read a notice as far off as that. This notice, giving a warning that another train may be coming if the lights continue to flash, is of vital importance. I know that the noble Lord, Lord Winterbottom, has said that this is likely to be reworded, but there will be a sentence of that kind and I submit that it ought to be on the half-barrier, right in front of the driver, where it can be read by him, and not on the right, where he cannot reasonably be expected to see and almost certainly will not see it.
I now have one or two remarks, I hope constructive, about the traffic signs themselves on pages 37 and 38. My noble kinsman Lord Shannon and my noble friend Lord Somers have already mentioned the diagonal lines, and may I support what they have said? If one thing can be cancelled by having a line drawn through it, then why not another? If a line can be drawn through a walking man meaning "No pedestrians", why not have a line through a bicycle meaning "No bicycles"? And in the "No overtaking" sign, why not put a line through the right-hand car, the red one? I think that a sign of that sort exists in France. If one crosses out the right-hand car, it becomes clear to everybody that it means "No overtaking". It also, I think, makes unnecessary the sign on the next page, "Single file traffic". This appears to me to offend against three of my criteria: it is not simple, it is not unambiguous, and it is not necessary. I do not know what "single file" would mean to a foreigner; and perhaps that is not very important, though I think it is important but I am not at all sure what it means to an Englishman. What is single-file traffic? It is made clear what it is, although not very clear, by saying that it is "single file in each direction". What in fact it means is simply "No overtaking". Therefore, would not the "No overtaking" sign be enough, without having this extra sign? I think that it is a plate to be put on some other sign, but I do not see that it is altogether necessary.
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In regard to the matter of roadworks, in the Highway Code one sees "Fred" with his shovel, digging away at a mound of earth. I am all for this sign if it is used sensibly, but when one has got past the roadworks there ought to be a sign. Roadworks ended "—not in the form of a sign saying, "Road clear", which exists on the next page and which must be used only by the police and probably only on motorways, but certainly a sign saying that one has passed those works. The sign that I suggest is to have the same picture of "Fred" and his shovel with a red line drawn through, which would make the matter clear. There is a sign in France which tells you that you have come to the end of roadworks. The point is that once you have passed an obstruction in a road announced in advance by a roadworks sign, you think that they are over; but you may come round the bend and find another one which was covered by the original sign, and that is dangerous. Every single obstacle in the road ought to have a sign which should be cancelled as soon as one has passed it.
I have a personal béte noir and that is the sign that says, "Reduce speed now". I have discovered that my own personal antipathy to this sign is not entirely peculiar to myself. A few days ago I was discussing this debate with a very distinguished motorist of my acquaintance, and indeed of some of your Lordships, and I said that I was proposing to say something about this sign. He said, "Oh, it doesn't bother me. When I see that sign I know that there is another hundred yards before I need slow down". The sign says, of course, "Reduce speed now"; but that comment is an indication of the sort of respect that is given to this particular sign. This offends against practically every criterion I can think of. It is not simply because you do not know what it means; it is not unambiguous for the same reason, and it certainly is not necessary, and it could even be dangerous. What speed am I doing when I am told to slow down. Am I doing 70 m.p.h. or 30? Is it raining? Is there mud on the road, or is it bone dry? What is "now"? Is it when I pass this sign or when I see it? I submit that the sign is totally unnecessary, and I very much hope that we shall see the end of it before much longer.

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I confess that there is one sign which I ought to have known, but did not. I think that it was in the old Highway Code, and I excuse myself only on the ground that I have never seen it. I am enchanted to discover that there are two signs which are identical, except that one has a yellow background and one has a white background. One sign says "Stop: Children" and the other sign says "Stop: Police". Now that I have discovered this, I can hardly wait for the day when 1 am driving down the street and see the "Stop: Police" sign held up by a man in a white coat while a party of "Bobbies" goes scampering and skipping across the road. Perhaps that is rather frivolous. Perhaps it would be more dignified if they were marching tightly closed up together in single file. If only at the same time they could sing the Policemen's Chorus from The Pirates of Penzance, then my cup of happiness would be full. My Lords, I think that I see clearly ahead of me a sign with a red circle and a red triangle inside it and another red triangle beyond it! It reads "Stop—Give Way".
8.0 p.m.
VISCOUNT BRENTFORD: My Lords, I must apologise to your Lordships for not having put my name down for this debate, but unfortunately I did not know whether or not I should be able to be present. Consequently, I shall certainly not detain your Lordships for many moments. However, I want to take the opportunity of congratulating the Government on achieving a very good job in the production of this Highway Code, which is a very great improvement on what has gone before. If one realises the purport and object of the production, and the fact that it is intended to be a source of information both for those who do not drive and for those who are experienced drivers, it necessarily has to cover a great deal of ground and I think it covers it very well indeed.
One thing which I should particularly like to say to the Government is that we appreciate very much the consultation which they had during the course of production of this Code with those organisations who are interested in road user-ship. I think all of us were able to offer quite a number of constructive suggestions, and it is evident that the
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Government have paid considerable attention to them. It was a great disappointment to me to realise that, as a Parliament, we were not going to he able to see the Code in draft. The new suggestion which the Ministry have put before us to-day, that it is proposed in future to publish the draft in the form of a Green Paper, is exceptionally helpful. That will be a very great advantage, because in this debate alone quite a number of exceedingly cons ructive suggestions have come forward, which the noble Lord would probably wish to include in the Code itself.
I would refer in particular to the great matter of dispute as regards inside and outside lanes, on which I agree entirely with the noble Lord, Lord Lucas of Chilworth, and the noble Earl, Lord Cork and Orrery. I had myself spotted the solution in Rules 60 and 61, and I feel that that must be the answer, because there is no doubt that at least 50 per cent. of the people will consider that the outside lane is, in fact, what the Government consider to be the inside lane, and vice versa. But if you refer to them as the left-hand lane, the centre lane or middle lane, and the right-hand lane, it must surely avoid all confusion until we get to the point of six-track highways.
Of course, everything has gone up in price during the past four years or so, but a jump from 6d. to ls. 3d. in the price of The Highway Code strikes one as being slightly excessive. Nevertheless, one appreciates that this is a considerably bigger production than its predecessor. But there is one Point about which I should like clarification. Who is going to subsidise the free issues of this Code? It is being freely issued to those who obtain their provisional licences and also to all those foreign visitors who come into the country. I should like to know whether the subsidy which is going to meet the cost of this provision will come from the taxpayer as a whole or from those road users who buy The Highway Code at the price of 1s. 3d. if that price of 1s. 3d. contains a sufficient margin of profit to enable the free issue to those other classes, then I think it is very unfair indeed. If the Government decide to make a free issue to any particular section of the community they should accept the responsibility for meeting its

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cost out of the general body of taxation, rather than that it should fall to be a burden upon the shoulders of other road users.
I hope that the Government will maintain their programme in regard to the time when this Code will become available to the public generally. It has been stressed that it has been overdue for a very long time. I hope, too, that the Government will do their best to have much more speedy revisions and not take nearly such a long time before bringing out another edition. I am sure that would be a very good thing.
There is only one other question which I should like to ask the noble Lord, and that is with regard to the front cover. I noticed in the chart of signs that the sign on the cover is the one which indicates that a motorist is to keep left. May I ask whether there is any political significance in the cover?
LORD NUNBURNHOLME: My Lords, I hope your Lordships will not mind my intervening at this late hour, but there is one point which I should like to make. The rules for pedestrians are too few. There should be a Rule 22 which reads:
"You must not be drunk in any highway or public place."
I mention this matter of drunkenness of pedestrians because I myself was once affected. Thirty years ago I ran over and killed a man, and after three days at the law court it was proved that he was a drunkard. Increased penalties for being drunk on the road are well worthy of consideration by the Minister of Transport, and I ask the noble Lord, Lord Winterbottom, to mention that point to him.
8.7 p.m.
LORD CHESHAM: My Lords, I feel that I should perhaps apologise to the House that my name went down on a list which did not reach everybody. Nevertheless, I happily give way to my noble friend on this score. There are two reasons why I do not want to follow other noble Lords into criticism or otherwise, or comment in some detail, on the contents of the Code. They are, first, that I am one of the fortunate people who were involved in consultation with the Ministry,
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the R.A.C. being one of the bodies consulted. So I have had some opportunity to have my say in detail, and repetition is useless. But I should like to join in what my noble friend Lord Brentford said about the quality of these consultations, because, let us be fair, I have been critical of some aspects of consultation with Government Departments in the past, and it is only right that when something has gone well I should say so.
I, too, am very glad to see the inclusion of certain matters that we put forward, certainly with regard to roundabouts and the new signs for direction indicator signals, and I think we have both been able to be helpful on this occasion. I should point out that this little motif on the outside, to which my noble friend has drawn attention, is not of my doing, although it is of course a fairly familiar emblem on the outside of a number of R.A.C. publications. I disclaim that, as I also disclaim any influence in the little sign at the bottom right-hand corner of page 39.
The second reason why I am not going into detail is that our debate, though useful and informative for the future, is academic at the moment because, whatever may be suggested, we cannot change the contents of the Code. We are asked to approve. We can reject it or accept it. Therefore, I was most happy to hear the noble Lord, Lord Winterbottom, confirm what the Minister of Transport said last night in another place, that immediate consideration was to be given to revising the system. I certainly agree with him that there should be no question of holding up this new edition, which is required after so long, while this consideration takes place. Too much has gone on and there is too much requirement for that, although it has to be admitted that it is in some ways a pity that the Code has to go ahead with a number of things in it which we should have preferred to see changed.
I hope, however, that this consideration of a better system for the future will really be immediate. I shall look forward to communicating in due course, either with the noble Lord or with the Minister, on some ideas with which I will not waste time now. But I should like to say just this. I hope that, in that consideration which is to come, it may be possible to examine whether

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arrangements can be made so that the Minister of Transport will be able to alter part of the Code without having to come back to Parliament. I have in mind in particular the question of signs, which he can in any case authorise by regulations, subject to the normal scrutiny by Parliament. It seems to me that even if a new Code is to come out in two or three years' time it may be necessary to change some signs (I have particularly in mind the automatic half-barrier crossing sign, and there may indeed be others) well before that happens, and I feel it should be possible for changes of this kind to be made whenever there are reprints. I think it might even be worth considering whether it is possible to provide some kind of correction slip, preferably adhesive, which could be stuck in the Code in lieu of a natural reprint.
I think this brings up the point of the necessity for widespread and powerful publicity because, apart from signs and things, there will inevitably be in the future, as has proved to be the case in the past, many new developments starting before there is another edition of the Code. I hope, therefore, that the Government will take all necessary steps to ensure that everything possible is done—a point has been made particularly with regard to "X-ways"—to bring this to the attention of those who need it.
The noble Lord, Lord Winterbottom, said quite rightly that it is a requirement for everybody, on renewing his driving licence, to write "Yes" in the space provided for the answer to the question, "Have you read The Highway Code?"—and he gave us impressive figures on the distribution of the Code in very large quantities, running into millions. I am sorry to say it, but it is my personal belief that that writing of "Yes" on the driving licence application form is probably the biggest instance of mass perjury in our national life. And it has to be admitted that, notwithstanding all this, The Highway Code will not reach a great many people; neither will those that have the chance bother to read it. This brings out the necessity for propaganda activities in this connection, to ram it down the nation's throat if necessary; and I hope the noble Lord may be able to say something about that when he comes to wind up the debate.
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The noble Lord also mentioned the question of automatic half-barrier crossings, and I was glad to hear him say for the Government that they had taken up what the Hixon Tribunal had recommended. We, of course, have had regard to what the Tribunal said in regard to national publicity, that this should be pursued
"to the extent thought most effective with the aid of the motoring organisations".
We are certainly quite prepared to do our best. My noble friend Lord Brent-ford mentioned this point, and it may be that he will want to say something more before I sit down. We tried hard 0 help by issuing a map containing advice and showing the location of all these things, but it has to be admitted (and I feel that here my noble friend may agree with me) that under the impact of S.E.T., and things like that, we are simply not in a position to support the Ministry over these matters in the way we should wish However, I welcome what the noble Lord, Lord Winterbottom, said—that sound education of the public is the best answer to this—and I hope very much that it is going to be really sound and, as with the other point I have just made, really powerful and effective.
My Lords, there is just one point arising from the Code which I should like to mention, and that is the traffic sign illustrated in the bottom left-hand corner of page 38. That is the sign depicting a level crossing with automatic half-barriers ahead. The sign itself is referred to variously, according to, taste, as "The hammers of Hell" or "The low-flying tin-tacks", whichever you choose. It is, of course, the sign which came in for so much criticism by the Hixon Tribunal, and I am rather sorry to think that it should go into the Code at this stage, although I appreciate the difficulty of taking it out because the matter is not decided. But I hope that the Government will not hold back on the speed of their decision and that it will be possible to amend the Code in future reprints in respect of this sign, which is now known to be, or has been pronounced upon as being, dangerous and ineffective.
My Lords, I have not much more to say, but on this point of education by means of propaganda I feel that I very good point was made earlier on (I think

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the noble Lord, Lord Winterbottom, himself mentioned this) about the necessity to preserve gaps between cars. Education by propaganda means is urgently required here, because at the present time if you drive at the correct distance from the car in front it will instantly be filled up by a couple of minis. There is no effective means of stopping this except by education, and I hope that this is what will happen.
There is another curious thing which has been completely omitted from this Code and which I should think is a great cause of confusion, particularly to less-experienced drivers. That is what I can only describe as the police "pointing" signal. That is the signal frequently used by policemen on traffic duty—it is widely used in London and, so far as I know, everywhere else—when they are about to halt the traffic. They point at the car they wish to halt and then put their hand up. It does not say anything about that in the Code. Also, it is a questionable signal at best, because if a policeman points his finger at somebody and you look you can see that finger pointing, but when you have it pointed at you all you see is a little blob and you cannot be quite sure what he means. I think there needs to be clarification on this point. This practice has crept in and is now very widespread. But, as I say, it is not mentioned here in the Code. I feel that at the earliest opportunity this practice should be regularised. Either it should be accepted as an official signal or the police should be stopped from using it, because I think it could very easily lead to a prosecution for ignoring a signal given by an authorised person.
My Lords, I think the noble Lord was quite right when he said that we shall see another edition of the Code in a couple of years or so, plus a little administration time, because I think that the present Congress sitting in Vienna will probably throw up something which will make it necessary. In the meantime, as an interim effort, though there are still a few details that need putting right, I wish it well.
8.20 p.m.
LORD SWANSEA: My Lords, I should like to intervene briefly, with apologies for not having given notice. I wish to
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take up one or two points and in particular one mentioned by the noble Lord opposite and by my noble friend Lord Chesham, namely, that of separation distances. It is obvious that there is room for a great deal of further education of drivers in keeping the correct distance from the vehicle in front. May I put forward for the Government's consideration a scheme which I have seen in operation in New Zealand? There, on certain roads, they have transverse lines painted on the road at intervals of so many feet. There is a notice at the roadside to the effect that the spacing of these lines is the correct spacing for vehicles travelling at, say, 40 miles an hour. I have never seen anything like that in this country and I think that its adoption would be worth considering. I put it forward to Her Majesty's Government in that spirit.
The question of driving in fog has already been dealt with fairly fully. I had intended mentioning that, having had only this morning a long drive from mid-Wales in varying degrees of fog. I was appalled by what I found in the way of lights, or lack of them, on most of the vehicles. I hope that Her Majesty's Government will use every means of publicity at their disposal to bring home to people the absolute folly—there is no other word for it—of driving in thick fog on sidelights alone. Part of the trouble arises from the term "sidelights". We ought to consider them purely as parking lights and to call them parking lights. I hope that we shall eventually see the day when if we see a vehicle with its sidelights (or its parking lights) on we shall know that that vehicle is stationary, and if we see a vehicle with headlights on, dipped or not, we shall know that the vehicle is moving. I am sure that that is the eventual answer that we shall come to. I am convinced of the value of having dipped headlights on all moving vehicles, even in built-up areas with street lights. One way in which we can start in that direction is to stop calling those silly things "sidelights" and start calling them "parking lights" instead. People will then be less tempted to rely on them alone when the car is moving.
My noble friend, Lord Cork and Orrery, mentioned people who do not know and think that they do. A far greater number on the roads are people

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who think that they know better; people who think that they know better than the painstaking draftsmen, for instance, who produced this booklet; people, in short, who invent their own signals. They are one of the biggest menaces on the roads to-day. Now that flashing direction indicators are being used more and more, people are using them for all sorts of purposes for which they were never intended. They are forgetting about hand signals altogether. A very widespread and pernicious practice is that of switching on the left side or nearside indicator to show that they are ready to be overtaken. About half the drivers I meet on the road—or half of those that I overtake—do that. It is bound to cause some confusion if you use a mechanical signal for more than one purpose. I even know drivers who use the right indicator for the same purpose, which is even worse. Here again, I hope that Her Majesty's Government will use all the means at their disposal to bring these lessons to the driving public.
There is one last, small point on behalf of visitors from abroad. So long as we continue to drive on the left side of the road there will be differences in practice between this country and the Continent; and I think some guidance is necessary for foreign visitors coming here. A short time ago I needed to get something of that sort for a girl who was coming to us and who spoke no English. I went to the A.A. and asked if they had any digest of The Highway Code in either French or German. No such thing! I hope that the Minister of Transport will produce some sort of précis of the traffic regulations in this country in other languages for the benefit of foreign visitors.
8.27 p.m.
LORD WINTERBOTTOM: My Lords, is a very strange experience to take part in a debate where Her Majesty's Government are almost constantly praised by all speakers. It brings a slight air of unreality to our proceedings. But may I say how grateful I am to noble Lords who have spoken so constructively about this particular new publication, or old publication in a revised form, and also for the congratulations which they have given to the devoted men and women who have produced this booklet? I think personally that it is an excellent piece
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of work and I know that your Lordships' congratulations to them will be appreciated.
Incidentally, I do not believe that there is any specific significance in the fact that the arrow on the cover is the "Keep Left" sign. Mine seems to have grown red—which perhaps makes it "Keep even Letter". But it is good typography, I am advised, pointing to the title of the booklet. There is another strange experience that I have enjoyed to-day: the pigeon post has been working very effectively throughout. It has indicated that the noble Earl, Lord Shannon, has come up with an idea that people have not as yet thought of. The suggestion that he has made about a different type of hand signals at a zebra crossing is, apparently, a new one and will be considered by the Ministry. May I congratulate him on the originality of his thought? The noble Lord, Lord Somers, suggested a sign of this type and I think that this is obviously sensible. As to the situation of pulling up at a crossing, and at a zebra crossing, where some such sign is needed, it is not as difficult as noble Lords make out—inside, outside, left hand, right hand. If you read the booklet carefully enough it is fairly clear. The passage about horses is a little obsolete now—
THE EARL OF CORK AND ORRERY: My Lords, I hope the noble Lord will forgive me for interrupting: but is "fairly clear" clear enough?
LORD WINTERBOTTOM: My Lords, the noble Earl is most precise. A thing is either clear or not clear. I am glad that he has reminded me of this fact. Incidentally, as noble Lords may know, there is a fairly substantial debate to follow this discussion, so I hope that noble Lords will forgive me if I do not attempt to deal with all the points which have been raised. They will, of course, be studied by the officials. We shall all agree that it is not too early to start considering the next edition. The Minister has said that in two years' time we are expecting to start work on the successor to this document if not to bring it to a final form, so I think it would be wise, while this debate is fresh in people's minds, if organisations like the British Horse Society and the Cycling Council of Great Britain, and those noble Lords who have put a lot of hard work and

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thought into this matter, started to feed ideas into the Ministry of Transport now.
I should like to make one or two points which I think of importance. The noble Lord, Lord Chesham, who courteously apologised for having to leave before the end of the debate, said that one of the major causes of mass perjury in the country was the need for people to sign a piece of paper when they applied for a driving licence, stating that they had read the Code. In fact this is no longer required, so we need no longer perjure ourselves in that way. The noble Lord, Lord Chesham, also said that publicity for the contents of the document was more important than the need to perjure ourselves by signing a form. There is to be a widespread campaign about its contents conducted by the Ministry of Transport, and I think that that is the best way to get the contents known by as many people as possible.
The noble Viscount, Lord Brentford, made an important point about price. This links up with what other noble Lords have said about the size of the document. It is really a combination of two documents, the old Code and the old publication on traffic signs. Sold separately, they would each have cost one shilling. Printing costs have gone up, and so I think that the price of 1s. 3d. for this publication is not unreasonable. The noble Lord, Lord Swansea, mentioned the problem confronting foreigners who could not read the Code. The main points of the 1959 Code were contained in leaflets printed in French and German which were given to visitors from overseas. Probably on the occasion to which the noble Lord referred the supply of copies had run out. I am sure it is important that there should be a précis of this document in French and German, as there was of the 1959 publication. Incidentally there are leaflets in Hindu and Urdu, which is not unimportant today.
Suggestions have been made about a special précis for children and for learners. I think this is a good idea. There is in fact a very good publication for children. It was produced for deaf children, but was so good that it is used for general distribution to children of six to twelve years of ago. It is profusely illustrated and it has proved useful. I have no doubt that the suggestions
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made for special extracts to be taken from this document will be considered by the Ministry of Transport.
My Lords, I have only two other points to make. Various noble Lords spoke about the use of side-lights on motor vehicles. In fact it is made clear in the Code that when there is fog it is headlights which have to be used. Paragraph 94 says:
"Use your headlamps in day-time mist or fog or if the light is bad…".
The other point relates to the barrier at level crossings and the existence of a flashing light indicating that another train is coming. This is one of the important elements under consideration—whether a different sort of light or indication should be given, for the benefit of someone standing at a half-barrier halt, that a second train is coming almost immediately. The positioning of the present sign is not, I think, so important. A few vehicles standing in line at the barrier would mean that there would be plenty of time for a driver to read a sign on the right hand side of the road. I am certain that the designer working on a revised lay-out of the half-barrier will consider the points which have been made by noble Lords.
As I said earlier, my Lords, we have another important debate to undertake. May I thank noble Lords for their courtesy and for their constructive analyses. I know they will be noted by the various individuals in the Ministry of Transport who I am certain are already preparing the next edition of this Code.
On Question, Motion agreed to.

RIGHTS OF MINORITIES IN NORTHERN IRELAND
8.36 p.m.
LORD REAY LORD REAY rose to ask Her Majesty's Government whether they will inform the Government of Northern Ireland that unless radical reforms are soon enacted by the Northern Ireland Parliament to eliminate discrimination against religious and political minorities, action on this fundamental question by the United Kingdom Parliament will become inevitable. The noble Lord said: My Lords, I should like to start with a two-fold proposition; namely, that the situation in

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Northern Ireland, both the underlying situation and the current situation, is such that for the reserved powers in the Government of Ireland Act to have any meaning Parliament at Westminster must be entitled to debate this subject, not just in this House, but also in another place, where at present Members of Parliament have been prevented from debating it. Secondly, unless the Government of Northern Ireland rapidly removes the causes of discontent in that country, it must be proper for the Government of this country to take the initiative.
No attempt has been made to deny that the situation in Northern Ireland is serious, even by the Government of Northern Ireland. When they produced their promises of reform on November 22 they said:
"Unless the situation is stabilised and political action restored to constitutional channels there is a grave risk of still more serious disorders."
Yet a week later, after promises of reform had been made, a senior police officer is reported as saying, referring to the events of last week-end in Armagh:
"Yesterday was the most potentially dangerous situation we have had since the present unrest began."
And again:
"It could have been the beginnings of civil war in Ireland."
In other words, the situation is potentially critical to law and order, despite the recent announcements of reform, and in so far as the life and liberty of subjects of the United Kingdom are the concern of this House it must be our business to debate this subject and to recommend action, if we choose, to Her Majesty's Government.
My Lords, before going on to discuss the causes of the discontent I should like to say something about the relationship between the Government of Ireland and the Government of this country. To start with, I should like to read Section 75 of the Government of Ireland Act, 1920. Since the only copy I could get in this House is an uncut version, I may be right in supposing that some of your Lordships, at least, are not familiar with its terms. Section 75 says:
"Notwithstanding the establishment of the Parliaments of Southern and Northern Ireland, or the Parliament of Ireland, or anything con
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tained in this Act, the supreme authority of the Parliament of the United Kingdom shall remain unaffected and undiminished over all persons, matters, and things in Ireland and every part thereof."
So it will be seen that the terms are very wide.
In the ordinary business of the year-to-year management of the economy there is of course a great deal of concealed, but very real, direction of the affairs of Northern Ireland by the Government in this country. The word "direction" is not a very good word, but what I mean is something more than influence and something generally less than coercion. The strength behind this direction lies not only in the legislative function of Westminster in relation to the North of Ireland, and in the exclusive responsibility which the United Kingdom Government has in the fields of defence and foreign policy, but also on the dependence of that country on United Kingdom subsidies. They are difficult to assess but must be something between £50 and £100 million a year.
But beyond the question of economic management there is a more important principle which is recognised—namely, that parity in legislation should exist between Westminster and the North of Ireland in those fields affecting the fundamental rights and obligations belonging to citizenship of the United Kingdom. It is accepted that parity should exist, and does exist, in the fields of taxation and of social welfare. Surely if it must exist in these fields, it should also exist in the field of political enfranchisement which touches even more intimately on the description of United Kingdom citizenship. Is not political equality involved in the very description and structure of citizenship of the United Kingdom? For what we are talking about is a case of political inequality which has gone on so long that it has become a matter of scandal and has produced resentments that have become a threat to public order.
The history of bitterness, of the prejudices and the antagonisms of and between the two groups in Northern Ireland is as long as the history of Ulster itself, but I am sure they have become much less than they once were. But inequalities in the present structure of local government simply allow those

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past antagonisms and prejudices to be perpetuated. Moreover, they have another undesirable effect. There is an all too long tradition, both depressing and dangerous, of minority Parties and interests in Northern Ireland not contesting elections. This is only another reflection of the reasons that produce violence in the streets. Both derive from the minorities' certainty that they cannot get justice under the system as it now operates.
The two principal inequalities in local government are these. In the first place, suffrage is not universal. In local elections only about 75 per cent. are enfranchised. Voters need to be the legal occupiers of their places of residence. This is an inequality against the poor and the young, and it is intolerable in itself. But it leads to a further and worse abuse, in the siting and allocation of houses. The allocation of houses is in charge of the councillor of each ward, and the practice that has sprung up is to pack the voters who are of a different allegiance to your own into that ward which you are bound to lose. This practice is called gerrymandering, a term which derives from the practice of the Irish in Boston. An example of the effect of this is found in Londonderry, where so many houses have been sited in the one Catholic ward that it has a density of 125 persons per acre, compared with a density of 25 per acre in the Protestant wards.
The second practice which has grown up is that where a family do not have a vote, because they have never had a house, they may be kept indefinitely on the waiting list for a house. So that in order to deprive a family of a vote they have first of all to be deprived of a house. The principal effect of all this is to provide Protestant majorities in predominantly Catholic areas. Londonderry has a Protestant minority of 30 per cent., yet there is a majority of 12 to 8 on the local council. But this is not just the effect; it is the purpose of these malpractices. These are the two chief electoral grievances. Others, such as the business vote, are much less important. But clearly there is a broad field in which discrimination is practised. It exists in employment, both public and private. The proportion of Catholics in prominent
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positions on public bodies is much lower than the proportion of Catholics in the country. Here I should like to refer to a report which has been produced by a Committeee of the Society of Labour Lawyers, who have amassed considerable evidence of discrimination. At this moment it has been sent to the Government of Northern Ireland, prior to general publication. When it is published, I think that discrimination will be even less deniable than it now is.
My Lords, I want to make one other point. Section 5 of the Government of Ireland Act declares that any law made so as (among other things) either directly or indirectly to give a preference, privilege or advantage, or impose any disability or disadvantage, on account of religious belief shall be void. Accordingly, I should like, in all seriousness, to raise the question of whether an electoral law which enables the practice of discrimination on religious grounds, as we have every reason for concluding now exists in Northern Ireland, should not itself be considered or be ruled void under the terms of the 1920 Act. Secondly, even if a legal interpretation is found against the point I am making, I suggest that the discrimination is so patently against the spirit of the Government of Ireland Act, and evidence for its existence is so abundant, that the Government of the United Kingdom is not only warranted but by its responsibility in relation to Northern Ireland under an obligation to demand that this should be investigated and remedied to its own satisfaction.
On November 22, the Government of Northern Ireland announced considerable concessions. In the first place, they said that houses would in future be allocated on a points system, as is done here. Secondly, they promised reform of local government by 1970. In addition, they announced the removal of the business vote, a colourful but relatively unimportant anomaly, and the establishment of an Ombudsman (though they did not include any reference to local authorities and local affairs), and the setting up of a Development Commission for Londonderry, which to some extent was an admission of failure of local authority government. The announcement on the reform of the housing allocation is extremely welcome. Obviously, we do not

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know how the points system will work, or how it will be made to work. We shall have to wait to judge by its effects. Moreover, we do not know whether there will be any difficulty in getting local authorities to accept it. Indeed, there is a report that one council has already refused to adopt the system.
In the 1967 White Paper on Local Government Reform, the Government of Northern Ireland managed to discuss the question without once mentioning franchise reform. So the proposal as it stands is too distant and too vague. But the worst omission of all from the Government's announcement is the refusal to include universal suffrage in local elections. This is something much too closely related to the malpractices in local government and much too widely demanded for its own sake to be ignored now. Moreover, there seems to be a certain distrust of the Government's intentions which has not been assuaged by the announcements of reform. Even the proposed Commission in Londonderry has been feared in some quarters as likely to be a device for removing economic control of that area against the day when Catholics acquire a majority in the area.
The Government of Northern Ireland has certainly shown itself at least responsive in some measure to the minority demands, but the proposed reforms come at a very late hour, and they are not yet enough. We all know that the Government has to contend with strong pressure, but for decades the Government line has been simply to deny that there is any malpractice, any discrimination, any need for reform at all. The Government will concede to pressure, but only to pressure; and we are therefore calling on the British Government to apply that pressure on behalf of the minorities in Northern Ireland. In conclusion, I would say that this Government should demand that universal franchise be introduced into local government; that machinery should be established to put an end to religious discrimination, and that this machinery be sufficient to satisfy the British Government. That Government should, in short, demand that Section 5 of the Government of Ireland Act be implemented and the spirit behind it honoured, and that the
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principles of management and franchise be brought in line with those that operate everywhere else in the United Kingdom. In doing this, my Lords, Her Majesty's Government would not be exceeding their powers; they would be discharging their duty.
8.51 p.m.
LORD RATHCAVAN: My Lords, I do not know what connection the noble Lord, Lord Reay, has with Northern Ireland or whether he knows it well or not, but I have grown up and lived with the Irish question all my life. I am against discrimination. Whether or not it exists in Northern Ireland, I cannot say. I should like to say a word or two about recent history connected with Ulster. It will only be the older Members of your Lordships' House who will remember the Ulster crisis of the days immediately before the First Work War: the signing of the Solemn League of Covenant; the raising of the Ulster Volunteer-Force; the mutiny at the Curragh, when numbers of British officers sent in their resignations rather than be ordered to go North towards Ulster. They had the support in those days of the whole of the Conservative Party in this country under Bonar Law, himself an Ulsterman. This brought Britain to the very fringe of civil war, which was checked only by the outbreak of the World War.
The point I want to make is that at that time Ulster was not struggling to obtain self-government. She did not want self-government. Ulster wanted to remain governed by this country, as it had been governed since the Union for 120 years. When she failed to achieve that she agreed as part of the general Irish settlement to accept a Parliament and Government which she did not want. That is the historical background.
We are now debating a Question which asks for action by the United Kingdom Parliament on the fundamental question of discrimination against the minority. The noble Lord, Lord Reay, did not seem to me to suggest what action he thought should be taken. Would he, for example, like Ulster to go back to the old situation and be governed again by this country, abolishing the Parliament and local government? Let me look at that suggestion for a moment

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and see what it would mean. It would mean increasing Ulster Members here at Westminster from twelve, as they are at present, to twenty-six. All Ulster services would have to be operated from Whitehall under a Minister, presumably a Chief Secretary for Ulster, as there used to be a Chief Secretary for Ireland. But after fifty-five years of self-government would Northern Ireland now accept this solution to be governed again directly by Britain as she was? I doubt it.
After Southern Ireland cut all connection with Britain in 1948 and became an independent Republic, Mr. Attlee, who was then Prime Minister leading a Labour Government, in the other place on October 28 of that year said:
"The view of His Majesty's Government has always been that no change should be made in the Constitutional status of Northern Ireland without Northern Ireland's free agreement."—[OFFICIAL REPORT, Commons, 28/10/48; col. 239.]
After all, Britain governed Ireland for 120 years, and I do not think anybody could say that that government was particularly successful. In the days of Mr. Gladstone, before he became converted to Irish Home Rule, coercion Bill after coercion Bill was passed in the British Parliament. Crimes Acts were passed and terrible things happened, like the occasion somewhere in County Cork—I think it was in a place called Mitchelstown—when the police were sent in to restore order and when they fired their rifles and killed a number of people. That was when Britain was governing Ireland. It is not, I am afraid, a very creditable record.
What else could you do? Would the noble Lord suggest, for example, that we should apply sanctions, like sanctions are now applied to Rhodesia? Would that help the minority in Northern Ireland, where unemployment is already especially high? I do not think it would. Under the financial clauses of the Government of Ireland Act, all the main taxes which the Ulster people pay are imposed, levied and collected by the British Treasury, and the Northern Ireland Government has power over only a very small section of the taxation field. Income tax and customs and excise, which are the main sources of taxation,
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are collected by the British Treasury. Then there is a body called the Joint Exchequer Board, and the Northern Ireland Minister of Finance meets representatives of the British Treasury. They meet periodically and allocate revenue as between Britain and Northern Ireland.
I should like to say a word now about the minority in Northern Ireland, to which the noble Lord has referred. I do not say this in any way because I think the minority should be badly treated: I think they should be treated exactly the same as all the other people in Northern Ireland. But certain things about that minority must be remembered. You cannot dissociate them from the constitutional issue, because their whole raison d'étre is to abolish partition, to end Ulster's position in the United Kingdom and to bring her into the Irish Republic. That is the well-known aim of the Nationalist minority in Northern Ireland. To go into the Irish Republic, Ulster will never consent to do.
I am not suggesting that all the members of these recent Civil Rights marches were Nationalists, but quite a number were. For instance, in the march in Londonderry on October 5 the leaders of the Civil Rights marchers were two or three Nationalist Members of Parliament. Also, it must not be forgotten that for six years, from 1956 to 1962, Ulster was savagely attacked by armed bandits of the Irish Republican Army based on the Republic. They burnt Customs posts; they attacked police stations; they attacked British Army camps, and in that campaign six Ulster police were murdered and over £1 million worth of property was damaged. It was largely that campaign by the I.R.A. which led to the passing of what is known as the Special Powers Act, which gave to the Northern Ireland Government power to detain without trial and other powers of that sort, because, by reason of intimidation, nobody could get any witness to come against those who were charged. That Special Powers Act, as noble Lords no doubt know, is still in operation. I understand that if things are made peaceable it is likely to be very much modified in future.
Now I come to another point which makes the position much more difficult in Northern Ireland, and that is the

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action of a Presbyterian Minister named Mr. Ian Paisley. Mr. Ian Paisley leads a band of militant and extreme Protestants, and whenever a Civil Rights march is going to take place he brings his people—he did it in Londonderry; he did it in Armagh two days ago—joined, as I saw in the Press, by special contingents from Scotland, and I think he is largely supported by funds from the United States. He comes to these cities where the Civil Rights marchers are having their march and creates a situation in which there is likely to be serious fighting between the one group and the other.
I do not believe that Paisley commands any significant support among the people of Northern Ireland. If a referendum were taken to-day, I am certain that there would be a very large majority indeed for moderation, which, as noble Lords know, has been the theme of the present Prime Minister of Northern Ireland, Captain Terence O'Neill, who has, ever since he took office, persued a moderate and liberal line. But these followers of Paisley are 400 years behind the times. One hardly dares to contemplate what took place in this country, in England, 400 years ago when the main theme of life was Protestant v. Catholic for 200 years; when Roman Catholic priests were dragged through the streets of London on hurdles and hanged, drawn and quartered just because they were Roman Catholic priests; and Protestants like Latimer and Ridley were burnt at the stake just because they were Protestants. That took place here 400 years ago. But, of course, all that has long ceased in this country, and I believe that it is now on the way out in Northern Ireland.
The noble Lord, Lord Reay, referred to the reforms which have already been announced by the Northern Ireland Government. I expect the noble Lord, Lord Stonham, when he replies, will probably refer to them, so I do not propose to go into them in detail at the moment, but, broadly speaking, these reforms have been approved by Liberal and Nationalist opinion in Northern Ireland; and they were notably approved the other day by the Liberal Member in the Northern Ireland House of Commons. Miss Shelagh Murnaghan. The outstanding thing that has not been dealt with is the local government franchise, to which the noble Lord referred. Of course, the position there is
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this. The local government franchise which now exists in Northern Ireland is exactly the same as that which existed in this country up to the time when Mr. Attlee's Labour Government in, I think, 1948 changed it and introduced "One man, one vote." But in Ulster it vias not changed. I do not know whether it is suggested that Northern Ireland should follow slavishly everything that is done in this country, particularly when there are Governments of different complexions. There was a Labour Government here and a Conservative Government in the North of Ireland. Be that as it may, I personally think it ought to be done and that we ought to give the same local government franchise in Northern Ireland as we have here—one man, one vote. I think it will be done, but it may not be done to-morrow.
In view of what has already been done to meet the situation, surely these Civil Rights marchers should call off their demonstrations. But if they are going on and are to be opposed on every occasion by Paisley's band of extreme Protestants, then in my view consideration should be given to this. There are in Northern Ireland units of the British Army which are always stationed there, and I should have thought there was something to be said for the civil authorities there approaching the military authorities with a view to bringing in troops to prevent disorder if it is likely to arise.
I can remember, many years alp now, fortunately, when there were serious Protestant versus Catholic riots in Belfast. It must have been at least forty years ago. The Army was called in and troops were picketed at various points in the city, and they prevented a great deal of bloodshed. After all, when there were Civil Rights marches recently in the United States of America the National Guard was called in. If these disorders go on and if these Civil Marches continue it may well affect the remarkable industrial development which has taken place in Ulster in recent years, because people may think that it is a country of disorder and it will be unwise to establish their business there.
As noble Lords know, the two main industries in Ulster used to be shipbuilding and linen: shipbuilding by the two great firms of Harland and Wolff (which still goes on) and Workman and Clarke,

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who have now been wound up for several years. But both those industries have declined and numbers of people who used to be employed in them are no longer so employed. The Ulster Government have done a remarkable job since the last war. I have obtained certain figures from the Northern Ireland Government Office here in London, Since the end of the last war 65,000 new jobs have been found. Industries have come in, one may say from all over the world. There is the great Du Pont industry of the United States of America and also Chemstrand of the United States, which both make some type of nylon and give a great deal of employment. The Michelin Tyre Company from France is established in Ulster; the British Enkalon Nylon factory from Holland is also established in that country, and of our own big concerns, Courtaulds, I.C.I. and Rolls Royce all have big establishments in Northern Ireland, and many other smaller firms have come in. I understand that there are ten new projects, recently finalised, which are going to Londonderry and which are expected to give jobs for 2,000 people.
The credit for getting in all these new businesses and firms must go to the Ulster Government, and particularly, I think, to their Minister of Commerce, Mr. Faulkner, who himself has travelled all over the world to get new industries—the United States, Germany, France and all over Europe, with, as your Lordships realise, great success. Nevertheless, it is well known that the rate of unemployment in Northern Ireland is high. In spite of that, I think it can truly be said that Ulster is now a prosperous community. The advance in the standard of living there during my lifetime has been almost unbelievable, and in this economic climate all sections of the community have benefited, both majority and minority alike.
9.15 p.m.
THE EARL OF GOWRIE: My Lords, I wish to make it clear that in giving support to the Question of my noble friend Lord Reay I am speaking entirely for myself. The noble Lord, Lord Rathcavan, wished to know what connection Lord Reay had with the North of Ireland. I cannot tell him that about my noble friend, but, as I say, I can
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speak for myself. I happen to be a resident of the Republic of Ireland. I in fact live on the Curragh, where the mutiny referred to by Lord Rathcavan took place. I was brought up in Donegal, which is now in the Republic but was part of the old Kingdom of Ulster, and I have just discovered, more or less to my alarm, that I am the owner of slum property in Londonderry, very much in the condition of the crowded wards which my noble friend has described, and I have been taking steps to find out exactly what anomalous position that puts me in. I am, politically speaking, a fan of both Captain O'Neill and Mr. Lynch the Republic's Taoisach, but I try not to let these things and my natural affection for all Ireland and Irishmen influence me too much.
It is as a Member of your Lordships' House, and the role, the often ambivalent role, of the British Parliament in these matters, which leads me to take a very little of your Lordships' time. I feel that time is the essence of my noble friend's Question. As I understand it, the desire of both Front Benches, both here and in another place, is to acknowledge the very considerable progress made by Captain O'Neill and not to interfere with it by interfering with him. He has done wonders which only a longtime pub-crawler in both Londonderry and Belfast could tell your Lordships about, were the hour not very late and your Lordships perhaps rather dry. He has made considerable dents in the uncivil (in its fullest meaning) political anomalies to do with the multiplicity of business votes and with the construction of local political boundaries. Left to himself—and he has appealed to Her Majesty's Government to leave him to himself—he would undoubtedly do much more.
The trouble is, will he be left to himself? Your Lordships will be aware of two modish phrases, "Revolution of rising expectations" and "Revolutionary backlash". Their modishness cannot take a slight chill from them. Both forces, in my experience, are at work in Northern Ireland, and each is the other's lines of supply. The persons and property of the innocent and not so innocent have already been caught in a dangerous field between these two poles, and the

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danger is on the upswing in Londonderry, Belfast and now Armagh. Whatever its political complexion, Her Majesty's Government raises taxation in Northern Ireland, and though the economic traffic is not merely two-way but altogether favours the smaller country, as it should, the raising of taxation is a political privilege which goes with extreme political responsibility. The bedrock of responsibility is care for the citizen, and events in Northern Ireland suggest that local political control is less capable of this care because less sympathetic to the needs of its citizens.
How long must our Parliament wait? How much violence—and your Lordships have been told about violence or read about it—is needed before a little pressure, a little real interference, comes into being? My right honourable friend Mr. Grimond, lost leader of my noble friend Lord Reay, got into hot water himself last summer for suggesting that on the whole violent agitation did, regrettably, pay a few dividends. Will Ulster prove him right after all? In spite of my "revolution of rising expectations". I hope and believe that if Westminster makes clear to Stormont, and Stormont makes clear to its electorate. that the basic electoral reforms will go through, are going through, are subject neither to filibuster, gerrymandering, or less subtle modes of pressure, then, and only then, will there be a reasonable chance that the problems of Northern Ireland will be settled elector-ally: that is, reasonably: that is, as we all hope, politically.
In another place recently Mr. Maudling suggested that the question of Ulster be debated, if only because the Republican Labour Member for Belfast West, in the course of making similar representations to the Speaker, had slipped in a few blows below the belt. Mr. Maudling wanted these blows to be answered, though not in kind. Let me at least urge on noble Lords more influential than I am that we undertake a full debate in both Houses on the Ulster question and that we undertake it quite soon. I insist that such a debate might clear the air of those buried allegations of violence, malpractice and time-serving which so often give rise to the very actions they deplore.
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I insist that such a debate would be no disservice to Captain O'Neill and no slur on a man with the courage of his own moderation. I suggest that it would also be politically honourable to debate Irish affairs at a moment when, due to Her Majesty's Government's import deposit manœuvre, the Republic is rather suspicious of our political honour. The crucial fact is that we may want the red hand of Ulster to remain politically the symbol of Northern Ireland; but vie certainly do not want a messy and less symbolic red on our own hands.
9.22 p.m.
THE EARL OF ENNISKILLEN: My Lords, I should like to start by thanking the mover of this Question for giving us an opportunity to say some of the things that I think ought to be said, and many of which have indeed already been said. I would particularly refer to the speech made by the noble Lord, Lord Rathcavan, who has, I think, most adequately filled in for your Lordships the general history and some of the details. I should like also to congratulate the noble Earl, Lord Gowrie, on his balanced approach to what is a most difficult problem.
The noble Lord, Lord Rathcavan, has been brought up in Ireland, and has known it all his life. I have not that advantage. But I have the advantage that I was brought up there as a child; I lived there for a considerable period of time, and I have returned there again, this time with perhaps some more responsibility than I had when I was young. I am not a particularly old man, but I can remember the day when we had no motor car. I well remember coming from school on a terribly slow train and being met with a horse and carriage; and I think I am correct in my memories when I say that we certainly did not have a car until somewhere around 1930.
Ireland is miles behind this country, and I must say that I think the responsibility lies here. I should also like to say that I feel that the best way we can help in this situation is to try to produce constructive feelings in Ulster between its peoples, and all its peoples. The ordinary person who to-day goes about his business on day-to-day affairs in the country has nothing else in mind except to exist, to get on, to do what any other ordinary human being in this United Kingdom wishes to do. He

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is interested in the price of his cattle; he is interested in the astonishing difficulties of his farming; he is miles away from his market. He feels to a certain extent unsupported, and yet he feels that he is taxed and criticised. These, I feel, are points which we on this side of the water could help to smooth over, to support, to give strength to, so that in their day-to-day going about their business the people do not feel that they are subjects of criticism.
I have no doubt that there is discrimination. I have no doubt whatsoever, and it would be stupid to say that there was not. There are reasons for it, and it is the reasons we want to do away with. The suggestions which are made are very good, but at the same time I am worried about pressures. When we talk about bringing pressure to bear, then I think we are undermining the very things that we want to do. I think it is pressure which is largely causing indigestion in the entire world, let alone in Northern Ireland.
I think that both the Church and the State are perhaps inclining to move too fast to order, where there is no real feeling on which to hitch the order. When the forces which are at the disposal of Governments exercise their authority, with modern communications and modern methods they are subject to immediate "showing up". I have been a policeman, and I know that unless you feel that you have the confidence of those in authority over you and the confidence of those you are trying to protect and be fair to, you very soon turn sour and you are no longer a good policeman. The police force, the forces of law and order, should be protected and supported. They should be given every possible facility to maintain that law and order and to restore the discipline without which no community can live a decent, organised existence.
My Lords, I think that one must refer to that which the noble Lord, Lord Rathcavan, has already mentioned, the other side of the Border, the Republic of Ireland. It is not mincing matters to say that the Nationalists' whole policy is that Ireland should be united, and this is totally against the feelings of your fellow-countrymen in Northern Ireland. I would appeal to the Church, to the people who
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live in Northern Ireland who enjoy the benefits of Northern Ireland, to come forth as individuals and to prove that they are not the directed force that they are thought to be. Let them come out and prove it, and then I feel we shall be getting somewhere towards making a homogeneous community, and one which we all want to see established.
I am sure that there are faults on both sides, but I do not believe that undue pressure or undue haste will increase the chance of our making the sort of responsible community that all of us who live in Northern Ireland wish to see. Jobs and houses are not only and solely the privilege of the Protestants, as is so often made out. There are Protestants without houses; there are Protestants without jobs. It is not just Protestants and Catholics. There is a wealth of poverty in Northern Ireland which must be overcome, and you have got to dig down beneath these flaunted differences to get to it.
I have said before that it is not really our fault that we are miles behind. In response to this Question, I beg that the Government at Stormont and the Government of the United Kingdom will work closely together, hand in hand, in support of one another, rather than the other way round, with this Government kicking Stormont into actions which they would be responsible for putting into force so that they would receive all the criticism.
I wholeheartedly agree with those who have already paid tribute to the present Prime Minister in Northern Ireland. He needs support, as do all the moderate, ordinary folk who have not raised their voices or their sticks. The best way to do that is to ensure that over here and over there we speak with the same voice. This will do away with the fear of isolation and will also show the other side—and there is another side—that they have no right to interfere in the affairs of the North any more than we have any right to interfere in the affairs of the South. If this is established, we can then, as the noble Earl, Lord Gowrie, said, live side by side with honour, and not with guns, sticks or with verbal blows or any of the things with which, unfortunately, Ireland is to a great extent associated. Ireland is a happy country. It wishes to be happy, and it can be happy if we can bring it up to date—and it is time to do so. I have

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nothing else to say, except to hope that this Government will give their fullest support to the present Government in Northern Ireland.
9.33 p.m.
LORD SOPER: My Lords, I must apologise for not setting down my name as intending to speak in this debate. I had two Church appointments which I intended to fulfil, but on reflection I felt that some ecclesiastical representation might not be out of place in relation to the situation in Ireland in which the religious issues are so deeply entrenched. However unsuitable I am, in the absence of any other minister of religion or clerk in holy orders I wish to say something about the religious situation as it is represented, squalidly indeed, by Mr. Paisley.
Before I do so, may I first of all agree in principle with the noble Lord, Lord Reay, in his assertion that constitutionally there is room for, and at a certain stage there will be a demand for, action on the part of this Government if matters in Northern Ireland reach the kind of crisis which some people already envisage. I stop short of wild enthusiasm when I am told of the proposals which have now been made and the fourfold programme which is now in progress in Stormont. It is true that a points system has been set in prospect for rehousing problems, but it is as yet strictly permissive. At least one Council, Dungannon I think, has refused altogether to have anything to do with it, and in any case it would need far more powerful teeth than is at present anticipated by those who look upon it with a good deal of anticipation and confidence.
It does not seem to me that the postponement of radical electoral improvements for at least three years has upon it the mark of urgency, when one reflects that 300,000 adults in Northern Ireland are now denied local government votes. If it were not somewhat cynical, it might be thought that the Unionist Government in Northern Ireland would prefer to postpone these matters until perhaps, as they think, a more favourable atmosphere to them were to appear on this side of the Irish Sea. Whether or not that is true, what surely is substantially true is that the Unionist Government at Stormont believe that they have to reckon with a powerful Protestant attitude which, in
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large measure, is characterised by the so-called leadership of Mr. Ian Paisley.
Furthermore, Mr. Ian Paisley has been described, first of all, much more widely than in the particular areas of Northern Ireland, as a Presbyterian. He is not a Presbyterian. He is what is called a Free Presbyterian, and the adjective there is quite as inaccurate as the noun. In any case, he is not a Protestant leader, as one incautious statement averred in the daily Press only a few days ago. He is certainly not a Protestant in the accepted and traditional sense in which I claim to be a member of that great tradition, and he is certainly not a leader in the sense that he has great and objective ideas with which he has electrified, or with which he has stimulated, intelligent and resourceful Christian people.
It might not be out of place if a little more of Mr. Ian Paisley were put on record. He is very largely the author of the particular church which he has spawned. His doctorate is, I think, very largely a self-inflicted wound. He is a man of bony appearance and of a loud voice. I say these things without any feeling that I am unjustly treating him, because I said these things on two occasions in the open air in Ireland, one in Belfast and the other—a rather unsuitable place—an open air rally in the Horse Fair at Ballymena. I have tangled with Mr. Ian Paisley. On the first occasion he displayed a typical quality of his. He showed no inhibition whatsoever in the fact that he had no scholarship, and he was not in any way deterred by he fact that he was purely dogmatic and had no argument whatsoever to offer for the various declamatory statements that he was making. On the second occasion his followers threw a Rosary and a Bible at me, which I felt was at least an ecumenical gesture, and there was a near riot.
I assure this House that Mr. Ian Paisley has been immensely over-praised for qualities that he does not possess. He is a rabble rouser, he has a raucous approach and he has a dogmatic gesture. He is very largely duping a lot of simple people. Their prejudices are being increased by what he has to say, and it would be the gravest of misjudgments if it were allowed to appear in our affairs

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that here is some Heaven-sent or devil-sent leader, some führer who can command the loyal support of people who follow the Protestant tradition and who stands for those things that are required and are necessary to the proclamation of the Christian faith. I say this without any fear of contradiction, because, unlike your Lordships, I know Mr. Ian Paisley and I have no use for him whatsoever. It is unfortunate that other people have a considerable amount of use for him, and it is not true, unfortunately again, that he does not represent a considerable fraction of anti-Roman feeling in Ulster.
What is true is that, on the general count of argument on the creative side of any political or Christian gesture which could be interpreted as a contribution to the welfare of Ulster, the sooner Mr. Paisley retires to the obscurity from which he should never have emerged, the sooner we shall be able to see an improvement in the situation in Northern Ireland itself. It is this comfort that is being given to Mr. Paisley and his supporters by incautious propaganda and by his self-styled leadership which is the spearhead or, if you like, the running ulcer betokening something of the underlying disease.
It is perhaps on that point that we can most practically register our attitude, and I would do so, if I may, on behalf of the Christian Church in this country, and would say, for I know that I speak for Anglicans as well as Methodists, and indeed for true Presbyterians, that we support those in Northern Ireland who are as disgusted as we are with the antics and the brutalities of Mr. Ian Paisley and his thugs. We will try to lend what support we can to them in their repudiation of Mr. Ian Paisley and all for which he stands. That is not enough, but it is something. It is high time that this should be said, clearly and unmistakably, and that is my own presumption for taking part in your Lordships' debate, recognising that there are many other things that must be done, but isolating in this particular speech of mine a factor in the present situation which is spurious, factitious and, above all, completely unrepresentative of that Christian faith of which I happen to be a representative to-night.
9.40 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I would also apologise for not having my name on the Speakers' List, but I felt I could not let this occasion go by without saying a few words to back up my noble friend Lord Rathcavan. Before doing that, I should like to agree heartily with the noble Lord who has just sat down. I am most cheered to hear his words regarding Mr. Paisley. I heartily agree with him.
My Lords, my family has had a very long connection with Ireland. I know I must not boast, but the first Governor for the British Crown, for Queen Elizabeth I, was my direct ancestor, Sir William Skeffington, and my family has provided Lord Chancellors and Speakers of the Irish House of Commons. I was brought up as a very young boy in the North of Ireland. I had to flee for my life there, with my home roaring up in flames and with chaos everywhere. Somebody was killed. The last thing I remember was the nursery cat, with its fur on fire, screaming. So, of course, I have not very pleasant memories of my childhood in Ireland. Nevertheless, I love the Irish, and I do not hold that against the Irish at all. I am afraid, however, that I do hold it against the Party of the noble Lord, Lord Reay—the Liberal Party—and I particularly hold it against Mr. Lloyd George, the Prime Minister at that time; but we will not go into that now.
I should just like to say that the noble Lord who introduced this Question appears to forget that, after all, the North of Ireland Government has been elected on a full franchise. It is a universal franchise as regards General Elections. The noble Lord quoted the Government of Ireland Act. The North of Ireland Government has at present in local elections the same system of franchise that we had in this country before the Labour Government altered it, and I really think it would be—and I am quite sure the noble and learned Lord the Lord Chancellor would agree with me—quite incorrect, and an arbitrary act, to say to the independent North of Ireland Government, "You have to alter your franchise for local elections immediately, and everybody, irrespective of whether they are ratepayers or not, must have a vote". As has been said by one

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or two noble Lords, we are extremely fortunate in having Captain Terence O'Neill as the Prime Minister of Northern Ireland. He is the most moderate of men; and I personally think he has done wonders and will continue to do so. But if the British Government put pressure on the North of Ireland Government it will not help the position.
My Lords, it is true that there is discrimination. Of course there is. You have Protestant discrimination and you have Catholic discrimination, but, of course, you have more Protestant discrimination because there are far more Protestants in the North of Ireland. It is true that where the Protestants control the council probably more Protestants get houses. But there are other areas where the Catholics control councils, and in those areas—although it is true that there are far fewer councils controlled by the Catholics—the Catholics get more houses. I sympathise with the noble Earl behind me. He says that he finds that he has some slum property in Ireland. It must be a worry to him. I can truthfully say that I have no slum property in Ireland. I should like to point out also that the Catholic schools have an 80 per cent. grant from public funds. I am not saving anything against that. They practise all their Catholic teaching there—as, of course, they must be allowed to do—and they have this 80 per cent. grant from the Protestant Government. So one cannot really accuse the Northern Ireland Government of great discrimination. I am speaking from memory, but I think that that figure is correct.
Let us take the question of religion. In Londonderry about two or three weeks ago, before this great demonstration, an all-night service (I believe it lasted for 24 hours) praying for moderation, was held in both the Catholic Cathedral and the Protestant Cathedral. Protestants and Catholics went to each other's cathedrals. That would have been an impossible event 20 or 30 years ago. Great strides are being taken towards religious toleration in the North of Ireland. I am quite sure that religious discrimination will disappear among the younger generation, that it is only a matter of time. For instance, in Queen's University, Belfast, where three-quarters of the students are Protestant there is now a Catholic President of the Union.
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This is a great step forward. I am quite sure that the young people do not hold with religious discrimination and that in the North of Ireland things are working in favour of toleration. It may take 20 years or more for religious discrimination to disappear—for we must allow time for the young people to grow up—but eventually it will disappear.
There is another matter on w lich I do not quite agree with the noble Lord, Lord Rathcavan—though I hesitate to disagree with such a great authority on the North of Ireland and with one who is so much my superior in all matters appertaining to the North of Ireland. In regard to the present troubles, I do not think that a great number of the Roman Catholics—and perhaps even some of the Nationalists—who are standing out for full local franchise in the elections are bothered about Partition at the moment. But if that were to happen, if they do get full franchise in local government, I think that when we join the Common Market, as I presume one day we shall, the whole question of Partition will become a comparatively minor one. I do not think it will continue to raise much emotion.
I hope that Her Majesty's Government here will not try to force the Northern Ireland Government. I suppose tin t they could do so to a certain extent; but if they did, I am sure that it would only raise the temperature in the North of Ireland, and that would be very unfortunate. I am also quite sure that if the situation is allowed to run its course, and with the ability to present the Pope and the Queen, and other such dignitaries, on television in the poorest households in the land, people will not look on the Pope as a devil or the Queen as a tyrant. I am sure that, with education and television, this problem will be solved in time, and I therefore hope that no undue pressure will be put on the Ulster Government.
LORD REAY: My Lords, before the noble Viscount sits down—he has talked a good deal about the great religious toleration—may I ask whether he is aware that a cousin of the Prime Minister of Northern Ireland, a Unionist Member of Parliament, was obliged to resign from the Orange Order because he attended a Catholic service during civic week in his constituency? Would he not think this

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a rather poor example to give to the young to-day?
VISCOUNT MASSEREENE AND FERRARD: My Lords, no doubt it may be a poor example, but the Orange Order is not in complete control of everything that goes on in Northern Ireland. It is certainly still very strong, but it is by no means as strong as the noble Lord would appear to think.
LORD REAY: My Lords, I did not say that at all, but it is influential, surely.
VISCOUNT MASSEREENE AND FERRARD: My Lords, of course it is influential, but so are the Catholics.
9.52 p.m.
VISCOUNT BARRINGTON: My Lords, I apologise for intervening, because I realise that time is vital, but I should like to say one thing on the question of whether we are justified in allowing things to right themselves in time. I think that on this Irish question it is untrue to say that a whole history of Ireland has been given to-night—God knows! it could not be. That fact is shown very clearly by the name "Tory Party" which I looked up in the dictionary. I found that the definition of a Tory was:
"One of the dispossessed Irish who became outlaws, subsisting by plundering and killing the English settlers and soldiers; often applied to any Papist or Royalist in arms."
Since then, the pendulum has swung a very long way. That may have been said of the Tory Party a long time ago, but it does not apply now. I think that now it is rather the other way round: that they would be more inclined to support the English settlers and soldiers in plundering the dispossessed Irish.
In 1938, when I lived in Ireland, a Protestant English General, who was against the Catholics in almost every way, was so disgusted at not being allowed to include Roman Catholics in his Boy Scout troop that he founded a body called the Irish Association which now has only 420 members. Your Lordships can easily find out the purposes of this. The General was confronted by immense opposition to what he was doing. The efforts of the members are entirely directed to trying to bring people on either side of the Border together in a reasonable and rational way, forgetting about history. He has not been
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very successful, in that it has taken a very long time. And I would express my complete support for the belief voiced by my noble friend Lord Reay that pressure must be put on—and indeed it has been put on by police in a riot—not violence, but pressure, in order to get any kind of action taken. I am confident that the noble Lord, Lord Stonham, will sympathise with the principle behind that, and I hope that we shall hear what action will be taken.
9.55 p.m.
LORD NUGENT OF GUILDFORD: My Lords, may I say a brief word from the Front Bench on this side of the House in this interesting and important debate. I listened with close attention to the speech of the noble Lord, Lord Reay, in opening it, and if I may say so I thought that it lost some force by lack of impartiality. I felt that he did less than justice to the reform measures which Captain O'Neill has introduced in blowing upon them as he did. I think that they should be taken in good faith for the good which they will do. The reply made by my noble friend Lord Rathcavan really covered the whole field, and I am sure that noble Lords on all sides felt that this was a complete answer to the attack that was made.
My noble friend's speech brought out the immense complexity and difficulty of the situation in Northern Ireland. The minority Party there is in such a peculiar position. They do not want to govern Northern Ireland themselves. They want to abolish Northern Ireland as an independent entity, as a State. They want to join up with Eire. This is bound to make extra tensions, extra emotions and extra difficulties. Indeed, this point was made by my noble friend Lord Enniskillen in his very effective speech.
I was glad to hear my noble friend Lord Rathcavan say that local government franchise should be dealt with, and this would certainly be my feeling. I was glad to hear him say, with his great knowledge of Northern Ireland, that it will be dealt with. It may not be tomorrow, but it is coming. These things have to take their time. One point which must be clear to all of us is that much of Irish life, in Northern Ireland and in Eire, is somewhere behind the standards of living here and they need time.

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The only point on which I would part with my noble friend Lord Rathcavan is on his advice that troops might be brought in to assist in keeping order. I suppose that in extremis they may be, but as a rule the arrival of troops tends to inflame tempers rather than cool them. I feel, with my noble friend Lord Enniskillen, that everything depends on the police themselves having the strength and the popular support to keep order. I think that their record has been pretty good up to date, and I hope that they will continue to get support.
I do not pretend to know to what extent the noble Lord, Lord Soper, is right in thinking that the Government of Northern Ireland consider that Mr. Paisley has popular support. But I am interested to learn that there is a police summons out against him for his part in the Armagh disorders. This is evidence that they are not frightened to take action, if he is in the wrong. I have no doubt that when lie is taken to court he will be able to show whether or not he is right.
I am sure that my noble friend Lord Rathcavan is right in his point about industrial progress and that the noble Lord, Lord Stonham, will be 100 per cent. with me there. Though my noble friend rightly referred to what the Northern Ireland Government have done in this respect, both Labour and Conservative Governments have subsidised this development, and this is, I am sure, the right road to strengthen, develop and liberate life in Northern Ireland. If poverty is relieved, the people educated, and conditions improved, many of these troubles will gradually disappear. So industrial progress is vital, and I am sure the noble Lord, Lord Rathcavan, is right in saying that nothing should be done which might deter industrialists from considering going there and taking advantage of the attractive financial inducements provided by the United Kingdom Government for them to go there. These, I hope, will go on.
I thought that we had two interesting speeches from the noble Earl, Lord Gowrie and the noble Earl, Lord Enniskillen, both noble Lords obviously speaking with great knowledge. The noble Earl, Lord Gowrie, recommended that there should be pressure by Her Majesty's Government on Captain
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O'Neill's Government in order to accelerate reform, and the noble Earl, Lord Enniskillen, recommended the reverse. For myself, I should think that the reverse view is right, especially in a situation of such complexity.
I do not pretend any intimate knowledge of the affairs of Northern Ireland, or indeed of Eire, but we have all learned a great deal, I think, in the last twenty years in the process of liquidating, as it has been, the Colonial Empire, and liberating these countries to become independent countries. On the whole, it has been successful when this country has taken the most generous tolerant and moderate line. I am sure it cannot be different in this case. I am sure that we should be patient and support moderation. It seems to me that Captain O'Neill's Government has a number of really worthwhile reforms already to its credit. It has done a great deal, and there is every reason to think that it will continue to move in this direction.
Moderation, which would ease these tensions, seems to me to be the right line. I fear that if the Government here put pressure on Captain O'Neill and his Government it will be bound to cause reactions in the Protestant camp over there and will increase, rather than reduce, tensions. We want the Protestant camp in Northern Ireland to feel confident that they are going the right way; that, broadly, responsible opinion here supports them, and that they are not going to lose by it. I think that tolerance, patience and a generous view here will help most, and I hope that the noble Lord, Lord Stonham, will tell us that the policy of the Government will continue to be what it has been to date. No doubt the noble Lord, Lord Stonham, will tell us also the very limited constitutional position as the law now stands. But, for myself, I should hope that we may continue with the same policy that we have followed in the past, with every hope that the Constitution which we should like to see in Northern Ireland will progressively emerge.
10.4 p.m.
LORD STONHAM: My Lords, I am sure that the House has reason to be grateful to the noble Lord, Lord Reay, for giving us this opportunity of discussing recent developments in the Northern Ireland Constitution which are of such importance to us all. I feel

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that the debate has been a credit to your Lordships' House because of its moderate tone throughout. As the noble Lord, Lord Nugent, said, to display moderation is the best service that we can perform in the present circumstances.
The debate has been notable for a number of excellent speeches, and particularly those from my noble friend Lord Soper and the noble Lord, Lord Rathcavan, both of whose speeches I hope, for different reasons, will be extensively reported in Ulster.
My Lords, I shall of necessity repeat some things that have already been said, but I hope you will feel that I can best serve the House if, in replying to the debate, I give, as it were, a balanced picture of the whole situation as the Government see it and begin by outlining the recent developments. There has been concern for some considerable time that progress in Northern Ireland towards the ending of bitter political and religious divisions in the community and the resulting injustices suffered by individual people was not proceeding fast enough. We were all agreed about that. The only thing we disagreed about was how fast it should go. This was despite the undoubted efforts of Captain O'Neill, which not only noble Lords but my right honourable friend the Prime Minister have commended on a number of occasions in another place, and indeed also the efforts of other leading figures in Ulster of differing views. These fears were intensified by the events in Londonderry over the weekend of October 5 and 6 when it became plain that the tensions in the community could no longer be contained without the grave risk of continuing civil disorder.
Your Lordships will not expect me to comment on the events themselves, but my noble and learned friend the Lord Chancellor told the House on October 7 that the Prime Minister had invited the Prime Minister of Northern Ireland to visit him for the purpose of discussions about the situation. At the same time, he pointed out that the maintenance of law and order in Northern Ireland was a matter for which the Parliament and Government of that place were solely responsible.
The discussions took place on November 4. The Prime Minister afterwards announced that they covered five main
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areas; namely, the local government franchise; allocation of housing; the recent events in Londonderry; the Special Powers Acts, and the appointment of a Parliamentary Commissioner of Administration in Northern Ireland. It is, I believe, true to say that these are the questions on which concern has mostly been voiced and which lie behind the public expressions of feeling which have been made. The discussions between Prime Ministers were confidential. I have nothing to add to what my right honourable friend the Prime Minister has said in another place in answer to Questions.
It is gratifying, however, that on November 22, a little more than two weeks after the discussions in London, the Northern Ireland Government announced their intention to take a number of steps in the areas covered by the November 4 discussions. They are these. First, it is intended that a points system on a readily understood and published basis will be introduced for the allocation of local authority housing. Secondly, there is to be legislation in the Northern Ireland Parliament to appoint an Ombudsman. I understand it is the intention that he should deal, as the Ombudsman does here, with central Government activities, but consideration is also to be given—this is very important—to the need for effective machinery to investigate citizens' grievances in a wider area.
Thirdly the Northern Ireland Government propose to set up a Statutory Commission to implement the Londonderry Area Development Plan, which is designed to transform the economic and the social conditions of life in the city. The noble Lord, Lord Rathcavan, gave some particulars. My Lords, I have been there. It is not propaganda. I have spoken to the industrialists who are starting these projects. Some of them are more than started: they are in operation, and there are literally thousands of jobs in the area which will be coming forward. It will, I believe, transform conditions there, and this proposal, I am glad to say, has commanded support from all quarters.
Fourth, the intention has been announced to abolish the company vote in local elections at an early date. The Northern Ireland Government have said they intend to review the present property-based local government franchise

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once decisions have been taken on the reorganisation of local government which is at present under discussion between that Government and interested bodies.
Lastly, the Northern Ireland Government have accepted that such of the Special Powers legislation as conflict with the international obligations accepted by Her Majesty's Government—for example, under the European Human Rights Convention—should be withdrawn as soon as this can be done without undue hazard. At the same time, since the Government of Northern Ireland have the responsibility for maintaining law and order, they will feel free to resume the powers should this be essential in a state of public emergency. The Convention itself recognises that such circumstances may arise, and provides accordingly.
My Lords, these measures, and particularly the decisions to apply equitable standards in housing allocation by local authorities, the measures for the redress of grievances, including the appointment of a Parliamentary Commissioner, and the decision to give early effect to the Londonderry plan are most welcome. They must be most welcome to all of us, whatever criticism there may be, whatever dissatisfaction there may be, perhaps, with the particular membership of a Commission, or with a points system. There are many different points systems for the allocation of council houses in this country, but let us please welcome these changes. Certainly they are desirable steps on the way forward, if we put it no higher than that, and it is the hope of Her Majesty's Government that the Parliament and Government of Northern Ireland will take urgent action to give effect to these reforms and that they may be carried out in an atmosphere of tranquillity in the Province.
But, without in any way minimising their value—and I do not, because I know something of the conditions—your Lordships will note that the measures now proposed hold out no promise of implementing the principle of "one man, one vote"; namely, giving all adults the local government vote. That principle lies at the heart of citizens' rights and it is a matter which will need to be considered when the discussions which began on November 4 between the Prime Ministers are resumed.
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Your Lordships will be aware that under the Government of Ireland Act there is a division of executive responsibility between Her Majesty's Government and the Government of Northern Ireland. Stormont has responsibility for the so-called "transferred" matters which, broadly speaking, are matters dealt with in Ulster, while we have responsibility for affairs that are dealt with on a United Kingdom basis. All the five subjects which the Prime Minister discussed with Captain O'Neill on November 4 are "transferred" matters, which under the Government of Ireland Act 1920 have been placed within the competence of the Government of Northern Ireland. Subject to the rules of order, your Lordships are free to debate any Motion before you, and the noble Lord, Lord Reay, has exercised his undoubted right to raise questions and ask for answers, and even to urge that unless the Government of Northern Ireland takes action to eliminate discrimination against religious and political minorities Her Majesty's Government should take appropriate action which could (as he indicated) in the last resort mean using the reserved powers to legislate under Section 75 of the 1920 Act.
You, my Lords, are free to debate this, but I am not. I must remind you that as a Minister of Her Majesty's Government I cannot answer questions on matters for which this Government have no executive responsibility. In other words, I cannot answer the questions put to me to-night on matters on which I am not answerable to Parliament because they are transferred matters which are the responsibility of the Northern Ireland Government. One example of this is what happened in Armagh last weekend, which has been so widely reported in the Press. I refrain from making any comment on this—which otherwise I might be tempted to do—for, as your Lordships will appreciate, certain aspects of those events are now before the courts in Northern Ireland. But, in any case, responsibility for the maintenance of law and order in the Province rests on the Government of Northern Ireland, and they have the necessary powers. I leave it at that.
There are some things that I would say, because since, under the Home Secretary, I am the Minister with special

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responsibility for Northern Ireland, and because I have many friends there of widely different views and persuasion, I know as much as most people about the present situation. And since we have all been talking about our Irish ancestry, may I say that I am of course Irish, with an Irish family name.
The first thing I want to say is that extreme language from this House and from this country will not help. That is why I felt the debate has been such a credit to this House. And I whole-heartedly agree with the noble Lord, Lord Rathcavan, that the great majority of the people of Ulster desire a peaceful solution of the present disputes. Let there be no manner of doubt about that. No-one who has been there can have any doubt about it. It is the extremists who are the enemies of peace. Of course they receive the most publicity and, as I know from my correspondence (and many of them write to me), and also from their public utterances and deeds, their fanaticism is almost beyond belief, and certainly beyond reason. They are prepared to use violence to deny essential justice and freedom to others. They are the main obstacle to a speedy and satisfactory settlement of those matters which we in this House agree, and we have agreed to-night, must be settled. And we can best serve the cause of peace, reason and justice in Northern Ireland by supporting the efforts of those who are genuinely working to achieve them. And it is not only people in the Unionist Party who are working to achieve that; I know that others are, too.
One thing I must say, with the greatest firmness and clarity that I can command. Northern Ireland is as much a part of the United Kingdom as Wales or Scotland; and even the noble Lord, Lord Rathcavan, in his speech, it seemed to me, seemed to forget that when he was talking about paying the same taxes. Of course you pay the same taxes; you are part of the United Kingdom. The noble Lord, Lord Reay, mentioned a figure of some £50 to £100 million which, as he put it, went back in the form of subsidies. It is not so much a question of subsidies. Northern Ireland is part of the United Kingdom, and it happens that it is a development area; and therefore of
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course in some respects more money flows there. So I hope we shall not be having again from an Ulsterman this argument that seems to suggest that even he is thinking that Ulster is not part of the United Kingdom. They are our people, and that fact is fundamental to the relations between us.
In case any misapprehension may still linger, particularly following some recent remarks in the Dail, let me remind your Lordships of the recent reaffirmation by my right honourable friend the Prime Minister of the pledge given by Mr. Attlee (as he then was) in 1948 and 1949, which is enshrined in the Ireland Act 1949; and because of that, despite what has been said by so many noble Lords to-night about the basis of the problem, I say that the Border is not in issue. We are all members of one nation, with a common heritage, and I well know the pride that Ulster takes in that. But pride and unity are based on more than a Union Jack, and if we are to lay just claim to unity in this United Kingdom we must share common standards and fundamental principles of good government.
This is by no means a Party issue, as we have shown to-night. I am not arguing for slavish imitation of the policies of one Party or another—whichever happens to be in power. I am arguing for the need for general acceptance in all parts of the United Kingdom, which I say clearly includes Ulster, of the principles of fairness and justice. It is the partial lack of that acceptance in Northern Ireland which has given rise to the tense situation which has prevailed over the last few months. It is a disappointment to me, and I am sure to many of your Lordships, that the Northern Ireland Government have not yet announced a firm intention to introduce a universal adult franchise for local elections. It is only when the will and voice of reasonable men on all sides can find democratic expression in every aspect of life that reason and goodwill can banish bigotry and extremism. We must work together with Ulster for uninterrupted progress, with a good hope for and a shared belief in the future peace and prosperity of Northern Ireland.
House adjourned at twenty-two minutes past ten o'clock.