Sitting of 11 December 1968

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
DEATH OF A MEMBER
Mr. Speaker: I regret to have to in form the House of the death of George Forrest, esquire, Member for Mid-Ulster, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.
ORAL ANSWERS TO QUESTIONS
  BOARD OF TRADE

    Investment Grants
    1. Mr. Gordon Campbellasked the President of the Board of Trade if he will take steps to improve the procedures for dealing with applications for investment grants.
    The Minister of State, Board of Trade (Mr. Edmund Dell): If the hon. Member will let me know what aspect of the procedures he considers should be improved, I will, of course, consider this.
    Mr. Campbell: Is the Minister aware that the present system by which arbitrary questions of eligibility are decided by officials is a cause of delay and great uncertainty?
    Mr. Dell: I do not think that there are serious problems of delay. The average time for processing applications is six weeks and, although this causes administrative work for firms, this is far outweighed, in my judgment, by the fact that they are now getting their cash payments in 12 months from expenditure.

    Balance of Trade
    2. Mr. Gordon Campbellasked the President of the Board of Trade what
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    measures he is now taking to improve the balance of trade.
    47. Mr. Croninasked the President of the Board of Trade what further proposals he has for increasing exports and diminishing imports, having regard to the latest balance of trade figures.
    Mr. Dell: The Government are pursuing a wide range of measures designed to promote exports and encourage import saving.
    Mr. Campbell: Since there has been little change a year after devaluation, and since the Government apparently expect the effect of the import deposits scheme to be only marginal, are we not in a more serious situation than the Government have so far recognised?
    Mr. Dell: I do not think the hon. Member is right in saying that there has been little change. On the contrary, the visible trade deficit has been improving substantially on a three-monthly basis and moreover, exports are on a sharply rising trend. Together with the import deposits scheme, this creates considerable confidence in our acheiving balance very shortly.
    Mr. Cronin: Will not my hon. Friend agree that there is still scope for direct attack on this problem, perhaps by further import restrictions of luxury goods, consistent with our obligations to G.A.T.T. and E.F.T.A.? Will he also put more pressure on firms to export, particularly those which are getting large Government contracts and living largely at the expense of the taxpayer?
    Mr. Dell: I agree with my hon. Friend that more can be done by way of import substitution, but on the restriction of imports, my hon. Friend knows what has been done with the import deposits scheme. A great deal of encouragement has been given by the Government to import substitution and to exports, and the sharply rising trend in exports to which I have referred is a substantial factor in our present situation.
    Mr. Michael Shaw: Does not the hon. Gentleman consider that the latest issue of the Bank of England Quarterly Bulletin makes very disturbing reading, in view of its forecast of a continuing deficit in the last quarter of this year? Is it

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    not accepted that the real problem is the new factor that appeared for the first time in November, 1964, namely, a lack of confidence which is now overriding all touches on the tiller made by the Government?
    Mr. Dell: I think that the real character in our present situation is shown by the continuing improvement in our visible trade deficit. We have to achieve as rapidly as possible a trade balance and a substantial balance of payments surplus. There is nothing in the current facts of our situation that in any way justifies lack of confidence. On the contrary, the current figures show that there is sub stantial reason for confidence in our future prospects.

    Manufactured Imports
    3. Mr. Sheldonasked the President of the Board of Trade what estimate he has made of the level of manufactured imports in the fourth quarter of 1968 and the first quarter of 1969.
    Mr. Dell: I would not wish to make an estimate so soon after the adoption of the new import deposits scheme.
    Mr. Sheldon: I understand the reason for that reply, but will not my hon. Friend agree that it is here where the greatest cause for concern in our balance of trade figures lies, and would he not consider that in a month or two, after study of the way in which the import deposits scheme is working, it may be necessary to come to the House with further measures?
    Mr. Dell: The situation in respect of imports has been less favourable than the Government anticipated earlier this year, but my hon. Friend should not exaggerate the situation. A comparison of the June-October figures with the February-May figures shows that there has been only a moderate increase in the import of manufactures, including semi-manufactures, amounting to about 2 per cent.
    Mr. Biffen: Did not the Government make an estimate before the introduction of the import deposit legislation, and was not that estimate necessary to enable the legislation to be brought forward? Why cannot the House be told about that estimate?
    Mr. Dell: The effect of the import scheme was discussed when the legislation was being passed through the House. It was made clear that the Government were not prepared to give any estimate of this. They judged the effect on imports to be marginal, but certainly not negligible.

    Take-over Panel
    4. Mr. Sheldonasked the President of the Board of Trade if he will now make a statement on the progress of his discussions regarding the future of the Take over Panel.
    Mr. Dell: I have nothing to add to the Answer my right hon. Friend gave to my hon. Friend the Member for Reading (Mr. John Lee) on 3rd Decem ber.—[Vol. 774, c. 422.]
    Mr. Sheldon: Is my hon. Friend aware of the extreme disquiet that is being felt among large sections of the investing public, and does he agree that one of the aspects which causes most concern is the estimating of future profits by various companies which are threatened with take-over? Does he further agree that it is nearing the time when his right hon. Friend will need to come to the House for further powers to regulate this as well as other matters concerned with this problem?
    Mr. Dell: I think that there are many aspects of this situation which cause concern. I do not want to make any com ment, because we are still in discussions with the Governor of the Bank of England on this whole subject. I merely refer my hon. Friend to the announcement that was made following the visit of the Governor of the Bank of England to my right hon. Friend, when reference was made to the possible reinforcement of these measures by the Board of Trade.
    Mr. Barnett: In view of the failure of the present panel to stand up for the rights of the small shareholder against major city interests, does not my hon. Friend feel that it is unlikely that there will be any confidence in a panel consisting of similar type of people.
    Mr. Dell: It is the interest of the small shareholder that we have very much in mind in these discussions, but I should emphasise that in our judgment

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    it would be much better if a voluntary system of control could be made to work, and it is to that end that we are currently working.

    Overseas Commercial Officers (Engineering Exports)
    7. Mrs. Renee Shortasked the President of the Board of Trade if he is satisfied with the ability of official British agents abroad to act in the promotion of exports of engineering products; and if he will make a statement.
    The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dunwoody): Yes. They are expected to be knowledgeable about local market conditions. It is for firms to provide technical information about their products.
    Mrs. Short: Has my hon. Friend's attention been drawn to the little Neddy Report, which was produced after its conference at the beginning of November, which drew attention to the lack of facilities and organisation of our embassies abroad to deal with exports, particularly of certain engineering projects? As these are an important part of our export drive, does not my hon. Friend think that her attitude is a little complacent. and that something ought to be done about our representation abroad?
    Mrs. Dunwoody: I am sure my hon. Friend will accept that engineering products fall into about 1,600 different categories, and that it would be extremely difficult for any commercial officer abroad to have detailed knowledge of every individual branch. What I am sure will produce good results is if the firms themselves brief embassy personnel adequately, before they go on missions, with the right sort of technical information about their products.

    West Midlands
    8. Mrs. Renee Shortasked the President of the Board of Trade what criteria guide him in deciding when to grant permission to firms in the West Midlands to expand there.
    Mrs. Gwyneth Dunwoody: Each application for an industrial development certificate is considered on its merits.
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    Among the factors taken into account are local employment needs and resources, the nature of the project, its ties to a particular area and its contribution to exports and industrial efficiency. Special regard is paid to the suitability of projects for the Development Areas, whose needs must have priority, and where appropriate the overspill towns.
    Mrs. Short: But my hon. Friend does not mention that she takes into account the existence of under-used or empty factory space. As my hon. Friend's Department keeps no record, how is she in a position to decide whether firms should be allowed to expand?
    Mrs. Dunwoody: I am sure my hon. Friend will accept that we have some knowledge, although we do not have detailed knowledge of every empty factory, of which firms are going to move out, and we take what is going to happen to their remaining premises into account before deciding what their future pattern should be. In 1967 approval was given for 7· 1 million square feet of new industrial building, which is expected to provide 6,900 jobs. In the first nine months of 1968 approval was given for 8· 5 million square feet of building, which is expected to provide 4,700 new jobs. This is a fairly considerable amount of development.
    Mr. Kenneth Lewis: Is the hon. Lady aware that in my view there is no damn merit about this at all? The Minister is turning down far too many requests for these certificates by small country towns seeking to employ only 30 to 40 people in small factories, and this is absolute nonsense. Will the hon. Lady reconsider the policy of her Government in this matter?
    Mrs. Dunwoody: The hon. Gentleman is not only unfair, but inaccurate. It is about time a little of the psychological hysteria which seems to be gripping some parts of the Midlands was dealt with on fact, and not on fancy.

    G.A.T.T. (Developing Countries)
    9. Sir R. Russellasked the President of the Board of Trade if, in view of the acceptance by the General Agreement on Tariffs and Trade of a waiver allowing developing countries to make preferential tariff arrangements, he will apply to have the waiver extended to developed

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    countries, and between developed and developing countries.
    Mrs. Gwyneth Dunwoody: No general waiver in the G.A.T.T. allowing developing countries to make preferential tariff arrangements has been given.
    Sir R. Russell: Is not the hon. Lady aware that arrangements appear to have been made between India, the U.A.R., and Yugoslavia for preferential arrangements, and have not these received a G.A.T.T. waiver?
    Mrs. Dunwoody: I think the hon. Gentleman will accept that what was considered was the five year agreement, but it was decided that a final decision would be given in the 1969 Session.

    Special Development Areas (Blyth)
    10. Mr. Milneasked the President of the Board of Trade if he will make a progress report on the special development districts in the Blyth constituency, giving details of advance factories built, tenants secured and the number of jobs to be made available during the next 12 months.
    Mrs. Gwyneth Dunwoody: In the special development areas in my hon. Friend's constituency, four advance factories have been built since 1964. Three of these are occupied and an application for the fourth is under consideration. Other industrial development is also taking place in these areas. Two thousand six hundred and fifty new jobs, including 1,820 for men, are expected to arise within the next four years. I regret it is not known how many of these will become available during the next twelve months.
    Mr. Milne: Is my hon. Friend aware that while that represents a considerable success story of past achievements, the rate of progress in the months ahead to meet the impact of impending pit closures is of itself not sufficient, and will my hon. Friend inject some sort of urgency into her Department to speed up an already satisfactory programme?
    Mrs. Dunwoody: I accept that it is bound to be worrying if there is continuing job loss, but I hope my hon. Friend will accept that the special development area projects are bound to have an increasing effect in the coming months.
    Mr. Higgins: The hon. Lady keeps talking about new jobs. Will she define that precisely? Is it the same as additional jobs, or not?
    Mrs. Dunwoody: It is all jobs of which we are aware which will be created in all new industrial development. I hope that the hon. Gentleman will accept my definition.

    Frozen Fish Fillets
    11. Mr. Milneasked the President of the Board of Trade what discussions have taken place with Norway and other European Free Trade Association countries concerning Great Britain's decision to impose a 10 per cent. import duty on frozen fish fillets; and what other alternatives were considered before the decision to impose a tariff was made.
    Mr. Dell: My right hon. Friend described the discussions with Norway and other E.F.T.A. countries in the debate in the House on 2nd December. These discussions failed to reach agreement. In the absence of agreement, the 1959 arrangements envisage only reimposition of the duty on frozen fish fillets.—[Vol. 774, c. 1167-83.]
    Mr. Milne: Is my hon. Friend aware that there is some dissatisfaction at this Measure, introduced as it was, and there has been a general recession in the white fish industry? Does he agree that this was not necessarily the best way of dealing with that, and is he further aware that we have with Norway and the Scandinavian countries our best balance of payments relationships in Europe? Will he look at the matter again?
    Mr. Dell: I am well aware of our excellent trading relations with all countries affected by the decision, and I hope that those trading relations continue to improve. However, we have rights under the 1959 arrangements, and it was these rights, and these rights only, which we exercised in a situation in which imports of frozen fish fillets were far beyond the agreed level.
    Mr. R. W. Elliott: Will the hon. Gentleman note that the Newcastle-upon-Tyne Corporation made an enormous effort in the name of long-term North-East prosperity through the medium of a Norway Week recently, and this type of

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    imposition undermines a great deal of local work done in the name of good relations?
    Mr. Dell: I am well aware of the importance of friendly relations and good trading relations with Norway. We wish to do everything we can to encourage them. But this country has rights under certain agreements, and, if those rights fall to be exercised as a result of a failure to reach agreement, a failure occurring before this imposition of duty was decided upon, then we must exercise our rights under the treaty.
    30. Mr. Martenasked the President of the Board of Trade if he will make a statement on Anglo-Norwegian trading relations with particular reference to tariff on frozer; fish fillets.
    Mr. Dell: Since the inception of E.F.T.A., trade has nearly doubled in each direction. My right hon. Friend explained our decision to restore the full most-favoured-nation duty of 10 per cent. on frozen fillets from E.F.T.A. in the House on 2nd December—[Vol. 774, c. 1167-33.] Frozen fish fillets account on average for less than 3 per cent. of our total imports from Norway.
    Mr. Marten: In view of the growing dissatisfaction in Norway at the series of measures affecting trade which have been taken by the Government, would the hon. Gentleman explain—which his right hon. Friend did not do in the debate recently—why this duty was not applied on the excess amount over 24,000 tons rather than on the whole lot?
    Mr. Dell: To answer the first part of the hon. Gentleman's supplementary question, I repeat that we regard our trade with Norway as most important. Our imports from Norway this year have shown a notable increase.
    To answer the second part, the hon. Gentleman made this suggestion in the debate. What we did we were entitled to do under the 1959 arrangements. What the hon. Gentleman has suggested we should do would take us outside those arrangements. In any case, the object of the exercise was to reduce imports of frozen fish fillets down to the level of 24,000 tons—but not below that figure—and the hon. Gentleman's suggestion
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    would have been irrelevant to that pur pose.
    Mr. James Johnson: Hon. Members who represent fishing ports will welcome the 10 per cent. import duty on frozen fish fillets. Is it not a fact that imports were approaching the 30,000 tons mark, which made this imposition necessary? Is it not also a fact that the Minister has been to Vienna, has had amicable discussions with our E.F.T.A. partners and that this whole matter can be settled peacefully next year when the agreement is considered after being in force for 10 years, from 1959?
    Mr. Dell: I agree that there will be further discussions on this matter in E.F.T.A. circles in February or March of next year.

    Scrap Metal Industry (Investment Grants)
    14. Mr. Patrick Jenkinasked the President of the Board of Trade what representations he has had about his refusal to pay investment grants to firms engaged in the business of recovering and processing non-ferrous scrap metals; and what replies he has sent.
    Mr. Dell: I have nothing to add to the answer I gave on 6th November to the hon. Member for Leicester, South-west (Mr. Tom Boardman).—[Vol. 772, c. 87-8.]
    Mr. Jenkin: Is it not absurd that an industry which invests millions of pounds in machines such as shredders, crushers, balers and saws is not entitled to investment grants? Does not the hon. Gentleman recognise that there is a substantial change in the character of the goods which pass through the scrap processors' works, and that this should entitle them to investment grants?
    Mr. Dell: I entirely appreciate all the consideration which the hon. Gentleman has mentioned, but I do not think that any of the types of equipment to which he refers involve what is required under the Industrial Development Act, namely, the making of an article, and it is to this that the Act requires us to have regard. There is some encouragement to the industry by way of initial allowances on plant and machinery at the enhanced rate of 30 per cent.
    Mr. Crawshaw: My hon. Friend's answer will be received with disappointment particularly in the light of his emphasis on rising imports. Will he assure the House that there is a section in his Department which not only views with alarm the rising level of imports but makes recommendations on how our own industry could save these imports coming in?
    Mr. Dell: I am aware that my answer will be received with disappointment. We have had continuing discussions with the industry concerned. Import saving is of the highest importance, but the Industrial Development Act does not assist all industries engaged in import saving or assisting the balance of payments. The Act concentrates the grant system of assistance on manufacturing industry, that is, on those industries which make a major contribution to exports.

    Finished Manufactures (Imports)
    15. Mr. Tom Boardmanasked the President of the Board of Trade what has been the particular cause of the increase in the volume of imports of finished manufactures in the first nine months of 1968; and to what extent this increase corresponds with estimates made before the Budget.
    Mr. Dell: These imports, about 70 per cent. of which are capital goods, have been rising strongly since the 1950s, in common with the experience of other industrial countries. The increase in volume this year has been about two-thirds the average over the previous 10 years. This slowing down reflects the pause in the growth of home expenditure on plant and machinery. It is not the practice to discuss forecasts of detailed categories of imports.
    Mr. Boardman: A large part of the increase in the last nine months comes in the post-devaluation period, and a great deal of it comes in imports of goods which could be manufactured in this country, such as footwear. What is the cause of the increase in products of that type?
    Mr. Dell: I have already made clear that the Government would be glad to see a great deal of additional import substitution. The hon. Gentleman referred to imports of footwear. These, no doubt,
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    are due to the competitiveness of exports from other countries. British industry also is making efforts to export to many other parts of the world, and I hope that these efforts will be successful.
    Mr. Patrick Jenkin: Is not the significant fact regarding these imports of industrial manufactured products, machine tools and so on, that the value has risen by the full amount of the price increases as a result of devaluation, and does not that demonstrate that this is essentially a competitive trade in which specialisation is the guiding light? Do not those facts show up the short-sightedness of Government policies which increase the cost of machinery which we do not make in this country?
    Mr. Speaker: Order. Supplementary questions must be brief.
    Mr. Dell: A great deal of international trade arises from specialisation. That is what international trade is all about. However, that does not mean that there are not considerable opportunities for import substitution, of which, I hope, British industry will increasingly take advantage.

    Aluminium Smelters
    16. Mr. Ridleyasked the President of the Board of Trade what will be the total of loans and grants made toward the cost of the three aluminium smelters out of public funds.
    Mr. Dell: Loans of up to £33 million and £30 million will be made to Anglesey Aluminium Metal Ltd. and the British Aluminium Co. Ltd., respectively. The amounts of investment grants and assistance under the Local Employment Acts for all three companies are confidential.
    Mr. Ridley: Since my calculations, in default of the Minister's, make the total £110 million, will the hon. Gentleman set up an independent inquiry by an economist to ensure that the British taxpayer is getting value for money from this enormous expenditure?
    Mr. Dell: No, Sir. Obviously, I cannot comment on any estimate which the hon. Gentleman makes. As I said, and as I emphasised in the debate in which he played a full part, these figures are and must be confidential unless the firms themselves wish to reveal them. We are

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    confident that this project will be of substantial benefit to this country's economy.
    Mr. James Hamilton: Is my hon. Friend aware that this is a continuation of the Tory Government's policy under which they lent money to private enterprise, and is he further aware that we in Lanarkshire did not think that we got value for money?
    Mr. Dell: I am interested to hear my hon. Friend's view. I am sure that in this case the country will have value for money.
    Mr. Ridley: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible moment.

    Trade Deficit
    20. Mr. Kenneth Bakerasked the President of the Board of Trade if he will give his estimate of the likely size of the deficit on visible trade in 1968.
    Mr. Dell: No, Sir. I shall wait until statistics for the whole year are available.
    Mr. Baker: I appreciate the Minister's reluctance to stick out his neck, but would he agree to comment on the estimate made by the National Institute that the deficit on visible trade this year will be £791 million, which will be the worst in the history of Britain? Does not this contrast with the record year expected in invisible earnings this year, and is this not a case of the gnomes of the City having to bail out this country again?
    Mr. Dell: It was always expected, and said at the time, that the initial effect of devaluation would be to increase the value of imports more than exports in sterling terms in the short term. But there is now a fast-rising trend of exports and I see no reason why hon. Members opposite find it so difficult to welcome this fundamental and essential fact in our current situation.
    Mr. Winnick: Would my hon. Friend not agree that, although some excellent work is being done by many firms and individuals in the export drive, there are speculators in the City who are far more concerned with undermining a Labour Government and Parliamentary demo-
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    cracy itself, than with helping the country's economic position?
    Mr. Dell: I note what my hon. Friend says. What I am most concerned with is building up the nation's exports of both visible and invisible character so that we can get into a balance of payments surplus as rapidly as possible.

    Exports (Foreign Exchange Earnings)
    23. Mr. Blakerasked the President of the Board of Trade whether the rate of earnings in foreign exchange from visible exports during the average of the last three quarters is now as great as during the last three quarters before devaluation.
    Mr. Dell: Yes, Sir. The dollar value was slightly greater; in terms of foreign currencies generally the average increase would be somewhat larger.
    Mr. Blaker: Is the hon. Member not aware of the figures given by his right hon. Friend on 25th November, which show practically no difference in the two figures when it comes to foreign currency earnings? Is not this fact just as significant as the increased percentage in volume terms and the increased value in sterling terms?
    Mr. Dell: The hon. Member must remember the difference between dollars and foreign exchange. As I pointed out, in terms of foreign currencies generally the average increase was somewhat larger. In dollar terms, I agree that it is only slightly ahead. I must emphasise that there was bound to be a fall in the dollar value of our exports immediately after devaluation, but we are currently on a strongly rising trend of exports. This is a fundamental fact of our situation.

    Tourist Industry
    24. Mr. Blakerasked the President of the Board of Trade what is the percentage import content in the value of the output of the tourist industry; and how this compares with manufacturing industry.
    Mr. William Rodgers: In 1963, 18 per cent. of the gross output of manufacturing industry was imported; no corresponding figures are available for those trades which serve tourists, but

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    the weighted average of the proportion imported is likely to be under 10 per cent.
    Mr. Blaker: Do not those figures completely destroy one of the Government's main arguments for the imposition of the Selective Employment Tax?
    Mr. Rodgers: They certainly do not. The important thing is to acknowledge the great importance of tourism and to welcome the proposals which my right hon. Friend put before the House three weeks ago.
    Mr. Higgins: Would the hon. Gentleman not agree that those proposals were made without adequate consultation with the industry? If he really hopes to help the industry, should there not be adequate consultation?
    Mr. Rodgers: There was very full consultation, certainly with the B.T.A. Of course, if organisations wish to make further representations, it is open to them to do so before we introduce the legislation.

    Springburn-Cowlairs Industrial Estate
    25. Mr. Buchananasked the President of the Board of Trade what progress is being made in the development of the Springburn-Cowlairs Industrial Estate.
    Mrs. Gwyneth Dunwoody: Construction of the 20,000 sq. ft. advance factory on this estate has begun, and is expected to be completed in October next.
    Mr. Buchanan: Is my hon. Friend aware that it is very heartening to learn of the progress in the demolition of the old railway works and the construction of new factories in the very short period since this estate was acquired? Would she maintain the urgency necessary to complete the job on the estate and so bring more employment to the Springburn area?
    Mrs. Dunwoody: I am aware of the urgency of building the estate. I am sorry that the demolition work has been held up because of some technical factors, but we hope that the rest of the work will be completed by the end of this year.

    Repair Agencies (Charges)
    26. Mr. Carter-Jonesasked the President of the Board of Trade if he will in-
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    troduce legislation to compel repair agencies to display prominently minimum charges where such charges apply; and if he will make a statement.
    Mrs. Gwyneth Dunwoody: Those who impose a minimum charge for servicing or repair generally make this clear to the customer at the outset, and, if they do not, the customer would be well advised to ask. I see no need for legislation.
    Mr. Carter-Jones: Surely my hon. Friend has given the show away in saying that they "generally" do it; the unscrupulous do not. There may be a case for minimum charges. If it is the sole method of having a repair, is it not unfair to the consumer suddenly to find himself with a fabulous bill for a minimum charge?
    Mrs. Dunwoody: No one sympathises more than I do with what my hon. Friend says, but I am sure that he will realise that there are all sorts of difficulties in this field. For instance, someone who had asked for a service in his home on a piece of machinery would have no way of knowing what was displayed in the shop as a minimum charge. It is a problem, but I hope that people will have enough common sense to demand to know the price of repairs before getting the repair man in.

    Domestic Appliances (After-Sales Service)
    27. Mr. Gwilym Robertsasked the President of the Board of Trade if he will take steps, by legislation or otherwise, to ensure the maintenance of a reasonable after sales service by manufacturers of domestic washing, heating, cooking appliances and other similar consumer durables.
    Mrs. Gwyneth Dunwoody: I do not think that this is a subject which can be dealt with by legislation. In general, I believe that reasonable after-sales service is a matter for the manufacturer to arrange and if my hon. Friend has grounds for thinking that the arrangements made by any particular firm or industry are defective perhaps he will convey them to my right hon. Friend the Minister of Technology.
    Mr. Roberts: But is my hon. Friend aware that I have had a crop of complaints in this direction, particularly in

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    connection with washing machines? Would she not accept that there should be a minimum condition that the major manufacturers should at least provide a direct after-sales service?
    Mrs. Dunwoody: It is to the benefit of any manufacturer to provide a very good after-sales service. I hope that house wives who are not satisfied will tell the manufacturer plainly what they think of his product.

    Service and Distributive Industries
    29. Mr. Michael Shawasked the President of the Board of Trade if he will specify the respects in which manufacturing industry makes a more direct and immediate contribution to the United Kingdom balance of payments than service and distributive industries, respectively.
    Mr. Dell: A larger proportion of the output of manufacturing industry is exported. In general manufacturing industry also competes more with imports than do the service and distributive industries.
    Mr. Shaw: Would the hon. Gentleman recollect that his right hon. Friend felt it right that there should be discrimination in favour of manufacturing industries, in the short term? Could he say, in the years, 1966, 1967 or 1968. where the benefit of such discrimination of such matters as Selective Employment Tax is shown in the figures?
    Mr. Dell: I can certainly indicate one possible benefit from this discrimination in favour of manufacturing industry. That is that, within the downward turn of the cycle in 1967-68, after the boom in 1966, the fall in manufacturing investment was far less than either was estimated or had taken place on previous similar occasions in similar cycles.
    Sir K. Joseph: Will the hon. Gentle man convey to his right hon. Friend our sympathy following his accident and our best wishes for his speedy recovery?
    Would the hon. Gentleman agree that visible trade can be judged only in conjunction with the movement of stocks, that in: he first nine months of 1964 the visible trading deficit was more than half accounted for by the rise in stocks of £260 million, whereas in the first nine
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    months of this year there was a huge visible trading deficit coupled with a falling in stocks of £26 million?
    Mr. Dell: I thank the right hon. Gentleman for the remarks in the first part of that supplementary question, which I will certainly convey to my right hon. Friend.
    On the subject of stock levels, there was a previous Question on this and I repeat that stock levels, after an initial fall, have been rising in recent quarters. I am, of course, speaking of total manufactured stocks. It is absolutely true, however, that we must in future achieve—I hope we shall because this will help our balance of payments—a far better relationship between total production and the level of stocks in this country.

    Anglo-Brazilian Trade
    31. Mr. Martenasked the President of the Board of Trade if he will make a statement on the future of Anglo-Brazilian trade.
    Mrs. Gwyneth Dunwoody: Yes, Sir. Anglo-Brazilian trade is increasing well in both directions. Our exports to Brazil in January-October this year exceeded £36 million compared with just under £16 million in the same period last year; our imports over this period increased from about £22 million to over £33 million. British industry is giving strong and widespread support to the British Industrial Exhibition to be held in Sao Paulo next March. Both the British Government and British exporters are alive to the potential of the developing Brazilian economy, and I hope to see a continued expansion of trade.
    Mr. Marten: While welcoming that Answer and the trend shown in the figures, may I pay tribute at this stage to the results which have been achieved by the visit of Her Majesty the Queen and Prince Philip to Brazil?
    Mrs. Dunwoody: All hon. Members will join in welcoming the demonstration of affection which was shown to Her Majesty on her visit. I am equally sure that all hon. Members hope to see a further expansion of trade between our two countries.
    Mr. Blenkinsop: Is my hon. Friend aware that criticisms have been voiced about British exporters not being fully

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    aware of the opportunities which exist in Brazil's markets, including possibilities in the free port of Manaos in the Amazon?
    Mrs. Dunwoody: The opportunity that we have been given, from the amount of publicity devoted to the visit of Her Majesty and from the expansion of trade which is already taking place, must be followed up by manufacturers in this country, and I hope that they will take every opportunity of doing so.

    Vicuna (Protection)
    32. Mr. Dalyellasked the President of the Board of Trade what representations he has had from the Flora and Fauna Preservation Society on legislation to ban the sale of vicuna skins in Great Britain, and the import of vicuna skins, in order to lessen the dangers of the extinction of the species; and what reply he has sent.
    Mr. Dell: My hon. Friend has informed me of the Society's views, but I have received no representations from the Society.
    Mr. Dalyell: What approaches has Peru made?
    Mr. Dell: We have had representations from the Peruvian Government to ban the free entry into the United Kingdom of live vicuna, skins or cloth and we are currently investigating the situation to see if, in collaboration with other large importers and exporters of vicuna, a viable and effective system of control can be established.

    Riddochhill Colliery, West Lothian (Closure)
    33. Mr. Dalyellasked the President of the Board of Trade what steps he is taking to provide suitable jobs for miners made redundant by the closure of Riddochhill Colliery, West Lothian.
    Mrs. Gwyneth Dunwoody: It is expected that the majority of men affected by the closure of Riddochhill Colliery will be offered jobs in other pits within reasonable daily travel to work distance. It is hoped that others of the men displaced will find jobs in the many expanding industries which have set up in West Lothian in recent years. The Board of Trade will continue to use its powers
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    under the Local Employment Acts, 1960 to 1966, and the Industrial Development Act, 1966, to encourage existing industry to expand and new industry to establish there.
    Mr. Dalyell: How does the Board of Trade define the term, "reasonable daily travel to work distance"?
    Mrs. Dunwoody: This is a difficult problem and I am not pretending that it is easy to say to a man who has always worked and lived in the same village, "You must travel some distance to find a job". My hon. Friend will accept, however, that if we are to establish successful alternative industries, we must do that in new modern premises where industrialists will wish to develop. This is bound to lead to a certain amount of travelling.
    Sir C. Osborne: Were not these miners promised full employment by the Labour Party? Why have those promises been broken?
    Mrs. Dunwoody: The miners are well aware that the Government are very concerned about their future. The hon. Gentleman might care to remember that when the Leader of the Opposition talks about the shibboleth of regional policy, he is not concerning himself with either the future of Scottish miners or anybody else in Scotland.

    Portsmouth (Industrial Development Certificates)
    34. Mr. Juddasked the President of the Board of Trade how many requests for industrial development certificates he has received from Portsmouth in 1968; and how many he has granted.
    Mrs. Gwyneth Dunwoody: In the nine months ended September, 1968, 18 industrial development certificates for 432,000 sq. ft. were issued in the Portsmouth, Havant, Gosport and Fareham employment exchange areas. No applications were refused.
    Mr. Judd: In view of the unemployment level in Portsmouth, which is higher than the national average and twice that of the region of which it is a part, would the hon. Lady assure us that a positive attitude will always be shown towards requests of this kind?
    Mrs. Dunwoody: We must always take the immediate needs of the development areas into priority consideration. Having said that, I assure the hon. Gentleman that we are aware that the seaside towns are facing some difficultties; and we are giving them as much sympathetic consideration as we can.

    Developing Countries (Commodity and Tariff Agreements)
    35. Mr. Juddasked the President of the Board of Trade how many new long-term commodity agreements and how many tariff agreements he has concluded with developing countries in each of the past four years.
    Mrs. Gwyneth Dunwoody: A new International Sugar Agreement was concluded this year. The Kennedy Round of international tariff discussions, leading to a multilateral tariff agreement, was concuded in 1967. In each case the United Kingdom and a substantial number of developing countries were parties to the agreemnt.
    Mr. Judd: In view of this country's commitments to U.N.C.T.A.D. and overseas development, would not the hon. Lady agree that there is room for much improvement in this sphere and that agreements of this kind are worth any amount of aid handed out as traditional charity?
    Mrs. Dunwoody: Obviously for countries which are one-crop countries this must be an immediate means of development. We are members of a number of existing international commodity agreements and it is to be hoped that this kind of trading agreement will be extended in the future.
    Mr. Frederic Harris: Is the hon. Lady aware that this is particularly important to countries like East Africa, which have been placed in difficulty because we devalued and they did not because their circumstances were different? Will she take this point particularly into account?
    Mrs. Dunwoody: Yes, Sir. We are very well aware of the difficulties being faced by East Africa and I assure the hon. Gentleman that we will keep this matter very much in mind.

    Cheese Imports
    36. Mr. Peytonasked the President of the Board of Trade if, in view of the fact that imports of cheese during the first nine months of 1968 showed an increase of more than 17,000 tons against the corresponding period of last year at prices substantially below those ruling in the countries of origin, he will now review the efficacy of the anti-dumping legislation and consider imposing similar quotas to those concerning butter which were introduced in 1962.
    Mr. Dell: No such review is necessary. The anti-dumping legislation as recently amended gives the Board adequate power to act against dumping or subsidisation that is causing or threatening material injury to a British industry. The Board normally requires British producers affected to apply for action under the legislation with supporting prima facie evidence. No application on cheese has been received by the Board.
    Mr. Peyton: Is the Minister satisfied that the legislation affords adequate power? If he is, why in the name of conscience does not the Board of Trade use it? Does he not realise that to continue indefinitely this policy of absorbing other people's surpluses at throw-away prices will spell disaster for the dairy industry and a very big reversal for the country as a whole?
    Mr. Dell: Answering the hon. Gentleman's first point, as I said in my original reply, there has been no application from the industry with the necessary prima facie evidence for us to act on it. As to his second point, the hon. Gentleman knows that my right hon. Friend the Minister of Agriculture made a statement in the House on 6th November, 1968, that he was discussing with the countries concerned a scheme of voluntary restraints for a period after 31st March, 1970.
    Mr. Roebuck: Is my hon. Friend aware that if we enter the European Economic Community there will be no point in anti-dumping legislation, and that the cheese industry will be ruined? What does he intend to do about that?
    Mr. Dell: I know that this is not a question on which I and my hon. Friend

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    are always in agreement, but I would not accept his facts as he states them.
    Mr. Patrick Jenkin: Does not the Minister recall that Article 93 of the Rome Treaty provides quite effective protection against dumping by fellow members of the Common Market?

    Wearside
    37. Mr. Willeyasked the President of the Board of Trade what representations have been made to him about the employment needs of the Wearside area; and what reply he has made.
    Mrs. Gwyneth Dunwoody: I am well aware of the employment needs of Wearside, as of other parts of the North-East, and during my right hon. Friend's visit there in July these were again brought to his attention by the many local representatives he met. My right hon. Friend will continue to do everything possible within his powers to encourage industrial development in the region.
    Mr. Willey: As Sunderland has had the largest percentage of unemployment of any large town in Britain for well over a year, does not my hon. Friend realise that we need exceptional steps to concentrate attention upon the Wearside within overall development area policy?
    Mrs. Dunwoody: I sympathise with my right hon. Friend. I know that his own efforts to assist us in the employment field have been herculean. I am sorry that we have been having so much difficulty, but we hope to see a change in the immediate future.

    Advance Factory, Sunderland
    38. Mr. Willeyasked the President of the Board of Trade whether he will make a statement on the advance factory in Sunderland which is at present unoccupied.
    Mrs. Gwyneth Dunwoody: The Board of Trade is continuing its efforts to find a suitable occupant.
    Mr. Willey: I greatly appreciate my hon. Friend's help in trying to get industry into this factory, but does she not realise that, again, in the circumstances, exceptional measures are necessary; that where the Government have provided a factory they cannot afford to leave it idle, and that we should consider, perhaps, spon-
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    sored production as well as advance building?
    Mrs. Dunwoody: I am sure that my right hon. Friend will accept that we are doing everything we possibly can to get someone in to the factory—[Interruption.]—and hon. Gentlemen opposite who so frequently resent the amount of money spent by the Board of Trade might like to bear in mind their thinking about their own policy.
    Mr. R. W. Elliott: Will the hon. Lady take very much to heart her right hon. Friend's appeal? Is she aware that at this time for every available job in Wear-side there are 68 unemployed men? Is she further aware that the Labour Party in the North-East claimed at the last election that it would clear unemployment in the region in 17 months?
    Mrs. Dunwoody: I am not complacent about any area which has these unemployment problems, but I am sure that the hon. Gentleman will accept that his own leader has made comments which lead us to believe that this would not be his policy if he were returned to power.

    Preston and Blackburn Building Society
    41. Mr. Henigasked the President of the Board of Trade whether he will make an official investigation into the continued delay in completing the liquidation of the Preston and Blackburn Building Society.
    Mr. Dell: The progress of the liquidation is kept under review by the Board of Trade. I am satisfied that the liquidator is doing all he can to bring this difficult and complicated liquidation to a conclusion.
    Mr. Henig: Is my hon. Friend aware that a constituent of mine has now waited for more than eight years to get back anything at all of his investment in the society? Is he further aware that six years after his appointment the liquidator admitted that he still did not know the total amount of claims outstanding? Is not this far too long a period, is it not a most disturbing state of affairs, and will he take a fresh look at the case?
    Mr. Dell: I know the trouble which my hon. Friend's constituent has had, and I very much sympathise with his position. I am convinced that the liquidator is

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    making all the progress he possibly can in the extremely difficult circumstances of this case, and I am prepared to write to my hon. Friend bringing him up to date on the facts.

    Hotel Grant and Loan Scheme
    42. Mr. Michael Shawasked the President of the Board of Trade when he will introduce legislation to give effect to the proposed hotel grant and loan scheme.
    Mr. William Rodgers: As soon as possible after the Christmas Recess.
    Mr. Shaw: Is not the Minister aware that the continuing delay in bringing forward this legislation, far from helping the industry is causing increased uncertainty, for is it not clear that action cannot be taken by the industry solely on the authority of a White Paper?
    Mr. Rodgers: This is correct, and we fully appreciate the hon. Gentleman's point. We want this legislation as soon as possible. It is complicated, and we expect it to cover the new tourist organisations we are setting up.
    Mr. Costain: Does the Minister appreciate that earlier proposals were made without regard to the needs of the industry and of hoteliers, and that his Department is now writing letters expressing views different from those expressed in the House? Will he, therefore, assure the House that he will take the industry into his confidence, and will also take its advice?
    Mr. Rodgers: We have had consultations, and we will have more, but, having published the White Paper and my right hon. Friend having made a statement in the House three weeks ago, we believe it to be in the best interests of the industry that we should proceed as fast as we can to get the legislation.
    Dr. Gray: Does my hon. Friend intend to tie his hotel grant and loan scheme to the scheme for classifying, registering and inspecting hotels so as to ensure that consumers get value for money?
    Mr. Rodgers: This is not the present intention. A scheme such as my hon. Friend mentions is something that must be considered by the new tourist boards. Meanwhile, let us get on with the incen-
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    tives, because I agree that they are needed.

    Industrial Development Certificates
    43. Mr. Brewisasked the President of the Board of Trade how many applications for industrial development certificates by firms wishing to set up or expand within the scheduled development areas have been refused in the past two years.
    Mrs. Gwyneth Dunwoody: Two, Sir.

    Early Potatoes
    44. Mr. Brewisasked the President of the Board of Trade what was the tonnage of early potatoes imported this year; and how it compares with 1966 and 1967.
    Mr. Dell: 303 thousand tons in the first 10 months of this year compared with 234 thousand and 304 thousand tons in the corresponding periods of 1966 and 1967.
    Mr. Brewis: In view of the very large imports of potatoes, particularly in the months of June and July when we can grow them perfectly well ourselves, will the hon. Gentleman seek an agreement with our overseas suppliers to exercise restraint in what they send, and will he do so urgently?
    Mr. Dell: This is a question for my right hon. Friend the Minister of Agriculture, but it is against our trading interests and contrary to international obligations to place further restrictions on early potatoes for balance of payments reasons.
    Mr. Emrys Hughes: What is likely to happen to the importation of new potatoes and the new potato industry in Scotland when we enter the Common Market?
    Mr. Dell: My hon. Friend should not ask me to speculate in that way.
    Mr. Bessell: Is the hon. Gentleman aware that very considerable hardship has been caused to growers of new potatoes, particularly in the South-West? will he, therefore, look at this matter with some urgency?
    Mr. Dell: I shall certainly look at this question. If there were a cause for anti-dumping action, the industry could make such an application but no such application has been received.

  AVIATION

    Edwards Committee (Report)
    5. Mr. Onslowasked the President of the Board of Trade when he now expects to receive the report of the Edwards Committee; and if he will make a statement.
    The Minister of State, Board of Trade (Mr. William Rodgers): By the end of March. But we have discussed with Sir Ronald Edwards whether there would be any possibility of advancing this date and he is aiming at the earliest possible moment consistent with a full and complete report.
    Mr. Onslow: That is welcome news, but is the hon. Gentleman aware that so long as this report remains unpublished damaging uncertainty must effect the future of the independent airlines, and will the hon. Gentleman take this opportunity to give an assurance that he sees these airlines as playing a major part, where they are sound, in the future British civil aviation industry?
    Mr. Rodgers: I think that the hon. Gentleman has less confidence in the independents than they have in themselves at the moment. I refer the hon. Gentleman and the House to a most interesting letter from the Chairman and Managing Director of Caledonian Airways, which recently appeared in The Times, I confirm that we have no doctrinaire views about the future of the industry.
    Mr. Dobson: Does my hon. Friend agree that it is important to give adequate and proper time for this Committee to pursue its very important work, and is it not a bad thing when hon. Gentlemen opposite continually deploy tactics which make the uncertainty in the independent airlines even worse?
    Mr. Rodgers: Certainly we should avoid any damaging speculation. This must be a report which covers the many matters within the Committee's terms of reference. Certainly the sooner the better, but we would not wish any hasty stop gap measures meanwhile.

    B.E.A. (Trident 3-B Aircraft)
    6. Mr. Onslowasked the President of the Board of Trade whether he will now
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    make a statement setting out the basis of calculation of the compensation to be paid to British European Airways on purchase of Trident 3-B aircraft.
    Mr. William Rodgers: My right hon. Friend will be making a full statement about financial aid for B.E.A. when we introduce the necessary legislation.
    Mr. Onslow: Does the hon. Gentleman agree, as his Department told Flight that Parliament is entitled to ask for the necessary explanation, and the necessary explanation will no doubt be given?
    Mr. Rodgers: I am sure that Parliament is entitled to ask for information about the calculations upon which the decision to make this financial aid available was based.
    Mr. Rankin: In view of the question which has just been asked, can my hon. Friend assure us that the £25 million which have been promised as compensation payable over four years still stands?
    Mr. Rodgers: It certainly still stands.

    B.E.A. (Domestic Air Services)
    17. Mr. Ridleyasked the President of the Board of Trade what are the losses for the latest year for which he has figures incurred by British European Airways upon domestic air services.
    Mr. William Rodgers: For its last financial year, 1967-68, B.E.A. assesses the loss at £1½ million.
    Mr. Ridley: Does not the hon. Gentleman consider that causing B.E.A. to make these losses and then making them up from taxes is just about the best way one can think of to bankrupt independent airlines which have the effrontery to compete with the State?
    Mr. Rodgers: Making them up from taxes does not arise. For many years the domestic losses have been more than offset by profits on B.E.A.'s international services.
    Mr. Marten: As the hon. Gentleman said in answer to a previous Question that he had no doctrinaire approach to this matter, will the Government not shut their eyes to the proposition that the best way to solve the whole problem of these airlines is to denationalise the two Corporations?
    Mr. Cronin: Does my hon. Friend agree that these losses contain a substantial component consisting of losses due to services provided, for instance, to the Highlands and Islands which the independent airlines would not touch with a barge-pole because there is no profit in them?
    Mr. Rodgers: That is correct. It is necessary to notice also that most independent airlines are not making a profit on their domestic scheduled services at present.
    Mr. Onslow: When does the hon. Gentleman expect these services to show a profit?
    Mr. Kodgers: As the hon. Member knows, operations must be taken one year with another. This has been a bad year; we hope that the next year will be better.

    Coastal Airports
    28. Mr. Gwilym Robertsasked the President of the Board of Trade what studies he has made of proposed off-shore airport developments on Lake Michigan, United States of America, details of which have been sent to him by the honourable Member for South Bedfordshire; and if he will seek to finance research into the designing of major off-shore airports for use off British coasts to meet the needs of London and other large urban areas.
    64. Mr. Bostonasked the President of the Board of Trade what studies are being made into the problems of coastal air ports.
    Mr. William Rodgers: Coastal and off-shore locations are among the sites at present under consideration by the Roskill Commission for a Third London Airport. In addition, my right hon. Friend the Minister of Public Building and Works is looking into some of the practical and cost problems of airports in such locations, to which the Lake Michigan proposals (which he has studied) do not offer any novel solutions; he also has in mind some longer term research into the feasibility of constructing floating airports.
    Mr. Roberts: Would my hon. Friend not accept that the main decision must be that major airfields of this type must be located considerable distances from major urban centres and that the two problems
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    facing the Government are the design of such airfields and the production of fast passenger transport connecting them with the urban centres?
    Mr. Rodgers: Many considerations are involved and I would be wrong to prejudge in any way the recommendations of the Roskill Commission.
    Mr. Boston: Would my hon. Friend confirm that the replies to Questions on 6th November were in no way intended to prejudge any inquiries currently being made into coastal and other sites? Would he agree that some coastal sites would be far more disadvantageous and would affect adversely far more people than some inland sites which are being suggested?
    Mr. Rodgers: My hon. Friend may be correct in his second statement, but if I am to support him in his first, I do not think that I am required to comment.
    Mr. Fortescue: The Question refers to London and other large urban areas. Is the hon. Gentleman aware that the large urban area of Merseyside has a first-class airport which is grossly under-used and starved of help by the Government? Would he give the House his plans in this connection and confirm that this starvation has no connection with the fact that the airport is not used by either of the two nationalised Corporations?
    Mr. Rodgers: I would not accept the hon. Member's assumption for a moment, but I think that there is a later Question about this problem which deals with it more fully.

    Luton Airport
    39. Mr. Allasonasked the President of the Board of Trade whether he will make an order under the Civil Aviation Act, 1968, for consultation with local interests at Luton Airport.
    Mr. William Rodgers: I would refer the hon. Member to the Answer which I gave to my hon. Friend the Member for Luton (Mr. Howie) on 21st November.—[Vol. 773, c. 322.]
    Mr. Allason: As that reply only told us that Luton was one of a number of places being considered, will the hon. Gentleman tell us whether he needs further representations to ensure that he

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    gives favourable consideration to this plea?
    Mr. Rodgers: No further representations are required to ensure that a decision is made with regard to Luton. We shall make a decision as soon as possible, but before making a decision it is right that we should have consultations with the owners, both municipal and private.
    Mr. Gwilym Roberts: But will not my hon. Friend accept that tens of thousands of people in the area are already affected by aircraft-noise, and as tens of thousands more will be affected if the airport is extended, does he not agree that this matter is of the utmost urgency?
    Mr. Rodgers: I entirely agree that noise at Luton and elsewhere is a real social problem and that we must do all we can to alleviate it. For that reason, we are very anxious indeed to see these consultative committees, which will enable those most affected to express their point of view.
    Mr. Howie: On a point of order, Mr. Speaker. Since the whole of Luton airport lies in my constituency—
    Mr. Speaker: Order. Supplementary question—Mr. Howie.
    Mr. Howie: I am deeply grateful to you, Mr. Speaker. When my hon. Friend says "as soon as possible," or words to that effect, will he try to make sure that his definition of "soon" is at least as agreeable to me and my constituents as it is to him, his Department, and the Luton Borough Council?
    Mr. Rodgers: My hon. Friend is hard to please, such a determined advocate is he for his constituency, but he will be very glad to know that we hope to do this early in the new year.

    Scotland (Passenger Services)
    40. Mr. Eadieasked the President of the Board of Trade if he has studied the Report of the Scottish Board for Development and Industry on passenger flying services in Scotland; and what action he proposes to take.
    Mr. William Rodgers: I assume my hon. Friend has in mind the evidence submitted by the Scottish Council
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    (Development and Industry) to the Edwards Committee. I have certainly read it, but must await the Committee's report before deciding what action to take.
    Mr. Eadie: Is my hon. Friend aware that at Turnhouse Airport, Edinburgh, we have two morning flights to London within about 35 minutes of each other, and that people have to use cars because the commuter services do not seem to fit in with those flights? Does he not think that this situation requires some investi gation?
    Mr. Rodgers: I agree that there are problems about operations at Turnhouse but, in the last resort, some matters must be left to the commercial judgment of the operators themselves. If I understand my hon. Friend's supplementary question aright, it comes within that category.
    Mrs. Ewing: Is the Minister aware that the results of policies followed by successive London Governments has been to separate Scotland from most other countries? Has he seen the B.E.A. summer timetable, which shows that Scotland is not linked with any country in Europe? Will he recommend that Scotland should now be brought back into the world and linked by direct flights to other countries in Europe?
    Mr. Rodgers: I am wholly in favour of Scotland maintaining its links with other parts of Europe. I am sure that in organising their air services, B.E.A. and others have this approach in mind, given the traffic which is available to them to carry.
    Mrs. Ewing: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

FALKLAND ISLANDS
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Michael Stewart): With your permission, Mr. Speaker, and that of the House, I should like to make a statement on the Falkland Islands.
On 26th March last I gave a full explanation to Parliament of our reasons

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for holding talks with the Argentine Government about this question and I also described Her Majesty's Government's policy in these talks in some detail.
In their talks with the Argentine Government Her Majesty's Government have been trying to reach an understanding with Argentina with the object of securing a satisfactory relationship between the islands and the nearest continental mainland. Since that time, the talks have continued and the two Governments have reached a measure of understanding, although this is not yet complete.
There is a basic divergence over Her Majesty's Government's insistence that no transfer of sovereignty could be made against the wishes of the Falkland Islanders.
This pledge has been repeatedly given to Parliament by Ministers who have reiterated on numerous occasions the principle that Her Majesty's Government could only consider the solution of this dispute by a cession of sovereignty to Argentina, first, as part of an arrangement which would secure a permanently satisfactory relationship between the islands and Argentina and, second, if the islanders themselves regarded such an arrangement as satisfactory to their interests and it accorded with their wishes.
It is on this basis that Her Majesty's Government propose to continue to negotiate with the Argentine Government in order to overcome the obstacles which now exist to a normal relationship between the islands and the mainland.
Her Majesty's Government are very conscious of the close ties between the population of the islands and the United Kingdom and of their loyalty to the Crown. It is for this reason that Her Majesty's Government have insisted on the paramountcy of the islanders' wishes. Her Majesty's Government have not exerted any pressure on the islanders to change those wishes nor do they intend to do so.
We shall continue to discharge our responsibilities towards the islands as a British Dependent Territory. In this context it is particularly relevant that, in the course of my right hon. and noble Friend's recent visit to the Falkland Islands, the Executive Council accepted that the British Government have been acting in good faith in our talks with
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Argentina and that our understanding with Argentina, if it is reached, will be fully in keeping with the promise that Her Majesty's Government would not transfer sovereignty against the wishes of the islanders.
Sir Alec Douglas-Home: The House will be grateful to the right hon. Gentleman for taking the earliest opportunity he has had to make the statement. May I ask him these questions? As the right hon. Gentleman said that Her Majesty's Government are not using sovereignty as a bargaining factor and it is the basic difference with the Argentine Government, as it is quite clear the islanders do not wish sovereignty to be transferred and the right hon. Gentleman has said that the wishes of the islanders are paramount, and as the Argentine Foreign Minister has said that there can be no agreement unless sovereignty is ceded, will the right hon. Gentleman tell the House that the question of sovereignty, therefore, will not enter into any future negotiations he may have with the Argentine?
Mr. Stewart: No, I cannot give that undertaking. [HON. MEMBERS: "Oh."] The undertaking I have given, and have given on many occasions, fully secures the position of the Falkland Islanders themselves, but I believe that, despite the fact that there is what I referred to as a basic divergence, we should still try to seek agreement if it can be reached consistently with the principle I have so repeatedly laid down.
Mr. Thorpe: In the right hon. Gentleman's reference to securing a satisfactory relationship between the islanders and Argentina, may we take it that what the Government have in mind are matters like trade and communications and that there is no question of any constitutional alteration envisaged during the nego tiations?
Mr. Stewart: What I said was that the only circumstances in which we could consider settling this dispute by a cession of sovereignty would be, first, that that would be part of the settlement which got a satisfactory relationship in all respects and, secondly, that it did not transgress the principle that we will not transfer sovereignty against the islanders' wishes.
Mr. Hooley: Would my right hon. Friend agree that a 19th-century colonial situation cannot be perpetuated indefinitely in respect of these islands, nor indeed of other colonial territories round the world? Will he confirm that the best way of arriving at a satisfactory settlement is to continue the civilised dialogue he has established with the Argentine Government?
Mr. Stewart: I believe that it is right to continue the dialogue. My hon. Friend referred rightly to attitudes in the world that have been taken up about our former colonial possessions, but I must stress this point: the Charter of the United Nations lays down that in dealing with these matters the interests of the inhabitants must be paramount. We take our stand on that position, but I believe, also, that if we try to live in this century and not in the last it is right by patient argument to try to reach a satisfactory solution.
Mr. Heath: Is the Foreign Secretary saying that he is now continuing these negotiations in order to find a way of transferring sovereignty which he will then put to the islanders to see whether it is satisfactory or not? Is that the purpose of his negotiations now?
Mr. Stewart: What I want to reach is a settlement. From our point of view we want to reach a settlement which will remove the difficulties that there are now between the Argentine and the islanders and to remove the dispute from the United Nations. To do that it has been necessary, as I have repeatedly told the House, to make sovereignty one of the topics of discussion, but we could not agree to the cession unless it were agreeable to the islanders themselves. This has been made clear all along.
Mr. Heath: With great respect, the right hon. Gentleman has not answered my question. It is quite specific and goes to the heart of the matter. Is he now negotiating with the Argentine Government for a form of transference of British sovereignty to the Argentine over the islands which he can then put to the islanders to see whether or not it is satisfactory? Is that what his negotiations are about?
Mr. Stewart: I think that it would be more accurately put thus. [HON. MEM-
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BERS: "Answer."] I am answering the question. I am trying to seek an agreement in which, if there is any reference to cession of sovereignty, it would have to be subject to this over-riding condition. As the right hon. Gentleman knows, we have already taken the Executive Council of the islands into our confidence about the progress of the talks so far. It might well be necessary to do that again if the talks made further progress. If the talks resulted in any kind of understanding which involved in any way a cession of sovereignty, it would have to be subject to this condition.
Mr. Crawshaw: Is my right hon. Friend aware that one of the suspicions is that, although no pressure is being brought to bear on the islanders, the blackest possible economic future is being portrayed for them if they continue to be one of our colonial possessions? Can my right hon. Friend say that this is not so and that, in fact, economic assistance will be given to them if they continue?
Mr. Stewart: Yes, Sir. I am glad this question has been asked, because there have been allegations of the kind to which my hon. Friend refers. They are complete fabrications; they are wholly untrue. For the last 20 years, under the Colonial Development and Welfare Act, we have been giving grants to the islands, quite properly. This was one of the things I had in mind when I said that we should continue to discharge our responsibilities to the islanders as a British Dependent Territory.
Mr. Dalyell: Granted the paramountcy of the wishes of the islanders, is the Foreign Secretary aware that some of us, unlike the Opposition, want adult relations with the nations of South America?
Mr. Stewart: I think that this is an important consideraton. To be fair, my hon. Friend will agree that some hon. Members opposite are aware of this aspect of the matter. I am certainly aware of it, and that is why I am endeavouring to reach agreement.
Mr. Sandys: Is the Foreign Secretary aware that his tortuous replies give the impression that he is in the process of selling the Falkland Islanders down the river? Since the Argentine Government have made it perfectly clear—they have

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said so publicly—that they will not conclude an agreement which does not include the transfer of sovereignty, what is the use of going on talking?
Mr. Stewart: The right hon. Gentleman rarely rises without accusing somebody of bad faith. His statements and declarations are by now totally devalued. The statements I have made repeatedly to the House have not been tortuous at all. I have not disguised from the House that we are in discussions with the Argentine. I have not disguised from the House that sovereignty is part of those discussions. I have made clear to the House the whole time that in no case would there be a cession of sovereignty against the islanders' wishes. It is only possible for someone who wishes to mislead to twist that into something else.
Mr. Wellbeloved: Will my right hon. Friend continue to bear in mind that his fair and straight statement that this country is not prepared to cede sovereignty of the Falkland Islands against the wishes of the inhabitants is fully accepted by all reasonable people? Will he also continue to encourage the Falk-lands Islanders to understand that the long-term solution of their future depends on the establishment of friendly relations between themselves and the Argentine?
Mr. Stewart: I think that the islanders are very well aware of that. I think it was partly because they had that in mind that they authorised my right hon. and noble Friend to say that they recognised that the British Government were acting in good faith and that any understanding, if it were reached, would be consistent with the pledge concerning their wishes.
Mr. Clark Hutchison: Does the Foreign Secretary realise that the Government's attitude is doing untold harm to the islanders and their prospects for future trading? If an agreement is reached with the Argentine, will it be written in that document that there will be no transfer of sovereignty against the islanders' wishes?
Mr. Stewart: I cannot answer as to the exact wording of a document that has not yet been reached or agreed. In no circumstances would the United Kingdom put itself in a position in which it could be required to surrender the sovereignty against the wishes of the islanders. The hon. Gentleman has done his best to
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create disturbance in the islands, but has not succeeded.
Mr. Winnick: Is the Foreign Secretary aware that people who believe in majority rule will be very happy with the statement he has made today? Is he also aware that there has been a vicious campaign by the Opposition and by the Tory Press against our right hon. and noble Friend the Minister of State—a smear campaign somewhat along the lines of that being conducted in relation to a Bill which the House is considering later today?
Mr. Stewart: I am aware that there have been a number of wholly false statements about my right hon. and noble Friend. The decisive reply to them has been given by the statement of the islanders themselves, which I have twice quoted to the House.
Mr. Turton: Do these talks merely concern the Falkland Islands, or do they extend to the Falkland Island Dependencies in the Antarctic, which are very valuable?
Mr. Stewart: The talks do not apply to either of those.
Mr. James Johnson: After hearing the Secretary of State's assurances, which, of course, I believe, may we on this side be told why we ever began the dialogue? Are not these 2,000 people of British stock merely pawns to the Argentine? Is not this affair part of a wider setting in which the Argentine is staking a claim to the Continental Shelf and to fishing limits of about 250 miles?
Mr. Stewart: We began the talks for the reasons I have explained to the House, that there is a dispute here, that the United Nations is seized of it, that there are, while the dispute persists, certain vexations to which the islanders are subject and which they would be glad to see removed. I repeat that I do not know whether we shall be successful, but I think that I should try and go on trying to see whether these drawbacks to the islanders could be removed without the abandonment of the one vital point in the matter.
Mr. Eldon Griffiths: Does the Foreign Secretary's statement involve any going back on undertakings, either given or

431
implied, that he has offered to the Argentine Government? Does he not think that it would be better if as Foreign Secretary he were encouraging and not discouraging these people to stay British?
Mr. Stewart: The suggestion that I am discouraging them to stay British is wholly untrue. The hon. Gentleman has no evidence for it. The answer to his first question is, "No". Indeed, so far there has been no undertaking made of understanding reached of any kind. The talks are still in progress.
Mr. Boyd-Carpenter: What useful purpose is served by continuing to include the question of sovereignty in the talks when the attitude of the islanders is perfectly clear?
Mr. Stewart: Because I still believe that although we must continue to maintain the position we have maintained about the islanders' wishes, it might none the less be possible to reach an agreement which would be beneficial to them and to our relations with Latin America generally.
Mr. Albu: Does my right hon. Friend think that the wilful misunderstanding of his repeated statements by the Opposition is motivated by care for the interests of the inhabitants or by memories of their colonial past?
Mr. Stewart: I always hesitate to speculate about people's motives, particularly the motives of some hon. Members opposite. What is quite clear is that the Government's position in this has now been stated over and over again. There is no excuse for misunderstanding.
Mr. Braine rose—
Hon. Members: Withdraw.
Mr. Braine: While, contrary to what the right hon. Gentleman has just said, I fully accept the Foreign Secretary's good faith and his obvious intention today to clear the air, would he not agree that as long as sovereignty remains on the agenda, statements, whether true or untrue, that joint efforts being made by the two Governments to convince the islanders of the necessity for a change in their links are bound to be misunderstood, if one bears in mind—[HON.
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MEMBERS: "Speech."]—the Argentine Government's known intention to have sovereignty—[HON. MEMBERS: "Speech"]—and the British Government's open declaration that they do not rule out the possibility—[Interruption.]
Mr. Speaker: Order. We are discussing a serious topic.
Mr. Braine: I hope that the House will listen.
Would the Foreign Secretary not agree that these statements have to be seen against the known interest of the Argentine Government to acquire sovereignty and the openly declared view of Her Majesty's Government, expressed only last week, that they do not exclude the possibility of the islanders changing their minds about their remaining British in the future?
Mr. Stewart: No one can make statements which exclude all possibilities in the future. If the hon. Gentleman wants to be quite clear about this, he had better study the terms of the statement which I have just made. I said that we could only consider a solution based on a cessation of sovereignty, first, as part of a generally satisfactory relationship between the islanders and the Argentine and, second, if it accorded with the wishes of the islanders. That has been made clear over and over again. I do not think that this provides any background for the determined efforts of the hon. Gentleman, which I understand that he engaged in last week, to present the House with an incorrect account of what my right hon. and noble Friend has been doing.
Mr. Judd: Would not my right hon. Friend agree that, in view of the complexity of the problem, the Government are right not to be pushed into an irrevocable position on sovereignty or on any other matter and to place so much emphasis on the most thorough possible discussions with the islands' population?
Mr. Stewart: This is a problem which is both complex and difficult. I understand the difficulties which right hon. and hon. Gentlemen opposite raise, in view of known statements of both Governments about this matter. I assure them that I am making it clear that we shall not abandon this essential principle that I have stated so often. In view of that,

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I do not know whether it will be possible to reach an agreement. I hope that it will be, in everyone's interests, including the islanders'.
Viscount Lambton: Will the Foreign Secretary go a little further than he did in his reply to my hon. Friend the Member for Edinburgh, South (Mr. Clark Hutchison) and make it clear that, if an agreed statement is signed, it will include the phrase that sovereignty will depend upon the wishes of the people? Secondly, will he say whether there have been negotiations between England and the Argentine about sales to the Argentine of ships essentially dependent on this agreement?
Mr. Stewart: Certainly, there has been no discussion about sales of ships in connection with this agreement. Whether there have been other discussions connected with ships at any time, I could not say without notice. But it has no connection with this matter.
On the other point, as I said to the hon. Member for Edinburgh, South (Mr. Clark Hutchison), whatever ultimate wording or arrangement may come out—and I cannot predict this—it would have to be consistent with the pledge that I have made repeatedly.
Sir Alec Douglas-Home: We can, it necessary, return to some aspects of this tomorrow I think that the right hon. Gentleman has done his best to reassure the House on this matter of principle
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concerning the paramountcy of the islanders' wishes. As the Argentine Minister has made it clear that there can be no agreement unless sovereignty is conceded, can the Foreign Secretary say what is the point of going on with these negotiations?
Mr. Stewart: I do not think that the right hon. Gentleman has got that quite right. My own statement just now mentioned solution of the matter by cession of sovereignty, but made it clear what were the essential conditions that we should lay down. It may be that those conditions prove so unacceptable that agreement cannot be reached. That is what I do not yet know.
Several Hon. Members rose —
Mr. Speaker: Order. We must move on.

BILL PRESENTED
  HORSERACE BETTING LEVY
  Bill to make further provision with respect to the contributions to be made, under Part I of the Betting, Gaming and Lotteries Act 1963, by bookmakers and the Totalisator Board to the Horserace Betting Levy Board, presented by Mr. James Callaghan; supported by Mr. William Ross and Mr. Elystan Morgan; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 54.]

  HIGHWAYS (STRAYING ANIMALS)
  3.55 p.m.
  Sir Barnett Janner: I beg to move,
  That leave be given to bring in a Bill to provide for the payment of compensation for injury or damage caused by animals straying on the highway.
  I had hoped that the abundant evidence which is and has been available for many years to prove the necessity of affording compensation to those who are injured by animals straying on the highway would have resulted in legislation being passed on a Government level.
  I am indebted, in the first place, to my hon. Friend the Member for Aberdare (Mr. Probert) who, many years ago—[Interruption.]
  Mr. Speaker: Order. The House decided some time ago to continue the consideration of Ten-Minute Rule applications at this point of time. The House must listen.
  Sir B. Janner: I am grateful to you, Mr. Speaker. I appreciate that it is difficult, when introducing a Bill under the Ten-Minute Rule procedure, to command a very large attendance in the House. Nevertheless, I am glad that a number of hon. Members are here, because this is a very important subject.
  We have just been discussing another very important matter affecting a comparatively small number of people in the Falkland Islands. I understand that there are about 2,000 inhabitants. I am in no way deprecating the fact that we have spent some time doing that, but I wonder whether the House realises that the subject matter with which I am concerned is one in which, in one county alone, Monmouthshire, there were over 2,370 accidents during a period of five or six years. Throughout the country, tens of thousands of accidents have been caused by animals straying on roads which have been allowed to do so in consequence of the negligence of those who should be responsible to the persons who are injured.
  As the House is aware, I have sought to get a Private Member's Bill passed dealing with this subject on a large number of occasions and over a period of
  436
  years, unfortunately without success. Our learned judges, as well as very many other experienced persons, have indicated the necessity of dealing with this urgent matter. Families have been and are being deprived of their breadwinners by death and injury caused to them in consequence of animals straying on to highways.
  Every hon. Member will appreciate that a matter which affects his constituents, even though it may not apply to vast numbers compared with other problems, is of vital significance to the particular individuals concerned. This is apparent from the correspondence and interviews which we have. Speaking from a professional standpoint, every client who seeks advice, whether it is on a matter of small or large dimensions, regards his case as being equal in importance to any other. Almost invariably, a professional man treats this situation with complete understanding. We as Members of Parliament do the same when people come to us with their problems, even though they may be problems which, compared with the vast amount of other important work done by Parliament, might be regarded as being comparatively small.
  The common law is still the basis of our legal system. The Law Commission set up under Section 1 of the Law Commissions Act, 1965 for the purpose of promoting the reform of the law submitted a Report on this subject in 1967. It said:
  "To the general liability for negligence there is in the case of animals an important exception under the present law. A school authority may be liable for negligence in allowing a child to wander on to the highway and there cause an accident. But the occupier of land adjoining the highway from which an animal gets on to the highway, there causing injury or damage to a user of the highway, is not liable in negligence even if it is possible to show that in allowing the animal to escape he failed to exercise reasonable care and that the user was guilty of no contributory negligence. This exception to the general rule was confirmed by the House of Lords in Searle v. Wallbank (where the appellant collided on the highway with a horse belonging to the respondent, which had escaped from a field in which the respondent had placed it). However qualified, the exception from negligence liability recognised in Searle v. Wallbank has been the subject of frequent and strong judicial criticism.
  Thus, in Hughes v. Williams, which was decided before Searle v. Wallbank, Lord Greene, M.R., said:

  437
  'In my opinion, this court is banned by a rule of law which I dislike but which has been stated or assumed to exist in several pronouncements of this court… The rule appears to be ill-adapted to modern conditions. A farmer who allows his cow to stray through a gap in his hedge on to his neighbour's land where it consumes a few cauliflowers, is liable in damages to his neighbour, but if through a similar gap in the hedge it strays on to the road and causes the overturning of a motor bus, with death or injury to thirty or forty people, he is under no liability at all. I scarcely think that this is a satisfactory state of affairs in the twentieth century.'"
  When parts of the New Forest were fenced in, the statistics for accidents on one of the lengths of trunk roads so fenced, given by the Hampshire and Isle of Wight Constabulary, showed a fall in the numbers of accidents in which animals were involved. The figures before the fencing was completed on 1st July, 1964 were: 1961, 81 accidents; 1962, 94; 1963; 80. In 1964, the number of accidents was reduced to 35, and in 1965, the first full year of fencing, the number fell to three. In 1966, one accident took place.
  The Law Commission has produced a draft Bill, and I am sure that if an hon. Member who was successful in the Ballot had taken up the Bill the Government would have agreed to do something about the matte". If it is desirable and there is no Government objection, I see no reason why a private Member should not be able to carry through a Bill of this nature.
  Question put and agreed to.
  Bill ordered to be brought in by Sir Barnett Janner, Mr. Arthur Probert, Mr. Donald Coleman, Sir Stephen McAdden, Mr. Leo Abse, Sir Myer Galpern, Dr. M. P. Winstanley, Mr. Albert Roberts, Mrs. E. M. Braddock, Mr. Gordon Oakes, Mr. Michael English, and Mr. Graham Page.

  HIGHWAYS (STRAYING ANIMALS)
  Bill to provide for the payment of compensation for injury or damage caused by animals straying on the highway, presented accordingly, and read the First time; to be read a Second time upon Friday, 21st February and to be printed. [Bill 52.]
ORDERS OF THE DAY

  REPRESENTATION OF THE PEOPLE BILL
  Considered in Committee [Progress, 10th December].
  [Mr. HARRY GOURLAY in the Chair]
  Clauses 16 to 23 ordered to stand part of the Bill.

Clause 24

  OTHER CONSEQUENTIAL AND SUPPLEMENTARY AMENDMENTS, AND REPEAL
  4.5 p.m.
  The Under-Secretary of State for the Home Department (Mr. Merlyn Rees): I beg to move Amendment No. 90, in page 19, line 12, at end insert:
  (2A) In Part VI of Schedule 3 to the Local Government Act 1933, in paragraph 5 (5) (which was substituted for the previous paragraph 5 (5) by section 5 of the Local Government Elections Act 1956 and applies certain provisions to polls consequent on a parish meeting)—

  (a) after the words 'A poll consequent on a parish meeting' there shall be inserted the words 'shall be a poll of those entitled to attend the meeting as local government electors, and'; and

  (b) any reference to a provision of the Representation of the People Act 1949 which is amended by this Act shall have effect as a reference to that provision as so amended, and the reference to the local elections rules shall apply also to paragraph 11 of Schedule 2 to this Act.

  This is a technical Amendment. Paragraph 5 (5), of Part VI of Schedule 3 to the Local Government Act, 1933 as replaced by Section 5 of the Local Government Elections Act, 1956, refers to local election rules. These are altered in the Bill and paragraph (b) of the Amendment deals with this. Paragraph (a) deals with the situation that between the date of the parish meeting at which a poll is demanded and the date at which the poll is held, more people may reach voting age and become electors. Under the Amendment, only the electors who were entitled to attend the parish meeting at which the poll was demanded will be entitled to vote at the poll consequent thereon. The poll is therefore, in

  439
  effect, an adjournment of the parish meeting.
  Mr. Richard Sharples: I do not think that anyone will quarrel with the Amendment, which is probably useful. There is another reason why we do not quarrel with it. It is the first Amendment that the Government have put down. We are grateful to them for using the parish councils as this vehicle, because it gives us the opportunity of debating the matter on Report, which otherwise I do not think we should have been able to do.
  Amendment agreed to.
  Clause, as amended, ordered to stand part of the Bill.
  Clauses 25 to 28 ordered to stand part of the Bill.

New Clause 2

  PROPORTIONAL REPRESENTATION
  After the passing of this Act the election of councillors of London boroughs and of the Greater London Council shall be conducted in accordance with the principle of proportional representation, and notwithstanding anything to the contrary in the Representation of the People Act 1949, the provisions of the Schedule (Proportional Representation) to this Act shall have effect with respect to the marking of ballot papers and the counting of votes.—[Mr. Lubbock.]
  Brought up, and read the First time.
  Mr. Eric Lubbock: I beg to move, That the Clause be read a Second Time.
  The Deputy Chairman (Mr. Harry Gourlay): We shall discuss, at the same time, Amendment No. 45, also standing in the name of the hon. Member for Orpington (Mr. Lubbock), the new Schedule:

  PROPORTIONAL REPRESENTATION
  Definitions
  1. In this Schedule:

  (1) the expression 'continuing candidate' means any candidate not elected or not excluded from the poll at any given time;

  (2) the expression 'first preference' means the figure '1' standing alone opposite the name of a candidate; 'second preference' means the figure '2' standing alone opposite the name of a candidate in succession to the figure '1'; 'third preference 'means the figure '3' standing alone opposite the name of a candi-
  440
  date in succession to the figures '1' and '2'; and so on;

  (3) the expression 'next available preference' means a second or subsequent preference recorded in consecutive numerical order for a continuing candidate, the preferences next in order on the ballot paper for candidates already elected or excluded from the poll being ignored;

  (4) the expression 'transferable paper' means a ballot paper on which, following a first preference, a second or subsequent preference is recorded in consecutive numerical order for a continuing candidate;

  (5) the expression 'non-transferable paper' means a ballot paper on which no second or subsequent preference is recorded for a continuing candidate:

  Provided that a paper shall be deemed to have become a non-transferable paper when ever—

  (a) the names of two or more candidates (whether continuing or not) are marked with the same number and are next in order of preference; or

  (b) the name of the candidate next in order of preference (whether continuing or not) is marked:

  (i) by a number not following consecutively after some other number on the ballot paper; or

  (ii) by two or more numbers; or

  (c) for any other reason it cannot be determined for which of the continuing candidates the next available preference of the voter is recorded;

  (6) the expression 'original vote' in regard to any candidate means a vote derived from a ballot paper on which a first preference is recorded for that candidate;
  (7) the expression 'transferred vote' in regard to any candidate means a vote derived from a ballot paper on which a second or subsequent preference is recorded for that candidate;
  (8) the expression 'surplus' means the number of votes by which the total number of the votes, original and transferred, credited to any candidate, exceeds the quota;
  (9) the expression 'count' means:

  (a) all the operations involved in the counting of the first preferences recorded for candidates; or

  (b) all the operations involved in the transfer of the surplus of an elected candidate; or

  (c) all the operations involved in the transfer of votes of an excluded candidate or of two or more candidates excluded together.

  Method of voting and counting votes
  2.—(1) Each voter shall have one transferable vote.
  (2) A voter in recording his vote—

  (a) shall place on his ballot paper the figure 1 opposite the name of the candidate for whom he votes: and

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  (b) may in addition indicate the order of his choice or preference for as many other candidates as he pleases by placing against their respective names the figures 2, 3, 4, 5, and so on in consecutive numerical order.

  3. A ballot paper shall be invalid on which—

  (a) the figure 1 standing alone indicating a first preference for some one candidate is not placed; or

  (b) the figure 1 standing alone indicating a first preference is placed opposite the name of more than one candidate; or

  (c) the figure 1 standing alone indicating a first preference and some other figure are placed opposite the name of the same candidate; or

  (d) it cannot be determined for which candidate the first preference of the voter is recorded; or

  (e) any mark is placed by the voter by which he may afterwards be identified.

  4. The form of ballot paper to be used, and the form of directions for the guidance of voters in voting shall be in such form as the Secretary of State may by order pre scribe.
  5. After the ballot papers for an electoral division have been counted and mixed in accordance with Rule 46 of the Second Schedule to the Representation of the People Act 1949, the returning officer shall examine the ballot papers and shall sort them into parcels according to the first preferences recorded for each candidate, rejecting any that are invalid.
  6. The returning officer shall then count the papers in each parcel and shall credit each candidate with a number of votes equal to the number of valid papers on which a first preference has been recorded for such candidate, and he shall ascertain the total number of valid papers.
  7. The returning officer shall then divide the total number of valid papers by a number exceeding by one the number of vacancies to be filled. The result increased by one (any fractional remainder being disregarded) shall be the number of votes sufficient to secure the election of a candidate. This number is herein called the 'quota'.
  8. If at the end of any count the number of votes credited to a candidate is equal to or greater than the quota, that candidate shall thereupon be elected.
  9.—(1) If at the end of any count the number of votes credited to a candidate is greater than the quota, the surplus shall be transferred, as provided in this paragraph to the continuing candidates for whom the next available preferences have been recorded on the ballot papers in the parcel or sub-parcel last received by the elected candidate.
  (2) (a) If more than one candidate has a surplus, the largest surplus shall be dealt with first.
  (b) If two or more candidates have each an equal surplus, the surplus of the candidate with the greatest number of notes at the
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  earliest count at which the candidates in question have an unequal number of votes shall be dealt with first. When the numbers of votes credited to such candidates are equal at all counts, the returning officer shall determine which surplus he will deal with first.
  (3) The returning officer need not transfer a surplus when that surplus, together with any other surpluses not transferred, is less than the difference—

  (a) between the votes of the candidate lowest on the poll and the votes of the candidate next above; or

  (b) between the total of votes of the two or more candidates lowest on the poll and the votes of the candidate next above, provided that the exclusion from the poll of the aforesaid two or more candidates lowest on the poll shall not reduce the number of continuing candidates below the number of vacancies remaining to be filled.

  (4) (a) If the votes credited to an elected candidate consist of original votes only, the returning officer shall examine all the papers contained in the parcel of the elected candidate whose surplus is to be transferred.
  (b) If the votes credited to an elected candidate consist of original and transferred votes, or of transferred votes only, the returning officer shall examine the papers contained in the sub-parcel last received by the elected candidate whose surplus is to be transferred.
  (c) In either case, the returning officer shall sort the transferable papers into sub-parcels according to the next available preferences recorded thereon, shall make a separate sub-parcel of the non-transferable papers and shall ascertain the number of papers in each sub-parcel of transferable papers and in the sub-parcel of non-transferable papers.
  (5) If the total number of papers in the sub-parcels of transferable papers is equal to or less than the surplus, the returning officer shall transfer the whole of each sub-parcel of transferable papers to the continuing candidate indicated thereon as the voters' next available preference, and shall set aside as a separate sub-parcel so many of the non-transferable papers as are not required for the quota of the elected candidate. The particular papers set aside shall be those last filed in the sub-parcel of non-transferable papers.
  (6) (a) If the total number of transferable papers is greater than the surplus, the returnning officer shall transfer from each sub-parcel of transferable papers to the continuing candidates indicated thereon as the voters' next available preference the number of papers which bears the same proportion to the number of papers in the sub-parcel as the surplus bears to the total number of transferable papers.

  (b) The number of papers to be transferred from each sub-parcel shall be ascertained by multiplying the number of papers in the sub-parcel by the surplus and dividing the result by the total number of transferable papers. A note shall be made of the fractional part, if any, of each number so ascertained.

  (c) If owing to the existence of such fractional parts, the number of papers to be transferred is less than the surplus, so many of

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  these fractional parts, taken in the order of their magnitude, beginning with the largest, as are necessary to make the total number of papers to be transferred equal to the surplus shall be reckoned as of the value of unity, and the remaining fractional parts shall be ignored.

  (d) If two or more fractional parts are of equal magnitude, the fractional part shall be deemed to be the largest which arises from the largest sub-parcel, and if the sub-parcels in question are equal in size, the fractional part credited to the candidate with the greatest number of votes at the earliest count at which the candidates in question have an unequal number of votes shall be deemed to be the largest. When the numbers of votes credited to such candidates are equal at all counts, the returning officer shall determine which fractional part shall be deemed to be the largest.

  (e) The particular papers transferred from each sub-parcel shall be those last filed in the sub-parcel, and each paper so transferred shall be marked in such a manner as to indicate the count at which the transfer took place.

  10.—(1) If at the end of any count no candidate has a surplus, or if any existing surplus need not be and is not transferred, and one or more vacancies remain to be filled:

  (a) the returning officer shall exclude from the poll the candidate lowest on the poll; but

  (b) if the total of the votes of the two or more candidates lowest on the poll together with any surplus votes not transferred is less than the number of votes credited to the candidate next above these, the returning officer may at the same count exclude the aforesaid two or more candidates lowest on the poll, provided that the exclusion of these candidates shall not reduce the number of continuing candidates below the number of vacancies remaining to be filled.

  (2) If, when a candidate has to be excluded, two or more candidates have each the same number of votes and are lowest on the poll, the candidate with the lowest number of votes at the earliest count at which the candidates in question have an unequal number of votes shall be excluded, and, when the numbers of votes credited to those candidates are equal at all counts, the returning officer shall determine which shall be excluded.
  (3) Upon the exclusion of any candidate, the returning officer, save as hereinafter provided, shall examine all the papers credited to that candidate; shall sort the transferable papers into sub-parcels according to the next available preferences recorded thereon for continuing candidates; shall transfer each sub-parcel to the candidate for whom that preference is recorded; and shall set aside as a separate sub-parcel the non-transferable papers.
  11.—(1) If at the end of any count the number of elected candidates is equal to the number of vacancies to be filled, no further transfer of voters shall be made.
  (2) If, on the exclusion of a candidate or candidates, the number of the then continuing candidates is equal to the number of vacancies unfilled, the continuing candidates shall
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  thereupon be elected, and no further transfer of votes shall be made.
  12. The order of priority of election of elected members shall be the order in which they are severally elected. If at the end of any count two or more candidates are elected, the order of priority shall be the order of magnitude of the numbers of votes credited to such candidates, beginning with the greatest.
  13.—(1) Whenever any transfer is made, each sub-parcel of papers transferred shall be placed on the top of the parcel, if any, of papers of the candidate to whom the transfer is made and that candidate shall be credited with a number of votes equal to the number of papers transferred to him.
  (2) Non-transferable papers (except such as in the transfer of a surplus may be required for the quota of the elected candidate) shall be set aside as a separate sub-parcel together with any parcel of non-transferable papers already set aside.
  (3) On the transfer of the surplus of an elected candidate, all papers not transferred to continuing candidates and not set aside as provided in the preceding paragraph, shall be placed together in one parcel as the quota of the elected candidate and the parcel shall be marked with the name of the elected candidate.
  14. Any candidate or his agent may, at the end of any count, request the returning officer to re-examine and recount all or any of the papers dealt with during that count, and the returning officer shall forthwith re-examine and recount accordingly the papers indicated without making any alteration in the arrangement of the papers in the various parcels, save where such alteration may be necessary in consequence of any error discovered in the recount; the returning officer may also at his discretion recount papers either once or more often in any case in which he is not satisfied as to the accuracy of any previous counting of the votes:
  Provided that nothing herein shall make it obligatory on the returning officer to recount the same papers more than once.
  15. If any question shall arise in relation to the exclusion from the poll of any candidate, or to any transfer of votes, the decision of the returning officer, whether expressed or implied by his acts, shall be final unless objection is made in writing by any candidate or his agent before the declaration of the poll, and in that event the decision of the returning officer may be reversed upon an election petition.
  16.—(1) If upon an election petition—

  (i) any ballot papers counted by the returning officer are rejected as invalid; or

  (ii) any rejected ballot papers are declared valid,

  the Court may direct the whole or any part of the ballot papers to be recounted and the result of the election ascertained in accordance with these regulations.
  (2) If upon an election petition the decision of the returning officer upon any operation

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  is reversed, the operation in question and all operations subsequent thereto shall be void and the court shall direct what operation is to be made in place of the operation in question, and shall cause the subsequent operations to be carried out and the result of the election to be ascertained in accordance with this Schedule.
  (3) On any recount, subject to such modifications as may be necessary by reason of any order of the court, each paper shall take the same course as in the original counting of the votes.
  17. The counting of the votes having been completed in accordance with this Schedule the returning officer shall publish a notice of the result of the poll and of the names of the persons elected. Such notice shall include a record of any transfer of votes made under this Schedule and of the total number of votes credited to each candidate after any such transfer, and shall be in such form as the Secretary of State may by order prescribe.
  Mr. Lubbock: It is an interesting reflection that the system we advocate in the Clause and the Amendment is considered all very well for export, but not suitable for home consumption. On several occasions when it has been our task to confer constitutions on developing countries, we have chosen proportional representation. For example, in Guyana, the right hon. Member for Streatham (Mr. Sandys), then Secretary of State for the Colonies, introduced such a system, although not along the lines I proposed. It was a list system and there are considerable differences between that and a transferable vote system. The House, therefore, has always thought proportional representation worthy of consideration for application to others but little thought has been given to its introduction here.
  I do not propose to detail the mechanism set out in the Schedule which constitutes Amendment No. 45, because it is not necessary to understand how the single transferable vote operates in order to make it work for the electorate. One must only bear in mind that, instead of putting a cross against the name of a single candidate, the voter places 1, 2 and 3 against the names of three candidates in order of his preference and, therefore, gives himself wider freedom of choice.
  For the counting process, I use an analogy in what was said by the Secretary of State for Defence when he appeared before the Select Committee on Science and Technology. He was asked
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  why control of defence research appears to be so complicated. He said that it is like a transistor radio. When one turns it on, "pop" music comes out but, if one opens up the back, the circuits look very complicated. I hope that we can leave out any argument concerning details of counting and the job of electoral registration officers and consider the principles, which I outlined both in the debate on the White Paper and on Second Reading of the Bill.
  There are four principles on which any electoral system should be based. First, it should enable every citizen to participate in the process of government by making an effective choice between persons and attitudes. Secondly, it should not only give the vote to every elector but should ensure that, roughly speaking, every vote has the same influence on the final results. In slogan form, this second principle could be represented by, "one vote, one value", which is of equal importance to "one man, one vote".
  I recall the statement by the Minister without Portfolio about the electoral system in Rhodesia. He said, referring to the delimitation formula:
  "This provides that as the number of Africans on the A roll increases, the Africans' chances of capturing A roll seats should increase proportionately."—[OFFICIAL REPORT, 18th November, 1968; Vol. 773, c. 899.]
  It is, therefore, considered desirable that Rhodesian Africans should be represented in their House of Commons in proportion to the number of entries they have on the electoral roll. This is yet another example of Governments being keen on applying this principle to overseas territories, but not wishing to apply it here at home.
  The third principle is that any system must give fair representation in accordance with the number of votes cast as between different points of view. This applies not only to the different parties, as in the continental party list systems of proportional representation, but also to different expressions of opinion within the parties.
  Finally, the system should not be capable of giving arbitrary results because of the operation of extraneous factors such as delimitation of constituency boundaries.
  I have no doubt that the Under-Secretary of State will argue against the single

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  transferable vote as it applies generally and in the case of Greater London, in particular. Perhaps I can anticipate some of his arguments. First, we hear a great deal about "strong government" from opponents of electoral reform but if we recall the experiences this century in Parliamentary elections we find that we have had not such thing. On many occasions this century, we have had Governments either with no majority or with only a small majority which has been practically unworkable.
  4.15 p.m.
  The most recent case was in 1964 when, although, because of the praiseworthy efforts of their Chief Whip, the Government managed to survive for 18 months, there was a perpetual struggle to survive. No one would call that strong government. I believe that many decisions which should have been taken by the Government when they took office in 1964 were not taken because of the tenuousness of their majority. If they had been able then to deal more firmly with the situation in Rhodesia and to take the right kind of action to cope with the balance of payments crisis, particularly in the case of devaluation, we should not be in some of the difficult crises we face every few weeks today.
  It was because of that small majority, which was a result of our present electoral system, that the Government failed to take these decisions and the country is now in a mess. Let us be clear that our system does not by any means give strong government. On the other hand, it is not the case that, with the single transferable vote, wherever it is applied, the majority is necessarily very small.
  The second main theme of those who oppose the single transferable vote is the important argument about the association between a Member of Parliament and his constituency.
  They consider that, by having multimember constituencies of from three to seven members, as provided for in Amendment No. 45 in the case of Greater London, there will be some weakening of this close association between a member and his supporters at an election. I must agree that this is a valuable feature of our present system, even though it is not
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  one of the principles on which we should devise an electoral system.
  Are hon. Members not sometimes misled by the size of their postbag into thinking that their association with their constituents is closer than it is? A survey conducted by the Sunday Times and published on 16th October, 1966, showed that 58 per cent. of the people in the sample knew who their Member of Parliament was. Thus, by inference, 42 per cent. of those questioned were not even aware of the name of their Member.
  The second point about hon. Members' correspondence is, I think, that those who approach an hon. Member either by letter or through his advice bureau are only a tiny fraction of the electors in a typical constituency. Even many of the letters we receive from our constituents are instigated by interested bodies or pressure groups. For example, yesterday the hon. Member for Bury and Radcliffe (Mr. Ensor) sought leave to introduce a Bill on what he called "humane slaughter". I must have had 100 letters from constituents as a result of a pamphlet widely distributed in Orpington asking me to support him.
  I do not believe that those who wrote those letters had thoroughly studied the objections to the Bill nor had considered the great weight of scientific opinion that the methods of slaughter adopted by Jews and Mohammedans are as humane as those adopted by Gentiles. I mention this as an example of the enormous postbag one can receive as a result of the activities of pressure groups and which may mislead one into thinking that one is in close touch with opinion throughout the country.
  Mr. John Mendelson: I do not want in any way to question the hon. Gentleman's zeal for the method that he is proposing, but I hope that he will not, in the process of his argument, do damage to the very positive relations between Members and the electorate under our present system. The first part of his argument is a complete travesty of the truth. Surely it is irrelevant. There may be only 500 or 600 a year who write, out of 50,000, because not everyone has a case that he wishes to bring to the notice of the Member.
  Mr. Lubbock: I must apologise to the hon. Gentleman, who has had to

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  listen to my argument on about five previous occasions. There may be some repetition in what I have to say. Some hon. Members who were not on Mr. Speaker's Conference may be hearing this for the first time. I agree with what he has said—one would not want in any way to denigrate the association between a Member and his constituency, and I am far from wishing to do that, because I depend on it very heavily, as the hon. Gentleman may know.
  In my constituency I have a weekly advice bureau, and I probably have as heavy a post-bag as any other hon. Member. I counted the number of letters I received during the first six months of this year and they came to 2,251. I am answering 4,500 letters a year, and would be the last to play down the association between a Member and the constituency he represents. I am only trying to show that not all of the letters one receives are of equal importance, and that if one measures the connection, which has great value, purely in numerical terms, one may be misled into thinking that it is slightly closer than it is.
  Mr. Cranley Onslow: The hon. Gentleman will understand that all hon. Members can deliver equally convincing "commercials". I would invite him to return to the Motion that he is moving. Much of his argument is familiar to me, too. Would he assure us that he will deal with something which I do not think I have ever heard dealt within this context before, and that is how, in a multi-Member constituency one has a by-election?
  Mr. Lubbock: If the Chairman will allow me to deal with it, I will do so.
  To return to the original question, there is a small number of very important cases which come to our attention, and with which perhaps only we are capable of dealing. I have been very disappointed in the performance of the Parliamentary Commissioner since this House established his office. I believe that hon. Gentlemen can do the job very much better. For this reason I would be the last to wish to lose this connection. But, with my experience of six years in the House I say that as a Member for a multi-Member constituency, the London Borough of Bromley which returned four Members, I would not be in any less
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  closer touch because I represented only one part of it.
  This leads me to the question asked by the hon. Member for Woking (Mr. Onslow).
  Mr. Michael English: I am listening with interest to the hon. Member's remarks. As he knows I support him in certain parts of his argument. However, he should not be allowed to get away with the statement, "I have been very disappointed in the performance of the Parliamentary Commissioner", when it is quite unbacked by evidence. Many hon. Members very much appreciate the abilities of the Commissioner, within his terms of reference. If they are wrong, that is a matter for us.
  Mr. Lubbock: It would be out of order to go into the rôle of the Parliamentary Commisioner in any detail. What I have said is that I do not think that the Commisioner can replace an hon. Member. I agree with the hon. Member for Penistone (Mr. Mendelson) that we are already doing this job, have been doing it for many years before the Commissioner was appointed, and will continue to do it to the best of our ability, whether we have single Member or multi-Member constituencies. I am trying to point out that it would make no difference to any of us.
  I agree with the hon. Member for Woking that we can all quote personal experience to back up this talk of the care and attention which we devote to Parliamentary cases. If someone comes to us with a pensions grievance, or with a complaint about the education of his child, we will investigate it carefully, obtain reports from the officers of the local authority or the Ministry concerned and, having satisfied ourselves that the complaint is justified, we will see it through to its conclusion in the hope that we can obtain a satisfactory result for the person concerned.
  My point is that because one is one of three or five or seven Members representing a multi-Member constituency, one will not necessarily devote any less care to those individual cases than one does at present. One might even devote more time, because the constituents in one's; area would have a greater choice of hon.

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  Members to whom they could take their problems, as they already do on some local authorities.
  I want to answer the question put by the hon. Member for Woking about by-elections. In the case of the Greater London Council, where there is a by-election in a multi-Member constituency, the electorate throughout the whole borough is entitled to vote. We had a by-election in my own London Borough of Bromley quite recently and this was how the procedure went. All the 250,000 electors in the whole of the borough voted to replace that councillor who had died.
  Mr. Onslow: When the hon. Member says all 250,000 voters, I am sure that he has made a mistake. What proportion actually voted?
  Mr. Lubbock: I will deal with that point later.
  The other alternative is for the multi-Member constituency to be divided into the same number of electoral areas as there are Members representing it, purely for the purposes of the by-elections which may occur, and for dealing with those personal cases which are as interesting to me as they are to the hon. Member for Penistone (Mr. Mendelson). With these two alternatives I believe that we have solved the main objection about the closeness of the association in our Parliamentary system between a Member and his constituents.
  The third main objection in many people's minds is that the single transferable vote and proportional systems generally, lead to a multiplicity of parties. This arises from confusion of thought in the minds of those who have not studied this matter in any great detail, between the list system of proportional representation, common on the Continent, and the single transferable vote. This is used in the Republic of Ireland and Tasmania.
  If we look at those countries we find that there is no multiplicity of parties. In Tasmania, we find that there are only two parties there as compared with the rest of Australia, where generally speaking, there are four, the Australian Labour Party, the Democratic Labour Party, the Countryside Party and the Liberal Party.
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  The contention that some people advance that the single transferable vote leads to an increase in the number of parties is false and arises from the confusion with these lists, such as one has in many European countries, where the smaller parties are represented. That deals with the question which is often raised of how the system works in certain overseas countries.
  4.30 p.m.
  If one has any doubts about this matter, it is instructive to look at the recent poll taken in the Republic of Ireland. The electorate was asked whether it favoured changing to the British system or retaining the single transferable vote which has operated in that country since independence in 1921. The result of the referendum on 16th October this year was that over 424,000 people were in favour of changing to the British system and 659,000 people were in favour of retaining the single transferable vote—a majority roughly of 233,000 votes in favour of proportional representation.
  We see, therefore, that people who have had experience of the operation of the system for a number of years like it very much and do not want any change to be made even when, as in this case, their Government tries to persuade them, with all the propaganda weapons at their disposal, that this change would be in the people's interest.
  Turning to the situation in Greater London, it is interesting to recall a passage from a speech by the late Mr. Winston Churchill, as he then was, when the Representation of the People (No. 2) Bill was being discussed on 2nd June, 1931. He said:
  "Having to choose, as we shall have to choose if we are to redress the constitutional injustice, between the Alternative Vote, the Second Ballot and Proportional Representation in the cities, I have no doubt whatever that the last is incomparably the fairest, the most scientific and, on the whole, the best in the public interest."—[OFFICIAL REPORT, 2nd June, 1931; Vol. 253, c. 102.]
  If we are discussing the G.L.C. elections, to which I have attached the new Clause, we see from the results in the 1964 and 1967 contests why it would be desirable to make this change. There were some serious anomalies in 1964 and 1967. In 1967, the Labour Party secured only 18 out of the 100 seats, in spite

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  of the fact that it received more than one-third of the votes. Similarly, in 1967, the Conservatives, with their 82 seats, were vastly over-represented in relation to the share of the poll which they secured. In 1964, it worked the other way round. The Labour Party had a very substantial majority, although it received only the minority of the votes cast.
  One of the reasons for that is that in Greater London we have had multimember constituencies which correspond with the boundaries of the boroughs. For that reason, I thought that it would perhaps be useful to discuss the single transferable vote in the context of Greater London, because these multi-Member constituencies are ready made. Although, as I have shown in the figures which I quoted, it works very badly in the case of the "first-past-the-post" system, it would enable the single transferable vote to be introduced in the Metropolis with very little other change.
  Another point worth bearing in mind in connection with Greater London is that as the population shifts, and people continue to move out from the centre, as they have done historically over a very long time, it would be necessary not to make adjustments to the boundaries, but merely to alter the number of councillors returned for each multi-Member constituency. The object of the Royal Commission on which the London Government Act was based on designing smaller boroughs on the periphery of London and larger ones in the middle so that as the population moved out the electorate would be equalised. Unfortunately, it was done the other way round.
  Some of the largest boroughs are on the outskirts, in particular, the London Boroughs of Croydon and Bromley. Sooner or later, because these are the areas in which the population is growing most rapidly for the simple reason that land is still available in them for building houses, it will be necessary to redistribute the boundaries and transfer part of these boroughs to their neighbouring constituencies unless we are to have more than four councillors elected for one of the electoral areas. But with the system we are advocating there would be no necessity for that. We could merely alter the number of councillors returned without making any other consequential amendment.
  The hon. Member for Woking asked me what the turn-out was at the recent G.L.C. by-election in my borough. It was 20 per cent. I said, after the result had been declared, that it was shocking that so few people had bothered to vote in an election which vitally concerned the interests of the 250,000 people who live in that area. But, in a way, I could understand it. The Conservatives have always had a very big majority in the London Borough of Bromley as a whole. One or two people wrote to me after my remarks about the poor turn-out and said, "Why should we bother? We knew that the Conservatives were bound to win and that our vote would have no effect".
  That is one of the main reasons why there is a very poor turn-out of electors in local elections in many areas. It is not because people are disinterested in the services provided for them by their rural district, county borough or county council; it is that in the vast majority of cases they know that their single vote will carry no weight whatsoever in the result. Many of us, if we live in areas in which the majority party has a vast lead, go through life without influencing the result in the slightest. In many cases, we might as well have stayed at home in front of the television set on polling day for all the difference that we have made to the result.
  I have never been able to understand why there should be such a strong antipathy, particularly among those active in politics, to the idea of the single transferable vote. Conversely, I have never been able to understand why it should be assumed that over the years we have gradually approached more closely to the ideal of a perfect democracy as more of our citizens have been able to exercise the vote and fewer of them have been able to exercise it twice. If a man's vote in one electoral area is worth twice, three or four times that of his fellow citizen in some other area, we may have the appearance of democracy, but it is more apparent than real. When millions are, in effect, permanently disfranchised because of the small influence which they may exert on the result of an election throughout their adult lives, it is not surprising that the majority of people, particularly the young, are beginning to wonder whether some other kind of system should be substituted for our

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  parliamentary and local government democracy.
  This is probably the last opportunity that we shall have to make a change in our system for the next 20 years. I hope that we take it.
  Mr. English: The hon. Member for Orpington (Mr. Lubbock) spoilt the best part of his case, although he put up a very good defence for some of its weakest parts. He has spoilt the possibility of allowing individual local authorities to choose rational democratic systems of their own. Whether one accepts or rejects his argument for a particular system of election, his suggestion has the demerit of the present system concerning local authorities. We in our wisdom or lack of it, unlike other countries, say to all local authorities," You must all have an identical system of election, the system of election we think satisfactory nationally."
  I will not enter into a long dissertation on the merits or demerits of our present national system of election. Suffice it to say that I believe that the overwhelming majority of hon. Members believe that for the purposes of creating a national Legislature and a national Government our present system of election is the best one. I know that the hon. Member for Orpington does not share that view, but all the arguments have been discussed so much that I shall not weary the Committee by going into them.
  However, it does not seem to me that it therefore follows that the same system of election is appropriate to every one of hundreds, more than 1,000, local authorities. It does not seem to me that this is at all logical. Nor, in practice, is it the case. We have local authorities situated in the areas where the Parliamentary seats are marginal seats. For those local authorities one could say that the system of election which we have works reasonably well. We may say this, but I do not think that anybody can say that the present system works just as well in the overwhelmingly safe Parliamentary seats.
  Quite irrespective of party, it is fair to say, surely, that local government shows some of its least pleasurable aspects in the places where there are overwhelmingly Labour-dominated councils, sometimes so Labour dominated that
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  there is no Conservative representative on the councils. Alternatively, one knows of certain seaside resorts which are so overwhelmingly dominated by the Conservative Party that there may not be a representative of the Labour Party on a council. Even though possibly 20 per cent. or even 30 per cent. of the electorate may vote Labour. The Labour Party there is a totally unrepresented party.
  It seems to me that there is a case for saying that a system different from the national system would be appropriate in certain local authority areas. I would not, therefore, wish to support the hon. Member's Clause, but I would ask the Under-Secretary of State if his Department, in conjunction with other appropriate Departments, would consider this possibility in connection with the reform of local government, because it seems to me that while we must have a democratic system of election, nevertheless, provided that the system is democratic in a recognised sense, there is no valid reason why a local authority itself should not be able to have some say in the sort of system of election that it wants.
  This may sound an unusual idea, but the strange thing is that it does apply to just one of the areas the hon. Member for Orpington has mentioned. The City of London, unlike any other local authority, has almost semi-sovereign powers. Since the 18th century it has described its decisions as "acts" in the same way as we talk of Acts of Parliament, and this is quite right, because the City of London has, within very broad terms, power to alter its own constitution if it wishes to do so. The City of London is distinct from anywhere else in that it can alter its system of election. Legally, I believe, it could alter it tomorrow, by Act of the Common Council—although I do not think it is likely to do so.
  Moreover, in the United States it is quite customary to allow individual electors by referendum to decide the constitutions of their own local authorities or even the constitutions of their own State Governments, within the Federal system. Therefore, it seems to me that there is nothing unusual or irrational in this. It would lead to considerably more participation—which is a word we all pay lip service to, but, when we have opportunities, do not always implement.

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  The only thing one has to look to is the possibility that somebody may wish to introduce an undemocratic system, a sort of little local one-party state. I think that there are hon. Members on this side of the Committee who wished to raise the issue of Northern Ireland at an appropriate moment. However, it is not beyond the wit of man to say that as there are various possible electoral systems and that, provided a system is democratic, we would allow any local authority to implement any of them it chose.
  4.45 p.m.
  Mr. Lubbock: The hon. Member will appreciate that in the Republic where there is the single transferable vote, Protestants do have representation according to their numbers among the citizenry as a whole, whereas the very reverse is true of Roman Catholics in the North.
  Mr. English: Much as I would like to, I will not allow the hon. Member for Orpington to lead me astray from the subject of the Clause and into the rather treacherous waters of Northern Ireland, although if the hon. Member wants to know it, my own view of the Ulster Constitution is that it would have been better if a Bill of Rights had been inserted in it, as is the case within the Federal system in the United States. However, I am sure I would be out of order if I developed that point.
  What I was saying was that the essential thing is to preserve democracy. Where I think the hon. Member for Orpington spoiled his case was by bringing in such questions as the single-Member constituency versus the multi-Member constituency. Many of his arguments are perfectly true in the case of the small local authority. It is wholly untrue to say that single-Member constituencies are not desirable on the national scale. To start with, the constituency is much bigger; a single-Member constituency on a national scale might be a multi-Member constituency on a local scale.
  There is also a much more centralised party system with proportional representation in some countries. The hon. Member says, "No", but I think that one does get a much more centralised system in some countries. It depends how one operates the system—I would give the
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  hon. Member that—but he is totally wrong when he says that in the single-Member constituency contact is not as great as we think between Member and elector. This may be so, but it is overwhelmingly greater than in the multi-Member constituency.
  With other hon. Members, I spent part of the summer in Sweden, where multimember constituencies are used for the election of members to the legislature, the Riksdag. [Interruption.] I am still on this question of multi-members; I am not on the question of the method of election. I asked a Swedish Riksdagman a simple question, "How many letters from your constituents do you get?" He sat and thought and then said, "I think that I have had a couple in the last six months".
  Mr. Lubbock: The hon. Member will forgive me for saying so, but he has fallen into the very trap I was warning about in treating the system in those countries as though they were identical with those where the single transferable vote applies. Naturally, those representatives do not get letters from their constituents because the list is so vast, with on it the names of candidates determined by the party, so that the individual elector has very little interest in who is representing him. Where there is the single transferable vote the elector has the opportunity of choosing between candidates put forward as representing a party—Fianna Fail, for instance—and he has a very strong interest in the person he is electing and will communicate with him.
  Mr. English: I entirely accept that there is a difference, but I do not think I would at all accept the hon. Member's description of the list as "vast" in the case of a Swedish constituency which usually has five or seven members. It is not a vast list, but a list of five or seven. The hon. Member is not using adjectives correctly by saying that it is a "vast" list. It is perfectly possible for the individual under the Swedish system to know and vote for his Riksdagman out of five or seven or whatever the number may be.
  The fact remains that there is not the close degree of contact between member and elector that there is with the single-Member constituency system, but, irrespective of that, I do accept, as I say,

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  that what is true and desirable for national Government may not be appropriate on the local government scale.
  This is where the hon. Member for Orpington spoilt the best part of his case. He could have said that he would like to see this done with the consent of the Greater London Council or of its electors. He has not said that. He wishes to impose his proposal on the poor old Greater London Council as we have in the past imposed our system on all councils. This is a substantial weakness in what one might call a liberal position.
  I ask the Under-Secretary of State, while rejecting the Amendment, to express a view on the possibility of local authorities having electoral systems suited to them, which may not be the same as ours, in any consideration of the reform of local government.
  Mr. Onslow: I will not follow the remarks of the hon. Member for Nottingham, West (Mr. English), interesting though they are, since I do not wish to prolong the debate. I wish merely to comment on one or two points raised by the hon. Member for Orpington (Mr. Lubbock).
  I agree with him that we have still some way to go before we approach the idea of a real democracy. I can think of many more reasons than the absence of a single transferable vote in our system for our being as distant as we are from anything that can be claimed to be a real democracy. Most of the shortcomings, which I would analyse if I were tempted to do so, would be found not far from this Chamber.
  The point we are considering is the basis of elections and the case for having multi-Member constituencies and the single transferable vote. The hon. Member for Orpington was good enough to admit that in the G.L.C. by-election for Bromley only 20 per cent. of the electorate turned out to vote. I am not surprised that the figure was so low. I believe that the smaller the unit in which an election takes place the higher the percentage of voters is likely to be. I feel, and I have not heard him suggest this, that a Parliamentary by-election for a seat which had 250,000 electors would probably not produce a poll of more than 40 per cent.
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  I would regard this as a bad thing, a negation of democracy and all the other epithets which can be hurled about. The people will not vote because they do not know what they are voting about. It is the crystallisation of the issues and the personalisation of the candidate which will get people to the polls. A seven-Member constituency with an electorate of 350,000 is moving away from any real participation by the voters.
  The hon. Member said that there was an alternative, that a multi-Member constituency could be broken down into fractions for by-election purposes. Pre sumably, a constituency returning seven Members would be broken down into parts of one-seventh to each Member. If one Member who had been returned died or resigned, then the by-election would take place in one-seventh of the constituency. How is this to be sorted out? Is the oldest Member to take the safest seat, thus avoiding the danger of sweeping defeats for Governments in by-elections, or is there to be a previously registered preference on these lines, "If elected, I undertake to put myself down for the one-seventh part which includes Orpington "?
  This is entirely unworkable and ex tremely complicated. Why not stick to the single-Member constituency, which works extremely well? The only answer which the hon. Member for Orpington gives is that with a single-Member constituency there cannot be a single transferable vote. If forced to choose, I would come down unquestionably on the side of the single-Member constituency which serves this Parliament well.
  Mr. Merlyn Rees: I will deal first with the remarks made by the hon. Member for Orpington (Mr. Lubbock). I was sorry to hear him say that he thought the Parliamentary Commissioner had been a failure. My view, like his, is that the intention was not to replace the Member of Parliament. The Member of Parliament representing the single constituency does so much work and, when they were talking about a Parliamentary Commissioner, people did not appreciate that they were arguing for the wrong reasons.
  In my five years in the House of Commons, the one thing which has impressed me is that Members of Parliament of all political persuasions, including Ministers, act as Ombudsmen.

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  The work of the Parliamentary Commissioner is additional to that, in a direction in which the Member of Parliament by himself would not be so successful. The Parliamentary Commissioner does not replace Members of Parliament but adds to their efficacy. Underlying that is the value of the single member representing the single constituency.
  The hon. Gentleman sent me a copy of his pamphlet "One man, One vote". Taking up the point made there, even if, in the Winston Churchill sense, a man comes to an area as a carpet-bagger, it is not long before he will identify him self with the needs of that area.
  The Amendment is one which has been argued many times over the last 30 years; I do not criticise that because it is a perfectly respectable argument, but I was sorry that in tabling the Amendment the hon. Gentleman should seek to denigrate the existing system, which is a point my hon. Friend the Member for Penistone (Mr. Mendelson) mentioned. The pamphlet speaks of Members in safe seats not doing their job properly—
  Mr. Lubbock: Some.
  Mr. Rees: Some, or a few of them. Whether or not a Member does his job properly is not influenced by the size of the majority. But, of course, the size of the majority is one part of the argument of the hon. Gentleman. His argument is about safe seats and that in such a constituency a person might never vote for the candidate he wished to be elected. In the 25 years in which I have voted, in every local or national election, I have never voted for the man who has won. I have not felt that I have lost any rights. I have expressed my views by a cross on a piece of paper and, although my candidate has never won, I still have played a part in the democratic process.
  New Clause 2 speaks of the principle of proportional representation. Like the hon. Member for Penistone I once sat at the feet of the late Professor Laski, and I can recall him saying that he had found 949 different methods of proportional representation; no doubt since that day the number has been added to. To be fair to the hon. Gentleman, he has come down with one precise scheme for only the Greater London Boroughs and the single transferable vote.
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  To deal first with the general principle, I have no doubt that most schemes of proportional representation would give more precision to the views of the electorate. In speaking of the views of the 30 million-odd electorate of this country, one wonders if they have precise views that can be parcelled up into the views of small groups of political parties. When television commentators go out into the streets and ask the views of individual electors one finds a curious cross-section of views and it is extremely difficult to decide whether a person is, in terms of this House, left, right or centre. I accept that there would be more precision in terms of people being elected. Even in terms of the Liberal Party, which has a small number of hon. Members in the House, I imagine that one could still find a spread of views.
  5.0 p.m.
  In this country we have, over the years, developed what I think is one of the great strengths of this country, namely, the single member constituency, with the majority candidate elected. The hon. Gentleman said that in countries which have some sort of proportional representation, either by referendum or other wise, the majority of the people prefer the existing system. I suggest to the hon. Gentleman that if there were a similar sort of referendum here, there would be the same result. I have always felt that referenda in general never lead to change. Certainly the Australian experience has been of that kind. I do not think that the hon. Gentleman can necessarily read into that some sort of essential truth, except that people like what they have got—an essential con servatism.
  I should be with them in this sense, that the system which we have built up here over the years, bit by bit, is the correct one. Our democracy works, and one reason for that is the clear majority which is given to the Government of the day.
  Mr. Peter Walker: What about 1964?
  Mr. Rees: There was a majority of three then, and hon. Gentlemen say that that led to an incorrect view of how one should deal with the economic situation. But the previous Government had a majority of 100 for five years, yet they

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  did not deal with it, either. Indeed, they got their majority in 1959 by paying more attention to getting votes than to dealing with the economic situation. I am sure that if the Chief Whip were here he would agree that he had greater control over the Parliamentary party when there was a majority of three, than he has with a majority of 80.
  Mr. Lubbock: Is it not a reasonable hypothesis that if the Government had had a more substantial majority in 1964 they would have taken firmer action to deal with the rebel regime in Rhodesia, and that they would have devalued a long time before they did?
  Mr. Rees: I was a mere P.P.S. at the Treasury at that time, and it is not for me now to comment on questions of devaluation. I think that the hon. Gentle man is wrong in what he says about Rhodesia. I think that there were many other complicating factors in that situation which made it difficult to deal with other than the size of the Government's majority in the House of Commons.
  We do not, as a result of our system, have monolithic parties. If anybody had sat down at the beginning and asked, "What sort of a constitution shall we have?" or "What sort of political parties shall we have?" I am sure he would have drawn the conclusion that our system would have produced monolithic parties, because, on the face of it, it seems that that would be so. In fact, my experience over five years is that in neither of the major political parties, nor, indeed, in the Liberal Party, does the existing system lead to aught else than a multiplicity of views. On both sides of the House people are held together by strange bonds which look to be thin, but which are powerful and allow great diversity of opinion. People talk about the Whips, and about Members being Lobby fodder. This is simply not the case. It is true in a certain essential and important way, but it is not true that our system does not lead to a great diversity of views. If one looked at the relatively few members in the Chamber now, one would expect different attitudes and different outlooks on a common cause. I therefore reject the general principle.
  Over the years the G.L.C. has been a remarkably well run authority. In the
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  days of the London County Council, and going back to before 1888, when it was the Metropolitan Board of Works, it was always exceptionally well run. There is something good about it. I should be the last, therefore—and I shall come in a moment to the point made by my hon. Friend—to want to introduce this system of the transferable vote into the G.L.C. I accept that at the moment the Labour Party is under-represented on the G.L.C. I suspect that on the 1964 General Election the Conservative Party was under-represented, but I do not think that it matters very much. It might offend the purists, but it does not offend me very much. There has been a swing in popular opinion, in terms of 1964, for almost extra-Parliamentary reasons. The G.L.C. is not an authority which I should want to muck about with, because it has been remarkably successful.
  My hon. Friend the Member for Nottingham, West (Mr. English) said that perhaps one could have a variety of election systems for different local authorities but I could not commit anybody on that. If local authorities are to be bigger—and all the signs of informed public discussion seem to lead that way—I hope that embedded in them there will be small enough authorities to have on them the man or the woman who is the local representative, because the work done by local councils is extremely important. In the cities in the North—I accept that the position is different in the South where there is a more fluid society—at all hours of the day and night people knock on the door of the man who is the local councillor, and it is important that we should maintain that state of affairs.
  Mr. English: I am not, naturally, asking for any assurance now that my hon. Friend will do any such thing. What I am asking is that he should try to ensure that somebody in his Department studies this possibility. If, for example, we have larger authorities, I strongly suspect that in the south-western one the present system of election will allow little scope for the Labour Party, and I leave the Opposition Front Bench to form their own opinion of how many members they might have on the Welsh one.
  Mr. Rees: If there is a change in local authority structure, this will be a matter for many Departments, and I am sure

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  that that will be borne in mind. I hope that my hon. Friend will accept that sympathetic remark, and that the Committee will reject the new Clause.
  Question put and negatived.

New Clause 6

  AMENDMENT OF SECTION 69 OF 1949 ACT
  After paragraph (c) of subsection (1) of section '53 of the Representation of the People Act, 1949, there shall be inserted the following' nor, after the issue of the writ in a Parliamentary election, or the publication of the notice of election in a local government election, shall any person incur such expense with a view to influencing persons to give or refrain from giving their votes to a candidate or a group of candidates at that election, otherwise than by or through a candidate's election agent'.—[Mr. Strauss.]
  Brought up, and read the First time.
  Mr. G. R. Strauss: I beg to move, That the Clause be read a Second time.
  May I anticipate one criticism which may be made against the Clause, and that is that it is imperfectly worded. I have no doubt that that is so, as I have not had the technical help which the Government receive to word complicated and difficult legal provisions effectively. I hope that as a result of what I and some of my colleagues say the Home Secretary will agree to my proposal in principle, or will agree anyhow to consider it, and then, when it comes to Report, to put into proper, water-tight, legal form.
  I must go back in history to explain the purpose of the Clause. The 1944 Speaker's Conference came to the conclusion that the existing provisions for limiting expenditure during elections was in sufficient, and that something more was necessary than to lay down the maximum amount which candidates were entitled to spend. The conference came to the conclusion that it was desirable that expenditure by outside bodies should be limited, and that such expenditure should have to go through the ordinary machinery, in other words, it should be returned by the election agents in the ordinary way.
  That principle is very important. It was accepted by Parliament and during
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  the debates in 1948, which preceded the 1949 Act, it was clear that everyobdy—the Government, the Opposition, and all hon. Members who took part—accepted the principle that outside bodies should not have unrestricted freedom to spend such moneys as they wanted in support either of a candidate or a political party during the election campaign. That was the general concensus and it is a principle which everybody must now accept. I am sure that the Home Secretary does.
  The result of that general agreement was the passage of Section 63 of the Representation of the People Act, 1949, and I should like to read to the Committee the relevant part of it. Subsection (1) says:
  "No expenses shall, with a view to promoting or procuring the election of a candidate at an election, be incurred by any person other than the candidate, his election agent and persons authorised in writing by the election agent on account

  (a) of holding public meetings or organising any public display; or

  (b) of issuing advertisements … "

  Everybody thought that that was clear and simple, carrying out the intention of Parliament and the generally accepted principle that money must be limited in the weight which it is allowed to carry in an election. Otherwise, the parties which have the greatest funds or who have friends and supporters with the largest resources would be at an unfair advantage. As I say, it appeared that the principle was enacted in that way, and so everyone thought until 1952.
  In 1951, Tronoh Mines Ltd., after the Writ had been issued and during the election campaign, caused an advertisement to be inserted in The Times supporting the Conservative Party. That advertisement was perfectly clear and blatant, and, when the subsequent case was heard, it was accepted that the advertisement was one supporting the Conservative Party. A prosecution was brought by the Crown against Tronoh Mines for offending against Section 63 of the Representation of the People Act.
  Having studied the Act carefully, the judge came to the conclusion, in short, that the wording of the Section did not

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  carry out Parliament's obvious intention and that the words which I have quoted—
  "No expenses shall, with a view to promoting or procuring the election of a candidate at an election, be incurred"—
  referred to a single candidate, it being legitimate for anyone, any organisation or outside group, to spend as much money as they liked on propaganda supporting two or more candidates, so long as—I think that this is the supposition which was accepted—the actual name of a candidate or a constituency was not mentioned. In other words, general propaganda supporting one or other party could be issued by any outside body during an election campaign, and any such body was perfectly entitled so to do.
  This was wholly contrary to Parliament's intention when it passed the 1949 Act. Moreover, it put outside bodies at an advantage over candidates or political parties. Candidates cannot do it. The political parties do not do it, During an election campaign, any money which they spend has to be allocated and put in the election agents' returns.
  To fortify myself on this point, I inquired from my own party what its procedure was and what happened about election propaganda costs during a campaign. This is what I was told:
  "During the period of a Parliamentary general election, all expenditure that could be regarded as an election expense, that is to say, advertising, printing and publicity, speakers' expenses, posters, etc., becomes chargeable to the election agents against their written authorisation or order. After the issue of the writ, nothing is supplied by head office unless it is ordered by an election agent. All national advertising is stopped and all publications are withdrawn from general sale, except for single copies. Even the expenses of the Leader or Prime Minister or other main speakers are charged to the election agents of the candidates whose constituencies they visit."
  I am sure that the Conservative Party adopts the same procedure. Thus, it is clear that the political parties accept Section 63 in the letter and spirit intended.
  But now we find that other bodies need not do so. A Co-operative society, the Aims of Industry, or any other organisation is free to carry on any propaganda during an election campaign unrestricted and not required to make returns. They can do it to any extent they like.
  I give an example of what might happen. At a hard-fought election cam-
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  paign in Birmingham, the outcome in many constituencies might be in doubt. After the Writ has been issued, any propaganda and any election activity which costs money from the headquarters of the Conservative Party—I take it as an example—or any activities organised locally by candidates or agents would have to be returned in the election agents' figures. All comes within the limit laid down by Parliament in the 1949 Act, and, now, in the present Bill, in Clause 8. Thus, the parties both locally and nationally may spend only the limited sum authorised by Parliament.
  5.15 p.m.
  If we do not remedy the flaw in the law which was disclosed as a result of the Tronoh Mines case and Mr. Justice McNair's judgment, the Birmingham Chamber of Commerce, for example, might well say, after the Writ has been issued," We are prepared to spend £20,000 in Birmingham on advertisements in newspapers, on posters, on organising meetings, and so forth, in general advocacy of the cause of the Conservative Party". That would be lawful, yet I cannot imagine that any hon. Member on either side would regard it as right or just.
  Can this situation be satisfactory? Does my right hon. Friend consider that such a body as Tronoh Mines should be entitled to indulge in unlimited expenditure, after the issue of the Writ, asking people to vote for a particular party? The party headquarters cannot do it and local candidates cannot do it without returning the expenditure. Does my right hon. Friend consider that such a situation as I have suggested could happen in Birmingham would be defensible? Would it be in accordance with our democratic principles and the general agreement among all parties that the amount of expenditure during an election should be limited?
  That is the purpose of the Clause. On occasions in the past—not many, but some—outside bodies have taken part in an election. One thinks of the Freedom Movement, the National Socialist Movement and the like. They have not done so on a big scale yet, but when the import of the McNair judgment in the Tronoh Mines case is appreciated people will realise that there is no reason why all sorts of bodies indirectly interested in

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  politics should not undertake vast expenditure after the Writ has been issued.
  There has been some argument about whether there ought to be a limitation on expenditure during the period proceeding an election, whether moneys spent by the parties or outside bodies during the weeks and months leading up to an election should be limited in some way, on grounds of fairness. The case for that is arguable. It has been turned down on the general ground that it would be impracticable and would be an improper limitation on freedom of speech and freedom of advocacy for any cause which any individual or body wishes to put forward. But there is no case for having no limitation after the Writ has been issued and the election campaign is on.
  I ask my right hon. Friend the Home Secretary to consider this matter care fully. Perhaps he will not want to give an answer today, but I hope that he will assure us that he will consider the matter sympathetically and amend Section 63 of the 1949 Act so that it conforms with what was intended by all sections in Parliament at the time, no longer permitting the abuse which could occur as a result of the judgment in the Tronoh case which permits outside bodies of great wealth to participate to an unlimited ex tent by propaganda during an election campaign.
  Mr. A. P. Costain: I listened to the right hon. Member for Vauxhall (Mr. Strauss) with care and attention and I have a great deal of sympathy with his case, but I am in some difficulty to know exactly what he means by an advertisement. For instance, we read in the papers today that the British Steel Corporation is considering putting up the price of steel. Suppose that that coincided with a General Election and the Corporation wanted to publish an advertisement to say that the cost would be increased by the 7½ per cent. which is being discussed. Would the right hon. Gentleman make it clear whether that would be an advertisement in favour of the Socialist Party or one in favour of the Conservative Party? Frankly, I see it as a splendid advertisement for the Conservative Party. Does he contend that this could be charged to the advertising of the Conservative Party?
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  Would the Minister make it clear what is meant by an advertisement? I find it difficult at the moment to think of any article or comment in a newspaper which is not an advertisement for the Conservative Party. Would the right hon. Member assure us that any news items or advertisement would not be considered favourable to the Conservative Party, even though it is difficult to see how they can be favourable to the Socialist Party?
  Mr. Strauss: I am grateful to the hon. Member, as this enables me to add a sentence which I had intended to include in my original speech. Of course, this would be for the judge to decide, but I must make it clear that the acceptance of my Amendment would in no way restrict newspaper comment, letters to news papers or the ordinary freedoms now enjoyed. But if any question arose as to whether some announcement was an advocacy of one party or another, that would be a matter for the court to decide.
  Mr. Costain: I am grateful to the right hon. Gentleman for that partial explanation, but it does not answer my question. The G.P.O. recently advertised about the rise in postal charges. We are used to so many announcements at the moment of increased charges because of the Socialist Government. Would the right hon. Gentleman make it clear that his proposal would exempt them from being charged to the Conservative Party? They are against the Socialist Party be cause of that party's performance, but they should not be charged to the Conservative Party because of the failures of the Socialists.
  Mr. Mendelson: In supporting this Amendment and the powerful case which my right hon. Friend the Member for Vauxhall (Mr. Strauss) has made, I am immediately up against the main difficulties which the hon. Member for Folkestone and Hythe (Mr. Costain) has raised—although his first example was more amusing than his second. It did not gain by repetition.
  First, I support the important principle which my right hon. Friend has introduced. It is, I think, common ground in all Parliamentary democracies that it is a desirable and fundamental aim of constitution making and amending to ensure as far as humanly possible that every elector has an even chance to support his point of view publicly. For instance,

  471
  there is a great deal of trouble from time to time in the United States about the precise conditions under which funds have been contributed and campaigns run on behalf of one party or another or on behalf of particular candidates. A great deal of legal work has been done on this subject, far more than in this country.
  Indeed, to hold a fair balance between various capital interests and people disposing of great financial resources in the United States has often made up the entire Presidential campaign: towards the end of the campaign, people are arguing not about foreign policy or taxation but about the purity of the campaign. This teaches us a lesson. We do not suffer from so much of this nowadays, but there might well be a good deal of it in the future. That is why this is a very important Amendment which my right hon. Friend the Home Secretary should sup port in principle.
  I now come to the important difficulty raised by the hon. Member for Folkestone and Hythe. To put it in the form of a formula rather than of an example, it is the difficulty of limitation and definition. In all debates in recent years on this subject—Mr. Speaker's Conference also discussed this matter—the problem of limitation and definition has been the central point of argument. As a matter of principle, his subject is not unique in presenting this difficulty. It is Parliament's experience over the years and the centuries that, while a principle is not in dispute, there is often a difficulty of limitation and definition. If we were to throw up our hands every time this difficulty arose, the amount of legislation—some hon. Members might regard this as highly desirable—passed by the House would be reduced to a tiny minimum.
  Therefore, it cannot be sufficient, as the hon. Member has done—I say this in all friendliness and in no polemical spirit—to produce two absurd examples and say that he has thereby killed the case—
  Mr. Costain: I gave two examples of advertisements which would, in all innocence, be to the benefit of the Conservative Party. Would the hon. Member give the Committee the benefit of opposite examples which might be to the benefit of the Socialist Party, since I can think of none?
  Mr. Mendelson: I do not intend to do that, since I am rejecting as sufficient to kill the case the production of two absurd examples. If I were to follow his tempting invitation and produce another two examples, I should have accepted his underlying argument that he had killed the case—and I do not.
  To proceed with my argument, which is rather different, where this difficulty arises, Parliament is not guided by absurd examples. It rejects them and then tries to limit the case and recommends legislation to do this as far as is humanly possible. After that process, it is left to the courts to determine what Parliament meant and to say, "This is our judgment", thus creating a body of case law, or, as sometimes happens, the judges might say, "Parliament has not put into the correct words what it obviously intended, so we must judge differently, and if Parliament takes a different view, it must pass amending legislation, upon which we will act accordingly". This is not an unprecedented situation.
  On the hon. Member's two examples, it would not be beyond the wit of man, the Parliamentary draftsmen and my right hon. Friend and his advisers to find a definition which clearly excluded that type of case. There is a real difference between publishing a routine statement about the price of stamps or steel and publishing a statement for which one would buy space in a news paper for £5,000, saying," We appeal to people to vote for Mr. X", or, in this case, since they would not be allowed to do that, "to vote for the Labour Party or the Conservative Party". Anyone who argues that no form of words could be designed to make clear the distinction for the courts to apply between an advertisement calling upon people to turn out the present Government and vote Conservative and one which announced an increase in the price of steel by 3 per cent., is not making a very serious case.
  My point, which remains, therefore, is rather different. The danger is very great that more and more interested groups might move into this field and that those who are skilfully preparing campaigns in the three years "run-up" to the General Election might not wish to be identified too openly with the continuation of the campaign.
  5.30 p.m.
  A firm or organisation might be running a campaign for two years prior to the General Election campaign actually beginning and prior to writs having been issued. At that point an advertising company might be hired to take over the job, and we know what could happen then. Advertising agencies are becoming more prominent in the political process and in a recent case a foreign Government hired an advertising company for this purpose. Only through the ineptitude of one of the directors of that company did the facts come to light, and the campaign end. However, one must not assume that all advertising companies will be as amateurish as that one. I am referring to a case involving the Greek Government. Other people may not writer semi-secret reports only to have them discovered and the facts published in the newspapers.
  At this time, when advertising companies are becoming more important in political activities—when the indirect approach is being preferred to hide political intentions—there may be a real danger, as my right hon. Friend the Member for Vauxhall pointed out, that if we leave the law as it stands and is now being interpreted, the whole election process as we have known it may come to an end.
  Elections are for the electors and candidates. They play the essential rôle. However, we live in an age of television when a great deal of mechanical reporting is occurring. This has already created the danger of reporting being regarded as more important than the election campaign itself. There is also the danger of campaign incidents being staged in such a way that they will become more important in the eyes of some people than the discussion and debate between the electors and candidates. This is a danger which Parliament must consider.
  If this trend is not stopped in time, it may result in the present balance between candidates and electors being seriously upset; whilst the expenditure of candidates, parties and electors is strictly limited interested groups from out side are free to spend vast sums to influence people to the detriment of our political life.
  [Mr. BRYANT GODMAN IRVINE in the Chair]
  Miss J. M. Quennell: I had not intended to intervene at this stage, but certain issues have been raised which need careful consideration.
  My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) raised that the problem of defining an advertisement. How would the new Clause affect the freedom of the normal democratic processes to express opinions? The right hon. Member for Vauxhall (Mr. Strauss) said, in effect—the hon. Member for Pennistone (Mr. Mendelson) said the same thing—that the courts had to decide these matters and that if Parliament had to spell everything out in detail and be pernickerty over every piece of legislation, we would never get anything done.
  Ignorance of the law is no defence in Britain. It is, therefore, incumbent on Parliament to ensure that legislation is clear, precise and as well defined as possible. Woolly law is bad law and there are already far too many judicial decisions awaiting the consideration of eminent gentlemen in wigs and gowns. Although judges make some excellent decisions, we must be precise.
  I admit that the right hon. Gentleman has drafted the new Clause clearly. It says that
  "… after the issue of a writ in a Parliamentary election … such expense …"
  may be incurred only with the permission of
  "… a candidate's election agent".
  Mr. Strauss: I do not understand the difficulty which the hon. Lady is emphasising about definition. I am merely attempting to extend the present law. This contains the necessary definitions and these have been in operation for many years. At present they cover only the election of individual candidates in individual constituences. I want to use the same definitions to cover candidates in a large number of constituencies, or candidates generally. The present law is already wide. I wish to make it wider.
  Miss Quennell: That may be true, but let us consider the situation today. The business of Government covers a wide sphere. A body might be in existence

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  for the discussion of economic affairs and these activities might be held to have a political connotation and be applicable to one or other of the parties. One might say the same of social affairs.
  A large number of Motions appear on the Notice Paper and hon. Members receive letters urging them to sign some of them. At election time the societies concerned with the promotion of the objectives of those Motions circulate people in the constituencies telling them whether or not certain hon. Members have or have not signed certain Motions. If the new Clause as drafted becomes law, it will not be possible for them to circularise people without writing to the election agents of every candidate—with 630 constituencies, and about three candidates fighting each one, a great many letters would have to be sent out—before being able to pursue their aims. In our democracy those aims are perfectly legitimate. I hope that the Home Secretary will bear in mind the possible impediment which this could place on the free expression of opinion, which, in our democracy, we consider to be perfectly legitimate.
  The right hon. Member for Vauxhall attached great importance to the con sequences of the Tronoh Mines judgment, but that was some years ago and I do not believe that the lack of this new Clause would result in the Measure suffering.
  Sir Stephen McAdden: Like my hon. Friend the Member for Petersfield (Miss Quennell), I had no intention of taking part in the debate until I was stimulated by the arguments of the right hon. Gentleman the Member for Vauxhall (Mr. Strauss) and the hon. Member for Penistone (Mr. Mendelson). As one would expect, the proposition put forward by the right hon. Gentleman was reasonable and sensible—and, perhaps, a very good idea—but in advocating it he drew upon our experience in earlier legislation. He pointed out that in 1949 Parliament had drafted legislation which had the blessing of all parties. They all thought that they knew what they were up to, only to discover subsequently that Parliament had not tied things up as tidily as they had thought. The right hon. Gentleman has tabled a new Clause
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  which he thinks will improve the position, but I am not so sure that it will.
  As I understood him, the hon. Member for Penistone said that we need not worry too much about niceties of drafting because it will be for the courts to decide whether what is done is against the intention of Parliament—
  Mr. Mendelson: No. I said that, quite apart from two absurd examples, we still have to wory about the drafting, but that I do not rgeard it as being beyond the wit of the Home Secretary's advisers and of the Parliamentary draughtsmen to produce watertight drafting.
  Sir S. McAdden: I heard the hon. Gentleman say that later, but earlier he said that it would be for the courts to decide what Parliament meant. I am not a lawyer, but I do not think that his is true at all. It is not the job of the courts to decide what Parliament meant but what Parliament said. The Home Secretary will recall that in earlier gaming and betting legislation Parliament meant all sorts of things. We thought that we had got it all nicely sewn up, only to discover that Parliament's intentions were not accurately translated into the Measure, and subsequent legislation became necessary.
  Mr. Mendelson: All I said was, and I repeat it now, that if the judges feel that what Parliament meant is not absolutely clear they are entitled by long constitutional and legal practice to go through the arguments in order to discover Parliament's intention.
  Sir S. McAdden: That may well be, but it is not the judges job to go contrary to the law, and if the law lays down some thing in imprecise terms it is not the duty of the court to decide the matter.
  I was intrigued by the example which the right hon. Gentleman gave of some of the consequences that might ensue unless his Clause was incorporated. He said that at a General Election the Birmingham Chamber of Commerce might, without naming any names, take several thousand pounds worth of space in the Birmingham newspapers advocating the cause of a particular political party. That might be so.
  The Southend, Westcliff-on-Sea and District Chamber of Trade, which covers

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  my constituency, has recently taken space, and has issued posters headed,
  "Don't blame the shopkeeper for rising prices."
  It lists under the causes of rising prices, Selective Employment Tax, increases in Purchase Tax, and so on and so forth. That seems to me to be a perfectly reason able activity for a chamber of trade to engage in; to call the attention of the population to the fact that the increases in prices which the shopkeeper can charge are not his fault but arise out of a series of impositions placed on them by the Government.
  But if I understood him aright, the right hon. Gentleman would not, in the course of a Parliamentary election, allow any such truthful statement to be made by anyone unless it had the imprimatur of the election agents—
  Mr. Strauss: We are, of course, only talking about the period between polling day and the issue of the writ. If, during an election, a chamber of trade issues in his constituency such a circular as the hon. Gentleman has mentioned, which was blatantly Conservative propaganda, it would be committing an offence, and could be prosecuted.
  Sir S. McAdden: I very much doubt whether the issue of a truthful statement that the shopkeeper is not to blame for high prices can be described as blatant Conservative propaganda. The statement may not even mention the Socialist Government. The chamber of trade just lists the increases in taxation with which the shopkeeper has been loaded—
  5.45 p.m.
  Mr. Costain: Has it escaped my hon. Friend's notice that when I put two perfectly reasonable examples before the Committee the hon. Member for Penistone said that they were absurd, but when he put a case the right hon. Gentle man said that it was propaganda—when can we get at the truth?
  Sir S. McAdden: That is one of the difficulties in trying to lay down in the new Clause what is and is not to be permitted. As my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has pointed out, since the celebrated case to which the right hon. Gentleman referred there has not been any wide spread abuse by people using vast sums
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  of money to distribute propaganda on behalf of Conservative Governments, or Liberal Governments or Socialist Governments. So we must not worry too much about that.
  Whilst, superficially, the right hon. Gentleman's idea may appear to be attractive, it imposes some fairly severe limitations. The way in which the right hon. Gentleman rose at once to say how wicked it was that the Southend, Westcliff-on-Sea and District Chamber of Trade should issue a poster drawing the attention of the public to the sufferings imposed upon them by Government, without mentioning the Government, seems to indicate a fairly drastic curtailment of the rights of free speech. It comes rather oddly from the right hon. Gentleman, who I understood was opposed to censorship in all its form, that he should now want to stop people from speaking out as they have to those with whom we are inflicted at present.
  The Secretary of State for the Home Department (Mr. James Callaghan): My right on. Friend the Member for Vauxhall (Mr. Strauss) first indicated that he did not want me to say anything that would destroy his Clause on grounds of inadequate wording. I hope that he has known me long enough to know that I will not rely on any such argument. It would not be worthy argument to say that because the wording was defective we should reject the Clause, because if the arguments were good it would then be for the Government to find wording that would fit in with his objective. My right hon. Friend need have no fears on that score.
  As I understand the Clause, its general intention and effect is to prohibit general political propaganda after the issue of a Writ in a Parliamentary election or publication of a notice of election in a local Government election.
  At present, general political propaganda is not an election expense. Election expenses are defined in Section 103 of the Representation of the People Act, 1949, as expenses incurred
  "… on account of or in respect of the con duct or management of the election …"
  Therefore, expenses incurred by an adopted candidate in promoting and disseminating the political opinions of the party to which he belongs and in holding

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  meetings merely for that purpose are not expenses in the conduct and management of his election, even though the candidate may be incurring those expenses with reference to his future election, because he hopes, if he can establish the principles of his party, to be in a majority in the constituency so that when he comes to be the actual candidate he will get elected. In a case decided some time ago it was held that ward and other meetings held during the period of 16 months be fore the election to promote the interests of the Conservative Party were not election meetings, and that the expenses of such meetings were not incurred in the conduct and management of the election. I am sure that most of us are relieved to hear that.
  It is on this principle that hon. Members and prospective candidates are free to address meetings on political subjects before the election campaign commences. When an election is deemed to have commenced for the purpose of election expenses incurred by a candidate has to be determined in the light of all the circumstances. A candidate knowing that an election is bound to occur in the near future may incur election expenses before the date of a General Election is announced or the Writs are issued. It is as well that we should remind ourselves of what the position is.
  Section 63, to which my right hon. Friend wishes to attach his Amendment, widens the scope of election expenses by requiring certain expenditure to be authorised by a candidate's election agent thereby bringing it within the definition of election expenses. The case of Rex v. Tronoh Mines in 1952 related to an advertisement in The Times which was designed to promote the election of candidates other than Socialist candidates in the General Election of 1951.
  The judge took the view that Section 63 (1) is not intended to prohibit expenditure incurred on advertisements designed to support, or having the effect of supporting, the interests of a particular party generally in all elections, at any rate at the time of a General Election, and not supporting a particular candidate in a particular constituency. He ruled that the Section does not prohibit expenditure the real purpose or affect of which is general political propaganda even
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  though that propaganda does incidentally assist a particular candidate. I think that states the law as it is understood to be at present.
  We now come to an interesting point, the case in which a former Prime Minister was involved, the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home). In that case it was decided that expenses on party political broadcasts are not within Section 63, I assume on the ground that they are general political propaganda. That leads me to the point about difficulty of definition in this matter. I share my right hon. Friend's view about this. The hon. Member for Folkestone and Hythe (Mr. Costain) has mined an unsuspected vein of humour in his make-up this after noon, but I hope that he, too, will share the general sentiment that it is wrong that great organisations should be able to throw the whole of their financial weight behind individual candidates in an election. That is the reason why Parliament lays down the maximum limit that may be spent on elections.
  Those figures and those limitations have been born out of our experience in the past. So, despite the hon. Member's fun, I hope he will appreciate—
  Mr. Costain: May I interrupt the hon. Gentleman?
  Mr. Callaghan: No, not for the moment. The hon. Member had his joke once and a second time. A third time would be getting a little tedious. He will appreciate that there is a real problem which has to be met. It is one which most of us, on reflection, if we are not advancing our party's interest, would agree is for the health of democracy. It is that individuals should not be sup ported to a tremendous extent by great corporations, or indeed by individuals—that they should not be bought. This is one of the reasons why we must put these limitations on and why we should endeavour as far as possible to define them as closely as we can.
  I agree with the hon. Member for Peters-field (Miss Quennell) that there have not come to light any great abuses since 1952. The case was decided and it might have been thought that following from that there would have been a whole spate of this kind of thing, but that has not in fact happened.
  Mr. Strauss: I mentioned a number of interferences by various bodies, not on a vast scale, it is true. Application was made on several occasions by the Labour Party to the Director of Public Prosecutions to take action on one, but the party was informed that in view of the wording of Section 63 it was impossible to do so.
  Mr. Callaghan: I am aware that there was the recent case in connection with the organisation called Aims of Industry, but I said that there were not many cases of this sort. Although my right hon. Friend may have mentioned one, or even two, there is not a great number in view of the size of the problem and the difficulty which would arise if we were to adopt this proposal.
  The purpose of the new Clause is to forbid general political propaganda after the issue of the Writ in a Parliamentary election. This would bring us up against quite formidable difficulties which have to be weighed against the principle I have enunciated. The new Clause would permit general political propaganda incurred after that date only through a candidate's election agent. One minor consequence would be that candidates who now incur personal expenses which do not at pre sent have to be incurred by or through the election agent would under this rule have to incur them through the agent in future. That is a minor point and no more, but it is worth mentioning that a candidate is entitled at present to certain expenses which do not have to be vouched for by the agent.
  The let out for general political propaganda incurred by or through an election agent raises problems concerning the election agent's consent and the apportionment of expenses between the candidates concerned. The difficulties can be posed by considering again the question of party political broadcasts. Does the expense of the broadcast fall solely on the candidate or the candidates taking part? This would have to be apportioned in some way.
  Suppose it was a by-election and the broadcast coincided with the by-election. General political propaganda would not be possible unless it had been sanctioned by the candidate's agent. It would be necessary therefore to avoid political propaganda during that period. That would be unfair when party political
  482
  broadcasts are laid down according to a strict schedule. These are things which would have to be considered and taken into account. Suppose there was a broad cast during a by-election—I give an extreme example—in which only their Lordships took part. Which candidate would have to vouch for the expenses? It clearly could not be done. Would it be all the candidates supporting the party concerned, or all those who approved the broadcast, or a sufficient number who were prepared to foot the bill?
  We are in a difficult field here. Similar difficulties would be faced when deciding whether to prosecute. Suppose that an expense had been incurred on the under standing that part of it would be met by one or more of the candidates. The problem is different from that which arises under section 63 (1) since under that Section it is limited to the election expenses of one candidate.
  Mr. Strauss: I am not sure whether my right hon. Friend is aware that national party broadcasts during an election are at present excluded from election expenses which have to be accounted for by individual agents. National propaganda in newspapers and on posters is not excluded, but television or radio talks are already excluded, so no problem arises there.
  Mr. Callaghan: That was exactly the point I was making. Perhaps my right hon. Friend did not hear it. I said that under his new Clause it would be necessary to apportion those expenses, but it would be physically impossible to do so.
  I come to what I regard as the important part of the new Clause. That is the question relating to support of candidates. My right hon. Friend mentioned support of candidates by the Birmingham Chamber of Commerce. He said, correctly, that at present election agents supplied by Transport House with literature during an election have to pay for it. I dare say the same is true of the Conservative Central Office. The argument by my right hon. Friend that the law at present prohibits the major political parties from incurring expenditure on general political propaganda after nomination day but does not likewise prohibit the Birmingham Chamber of Commerce is thought to be incorrect.
  Mr. Strauss: No.
  Mr. Callaghan: I am giving my right hon. Friend an opinion. The major political parties can incur expenditure in connection with party political broad casts precisely because they concern general political propaganda not related to the particular election of some person.
  6.0 p.m.
  I do not think that the Birmingham Chamber of Commerce should take too seriously what my right hon. Friend said or be tempted into the political field too quickly, because I am advised that expenditure by a more local body like the Birmingham Chamber of Commerce might be held to be so closely allied to the activities of the candidates it was supporting in some or all of the Birmingham constituencies as to come within Section 63 (1) as incurred
  "with a view to promoting or procuring the election "
  of those candidates. This would be a matter for the courts to decide. In such a case, the elections would be set aside.
  I think that the major parties are wise at the moment to discontinue a great deal of general political propaganda unless it is channelled through their local election agents, as soon as an election is declared, because the law is uncertain on this subject. Even though the law is uncertain as to the extent to which general political parties can undertake general political propaganda—it is not ruled out, but the law is uncertain as to how far they can go—it would certainly be very unwise for a chamber of trade or commerce to insert advertisements or take up space somewhere or other to advocate policies so closely related to policies being put forward by the local candidates that the chamber could run the risk of having the elections invalidated.
  Perhaps the protection is greater than my right hon. Friend thinks. I agree that the matter has not been decided in the courts, but it is right to utter this warning, because if this is the view which is held at present it would be wrong not to state the view as it is held, and as I understand it, and as I think that Parliament wanted it to be under the original Act.
  Mr. Sharples: The Secretary of State has referred to the Birmingham Chamber
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  of Commerce. Would not his warning also apply to any body which might be connected with a particular group of would-be Parliamentary candidates?
  Mr. Callaghan: Certainly. This is another reason why we have to be careful. What I have said could be held to apply to a trade union which supported and named a particular group of candidates and asked for support for them. It could be held to apply to a co-operative party which did the same. I mentioned the Birmingham Chamber of Commerce because that was the illustration used by my right hon. Friend. The hon. Member for Southend, East (Sir S. McAdden) referred to his own chamber of trade. I hope that he will not get subscriptions from that chamber on a false prospectus. He may find when it comes to an election that the chamber will not be able to deliver the goods in the way he would hope.
  I believe that the whole Committee would want us to narrow, as far as we can, the circumstances in which expenditure of this sort can be incurred. It is certainly my desire. I resist the Clause only because I think that it would not be possible to administer it in a way which would meet Parliament's desire without inhibiting the expression of legitimate public opinion during the course of an election.
  My right hon. Friend is right to be vigilant. This is something which Parliament should continue to watch. In rejecting the Clause now I would not feel myself bound to reject a fresh approach to the subject if the kind of circumstance which led to the 1952 case was to be repeated in circumstances which were clearly opposed to the will of Parliament when it enacted this Section.
  Mr. C. Pannell: My right hon. Friend said that he did not think that there had been any case before the courts since the Tronoh Mines case in 1952. Our party has referred to the Director of Public Prosecutions, unsuccessfully, from 1955 the activities of Aims of Industry, Martell's attack on the Prime Minister by a newspaper advertisement in 1964, and the British National Party's activities in the famous Leyton by-election. In the opinion of many people, those activities cut completely across the

  485
  original Legislation, but the Director of Public Prosecutions has taken a very narrow view. This matter was raised during the proceedings in Mr. Speaker's Conference. We say that in the Tronoh Mines case the court took a narrower view that that which Parliament took when it enacted the legislation. This case caused great surprise. I am sure that in fairness my right hon. Friend will agree that we are talking not merely about the cases which have come out into the open. It is whether political parties have felt that there are grounds for such cases.
  Mr. Callaghan: I know that my right hon. Friend has some information on this. I said that cases had been referred to the Director. I think that the Labour Party is more likely to suffer as a result of this than the Conservative Party. My right hon. Friend, therefore, will not think that I would look at this with an unsympathetic eye. I would tend to look at it in rather the reverse way, consistent with my responsibilities as Home Secretary. Having looked at the matter in an endeavour to meet it, I am not satisfied that we would not create more problems than we would solve. Therefore, I rely on my general warning about the consequences of carrying the examples given by my right hon. Friend the Member for Vauxhall too far in a particular case, town or area.
  Mr. Strauss: It is pointless to pursue the matter. I am sorry that my right hon. Friend the Secretary of State has not gone further than to utter a warning. It was held in the Tronoh Mines case that an offence is committed only when the propaganda is directed to a particular candidate in a particular constituency. The warning my right hon. Friend gave about what might happen in Birmingham does not hold water, because according to Mr. Justice McNair's judgment—there has been no further judgment on the matter—Birmingham Chamber of Commerce would be perfectly entitled to issue propaganda dealing with the whole of Birmingham, because that would be directed to a large number of candidates in a large number of constituencies.
  Mr. Callaghan: My right hon. Friend is entitled to his interpretation of the law. I am entitled to mine. I do not claim to be correct. I can only give the
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  Committee the best advice I have. I repeat that I hope that my right hon. Friend will not encourage the Birmingham Chamber of Commerce to indulge in this sort of thing by telling the Chamber that his view of the law is correct, that I hope he is wrong in this matter, and that I hope that no candidate's election will be invalidated if it is challenged in the courts and the Chamber is found to have been involved in expenditure which is found to be ultra vires.
  Question put and negatived.

New Clause 7

  AMENDMENT OF SECTION 4 OF 1949 ACT
  In the Representation of the People Act 1949 for section 4 (3) there shall be substituted the following subsection:—
  (3) A person who is detained as a patient in any establishment maintained wholly or mainly for the reception and treatment of persons suffering from mental illness or mental defectiveness under section 26 or section 60 of the Mental Health Act 1959, or who is the subject of an order made by the higher courts under section 65 of that Act, or who is the subject of an order made by the Secretary of State under section 71 or section 72 of that Act, or who is detained in legal custody at any place, shall not by reason thereof be treated for the purposes aforesaid as resident there.—[Mr. Lubbock.]
  Brought up, and read the First time.
  Mr. Lubbock: I beg to move, That the Clause be read a Second time.
  I was relieved to hear the Secretary of State say at the beginning of the speech he made on new Clause 6 that he rarely relied on the argument that Amendments have not been correctly drafted. I am certain that the Clause is not correctly drafted, although I have spent some time thinking about it. In a few moments I will explain to the Committee what the difficulty has been.
  The Clause seeks to amend Section 4 (3) of the 1949 Act, which says:
  "A person who is a patient in any establishment maintained wholly or mainly for the reception and treatment of persons suffering from mental illness or mental defectiveness, or who is detained in legal custody at any place, shall not by reason thereof be treated for the purposes aforesaid as resident there."
  To put it in rather more simple language, this means that a person resident in a psychiatric hospital is not entitled to use

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  that hospital as his address for the purposes of registration.
  The difficulties which arise from this provision in the Act of 1949 have been drawn to my attention by the National Association for Mental Health, which wrote to me on 29th November about the consultations which it had had with the Home Office in the past year. The Assistant General Secretary said in her letter:
  "The Royal Medico Psychological Association and ourselves have had some correspondence with the Home Office in the past year and, perhaps as a result, have been pleased to note that householders were reminded this year on their return for the electoral roll that they should include informal patients in psychiatric hospitals who normally reside at their address. However, we know that many informal patients have no home or other settled address outside, and we are anxious that they should have the same voting rights as the others. When it actually comes to voting, the final decision as to whether a patient or, indeed, any other person is in a fit state to vote rests with the presiding officer at the polling station."
  Of course, that power of the presiding officer is dealt with in paragraph 36 of Schedule 2, which enables him to ask an elector who is applying for a ballot paper," Are you the person registered in the register of Parliamentary electors for this election, as follows"—and then the presiding officer reads out the name, and the person has to reply "Yes", Obviously, if that person is not in a fit state to understand the question, he will not be able to exercise his vote, and the presiding officer has to have the answer "Yes" before allowing the person to proceed.
  We have a situation where the Home Office, very wisely, has issued a reminder to householders that if they have relatives or friends normally resident at their addresses, but who are in psychiatric hospitals for the moment, they may be included on their returns.
  The difficulty arises with patients who have no such relatives or friends, who are permanently resident in psychiatric hospitals and who, because they have nowhere to be registered, are not entitled to exercise their votes.
  In this Clause, I suggest that, to the extent that these people are what are called informal patients, they should be entitled to register as being resident at their hospitals. My difficulty is that nowhere in the Mental Health Act, 1959,
  488
  is there a definition of the word "in formal". It is used in the sidenote to Section 5 of the Act. I suppose that one could have said that any person who is in an institution as a result of the provisions of Section 5 of the Mental Health Act, 1959, shall be entitled to register at that address. However, I have done it the other way round and excluded from the right to be registered at such an institution all those who are admitted other than as informal patients.
  I have tried to go through the Sections of the 1959 Act to which this consideration applies. It has not been necessary to deal with them all. For instance, Section 25 allows a person to be detained for only 28 days. Section 29 deals with observation in the case of emergency, and the period is limited to 14 days. Section 51 refers to children and young persons. Section 73 concerns prisoners in custody. Finally, there is the Sixth Schedule, which refers to patients who were legally detained prior to the 1959 Act. The other Sections of the Act which I have mentioned apply to people who are not in formal patients, and I propose amending Section 4 (3) so that those persons should not be treated as resident in the hospitals for the purposes of registration.
  The number to whom my Clause applies is quite considerable. If one refers to the last Annual Report of the Ministry of Health, which is that for the year 1967, one sees that, on 31st December, 1966, there were 175,186 patients in psychiatric hospitals.
  6.15 p.m.
  Mr. James Dempsey: Would the hon. Gentleman be good enough to define what he means by "psychiatric hospitals"?
  Mr. Lubbock: The phrase used in Section 4 (3) is slightly different and refers to
  "… any establishment maintained wholly or mainly for the reception and treatment of persons suffering from mental illness or mental defectiveness … "
  I have not modified that phraseology in putting forward this new Clause, because I think that it is well understood by the Home Office and others who are concerned.
  I was discussing the number of patients in psychiatric hospitals and giving the Committee the figures which I

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  have taken from the last Annual Report of the Ministry of Health. In a further letter to me from the National Association of Mental Health, the Assistant General Secretary says:
  "… some informal patients, even those who are in hospital for quite long periods, have a settled address which they use or can use for voting purposes. However, at one hospital with about 700 beds of which we made inquiries, only about 200 patients came into this category. Of the remainder, about half were regarded as too old and/or confused to vote, leaving about 150 who had no settled address other than the hospital and were capable of voting. At another hospital of similar size we were told that more than half the patients had no settled address outside the hospital. In yet another hospital, about twice the size of the first two, an even smaller proportion of patients had no address which could be used for voting purposes."
  The Assistant General Secretary goes on to say:
  "As detained patients form such a small proportion of all patients in psychiatric hospitals"—
  I do not think that it is necessary for me to go through the figures, but they make up a minute number in comparison with the 175,000 informal patients—
  "… it is clear that the vast majority of those who have no settled address outside the hospital are informal patients. Many of them will be as fit to vote as those with a family or landlady prepared to put their names on their householders' returns."
  It seems reasonable to argue that, if one is entitled to exercise the vote and is fortunate enough to have a relative or friend at whose address one can register, equally one should be entitled to exercise the vote if one has no other address than the hospital in which one is being treated as a patient.
  The wording of Section 4 (3) of the Representation of the People Act, 1949, is too narrow as it stands. The Under-Secretary of State would be both logical and democratic if he agreed to this Clause.
  Mr. Sharples: I want briefly to sup port what the hon. Member for Orpington (Mr. Lubbock) has said. Until he spoke, I had not realised the extent of the problem. It is clear that a good many people who are informal patients in psychiatric hospitals normally reside at those hospitals. The problem is a real and difficult one, and I am quite sure that the Under-Secretary of State will consider it sympathetically if he feels able.
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  The hon. Member for Orpington pointed out realistically the great difficulty in drafting a new Clause to cover such a point as this. I doubt whether the Under-Secretary of State will be able to accept it as it stands. I think that there are deficiencies in it. However, if he could give the Committee an undertaking to look sympathetically at the general problem to see whether, on Report or while the Bill is passing through the other place, it was possible to meet the point, I am sure that hon. Members on all sides would be grateful.
  Mr. Merlyn Rees: I shall look at the question very sympathetically and consider what we can do to help. So that discussion shall not take place simply in the Department and among people who already know the facts, it may be helpful if I say something about the situation. That may throw a new light on the matter for some people, as one or two of the remarks of the hon. Member for Orpington (Mr. Lubbock) did for me, which is the purpose of debate.
  Section 4 (3) of the Representation of the People Act, 1949, as amended by the 7th Schedule to the Mental Health Act, 1959, reads as follows:
  "A person who is a patient in any establishment maintained wholly or mainly for the reception and treatment of persons suffering from mental illness or other form of mental disorder, or who is detained in legal custody at any place, shall not by reason thereof be treated for the purposes aforesaid as resident there."
  That is the starting point.
  When I am dealing with the general principle, it may be a small point to add that the words "… or other form of mental disorder, …" apply to England and Wales. In Scotland, the words used are "or mental deficiency", and in Northern Ireland they are replaced by the words "or arrested or incomplete development of mind". I do not know whether that leads to any profound differences between the three parts of the United Kingdom.
  The new Clause would prohibit the registration of a patient legally detained in psychiatric hospitals under the Mental Health Act, 1959. I think that the inference of the way the hon. Gentleman has worded the Clause is that it would permit the registration of an informal

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  patient at such a hospital, that he is concerned with the informal patient alone.
  Mr. Lubbock Mr. Lubbock indicated assent.
  Mr. Rees: An informal patient—in general terms, that means one who is free to return home—in a psychiatric hospital may be registered as an elector at his home address under the law. He may have been registered before becoming a patient, or may be registered while a patient. A legally detained patient may also have been registered before becoming a patient, but after becoming a patient he is not entitled to be registered any where.
  The registration of patients in psychiatric hospitals was considered by Mr. Speaker's Conference, which recommended that steps should be taken to bring to the attention of persons completing Form A in Schedule 1 to the Representation of the People Regulations, 1950, that a patient free to leave a psychiatric hospital from time to time may be included on the form.
  That recommendation has already been implemented, and Form A pre pared for the canvass of the 1969 Register, the form which has recently been filled in, asked occupiers to include
  "… those who normally live at your address but are temporarily away, e.g. on holiday, as a student or in hospital (including informal patients in psychiatric hospitals)."
  The law, to some degree, makes a differentiation between the legally detained patient and the informal patient, a term which includes the voluntary patient.
  I have been putting some facts on the record so that we have something on which to work. We are left with a smallish group of informal patients who may have been missed out because they were in hospital at the time of registration. Surely they should be covered because there is somebody to register them? The narrow point that we come down to is: what happens when there is nobody to register them?
  Mr. Lubbock: The point I made was that the number of such patients is surprisingly large. According to the inquiries made by the N.A.M.H., in one hospital with 700 beds only about 200 patients had an address which they could
  492
  have used outside the hospital for registration purposes. Of the remaining 500, 150 patients were perfectly fit to vote, in the hospital's judgment, but were not capable of being registered. It is quite a big number.
  Mr. Rees: I shall certainly look at the question.
  There is one other point—one always finds interesting twists to the curious little problems that arise on Bills such as this. If patients in psychiatric hospitals were entitled to be registered at the hospital address, the register for constituencies and local government electoral areas in which the hospitals were situated would be swollen by a considerable number of persons having little connection with the area, and suffering from varying degrees of mental disorder.
  This would raise a problem in Surrey, in parts of which there are large numbers of psychiatric hospitals. One figure I have had is that there are a total of 179,000 informal patients in the county. In some areas, if informal patients were all registered at the hospital their number would be such as to enable them to elect candidates from amongst themselves if they wished. I do not say that that would necessarily be unusual, judging from what one sometimes sees in politics. But there are curiosities in this matter if we take it too far.
  I have thought aloud in an attempt to be helpful. It was my inclination to resist the Clause, and I ask the hon. Gentleman not to press it. But if we can help with this marginal problem in some way, without opening up an avenue that would lead to other difficulties, we shall do so.
  [Mr. SYDNEY IRVING in the Chair]
  Mr. Dempsey: The Clause raises a vital matter of principle. My hon. Friend described it as marginal, but I think that validity is a much more descriptive term. It raises the vexed problem of whether a person detained voluntarily or statutorily in what we in Scotland call a mental hospital should have the right to decide which candidate should represent him in Parliament, when the patient is mentally disordered or mentally deficient but has sufficient faculties to make that decision.

  493
  That is the vital point. We should not talk in terms of whether there are scores, hundreds, or a few thousand people involved. In our democracy, of which we are very proud, such people should be given every encouragement.
  Therefore, what we are discussing is the limitations that might be set on the Clause if its intent were accepted by my hon. Friend. One comes across various questions when dealing with the problem. For instance, there are people who have no domiciliary residence and are resident in mental hospitals in my part of Scot land. I know someone who has been nearly two years in such a hospital. His residence has gone, but he has many faculties.
  This is the type of person whom the psychiatrist would say was capable of exercising his vote, but, under present legislation, there is no hope of his being able to do so. However, he might be given that opportunity if my hon. Friend would consider whether, on Report, we could introduce a new provision. It is certainly worth looking at.
  6.30 p.m.
  In my part of the country, we have in many instances to say to persons who have left council houses to enter the hospital for treatment," We are sorry. We cannot keep your home going indefinitely. You are likely to be domiciled in the hospital for some time and we are taking away your home. But should the day arrive when your medical practitioners recommend your release, we will provide a home for you at that stage."
  I hope that my hon. Friend will grant that this means that, for an interval after a man is released from hospital, he has no home and, therefore, although quite capable to taking part in community life and in elections, does not have the right to vote if an election takes place. This arises because he was not registered, having no domiciliary residence. Yet he could not have had a residence because his local authority took it from him when he entered hospital. It is unfair that persons of that calibre, no matter how few, should be deprived of the right to vote.
  There are other persons who spend long periods in hospital. I knew a lawyer who worked in his office during the day, but stayed at nights in hospital
  494
  for treatment. He had no domiciliary residence because he was really domiciled in the hospital. Yet he was capable of attending to his legal duties during the day. It gives a good deal of credit to lawyers when they can practise in this way and give people advice. That gentle man lived to a ripe old age.
  It is clear that, if there are individuals who are capable of voting but are pre vented from doing so by a technicality, the Government should consider introducing a suitable provision on Report. We have a duty to these people. They are citizens. They probably smoke and pay tax on their tobacco or cigarettes. They pay tax on their sweets. If they are capable and it is said by their psychiatrists that they are fit to exercise their responsibilities to the State, they should be given every opportunity to do so.
  I hope my hon. Friend the Under-Secretary of State will seriously consider this situation and earnestly study what has been said in the debate and that, on Report, he will bring forward a provision giving these individuals the same right as others in the United Kingdom—the right to vote.
  Mr. David Steel: This has been a constructive and useful debate and my hon. Friend the Member for Orpington (Mr. Lubbock) is to be congratulated on raising the subject. Since we have had such a good reception from the Under-Secretary of State I only want to add one point. I face this problem in my constituency and my hon. Friend the Member for Bodmin (Mr. Bessell) tells me that, at St. Lawrence's Hospital, in his constituency, he has had a similar experience.
  At Melrose, in my constituency, I have a large hospital, Dingleton. It is a very progressive mental hospital which, at election times, invites the candidates to come and meet the staff and address a meeting. I have been there at each of three elections and on each occasion it has been pointed out to me that the majority of those who have come to listen would have no vote, although, in the main, they were voluntary patients and were not detained. This was felt to be a grave injustice, but I never thought that we would have the opportunity to

  495
  put it right because so often one hears complaints and all one can say is," Perhaps one day this will be put right."
  I hope that the Government will look at this case sympathetically. I think that we are going through a welcome revolution in our treatment of mental illness and in our attitude to the stigma attached to it. It is curious that psychiatric patients admitted to a general hospital would be qualified to register and vote at an election whereas the law says," If you are in an institution recognised as a psychiatric hospital, you may not have the vote."
  But the psychiatric hospitals are opening up. There is much more involvement with the local community. The Under-Secretary of State suggested that it would be wrong, for example, if a large number of people with no local community or constituency interest residing in a mental hospital registered and thereby swamped the register. My reply to him is that long-stay patients, with the development of psychiatric hospitals, are becoming more and more involved in the community and are encouraged so to do. This proposal, therefore, although small, would be a consistent and significant step in helping to remove the stigma illogically attached to mental as against physical illness.
  That is the sole point I wish to represent. No one suggests that the vote should be given to those detained or certified in mental hospitals. I think that we are all agreed on that; but I hope that the Government will look at the question as it involves voluntary patients very sympathetically.
  Mr. Merlyn Rees: I repeat that I shall look at this matter extremely sympathetically. As the debate has gone on, it has grown on all of us that there are more problems than perhaps we felt at the be ginning.
  The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) has made it clear that we are talking about informal or voluntary patients. I would not like anyone to think that, in talking about the effects of a large number of people being registered in a locality, I would not have said the same in the case of, for example, university students or anyone else. I was not referring
  496
  specifically to the problem as it concerns people having to be in hospital.
  I want to leave the matter in this spirit. I agree that there is a new attitude to the problems of mental illness. It is not per haps that mental illness is growing, but that our understanding and treatment of it becomes more civilised. Perhaps, in this civilising attitude the Committee will accept my undertaking to look sympathetically at this question and consider what can be done.
  Mr. Lubbock: In view of the helpful reply by the Under-Secretary of State, I beg to ask leave to withdraw the Motion.
  Motion and Clause, by leave, with drawn.

New Clause 8

  AMENDMENT OF SECTION 23 OF 1949 ACT
  In section 23 of the Representation of the People Act 1949, in subsection 7 the words 'rural district or' shall be left out.—[Mr. Lubbock.]
  Brought up, and read the First time.
  Mr. Lubbock: I beg to move, That the Clause be read a Second time.
  The Chairman (Mr. Sydney Irving): With this Clause we will also consider new Clause 9, Amendment of section 23 (7) of the 1949 Act:
  Subsection (7) of section 23 of the Representation of the People 9ct, 1949 shall be amended by leaving out the words 'except, in England and Wales, elections of rural district or parish councillors'.
  standing in the names of the hon. Member for Petersfield (Miss Quennell) and the hon. Member for Stoke-on-Trent, South (Mr. Ashley), and Amendment No. 76, in Schedule 3, page 33, line 24, at end insert:
  8. In section 23 (7) the words from 'except' to the end of the subsection shall be omitted.
  standing in the name of the hon. Member for Carlisle (Mr. Ron Lewis).
  Mr. Lubbock: This Clause enables me to return to a point I made briefly on Second Reading, namely, the difference in treatment, as far as postal votes are concerned, between urban and rural district councils. This arises from Section

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  23 (7) of the Representation of the People Act, 1949, which states:
  "Postal voting shall be allowed at all local government elections, except, in England and Wales, elections of rural district or parish councillors."
  On an earlier Amendment, we tried to provide for postal votes to be given to orthodox Jews who were unable to cast a vote in person if an election were held on a Saturday. It was pointed out to me on that occasion that we could only solve that problem as far as urban district councils were concerned because there is no provision in our legislation for a similar right to be extended in rural district council elections.
  I therefore hastily put down this Clause so that we might have an opportunity to discuss the matter. It would go wider than enabling orthodox Jews and other minorities to exercise votes on Saturdays or other holy days.
  We are discussing whether there should be any distinction between the U.D.C.s and the R.D.C.s, bearing in mind that the responsibilities of these authorities are very much the same, and that people wishing to use a postal vote are more likely to be in spread-out areas than in a closely-knit urban community. Think of the old person who is infirm and consequently needs a postal vote, because she cannot get between her home and the polling station. If she lives in a spread-out rural area she is more likely to need the postal vote than if she lives in the middle of a town governed by a U.D.C. That is the essence of the argument.
  I understand that the Rural District Councils' Association has made representations to the Home Office in favour of postal voting being extended to rural elections. I think that there is an argument for the further extension to parish councils too. This is recommended by the Amendment of the hon. Member for Carlisle. The National Association of Parish Councils has written to me pointing out that parish and rural district council elections are always held to gether, so it would be no additional administrative inconvenience if postal votes were conferred in those elections, too.
  I would have liked to have had time to go back to the discussions on the Representation of the People Act, 1949, to try to understand why this distinction
  498
  was made. I have not had the time to do this, but no one with whom I have discussed the matter since it arose can think of any logical reason. I hope that the hon. Gentleman will give as sympathetic reply to this as he did to the last debate.
  Mr. Ron Lewis: I am delighted to follow the hon. Member for Orpington (Mr. Lubbock) and I am hoping to go a little further than he is suggesting in his new Clause. This is a very important matter, dealing with postal and proxy voting. The hon. Gentleman said he could not understand why the 1949 Act was not extended. I may be wrong, but I gather that at that time both the Rural District Councils' Association and the Parish Councils' Association were against that principle. I speak tonight only on behalf of the Rural District Councils' Association, which has come out firmly and strongly in favour of postal and proxy voting being extended into rural and parish areas.
  Take the example of a blind man who can become a postal voter in Par liamentary, county council, borough or urban elections, but not in rural or parish council elections. In a rural election, he may have to travel much further to the polling booth than if he lived in the towns. Unsuccessful attempts have been made during the discussions of the Bill to make provisions enabling persons on holiday to vote in Parliamentary elections, but how much greater is the need to correct than anomaly in local elections?
  6.45 p.m.
  It cannot be right if one class of voter is excluded from rights given to another simply because of the area of the country in which he lives. It may be said that there are administrative difficulties in carrying this out. This has been one of the arguments in the past, the timetable of elections and the printing of ballot papers. As one who lives in a rural district council area, I say that the administrative problems should not be allowed to stand in the way of what must be right, and that is that people living in a rural or parish council area should have the same rights as those living in a county.
  Take the case of a father living in the countryside and his daughter-in-law

  499
  living in the city. It could happen that both were ill at the same time, but the father, because he lived in a rural area, could not vote by post while the daughter-in-law, living in the town, could do so. On 21st November, the Government announced that they intended to introduce legislation to settle the pattern of local areas in Wales. Details produced show an amalgamation of boroughs, urban districts and rural districts into districts. Unless postal voting is with drawn from the former borough and urban districts there has to be an ex tension of postal voting. I hope that this local government apartheid, which has been with us so many years will go. What is fair for the town is equally fair for the parish. I hope that my hon. Friend will meet the wishes of these people.
  Miss J. M. Quennell: I am delighted to support the hon. Member for Orpington (Mr. Lubbock) in his new Clause. I have one on the Notice Paper relating to much the same subject. While he has not had time to go into the history of this case, the Clause which I have tabled is a culmination of a long argument that I have had with the Home Office over many years. The hon. Gentleman became acquainted with this anomaly within our electoral structure as a result of dealing with orthodox Jews, while I became aware of it a year after I entered this House, in 1961, in connection with handicapped persons.
  It applies to them just as much. I thought it only fair to give the Under-Secretary fair warning, so in the Second Reading debate I warned him that I would
  "seek to correct a serious omission from the Bill … "—[OFFICIAL REPORT, 18th November 1968; Vol. 733, c. 981.]
  I noticed when I spoke a look of bewilderment upon his face, and I realised that all those years of correspondence with the Home Office had disappeared into limbo. That was not really surprising. The position arises from Section 23 of the 1949 Act. This was a far-reaching and complex Act, but it was put on the Statute Book 20 years ago, in the light of knowledge and medical experience of that time.
  Many war injured people were about, and it was assumed that they would tend to live in towns rather than in the country.
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  As medical science has progressed and made it possible for handicapped people to take their part in the community, and to be effective taxpayers and ratepayers, they have spread much more widely into the countryside. I cannot say precisely how many handicapped people who are confined to their chairs there are, but there are thousands of them—I would think about 10,000.
  Section 23 of the 1949 Act made pro vision for most classes of people eligible for postal and proxy voting. This is why handicapped people and presumably orthodox Jews in urban districts enjoy the facilities of postal and proxy voting, but not those in rural districts. A nation wide apparatus of electoral machinery has been established covering every parish and rural district under the 1949 Act. This is why the anomaly is so ridiculous. Every county division has this apparatus, and, therefore, every parish is covered, but Section 7 of the 1949 Act excludes rural districts. It provides that postal and proxy voting shall be available for all local government elections and then goes on to knock on the head all rural district and parish council elections in England and Wales. I am not brave enough to trespass into the Kingdom of Scotland. I leave that to Scottish Members and the bravery of the Home Office.
  The effect on handicapped people is that they can cast their vote at Parliamentary elections because they have access to the postal or proxy facilities as rate payers. But they cannot cast their vote at district council elections, not because they are statutorily barred or because they are criminals or lunatics, but simply and solely because they are crippled. I do not believe that any hon. Member would willingly accede to the continuance of this state of affairs.
  Between 1961 and 1964 I received a number of letters from the Home Office to the effect that when the legislative opportunity occurred this anomaly would be borne in mind. In 1965, we had Mr. Speaker's Conference and the appointment of the Advisory Committee to the Home Office, and their recommendations have been incorporated in the Bill. But, unfortunately, there is no provision in the Bill to correct this unjustifiable anomaly which denies a small group of people, who are perfectly good taxpayers and ratepayers, the same rights in a democracy which others enjoy.

  501
  Let me try to visualise the arguments which would be adduced against this proposal. In.949, the Rural District Councils' Association and the Parish Councils Association were a little afraid. The 1949 Act was far-reaching and they were not sure how the new machinery would operate. There was fear of undue expense and undue complications. But the mere fact that the postal and proxy facilities were established so widely under Section 23 of the 1949 Act, and because they exist in respect of every county division and therefore in respect of practicaly every parish, the polling station apparatus is in existence. This new Clause would simply enable the use of the existing apparatus The additional cost must be marginal. There could be no consequent expense from the Clause in connection simply with proxy voting.
  There is one other point which we should bear in mind. A Royal Commission is currently considering the whole structure of local government. It is not unlikely that it will make recommendations which would radically alter the structure. It is possible that district councils will assume far greater importance than they possess now. It would be intolerable if the denial of the full franchise to a small minority of citizens were to be extended.
  Mr. Onslow: You may remember, Mr. Irving, that I was once a member of the Dartford Rural District Council. I came across this ridiculous anomaly when I first stood for election. I never under stood it. It caused much resentment among the electors. On behalf of the people whom I used to represent, and whom you now represent, Mr. Irving, I strongly support the new Clause.
  Mr. Sharples: I support the new Clause. There is broad agreement in the Committee that the law as it stands is wrong and that a change should be made either on the lines proposed in the Clause or by going even further and taking in parish councils as proposed in the Amendments put forward by other hon. Members.
  My hon. Friend the Member for Petersfield (Miss Quennell) speaks with great knowledge of this subject. I am one of her constituents. She represents a constituency covering a very large
  502
  number of rural district councils. We should pay careful attention to what she has said. One important point which she raised concerns the outcome of the Royal Commission and the effects which that will have on the pattern of local government. As she rightly said, a number of people are prevented from exercising the right to vote enjoyed by others because they live in areas covered by rural district councils.
  The hon. Member for Carlisle (Mr. Ron Lewis) rightly said that administrative difficulties were likely to be advanced against implementing the change proposed in the new Clause. He said that administrative considerations should not be allowed to stand in the way of a principle if that principle was right. I support his view. I believe that there is general support for it.
  I appreciate that there may be very considerable administrative difficulties, but I do not believe that they are insuperable. I hope very much that when the Under-Secretary replies he will tell the Committee that it is his intention to get over those difficulties and to find a way round them if that can possibly be done.
  7.0 p.m.
  Mr. Merlyn Rees: We are considering two new Clauses and another Amendment. The object of the first new Clause is to extend postal voting to rural district council elections. The second new Clause would extend it to rural district and parish council elections. There is one odd quirk—one learns all the time—and I think that the point may have been omitted by accident, but there are a few rural borough council elections; there are such cases, and I see that hon. Gentle men are as surprised as I was to learn that.
  The object of the Amendment is to ex tend postal voting to all local government elections at which it is not allowed at present, that is, rural district, rural borough, and parish council elections. My hon. Friend the Member for Carlisle (Mr. Ron Lewis), by his Amendment, covered the point which the second new Clause missed out—that is, that of the rural boroughs.
  The hon. Lady the Member for Peters-field (Miss Quennell) said quite correctly that she had been in touch with the Home

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  Office over the years. I have her correspondence here. I had always thought, in my innocence, that one never saw correspondence with the previous Administration. However, I imagine this is not exactly the 50-year rule, or anything like that. I have looked at it, and it shows that she has stuck to her last over the years.
  The situation now is that under Section 23 of the Representation of the People Act, 1949, as amended, there are postal votes for all local government elections except rural district, rural borough, or parish council elections. The rural boroughs are a few former municipal boroughs of great antiquity which managed, I think before 1957, to get this type of organisation. Postal votes arose for the first time after the last war. They were a new venture. We have had discussions in recent weeks about how far they should spread. I accept straight away that we are not on that argument, and that there are strong views one way and the other. The argument now is that for certain local government elections, citizens who would have the right to vote in other local government elections do not get that right in those particular local government elections. I accept straight away that this is more than an anomaly, that it is something which must be put right.
  In 1946, the Oliver Committee on Electoral Registration looked at the whole matter and one phrase in its Report illustrates the difficulties which were seen then. The Committee said, in connection with postal votes in all local government elections:
  "We accordingly recommend that so far as practicable provision should be made for postal voting. …"
  It is the phrase "so far as practicable" which has to be borne in mind. The question of postal voting facilities in the rural district councils, and so on—though I know that my hon. Friend the Member for Carlisle has argued about it today—turned on the question whether it was practicable.
  Since that time there has been one change. Since 1956, parish council elections, by Statute—my hon. Friend will corect me if I am wrong—are held at the same time as rural district council elections. This is something which one has
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  to bear in mind. This means that there are certainly two elections, although for different types of authority, taking place at the same time.
  Mr. Ron Lewis: Yes, but surely the difficulty can be got over with postal voting—by having different coloured ballot papers?
  Mr. Rees: I am not arguing that this cannot be overcome and I am not pressing it too far. However, there are problems which I have to consider in deciding what attitude to take.
  The returning officer for a combined rural district, rural borough and parish council elections is the clerk to the rural district council. In many cases he is responsible for a large number of parishes with long lists of candidates in the parish council elections as well as in the rural district council election.
  Again, I do not say that administrative difficulties should not be overcome to meet a principle, but I am advised that it is difficult for the necessary work to be done in time after the close of nominations and that if postal voting were introduced it would be for the electoral registration officer to see that special lists for postal voting in each parish were prepared. But the returning officer would have to have the ballot papers ready about a week earlier. There are, therefore, complications and difficulties. What I want to do is to find a way to overcome these difficulties in elections at that level—I do not mean that these elections are unimportant, rather that they are different from Parliamentary and urban district council elections.
  The real problem is not registration. The hon. Lady made this clear. Registration is relatively a simply matter, in the sense that the machinery is there—for the Parliamentary elections. There is a problem of machinery, however, in relation to the work of the returning officers in widespread areas. All of us know that on the returning officer there are put certain duties at the Parliamentary election level.
  We all of us as candidates have a right to see the opening of the votes and to be at the counting of the postal votes. This is not something I have done very often, certainly not recently, because postal vote openings do not on the whole give my party any indication of what the

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  result will be. However, one is allowed to go along and have a look at the votes being opened and one can get some indication of what is going on. As I have said, there is a problem of the mechanism for dealing with the postal votes in rural district council and parish council elections, and this is why postal votes were not allowed in those fields 20 years ago.
  I would very much like to help. I have tried to be as helpful as possible with other Amendments and new Clauses this afternoon, but in this instance I advise very strongly that, when we are dealing with people's voting, putting crosses on bits of paper, we must be sure that the mechanism and arrangements for doing that are impeccable. This is not some thing one considers lightly. It is not a question of administrative difficulty in the normal sense of the term—that is not an argument which one would press too far—but there are administrative difficulties when one talks of spreading postal voting to other fields. In Parliamentary elections, at least, the mechanism is there. One can talk of overloading, and so on, but what I am now arguing is that the mechanism for dealing with rural district and parish council elections in preparing lists, and so on, is not such that I could recommend that this Clause be accepted.
  I thought for a moment during the debate about proxy voting which my hon. Friend and the hon. Lady mentioned, and the problem of the disabled. One has to bear in mind that the proxy vote is for the Service voter. The point is that if one says that we will have proxy voting for one class, however desirable it may be for that class, it then becomes necessary to take into account the arguments which will be put by other people, and I do not think that it would be right, for just one group, to open up a completely new avenue.
  We must make sure that the right given to all those who are entitled to postal votes in Parliamentary elections is also given for rural district and parish council elections, but I think that it would be wrong to erect yet another special class. The hon. Lady in saying that local government reform would not be very helpful in this respect was countering an argument which I had in mind.
  I want to do something about this, and would have done so, had I been able to
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  tell the Committee that I was satisfied with the machinery of dealing with postal votes—it is not a question of the machinery for registration. I have spent some time discussing this matter with interested people and, much as I started out wanting to help, I cannot recommend the new Clause and Amendments to the House.
  Local government will change. I know that the hon. Lady has heard this argument in a different form since 1961. On that occasion, it was said that the time would come when this matter could be dealt with, meaning now; but it is not being dealt with now. The time will come in local government reform when the machinery for looking after postal votes can be applied universally. I am not saying that there are not rural district and parish councils that could do it now, but, in general, I do not believe that there could be the certainty about the organisation that would enable it to be done.
  As the hon. Lady pointed out, it is done in county council elections. The machinery in county council elections is such that I am satisfied that the rules of electoral law that have been built up can be properly carried out in every place.
  Mr. Ron Lewis: Surely that applies to the rural district councils? Is my hon. Friend saying that we have not the intelligence in the rural district councils to be able to carry it out honestly?
  Mr. Rees: No, I am certainly not saying "intelligence", by a long chalk. I am saying that in terms of the returning officer having the machinery for dealing with it, the postal voting facility is not something which can be spread lightly. At county council elections, in the nature of things, it can be done. I do not want to offend anybody, and I have been seeking the right words all along the line.
  Had I felt that there was a way of dealing with this, I would have done so, because I want to. We will look at this most carefully. The intention of my right hon. Friend is that the rights now avail able in local government elections at urban and county council level will also be applicable to parish and rural district councils.
  Miss Quennell: I am puzzled by the Under-Secretary's argument. At a county council election or a General Election the clerk of the rural district council is appointed by the county returning officer to act and he conducts the proceedings perfectly well. I do not under stand why he should now be supposed not to be able to do so.
  Mr. Rees: The hon. Lady is absolutely right; the clerk of the county council handles these elections. I am the last to cast a reflection on anyone, but I advise the Committee that the machinery for dealing, not with registration, but with postal votes, and so on, is something which I would like to be happier about, so that elections can be carried out in the way we expect. As the hon. Lady has pointed out, it is done in this way at county council elections. I am not criticising anyone for his personal integrity, or for what he is doing.
  Mr. Onslow: Will the hon. Gentleman accept that if an authority is fit to levy a rate it ought to be able to administer a postal vote, and that is all there is to it?
  Mr. Rees: I want to be sure that the postal voting arrangements can be carried out. I will look at this again, but not in the light of Report. Much as I want to help on this, I am satisfied that I cannot. When local government reform comes about, which will be very soon, we will look again at the matter.
  7.15 p.m.
  Mr. Lubbock: I cannot pretend that I am entirely happy with the hon. Gentle man's reply, and, I think, neither is he. We are grateful that he has agreed with the principle of new Clauses 8 and 9 and Amendment No. 76, and that he has accepted that, in theory, one cannot argue against the principle on the basis that a person given a democratic right for one type of local authority should have the same right for another.
  I am not sure that I understand the hon. Gentleman's explanation of the administrative difficulties, but I am satisfied that he has looked into the matter thoroughly. I am sure that he would not be taking the view which he puts before the House without having gone into the matter with extreme care and attention.
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  Unhappy as I am about the conclusion which we will have to reach, I will accept his undertaking that the matter will be looked at again after the Royal Commission on Local Government has reported and the structure of local government is recast. I think that we have on the record a positive under taking from him that the same machinery will be applied throughout the whole country when the recommendations of the Royal Commission are implemented. In view of that undertaking I beg leave to withdraw the Motion.
  Motion and Clause, by leave, with drawn.

Schedule 1

  REGISTRATION OF POLITICAL DESCRIPTIONS
  The Chairman (Mr. Sydney Irving): The next Amendment selected is No. 54.
  Mr. Sharples: Amendment No. 54 refers to the prescribed fee in relation to the party labels scheme. As the Home Secretary yesterday gave an undertaking that he would take away the whole scheme and reconsider it, it is not my intention to move the Amendment.
  The Chairman: The next Amendment selected is No. 91.
  Mr. Rees: In view of the undertaking given yesterday evening by my right hon. Friend that he would consider the matter raised in Clause 12, it is not my intention to move this Amendment.
  Schedule agreed to.

Schedule 2

  MISCELLANEOUS AMENDMENTS OF PAR LIAMENTARY AND LOCAL ELECTION RULES
  Mr. Onslow: I beg to move Amendment No. 34, in page 26, line 20, at end insert:

  Rule 10

  …

  …

  Deposit.

  The Chairman: With this Amendment we will take Amendment No. 35, in page 26, line 22, at end insert:

  Rule 54

  …

  …

  Return or forfeiture of candidate's deposit.

  and Amendment No. 38, in page 28, line 22, at end insert:
  6. In Rule 8 (1) of the Parliamentary Election Rules (which deals with the number of electors required to propose, second and assent to the nomination) for the word 'eight' there shall be substituted the word 'forty-eight'.
  Mr. Onslow: I hope that the Commit tee will not feel that we have reached too late a stage to spend a few minutes considering an important subject in the con text of elections, that is to say, the deposit. Mr. Speaker's Conference, having considered this matter, decided to make no recommendation, but I feel that the subject is one which could be considered by the Committee, given that there are such few opportunities, and such a long time between them, to consider the basic features of the parliamentary rules.
  The deposit of £150, payable by any candidate standing in an election, is widely thought of as being a deterrent to keep frivolous candidates out of the lists but, on looking back at the history, one finds that is a misconception and that the real purpose of the deposit was to attempt to provide the public with some security against the expenses involved if an election had to be held.
  The present position dates from the Representation of the People Act 1918, which provided that every candidate should put up £150 with the returning officer at the time of nomination. Before that time, under the Parliamentary Elections (Returning Officers) Act, 1875, the returning officer had certain powers to require security to be given for the charges which may become payable.
  It is interesting to note what they were, and to reflect that the maximum charge payable in the case of a county constituency with more than 30,000 electors was £1,000, and in the case of a borough it was £700. It is clear that in 1918 the view was taken that the financial charge involved should be reduced, and that the figure which we now have of £150 is not there to act primarily as a deterrent to frivolous candidates. Perhaps I might mention, in passing, that it is calculated that the equivalent of £150 in 1918 is £52 10s. today.
  At a General Election nowadays all the seats, including Mr. Speaker's seat, are contested. I think that possibly the only present Member of the House ever to have had the pleasure of being returned unopposed is my hon. Friend the Member for Eastbourne (Sir C. Taylor). Few of us are likely to be returned unopposed. There will be contests between the official party candidates for every seat in the country, and the question of the deposit is not likely to deter any of those can-
  510
  didates. To suppose that there is any deterrent effect in the deposit seems to be unreal.
  Nor do I believe that the deposit has the effect of deterring what are identifiable as less than serious candidates. For instance, "Screaming Lord Sutch" was not deterred from taking on the Prime Minister at Huyton by the fact that he had to put up £150. Indeed, his advisers may have told him that this could be money well spent. I do not know. But if the purpose is to deter the frivolous candidate, the present situation does not help. Instead, it creates a situation in which we are apparently prepared to tolerate the idea of a financial penalty on candidature, and I find this objectionable.
  We know that the penalty can be considerable. It is only necessary to look at the statistics of some of the General Elections since the war to see how consider able it can be. In 1950, there were 460 forfeit deposits, 319 of which were on the Liberal side. In 1964, there were 187 forfeit deposits, 53 of which came on the Liberal side. In 1966, there were 237 forfeit deposits, and 104 Liberals were unlucky enough not to get their money back.
  I make that point because, in moving the Amendment, I claim complete disinterest. I do not think that the effect of removing the requirement for a deposit will benefit my party at all, and I stand in the paradoxical position of arguing a powerful case for a totally absent Liberal Party.
  Mr. John Boyd-Carpenter (Kingston-upon-Thames): The subject is too painful for them.
  Mr. Onslow: I had thought that I should get some support from the Liberals, at least on behalf of their insurers. I understand that at one time the Liberal Party persuaded an insurance broker to take the risk. I believe that in 1950 they may well have taken their insurers to the cleaners. Whether they can still insure against the risk of losing their deposits I do not know, but I do not consider that it adds to the dignity of an election that any candidate has to insure against the loss of his deposit. This seems to be an unnecessary indignity.
  If the purpose is to safeguard public funds against unnecessary expenditure at

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  an election, I do not think that that works, either. I do not believe that it deters frivolous candidates. We could not argue that the original level set in 1918 would apply today, unless we were prepared to raise it to £400, and I am not prepared to argue that. The financial burdens on democracy are already dangerously high.
  That leads me to suggest, first, that we should withdraw the requirement for a deposit, and, secondly, that we should increase the number of signatures validating a nomination. At the moment what is required is a proposer, a seconder, and eight names. Amendment No. 38 suggests that that should be amended to read a proposer, a seconder, and 48 names, a total of 50. I know that the old election hands will throw up their hands in horror at the idea of 50 people having to sign their names correctly on the election nomination paper, but this is the argument of an idle man. If an agent is so careless that he is incapable of checking that the 50 names are right, and are correctly reproduced in the form in which they are set out on the electoral roll, he is not capable of running an election at all.
  Most of us stand for Parliament fortified by the knowledge that we have more than 10 signatures behind us. It is not unknown for candidates to be put up with two, three, four, or five nomination papers, all perfectly entered, to sup port their candidature. I think it is much more a fair test that a man should be able to say that 50 people wish him to put his hat into the ring, than that he should have to say that he has been able to get 10 people to put their names down, and that as he has £150 he will have a go.
  Mr. C. Pannell Mr. C. Pannell indicated dissent.
  Mr. Onslow: The right hon. Gentle man shakes his head. I put forward that point of view because we see the financial burden on political activity and democracy increasing daily. The Amendment is consistent with the principles of democracy, and if the Bill had been so drawn I should have been glad to couple it with a further Amendment enabling candidates who get a fair proportion of the poll to reclaim a proportion of their
  512
  expenses. I cannot, however, argue that, because to do so would take me out of order.
  I welcome the opportunity of putting my case to the House, and of suggesting that it is much more important, in a man's entitlement to stand for election to this House, that he should be able to bring before the public a substantial number of names to endorse his candidature, than that he should be able to say, "I can, if the worst comes to the worst, afford to throw away £150 ".
  The Under-Secretary of State for Scot land (Mr. Norman Buchan): I have listened with interest to the hon. Member for Woking (Mr. Onslow). Basically, this is a simple proposition. I do not think that the deposit of £150 effectively pre vents a freak or frivolous candidature. An example of that was given. A much better alternative is, however, that there should be some evidence of a substantial body of support, in this case it is suggested 48 names. This is a fairly simple proposition.
  There has been a lot of talk about it, but it has never been accepted that this change should be made. I remember Mr. David Butler, the psephologist, arguing that a large number of names should be brought forward in this way, but I do not think that the Amendment would do what the hon. Gentleman in tends. I say that because 48 is too few to establish a substantial body of sup port, and, on the other hand, too many for the comfort of the agent who may, in a great hurry, have to make the proper arrangements.
  Mr. Onslow Mr. Onslow indicated dissent.
  Mr. Buchan: The hon. Gentleman disagrees with me, but we know the difficulties which can be caused by trying, in a short time, to get the whole thing exactly right. We know of the signature which misses out the middle name, or is slightly different from that on the electoral roll, and so on. The figure suggested is too many for comfort, and too few to establish substantial support. I therefore do not consider that the hon.' Gentleman has made his case.
  This is an interesting issue, and I am glad that the hon. Gentleman has raised it. I accept that basis of his argument that we should not use finance to prevent

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  the workings of democracy, and I am glad that he rejected the possibility of increasing the amount of money payable. The case for a change has not been made, and I think that we should follow the line of successive Electoral and Speakers' Conferences, and accept the situation as it stands.
  Mr. Costain: Can the Minister tell us the amount of deposits forfeited at the last two General Elections?
  Mr. Buchan: Some figures were given earlier, and I saw no reason to challenge them. I do not have the up-to-date figures. I suspect that both in relative amounts and per party the sum was not unlike some of the figures put for ward earlier.
  7.30 p.m.
  Mr. C. Pannell: The hon. Gentleman was a member of Mr. Speaker's Conference, as I was. There is something in the point which he makes that £150 in 1918 is worth only about £52 now, but he knows that we took that into consideration. Whereas it might have been a burden in 1918, it is less of a burden row, so Mr. Speaker's Conference deliberately decided to keep it as a relatively small financial penalty. As for "Screaming Lord Sutch", it was probably worth more for the publicity to him, and in any case he probably earns far more than the Prime Minister does.
  Mr. Onslow: Oh, come!
  Mr. Pannell: Yes, he probably does, or he gets it in one way or another. The hon. Gentleman had better not tempt me on that issue, and, for the sake of argument, perhaps I should speak of "any" Prime Minister. The whole affair was frivolous, and it was rather a bad thing in itself that we had that candidature, but I do not regard it as a good case to argue from.
  Now, the point about signatures. I am not at all sure that what the hon. Gentleman says is right. I can remember one occasion when the question of a nomination paper was raised and the returning officer said," As long as the person is identified as that person, I shall take the paper ". However, I am sure that the hon. Gentleman's agent could tell him about these things. There is
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  always the tested nomination paper, the one which is put to the returning officer, which is 100 per cent. right. We all collect the other nomination papers—from the branch of the A.E.U. in my case, from the British Legion in another, from the Soroptimists in another, and so on. These are the dummies, the decorative nomination papers.
  After having spent a good deal of time on this matter in conference and having taken part in a collective decision, I cannot see an affront to democracy in the arrangements we now have. I think that it is probably a good thing to indicate that Parliamentary candidature is in no sense a frivolous matter, and I should not want it ever to be so, but, though I listened with sympathy to the hon. Gentleman's argument, I feel that we shall approach the subject rather more responsibly if we leave the position as it is.
  Mr. Onslow: I am much obliged to the right hon. Member for Leeds, West (Mr. C. Pannell), the level of whose reply, if I may say so, was more studied and less superficial than that of the Under-Secretary of State for Scotland. I despair of getting any sense out of the Under-Secretary, and I suppose that I had better withdraw the Amendment, though I do so with reluctance.
  I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Mr. Sharples: I beg to move Amendment No. 94, in page 27, line 12, leave out paragraph 2.
  The Chairman (Mr. Sydney Irving): We may discuss, at the same time, the following two further Amendments: No. 36, in page 27, line 16, leave out 'ten' and insert 'a quarter past nine'.
  No. 37, in page 27, line 16, at end insert:
  Polling hours at local elections
  3 In rule 3 of the local election rules, for 'eight o'clock in the morning' there shall be substituted the words 'seven o'clock in the morning', and for 'eight o'clock in the evening 'there shall be substituted the words' a quarter past nine in the evening', and the proviso to paragraph (1) and the whole of paragraphs (2) and (3) shall be deleted.
  Mr. Sharples: Paragraph 2 of the Schedule extends the hour of polling at

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  Parliamentary elections from 9 until 10 o'clock at night. This matter was debated on Second Reading, but one of the difficulties which the House found, and which its Committee still finds, is that the Government have advanced no argument in favour of the change. I understand that it was one of the matters considered by Mr. Speaker's Conference, which came to the conclusion that no change should be made.
  Before agreeing to what is now pro posed, the Committee should be told what evidence has been put to the Government to persuade them to reverse the decision of Mr. Speaker's Conference. If an important decision like this is to be taken, there must have been clear evidence and pressure put on the Government to that end.
  From whom did the pressure come? Did it come from representatives of the trade unions? If there is a real demand for the extra hour from any broadly representative section of the community, no one would wish, by opposing such a move, to prevent people from exercising their right to vote.
  Is the change intended to meet the problems of shift workers? We have not been told. Was there pressure from employers' organisations? We must have clear answers to these questions. Did representations come from any of the main political parties? Was it felt by any of them that people were being deprived of their right to vote by the closing of polling stations at 9 o'clock instead of 10?
  Did representations come from any of the bodies concerned in the conduct of elections or in the administration of Government generally? If there is such evidence, the Committee should be plainly told.
  Mr. C. Pannell: At a time when we want to get away, the hon. Gentleman asks all these questions although he knows that the answer to each one of them is, "No".
  Mr. Sharples: If the answer is "No", as the right hon. Gentleman says—he knows much better than I do, since he was a member of Mr. Speaker's Conference—I do not know it and, if
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  the Committee is asked to make a major change in the electoral system the Government should tell us on whose recommendation it is proposed.
  What consultation took place? Were there consultations with any of the interested bodies? What was the view of the various societies representing returning officers? They are the people who have to administer elections and on whom grave responsibilities lie. If they objected to this proposal, the returning officers may have said that there were administrative difficulties. Administrative difficulties are by no means insuperable, but we should look at the matter from the point of view of the officer who is responsible for the conduct of an election.
  Let us think of the clerk at the polling station. At a Parliamentary election, he probably has to be at his place of work at least half an hour before polling opens to make sure that everything is set up properly. If the proposed change is made, he will probably have to remain in the polling station for 15 hours. In many cases, it is difficult for returning officers to arrange reliefs for those who man polling stations at a Parliamentary election when polling is relatively heavy during the whole of the day. Moreover, in many constituencies the same people have to be used for organising and taking part at the count as were used throughout the day at the polling stations.
  Everyone concerned with local government accepts that at General Election times he will have to work very long hours, but there are limits beyond which we ought not to ask those who serve us so well to go. If people are asked to go too far, they will get tired and make mis takes which all of us will regret.
  The Government may say that this is essential to meet the needs of certain people who cannot vote during the 14 hours at present available, but, if so, what is so different about local elections? If someone cannot get to the poll by 9 o'clock at a General Election, what different arrangements is he supposed to make for a local election? If this proposal is accepted, there will clearly be absolute confusion during the first local election after it comes into effect. If there were a March General Election, and

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  the polls closed at 10 o'clock, would any one realise at the local government elections the following April and May that the closing hour was different?
  One thing that we must do is make it possible for as many people as possible to vote in local elections, which are, in some ways, almost as important as General Elections. The hon. Member for Orpington (Mr. Lubbock) has said that the hours are different now. They are in the morning, of course, but it is not in the morning that this difficulty arises. Many people put off voting until the last minute. It does not matter whether the polling stations close at 11 or 12 o'clock: these people would still do the same. There is a great difference between different opening hours in the morning—although I should like them to be the same—and different closing hours, which present great dangers.
  This proposal is wholly unnecessary, administratively undesirable and will lead to confusion at local elections. It is directly contrary to the recommendation of Mr. Speaker's Conference and not one shred of evidence for it has yet been offered to the Committee. I do not believe that it should be in the Bill, and unless we get a firm assurance that the Government intend to reconsider their decision, I shall advise my right hon. and hon. Friends to divide the Committee against it.
  Mr. Roland Moyle: I want to draw attention to the Amendment in the name of the hon. Member for Orpington (Mr. Lubbock), proposing that polling stations should remain open until 9.15 only. I suppose that the longer they are open, the more likely it is that there will be a 100 per cent. vote. Traditionally, my party more than any other has pressed for the extension of the hours of opening, but one can have too much of a good thing. We shall have to maintain party workers in action until 10 o'clock and this is not the first time that I have said that party workers who support hon. Gentlemen on both sides are fairly important people in the working of the democratic machine.
  To some extent, we should curb their natural enthusiasm to ensure our return to the House. I know that it is probably fashionable on both sides to think that hon. Members themselves are solely
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  responsible for any electoral triumphs in their constituencies, which is why we often do not pay enough attention to these voluntary and hardworking people who canvass, man polling stations and push out literature—
  Sir Harmar Nicholls: I agree completely that these people are a very important part of the Parliamentary system. Is it not a pity, therefore, that the Prime Minister should have cast a slur on them in saying that, because they are interested in politics, they can not be included in the Honours List—as if they were lepers?
  7.45 p.m.
  Mr. Moyle: I am sure that my own party workers get their reward by seeing me in the House, but I would hesitate to say that the same applied in Peter borough.
  The other aspect of this problem, which is not confined only to my constituency but which I have seen in a number of others in which I have worked, is that the great majority of electors have voted by about 8.30 or 8.45. Therefore, there will be a rapidly diminishing return in keeping the polling stations open a further hour. There is also the problem for the voters themselves who, having voted by 8.30, find while relaxing before their television sets at 9.45 that they are continually knocked up by party workers from both main parties. This will not add to the popularity of party political activity.
  For all these reasons, I should like my right hon. Friend to consider this again, possibly with a view to seeing whether he could not accept the Amendment of the hon. Member for Orpington, which is a very sensible compromise.
  Mr. Lubbock: I am very grateful for the support of the hon. Member for Lewisham, North (Mr. Moyle) and I echo what he said about party workers. None of us, once he is elected, spends enough time considering how much he owes these workers, without whose assistance none of us would be here. To impose on them the great additional load of having to stay on until 10 o'clock, getting voters to the polls and staying on there after as observers during the count—
  Mr. C. Pannell: Scrutineers.
  Mr. Lubbock: I mean scrutineers, a word which I know the right hon. Gentle man prefers.
  This will mean that they will have had a 16-hour or 17-hour day, which is absolutely unreasonable and too much to ask of anyone who voluntarily gives service to make the democratic system work. If I had to call on the Orpington Liberal Association to do it, I know that they would put their shoulders to the wheel with a glad heart, but it would be unreasonable to compel them to spend that much time "at the finishing post" after what has probably been a long and gruelling election.
  Therefore, I have suggested what the hon. Member has been good enough to call a sensible compromise, designed to test the Home Secretary's hypothesis that, because polling stations are closed at 9 o'clock, some people are thereby pre vented from voting and that, if we kept them open another hour, they could do so. Very well, let us advance the hour to 9.15, and we can then make a comparison between previous elections and the first at which this change was made to see whether there was any noticeable difference. But if there has not been, then, as the hon. Member for Sutton and Cheam (Mr. Sharples) said, we can only assume that, whatever time polling comes to an end, there will be people who will leave it to the last minute. If one goes to a polling station just before 9 p.m. one usually sees a rush of people to vote when previously during the afternoon it has been quiet. There is a tendency for people to leave voting till the last minute.
  Amendment No. 37 is concerned with bringing the hours of polling in local elections into line with those applying to Parliamentary elections. I am grateful to the hon. Member for Sutton and Cheam for his support, although I suggest that it is important to make the polling times coincide at both the beginning and end of the day.
  Many people go to polling stations at 7 o'clock in the morning at local elections, having only a month or so previously cast their votes at that hour in a Parliamentary election. However, they find that in local elections the polling stations are not open at 7 a.m. It may be inconvenient for them to return before 9 o'clock at night, or they may say," I have gone to the trouble to arrive at the
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  polling station at 7 a.m., having hurried over my breakfast, leaving me little time in which to catch my train. As they have not bothered to open, I will not bother to cast my vote." I have heard people say this.
  There is no reason why we should not change the hour at which people may vote in local elections to make it coincide with opening time for Parliamentary elections. Indeed, I cannot understand how the difference arose in the first place. At present there is an option at the end of the day under the election rules. There is a proviso by which instead of closing at 8 p.m. the polls may be kept open until 9 p.m. I am informed that in practically every part of the country this option is exercised and the 9 o'clock rule applies.
  I recommend that we no longer need this proviso. Instead, there should be a universal closing time for local elections throughout the country, just as there is for Parliamentary elections. I have suggested 9.15 p.m. for local elections so that both local and Parliamentary election closing times are the same.
  I cannot see any virtue in having a close of poll coinciding with the striking of the clock at the hour of 10, except that it might be easier for people to remember 10 o'clock, which is the only argument of substance in favour of advancing the time by one hour. At first people might go to the polls just after 9 o'clock. They would previously have been prevented from casting their vote. They will find that there is an additional quarter of an hour—that is, if my recommended time of 9.15 p.m. is accepted—and thus be able to cast their vote, which may result in a marginally increased poll.
  Unless powerful evidence can be adduced by the Home Secretary to show why an extra hour is vital, his proposal will create all sorts of difficulties. I am mainly concerned with the plight of party workers, but we must not forget the returning officers and those who are engaged professionally in the conduct of elections. The right hon. Gentleman's proposal will inevitably mean many results not being declared until the following day, particularly if counts must in some cases take place the following morning. Indeed, if the former Leader of the House had his way, we might have had morning

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  polling the following day, the polls having been closed at 9 o'clock the night before
  We are prepared to go a part of the way with the Government to test the feeling of the electorate. If the right hon. Gentleman would accept 9.15 p.m. as a compromise between his suggestion and the system we already have, I am sure that that would be acceptable to the three parties and the electorate as a whole.
  Mr. C. Pannell: I do not think that many of the arguments that have been advanced, however eloquently, on this subject will move the Home Secretary. I wish to advance some that may influence him.
  My right hon. Friend received advice from both of the main political parties saying that there should be two registers a year. He replied that, refretfully, he could not accept that advice. It would have been too expensive. Sir Stafford Cripps abolished the idea in 1949, and then it cost £3 million.
  Bearing that in mind, what is this extra hour for polling likely to cost? There will have to be a completely new scale of expenses for returning officers, otherwise we will not get them. There will be overtime all along the line, great confusion and a great deal of other expense, particularly in a divided city like Leeds, with a complete recount the next day. That used to happen regularly. In divided cities there were frequently six recounts. This is one reason why I am still in favour of carrying on the process the following day, but that is another argument.
  A great deal of strain is bound to be placed on many people. In 1924 in my constituency there were seven recounts of two votes. The nonsense was stopped only when the Conservative candidate went into hysterics and fainted. The Home Secretary—who, after all, has not lost a certain fiduciary flavour in his arguments—should say why he is pre pared to refuse two registers a year, which would be vital—both parties want that; it would not really be an extravagance—but is prepared to condone this sort of extravagance all along the line.
  There is the other argument that in many cases one cannot increase the size of the poll. By the time the count is taken, the register is usually only about
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  85 per cent. accurate. This proves that the polling figures at General Elections are nothing short of amazing. On one occasion a village in my constituency polled over 90 per cent. On another occasion sufficient ballot papers were printed in South Coventry to cater for a poll of 95 per cent—and they ran out of ballot papers.
  The antecedents of the Chair, however lurid, must never be referred to. The antecedents of the Under-Secretary may be referred to, and even called in question. My hon. Friend represents Leeds, South. He is next door to me and I regard him as a good neighbour. I am willing to bet that if, at the last General Election, he had gone into a polling booth in his constituency at the same time at which I went into one in my constituency, he would not have found any voters there. I was told by the presiding officer," They are all watching 'telly'. 'Gunsmoke' is on. In any event," he added," they have nearly all balloted."
  I assure hon. Members that I have studied this matter. At the last General Election I carefully watched what went on at one polling station. Not a vote was cast after 8.40 p.m. Leeds and Pudsey have been the subject of investigation by the Leeds University. Considering the polling habits of people, it seems that we are now unable to get much bigger polls than we already get. One will always come across the person who will be shut out at the last moment. In many instances people will use this as an alibi for not voting. The electoral process cannot turn on that sort of consideration.
  Perhaps the Home Secretary is struggling after an electoral liability. Has he realised that if the polling stations are kept open until 10 o'clock the pubs may suffer? Does he believe that people should do their drinking before or after they have voted? All sorts of considerations come into this and I trust that my right hon. Friend has borne them in mind.
  I was a member of Mr. Speaker's Conference. I appreciate, whatever I may feel about youngsters of 18 having the vote, that strong views are held on the subject and that it is a substantial political matter. It is of far more importance than the matter we are now considering. Although I might not have agreed on the first issue, I appreciate the weight of argument in favour of votes at 18. But

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  I have never heard a great demand for the polls to be kept open until 10 o'clock. In the main, people are working shorter hours and they are not working overtime to such an extent. Who would this proposal benefit? It would be to every one's disadvantage. I do not usually vote against the Government, but I certainly will not go into the Lobby in favour of this proposal in the Bill.
  8.0 p.m.
  Mr. Callaghan: Perhaps it might be advantageous if I intervene at this stage to give answers to some of the questions which have been asked. I have no intention of bringing the debate to an end.
  I regret that I was not in my place when the hon. Member for Sutton and Cheam (Mr. Sharples) asked a number of questions, but I have had a full account of them and I shall endeavour to give the answers. I was engaged elsewhere when he was speaking. Somehow the Home Office seems to be involved practically every other day in something or other in the House.
  It is true, as my right hon. Friend the Member for Leeds, West (Mr. C. Pannell) said, that Mr. Speaker's Conference recommended that there should be no change in the law in this respect. This is a situation in which the Government have departed from the recommendations of the conference. The evidence that was given to the Government was, on the whole, along the lines of that which has been expressed in speeches this after noon—that the functionaries concerned with elections do not want this change.
  They wanted polling to finish at 9 o'clock at night, but the Government take the view—it was the Government's own decision—that there was a case for extending the hours of polling to 10 o'clock. There are people who are excluded when polling ends at 9 p.m. They should be given the opportunity to vote. Therefore, the Government bring this as their conclusion to the Committee in face of the recommendation of Mr. Speaker's Conference. I ask the Committee to sup port their view.
  Mr. Sharples: For reasons which I appreciate, the right hon. Gentleman was not present when I made my speech. I not only asked what were the views of returning officers, but what positive
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  evidence there was from outside bodies of any kind, trade unions, employers, local government, and so on, from either side of industry or the political parties, of a demand for this change.
  Mr. Callaghan: This conclusion was drawn from the political experience of members of the Government, which is as great as that of outside organisations or of anyone else. In their view there were circumstances in which people did not vote until 9 o'clock. It was the Government's collective view, having discussed and considered the evidence, that there was a case for extending the time to 10 o'clock.
  Several Hon. Members rose —
  Mr. Callaghan: I did not think that I was saying anything controversial. I was stating the Government's view.
  Mr. Lubbock: Will the right hon. Gentleman say whether that view was supported by any outside organisation?
  Mr. Callaghan: I thought that I was being absolutely clear. The Government reached their own conclusion on this matter. The functionaries were opposed; the presiding officers and those concerned with elections do not like this proposal. They want polling to finish at 9 o'clock, but the Government are entitled to reach their own conclusion and to submit it to the Committee. There is no more to it than that and no less.
  Sir Harmar Nicholls: Will the right hon. Gentleman give way?
  Mr. Callaghan: I think that the hon. Member would be about the fourth on the list.
  Mr. Costain: Does the right hon. Gentleman appreciate that in some rural areas where only a few people are going to the poll, it is absolutely absurd to keep polling stations open for 15 hours when probably about 190 have polled early in the morning?
  Mr. Callaghan: I should like to be permitted to develop the case. I have been interrupted several times after speaking about two sentences. Before 1948, the polling hours were 8 a.m. to 8 p.m., but there was an option to apply for an extension at either end. The present statutory hours are 7 a.m. to 9 p.m. It is difficult to produce concrete

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  evidence that any polling hours are in disputably the right ones. I grant that there are constitutional difficulties, but these have to be balanced against other considerations. There are the interests of election officials, of candidates, of agents and the interest of the electorate, to be considered.
  On average, Parliamentary elections occur only every four years. It is not as though we were asking everyone to do this additional work every day, or even once a week; it happens once every four years. The Government propose that once every four years the poll should be open until 10 instead of 9 o'clock. It cannot be expected that the poll should be open no more than the present mini mum number of hours. The emphasis should be the other way round giving the longest possible reasonable time.
  With our changing social habits it cannot be argued that 10 p.m. is very late for members of the public to be about. Working hours may be shorter than they used to be—since the Government came to office they have been shorter—but there is much more travel ling than there used to be. Although no one can prove that any particular hours are right, there is a case for extending the time to 10 o'clock.
  After the publication of the Government's proposals, the societies representing returning officers in England and Wales asked the Home Office for a meeting and put their view. They did not conceal the fact that they were concerned about the arrangements for Parliamentary elections. They said that it was difficult to get staff of the right calibre, particularly for the type of presiding officer needed, and that the extra hour would not add to the attractions of the job.
  My right hon. Friend the Member for Leeds, West asked about cost. The Treasury fixes the scale of expenses for returning officers, including the pay for presiding officers and poll clerks. The present fees are seven guineas and £4 a day respectively. The Treasury indicated to societies of returning officers that it would be prepared to consider a pro rata increase for the extra time of polling. The returning officers have ex pressed doubt whether such an increase would be sufficient. I can only say that
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  the Treasury is willing to meet the additional cost on a pro rata basis for the extra hours involved for the staff.
  I accept that this means that in a number of areas the count cannot take place on the evening of the day of poll and it may have to be postponed to the following day. This would be one of the results of the proposed change, but in many constituencies the count already takes place on the day after the poll. If satisfactory arrangements can be made for a count on the following day, which, of course, involves the custody of ballot papers overnight, there is no reason to expect greater difficulty in other areas than where at present the count takes place on the following day. There may be difficulty about mustering as many observers, but candidates do this in areas where the count traditionally takes place on the day after the poll.
  I do not think that there is anything in the point about the use of schools, because at the moment there is no requirement on a local authority to do more than to allow the school to be used for the polls. I do not want to make too much of this, but there is no authority to require a local authority to make the school available for the purposes of a count. It is only for the purposes of the poll. I dare say there will be many cases, as there are in county areas now, where this alternative arrangement can be made.
  As regards the extension proposed by the hon. Member for Orpington (Mr. Lubbock), a quarter of an hour is neither here nor there. There is something to be said for closing the poll on the striking of the clock, though on occasion I have regretted it. More recently, there have not been quite the crowds at the close of the poll that I remember in my earlier days, when I saw queues at ten to nine at night trying to get into the polling station and often people were shut out. There fore, I propose that we adhere to the striking of the clock. That makes it 10 p.m. or 9 p.m.
  As to the starting time, I rely on the fact that the political parties considered the matter, but although they would have liked an earlier start, they recognised the administrative difficulties and were content for it to remain at 8 a.m. This is what I understand to be their conclusions in my conference. This is

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  what is reported to me as being the conclusions of the conference.
  Mr. Lubbock: Why should administrative difficulties be brought in to argue against doing something in the morning which the Secretary of State has decided to do in the evening?
  Mr. Callaghan: If the Government had thought that there would be a substantial number of people voting in local elections at 7 a.m., that would have made a difference and we would have overcome the administrative difficulties. I do not think that there is the same incentive to vote at 7 a.m. in a local election as there may be to vote after 9 p.m. in a General Election. There is a case for an optional closing time, but nobody has suggested this. I suggest that this is something that the Committee might want to consider, although I would not recommend it. There is much to be said for having a fixed time, with everybody knowing what it is, and for its being standard through out the country.
  My recommendation to the Committee on behalf of the Government is that we should give the electorate this extra hour in which to cast their votes, accepting that there are administrative complications arising from it, but hoping that in the end the result will be that there will be a bigger vote than there would have been otherwise, in which case it will have been justified.
  Mr. J. E. B. Hill: Does not the Home Secretary appreciate that the lethargic who have not managed to cast their votes in 14 hours will be shut out at 10 p.m. just as they are shut out at 9 p.m.? Many people say that they have had no time to vote as a polite way of saying that they want to abstain.
  Mr. Callaghan: I have met such people at 8.45 in the evening, just as the hon. Gentleman has, no doubt. It is also the case, especially with shift workers, that 10 p.m. could be a convenient time. There are a number of shifts that start at 10 p.m. and run to 6 a.m. The workers start to leave for their work at 9.30 p.m. Perhaps they even go into the "pub"—into the Labour club in my constituency—and drink a pint before going to work. If the poll
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  closes at 9 p.m., I see them coming into the club at 9.30 in the evening having just left home in time for a drink, and then going straight to the works.
  I hope that maybe some of them will be inclined to vote before they go to work. This is a matter that cannot be proved either way. There is no case for saying that there should be less than a reasonable number of hours in which people can cast their votes. Nobody can claim that from 7 a.m. to 10 p.m. is an excessive number of hours in which to register a vote once in five years to re turn someone to the House of Commons.
  [Dr. A. D. D. BROUGHTON in the Chair]
  8.15 p.m.
  Sir Harmar Nicholls: I do not think that even the Secretary of State believes that he deserves to get away with that. I have admired the right hon. Gentleman's tactics for many years. He pulled all the stops out of the barrel to smooth over a point, knowing that he has no case. He used all his charm and sweet reasonableness, but did not answer one of the questions. He had to admit that he has nobody to support him, except what he calls "the Government".
  This is a case in which the voice of Parliament should be heeded. Both sides have made it clear that they think that the Government are wrong in making this proposal. I was interested in one sentence the right hon. Gentleman used. He said that the Government have decided this, that the Government are com posed of people with a fair amount of experience at elections, and that their view is that it should be 10 p.m. He said," Having examined the evidence, that is what the Government have decided ".
  What was the evidence that the Government examined? Was there any evidence which they examined which fitted in with what they have decided to recommend their supporters to vote for? The right hon. Gentleman admitted that those who run the elections have made it clear that they think that this is a bad thing and that they may not be able to recruit people to run the machine. Mr. Speaker's Conference made the clear recommendation that this is wrong. The right hon. Gentleman has heard the view of the right hon. Member for Leeds, West (Mr. C. Pannell). What was the evidence that

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  the Government examined? I would give way if the right hon. Gentleman wished to say that he had any evidence at all which fitted in with what the Government are recommending to the Commit tee.
  Mr. Callaghan: When a challenge such as this is issued it is easy for an hon. Gentleman to go on and say," As the Minister did not rise, clearly he had no evidence ". So I intervene. The evidence is that people have been shut out of the poll at 9 p.m.
  Sir Harmar Nicholls: I wonder where the evidence came from. Some people will be shut out at 10 p.m. Whatever the closing time, somebody will be shut out. I do not think that the right hon. Gentleman has any evidence—otherwise, he would have used it—to show that a sufficient number of people were shut out at 9 p.m. to justify this alteration. Certainly, those running the machine do not think that. His right hon. and hon. Friends do not think that. My right hon. and hon. Friends, who are equally experienced, do not think that.
  The right hon. Gentleman used all his charm. He used that reasonable approach of which he has such an abundance. But he did not make out a case. This is an instance where, even now, he ought not to try to whip his hon. Friends into the Lobby to support anything as nebulous as this. I beg him to have second thoughts.
  Mr. Onslow: The Home Secretary has been so urbane and bland, for a change, that he has made it perfectly clear that he has a rotten case—and he knows it. It is the right hon. Gentleman's manner, when he thinks that he has something of a case, to be somewhat more discourteous than the Committee likes.
  It may help the House if I go briefly through an exchange of correspondence which I have had with the Home Office on behalf of the clerk of one of my local authorities who was concerned in the giving of advice to the Electoral Advisory Committee. He wrote to me on 25th July, after the publication of the White Paper, complaining about the proposals to extend polling hours till 10 p.m. He told me then that in April, 1968 he was asked by the Home Office to express his opinion on the possible extension of polling hours
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  till 9.30 p.m. He expressed himself as being strongly opposed to it. He was, naturally, very surprised, on the publication of the White Paper, to find that the proposal was for an extension till 10 p.m. and he told me that he was even more strongly opposed to that proposal.
  I undertook to do what I could to discover what was in the Government's mind; why this decision, which was wholly unlooked for, had been made; and what evidence, if any, the Government had seen fit to consider.
  Accordingly, I wrote to the Home Office. On 12th August I received a reply from Lord Stonham, in which he said:
  "In reaching their conclusion on this matter the Government were aware of and took into account the administrative difficulties … which would be involved, but we considered that these difficulties should not be allowed to prevail over the principle of affording the longest reasonable time for people to exercise their voting rights at Parliamentary elections, which are held infrequently."
  The Home Secretary repeated that tonight.
  The letter goes on:
  "In our opinion an extension to 10 p.m. would be of particular advantage in areas where people travel some distance to work and do not return in time to vote conveniently before 9 p.m."
  I wrote again to Lord Stonham, asking whether he could tell me from whom evidence had been taken about the value of an extension to 10 p.m. and whether he could cite specific areas where people travel some distance to work and do not return in time to vote conveniently before 9 p.m. He replied as follows:
  "The answer to your first question is that my colleagues, with their experience (which I can from personal knowledge confirm) of fighting elections and of what goes on at polling stations, required no evidence from out side to convince them of the value and importance of allowing the maximum opportunity for people to vote. As for the people about whom you particularly asked—those who travel some distance to work and do not return in time to vote conveniently before 9 p.m.—my colleagues had particularly in mind the needs of shift workers in industry. Shift working is commonest in the large industrial areas, but is by no means unknown in many other parts of the country."
  This care for shift workers is no doubt commendable, but the statement that the Government required no evidence is an extraordinarily insulting remark even from a Minister of this Government. The

  531
  comment in the Fulton Report that it is an abuse of consultation if it is simply used to prepare the ground for decisions which have been taken already applies with great force to this case.
  Shift workers who are likely to be away for the whole of polling day ought to have no difficulty in getting a postal vote, anyway. If they come home at six in the morning, it ought to be no great trial for them to stay up an extra hour and vote when polling stations first open. The unfortunate functionaries, as the Home Secretary so patronisingly calls them, who man the polling stations will be working a day of 15 hours or more for a sum as yet undisclosed, but certainly it will be substantial.
  Those of us who are used to getting election results on the night of the election will find increasingly that counts take place the following day. The premises for counts will cost more to obtain, and the staff to do the counting will be more difficult to obtain, because most bank clerks will be working in their banks and will not be able to do it. The whole process will be made more difficult, expensive, and cumbersome simply because the Home Secretary will not admit that he is wrong.
  The right hon. Gentleman took a certain view. He consulted a lot of people and found that they did not agree with him. He was to stubborn and is still too stubborn to change his mind. As a result, thanks to one man's stubbornness, a great many people will be put to considerable inconvenience.
  I do not think that there is any substantial evidence to show that large numbers of people are being deprived of the opportunity to vote by reason of the polling stations shutting at 9 p.m. I doubt whether there will be more than 10 in any constituency. Let us say that there will be 6,000 throughout the country, half of whom, if they applied themselves, could get there in time and would be unable to vote only if they went home, had a meal, washed and changed and
  perhaps stopped at the local for a beer before going to the polling station.
  If we agree to the Home Secretary's proposal, voters will be exposed to the danger of polling procedures being handled by tired men. That is too great a price to pay for one man's stubbornness. This is a bad proposal, though I have no doubt that the Home Secretary is delighted at the prospect of whipping his supporters to vote for it. It is his proposal and his alone.
  Mr. Sharples: We have had an extremely unfortunate reply from the Home Secretary. To say that it was a disappointment would be the under-statement of the year. Unfortunately, he was unable to be present throughout the debate, for reasons which I understand, but finally he came into the Chamber apparently with no interest in any of the arguments put forward from either side of the Committee. There was a most powerful speech from his right hon. Friend the Member for Leeds, West (Mr. C. Pannell), who asked a large number of questions. The right hon. Gentleman made no attempt to answer them, or any of the points raised by other hon. Members. After listening to one and a half speeches, he came to the Dispatch Box and said," We have no evidence of this. No views have been expressed to us about it. It is the Government's view that this change should be made ".
  Clearly, it is the Government's view. It is not that of his own party. The Government have been wrong before, and they are wrong again, and the country will realise it.
  There is no point in continuing this debate. It is clear that the Government are not prepared to listen to reason from either side of the Committee or anyone outside. I advise my right hon. and hon. Friends to divide the Committee now.
  Question put, That the Amendment be made:—
  The Committee divided: Ayes 110, Noes 171.

  Division No. 35.]

  AYES

  [8.25 p.m.

  Astor, John

  Boyle, Rt. Hn. Sir Edward

  Carlisle, Mark

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

  Brewis, John

  Carr, Rt. Hn. Robert

  Baker, Kenneth (Acton)

  Brown, Sir Edward (Bath)

  Chichester-Clark, R,

  Bessell, Peter

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

  Cooke, Robert

  Biffen, John

  Bullus, Sir Eric

  Cooper-Key, Sir Neill

  Birch, Rt. Hn. Nigel

  Campbell, B. (Oldham, W.)

  Corfield, F. V,

  Boardman, Tom (Leicester, S.W)

  Campbell, Gordon (Moray & Nairn)

  Costain, A. P.

  Dalkeith, Earl of

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

  Ridsdale, Julian

  Davidson, James (Aberdeenshire, W.)

  Lubbock, Eric

  Rossi, Hugh (Hornsey)

  Dean, Paul

  MacArthur, Ian

  Royle, Anthony

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

  Maclean, Sir Fitzroy

  Sharples, Richard

  Dodds-Parker, Douglas

  McMaster, Stanley

  Silvester, Frederick

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

  McNair-Wilson, Patrick

  Sinclair, Sir George

  Eyre, Reginald

  Marples, Rt. Hn. Ernest

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

  Farr, John

  Maude. Angus

  Speed, Keith

  Fortescue, Tim

  Mawby, Ray

  Stainton, Keith

  Gibson-Watt, David

  Maxwell-Hyslop, R. J.

  Steel, David (Roxburgh)

  Gilmour, Ian (Norfolk, C.)

  Mills, Peter (Torrington)

  Stoddart-Scott, Col. Sir M.

  Gilmour, Sir John (Fife, E.)

  Mills, Stratum (Belfast, N.)

  Summers, Sir Spencer

  Glover, Sir Douglas

  More, Jasper

  Temple, John M.

  Gower, Raymond

  Morgan, Geraint (Denbigh)

  Thatcher, Mrs. Margaret

  Grant, Anthony

  Monro-Lucas-Tooth, Sir Hugh

  van Straubenzee, W. R.

  Grieve, Percy

  Murton, Oscar

  Vaughan-Morgan, Rt. Hn. Sir John

  Griffiths, Eldon (Bury St. Edmunds)

  Nicholls, Sir Harmar

  Waddington, David

  Harrison, Brian (Maldon)

  Noble, Rt. Hn. Michael

  Wainwright, Richard (Colne Valley)

  Harrison, Col. Sir Harwood (Eye)

  Onslow, Cranley

  Webster, David

  Hawkins, Paul

  Osborn, John (Hallam)

  Wells, John (Maidstone)

  Heald, Rt. Hn. Sir Lionel

  Page, Graham (Crosby)

  Whitelaw, Rt. Hn. William

  Hiley, Joseph

  Page, John (Harrow, W.)

  Williams, Donald (Dudley)

  Hill, J. E. B.

  Peel, John

  Wills, Sir Gerald (Bridgwater)

  Howell, David (Guildford)

  Pike, Miss Mervyn

  Winstanley, Dr. M. P.

  Hunt, John

  Pounder, Rafton

  Wright, Esmond

  Jennings, J. C. (Burton)

  Pym, Francis

  Wylie, N. R.

  King, Evelyn (Dorset, S.)

  Quennell, Miss J. M.

  Younger, Hn. George

  Kitson, Timothy

  Ramsden, Rt. Hn. James

  Lancaster, Col. C. G.

  Rees-Davies, W. R.

  TELLERS FOR THE AYES:

  Lane, David'

  Ronton, Rt. Hn. Sir David

  Mr. Hector Monro and

  Legge-Bourke, Sir Harry

  Rhys Williams, Sir Brandon

  Mr. Bernard Weatherill.

  NOES

  Albu, Austen

  Evans, Fred (Caerphilly)

  McCann, John

  Allaun, Frank (Salford, E.)

  Evans, Gwynfor (C'marthen)

  MacColl, James

  Alldritt, Waiter

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

  Macdonald, A. H.

  Allen, Scholefield

  Ewing, Mrs. Winifred

  McGuire, Michael

  Anderson, Donald

  Faulds, Andrew

  Mackenzie, Gregor (Rutherglen)

  Archer, Peter

  Finch, Harold

  Maclennan, Robert

  Ashton, Joe (Bassetlaw)

  Fitch, Alan (Wigan)

  McMillan, Tom (G'gow, C.)

  Atkins, Ronald (Preston, N.)

  Fletcher, Ted (Darlington)

  McNamara, J. Kevin

  Atkinson, Norman (Tottenham)

  Foot, Michael (Ebbw Vale)

  MacPherson, Malcolm

  Bacon, Rt. Hn, Alice

  Ford, Ben

  Mahon, Peter (Preston, S.)

  Bagier, Gordon A. T.

  Fowler, Gerry

  Mahon, Simon (Bootle)

  Beaney, Alan

  Galpern, Sir Myer

  Mallalieu, E. L. (Brigg)

  Bennett, James (G'gow, Bridgeton)

  Gardner, Tony

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

  Bishop, E. S.

  Garrett, W. E.

  Mapp, Charles

  Blackburn, F.

  Gray, Dr. Hugh (Yarmouth)

  Marks, Kenneth

  Blenkinsop, Arthur

  Gregory, Arnold

  Marquand, David

  Boardman, H. (Leigh)

  Griffiths, David (Rother Valley)

  Mason, Rt. Hn. Roy

  Booth, Albert

  Griffiths, Eddie (Brightside)

  Mendelson, J. J.

  Braddock, Mrs. E. M.

  Griffiths, Will (Exchange)

  Miller, Dr. M. S.

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

  Hamilton, James (Bothwell)

  Milne, Edward (Blyth)

  Buchan, Norman

  Hamilton, William (Fife, W.)

  Morris, Alfred (Wythenshawe)

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

  Hannan, William

  Morris, Charles R. (Openshaw)

  Callaghan, Rt. Hn. James

  Harper, Joseph

  Moyle, Roland

  Carmichael, Neil

  Harrison, Walter (Wakefield)

  Neal, Harold

  Carter-Jones, Lewis

  Hattersley, Roy

  Newens, Stan

  Coe, Denis

  Hazell, Bert

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

  Coleman, Donald

  Heffer, Eric S.

  Norwood, Christopher

  Concannon, J. D.

  Herbison, Rt. Hn. Margaret

  O'Malley, Brian

  Crawshaw, Richard

  Hooley, Frank

  Oram, Albert E.

  Cullen, Mrs. Alice

  Houghton, Rt. Hn. Douglas

  Orme, Stanley

  Dalyell, Tarn

  Hoy, James

  Oswald, Thomas

  Darling, Rt. Hn. George

  Hughes, Emrys (Ayrsh're, S.)

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

  Davies, Ednyfed Hudson (Conway)

  Hughes, Roy (Newport)

  Owen, Will (Morpeth)

  Davies, Dr. Ernest (Stretford)

  Hunter, Adam

  Page, Derek (King's Lynn)

  Davies, S. O. (Merthyr)

  Hynd, John

  Park, Trevor

  Dell, Edmund

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

  Parkyn, Brian (Bedford)

  Dempsey, James

  Janner, Sir Barnett

  Pavitt, Laurence

  Dewar, Donald

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

  Pearson, Arthur (Pontypridd)

  Dickens, James

  Jones, Dan (Burnley)

  Peart, Rt. Hn. Fred

  Dobson, Ray

  Jones, T. Alec (Rhondda, West)

  Pentland, Norman

  Doig, Peter

  Kelley, Richard

  Perry, Ernest G. (Battersea, S.)

  Driberg, Tom

  Kenyon, Clifford

  Perry, George H. (Nottingham, S.)

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

  Kerr, Russell (Feltham)

  Prentice, Rt. Hn. R. E.

  Eadie, Alex

  Lawson, George

  Price, Thomas (Westhoughton)

  Edwards, Robert (Bilston)

  Leadbitter, Ted

  Probert, Arthur

  Edwards, William (Merioneth)

  Lewis, Ron (Carlisle)

  Rankin, John

  Ellis, John

  Lomas, Kenneth

  Rees, Merlyn

  English, Michael

  Loughlin, Charles

  Roberts, Albert (Normanton)

  Ennals, David

  Lyon, Alexander W. (York)

  Robertson, John (Paisley)

  534

  535

  Rose, Paul

  Steele, Thomas (Dunbartonshire, W.)

  Watkins, Tudor (Brecon & Radnor)

  Ross, Rt. Hn, William

  Strauss, Rt. Hn. G. R.

  Whitaker, Ben

  Sheldon, Robert

  Symonds, J. B.

  Wilkins, W. A.

  Silkin, Rt. Hn. John (Deptford)

  Taverne, Dick

  Woodburn, Rt. Hn. A.

  Silkin, Hn. S. C. (Dulwich)

  Urwin, T. W.

  Woof, Robert

  Silverman, Julius

  Varley, Eric G.

  Slater, Joseph

  Wainwright, Edwin (Dearne Valley)

  TELLERS FOR THE NOES:

  Small, William

  Walker, Harold (Doncaster)

  Mr. Neil McBride and

  Snow, Julian

  Watkins, David (Consett)

  Mr. Ernest Armstrong.

  Spriggs, Leslie

  Mr. Oscar Murton: I beg to move Amendment No. 74, in page 27, line 23, leave out 'In'.
  The Temporary Chairman (Dr. A. D. D. Broughton): It would be convenient to discuss at the same time the following Amendment, No. 75, in page 27, leave out lines 26 to 34 and insert 'are hereby repealed", also standing in the name of the hon. Member for Poole (Mr. Murton).
  Mr. Murton: I am really speaking on behalf of the Association of Municipal Corporations which, while realising that the recommendation of Mr. Speaker's Conference was that the ballot paper should continue to be stamped with an official mark, urges that further thought should be given to whether ballot papers need official marks on them at all.
  Paragraph 4 of the Schedule has been amended to abolish the procedure under which ballot papers can be embossed as an alternative to being perforated. Now, they must be embossed solely. This will reduce the number of papers which have to be declared invalid for want of official mark, for experience has shown that, where papers are marked rather than perforated, they can slip through the net. Many an indignant voter has found himself disfrancished because his paper has been disallowed.
  On the other hand, one wonders whether there is any real safeguard against forgery in having the papers marked or embossed. It is worth considering whether it is worth the expense of having machinery which, simple though it may be, makes it necessary for papers to be physically perforated.
  Marking or perforating is probably an obsolete relic of days when people were more unscrupulous at elections than they are now. Indeed, it is debatable whether perforation itself will give absolute protection against anyone determined on forgery. It is always possible that someone could enter a polling station early in the morning and remove a paper after
  536
  it had been perforated. It would surely not be beyond the wit of man to reproduce, in the course of the day, the perforated mark and to produce forged perforated papers with someone else in the evening entering the polling booth and putting a sheaf of them into the ballot box. It sounds absurd, but equally absurd is the suggestion that the papers need a physical mark upon them.
  The object of my Amendment is to remove this. When one comes to the postal vote, the paper has to be perforated, yet there is even less likelihood of forgery here. The postal vote is checked against the person in whose name it is registered. Altogether this is a time-consuming exercise. It is liable to mistakes. In debating the last series of Amendments, the Secretary of State for Scotland said that perhaps someone might get tired towards the end of the evening, and this is the one likely case when a paper may be overlooked. It would be much better if the paragraph of the Schedule were amended on the lines I recommend, which would mean that the paper would not require marking by stamping or the new arrangement of perforation.
  Mr. Buchan: The argument boils down to three points—it is unnecessary, time-wasting for officials and in any event the devised method could be reproduced. This is false. It is necessary to retain some kind of marking. It is true that no one really suspects forgery in British elections, but one of the reasons for this is because of the fairly elementary but effective safeguard of marking the paper. If that did not happen, and if people did not change their habits, the kind of suspicion we want to avoid might be aroused, and that might lead to the kind of practice which we do not want to encourage.
  We have tried to tighten up on this and make it more effective by bringing in perforating, which is more easily identifiable and avoids the problem of papers

  537
  being marked and subsequently lost because the mark has rubbed off following handling. The figures are interesting. Something like 50,000 ballot papers were rejected at the last General Election for various reasons. Of these 2,061 were rejected because they lacked official marks altogether. The suggestion that the perforating could be reproduced is a little far-fetched. The "Great Train Robber" concept of an election is not really our problem.
  It boils down to whether we think it fair to put this extra work on the pre siding officers to secure the sanctity of the election. I think that it is. In an election that takes place once every four or five years to decide the government of the country the extra work needed should be done. If a failure in stamping occurs, the ballot paper is wasted. The only answer is extra vigilance on the part of the presiding officer. We note that it should be opened before being put into the box. I agree that this does not happen very often. What is saved by retaining this habit here is very considerable.
  Amendment negatived.
  8.45 p.m.
  Mr. Sharples: I beg to move Amendment 39, in page 29, line 46, at end insert:
  'by a person authorised by the returning officer'.
  Rule 44 (1) of the Representation of the People Act, 1949, refers to the procedure adopted on the closing of the poll and lays down what should happen to the ballot papers after the poll has been closed. It concludes by setting out the duty of the presiding officer. It provides that he
  "shall deliver the packets to the returning officer to be taken charge of by him ".
  Paragraph 9 of Schedule 2 of the Bill proposes that
  "after the words 'deliver the packets' there shall be inserted the words 'or cause them to be delivered'".
  It does not make clear who can be authorised to carry the ballot papers from the polling station to the count.
  It is right that we should make it clear that the responsibility remains with the presiding officer and that only a person who is authorised by him should be allowed to take charge. I know that normally the job will be done by a
  538
  policeman in a police car. The ballot papers are handed to the police and the presiding officer normally goes with them. It is reasonable that the presiding officers should hand over the papers to someone like an officer in charge of a police car. But there could be a misunderstanding, and it would be wrong if the ballot papers were handed to, for example, a taxi driver or someone of that kind. The purpose of the Amendment is to clear up any doubt and to safeguard the situation.
  Mr. Buchan: I should like to consider the Amendment. Probably it would be a good addition to the Bill. It is possible that the drafting of the Amendment needs to be altered. However, if the hon. Member for Sutton and Cheam (Mr. Sharples) will withdraw it, I will consider it favourably.
  Mr. Sharples: I am grateful to the hon. Gentleman. In view of his clear under taking, I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Mr. Buchan: I beg to move Amendment 92, in page 30, line 22, at end insert:
  "Provided that where it is for the mayor or town clerk to give notice of the poll, the description required by this sub-paragraph shall also be given by him instead of by the returning officer."
  The Temporary Chairman (Dr. A. D. D. Broughton): It would be convenient to discuss, at the same time, Amendment 93, in Schedule 5, page 47, line 50, column 2, at end add:
  "and the proviso, and in the local elections rules in Schedule 2 the words 'or town clerk', and in the rules in Schedule 3 the words 'mayor or'".
  Mr. Buchan: These are technical Amendments, consequential on the provision in paragraph 12 (1) of Part II of Schedule 2 to the Bill that
  "the returning officer shall, as soon as practicable after publication of a notice of poll, give to each of the election agents a description in writing of the polling districts, if any".
  The returning officer is not the appropriate person on whom to place this responsibility for borough elections in England and Wales outside London or at burgh elections in Scotland. At borough elections in England and Wales the mayor is required to give notice of poll. At burgh elections in Scotland the

  539
  town clerk is required to give notice of poll.
  The effect of the Amendment is to place on the mayor or town clerk the responsibility for giving the election agents a description of the polling districts at these elections.
  Amendment agreed to.
  Schedule, as amended, agreed to.

Schedule 3

  CONSEQUENTIAL AND SUPPLEMENTARY AMENDMENT OF REPRESENTATION OF THE PEOPLE ACT 1949
  Amendment No. 49 made: In page 41, line 15, at end insert:
  35. In the Appendix to Schedule 3, in Form A.I, in paragraph 3, and in Forms A.II and A.III, in paragraphs 2 of both those forms. for the word 'Tuesday', where second occur ring, there shall be substituted the word 'Friday'.—[Mr. Buchan.]
  Schedule, as amended, agreed to.

Schedule 4

  REPEALS
  Mr. Merlyn Rees: I beg to move Amendment No. 43, in page 43, line 27, column 3, at end insert 'paragraph 36'.
  This Amendment inserts a further pro vision in Part I of the Schedule which repeals provisions which can be regarded as dead wood. Part II repeals enactments which are no longer necessary. The Amendment is consequential to Part I, which removes the dead wood. I think that it is self evident. It relates to the London Government Act and an aspect which is no longer required.
  Amendment agreed to.
  Mr. Merlyn Rees: I beg to move, Amendment No. 44, in page 45, line 16, at end insert:

  1963 c 33

  The London Government Act 1963

  In Schedule 3, paragraph 25.

  Part II of the Schedule, as I said on the last Amendment, repeals enactments no longer necessary. The Amendment includes a further provision in Part II of the Schedule which relates to consequential repeals. The provision to be
  540
  Schedule 3 to the London Government repealed is paragraph 25 of Part III of Act, 1963, which amends Section 5 of the Representation of the People Act, 1949, which is being repealed by the Bill.
  Amendment agreed to.
  Schedule, as amended, agreed to.

Schedule 5

  INSERTIONS AUTHORISED IN REPRESEN TATION OF THE PEOPLE ACT 1949 IN REVISED EDITION OF STATUTES
  Amendment made: No. 93, in page 47, line 50, column 2, at end add:
  'and the proviso, and in the local elections rules in Schedule 2 the words "or town clerk". and in the rules in Schedule 3 the words "'mayor or"'.—[Mr. Buchan.]
  Schedule, as amended, agreed to.
  Bill reported, with Amendments; as amended, to be considered Tomorrow and to be printed. [Bill 57.]

  TELEPHONE SERVICE (CHELTENHAM)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. McBride.]
  8.52 p.m.
  Mr. Douglas Dodds-Parker: I am delighted that we have reached my moment for putting a point to the House at a time much earlier than I expected. I had felt a certain fear that we should not be on the Adjournment till three or four in the morning, in which case if I did not take the Adjournment I would be in the bad books of a large number of my constituents, and if I did take it I would be in the bad books of a large number of servants of the House who do so much to keep this place working—and all through the winter as well as the summer. It occurred to me that, in considering business of the House, one might suggest that we should take the Adjournment at the beginning of business instead of at the end, because, after all, then not many hon. Members would be inconvenienced, and it would enable others to get home half an hour earlier at the end of the day. After all, it is rather like a

  541
  private House now; there are not many here.
  However, despite the chance afforded to me of the Adjournment coming slightly earlier than usual I propose to keep my remarks brief in going from the sublimity of gerrymandering in the Bill we had before us just now to the practical question of the shortage of telephones for my constituents in Cheltenham.
  Like other hon. Members, I have had correspondence from a number of constituents who have been unable to get telephones installed because exchange facilities are not available. I had the usual replies from the Postmaster-General, but at last one of my constituents, who is versed in the ways of Whitehall, and who, frustrated beyond the normal degree one's constituents are, sent me a list of queries to which I could not get adequate replies. Eventually, some facts emerged after further inquiry. I hope I may be permitted to interpose that both the present Postmaster-General and his predecessor have always been most courteous in their personal replies. However, the replies I had seemed to reveal centrally at headquarters weakness in forecasting needs, and a certain dilatoriness in action in getting on with the job.
  My ccnstituent asked for a telephone in February, 1968. He was told that he would get it by the end of the year. Later, he was told that he would get it in 12 months' time. The latest in formation is that he will get it by April, 1969, 14 months after he originally asked for it. I submit that that is an unreasonably long time to have to wait.
  From the investigations that I have made, and from the facts which the Post master-General has been good enough to send to me, I find that an estimate was made locally in 1963 that extra capacity would be needed by 1967 and that it takes two years and one month after such a decision is taken to order and install such equipment. No order was placed until February, 1966. This capacity should have been ready, according to this arithmetic, in March, 1968, but the news now is that it will be ready by April, 1969.
  In mid-summer 1968 there were about 600 names on the waiting list, and the
  542
  growth of demand for telephones in the Cheltenham area which had been fore cast at 670 a year was running at about 900 a year. In the meantime, a mobile exchange, taking care of about 350 ex tensions, had been brought in to help to fill the gap. Further provision in the new exchange is for about 3,800 lines. Over 600 of these had been pre-empted by July, and others no doubt have been taken up since. If the growth rate is now running at about 1,000 a year, I estimate that half the 3,800 will be taken by the end of 1969 and the whole lot will be taken by the end of 1971 at the latest, especially as the Postmaster-General goes out to sell the telephone service, which he is not yet in a position to do.
  A point which arose in the correspondence is that there was a local rumour, which, I am glad to say, turned out to be untrue, that the capital cost of the telephone service had been cut by £72 million. I am informed that only £15 million was cut, as the Prime Minister announced in the House in July, 1966, just after that General Election which cost us also the Landsdowne station in Cheltenham and which we hope, one day, will again be staffed. Despite the cut of £15 million, I understand that in the South-West Telecommunications Region the amount set aside for telephones has been increased from £2· 2 million in 1964–65 to £6·9 million in 1967–68.
  The conclusion which I draw from all this, and which I ask the Assistant Post master-General either to acknowledge or to refute, is that, in the first place, no blame lies on the local telephone managers. They clearly want to get North Gloucestershire on a bigger and better central exchange. A new exchange was built at Cheltenham not long ago, but it has proved to be too small to take the increased growth of the past two or three years to which I have referred. There is no brake on the contractors, either for the buildings or for the equipment. I believe that they would have been ready to provide extra capacity had the orders been placed in time.
  It seems to me that the miscalculation has been made essentially on the growth which was likely to take place, and also in taking action in making available the necessary capital and ordering in good time. Whether this growth has been due

  543
  to the success of S.T.D., which I think we all recognise has taken the telephone service forward faster than expected, whether it is due to the success of Telex, which is a wholly admirable service which has not yet been brought sufficiently to the notice of the public, or whether it is due to the increased costs and difficulties of the telegraph and postal service of the past two or three years, it is not for me to say. All I can say is that the growth has been greater than expected.
  I maintain that, first, there would have been no difficulty in the manufacturers putting in extra capacity to take care of domestic as well as export demands if they had been alerted in time. With some knowledge of the American Tele graph and Telephone Company, which is a public utility, which many of us feel is the right way of handling these facilities these days, I believe that the forecasting under such a system would have been more accurate, and the pro vision of facilities more rapid and more effective within an economy which en courages capital formation and savings in the private sector to provide such public utilities.
  Secondly, I maintain that there was no difficulty in building a relatively small extension such as this. Two years and one month is enough to provide both the building and the equipment. In the meantime, the mobile exchange for 350 was not big enough. I believe, again, that some organisation like the A.T. and T.C. would have had more units available to put in for these areas which had expanded more than the estimate. I ask the Assistant Postmaster-General to tell me why, when the capital was available, and was greater than in previous years, he chose to pick on Cheltenham for this discrimination.
  There is a suggestion in the Press from time to time that Cheltenham is full of retired people. There are a number of them there, and I wish that there were many more, because they are very good supporters of mine. I draw the hon. Gentleman's attention to the fact that Cheltenham is a light industrial town, having some of the finest aircraft and other craft industries in Britain, and one of the biggest insurance companies has just made its headquarters there. All
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  this, with the development of the motor ways and other facilities in the last few years, has led to the expansion of demand.
  The promenade, with its Christmas lights, is unbeatable as a spectacle, as well as a shopping centre. Why should more and more of my constituents be prevented from ringing up Father Christmas? I ask the hon. Gentleman to tell me why there is such a shortage in Cheltenham, when it will be resolved, why it had to be Cheltenham, and whether he will give an assurance that it will not happen again.
  9.3 p.m.
  The Assistant Postmaster-General (Mr. Joseph Slater): I am grateful to the hon. Member for Cheltenham (Mr. Dodds-Parker) for giving me this opportunity to speak about the telephone service in his constituency. The hon. Gentleman has presented his case on behalf of his constituents with great regard for the people who have been affected by the lack of telephone facilities, and I shall endeavour to give the hon. Gentleman the full picture as it relates to Cheltenham.
  The hon. Gentleman has drawn our attention to one weakness, which is that at the moment we are not able to meet all the demands for a telephone service by those who want it. But there is little to be ashamed about the service in general, which in many respects is very good.
  Perhaps I might deal straight away with the question of the waiting list. I accept that there is at the moment a shortage of telephone exchange equipment at Cheltenham. This will be rectified by a large extension of the equipment which should be installed and working by the spring of next year. The exhaustion of the present equipment was brought about by an unprecedented increase in the demand for the telephone service, which began in 1965 and 1966. The increase was not, as it were, assigned only to Cheltenham; it came throughout the country, but it was particularly high in Cheltenham. The average annual growth in Cheltenham during those two years was nearly 9 per cent., compared with about 8 per cent. elsewhere.
  As soon as we realised that this rapid growth was taking place, we ordered additional equipment for Cheltenham. The amount required was such that it

  545
  would take more than two years to make and install it. The size of the undertaking will be appreciated if I mention that the contract was valued at no less than £200,000. The lead time meant that we could only hope to have this extra equipment working about mid-1968, whereas the existing equipment would run out early in 1967.
  To make matters worse, at the same time our equipment contractors suddenly found themselves inundated with orders because of the rapid general growth in demand for telephone service that was taking place throughout the United Kingdom. Inevitably, manufacturing delays began to occur, and, despite every possible effort to overcome them both by the contractors and by the Post Office, these delays, I admit, are still with us. The effect of the delays on Cheltenham was to hold back the new equipment until next spring.
  To help meet this problem, we put in a mobile exchange at Cheltenham in November, 1967, and this enabled us to serve another 350 people who were waiting. The main exchange and this mobile relief unit are now serving nearly 14,000 customers, leaving about 900 still waiting for service. I agree that that is a very high figure. These are all householders; there are no businesses waiting for tele phones in the hon. Gentleman's constituency, according to my information. The average waiting period so far is about 6½ months, and the longest period that anyone on the list has waited—I accept what the hon. Gentleman said about it—is 20 months.
  All these people will be given service either at the time the exchange extension is completed in April, 1969, or within a short period after that. The only exceptions will be a few cases where the houses concerned are on new estates and we may not be able to put in cables until roads and buildings are ready.
  I am very sorry—I say this most sincerely—that this situation has arisen, but it is largely a reflection of an unprecedented demand and under-capitalisation in the past. But I am not seeking to make political points tonight; that would not do. There have been critics who have maintained that we ought to have fore cast the great increase in demand which commenced in 1965 and 1966. No one,
  546
  of course, can see clearly what the future holds, but I am glad to be able to tell the House that, since those years, we have considerably improved our fore casting techniques.
  At the time when our original fore casts were made for telephone demand in Cheltenham, we made these only every few years. Since the big national upsurge in telephone demand in 1965–66, we have considerably increased the frequency of these reviews, and we now make rolling forecasts which are revised every quarter.
  When we are preparing a forecast for any particular exchange, we get as much information as we can from local authorities and planning authorities on the expansion of trade, commerce and industry, and changes in population. To these we apply the existing known trends in the area. These then are looked at in the light of the national forecasts we make in Post Office headquarters, and this is where the biggest improvement has come in recent years.
  We have increased the staff who work on our statistics and economic forecasts for the whole of the Post Office, and we have also increased the staff on actual forecasting itself. We are developing new techniques based on econometric models and the use of computers. This enables us to study and analyse trends more closely and apply many more variables to our forecasts for the future.
  We have even gone so far as to have an "on line" computer terminal in our fore casting department. All this has meant that, over the last three years, our fore casts have been very much more accurate, and the effort that we are still putting into researching and developing these new techniques will mean that they will become increasingly accurate in the future.
  I now turn to the standard of service which we are giving today to our customers in Cheltenham. First of all, S.T.D. In 1963 Cheltenham became one of the first towns to be given S.T.D., and I am glad to report that in Cheltenham the S.T.D. service is well up to the national average. The equipment is working well and we have sufficient trunk lines between Cheltenham and other towns and cities. When it is difficult to get through on S.T.D. this is most probably due to congestion at the other end.

  547
  Trunk traffic nationally has been growing at the very high rate of 13 to 14 per cent. per annum, and this has inevitably put pressure on our main trunk network at certain places. We are, therefore, adding 10,000 circuits to the national system this year, which is an increase of 15 per cent. This should go far to improve the trunk service generally.
  Now I turn to the local service. This is good. The figures for the month of October show that the local equipment operated correctly, and was adequate on 98· 5 per cent. of local automatic calls. We obtain these good results only by giving a great deal of attention to pre ventive maintenance. The equipment in the exchange is tested by special electronic machines during the night when the exchange is not very busy. Automatic printing devices type out details of what is going wrong, so that, when our engineers come on duty next morning, they can deal with the defects straightaway.
  This helps to ensure that calls do not fail, either because they come across a faulty piece of equipment, or because they cannot get through owing to the shortage of equipment which would arise if some had to be taken out of service at peak times because it became faulty. Automatic devices—which check that the traffic passing through the exchange is being connected satisfactorily—should also be installed in the near future.
  We give similarly close attention to the plant—largely underground—lying out side the exchange, and reaching out to customers' premises or other exchanges. An automatic device—operating during the night—tests the insulation of customers' local lines. In addition, most of the underground cable system that is suitable for cable pressurisation has been protected in this way. We are bringing in a new type of polythene-sheathed, plastic-insulated and jelly-filled cable to protect this part of the underground system.
  By measures such as these, interruptions to customers' service have been kept at a particularly low level at Cheltenham. On average, service on an ordinary telephone is lost only once in every four years. Moreover, interruptions to service in Cheltenham are dealt with expeditiously when they do occur. Normally,
  548
  85 per cent. of service interruptions are cleared within the first working day, and nearly 100 per cent. of faults are dealt with by the end of the second working day.
  Reports of faults at kiosks are much fewer than the average throughout the country as a whole—less than one half in fact, which, I am sure, is in some measure a reflection of the public spirit shown by the hon. Gentleman's constituents.
  I come to the service given by the operating staff on the Cheltenham exchange switchboard, which serves 17 exchanges in the district. The quality of service is, according to the information I have, generally good because we have no staffing or equipment problems. Recent figures showed that the average time taken by operators to answer calls was 5· 5 seconds. During the evening the time was 9· 3 seconds. I think that this can be improved and more staff have already been recruited and are being trained. I have visited many exchanges which have not been able to reach this figure. Cheltenham is, therefore, high on the list of ability for the way in which it is able to handle calls.
  Directory inquiries, too, are answered promptly at Cheltenham. The latest figures showed that the time taken to answer customers was better than eight seconds. Our existing customers seem to find the operator service in Cheltenham generally satisfactory, and this is borne out by the absence of serious complaints to the local manager.
  All in all, this picture, although it has its black spots—the hon. Gentleman has rightly drawn attention to them on behalf of his constituents; I appreciate his feelings about the long time it has taken us to reach the position of being able to give a really good service—is an encouraging one. I appreciate that there is a long waiting list and that this concerns the hon. Gentleman. That is understandable and I assure him that we have noted his remarks.
  When the new exchange equipment is working next spring, I am sure that Cheltenham will have a service which will be fully adequate to meet the needs of this developing area, and of the sort

  549
  which the Post Office is determined to bring to all its customers.
  I am grateful to the hon. Gentleman for giving me this opportunity of replying to the points which he has raised about his constituency and the people he
  550
  represents. It is only right that he should put forward a case on their behalf.
  Question put and agreed to.
  Adjourned accordingly at sixteen minutes past Nine o'clock.

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Preamble
The House met at half past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Derby.
The Earl of Lauderdale—Sat first in Parliament after the death of his brother.
The Lord Wise—Sat first in Parliament after the death of his father.

LAND COMMISSION'S PURCHASES OF LAND
THE EARL OF KINNOULL: 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 how much of the land which is now in process of acquisition by the Land Commission is being acquired:—

(1) by compulsory purchase under normal procedure (section 7);

(2) by compulsory purchase under special procedure (section 8)

(3) by agreement with the vendor.]

THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, all the land which the Commission are at present in process of acquiring by compulsory purchase is being acquired by the normal procedure under Section 7 of the Land Commission Act. This amounts to 1,575 acres. The special procedure under Section 8 of the Act has not been invoked. 703 acres of land are at present in process of acquisition by agreement.
THE EARL OF KINNOULL: My Lords, while thanking the Minister for his reply, may I ask whether any land has been resold by the Commission, and if so whether it has been resold at a lower price than that for which the Commission purchased it? Secondly, could the Minister say whether the land that the Commission
508
are purchasing is development land or "white" land?
LORD KENNET: My Lords, 1·5 acres of land have been resold. It is hardly to be expected that land could be resold before it was acquired, and the figures I have just given are for land the acquisition of which is now being negotiated. I am not in a position to say, without notice, whether the price of the resale was above or below that for the acquisition. The land which has been acquired so far is for the most part, and possibly the whole part, development land.
LORD BROOKE OF CUMNOR: My Lords, if the Government are determined to keep in existence this very expensive organisation, would they encourage it to concentrate entirely on helping the local authorities with urban redevelopment, where there may be scope for the exercise of these powers, and discourage it from seeking to acquire "white" land in the countryside in the teeth of opposition from the local planning authorities?
LORD KENNET: My Lords, I do not know of any evidence that the Commission are seeking to acquire land in the teeth of opposition from the local planning authorities in the countryside. The question of when they can help in the redevelopment of urban land is being kept under close review by the Government.

CWMBRAN POLICE TRAINING CENTRE
2.40 p.m.
LORD ABERDARE: 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 why they are only allowing 76·5 sq. ft. for student bedrooms in the new Police Training Centre at Cwmbran.]
BARONESS SEROTA: My Lords, the training centre at Cwmbran is being built in conformity with standards which have the full approval of the Common Police Services Committee. Student bedrooms of the same dimensions, with furniture and wash basins built in to give a clear floor space, have already been provided in two other district police training centres, and experience has shown them to be satisfactory.
LORD ABERDARE: My Lords, I thank the noble Baroness for that Answer. Is she aware that there is no police officer on the Common Police Services Committee and that those other bodies which do have police representatives on them, such as the Chief Constables' Training Centre Committee, which expressed grave concern, and the District Local Authorities' Committee, which feels that this space is totally inadequate, are in agreement with the Home Office Memorandum on the planning of police buildings, which lays down a minimum of 100 sq. ft.?
BARONESS SEROTA: My Lords, the standards laid down for accommodation at police recruit training centres are the responsibility of the Common Police Services Committee. The standard that is being applied at the new police recruit centre being planned for Cwmbran (which will be a regional centre) was laid down in 1963. It was reviewed by the Committee as recently as last year and was confirmed. The particular centre under question at the moment was considered again only last month and once again the Committee confirmed their decision to adhere to the standards laid clown in 1963.
BARONESS STOCKS: My Lords, may I ask how this standard of accommodation compares with that which is recognised, I believe, as being right and proper for the student halls of residence and training colleges of education?
BARONESS SEROTA: My Lords, I am not quite sure whether the noble Baroness is in fact comparing like with like. A recent building bulletin of the Department of Education and Science made recommendations to local authorities on standards for student halls of residence which were somewhere between 90 and 100 sq. ft. per student, but I would remind the noble Baroness that a recruit training centre is only intended to serve the recruits for an 11-week course, five days a week. They go home at weekends.
LORD DERWENT: My Lords, I am not quite certain whether I have this right. Is it the fact that the Home Office has laid down a standard of 100 sq. ft. and that the training centre at Cwmbran is departing from that standard?
BARONESS SEROTA: My Loris, the Common Police Services Committee has laid down the standard to which Cwmbran is conforming.
LORD HAWKE: My Lords, could the noble Baroness let us know how this standard compares with the standard in Dartmoor Gaol?
LORD STRANGE: My Lords, would not the noble Baroness agree that the police, who have rendered such terrific service to this country recently, should be considered particularly in the question of the accommodation in which these young policemen wish to study, and that they have no room to do that in 76·5 sq. ft.?
BARONESS SEROTA: My Lords, I am sure the whole House will welcome the building of this new regional recruit centre for the whole of Wales, Which is needed to develop our police forces in that area. I would stress that it is a combined committee of Home Office and local authority personnel who are responsible for the administration of the police in their areas, and this is the standard that they themselves have laid down.

THE FALKLAND ISLANDS AND ARGENTINA
LORD CONESFORD: 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 on what grounds the Argentine Government is claiming sovereignty over the Falkland Islands.]
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD CHALFONT): My Lords, it is not for me to put the Argentine case. We have no doubt about our own legal title to sovereignty.
LORD CONESFORD: My Lords, I am grateful to the noble Lord for that reply and for the assurance, which ho also gave on the 3rd and 4th of this month. That being the case, can he say why we continue to encourage the Argentine Government to believe that we may ultimately yield to unfounded claims?
LORD CHALFONT: My Lords, with the leave of the House I shall be making a Statement on the Falkland Islands later this afternoon. I would ask the noble Lord whether he would be prepared to leave his question hanging until then.

BULL-BEEF PRODUCTION
2.44 p.m.
VISCOUNT MONCKTON OF BRENCHLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they intend to simplify the regulations concerning the production of bull-beef.]
LORD BESWICK: My Lords, as noble Lords will know, arrangements were introduced in March, 1966, on a trial basis and for a period of three years to allow young bulls to qualify for payments under the Fatstock Guarantee and Calf Subsidy Schemes, subject to certain conditions designed to safeguard the purposes of those payments and to comply with the sire licensing legislation. The experience gained over the past three years has now been reviewed, in consultation with the organisations concerned, and it has been decided in principle that young bulls should be brought into the Fatstock Guarantee Scheme and calf subsidy on a formal basis from the beginning of the next fatstock year—that is, March 31, 1969. Details of any changes in the present arrangements will be announced as soon as practicable.
VISCOUNT MONCKTON OF BRENCHLEY: My Lords, I thank the noble Lord for his very helpful Answer. Can he say whether he hopes that the regulations and sales will be simplified?
LORD BESWICK: My Lords, I understand that some minor alterations have been made in the application form for permits, and there will be some further changes; but I am sure the noble Lord will agree that there are certain basic requirements which have to be met. It is necessary to have some permit scheme and there must be some control over the housing of these animals. Subject to that, I hope that we shall be able to make some progress.
VISCOUNT MONCKTON OF BRENCHLEY: I thank the noble Lord.

BUSINESS
LORD BESWICK: My Lords, as my noble friend Lord Chalfont has already said, he will be making a Statement on the Falkland Islands at a convenient moment after 3.30 p.m.

INVISIBLE EXPORTS: B.N.E.C. REPORT
2.46 p.m.
LORD ALDINGTON LORD ALDINGTON rose to draw attention to the Report of the Committee on Invisible Exports (B.N.E.C.); and to move for Papers. The noble Lord said: My Lords, I come to this unusual position at the Box at the request of my noble friends behind me, and with their permission, to draw attention to the Report of the Committee on Invisible Exports and to move for Papers. In moving this Motion I seek to raise the question of our general attitude towards the country's invisible earnings, as well as to discuss certain of the points made by the Committee on Invisible Exports in their Report. I believe this debate to be an important debate and to be timely. I am here thinking of the longer term, and not of the current reports of interchange and pleasantries between City and Government, though these cannot, I fear, be excluded from our thoughts.
I should like to say two things in introduction: first, that success in capturing a day for this debate is due not to me but to the noble Lord, Lord Rhodes. This, I may say, is not a sign of coalition, nor even a sign of coalition between Lancashire and London; it is, I think, a sign of our mutual respect. Why then is the Motion in my name and not in the name of my noble friend? It is because he thought that so soon after assuming the Lieutenancy in Lancashire, on which all his friends and admirers have congratulated him, his first duty should be to present a Motion to your Lordships on the North West. He therefore asked me to take over responsibility for this debate from him.
My second point in introduction is to pay my small tribute to the first Chairman of the Committee on Invisible

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Exports, the late Sir Thomas Bland, who in the last months of his life put so much effort and devotion into this very important work. The Study, the Report and the Committee owe a great debt to the wisdom and driving force of Sir Thomas, and as he himself wrote in the preface to the Report, the Report broke new ground and paved the way to further inquiry, but was also a Report which may be regarded in its own right as a unique work of reference on a remarkably complex sector of our economy. Mr. William Clarke, the Director of the Study is rightly to be congratulated.
My Lords, what are invisible earnings? This is part of the strange jargon of the economists and statisticians that enslaves us. Invisible earnings are the earnings that the people of Britain produce year by year by offering a whole variety of services, such as financing and such as overseas investments, including oil, insurance, merchanting, commodities, marketing, Stock Exchange, shipping, travel and services connected with entertainment and arts and so on. These services play a far more important part in our national economy than is ordinarily understood, and a very important part, too, even when compared with visible exports.
I see that the noble Lord, Lord Brown, is to reply to the debate, and I do not think he will accuse me of being unconcerned with visible exports any more than he is. I do not think anybody here, certainly not any of us who are connected with industry, is going to seek to write down in any way the national good that comes from the work done in creating exports of manufactured goods. Exports and re-exports in that field earned the equivalent of £5,023 million in 1967. In the same year, 1967, what are called gross private invisible receipts—that is, the receipts from services performed by the private sector—amounted to a total of £3,089 million in value. That means that, taking all receipts from overseas together, visible and invisible, the invisible receipts in 1967 were around 37½ per cent. of the total.
There is quite a simple reason why such a large figure for invisibles will be a surprise to many, here and outside. It is because the statistics of our balance of payments which we are normally allowed to see give only the net figure for invisibles,
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whereas they give the gross figures on the visible account. We are, for example, accustomed to seeing the value of our exports, month by month and year by year, as well as those rather daunting figures of our imports; but the invisible account which we see normally gives a statement of the difference between the receipts from the various services performed for the people overseas and the payments for those services to overseas. A net, but highly respectable figure, always in credit, but much smaller than the gross figure is the outcome of this.
That is not the only difference between the way in which we treat visible and invisible accounts, for in the Balance of Payments Statement before striking the balance between the receipts and pay-merits on invisible account a deduction is made for Government expenditure overseas. That, as your Lordships will know, has been a growing figure and is now a very large figure of £430 million or thereabouts. This, as I regard it, bad practice both hides the success of those responsible for the invisible earnings of our country, and also may falsify trends.
I will try to give some examples of what I mean. The latest adjusted figures show that the net invisible balance, private and Government, in 1964 was £138 million; but the true balance on private account was £570 million. In 1967—that is, three years later—the true balance on the private account in the private sector had grown by another £100 million to £687 million, and is expected to have grown to over £700 million this year. But because Government expenditure overseas has been deducted, the figure that we shall hear talked about and we shall see usually as the balance on invisible account is only around £230 million.
I said that this bad practice may falsify the trends. Let me give an example of that. If you go back into history e little, say ten years, you will find a much larger net expenditure on invisible account, after deducting Government expenditure, of £307 million, which may lead you to conclude that the co repetitiveness of invisible services in Britain was falling. In fact, in that year, 1958, the private invisible balance was £526 million; and ten years later, this year, it is expected to be nearly £200 million

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higher. The difference, of course, is the growth in the Government expenditure overseas.
This balance between invisible receipts and invisible payments in the private sector has been of vital importance to our country, not only recently, since the last war, but for 175 years or more. In fact, in only seven out of those 175 years has there been a surplus on our visible trade (that is, in exports and imports) but throughout all those years there has been a continuous surplus on invisible account. We have had a surplus on visible trade, exports and imports, in two years since the war, but only in two years—that is, in 1956 and 1958—and as the Report we are considering to-day shows, there have been few other years, and no extended period in all this time of 175 years in which there has been a surplus on exports and imports.
This is at once some measure of the achievement required to-day of modern British industry, and also a measure of the importance to us of these invisible earnings. We as a country are trying now to produce a steady surplus on visible trade account, year by year, so that our total combined current account surplus can be £500 million or more. I believe it will have to be more. We shall not easily achieve this figure of £500 million surplus unless we also achieve an increase in our invisible surplus. It is right to add that the Report itself states that over the whole period of 175 years the invisible surplus has always been big enough to offset the deficit on visible trade if, but only if, Government spending abroad has been excluded from the figures.
These are the facts. I am not one of those who argue that the Government should not spend abroad, either for defence purposes or on Embassies or on overseas aid. But when our performance overseas is compared with that of other countries, seldom is enough account taken of the recent growth in British Government expenditure overseas. It is not, I think, so much the efficiency of our invisible earners, or the efficiency of our visible trade earners, that is the true cause of our problem here, as the failure of Government to make room for more overseas earnings to cover their higher
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expenditure overseas by taking proper measures at home, including a reduction in their own expenditure.
There is in Chapter 3 of this Report an interesting analysis of how important these invisible earnings are in relation to world trade invisibles as a whole. Over the years 1952 to 1964, which are covered in some detail here, world trade in invisibles rose faster than visible trade. This may be a surprise to many of your Lordships, as it was to me when I first read about it. The United Kingdom share of the total world trade in invisibles has been dropping, as indeed has that of the United States of America. That is not really surprising because of the growth of the trade in invisibles in other countries, particularly in the travel sector.
But there is one rather important exception to the statement that our share of the total has been dropping. Receipts from the United Kingdom investment income overseas have until quite recently been growing faster than the world total. Overseas investment income is the only sphere in our overseas earnings in which we have this most creditable achievement. The Balance of Payments White Paper (the latest one, I think, was in March) shows, however, in Table 16, that since 1965 the net earnings from interest, profits and dividends have fallen from £450 million to under £300 million. Portfolio investment earnings in particular have fallen, as if the Government had planned that they should. It is a salutary thought that net investment earnings were built up from a level of £280 million in the early 1950s to £450 million in 1965—and how fortunate we are that that was so! Is it really sensible to try to reverse that trend, or even to allow it to be reversed?
I have given these bits of statistical information at some length because they must form the background to the debate and to the points that many noble Lords may wish to urge upon the Government for their consideration in this important debate. I should like to join with the Committee in pressing on the Government the importance of simple and accurate information being available for those who study Britain's economy and have to make decisions about it concerning the performance of various sectors who contribute to the invisible account, and also about the trends both at home and in

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the world. To borrow a phrase from a former Prime Minister, the Bradshaw must be kept up to date.
One must say a word of special welcome to-day to the study of the City's overseas earnings, published in to-day's issue of the Bank of England's Quarterly Bulletin. This shows that an average of £235 million surplus has been achieved each year in the course of the last three years, and that is no mean achievement, whether it is the achievement of "gnomes", "goblins" or even of ordinary men and women.
Now what are the conclusions, or some of them, which we ought to draw from these statistics and the points that I have so far made? The first, I think, is a fairly obvious conclusion: that if we are to treat each of these activities which contribute so much to receipts of foreign exchange in the United Kingdom as of the very first importance, we must understand more about them. We should be making a mistake if we assumed that automatically a large surplus in one sector would continue over the years. History gives us plenty of warning in this regard. Shipping is an example. Our shipping receipts were £63 million more on an average each year than payments in the three years before 1914, and this was £63 million in a much higher valued pound. Though these receipts have now grown 12-fold the payments have grown by much more, and the balance was only £29 million in 1965. Even net overseas investment income, to which I have referred before, which is still the most important element in the surplus on invisibles, has not kept pace in real terms with the changes since 1913; only £451 million in 1965 instead of £188 million, in a higher valued pound, in 1913. Yet, as I have said, between 1952 and 1965 it was this item which was the only item in which the United Kingdom has increased its share of world trade overseas. For the future let us be warned that investment income cannot be expected to grow as fast as in the past if there is to be a limit on the outflow of funds for overseas investment.
My second suggested conclusion is that we must avoid being complacent. Though it is a fact that over the decade 1956 to 1965 the gross earnings on invisible account grew faster than visible exports and re-exports—they grew by 54 per cent.
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as opposed to 41 per cent.—there is no certainty that that will be repeated There is another reason, in my submission, for not being too complacent with the figures that we are reading to-day. The figures that we normally see, and that I have given, of invisible earnings are given in sterling, but the true worth of the value of our invisible exports is not to be found in sterling terms but in terms of the foreign currency that we earn, bettor seen in terms of the dollar. If you compare the invisible credits for the first half of 1968 with those for the first half of 1967, there is not the large increase which you will find in sterling terms, but a very small increase of 10 million dollars from 4,082 million to 4,092 million dollars. If you compare the net position after deducting payments, in foreign currency terms there was actually a decrease from 1,022 million dollars to 934 million dollars.
I should like to pause for a moment here and emphasise the importance of looking at these matters against the dollar figures. They give the real position of our progress year by year. The sterling figures are inflated by devaluation. They flatter, but they delude us. We have been congratulating ourselves; on a large increase in our visible trade exports and re-exports this year as compared with last, but in fact and in dollars we did not do as well in the first half of this year as we did in 1967. In the first half of this year, so far as my calculations go, we earned from exports and re-exports in dollar terms 7,157 million dollars compared with 7,498 million dollars the year before.
Not only do these figures challenge complacency, indeed they should eliminate it. But they give, alas! much support—and no comfort at all—to those of us who have always been sceptical of the phrase "benefits from devaluation". There are high hopes now, we read today, of better export figures for November. I hope that these hopes are fulfilled, but let us see these figures expressed in dollars before we begin taking too much comfort. Nevertheless, let us take some joy in these troubled times in every improvement that there and before we get too depressed let us remember that even to-day most of the basic costs of living and of product on in our country are lower than most of our

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competitors' costs. If growing efficiency in the private sector were not offset by too swollen a public sector we could, I believe, honestly say that the pound is greatly undervalued to-day. But meanwhile we face a threat, as we know, of a flight from money which we have never known before.
If we are to avoid complacency about our invisible earnings future we must, I think, understand the elements which have in the past made for these earnings. Now what does an analysis of present day affairs indicate are the vital factors? This Report gives us a very good guide to enable us to answer these questions. The first essential is the efficiency not just of those men and women who take part in these businesses, but the efficiency of the system as a whole. It was this efficiency, the efficiency of the system as well as of the individuals, which brought the business to London in the first place. It is comforting, in these times of challenge to sterling and the sterling system, to realise that it was the efficiency of businessmen and of the system which was more important than the development of the sterling system and the sterling area. But if the system grew up, as it has, to such success, it grew up in a very different world from that which now pertains. Exchange controls do not help the system. A wobbly and weak pound positively hinders it Rising costs, both of living and of doing business, must impair competitiveness. National attitudes of envy and malice towards those who are successful in this field can become—I do not say they are already—debilitating, even in a society like ours with our sense of humour and our sense of tolerance.
Last week-end's comments and outbursts of indignation against some nameless person who has been described as a "gnome" for an untapped telephone call to Germany would make one laugh, if the frame of mind of some Government supporters did not make one so sad. I really am horrified by the terms of emotion I have seen reported in another place. Incidentally, I should just like to add this thought: it seems to me extraordinarily arrogant of some members of the Government to assume that
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a rumour that they were about to resign is likely to weaken the pound.
Next in my conclusions I come to the part that the Government should seek to play. Here I must quote from paragraph 504 of this Report:
"The post war record is all the more impressive when it is realised that over the period visible exports have had continued support from the government."
Here, in fact, we are talking about successive Governments, in case there is any confusion about this. The Report goes on:
"Virtually every sector of the service trades giving evidence to the committee contrasted the facilities and encouragement provided for visible exporters with the lack of support (and often understanding) given to invisible exporters."
There are, of course, very real difficulties in providing equal support for invisible exports. Personally, I would not argue that either in the short run, or in the long run, invisible earnings would gain if the Government were to featherbed any of these businesses in any way. That, of course, is not what successive Governments have sought to do in the case of exports of the manufacturing industry. They have, as I understand it, sought to put exporters in the same position as their competitors overseas and to help them with problems of world trade by insurance through E.C.G.D. and information, and so on.
The fields in which Government help can be given for invisible exports are, I think, these. First, taxation—and I am glad to hear that the Committee on Invisible Exports, now under the chairmanship of Mr. Cyril Kleinwort, with Sir Richard Powell as Deputy Chairman, are investigatng in some detail what the Government can or might do to help in taxation. It is a very strange thing, at first sight, that those responsible for these massive earnings from overseas should be subjected to a discriminatory selective employment tax. If the costs of industry are important to exports—and of course they are—the cost of banking and insurance and many other businesses engaged in securing overseas earnings are at least as important. If the Government's argument is that the tax has not yet shown any sign of reducing competitiveness, let me beseech them to beware of such an argument and let me say that they cannot possibly prove the negative

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—that earnings would not have been higher had costs not been artificially increased in this way. I would add that even if it were proved, as I think is quite impossible, that the absolute increase in cost here is not of real importance, such a clear and positive discrimination against this type of business is and must be discouraging and tends to create a false national attitude to those who engage in business in this way.
There is in paragraph 289 of the Report a long list of alterations in tax and other law which would help portfolio investment, the receipts from which have been decreasing recently from £149 million in 1965 to £136 million in 1967. I must say that I am filled with gloom by the story in The Times Business Section to-day that there are threats of further obstacles to this excellent way of supplementing our income from overseas.
THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN): My Lords, could the noble Lord, if he is going to quote The Times, say what it says, because I personally have given up reading it?
LORD ALDINGTON: My Lords, it always seems to me to have the great advantage that it is contributed to by the son of one of the noble Lord's former colleagues and the son-in-law of one of his present colleagues, so I have always assumed that it was very well-informed. But the noble Lord will have plenty of time to think of the answer, and if I could have that put right I should be much less depressed than I am at present. The noble Lord knows me well enough to know that I am always an optimist at heart, so I will await his answer, and look forward to it.
Then there is the way that corporation tax falls on those who draw earnings from overseas countries with a higher rate of tax overall than the current rate of corporation tax, but an overall rate of tax which is lower than the combination of corporation tax here and the income tax on dividends.
LORD BROWN: My Lords, the noble Lord still has not told me the reference which he mentioned in The Times. I merely want to know what I am expected
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to answer. If he does not say what The Times has said, I can scarcely answer the point which he is making.
LORD ALDINGTON: My Lords, it is important not to delay your Lordships too long, but if the noble Lord will kindly look on the front page to the middle headlines of the Business Section to-day, he will see exactly what I mean. If he does not, I will present it to him at teatime; I have not got it with me at the moment. I thought that this report was good enough material. To return to what I was saying, I hope that the noble Lord heard me about corporation, tax on direct earnings, because that is very important to his Department.
Corning to the situation at home, I would point out that our hotels are crying out for help, or at least for equal treatment with industry. How can we sustain our travel and tourist income if new hotels are not built—not just in London and other cities but in the holiday resorts? I should like to remind your Lordships that for 16 years I represented in another place the great resort of Blackpool. There I learned of the resilience and spirit of adventure of the hotel industry, large and small. But let the Government ask themselves why no new hotel has been built in Blackpool since before the war, even with the massive receipts it must get from the Labour Party Conference and others which are held there. In all these cases, nice-sounding arguments can be adduced to maintain the present position. I think I heard somebody mutter, "The noble Lord was once a Minister himselfs." It may be that I made the same mistake but that is no reason why noble Lords opposite should not try to correct it.
My plea would be that the Government should apply the same sympathy and encouragement to the invisible exporter as they have rightly given to the visible exporter in recent years. If they do that, then I am quite clear that they will alter both the S.E.T. and the incidence of corporation tax; and they will help hotel owners and will probably wish to help shipowners and others, too.
I should like to say a word about exchange control, the second field at which one must look. In every twist of our balance-of-payments situation it has

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seemed to be desirable, for one reason or another, to close some new door to the movement of funds from this country. We have had the limitation of overseas investment; we have had restrictions on travel expenditure. More recently we have had restriction on the use of sterling for financing third country trade, and there are other ways, known to your Lordships who are expert in this matter, in which exchange control obstructs legitimate business which has earned good overseas currency for this country. It is not a wise thing to starve the goose that lays the golden egg because other farmyard animals are eating too much. This would be a dangerous metaphor to use in another place or on a political platform outside this House, but I hope that noble Lords will not misunderstand what I have said.
There are serious dangers for the future if we allow ourselves to take refuge in exchange control cuts on private overseas investment year after year, instead of the Government first pruning their own expenditure. The recently published Reddaway Report shows that if 10 or 11 years ago the then Government had imposed the kind of restrictions on overseas investment which have operated under the present Labour Government we should be worse off now than we are. This follows from Mr. Reddaway's conclusion that the period before the balance of payment starts to benefit from overseas investment on the assumptions which he sets out in his report is only 11 years. After that time the short-term cost, including the cost of the initial investment, is overtaken by the gains from it. So we know that 11 years on we shall be worse off than we need to be. Nobody would argue that invisibles, or visibles for that matter, should have absolute priority in taxation or exchange control over all other considerations of Government policy. But I would argue, and I do argue before your Lordships' that much more attention should be given by the Government to measures needed for the maintenance and future growth of our invisible earnings. And they must seek to avoid putting obstacles in the way of those who make those earnings.
The third field for Government help is in their general policies which set the
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climate and govern the infrastructure for the financial and other services. The encouragement of an international as opposed to a nationalistic approach to the provision of services of all kinds is as important as it is to the movement of goods and money, and so far as I know Her Majesty's present Government agree about this. In a more practical way efficiency of the most modern kind in our telecommunications system is absolutely vital to London's position as a central world market. Lastly, the Government can help or hinder in this matter by the lead they give to the encouragement of this kind of earning and to the encouragement of all the efficiency and ingenuity which lies behind it.
It is no use talking to most noble Lords opposite about the effect of high taxation on personal incentive. All of us know the arguments; and in our hearts we know them to be true. But we are not going to get much reduction in personal taxation just now, now that we have the Government we have. But there will be other ways in which the Government could encourage ingenuity and encourage enterprise and efficiency. The case for extending the Queen's Award in this field is well argued in the Report. Whether it would be right to extend the Queen's Award in this way, I am frankly doubtful. To spread this great Award too wide might destroy its value. That is my view. But I am in no doubt at all that the Government would be wise to show some practical sign of their appreciation of the work done for Britain by bankers, insurers, financiers, shippers, shipping people, hoteliers and others, who so massively contribute to our country's ability to buy the imports which really govern our standard of living.
So, my Lords, may I, with great humility, say to the Government, and particularly to the Lord President of the Council, that "Government versus the City" is as bad a slogan as "the City versus the Government". It is one of the many virtues of this Report we are discussing to-day that it proves beyond doubt the true value to our economy of the invisible earners in the City and elsewhere, as it points to the opportunities which a wise Government can seize to help increase that value. My Lords, I beg to move for Papers.
3.21 p.m.
LORD BESWICK: My Lords, we shall all want to thank the noble Lord, Lord Aldington, for bringing this Motion before us. Apart from other reasons—and there are other good reasons—it gives this House an opportunity of congratulating the Committee on Invisible Exports and Mr. William Clarke, the Director of the Study, on what is a quite outstandingly valuable and interesting Report. We shall all wish to echo, a little sadly, the noble Lord's tribute to the late Sir Thomas Bland. In many aspects of this field this Report will surely become the accepted text book, and its clarity of expression throws a most revealing light on the whole subject. The noble Lord is quite right in emphasising the importance of invisible exports to the British economy. Just how important they are I doubt whether many non-specialists who have not read this Report will have realised. The historical perspective and balanced judgment of this Report is of especial value at this point of time when we see an extraordinarily crude attempt, by what used to be thought Britain's outstanding newspaper, to foster an economic crisis for political ends.
I have learned to respect over the years, the noble Lord's sense of fairness, and he opened this discussion in the good spirit I expected. But he did refer to relations between the Government and what is called collectively "the City", and I shall make one observation on this which, in any case, I had intended to make. We had a debate last Thursday in this House on economic affairs. Most observers thought it went reasonably well for the Government. The two official Opposition speakers were not unduly critical; the Liberal spokesman showed understanding and was constructive; the noble Lord, Lord Boothby, from the Cross-Benches was good enough to say he thought my own contribution was convincing, the noble Lord, Lord Hankey, was also constructive. I say nothing of speakers on this side, but I should have thought the views of my noble friends Lord Shackleton and Lord Balogh were worth reporting; and then we had two sour speeches from noble Lords with City affiliations.
That debate was given prominence on the front pages of the next day's Times. Around 12 column inches were prominently
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devoted to it. Not a word, not a single word, by any speaker, save these two Peers who fitted in with the Times campaign. I trust that the noble Lord and others will accept that pleasantness or unpleasantness with the City is not always of Government making. Had the noble Lord, Lord Shawcross, found it possible to get here this afternoon—and I should add that I spoke to him on the telephone and he has an important business commitment which prevents his attendance—I should have dealt with what he said. But it was comical, to say the least, that he, a director of The Times newspaper, should have complained of selectivity from this side of the House.
It is worth while to restate the facts which the Report sets out. The noble Lord and I have chosen much the same figures. I hope he will agree that they bear emphasis. Since 1796 until the present day, in only seven years—1797, 1802, 1816, 1821, 1822, 1956 and 1958—according to the Committee's method of assessment, have we in this country achieved a trading surplus. For over 170 years, therefore, we have been dependent upon our invisible exports to pay our way. The gap has been filled by currency income from the service trades, shipping, brokerage, merchanting, commission agenting, financial services and earnings from investments held overseas. Probably it is not altogether surprising. After all, apart from coal, we have not been over-endowed with raw materials. Of course, as the noble Lord said, we have done immense things—and I pay tribute to what he himself is doing—in manufacturing industry, but it is still true, and it is greatly to our credit, that we have contrived to build up the present standard of living by putting our native skills and capacity for judgment at the disposal of others.
There is one other factor which emerges clearly from the Committee's analysis of our trading position, and I was glad the noble Lord seized upon it for it is highly relevant to the current controversy. The volume of invisible receipts has put us fairly near the top of the international league table in this particular field. While the United States' share of world invisible trade was close to double that of the United Kingdom, nevertheless our share, as second in the league table, was more

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than double that of Italy, the third ranking country. That is for the gross receipts. Then we come to the point which the noble Lord touched upon. The total net receipts, as against the net receipts of the private trade, disclose a different picture. The net balance of invisible private trade is shown to be very substantial and fairly stable, at any rate in money terms—£609 million in 1965 and £549 million in 1966. The figures could be better—and, indeed, have improved in subsequent years—but nevertheless they are good.
What reduced the net invisible balance down to £92 million in 1966—or, as I understand it, £151 million by another calculation—was the remorseless growth in Government spending overseas. So much has been said about Government spending generally, and such a vicious campaign has been mounted, that it is justifiable to emphasise these overseas figures. They rose from £61 million in 1952 to £457 million in 1966. That was in the period during which the noble Lord opposite had some responsibility. The growth did not take place under the present Administration. In fact, the spending has been held since 1964: indeed, in real terms it is possible to claim that it has been reduced. The increase in Government expenditure overseas took place in the period of the Conservative Administration, from £61 million when they took office, to £433 million when they left office. That is the Government spending which is at the core of our difficulties.
More than half of it was on military expenditure. Here are to be found the white elephants about which the noble Lord, Lord Crowther, spoke in his non-controversial maiden speech last Thursday. The roads, swimming pools, shops, houses, churches, parks and wonderful garden cities, all part of the East of Suez defence facilities built by successive Conservative Governments—those are the items which should be under criticism, instead of the social services for our people here at home. Her Majesty's Government, as distinct from Her Majesty's Opposition, have accepted that this military expenditure East of Suez must be reduced, and to the extent that this is done then the private earnings can again make an effective contribution to a growing net invisible balance.
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The question is: what can be done to give additional encouragement and help to those engaged in all the various activities which go to make up invisible trade? As it is only a year since the Report was published, it is perhaps not surprising that none of its recommendations can be said to have been implemented to a point at which invisible earnings have been significantly improved. The official estimates of balance-of-payments earnings so far this year show a marked increase, though of course the increased sterling value following devaluation must account for a large part of this. At present it is not possible to say whether income from non-oil services has grown in real terms. Nevertheless, it is true to say that there is a much greater awareness on the part of the general public of the important contribution to be made to the United Kingdom's balance of payments by invisible earnings, and I have no doubt that this debate will add to that awareness.
Now, my Lords, what has been done? The initial Report recommended that there should be established
"some permanent organisation responsible for keeping a continuing watch on the whole field of invisibles with a view to suggesting means of further promoting invisible earnings at home and abroad".
That organisation has now been established, under the chairmanship of Mr. C. H. Kleinwort. It has a very powerful Committee, and is fortunate to have retained the services of Mr. W. M. Clarke as Director. I understand that the Committee so far has produced three papers. One of these, produced by the Central Statistical Office, in consultation with the Board of Trade and the Bank of England, is on the action in hand, or proposed, for improving statistics of invisibles in the context of the Report's recommendations. I doubt whether anyone can say that we have as yet got that Bradshaw of which the noble Lord spoke, or the machinery for assembling the statistics which go to make it up; but I am glad to think that there is a growing recognition of the value of these statistics.
On the general point of public relations and public recognition of the work of companies and individuals in this field, there is substance in what the noble Lord, Lord Aldington, said: that up to comparatively recently, at any rate, they

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have not been given the recognition which they deserve. In many cases—let us face it—the tendency has been to treat some of these people as if they were economic parasites on productive enterprise. They have not had the sense of purpose which someone directly responsible for visible exports has been able to achieve. An export order for some thousands of motor cars or hundreds of aeroplanes has usually been accorded much more publicity than the day-to-day work of those whose efforts have yielded us at the end of the year some hundreds of millions of pounds in overseas currency. In this connection, it may well be that the Queen's Award, which has not hitherto been available to invisible, as against visible, exports, might be considered. I will not add to that, save to say that there are obvious difficulties, and the point has not gone unnoticed.
One direction in which I hope it will be thought we have made some progress is in the hotel industry, about which we shall perhaps hear something from the noble Lord, Lord Crowther. Substantial financial assistance for the hotel industry is intended to be made available from the Hotel Development Incentives Scheme, for which enabling legislation will be brought before Parliament in this Session. As the President of the Board of Trade indicated in his Statement in the House of Commons on November 13, this legislation will also embrace proposals for a new statutory organisation which will not only carry out the existing functions of the British Travel Association but administer the incentive scheme, and which will have powers to give selective financial aid to particular tourist projects.
Hotels in certain rural parts of development areas may now obtain refunds of selective employment tax, and since February of this year the Development Commission's activities have been extended to enable it to make loans to small hotels, guest houses, and similar establishments in rural parts of development areas. I should like to add, especially as I see that the noble Lord, Lord Geddes, is here, a tribute to the work done by the voluntary British Travel Association. It is hoped, and expected, that this selective capital assistance will modify the impact of selective employment tax on the hotel trade as a whole.
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My Lords, as I have now mentioned taxation, maybe I ought now to make some comment on what has been said, and what no doubt will be said throughout our discussions. Inevitably, many individual service industries, and especially the financial ones, conceive the major impediments to the ultimate goal of increased invisible earnings as stemming from taxation policies and exchange control.
"To tax and to please",
I think it was Edmund Burke who said,
"is not given to man",
and certainly not to the Chancellor of the Exchequer. I shall not try to acid more to the controversial issue of selective employment tax. The C.I.E. itself set up a special sub-committee on this fiscal aspect of its affairs and, I know, was asked to make "constructive proposals". I gather that the sub-committee has now assembled a good deal of material, with the assistance of Professor Alan Peacock, on the effects of S.E.T. on invisible earnings, and when the Reddaway Inquiry is ready t o receive evidence this will be presented. It is better, I think, that we leave it there this afternoon, although of course any proposals put forward during this discussion will be considered by Her Majesty's Government.
The C.I.E., in considering what might be done to increase the invisible earnings of banks, suggested that third country credit facilities might be extended. In fact, of course, they have been restricted. I can understand the disappointment. The Committee, however, were wise enough to qualify their recommendation. They suggested that it should not be done—and I quote:
"if there is a specific balance of payments danger in such a restoration".
In the present circumstances the danger is so apparent that I cannot see how any fair-minded person can challenge the action which the Government have taken. It is estimated that the withdrawal of the sterling credit facilities should bring the greater part of £50 million into the reserves as the outstanding credits are unwound over the next six months. The best estimate that can be made suggests that the value of the invisible earnings, if set against this drain of £50 million, is of the order of £4 million. Surely at a

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time when we are as a nation needing to borrow extensively abroad to replenish our reserves, it is only elementary prudence temporarily to restrict these third-country credits.
Then we have the criticism about Her Majesty's Government's overseas investment policy. Here again, the Government do not oppose overseas investment as such. They readily acknowledge that direct overseas investment can bring benefits, not only to the investing company but to the economy as a whole, in the form of invisible earnings. But in present circumstances, when we are not earning a surplus, it really does seem absurd to facilitate overseas capital investment. On a previous occasion I ventured to quote Mrs. Becton in this context. Before cooking a hare, she said:
"First, catch your hare".
Before we resume uninhibited overseas capital investment, surely we must earn the surplus to invest. In 1964 and 1965, the deficit on private capital flows accounted for more than one-third of the overall deficit on current and long-term capital transactions. In 1966 and 1967, it accounted for less than one-sixth. But this year has seen a substantial further capital out-flow and I suggest that it would plainly be wrong to relax our control until the balance-of-payments position is secure.
The Reddaway Report, to which the noble Lord referred, has much to say about the long-term advantages of direct investment abroad. But there is nothing in that Report to detract from the view that restriction is necessary and desirable at a time of balance-of-payments difficulties. Reddaway suggests that in this situation policies should be adopted which would encourage companies to raise finance abroad and which would select those projects whose profit and export potential was greatest. These are facets of the Government's present overseas investment policy.
No doubt the figures given in the C.I.E. Report about earnings on foreign investments will be quoted again throughout the debate. They are, no doubt, as the noble Lord said, extremely valuable in our present situation; but he should pay some attention to the cost at which these returns were secured. Over the
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period of, say, 1952 to 1964 when our current net balance was only £753 million—that is to say, over that period of time when we had a current surplus altogether of only £753 million—the capital outflow was no less than £3,524 million; that is to say, when we earned only £700 million-odd we invested overseas £3,500 million-odd. Clearly, we cannot contemplate at present buying long-term assistance at such a high immediate cost. Incidentally, there was the very relevant point made by my noble friend Lord Balogh last week which was never answered: that at a time when investment overseas was at its greatest, industry at home was being starved of up-to-date capital equipment.
My Lords, over the greater part of what the noble Lord, Lord Aldington, has said, there is nothing between him and Her Majesty's Government; there is no difference at all as to the objectives. I agree with him that there is some cause for gratification and absolutely none for complacency. I assure those noble Lords who are to follow me that any further constructive proposals that we hear this afternoon to attain those objectives will be given the fullest consideration by Her Majesty's Government.

THE FALKLAND ISLANDS AND ARGENTINA
3.43 p.m.
LORD CHALFONT: My Lords, with the leave of the House I should like to intervene in this important debate to repeat a Statement on the Falkland Islands being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. Before doing so, perhaps I might apologise personally to the noble Earl, Lord Limerick. I can imagine that he must think this timing particularly unfortunate, coming as it does immediately before his maiden speech. I hope he will bear with me.
The Statement is as follows:
"On March 26 last I gave a full explanation to Parliament of our reasons for holding talks with the Argentine Government about this question and I also described Her Majesty's Government's policy in these

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talks in some detail. In their talks with the Argentine Government Her Majesty's Government have been trying to reach an understanding with Argentina with the object of securing a satisfactory relationship between the Islands and the nearest continental mainland. Since that time, the talks have continued and the two Governments have reached a measure of understanding although this is not yet complete. There is a basic divergence over Her Majesty's Government's insistence that no transfer of sovereignty could be made against the wishes of the Falkland Islanders.
"This pledge has been repeatedly given to Parliament by Ministers who have reiterated on numerous occasions the principle that Her Majesty's Government could only consider the solution of this dispute by a cession of sovereignty to Argentina, first, as part of an arrangement which would secure a permanently statisfactory relationship between the Islands and Argentina and second, if the Islanders themselves regarded such an arrangement as satisfactory to their interests and it accorded with their wishes. It is on this basis that Her Majesty's Government propose to continue to negotiate with the Argentine Government in order to overcome the obstacles which now exist to a normal relationship between the Islands and the mainland.
"Her Majesty's Government are very conscious of the close ties between the population of the Islands and the United Kingdom and of their loyalty to the Crown. It is for this reason that Her Majesty's Government have insisted on the paramountcy of the Islanders' wishes. Her Majesty's Government have not exerted any pressure on the Islanders to change those wishes nor do they intend to do so. We shall continue to discharge our responsibilities towards the Islands as a British Dependent Territory. In this context it is particularly relevant that in the course of my right honourable and noble friend's recent visit to the Falkland Islands, the Executive Council accepted that the British Government have been acting in good faith in our talks with Argentina and that our understanding with Argentina, if it is
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reached, will be fully in keeping with the promise that Her Majesty's Government would not transfer sovereignty against the wishes of the Islanders."
My Lords, that is the end of the Statement.
LORD CARRINGTON: My Lords, your Lordships will be obliged to the noble Lord, Lord Chalfont, for repeating that Statement. I do not think it taxes us very much further down the road. May I ask the noble Lord two questions arising from it? In the Statement, he told us that the Government intend to continue to negotiate with the Argentine Government. May I ask him, in view of the statement (which was correctly reported in the British Press) by the Argentine Foreign Minister, that there was no question of any agreement being reached unless sovereignty was transferred to the Argentine, what is the purpose of continuing these negotiations? Secondly may I ask the noble Lord to confirm or deny the rumour which I have seen in the newspapers, and which is circulating in some quarters, that Her Majesty's Government have proposed to the Argentine Government that they—that is, the Argentine Government—should transport, compensate and re-settle the Falkland Islanders elsewhere, and that sovereignty of the Falkland Islands should then be handed over to the Argentine?
LORD CHALFONT: My Lords, so far as the first part of the noble Lord's question is concerned, we are continuing these negotiations, as I said in the original Statement, with the aim of coming to some satisfactory situation in regard to the relations between the Falkland Islands and the Government of Argentina. Nothing has changed that. As I said at an earlier stage in your Lordships' House, I cannot be responsible (and neither can Her Majesty's Government) for statements made by foreign statesmen to the Press. We have our own discussions with the Argentine Government; their views are available to us; and those discussions are confidential.
So far as the second part of the question is concerned, really, to ask me to comment on a rumour of this kind is something that I never expected of the noble Lord opposite. I think he will hardly need me to deny such a rumour. There have been so many rumours of this

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kind in the Press about this subject and some extremely bizarre opinions have been expressed. I can only say that, so far as I am concerned, there is no question of engaging in the sort of activity that he has mentioned, and I am surprised that he should even have bothered to mention this in your Lordships' House.
LORD BYERS: My Lords, I should not dream of pressing the noble Lord about any rumours in the Press. May I ask this question? Have the Argentine Government made the transfer of sovereignty a sine qua non of a satisfactory settlement? That is what we want to know.
LORD CHALFONT: My Lords, this is a valid question. The answer is that the discussions with the Argentine Government are not yet complete. I have made clear that the divergence which still exists between us is on this very point; that the divergence which remains between the two Governments in the general context of the measure of understanding that we hope to reach is about just that point. Our insistence is that the wishes of the Islanders are paramount. If there is a divergence, I think it hardly needs me to put the Argentine case.
LORD CONESFORD: My Lords, at the request of the noble Lord I deferred seeking an answer to the supplementary question that I asked earlier until he had made this Statement. May I now repeat that question? The noble Lord said in answer to my original Question this afternoon (as he had said twice previously, on December 3 and December 4) that Her Majesty's Government had no doubts whatsoever about our title to the sovereignty. May I ask him, that being the case, why we continue to encourage the Argentine to hope that we may some day yield to unfounded claims?
LORD CHALFONT: My Lords, really there is no question here of encouraging the Argentine Government to hope anything. I simply cannot believe that noble Lords opposite would think that in the 20th century we should simply ignore a claim made by another sovereign State because we do not believe it to be valid. That, to my mind, is no way to conduct modern international relations. If the noble Lord wants to know why we have
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been discussing these things with Argentina and why we are continuing to do so. I will repeat again what I have said on at least two occasions before. The dispute which has arisen has affected our relations with Argentina, it has affected the relations between Argentina and the Falkland Islands and has made relations between them extremely difficult and distressing to the islanders. It has given rise to the United Nations resolution requiring us to discuss this matter with Argentina, and we are so discussing it.
LORD CARRINGTON: My Lords, is the position then this: that the Argentine Government at the moment are insisting upon the transfer of sovereignty? I do not ask the noble Lord to comment on the Press report of what an Argentine Minister has said in the Argentine—unless he is implying that he says one thing in public and another thing in private. Is the position this: that the Argentine Government are insisting upon a transfer of sovereignty and Her Majesty's Government are continuing to negotiate in the hope that they can get negotiations short of transfer of sovereignty? And may I just put this point to him? Is he aware that it is necessary for those of us on this side of the House to ask him either to confirm or deny rumours since the rumours are circulating because there is deep suspicion of the Government's motive?
LORD CHALFONT: My Lords, I can only say, as I said before, that I am sorry that that suspicion exists, but I still do not believe it any justification for believing the wild kind of rumours that the noble Lord produced in the House this afternoon.
EARL ST. ALDWYN: He did not say he believed it.
LORD CHALFONT: But let me get back to this question of why we are discussing this and what we are discussing. The noble Lord really must get up a little earlier in the morning if he wants to put that kind of question. What is happening is that the Argentine Government have claimed sovereignty over the Islands. This is what the discussions are about. And to say that you can discuss a claim that another Government has made on the sovereignty of the Falkland Islands without in fact talking about the sovereignty of the Falkland Islands seems a most

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extraordinary suggestion. This is what the claim is about. It is this claim to sovereignty that we are required to discuss with the Argentine Government. That is what we are discussing.
LORD BLYTON: My Lords, is my noble friend aware that the Conservative Party, now that they think that they are on the ascendency, will kick us at every step? Is not the fact this—I put a simple question—that our policy is that we will not abrogate the sovereignty of the Falkland Islands unless the people decide so for themselves?
LORD CHALFONT: My Lords, yes, I should like to endorse everything that my noble friend has said. We will not transfer sovereignty against the wishes of the Islanders. I say it again and I hope that this may, for a little while anyway, be the last time.
3.54 p.m.
THE MARQUESS OF SALISBURY: My Lords, I am not quite clear: may I ask a single question? At one moment the noble Lord has said it is a matter for the inhabitants to decide and at one other moment he says that the whole discussion is over the question of who has the sovereignty of the Islands. If we hold to the position that the Argentine nation have no claim to sovereignty over the Falkland Islands, why do the feelings of the inhabitants of the Islands come into it at all? I should have thought the natural thing for us to have said to the Argentine is, "We don't agree, and there is therefore no further basis for any discussion."
LORD CHALFONT: My Lords, I think that we are likely to get ourselves confused unless we use the words that apply to this particular dispute accurately. I never said the Argentine Government have no claim to sovereignty; that is exactly what they do have. We say the claim is invalid, but for the reasons I have outlined we are discussing that claim with them. Although we believe it to be an invalid claim, we are discussing it with them like intelligent human beings engaged in the prosecution of international relations in the 20th century. So far as the wishes of the islanders are concerned let me make one thing clear, because really
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there seems to be an almost cosmic amount of confusion in the minds of noble Lords opposite. The sovereignty of the Islands belongs to us. It is we who decide whether that sovereignty can be disposed of and, if so, how. We have said we will not so dispose of it against the wishes of the Falkland Islanders. Surely that must be clear to everybody.
THE MARQUESS OF SALISBURY: My Lords, the noble Lord seems to think that we are silly; we think that he is "shifty"—and very "shifty".
LORD CHALFONT: My Lords, I am sorry if the noble Marquess—
LORD BOWLES: "Too clever by half!"
LORD CHALFONT: —allows his passion in this matter to overcome his good judgment. I do not think that noble Lords opposite are silly: I think that they are confused; and I hope that in saying what I have said I have made it clear that it is for Her Majesty's Government to decide upon the sovereignty of the Falkland Islands, which we believe to be ours in law. We shall not make any decision about that sovereignty without consulting the Falkland Islanders and we shall not make any disposition without their consent or against their wishes.
LORD CARRINGTON: My Lords, may I try just once more?—and I am sorry if I am confused, but I do not think it is entirely our fault. The noble Lord has said that the discussions are solely about sovereignty—
LORD CHALFONT: Will the noble Lord give way? I am constantly being misquoted and, for once, I really must object on the spot. I did not say "solely about sovereignty"; I said they are about sovereignty. They include the question of sovereignty and I asked him how he thought we could discuss an Argentine claim to sovereignty if it were excluced.
LORD CARRINGTON: My Lords, the noble Lord must not get so excited—
SEVERAL NOBLE LORDS: Oh!
LORD CARRINGTON: —and perhaps when he reads what he said—Does the noble Lord, Lord Bowles, wish to interrupt?
LORD BOWLES: Yes; I should like to see you keep calm.
LORD CARRINGTON: The noble Lord will read what he said in the papers—in Hansard—to-morrow, but I understood him to say that the whole of this claim was about sovereignty. If I am wrong I will apologise to-morrow. May I ask him if, as apparently is the case, the Falkland Islanders do not wish for a transfer of sovereignty what there is to negotiate about with the Argentine Government?
LORD CHALFONT: My Lords, perhaps it is time that everybody got a little calmer, because the noble Lord has now shifted his ground slightly.
SEVERAL NOBLE LORDS: No.
LORD CHALFONT: I did say—we really must be careful about the use of words in this important issue—that what the Argentine claim was about was sovereignty. I did not say that the discussions were solely about sovereignty. I hope at least that that is clear to noble Lords opposite. I hope that the noble Lord, like myself, will read my remarks in Hansard to-morrow, not in the papers, and if he does I think he will see that I made the position quite clear: that we are engaged in these discussions, we have to dispose of the sovereignty and we will not so dispose of it against the wishes of the islanders.
THE EARL OF SWINTON: My Lords, may I ask the noble Lord one question, entirely without heat, but which I think does properly arise? Are these negotiations entirely confined to the Falkland Islands or do they include the dependent territories?
LORD CHALFONT: My Lords, they are entirely confined to the Falkland Islands.
LORD BARNBY: My Lords, arising out of the reply which the noble Lord, Lord Chalfont, has just given to my noble friend, in which he referred to the United Nations, and in view of the fact that he doubtless now has first-hand knowledge of the attitude of the islanders and there is, to use his own words, some danger of confusion in this matter, would he now be able to reply, or give some elucidation, as to why we must be subject to the dictation
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of the United Nations on matters of sovereignty? Last week when I asked him this question he said it was not relevant to the discussion; but if questions are raised with regard to other countries' rights of sovereignty, are all these, at the dictation of the United Nations, to be given respect to?
LORD CHALFONT: My Lords, I hope we can confine ourselves to the matter of the Falkland Islands, which is the subject to the Statement. So far as the Falkland Islands are concerned there is no question of dictation from the United Nations. I gave three basic reasons why we were conducting these discussions. One of them is the United States resolution which was passed by an overwhelming majority at the General Assembly. We did not vote for that resolution but we believe it to be right that in pursuit of that resolution, coupled with the other reasons, we should conduct these talks.
LORD BARNBY: My Lords, are our representatives at the United Nations challenging the right of sovereignty by Russia over any of her dependent Eastern countries?
LORD CONESFORD: My Lords, I am grateful to the noble Lord for the answers he has already given to me this afternoon and I hope I am not being stupid when I ask for this clarification. He says, as I understand it, that we are discussing sovereignty. We think that we have a complete right to it, but the Argentine has put forward claims. How long will these negotiations have to proceed before it is realised that we cannot agree on that subject? In these arguments about sovereignty, are they trying to persuade us that our view of the law is wrong? If so, is there any suggestion of the question going to some court? Or is it that we are trying to use this sovereignty in bargaining for some other advantage?
LORD CHALFONT: My Lords, if I may say so, I think that this is a perfectly valid point, but let me first of all dismiss the sting in the tail of the noble Lord's question. We are not using these discussions as any bargaining counter at all. I have already explained our reason for engaging in these discussions. The position is that we believe that we have

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a just and legal right to the sovereignty of the Falkland Islands. The Argentine believes the same thing. There are two ways of dealing with this. Either we can throw up our hands and say, "In that case, there is nothing to discuss." Or we can behave like intelligent human beings who hold different views and discuss them, with the hope that we can come to an accommodation. That is what we are doing.
LORD CLITHEROE: My Lords, is it not very dangerous to say "Perhaps" when we mean "No"?
LORD CHALFONT: Well, perhaps, yes.
LORD BLYTON: My Lords, does my noble friend the Leader of the House not think that the Opposition have had a long run on this Statement? I wish the Tory Party would fight against the iniquities in Northern Ireland as much as they are fighting a feud which is non-existent?
LORD WEDGWOOD: My Lords, one thing I cannot understand about this present discussion is that the noble Lord has repeatedly said that Her Majesty's Government have no intention of handing over the Falkland Islands to the Argentine against the inhabitants' wishes. Is it not correct that Her Majesty's Government should now consult the wishes of the Falkland Islanders?
LORD CHALFONT: My Lords, we have consulted the wishes of the Falkland Islanders, and the result of that consultation is that they do not wish this sovereignty to be transferred. So long as they are of that opinion, it will not be transferred.
BARONESS HORSBRUGH: My Lords, could the noble Lord say how long Her Majesty's Government intend to continue the negotiations?
LORD CHALFONT: My Lords, that is a totally impossible question to answer. We intend to pursue the negotiations so long as they appear to give some hope of success.
LORD REDESDALE: My Lords, would the noble Lord be kind enough to explain a little more to us what he referred to in his Statement as "satisfactory arrangements with the mainland"?
LORD CHALFONT: My Lords, I do not want to go into long details of what this signifies, but, generally speaking, satisfactory arrangements would include the restoration of some proper communications between Argentina and the Falkland Islands. At the moment, communications are very bad. There is no air service, for example. There are difficulties over post and over visas, both ways. The whole thing is in a very unsatisfactory state, and we should like, in the general context of these discussions, to make it more satisfactory.

INVISIBLE EXPORTS: B.N.E.C. REPORT
4.5 p.m.
Debate resumed.
THE EARL OF LIMERICK: My Lords, in rising to address your Lordships for the first time I would ask for the customary and generous indulgence of the House. My late father, whose name I am proud to bear, was known to many here present as a man of some wisdom and foresight. He adhered strongly to the view that those with no special knowledge of a subject, whether or not they be seen, were better not heard. For as long as I may have the privilege of a voice in your Lordships' House, I propose to adhere to this precept. Consequently I shall not often, or for long, detain your Lordships.
I venture to address the House this afternoon because I have some small knowledge in fields related to the subject of the debate. These arise from my employment for the last ten year, with an old merchant banking house, which has very substantial overseas business and of which I am now a director; from my prior training in the accountancy profession, and from my current concern, both through my own bank and through the Committee for Middle East Trade, which is an area committee of the British National Export Council, with the overseas work of consultants, architects, insurance brokers, accountants and other professions.
The Report before the House is an admirable and very valuable document. The Chairman of my own bank is now the Chairman of the Permanent Committee which has grown from it. I am glad to see that he is present to hear

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this debate this afternoon. I am aware that currently the influence of the Committee and the scope of its work are steadily growing. I think that one's first conclusion on reading this Report must be of wonderment at the scant attention which has previously been paid to invisible exporters in contrast to that paid to their visible brethren. When there are questions of concessions, of incentives, and even of exhortations, the invisible exporters have been the Cinderellas waiting to be called to the ball. Happily, the vital contribution which they make to our national economy has now become more widely recognised. I feel that it cannot be too often repeated that invisible trade accounts for over 35 per cent.—currently about 40 per cent—of United Kingdom total trade and that the net surplus of private invisible trade has consistently been more than sufficient to offset the visible trade deficit, excluding net Government transactions over recent years, Another and less remarked fact is that the proportionate contribution of Britain's invisible trade to total trade is consistently higher than that of other countries in the Top Ten. Here one must except Norway and Sweden, whose absolute figures are less than one-fifth of our own and depend respectively on shipping and tourism, whereas our own invisible earnings are very broadly based, right across the spectrum.
Given these figures, I would endorse the plea made by the noble Lord, Lord Aldington, who introduced this debate (incidentally, I must apologise to him for having missed the first few minutes of his speech), that we should make some small gesture of recommendation by extending the terms of the Queen's Award to Industry to include invisible exporters, whose contribution is no less vital to our national economy and is something that I should like to see recognised. Doubtless it would be of some help to Cinderella's morale, and she might realise an unexpected potential if the Fairy Godmother smiled on her in this way.
My Lords, I should like to refer briefly to three fields in which I think some positive action may yield beneficial results to our invisible earnings. The first is in the field of overseas consultancy work. Here I hope that the noble Lord, Lord Crowther, will have some more informed
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comments to make later. We know that the contribution which is made by these consultants working overseas is very considerable. There are no accurate figures available to us, but what I think is ignored is that the work of these consultants leads often to very substantial direct exports from the United Kingdom. Their work is often out of proportion to the value of the services which they performed in the first instance. Our British consultants have a world-wide and a most enviable reputation for impartiality. They suffer from three particular disadvantages when we compare them with our foreign competitors, these disadvantages being the result of regulations introduced in the first instance for other purposes.
The first, which has already been referred to, is the selective employment tax. If there is any merit in this tax—and this is a point on which I confess I am not yet convinced—it must surely lie in its selectivity. I know of consultants who earn 70 or 80 per cent. of their income overseas, whose staff, nevertheless, is fully liable to this tax, which shows a figure certainly in excess of 2 per cent. of their total costs. This 2 per cent. may be a vital factor in a competitive situation. S.E.T. is a very blunt instrument, and it is hard to believe that it is beyond the wit of some Parliamentary draftsman to give relief where relief is due.
The second point is that of credit insurance available to cover the fees earned by consultants. Here I am talking particularly of the area of feasibility studies. There is, I believe, a need for the Export Credits Guarantee Department to look with a sympathetic eye on these proposals. The credit of one or two years which is currently offered may lead to a loss of competitive edge. Also, the necessity is growing daily for associating with this cover an element for local work, because it is becoming more and more demanding and more necessary that consultants should engage local staff in connection with their work.
My third point, which I concede gives more difficulty because it is much more general in its application, is that where consultants, in furtherance of their efforts, set up businesses overseas they are unable to obtain tax relief for the early losses which would almost certainly be incurred in such a venture. These losses for

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partnerships still spreading from this country are difficult to finance.
My next topic is that of the banks, and in particular the use of sterling. The recent introduction of the Exchange Control General 67 notice, which withdrew consent for the use of sterling to finance third country trade was peculiarly unpalatable to banks, for three reasons. The first is that it was introduced without consultation—although there is no question of the right of the Government to introduce it. The second is that it followed immediately on the heels of statements by the Chancellor and by the Governor of the Bank of England in which they foresaw no diminution in the international importance of sterling.
My third point—and this is not in the nature of a complaint, but is, I think, relevant to the debate—is that the introduction of this measure appeared to be taken without sufficient regard both to the short and to the long-term effects on invisible earnings. The noble Lord, Lord Beswick, has commented already on this point. I see that the estimate now being used is £50 million sterling. But I think that a return of 8 per cent. payable in full in foreign currency is not a bad return on investment of this sort. As to the sum involved, doubt was expressed that it might grow and get out of control. This was strange to the banks themselves, because in the midst of the tightest credit squeeze of all time they were unable to extend their facilities even if they wished to do so.
I think, however, that the long-term effects of this measure are more serious than has yet been acknowledged. Banks have continuing relationships with customers which depend on the ability of the bank to meet the legitimate needs of the customers. When the customer is overseas, and the withdrawal from him of the right to finance in sterling is virtually without notice, he not unnaturally looks elsewhere for the sterling that he wants. He is not suddenly going to start financing in another country. He will take his business elsewhere and experience shows that, unfortunately, once this is done, it is extremely difficult to get the business back again. So that there are losses in other directions which are not to be measured merely in terms of this one regulation.
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Looking on the cheerful side, as the pound has become a relatively scarce currency, the banks have moved steadily and progressively into finance and foreign exchange. It is to be hoped that there will be growing recognition now among United Kingdom companies having international businesses—and here I include some of the public sector—that the British banking system can meet a large part of their needs throughout the world in all currencies. Let us hope that they will take advantage of their own national banking system.
Before leaving the subject of banks, I should like, in passing, to make one other point. I discovered recently a tendency among my friends to regard me as a "gnome". I do not feel like a "gnome", and I have never thought that I looked like one; and if one accepts the current Press definition of a "gnome", I am quite sure I do not act like one. The point I am making is that British banks are quite scrupulous over exchange regulations; indeed they cannot afford to be otherwise. Occasionally a customer may express a view to us on exchange parities relating to his current transactions—it is always entirely within the regulations—and to this we tend to reply: "This is your affair, but remember that as a maker of nuts and bolts it is not your business to take this view." Here we recognise a clear distinction between the letter of the law and its spirit.
I could quote examples within my own organisation of ingenious, lucrative and wholly legal proposals which offend against no exchange regulations, but which we have nevertheless turned down because we considered that they might result in a net loss in invisible earnings or a loss of foreign exchange to the country. If my colleagues and I are "gnomes", I suggest that the "gnome" may sometimes be a better citizen than he is always given credit for.
My last point is on portfolio investments and, in particular, on the effect of the provision that 25 per cent. of investment dollars shall be surrendered at the official rate. The thrift of past generations has produced not only substantial invisible income for the country, but also a vital line of defence in our reserves. In a time of stringency such as the present, one can have little complaint of inability to expand this sort of trade. I

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think, however, there is a legitimate complaint when one sees a constant drain on the small investment dollar pull imposed by the surrender provisions. This has adverse effects which I suggest are cumulative. In the short term there is a direct tendency to push the dollar premium ever higher, and this in itself is bad for confidence. In the medium term it leads to immobility in portfolios, and this can be shown mathematically and quite readily to reduce both the taxable incomes of the companies concerned and the value of the foreign portfolios with the investment dealers themselves. This, again, must be bad for the country and for British reserves.
Finally, in the long term this provision leads to stagnation, and it leads to a loss of management expertise. British-managed pounds consistently out-performed their American counterparts until this measure following on the birth of the so-called "Go-go" funds in the United States, and the managers of such funds in this country are now hesitating in their recruitment of the necessarily expensive staff—expensive not only because they have to be remunerated, but because it is necessary to finance their travel to keep in touch with the market.
We are most grateful to the noble Lord, Lord Aldington, for giving us an opportunity to debate this subject. The Committee on Invisible Exports have produced an excellent Report which covers much new ground, and leaves us now to look forward to their future works. It is much to be hoped that not only will their conclusions be remarked, but that their recommendations may now speedily be acted upon.
4.20 p.m.
VISCOUNT WATKINSON: My Lords, it is a pleasant task, as a colleague of the noble Earl on the British National Export Council, to congratulate him on his maiden speech. I think the whole House would perhaps wish, with some sympathy, also to congratulate him on picking up the threads of our debate again after a rather awkward pause, at least from his point of view. We listened very carefully to what he had to say, and, if I may venture to say so, I hope that the noble Lord, Lord Beswick, will also take note of one or two particular points he made, especially about the Queen's Award, which the noble Lord has already
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mentioned, and about the work of consultants, who I think are rather overlooked in their possible capacity for steering orders to Britain. So, if I may say so on behalf of the whole House, I very much congratulate the noble Earl and we hope that he will speak to us again before long.
I want to turn away to a particular aspect of our debate. I entirely agree with everything my noble friend Lord Aldington said, and said very well, so I do not want to cover the broad ground but wish to deal with one particular aspect which I should perhaps describe as a slightly more visible part of our "invisibles". Speaking as a member of the British National Export Council, I should like not only to join in the tributes to the late Sir Thomas Bland but to say a word of congratulation to Sir Cyril Kleinwort, who had to pick up all this work and has done a very great deal for the Committee in keeping it going and leading on to the formation of the new Advisory Council, which is a very valuable body.
Speaking now as a member of the B.N.E.C., I would say that our thinking at the time of the original Bland Report was that it should not include overseas investments and overseas earnings because it was known at the time that Professor Reddaway was then engaged on his massive study. It was therefore thought right that this subject should be not included in the scope of the Bland Report. None the less, it was clearly the view, and still is the view, of the B.N.E.C. that the invisible export package does contain, as a very large element, our earnings from overseas due to prior investment, as my noble friend pointed out. International investment as a whole was regarded as a good thing until about 1965, when the Government, for obvious reasons, began to voice doubts about this form of trading. It is only fair to say that the facts available did not weigh heavily enough on the side of the case of the real value of our overseas investments, and the first Reddaway Report, the preliminary one, was not only very complicated—that was not Professor Reddaway's fault—but very difficult to read, and seemed to give some support to a policy of applying disincentives to the various kinds of investments overseas that have been so much

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a tradition in the past of Britain's way of earning her living.
So the tax system—and I do not think there is any disagreement about this—has now been heavily weighted against this form of activity; and although companies still benefit by the limited tapering effects that have been introduced, these have only, I think I am right in saying, about another four years to run, and then the burden on companies conducting overseas operations will tax-wise be very heavy indeed.
It is also fair to say that it has not been much encouragement to many of us who engage in wide international operations that we are actually debarred by the terms of the Queen's Award from making any application, even if we wish to. Now we have the benefit of the full and final Report from Professor Reddaway and again I do not think there will be any disagreement if I say that at least its main conclusion is plain. It is that direct investment by Britain overseas strengthens our balance of payments on current account. Again, to be perfectly fair, I know it can be said that one cannot invest a deficit, and the noble Lord, Lord Beswick, has said that. Secondly, it is only fair to say, too, that one has to find the money to make the investment, and that is a charge against the short-term balance of payments. That, too, I agree with, and I think it is only fair to say so. But, in forming the judgment, I want to put this point—and I think it is a very difficult one for the Government. If it could be shown that we could increase Britain's total earnings of foreign currency, and thus improve our balance of payments, by a policy which restricted Britain's overseas trade almost entirely to direct physical exports sold for cash over the counter, then it would clearly be right to apply heavy discrimination against overseas trading operations.
Let me give a short illustration, in terms of a mythical exporter whom I will call Mr. X, of why I think there is a very grave danger in pursuing this policy. Mr. X's company develops a new product. He wants to play his part in Britain's export trade. He does his homework; he researches an overseas market and launches his product there, and it is a dramatic success. Immediately his exports begin to leap up, and no
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doubt he would have every right to receive the Queen's Award, and all the rest. But, because of his very measure of success, Mr. X's product begins to hurt the home manufacturers of the product in the market to which he is exporting. I know that this story is very familiar to the noble Lord, Lord Brown, and to many other noble Lords. In other words, Mr. X's export begins to damage his competitors in the home market to which he is exporting.
What do they do? They go along to the authorities. They say, "This will be making our workers redundant. This will reduce our payment of taxes. This will harm our balance of payments". These are rather familiar words. So, despite the safeguards of GATT and everything else, a way is found—and a way always can be found—to make life difficult for Mr. X's product in this particular export market. Well, Mr. X now has a dilemma. What does he do? He may say, "All right; that is the and of that. I have to face steeply decreasing sales in this particular market. Or am I going to make a fight for it?" He makes a fight for it. So he first employs a local agency which imports his product and perhaps helps to distribute it. That does not get him by, so in the end he is forced to set up a local company and, being a wise man, he starts it with local people and has a board of local citizens, and he is back in business. But he is no longer a direct exporter. If you lice, he is no longer entitled to the Queen's Award and should presumably send it back.
But the point I want to make is that his choice—the noble Lord, Lord Frown, would not, I think, disagree with what I am saying in general—was really no choice at all. He either had to give the whole thing up, or he had to get into overseas operations as a way of saving that particular export market. This, frankly, is the dilemma that many of us have faced. We have tried to solve it in the only way we could, and of course one then has to put some money into the market. Then one has to go through all the painful and unpleasant business of going to the Bank of England and being told that, while there is no direct legislative bar to one's doing this, one will be regarded as not acting in the national interest in sending capital out of the

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country in order to save one's export market.
I am not saying that there are not ways round this situation. I am not saying that the Bank of England cannot be helpful; and one can sometimes borrow the money abroad and so on. But the dilemma that I wanted to stress particularly this afternoon is that there is not a simple choice between saying, "The right course and policy is to apply all the disincentives to overseas investment, because that must be good for the balance of payments", and saying, "It is to apply all the incentives to direct exports, because that also must be good for the balance of payments". The argument is not nearly as simple as that, and I beg that when firms face this kind of situation the kind of argument I have tried to put, as fairly as I can, is taken into account.
To try to make a helpful suggestion here, rather than a critical one, I would say that I often wondered why it is not the Board of Trade that is entitled to be consulted about this kind of problem. I am not sure that I do not carry the noble Lord, Lord Brown, with me on this point. Why is the Board of Trade not consulted when one faces this dilemma? It at least knows the standing of the firm and whether or not its story is probably correct. Why is it that one has to go to the Bank of England and that they are the ultimate and final arbiter as to whether or not one can get on with one's business? So, to try to make at least one constructive suggestion, I hope the Government will consider giving the authority in these difficult cases where clearly an exporter is trying to save his market in the only way he can, by switching over to overseas investment and thus overseas operations, that at least the Board of Trade could be called in to give a commercial judgment which, with all respect to the Bank of England, I do not think they are always well fitted so to do.
So I hope that, in taking note of the Report of this most able Committee, the House will accept what my noble friend has already said, and what I am sure pretty well every speaker in this debate will say, which is that Britain's trading future can be secured only on a "mixed bag" of export operations. If we delude ourselves into saying that one kind of
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operation is good and another kind of operation is bad we shall get into a difficult mess. Not only that, but even in the relatively short term we shall not secure the sort of results for which we are looking; and, as I have said, if controls have to be applied—and I suppose they do—at least let them be applied by a commercial Department like the Board of Trade, rather than by a financial institution like the Bank of England. For all I know, the Bank may go to the Board of Trade for advice and clearance, but if so they do it privately. Why should they not do it publicly? At least that would give a firm a greater assurance that their particular case (of the nature of the one I have outlined) had been properly considered.
There is one other point that I should like to make, because I think that in these difficult days it is easy for Governments, and for us all, to take excessively short-term views, and I am not sure that these are going to help even our medium-term position—and surely we are all at least interested in the medium-term position. As one so often is under pressure, I feel that we are being driven into shorter and shorter views, into eating next year's seed corn, and doing all the things we ought not to do. I tried to give one example in the too rigid rules that today are stopping quite a number of firms holding on to export markets where they have to switch from direct exports to overseas operation. I can also give instances of a number of firms that want to hold control of overseas firms which want to increase their capital. Again they may have to cede control if Britain cannot provide, or the firm cannot provide, the right proportion of the shares for an increase of capital to hold that control. I cannot feel that this is in our interest.
As another example of this short-term thinking, I feel that in the same way as we are tending to concentrate on "flogging" what we can in the short term for cash we also concentrate too much on the narrow idea that in some ways we are a kind of trading satellite of Europe. If we were to adopt this more liberal attitude to overseas investment, we should find, to give an example which I certanly personally know about, that there is no difficulty in getting into the E.E.C. There is no difficulty in trading

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profitably and expanding within the European Economic Community if you have taken the elementary precaution of either merging with a company there, setting up a company or buying your way in. You are then inside and you can flourish if the Community flourishes. If we had done more of this we should now be a fairly dominant financial influence inside the Community, in the same way as the Americans have done, merely by not arguing about politics and policies but going in and buying up companies and putting capital in.
There is another side to this problem, therefore. We could have established a much firmer base inside the Common Market if we had adopted the more liberal policies of encouraging firms to establish overseas operations. However, in mentioning this as an example I hope it will not be felt that I believe we should give some kind of special treatment to the E.E.C. In my view, encouraging firms to increase their investment, or to put an investment into Australia, is equally important—and perhaps more so—in the long term.
So I only wish to say that our short-term view of exporting, perhaps forced by events but none the less very bad, even in the medium term, for our country, is also being paralleled by a similar short-term view on our international markets. We seem more and more to think that every overseas marketing policy should be subordinate to our entry into the Common Market at almost any cost. I support our entry into the Common Market, as I always have done, but we must not take our eyes off chances in Australia, for example.
We must be ready to talk to the new American Administration as soon as it is formed, not only on how best they can push us into Europe—which I think is a short-sighted view that we might take—but saying to them, "We must be a world trading Power like yourselves. We cannot be as big as you are, and we are no longer as powerful and significant as you will always be in the world, but at any rate let us talk as a world trading partner and not as a subordinate, whom you will regard as somebody to be pushed into Europe in order to help the European situation, perhaps for the Americans' own ends". Time will not
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wait on this, my Lords. I think it is the middle of January when thc new President takes office, with his new Cabinet, and I hope we shall approach them in these broad terms. I do not make any particular plea for any set of initials, whether it is AFTA or NAFTA or E.E.C., but do let us talk to the new American Administration as a world trading partner and not as a small country that wants to become an appendage of Continental Europe.
What I have tried to say is this. Despite all the difficulties (and one cannot have been a Minister for al long as I was not to appreciate the difficulties that the Government must see themselves surrounded with at this time: though most of us feel that they have not surrounded themselves with the right difficulties—but we cannot go into that now), I do not think it wrong to press—perhaps to beg—the Government at this time to try to take the broadest view of our trade and to go for the "mixed bag" and not for the narrow division. Secondly, in seeking markets in the trading world let us make it the world and not the smallest possible market.
4.38 p.m.
LORD REMNANT: My Lords, it is with some diffidence that I rise to take part in this debate, realising as I dc that there are many noble Lords who have much experience and knowledge or this subject. Indeed, this afternoon we have had another example of that in the speech made by my noble friend Lord Limerick, with whom I am very glad to sneak for the first time in a debate in your Lordships' House. Nevertheless, I am emboldened so to do in the deeply held belief of the value to the people of this country of the financial expertise which is available to them in the City of London. This is available to them not only directly as individuals but also indirectly, due to the valuable part which the City of London plays in the economy of the United Kingdom as a whole. Therefore, I trust that my comments may be of some assistance in our deliberations on this subject.
Where quoting specific figures, I intend to take those of the investment trust movement, partly because this is a sphere of which I can claim some knowledge—and here I should declare an interest,

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since I am a director of a number of companies which themselves have overseas interests—partly because useful figures are readily available relating to overseas portfolio investment uninfluenced by extraneous factors, and also partly because the investment trust movement is a fair example of a combination of a number of private individuals and corporate bodies combining to take advantage of professional investment knowledge in the City of London.
The contribution which has been made to the country's invisibles by the appreciation in value of overseas funds has been substantial. We know that in so far as dollar assets are concerned, the value of those assets held by investment trusts increased over the five-year period from December 31, 1960, from 1,352 million dollars to 2,142 million dollars—an appreciation of 58 per cent., which includes nothing for the net cost of dollars purchased through the investment dollar pool. This appreciation of 790 million dollars has been achieved at no cost to the country, for the operation of the investment dollar pool ensures that any new dollars acquired can be purchased only from existing United Kingdom holders.
We have, therefore, in the investment trust movement alone a substantial increase in the value of overseas assets at no strain on the country's economy. More than that, however, there is a yearly benefit to the country's reserves due to the receipt of dividends and interest in dollars, exchanged at the Treasury at the official rate of exchange. Here again, for the investment trust movement alone, over this same five-year period from December 31, 1960, these yearly receipts have increased from 38 million dollars to 62 million dollars. This covered a period of relative freedom in investment management and may be taken as some sign of success by professional investment managers in those conditions. Since that date it has been necessary to restrict overseas investment in various ways. As a result, the previous remarkable growth has not continued, and we find that the value of the overseas assets of investment trusts over the two year period from December 31, 1965 has remained static. The yearly receipts of dividend and
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interest as estimated for 1968 is the same as that for 1966.
May I now refer to the programme of voluntary restraint? On May 3, 1966, in his Budget Statement, the Chancellor of the Exchequer brought in a voluntary programme for the restriction of overseas investment. In so far as portfolio investment is concerned, the aim was to ensure that there was no significant increase in total holdings of the relevant securities by the corporate investor over the subsequent period. The area of restriction was divided into two halves, first, the developed sterling area, comprising Australia, New Zealand, South Africa and Eire, and, secondly, countries outside the sterling area. In so far as investment in the latter area is concerned, it was already regulated by the operations of the dollar pool, which in effect mean that British investors as a group may not in any event increase their stakes in those investments. In so far as the developed sterling area is concerned, the effect of the voluntary programme has been to prevent the skilled institutional investor from participating in expanding economies such as Australia.
It is worthy of note that in spite of the recent heavy fall of Australian share prices the Sydney all-share index has improved from its level of May 3, 1966 (namely, the start of this programme of voluntary restraint) of 327 to its present level of 570. This does not reflect any increase in pound sterling terms due to devaluation. During the whole of this period it was open to foreign investors in European countries to take advantage of this situation. These voluntary restrictions did not apply to the private individual but solely to the corporate investor. We have, therefore, the anomalous situation that the private investor may invest his savings wheresoever in the world he desires, subject only to the normal exchange control regulations, whereas if he is prudent enough to take professional investment advice by placing his savings through the medium of investment trusts or insurance companies, the investment of those savings is inhibited in the way in which I have described.
I do not seek to question the right of the authorities to take whatsoever action they deem necessary in any situation as it arises. It is, however, important that those authorities should appreciate that

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restrictions of the type which I have described, if remaining in operation for lengthy periods of time, have a lasting and increasingly adverse effect on the appreciation in value of the overseas assets of this country.
May I summarise under two headings. First, I believe strongly that the City of London through its professional investors has benefited the economy of the country through a steady build-up of overseas portfolio investment. Secondly, I believe that best value can be taken of this expertise if it is enabled to operate without restriction. I trust that this can be achieved before too long.
4.47 p.m.
LORD TANGLEY: My Lords, I am very happy indeed that it falls to me to congratulate the noble Lord, Lord Remnant, on his maiden speech. Many of us knew his father he was an old friend and colleague of my own, and it has been a great joy to me in the City to appreciate the growing respect for the wisdom and judgment of the present holder of the title. We have seen glimpses of it in his speech to-day, and I hope, as your Lordships all will hope, that we shall have a fuller view of it in many speeches in the days to come. While I am on this subject of congratulations, may I humbly add my own to the noble Earl, Lord Limerick? I thought that both these maiden speeches were just the sort of speech which your Lordships love to hear, quiet, thoughtful, informative and useful, and I hope that we shall hear many more of these from both our maiden speakers to-day.
I am going to profit from the wisdom of the noble Lord, Lord Remnant, by descending from the general to the particular. It is almost impossible to take part in a debate of this kind—and we are all indebted to the noble Lord, Lord Aldington, for introducing it—without dealing in generalities. Generalities, however, are rather unreal, because the invisible exports are an aggregation of all kinds of activities, and I am going to invite your Lordships, as the noble Lord, Lord Remnant, has done, to consider one. It would be possible to take many others, but I think it would be helpful just to consider one, and I am going to ask your Lordships to consider in a little more detail than did the noble
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Lord the contribution of investment trusts to our invisible exports. I refer particularly to the dollar assets of the investment trusts.
I have to declare an interest. I am a past Chairman of the Association of Investment Trusts, and I am a director of a number of investment trusts and actively concerned in their management. As many of your Lordships know, and I hope, may I say, to your advantage, the main advantage of an investment trust is that it provides expert management, a world-wide intelligence system and a diversification of risk for the modest investor which only a very wealthy and large investor could hope to obain for himself. Most of our holders are quite modest investors. Diversification means not only a spread of investments, with their accompanying risks, over concerns in this country but also participation in the dynamic economies of countries abroad, and particularly, I would mention, in the United States and Canada. It is these dollar investments that I particularly want to refer to this afternoon.
Prior to the last war substantial dollar investments had been built up t y the investment trusts and by other institutions. During that war, quite rightly and properly, most of these investments were taken over by the Government and disposed of on the market for the purpose of raising dollars. In the in crests of winning the war this sacrifice of capital assets was amply justified. I may say, in passing, that the marketing was most successfully carried out by one of the ablest investment trust managers whose services the Government secured for this purpose—I refer to Mr. Carlyle Gifford, of Edinburgh, to whom we all owe a great debt of gratitude for his work in that connection. However, the sad result of the disposal of these investments was that at the end of the war the investment trusts were left only with those investments which the Government had not thought it worth while to take over. They had sunk to a very low level of value.
Contrast the position twenty years later, in 1966. The value of the trusts' dollar investments had risen to not less than £900 million, and the income annually remitted to this country and converted into sterling amounted to 62 million dollars that is, about £22 million.

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This is a remarkable achievement, I suggest, and your Lordships will probably agree that the Prime Minister was perfectly right when, not so long ago in an important speech in New York, he claimed that these assets constituted one of the invisible supports of sterling. I would guess that if you added to the investments of the investment trusts those of other institutions, you would probably be able to treble the figures that I have given. The figures I have given are accurate and can be relied upon; the rest are guesswork.
How have these funds been built up? It is most important to realise that they have not been built up by sitting back and peacefully riding upwards on the back of the "Dow-Jones Index". Every individual investment is carefully and continuously watched. In this task we are aided by a host of agents and friends all over the United States working with us and for us and constant contact is made by innumerable personal visits. If we believe that the management of a company is slipping, or that an industry is declining, or that a particular company is not holding its own in its own industry, or that the price has risen to a point where the yield is not commensurate with the risk involved, then we sell out and we reinvest in something we believe to be more promising. It is this process, which goes on day by day, all through the year, that is called portfolio management. There is no mystery about this. But anything that impedes this skilful portfolio management impedes the growth of these assets.
Your Lordships may ask, and I think rightly: what net outflow of sterling into dollars has been involved in this great growth of assets? The answer is, none at all. Throughout the period of twenty years to which I am referring we have been subject to exchange control regulations. One effect of these regulations is that it has been impossible, as the noble Lord, Lord Remnant, reminded us, to obtain dollars to buy an investment except from some other resident in the sterling area—who has dollars available through the sale of an investment.
LORD BALOGH: My Lords, may I ask the noble Lord whether he would
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not agree that certain current income up to 1965 entered the dollar pool, amounting, roughly speaking, to between £60 million and £80 million?
LORD TANGLEY: My Lords, I was going to mention that point in a few moments, if I may be allowed just to follow out my argument.
This growth of assets to which I have referred has been financed entirely out of the existing stock of dollars. These dollars are known as investment dollars, and the stock of them is known as the investment dollar pool. Not surprisingly, these investment dollars command a substantial premium in the market. This is sometimes called the dollar premium, but it is not really a premium on the dollar at all. You buy your dollars at the ordinary current rate of exchange, but in addition you pay a premium in order to find a resident in the sterling area who is entitled to sell you these dollars. Naturally, this premium varies from time to time according to the state of supply and demand. In recent years it has been rising rapidly and is now in the region of 50 per cent.
My Lords, I have gone over the history of this matter in order to explain the build-up of this great national asset and the way in which it has been done. It has been greatly to the advantage of the nation, and one might reasonably expect encouragement to continue the good work. Unfortunately, every possible obstacle has been placed in our path. I know that, as the noble Viscount, Lord Watkinson, indicated just now, there are reasons for it. But this is the effect. I will refer only to two of the obstacles. The first is the provision with regard to corporation tax—which has already been mentioned indirectly this afternoon.
When corporation tax was introduced provision was made to avoid double taxation of the same profits. So if an investment trust invests in a British company and that company pays corporation tax, dividends from that company received by the investment trust do not suffer corporation tax again in the hands of the investment trust. This is what we call franked investment income. But, my Lords, this provision was deliberately limited to British companies. Where an investment trust has invested in an American company, the American company pays

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American corporation tax and the investment trust pays British corporation tax on the dividends it receives; it is not franked investment income.
The double taxation treaty with the United States was re-negotiated, with the effect that the investor in effect pays double tax, American corporation tax and British corporation tax. The only allowance is for the American 15 per cent. withholding tax. This provision was introduced in order to discourage the process of building up dollar assets which I have tried to describe. I accept as reasonable, as any reasonable man must, that in a period of dollar stringency there must be some control of the amount of dollars bought for investment abroad. This control can be exercised by the Treasury so long as the emergency continues, through the administration of the exchange control regulations. But what has been done is to write a permanent disincentive into the very structure of our tax system. Surely that is a dreadful thing to do. Too little is perhaps known about these somewhat recondite provisions; that is why I am taking up your Lordships' time to make the point as simply and emphatically as I can in this debate.
The second impediment to which I refer has already been mentioned, and is the requirement that if a dollar asset is sold, 25 per cent. of the proceeds shall be surrendered to the Treasury at the current rate of exchange regardless of the dollar premium. With a dollar premium standing at about 50 per cent., this represents, in effect, a capital tax of 9 per cent. on the sale of a dollar investment. If your Lordships would be good enough to recall my description of how a portfolio is managed and built up, it is not difficult to see what a dead hand is imposed. In addition to the considerations I have mentioned which call for a change of investment;, we now have to take into account this capital tax which greatly inhibits the proper management of the portfolio.
I believe—and perhaps I may have misunderstood the noble Lord on this point—that the Treasury is receiving some £60 to £70 million a year through this arrangement. What the Treasury does with the money I do not know. If this money goes into the reserves, the monthly statement of which, of course, is awaited all over the world with bated breath, all
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that has happened is what a trader would do if he took stock off his shelves in his storeroom and put them in the shop window. That is no addition to the stock. The trader would be guilty of self-delusion if he valued his stock in that way and thought that he had added to his assets. Certainly if he added to the value of his stock in that way for the purposes of a prospectus, I am afraid that the Director of Public Prosecutions would look upon him with a very jaundiced eye. If the Treasury utilises these sums for the repayment of debt, then they are using what is virtually confiscated capital to repay current debts. This, to echo the words of the noble Lord, Lord Cromer—repeated here to-day by the noble Viscount, Lord Watkinson—is "eating the seed corn".
My Lords, I am grateful for your Lordships' forbearance in allowirg me to come down from generalities to particulars what I have been saying can be illustrated from many other activities which lead to invisible exports—but I have done so in order to put the situation in the simplest language that I can think of. My plea is that these impediments to the successful management of an existing dollar portfolio—and I emphasise "existing" dollar portfolio—are contrary to the national interest and should be removed.
5.2 p.m.
LORD MANCROFT: My Lords, like the noble Lord, Lord Tangley, to whose interesting speech we have just listened, I too would like to concentrate on the dollar market. I should like to do so because it is the market with which I am most familiar by reason of my chairmanship, which I took over some 18 months ago from my noble friend Lord Watkinson, of the American Committee of the British National Export Council. I do not think this is entirely irrelevant because the United States and Great Britain between them account for over 40 per cent. of the world's total earnings in invisibles. I believe that this country's share this year will be nearly £400 million, and the American share will be not far less. I use the word "believe" advisedly because the statistics are a little confusing. The Board of Trade and the United States Office of Business Economics do not use the same methods of calculation. For instance, I think the

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figures for transportation in the American figures are also counted in visible export figures so far as c.i.f. are also included in these.
This is a problem, and it is quite an important one, which my friend Mr. Cyril Kleinwort's Committee might investigate when they come to rationalise some of the economists' language in our two countries. My noble friend Lord Aldington referred to the strange jargon of the economist, and how right he is. Mr. Kleinwort's Committee might also deal with the dubious use of the word "average" in calculations used by both the Americans and the British. I suppose if a man is standing with one foot in a refrigerator and the other on a red hot stove you might say, on an average, that he was fairly comfortable, but this is not an argument which I think should be used in a precise science.
We have heard much this afternoon about banking and insurance, and they obviously occupy a prominent place in our invisible export earnings. There is a difficulty in the American market of precise assessment of how we are faring, and because the protectionist lobby in America is still fairly strong reticence is advisable. Neither the British insurance world nor the British banking world like to be over-vocal about their achievements. Indeed, you can find many Americans at a fairly humble level who do not actually realise that they are working for a British firm—and I think it is an understandable state of affairs.
Insurance has had a rough time in America in recent years, as we all know. Nevertheless, 50 per cent. of insurance on the Boeing 747, the 360-seater, has been placed on the London market which shows at least that the Americans still have confidence in our insurance stability. Americans are queueing up to become members of Lloyds, not a cheap occupation, particularly in view of the disastrous years through which Lloyds have recently gone, and this mostly arising from losses arising from American
I should like warmly to support the remarks made by the noble Lord, Lord Remnant, and the noble Earl, Lord Limerick, in the two excellent maiden speeches to which we have just listened, in hurricanes.
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which they stalwartly defended the "gnomes" of the City of London. They require no defence in America, where the expertise of the City of London is widely acknowledged and widely respected. Regret is frequently expressed in American commercial circles that this expertise is sometimes lost in political subservience.
The other invisible export to which I should like to draw attention may surprise your Lordships. A cynic would say that the most obvious invisible export in the American market at the moment is the British motor car. I say that as a result of having stood on the steps of Pittsburgh University last Friday afternoon and watched the graduates departing. I had been lecturing at Pittsburgh University on the British economy—not an easy task at the best of times. My task was made no easier by the fact that half-way through my speech a note was passed up to me informing me that the Prime Minister and the Chancellor of the Exchequer had both resigned, thus somewhat unbalancing my peroration. As the chairman was bidding me farewell, I looked around and all I could see was row upon row of Volkswagens. I could see no British cars at all. Of course I am being unfair—there are a very large number of British cars in America. We 'are doing better. The British motor industry has had a rough time with dock strikes, with the difficulties of meeting the American safety regulations, and indeed with the difficulties of meeting the demands which arise out of the acceptability of the article.
We have had much talk this afternoon about marketing. This is the point to which I wish to draw particular attention, because I regard marketing as one of the most important of our invisible exports. I am not being lighthearted in describing the absence of a British car from the market as an invisible export. But the reason for that, and the reason for the poor export performance—and let us be frank about it—of the British car trade in America is lack of marketing, lack of prompt delivery and lack of after-sales service. Nothing is more infuriating than to order a British car, which you know has done well and has a fine reputation, and to find that the firm has fallen down on delivery dates or that the car has been paralysed for six months for lack of some small part.

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The figures for British exports are happily rising. They are 28 per cent. up on last year, but the Japanese and the Germans are doing equally well if not better. We hear few complaints about the quality of our cars. The Austin America, specially designed as a second family car for this market, is doing well. It is being produced at the rate or 500 to 600 a week, and over 8,000 have been shipped already. Nevertheless, the complaints about delivery dates and after-sales service of other cars persist. They are too widespread to be ignored. I base this on the experience of eight visits to the United States within the last 12 months, and the complaint is widespread. We are getting better, admittedly. I am sorry to say this. I do not want to cry "stinking fish", but I must report the evidence of my own eyes and ears.
The two best British salesmen in America are a prompt delivery date and a stitch in time. I welcome, therefore, the improvement that has occurred in our after-sales service of late. The B.M.C. export of spare parts is up by 60 per cent., and a plants depot is being built in New Jersey at this moment. The same improvement applies to other British cars, but it also applies to the Japanese and the Germans who are making equal progress in this vitally important market. And why, my Lords? Because their cars are better? No; because their marketing is better, and also their prompt delivery and their after-sales service. Why has the Volkswagen been so successful? It is not a very new or distinguished car, but it has been supported by the most superb example of marketing in the whole of post-war commerce in the United States. A lot of nonsense is talked about marketing. It is really quite a simple operation. You find somebody who wants what you can make, you learn all about him, and then you look after him. That is all marketing is, and that is what the Germans have done with the Volkswagen. That is what we have failed to do in one or two notable examples.
I do not want to make a sweeping generalisation. Much of our marketing of British cars has been good, but too often we have fallen down on this basic principle. With the Germans, it has also been a question of public relations. A lot of nonsense is also talked about public relations. Public relations is merely the
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art of re-arranging the truth so that people will like you. That is what the Germans have done with the Volkswagen. They have repaired the aggressive and unhappy image which their war record had created by producing a timed and quiet little car called the Volkswagen, supported by a very fine piece of marketing and public relations. If only our industry can copy the invisible expert expertise which the Germans have put into the Volkswagen, a great improvement will be made in our own balance of payments.
If only the British motor industry, with, admittedly, their marked improvement in the last two or three years, could copy the British tourist trade in its marketing a further improvement could be claimed. This trade, as your Lordships know, is our biggest dollar earner. Here must declare a financial interest. As your Lordships may remember, I am a Deputy Chairman of the Cunard Line. Whether the sale of the "Queen Mary" and the "Queen Elizabeth" constitutes a visible or an invisible export the economists have not been able to explain to me, but I. am very happy with the idea of the old "Queen Mary" out in California and the Queen Elizabeth" now in Florida propping up the United States of A Tierica like a couple of gigantic book-ends. When I remind your Lordships that the tourist trade is the biggest dollar earner, I should like to pay a tribute to my noble friend Lord Geddes, Chairman of the British Travel Association, of which I, by virtue of being President of the London Tourist. Board, am a member.
Unless this should be immodest self-praise, may I call in evidence one of our sternest critics, the American travel industry, with this quotation from de current number of the Asta News, the American Society of Travel Agents News, written by Mr. William Patterson, a distinguished authority. This is what he says, referring to last year's programme:
"But the single most striking development was the decisive margin by which Great Britain consolidated its new position as the unchallenged No. 1 destination for American tourists in Europe. Some 868,000 Americans spent 190 million dollars visiting Great Britain, surpassing the traditional leaders, France and Italy, both on numbers of American visitors and on earnings from American visitors. France has traditionally welcomed more American visitors and Italy has heretofore earned more from American visitors than any other country in

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Europe, but Britain has not only moved ahead last year but clearly dominated both these vital tallies—the only country to do so in recent years and the first to do it two years in a row."
Now comes the point about marketing which I was seeking to apply to the motor industry:
"The British have proved one of the most basic laws of marketing. If you have a good product and promote it more steadily and more skilfully than your competitors, you will obtain a dominant share of the market."
That, my Lords, is what we in the tourist trade have done. We have moved up from fifth to first place, as regards the United States of America, since 1949. Here again I should like to pay tribute to my noble friend Lord Geddes and his staff for the part which they have played in that magnificent achievement.
This year we shall welcome something like 880,000 visitors. The rate by 1970, on a projection, will be running at about a million visitors from America each year. There are in America 4 million passport holders, all potential visitors to this country—unless of course the Americans change their policy in respect of export of visitors. You will remember that President Johnson attempted to impose an embargo on visitors out of America. It was not a law, merely on exhortation; but it did a great deal of damage to our trade because people obeyed it patriotically. President-Elect Nixon has gone on record as saying that he does not believe in such restriction, and we should heave a sigh of relief (though we do not ourselves come into court with clean hands, owing to our own absurd £50 allowance), but I am told that there is a risk that, even if President-Elect Nixon himself does not carry out such a policy, American officials in the Treasury may try to revive it.
Assuming that not to be the case, what is our policy in this country to reinforce the success? What policy have we in fact to increase the quality of our after-sales service to the Americans—this vastly lucrative invisible market—who have bought a holiday in Britain and bought it in America? I will not weary your Lordships with a detailed list of the things we could do. I will merely refresh your memory, and that of the noble Lord, Lord Brown, should he need it, with a few of the principal needs.
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We need, and we are still woefully short of, good middle-class hotels acceptable to American standards—this, despite the efforts of the noble Lord, Lord Crowther, and Mr. Max Joseph, and other hoteliers who have done a good job of work. I am happy to think that the Government are bending their minds to this and bending the taxpayers' purse to it. There could be no better thing to do. If only the Government will bear in mind what will happen when the jumbo-jet comes into service. Two or three days ago I was down in Atlanta, going over the Lockheed C.5A, a huge military aircraft which is capable, when converted to civilian use, of carrying about 800 people. Just imagine what will happen when two of those are diverted in a fog from London Airport to Prestwick or Manchester. I hope that we are making the necessary preparations.
I welcomed therefore, on a trip to Memphis, a visit to Holiday Inns, the biggest and most efficient American hotel organisation, who are planning to build about 100 new hotels in Europe, many of them in this country and a considerable number off the beaten track, in places away from the centre in places where they are badly needed, like Chester, York, Exeter, and so on. I understood them to say that they were meeting some difficulty in regard to planning regulations. I do not ask the noble Lord for an immediate answer to that question this afternoon, but if in due course, he could assure me that there is nothing untoward occurring in that matter, I should be relieved, because we welcome very strongly this American intervention of capital and know-how in providing a facility which is so badly needed. We also need more convention facilities, and more facilities for people visiting this country from America on business to show their wares. I hope that somebody in the Board of Trade has had a look at the trade marts in Atlanta and Dallas.
I now propose to do something which may horrify your Lordships. I propose to speak well of a Government Department—and the Foreign Office at that! There has been an immense change in the last three or four years in the attitude of the Foreign Office and of the Board of Trade towards our diplomatic representation abroad. The old days of the

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diplomatic representative whose sole occupation appeared to be that of exchanging pleasantries at cocktail parties on Nicaragua National Day have gone. There are some 20 diplomatic consular posts in America at the moment, and I have had the privilege of visiting all but three. They are now all highly commercial. Commerce is no longer a "dirty" word. Some are more expert than others. Some, or all, of them are making themselves as expertly commercial as they can possibly be. For this I think that we should thank the Foreign Office and the Board of Trade warmly, and particularly the present British Ambassador, Sir Patrick Dean, who is about to retire and who, with his officials, has paid special attention to this commercialisation of our posts abroad.
My only regret is that more British businessmen who visit America, this vitally important market, do not avail themselves of the services of the posts, and indeed of the advice and guidance of the four British/American Chambers of Commerce, which owe so much to my noble friend Lord Watkinson for their existence, and to your Lordships as taxpayers, for their continued existence, and which, in harmony with the 20 consular posts, provide British businessmen wishing to make their first invasion of this market with unrivalled expertise. I said "British businessmen", but in fact too many of them by-pass those offices; too many of them send the office boy. Americans do not want to see the office boy: they want to see the chairman. Let the chairman go there; and by all means let him take the office boy as well, and anybody else he wants to take with him to this inviting, welcoming, friendly and wholly lucrative market. The more people who go there the better.
5.21 p.m.
LORD CARRON: My Lords, I should like to be associated with the congratulations extended to the noble Earl, Lord Limerick, and the noble Lord, Lord Remnant, for the very interesting and excellent maiden speeches which they have delivered. I am sure that those of us who are interested in the subject under debate will have taken note of much of what they said. I sympathise with the noble Earl in his allergy to being included among the "gnomes". It is well-known
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that, unlike in an earlier period of my life, I now have some association with the City myself, and my allergy could be greater, because it is more likely that I would be taken for a "gnome" than the noble Earl—although, because of my Irish ancestry, it might be a leprechaun.
It has been said, and I am sure everyone agrees, that we should be tl- ankful to the noble Lord, Lord Aldington, for the way in which he spoke about this very interesting Report. Unlike the noble Lord, Lord Tangley, it is not my intention to dwell on it in detail; in fact, I shall roam rather widely. The figures contained in the Report are extremely interesting and illuminating and, in spite of interpretations of the figures—and interpretations of any figures can vary—the sum total is that our invisible exports play a very important part indeed in our economic well-being. We should regret very much indeed any serious disturbance of them or our being without them. I say that, because there are still quite a number of people—misguided people, perhaps; those who are not well enough acquainted with the subject—who would write off almost overnight the value of our invisible exports and would suggest policies which would do very serious harm in that field.
Consideration of invisible exports cannot be divorced from the institutions engaged in those activities. It has been said previously that those institutions and agencies located in the City play a major role to-day, as in past times. The expertise and status of those institutions are well recognised, and overseas it is acknowledged that they are excelled by none elsewhere in the world. With our natural propensity for self-denigration we here, as in most other cases, tend to be quite unjustifiably critical, where in similar circumstances other nationals would be boastful of achievements. While no one would be foolish enough to assert that the City institutions are perfect, least of all those who control them, nevertheless a good deal of the destructive criticism voiced springs from ignorance, suspicion and prejudice. Ignorance is the major cause of the suspicion, and to some extent of the prejudice.
Arising from many causes, some understandable, some not quite so evident, financial operations have tended to be, and largely still are, veiled in secrecy.

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Thus what is really a mechanism necessary for the conduct of trade and commerce in a complicated, sophisticated world assumes in the minds of the great majority of people something mysterious and thereby sinister. This gives a distorted and inaccurate picture. Naturally, attitudes so generated promote a degree of reaction and so unnecessary conflict ensues which can, and does, become both menacing and unnecessary. Fringe elements exacerbate this situation, and thus a picture is established which to people at home and abroad depicts a bitter feud between the Government and City. One hardly need dilate upon the dangers arising from this misconception, or upon the adverse impact it has on our national fortunes.
Of course there is criticism in the City of the policies of the Government; criticism which was also voiced of the previous Government, although possibly not so sharp as that which has emanated from some quarters in recent times. But is criticism of Government confined to the City? May I suggest that I have not found wanting in that respect those engaged in the manufacturing and service spheres of activity? In the trade union field is there not criticism? Apart from our natural bent in that direction, one would be more surprised if there were no criticism in times when, because of circumstances, Government have to apply necessary measures in the national interest—measures which bear quite heavily upon those affected.
Unquestionably, City interests of various kinds have been adversely affected and are naturally resentful. Surely it is realised that the City has not been singled out in this respect. Are not the people with whom I have such a long and close association affected by Government measures as greatly as City interests, possibly proportionately even more so? We all know that they are very resentful, but is it not a fact that many in the City consider unjustified the resentment by working people that they should have a halt in wages? It would be completely unjust if, in the position in which we find ourselves, one section of the community should be exempt from bearing at least a fair share of burdens which national necessity imposes.
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Arising from this kind of situation, there is a marked tendency for the assumption that, because the City has been adversely affected, the Government are pursuing some kind of vendetta against the City. Would it not be equally logical to assert that because working people have had to bear burdens, the Government are pursuing a vendetta against them? Surely that kind of assumption is the nonsense which I certainly believe it to be. I am equally convinced that there is no inbuilt vendetta in the City against the Government. There is criticism of Government on the one hand, and by Government on the other. Individual hostilities, yes; but not vicious, total antagonism.
Much has been said about the recent City rumours, and I should not wish to add much on that topic. What can and must be expressed is mortification and regret that the incident was so damaging to the country. While most of us would dearly like to know the origin of the rumour and to pinpoint the responsibility, I feel that investigation would be a futile exercise, with no result. Such rumours can never be traced to the point of origin. I myself could have theories. Such a rumour could emanate from agencies outside Britain. It should not be overlooked that there are substantial world influences who would be pleased to see the complete collapse of our Western financial system and to profit by the ensuing disruption and chaos. If to affect Britain or any of the Western democracies would help to bring about that situation, I have no doubt that any step would be taken to secure that objective.
May I just say that, parallel with assailment in that sphere, disruption of our activities internally, which has an adverse effect on our economic wellbeing, is a course which has been pursued by certain elements for a considerable time. It is not without significance that in recent times such disruption has increased in scale, with corresponding heavy impact on our unfortunate balance-of-payments situation. That is the area where, I consider, lies the real and vicious vendetta against the Government—difficult indeed to establish, chiefly because the vast majority of our people are unwilling to believe it.

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My Lords, in all debates concerning aspects of our economy international factors are mentioned, especially international monetary and exchange arrangements and institutions. Almost invariably heavy criticisms are voiced at the inadequacies of the regulating arrangements. The existing institutions and arrangements are far from perfect, and should be modified. That is a task far more formidable than some of the critics appreciate, but. I would say without hesitation that whatever may be involved there must of necessity be rules and codes of conduct. A considerable factor in the current unhappy and dangerous international monetary situation is the fact that those who devised and operate the system have almost all of them broken the rules. As is usually the case, everyone who has done so has the perfect excuse, just as the unpunctual individual always has the perfect reason for lateness. There is no doubt whatsoever that whatever mechanism is devised internationally for monetary exchange and trade regulation, rules will be necessary and obedience of the rules essential if effective operation is to ensue.
My Lords, everyone welcomes this debate on this important sector of our economy. I am sure that the recommendations made in the Report, many of which are now in process of study and, I would hope, of being brought into effect, will be further pursued; and I am quite sure that in the fields appropriate, short-term and long-term, the Government themselves will take notice of what has been said in this debate, and will take those steps which the present situation demands.
5.33 p.m.
LORD ABERDARE: My Lords, I was very hesitant about putting my name down to speak in this debate when I realised the number of experts that there are in this House, and I am even more hesitant now, having listened to the debate so far, starting with a brilliant introduction from my noble friend Lord Aldington and including a number of highly valuable contributions, including those from two well-qualified maiden speakers. But I put my name down for two main reasons. One was the, to my mind, immense importance of the subject, and the other was the excellence of the Report that is the subject of the
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Motion. I found it fascinating reading, and I should like to add my humble congratulations to the Committee responsible for it. Not only did I find it interesting to read, but I found it mercifully well arranged, in that one could read the arguments running through the chapters without having to bother with a mass of statistics and figures, which were relegated to an appropriate appendix to each chapter.
Whatever we may think of the individual recommendations and conclusions of the Committee, I believe there are two achievements that cannot be denied. The first is its historical analysis of the past in the matter of the balance of payments, and the second is its most useful pinpointing of the statistics required for the future if we are going to take proper account of our invisible earnings. The historical analysis, which appears in Chapter II, emphasises without any doubt the enormous importance of our invisible earnings. It takes figures for the last 175 years, in 168 years of which our visible trade has been in deficit. Yet in every one of those years we have had a surplus on our invisible account, and that surplus has always been large enough to cover the def cit on visible trade—if, of course (and his is the big "if" that was made by my noble friend Lord Aldington), we exclude altogether Government spending. This is the crux of the matter, as my noble friend made clear; and it is in view of some research on figures for th.3 last sixteen years that I should like to put these figures in a certain way to your Lordships. These are figures over the sixteen years from 1952 to 1967, which will shortly be published.
Over those years, on visible trade our deficit was £3,273 million. As against that, from the provision of services such as shipping, insurance and finance—but excluding any earnings from our overseas investments—purely the service trades, as it were, the invisible servicing for our exports, we earned £3,148 m Ilion, leaving an overall deficit of only £125 million over sixteen years in what might be called our private trading activities. When our net earnings from overseas investment are taken into account, that small deficit becomes a considerable surplus. But when, of course, further one

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takes into account Government expenditure overseas that handsome surplus is, unfortunately, more than swallowed up. Over a ten-year period from 1958 to 1967, whereas we earned net from our private investment overseas over £4,000 million, we spent in net Government expenditure overseas over £6,000 million.
My Lords, what can be done to put this balance right? The first, obvious method is to increase our exports to give us higher earnings from our visible trade. This is a familiar topic, and it is not the subject of to-day's debate. I do not intend to say anything more about it, except that I am sure we are all agreed that it is the right policy, and I know that all of us feel that the noble Lord, Lord Brown, is doing a great job in trying to achieve a greater export surplus. But I would point out two difficulties. One unfortunate one is that the countries whose currencies we most want to earn from our exports are themselves trying hard to achieve an export surplus, and we come up against the old paradox of international trade: that whereas it is a virtue to have an export surplus, it is statistically impossible unless someone else has an import surplus. The other difficulty arises, again, from the research to which I referred over the sixteen-year period 1952 to 1967, and this is that over this period, at any rate, our exports and imports had a tendency to balance. Over those particular years, our total exports were £83,670 million, and total imports £83.795 million. The suggestion which the figures show is cyclical swings but, in the long run, an overall balance. I only hope that the noble Lord, Lord Brown, can do better than the past statistics.
The second way in which we can improve our balance is by reducing Government spending overseas. I would assure the noble Lord, Lord Beswick, that I am not making a Party point. I fully realise that this is easier said than done, but I should like to make one suggestion, if possible. The noble Lord, Lord Beswick, knows my opinion that in our internal economy it is most important that our Government capital expenditure should be financed by raising loans in the market. I also feel that this should be applied to Government capital expenditure abroad. I mentioned earlier the excess of Government expenditure over net earnings from overseas investment, a
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figure of nearly £2,000 million. Of that amount, some £1,500 million was made up of overseas grants and loans, mainly to developing countries. This kind of grant and loan is essential; but it is, in effect, capital expenditure which we are trying to finance out of our income from overseas earnings. I wonder whether this kind of loan could not be financed by ourselves, raising the money from the World Bank. Could we not ourselves negotiate a long-term loan with the World Bank from which we could make grants and loans to overseas countries? The Report, on page 170, pointed out that our long-term creditor position is far stronger than our short-term debtor position. I wonder whether, in view of this fact, we could not negotiate a long-term loan which would give us the capital to make grants and loans and on which, as far as the balance of payments is concerned, we should be finding the annual interest.
The third method of improving matters is by increasing our invisible earnings, which is the subject of the Report we are debating to-day. Its importance has been abundantly proved and, above all, the Report points to the fact that the most important earner of our invisible earnings is overseas investment. Of all of the items that contribute this is the one which is growing fastest in absolute value and at a faster rate on average than it is elsewhere in the world. If one has had any military training I am sure one will remember the military adage: reinforce success. I feel that this is one very good reason why we should do our best to increase our earnings from our overseas investments. I take the point made by the noble Lord, Lord Beswick, that in times of financial stringency and balance-of-payments problems it is difficult to export capital which may affect the balance of payments. Yet I think it is worthy of notice that in the ten years from 1958 to 1967 the outflow of capital from the United Kingdom never exceeded the net inflow of income. In fact, over those ten years it was £800 million less; and while our income inflow from overseas investments has been rising at a rate of 8 per cent., our capital outflow over those ten years showed a slight decrease.
Like my noble friend Lord Aldington, and unlike the noble Lord, Lord Brown,

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I did read the Business Supplement of The Times this morning. I think it would be helpful if the noble Lord could comment on what is contained therein. If the report is true, I very much hope that this is an exercise for the purpose of following up the Committee's Report and of ascertaining facts rather than imposing restrictions. But I cannot help believing that in the long run our investment in great developing areas of the world, such as Australia and South Africa, will be of the utmost value to this country in the future.
My Lords, there is one vital question that affects the whole of our future earnings: Can we continue to expand our invisible earnings despite our difficulties over sterling and despite rising world competition? The Report throws up one hopeful example and one rather unhopeful one. The hopeful one—and a healthy feature—is the enterprise of the merchant banks and other financial institutions in developing a new international money market in Eurodollars and a new international capital market in Eurobonds. Whatever the future of sterling, these new initiatives will continue to bring invisible earnings to the City of London and deserve high praise. On the other hand, the Report contrasts with this the sad fact that we have lost our lead in efficient and low cost telecommunications. How we fare in the future will depend on the efforts of private persons and private companies; but will require the encouragement of the Government.
I conclude, therefore, that it is important to do all in our power to increase our visible export trade; it is important to economise on Government expenditure overseas and, if possible, to finance our long-term lending by ourselves raising long-term loans from the World Bank; and thirdly, and most hopefully of all, it is important to develop and to expand our invisible earnings, particularly our overseas investment income.
5.47 p.m.
LORD CROWTHER: My Lords, like the noble Lord, Lord Aberdare, I hesitated for quite a time before I decided to impose myself upon your Lordships for a second time within six days, but I reflected that I had perhaps some special knowledge of some sections of this country's invisible trade which might be useful to your Lordships, and that there were
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points that ought to be made that might otherwise go by default. In the end, I came to the conclusion that I should follow the advice of the poet, or, more accurately, of the poetess:
"So shall I join the choir invisible
Whose music is the gladness of the world."
Before I tune my harp to that particular song, I should like to digress for a moment to comment on the remarks made by the noble Lord, Lord Beswick, on the treatment in the Press of last week's debate—the relevance of which to our present purpose is that nothing is more important to the future and health of the invisible trade than that relations between the City and the Government should at least not be made out to be worse than in fact they are.
The noble Lord said that we had last week two sour speeches. He identified one of them, if I did not misunderstand him, as that of the noble Lord, Lord Shawcross. I hope that I was not the other guilty party. Let me say that I did not suppose that all my remarks would be found agreeable to the noble Lords who sit behind the Ministers; but I was, I thought, at great pains—as seemed to me to be only decent and proper in a maiden speech, and particularly by a newly enobled Peer—to make clear that I was not putting anything forward in a partisan spirit. I think I made only one reference—and that was of the most glancing kind—to the Government. I was therefore, I must say, surprised and disconcerted, indeed dismayed, to see myself billed in one newspaper on the following day as laying made—I have forgotten the exact words but it was something like "a vicious attack on the Government"; while another newspaper, one that one would have thought was most responsible and careful, put words into my mouth as a quotation that bore no resemblance at all to anything that I had uttered. I must therefore say that I have great sym lathy with the noble Lord when he complains. If the report of that debate is a sample of the present reporting of Parliamentary proceedings, then I think he has some justice on his side. It would be a pity if standards in this respect fell to the Johnsonian level of always making sure that at least the "Whig dogs" did not get the best of it.

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My Lords, I mentioned that I was in a position to know something about invisible exports. I am chairman of two companies engaged in that business, and in two different aspects of it. One of them is an hotel company which may be known to some noble Lords. This is not the occasion to go into a general disquisition on the hotel industry. The gracious Speech foreshadowed legislation bearing on the tourist industry in general and the hotel industry in particular. When that legislation comes before this House I shall hope to have the opportunity of saying something more general. Indeed, I raise the question of the hotel industry in this debate only to use its experiences in recent years to make a general point.
There is indeed a most singular contrast to be pointed. Here you have an industry which is one of the very largest of all the invisible exporters. The Report of the B.N.E.C. Committee which we are discussing to-day credits the travel industry with receipts of something over £200 million a year, and the hotel and restaurant industry with more than half of that. I must remark, in passing, that one of my company's hotels alone cashed over £1 million worth of foreign travellers' cheques in the course of a recent period of twelve months. That is one side of the contrast. On the other side it would be difficult (I hope that I am not being too subjective about this) to find an industry which has been more set upon and bedevilled by a whole series of Governmental actions in the last four years than precisely that same industry.
We thought, four years ago, that as an industry we were pretty badly treated. Almost alone among industries we had to pay purchase tax on the tools of our trade; we are not allowed to depreciate our buildings, though they are as purpose-built, and alas! obsolesce as quickly, as any industrial factory. But if that were so four years ago, how much worse is the picture since! One thing after another has been done to us. Entertainment expenditure was wholly disallowed. I will not enter into the merits or demerits of that decision; I will only say that it fell with particular heaviness on those sections of the hotel and restaurant industry which, as it happens, have the highest
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proportion of invisible exports—that is to say, those in the West End of London. The next blow was that investment allowances on the contents of our buildings, as distinct from the buildings themselves, were removed, and it was made clear that we were not to be eligible for the investment grant that takes their place.
Finally, of course, there was S.E.T. I will not attempt to voice my opinion of S.E.T. now—indeed, I am not sure that I could bring it within the bounds of Parliamentary language. I will simply make one point. The avowed object of S.E.T. was to free labour for transfer into what was called productive industry; yet this tax was applied to the hotel industry where a very large proportion of our labour, perhaps as much as half, is allowed into the country only on the express condition that it shall not move into any other industry. But that did not exempt us from having to pay the tax.
It is true that there is a promise now, in the proposed legislation to which I have referred, that we shall receive grants in aid of new construction. I do not wish to be put in the position of looking a gift horse in the mouth, and particularly before it is securely in the stable, but here I would just make the point that if such legislation eventually reaches the Statute Book—and, if I may mix my metaphors, I am anxious not to count any chickens before they are hatched—it will be small compensation. I think that my own company has as large a development programme as any—at least we are proposing to build from the Highlands to Devonshire—and we have calculated that even if all our plans come along as quickly as we could hope; even if everything fits into place at exactly the right time: if the contracts can be let and they are carried out quickly—even then we shall hope to receive in grants in the largest year only about one-quarter of what we have lost in S.E.T. and withdrawn investment allowances within the lifetime of the present Government.
My Lords, I do not make these points to excite your sympathy or to ask for relief, though I am perfectly prepared on another occasion to do both. I want to use them to make a particular point. Whether or not you think that the grievances that we -had a few years ago were justified, it must surely be a curious

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policy to impose these repeated, direct and heavy blows upon an industry that was earning more than £100 million in invisible exports. One cannot imagine it happening to any visible exporter. Why then did it happen? Nobody supposed that it was deliberate. Not even the most jaundiced hotelier thinks that somewhere in the recesses of the Treasury or the Board of Trade there is somebody who says, "Here is an invisible exporter. Let's hit him on his invisible head".
No, my Lords, this was done because it appears to be nobody's business to think ahead and to consider what the effects of these measures might be on this vital sector of the national life: that is, our invisible exports. This is because so many people in this country seem to be blinded by the strangest of latter-day delusions that services are useless disposable frills, not to be mentioned in the same breath with productive manufacturing industry. I am genuinely puzzled to know how this idea has obtained such wide credence in this country—and I say "in this country" because it seems to be limited to this country.
In most other countries that I am aware of the development of the service industries is regarded as a sign of economic progress. There is even a phrase for them—"tertiary production", the implication being that that is of a higher order than secondary production and two orders higher than primary production. Why is it that we hold the opposite view in this country, I wonder? Is it perhaps—and I offer this suggestion perfectly seriously—because, generally speaking, the trade union movement is weak in the service industries? So much of our discussion of economic policy in this country to-day takes the form of a bilateral, or trilateral, form between the T.U.C., the C.B.I. and the Government. The service industries are very poorly represented on the C.B.I. side, and even more poorly represented on the trade union side; and this may perhaps be the explanation why the service industries are so widely disregarded. Let me say, in passing, that I should not like my remarks to be taken as indicating that I would wish to exchange our present position for complete recognition plus the "closed shop". But, whatever the reason is, it appears to be the case that so many people have got it into
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their heads that making things—be they only bingo cards or fruit machines—is somehow a more worthy form of economic activity than the rendering of services.
This, my Lords, is the ultimate indignity of S.E.T., not the money side—though, heaven knows! that bur: badly enough. It is the thinking behind it; that the activities in which w; were engaged were not worthy of support and recognition for the contribution they made to the balance of payments. Of course I am not arguing—nobody could—that all service industries are invisible exporters. That would obviously be untrue. But it is very nearly true that all invisible exporters are service industries, and the two are obviously very closely corrected. Until we can get rid of this idea that service is somehow inferior to production it will be difficult, I think, for the invisible exporting industries to secure the recognition and support they deserve.
should like now to turn to the other company of which I have the privilege to be chairman, and to ask your Lordships' forgiveness for naming it, as otherwise you might not follow what I am going to say. It is the Economist Newspaper Limited. Over 50 per cent, of our gross receipts are derived from overseas, but I want to speak particularly of one of the companies in the group, the Economist Intelligence Unit Limited, which engages in the business of economic consultancy to which the noble Earl, Lord Limerick, referred in his maiden speech—and I should like to join in the congratulations to him on his speech.
This company has been pioneering, in the last decade or so, in what is an almost wholly new industry of international, economic consultancy, with, so we think, some success, and with profit both to ourselves and to the nation's balance of payments. But in doing so we feel that the Slate turns a very cold shoulder upon us. I will not mention S.E.T. again, though I could do so. Let me be more particular and refer, first of all, to the attitude of the Export Credits Guarantee Department. Generally speaking, the E.C.G.D. will not give any assistance for consultancy contracts. Perhaps your Lordships are not aware how large some of these contracts are. Some involve the collecting of teams of professional consultants from many different professions

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and industries and working them as a team over several years. The total fee can in some cases be as large as £1 million for a single contract.
These contracts are gained in the fiercest competition. Moreover, they usually lead to further business. Most of them take the form of what it is fashionable to call "feasibility studies", and if the answer is that the project is feasible, then there follow construction contracts and purchases of plant and machinery. It does not follow automatically that those contracts and purchases go to the same nation that does the feasibility study, but, as your Lordships will readily realise, there is a natural tendency for that to happen. At least we have observed that when the original economic feasibility study is done by a consultant of a different nation, the British contractors and engineering firms rarely get a look in. So the business is considerably larger than the initial fee given to the consultant himself. Nevertheless, the E.C.G.D. sticks to its position that though it will assist the contractor and exporter of machinery, it will give no assistance at all to the consultant, who in so many cases acts as the pathfinder and clears the way to a much larger volume of business than he himself is concerned with.
Secondly, we have some complaint against the attitude of the commercial officials of our Embassies and High Commissions abroad. The noble Lord, Lord Mancroft, paid a tribute, which I am sure is deserved, to the great improvement in the attitude of the commercial sections of our Embassies and consulates towards visible exporters. This change has not extended to the invisible exporters. These officials seem to suffer in a high degree from what I call the tangible illusion that if you cannot touch it and put it on a truck and take it away, it cannot be of any value.
The other day I read a report from one of our staff which referred to the senior commercial counsellor in our Embassy in one of the most important capitals in the world, certainly the capital where there is more business of this kind to be won than anywhere else. The report was that he seemed to be completely uninterested in the possibility of
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selling British services and, indeed, seemed to be completely unaware that it was possible to do so. We have suspicions (I should put it no higher than that) that British officials have been known to refer foreign companies to consultants of their own nationality for jobs in Britain, when we could easily do the business ourselves. Again, this is not a piece of deliberate sinfulness on the part of these officials. One suspects that they have not received adequate advice from London as to the attitude they should take and the results they should help to secure.
Thirdly, we should like to see some change in the attitude of those British subjects who are appointed to or seconded to the United Nations and similar organisations by the British Government. I know that once they are appointed they are supposed to be impartial, but we observe that all their colleagues from other countries seem to have little difficulty in being impartial on the side of their own nationals when it comes to the distribution of contracts, and consultants coming from those other countries can always rely on pressure to secure that they get at least their fair share of any business that is going. It seems to be only the British who are such perfect gentlemen that they lean over backwards not to show any partiality, thereby, one suspects, convincing all their foreign colleagues that they themselves do not think very much of the British consultant. None of these things is evidence of original sin but evidence of ignorance and of the absence of direction. If our invisible exports are to grow and flourish, we need to have an active awareness of the opportunities that they present.
I agree with the noble Viscount, Lord Watkinson, that it would be wrong to push invisible exports at the expense of the visible. There are no bad exports. All exports are good. I also agree with the noble Lord, Lord Aberdare, that there is great wisdom in reinforcing success. There are two reasons why opportunities for growth in invisible exports are greater than for visible. One is that they can be expanded with very little import content. We do not need to import raw materials in order to increase our invisible exports. Secondly, it is one field where we in this country still have a manifest

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differential advantage over other countries. For these reasons I believe that effort put into the expansion of invisible exports will bring a higher reward than in almost any other field. If the excellent Report we have been discussing and this debate have contributed to that more lively awareness, then they will have been well worth the time and effort that have been spent on them.
6.7 p.m.
LORD BALOGH: My Lords, like the noble Lord, Lord Crowther, I hesitate to inflict my voice twice on your Lordships' House, but as I am one of the few on these Benches who has worked for a decade in the City and knows some of its workings, I think that perhaps I might chance it. I do not wish to follow the noble Lord into the special topics which he illuminated with such unparallelled knowledge, I very much agree with some of his criticism. I should only like to say that S.E.T., when it came, came into a taxation system which did not tax services at all, unlike most other systems of taxation. In this country services are still relatively little taxed in comparison with merchandise. Our tax system is mainly concentrated on alcohol and tobacco and on merchandise, and our indirect taxation is on the whole not lower than in other countries. It seems to me that the spreading of the taxation load over services was a good thing on the whole rather than a bad thing, and it does not follow that there is a "gnome" in the Government who thinks that services are especially hateful things.
This has been an instructive debate, but I was reminded of the timing. The noble Lord, Lord Aldington, put his Motion down before these little occurences. There is an apposite little jingle from Jay Gould's poetry, which I shall quote—I am much more vulgar than the noble Lord, Lord Crowther—
"He who sells what isn't his'n
Must buy it back or go to prison"
I hope that this will apply literally to the gnomes who had those two wild raids on the pound sterling. I hope that they will be caught and punished for it. Of course, in a way (I hope that I do not cause any pain on the other side) this attitude of selling "what isn't his'n" obviously has applied to our foreign investment policy. We invested "what wasn't ours"—we borrowed it. While it
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would be silly to say that a bank is bankrupt because it borrows short and lends longer, there is a point, as we know from the Baring crisis of 1890, from the Knickerbocker crisis of 1907 and from 1931, at which the net short-term indebtedness grows too high and certain very unpleasant things follow. I hope that this will not be the case in some of the ventures which have been started recently in the C.I.E.
The noble Lord, Lord Beswick, has given the figures of the enormously greater investment activity on our part than was really justified by the balance of payments, and I do not wish to go into this. The Times to-day (like the noble Lord, I have read it) gives an interesting example of what I mean. They state on page 5 in an article on an Army base:
"Begun as late as 1957 (for reason; which senior officers now find hard to recall) and completed only in 1964"—
so we are not guilty on this side—
"in some style and comfort at the cost of more than £8 million … the grass cutting alone comes to £19,000."
There are very few noble Lords even on the other side who could afford £19,000 for grass cutting.
From some of the speeches that have been made (I am sorry that the noble Viscount, Lord Watkinson, is no.: here, because I shall have to refer to his speech) one might imagine the City as sort of torture chamber, with the rack really going round like mad, and the pressure enormous. But I do not think this is altogether a justifiable picture. It was most noticeable and interesting that on the other side hardly any figures were quoted. We had little tales by the noble Viscount, Lord Watkinson, of this terrible hardship which happened to companies which started out in a wonderful way and then could not follow on because the Government were very naughty. But I have looked at my figures for private investment in the last few years, and it is interesting to see that private investment abroad by this country only once sank below the £300 million mark, and that was in 1962 as a result of the ministrations of Mr. Selwyn Lloyd. The interesting thing is that even that sort of prohibition of sterling loans to third markets of which there was such complaint on the other side was invented by Mr.

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Selwyn Lloyd and imposed immediately. This Government, to my mind wrongly, did not impose it immediately the crisis occurred, but put it off.
I would not call this investment in all areas of £267 million chicken feed. I am not a member of quite such an affluent society as noble Lords opposite, but still it is not altogether chicken feed. This dream-world impression which was evoked by the contributions from the other side was strengthened, I think, when I reflected that there were Japan and Germany, both countries which were not altogether unsuccessful in defending their export markets. The Japanese came up from nought, and are now at 11 per cent.—they are just above our share in the manufactured goods export markets of the world; and the Germans are more or less double our share. Neither of these countries has ever had a large foreign investment. The Germans now pretend that they have a large foreign investment, but, of course, they have not. What they do is to lend out through swaps and loans, and there is a sort of new conventional behaviour in statistics that has grown up that allows them to count what are really short-term credits as long-term credits. And they keep their hands at the throat of the people to whom they give credit, because short-term credits can be revoked. So that there is a sort of invasion of the markets through these credit tactics of the Germans and their exports are at a maximum.
I must congratulate the noble Earl, Lord Limerick, and also the noble Lord, Lord Remnant, on their maiden speeches; but, if I may humbly and respectfully suggest it, even in the case of a maiden speech, theirs was not altogether a balanced statement of the situation; because, of course, people who really are experts in investing funds (and the noble Lords spoke about the people who are the sort of crême-de-la-crême of the investing world) know very well that if they borrow in America they can manage their investment absolutely freely. I am not saying that perhaps certain difficulties have not been caused by this 25 per cent. rule. But perhaps it would be fairer to the Government to say also that, in those cases where portfolio management is very important, means have
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been found to enable the managers of portfolios to manage freely, and those portfolio managers who have not availed themselves of this possibility, are not the crême-de-la-crême.
LORD TANGLEY: My Lords, before the noble Lord leaves this point—and I think he has just about finished with it—surely he is not suggesting that this liberty to borrow in the United States is anything more than a small contribution to solving the problem. He would not suggest for one moment that the power to borrow offsets the difficulties with regard to the 25 per cent. surrender which the noble Lord, Lord Remnant, and others, including myself, put forward? If he does, then I should like to ask him what are the total borrowings of investment trusts in the United States compared to the assets involved. We should need to know that figure before we know whether there is any validity in this point.
LORD BALOGH: I do not think we need to know that at all, because borrowings are needed merely to effect the changes of portfolios. When I first came to this country in 1930 I was introduced by Keynes to his insurance company. There was an interesting manager there who told me of Keynes's first remark when he joined, after the First World War, the National Mutual Insurance. A very noble Lord, Lord Curzon, was one of the members of the Board. He wanted to bait Keynes and said, "My dear Keynes, we welcome you with bated breath. Do tell us what in your opinion would be the best policy for an insurance company." And Keynes, with out batting an eyelid, said: "My investment company or insurance company would have only one asset, and change it every day."
LORD TANGLEY: If I am not being offensive, perhaps I may interrupt the noble Lord once more. We are listening now, if I may say so, to the "super cream" of the academic world. I am talking only about some rather skimmed milk of one of the largest investment trusts. I hope the noble Lord will take it from me that this power to borrow in the States is nothing more than a tiny palliative of the problem, and is absolutely no solution at all. I have borrowed as much as I can prudently, and it is no solution to my problem.

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This is the practical "skimmed milk" of the matter. I do not think what Lord Keynes said a generation ago really helps.
LORD BALOGH: On the contrary. The noble Lord suggests that you have to have so much borrowing that you should be able to change all your investments every day. I would not agree with him.
Then there is the corporation tax issue. It is interesting to note that it is true to say that the corporation tax left us still with a balance in favour of foreign investments, because certain expenditure can be offset against unfranked income. This is a very complicated issue, and I do not wish to bore your Lordships with it, but it is so.
LORD TANGLEY: My Lords, may I interrupt again?
NOBLE LORDS: Order!
LORD TANGLEY: Points are being put that these things can be done and should he done. In practice I agree that it is an extremely complicated matter, but again this ability to set certain expenditure against unfranked income is not, in our experience (if I may put it that way), a solution to the problem. I will not interrupt again.
LORD BALOGH: I am sorry, my Lords, but again I must maintain that these are problems which at least ought to be mentioned, if only to be dismissed. I fear that there is also a fundamental issue involved—and this is a more academic point. I am sorry to bore your Lordships with it, but it is an important question and we ought to discuss it freely and frankly. Of course, the corporation tax ought to strike the whole of the income repatriated into this country. It has to. Of course the foreign taxation ought not to be offset, because if it were offset it would mean that it would be a matter of indifference to a British subject or firm whether he or the firm invested in this country or in America. From a national point of view, the income from America after tax must be equal to the income from a home investment before tax, because we pay tax to the British Government and they pay tax to the American Government. Therefore, from a social point of view, from a national point of view, if the market mechanism is to work well what has to be equated is
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"after-tax" revenue from abroad and "before-tax" revenue at home.
We have had a most interesting debate and I have been impressed by how extremely representative the House of Lords is of the highest order of economic life. There is hardly any industry, sub-industry or sub-sub-industry which is not fully represented here. The "invisibles" have this enormous importance in this country as against other countries because this was the heart of a large Empire, the biggest Empire the world has ever seen. This Empire built up these assets because there were political advantages of having an Empire; there were the invisible preferences; and as a remit of that there were also the shipping lines, the bunkering and the coal industry in which Britain took an absolute lead. The coal bunkering stations became Colonies, and therefore these invisible exports mounted and mounted and we obtained for these services our food and raw materials. This position has now changed, and I am bound to say that a great many of these "invisibles" are going to go down. They are bound to go down because the situation of Britain has changed and therefore certain of the services will one after another be eliminated, just as industries such as the textile industry were, as other countries take over. I refer to those pioneer industries which the British have started.
These "invisibles" are very varied and the global figures are sometimes a little—shall we say?—suggestive of things which they ought not to suggest. The services performed by the City amount to only £144 million per annum. Even those services performed by the City are of an extremely varied character, and certain of the services can be performed whether or not we have a control over foreign investment. For instance, insurance represented almost a half of this, and even in the most fierce, the most savage, exchange control days its functioning was permitted. And it functioned very well.
LORD ALDINGTON: My Lords, before the noble Lord leaves the book which he has in his hand, may I say this. He said, in rather a defeatist fashion, that "invisibles" are bound to go down. If he will look at his book he will find that they have been going up. Why are they bound to go down? Those

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of us who are engaged in them find no such tendency. If we do find that tendency around, we take every step to see that they go up.
LORD BALOGH: My Lords, I wish the noble Lord the best of luck. I do not say that they will go down absolutely. I merely say that, relative to the old situation, they are bound to. This does not apply to every aspect, but they are bound to, because Britain is no longer the centre of art Empire, and that is a sufficient reason for it.
Out of the £3,000 million total invisible earnings £1,000 million represent shipping, aircraft and telecommunications. This has very little to do with it, and we are going to have, we are bound to have, fierce competition here and it is bound to affect us. The hotel industry represents £236 million, and then there is the investment income of £1,000 million. I think we have therefore to be very careful when policy recommendations are made on these figures. If we were to interfere with industry for the £40 million or £50 million a year—which is a great deal of money for the individuals but very little in national terms—if we were to pursue a policy which may harm industry and manufacturing, that would be mad—quite mad.
Then I look at the investments, especially at the direct investments, yielding 6 per cent. after foreign tax. That is very much less successful than the American figure. The American figure is not 6 per cent.; it is 14 per cent. And the portfolio investment is very much less. I agree with the noble Lord, Lord Tangley, that the yield on portfolio investment ought not to be measured merely by income but also by capital appreciation, which I agree was colossal. Nevertheless, it is a problem for a country to receive currently from its investments something like 2½ per cent. to 3 per cent., and pay out in interest payments on its debts 8½ per cent. or 9 per cent. This is not the way to do it.
I looked up the headline which the noble Lord, Lord Aldington, quoted, on "The Bank acts to check on investment". Surely Lord Aldington would not want to criticise the gathering of statistics.
LORD ALDINGTON: No.
LORD BALOGH: Then it seems to me that perhaps one ought not to have mentioned that, ought one?
LORD ALDINGTON: Yes, my Lords, I think one ought, if I may say so, if only to get that statement from a member of the Government. If we have that statement later on it will be very agreeable.
LORD BALOGH: There is one lesson, I think, in this debate. "Invisible" income has been the mainstay of Britain. Long may it remain the mainstay and prosper!, we all agree. But, in my humble opinion, it must not call for privilege. In my humble opinion, this country in her new situation in the world can prosper only by technological improvement and technological advance. Whether this advance is to be "invisible" or "visible" it does not matter, but it seems to me that policies to be pursued which will expose the manufacturing industry of the country to periods of "Stop" after periods of very slight "Go" are not in the interest of the country.
6.30 p.m.
LORD POLWARTH: My Lords, your Lordships will be relieved to know that I do not propose to make a speech of any length, having returned only a week ago from a somewhat arduous three weeks on the other side of the Atlantic, trying to increase our dollar earnings from the invisibles; and I certainly do not intend to follow the somewhat depressing attitude of the noble Lord who has just spoken, who seems to think that our invisibles face a decline in the future. If I have anything to do with it that will certainly not be the case.
I wish first to support strongly the earlier remarks made by the noble Lord, Lord Tangley, about the contribution to our invisibles of the investment trust movement, and I speak as one who is involved in a particularly active part of that movement, namely, Scottish Investment Trusts, who pioneered dollar investment and, I still maintain, are leading it to-day. In this connection, all I would say is that we do not seek privileges for our own form of investment; we seek only fair and reasonable treatment. The sums which have been invested in the dollar have grown and multiplied. It may be true that the income from them

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is only 2 or 3 per cent. to-day; but what of that? It is the growth of that income, and the growth of the capital on which the income comes, that has contributed so much to our reserves.
I wish to speak on only one other aspect, because I do not think it has received much treatment in this debate: I refer to the contribution made by the British insurance industry to our balance of payments. I am connected with one of our leading British insurance companies, and particularly one of our leading companies in the North American market, and it is from there, as I have said, that I have just returned. The income we are earning has cost the country remarkably little in outflow in investment. The figures of the current income from the industry are not easily put together. This is one of the criticisms in the Report, and it is due to the fact that they come under a variety of headings. However, a figure is given of an estimate for 1965 of some £81 million, and I would surmise that by this year it must be nearer £100 million, despite the hazards and difficulties facing the industry in the last few years.
Taking only the case of my own company, our total capital sent to the dollar market to build up our industry there over the last 68 years has been 5¼ million dollars. This year, in one year, we are bringing back in remittances alone 5½ million dollars—more than the total that we have laid out to build up that investment—and over that period we have brought home some 75 million dollars. So I should like the contribution that is being made by the insurance industry to our balance of payments to be put on record. And these results have been achieved in the face of considerable difficulties, not merely the natural hazards which we exist to counteract, but the restrictions on the rates that we may charge in the United States of America, and in difficulties at home, such as the taxation system, which has already been spoken of sufficiently and which I do not propose to follow up.
Last, but by no means least, there are the considerable demands recently added by the new Companies Act, in the form of returns and statistics which have to be made by insurance companies to the Board of Trade. These requirements were
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reasonably introduced in regard to the British business as a result of the unfortunate failure of a number of "fly by night" companies. But when these requirements for multifarious returns are extended to one's individual overseas territories the total burden of additional work is quite fantastic; and I can only say that in a meeting recently with our accountants and auditors in the United States I was told that only with the greatest difficulty would they be able to produce the accounts at the normal time—if indeed they could do so within some time of that date.
That is all I wish to say, my Lords; just to place on record the contribution of that industry and to express the hope that it may receive the treatment that is due to it in carrying out its part.
6.36 p.m.
LORD TERRINGTON: My Lords, at this late stage I wish to intervene for only a short while on one or two points, but before doing so I must declare a special interest as a member of a Stock Exchange partnership with considerable overseas interests. In this capacity, I wish to confine my remarks to encouraging foreign investment in United Kingdom securities, with particular reference to America, which I visit with considerable regularity.
As the Report points out, there was a sharp increase in foreign portfolio investment in the United Kingdom in 1963 and 1964, although this does not indicate the extent to which this was derived from the the United States. However, from my own personal experience in America at that time, I would say that we were making useful progress there despite a number of obstacles, to which I wish to refer.
Apart from the points raised in the Report, to which I shall come in a moment, we had to contend with a number of rather special problems. For example, there was a lack of regular progress reports from companies over here, and there was the difficulty of calculating earnings to suit the Americans owing to the differences in our tax systems. Also, of course, there was the high level of United Kingdom withholding tax on dividends received by U.S. investors, which was a considerable deterrent to a number of American portfolio managers. These

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particular problems are much less serious now because United Kingdom companies are more forthcoming in their reporting at intervals during the year. Also, the change in our tax system has helped our research departments to present earnings in a form intelligible to American managers, and United Kingdom withholding tax on dividend income is now in line with the American rate for overseas investors.
There are other deterrents, however, on which the Report which we are now discussing makes specific recommendations. These are set out in paragraph 289, and it is on these that I wish to make a few observations. From personal experience I can confirm that the Americans have a rooted objection to paying our stamp duty, and although there has been a reduction from 2 per cent. to 1 per cent., I would suggest that bona fide foreign investors might be relieved of this penalty altogether.
I should like also to endorse the recommendation contained in the Report for an increase in the number of fixed interest securities free of tax at source to non-residents. At the present time, about 60 per cent. of all British Government stock in issue, including undated securities, is free of tax to non-residents, but of the dated stocks with a life of over ten years only about 55 per cent. are in this category, which seems to me to offer scope for broadening the field in favour of the foreign investor.
Finally, I wish to refer to the recommendation in the Report regarding shares of no par value. I do not think this has been mentioned this afternoon, and it is certainly an issue of some importance to the American investor, who is accustomed to these and not to our methods of describing shares. Having said that, my Lords, I must now refer to the biggest stumbling block of all to American investment in this country, which is certainly not of our making. Just at the moment when we seemed to be poised for a further breakthrough in the selling of United Kingdom securities to American managers, the then President Kennedy introduced his Interest Equalisation Tax in March, 1964, retroactive to 1963. Understandably, this was done to discourage portfolio investment outside the United States on a temporary
596
basis in order to ease their balance-of-payments problem. Unfortunately, as is so often the way with short-term measures, this tax has been renewed in subsequent years, and recently the rate has been increased by President Johnson. As a result, I have to admit that the scope for interesting American investors in United Kingdom companies has been severely limited since 1964, and must remain so until this tax is repealed or modified. But on this point I remain an optimist, and I am encouraged to be so by the recent views expressed to me by a number of American friends and connections over here in London at the present time.
For this reason I would be grateful if, in his reply, the Minister could answer some questions of which I have given him notice. Will Her Majesty's Government give serious consideration to two specific suggestions: the waiving of stamp duty for foreign investors, and an increase in the number of British Government securities free of tax at source to non-residents? At the same time, could they perhaps give an indication that shares of no par value will be included in the next Companies Bill, which I understand has been promised during the life of this Parliament.
Those of us who are concerned with the task of trying to persuade American funds to invest over here can do a great number of things for ourselves to improve this contribution to the invisible exports; but the Government, it seems to me, could certainty provide additional help and encouragement if it were to implement the recommendations contained in the Report that we are discussing this afternoon.
May I now turn for a brief moment to a point which has been very fully covered and discussed by other noble Lords. In my work I am as much involved with investment by private individuals in United States' securities as I am with trying to sell United Kingdom stocks to the American funds. I would entirely endorse the plea put forward by the noble Lord, Lord Tangley, regarding the 25 per cent. surrender rule. I of course recognise that the investment trusts are the major factor in the field of American portfolio management, but I think it is fair to say that the size and number of

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privately owned portfolios is not insignificant
The noble Lord has pointed out that the investment trust managers continuously watch their individual investments and they make frequent visits to America in the course of their work. Those of us who are concerned with privately owned portfolios do very much the same thing in order to try and ensure that these funds are properly managed. I would, therefore, add my plea to that of the noble Lord when he said that such impediments to the successful management of a dollar portfolio should be removed. In fact I would go a bit further and underline another disadvantage of this surrender rule which has already been mentioned by the noble Earl, Lord Limerick, in his most admirable maiden speech. I am certain it is the case that the operation of this rule tends to contract the pool of available dollars and to discourage sellers, which in turn forces the premium artificially higher. It seems to me that a high premium is not in the national interest and that anything which makes it so artificially should be very carefully examined.
6.43 p.m.
LORD GEDDES: My Lords, first I must declare two interests: I am President of the Chamber of Shipping of the United Kingdom and a director of shipping companies, and I am also Chairman of the British Travel Association. The Report that we are discussing recognises just how imporant shipping and tourism are in the balance of payments. Depending on how one does the sums, these two industries can be said to earn about £800 million gross of foreign exchange per annum. This figure speaks for itself, but those of your Lordships who share my difficulty in grasping the significance of a figure of this order of magnitude may wish to be reminded that less than 500 million minutes have elapsed since the arrival in this country of that famous traveller William the Conqueror. I have therefore a special concern in the present Motion and I should like to thank the noble Lord, Lord Aldington, for raising it.
There could hardly be a better time to discuss our invisible exports and their contribution to the economy. Incredible as it may seem, relatively few people have been aware of the size of this contribution.
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As has been said, we export over £8,000 million worth of goods and services a year, and of this about 40 per cont., or approximately £3,100 million worth, is the contribution of the so-called invisibles. These are the real growth point it world trade.
The economic background to our debate needs few words: internationally, a major crisis of confidence in the value of currency; at home, the most serious difficulties that we have faced since the 1930s. The source of our trouble is known. Our external accounts cannot be brought under control and into reasonable balance. Despite an avalanche of controls and measures of one sort or another, despite tough talking and prophecies of miracles, the net result is that the deficit on our visible trade account this year—and I emphasise visible—has been most recently estimated at just about £800 million. What it will be next year is hard for anyone to forecast with any degree of confidence. But let us be clear: a deficit in visible trade there will most certainly be.
And yet our invisible earners—and I exclude what the Government themselves do—are giving a positive net balance this year of about £700 million. Historically, invisibles have always been substantially in surplus, while visibles have been almost always in deficit. But Government policy seems to be mesmerised by the virtues of visibles. By comparison, the conviction that services are not really productive seems still to persist. Lip service may be paid to the importance of invisible earners, but selective employment tax remains the embodiment of the contrary conviction. It penalises the successful by imposing a heavy burden on services. It foolishly hampers the ability of invisible earners to hold, and indeed increase, the country's share of the most rapidly growing sector of world trade. The time has surely come for a major re-think about visibles and invisibles, about their relative contribution to the balance of payments and consequently about what Government policy towards them ought to be. People and Government must see the true picture. The fact that one sector of our national effort is in the red should never be a reason for handicapping another part which is consistently and well and truly in the black. So much by way of general background.

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For shipping, the first essential is to know what one is talking about. Here the official publication on balance of payments—the Pink Book—can be misleading. Its shipping account covers all the country's transactions in foreign currency attributable to shipping, whether British or foreign. This means that the net balance on shipping account is more often than not taken to be the balance-of-payments value of United Kingdom ships. Such an approach is quite different from that used for visible trade. There is, for example, no machine-tool account which aggregates the exports of British firms and the imports of foreign machine tools. There is also another point of difference. In calculating the contribution of United Kingdom shipping, overseas expenditure is deducted from gross earnings; for example, the cost of bunkers lifted abroad. But for manufacturers the cost of the imported fuel oil which they consume is not deducted from their contribution. For these reasons it is difficult to compare shipping with visible trade industries so as to get a fair comparison.
Indeed, there is one more source of confusion. Because of an international convention on balance-of-payments analysis, United Kingdom shipping in the Pink Book includes a debit for foreign ships employed on time charter, mainly by the oil companies. The outcome is that the value of United Kingdom ships—over 2,000 ships totalling 18 million tons flying the Red Ensign—is concealed and is undervalued. Your Lordships will be glad to know that discussions are now under way with the full co-operation of the Government's statistical services to clear up this confusion.
The export value of the services of such ships in 1967, calculated so as to be comparable with a manufacturing industry, was over £450 million. Even after deducting foreign disbursements, the net worth of United Kingdom ships to the balance of payments was over £200 million. And these figures take no account of the very considerable import savings made. In brief, United Kingdom ships are major earners of foreign exchange. We can go further. As producers of foreign currency per pound of capital investment and per employee, ships are more effective than almost all of our visible trade industries.
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Shipping, both nationally and internationally, is developing rapidly. Two, factors stand out: the use of containers and the use of large bulk carriers in the oil and dry bulk cargo trades. Their effects will be widespread—on world transport costs, on port development and location, on internal transport systems and on the siting of industries. There may be painful changes to be faced, but there will be great opportunities to be seized. Whether, in the past, they have all been seized is arguable. What matters now is that British shipping is an industry on the move. Of that, no one who has any knowledge of it can be in any doubt whatever. The Committee of Inquiry headed by the noble Viscount, Lord Rochdale, is due to report to the Government next year. I do not, and could not, know what that Report will recommend. The real issue is how shipping can best maximise its already massive contribution to the balance of payments—how in fact to exploit to the full its power to convert domestic investment into foreign exchange earnings.
It is true that successive Governments have done much, as far as the general fiscal system allows, to help the industry. This we recognise; but shipping is an industry with no home market. It is wholly exposed to world competition—all of it keen; some of it not governed by normal considerations of profit and loss. The impact of our tax structure, designed primarily to regulate the affairs of people and companies within this country, is therefore disproportionately distorting. It really is a bit of nonsense to enwrap such an industry in the intricacies and convolutions of our unbelievably complex tax system, and then seek to lighten the load by vet further complications, however well meant. Would it not be better to take a fresh look at the whole problem? If there is, as we think, a strong enough and valid enough case for unorthodoxy, let us be unorthodox. But, mutatis mutandis, my plea extends to the whole range of invisible earners. The need is great; and so, too, are the possibilities.
This brings me to tourism. Tourism is the largest single item in world trade, and it is growing faster than visible trade. In 1967 about £5,000 million was spent throughout the world by international tourists. Britain has benefited from this

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impressive growth. It was not until 1955 that the number of visitors to this country passed one million per year. This year the total will be 4 million, and by 1970 it could well be 5 million. Our earnings from visitors in 1968 should exceed £370 million. Of this, about £110 million is paid by them on international fares to British carriers, and £260 million is spent within Great Britain. The latter figure includes, as well as the major items of accommodation and catering, expenditure on all types of services. Even our hairdressers earn 1 million dollars a year from overseas visitors. I do not suppose that many people ever thought of a haircut as an export; but it can be.
The United States provides more of our visitors than any other country. Britain, indeed, is their favourite choice in Europe, and they spend here over £100 million a year. This is more than the value of any single commodity—including whisky or cars—that we export to the United States. Yet for so long the word "tourism" in this country meant British people going abroad. The thought of tourists coming here seemed somehow unnatural. But this has all changed. Britain is now a major tourist country. And as, not surprisingly, we do not sell Britain on the strength of our weather, we can offer a longer season than many Mediterranean resorts. If only we can provide the facilities, there is an enormous potential for growth. But if we do not, people will go elsewhere, because like other export trades, tourism is sharply competitive.
There is, therefore, every justification for giving tourism real incentives for expansion and higher productivity. The case is as good as that for any manufacturing industry. Moreover, tourism requires very few imports. Yet, through the imposition of currency restrictions on overseas holidays, the Government are prepared to put our own tourist earnings at risk. The example that we have set has not gone unnoticed by the American and French Governments. We really must stop one sort of export—that of the bad example that might rebound on us.
The Government's recent statement on tourism is a welcome development, so far as it goes. Over a year ago, the British Travel Association pointed out to the Government that the ability to promote new traffic to Britain and the opportunities
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for massive increases in overseas visitor business were outstripping the rate of expansion of tourist services and amenities, and asked that greater resources should be deployed in the whole field of tourism. We recognised that the Association, which is a company limited by guarantee, directed by a volunteer board of whom only a minority are appointed by the President of the Board of Trade, might not be a suitable vehicle for the expanded operation. Instead, the creation of a statutory Board to take over the work of B.T.A. is now contemplated. But I emphasise that the changes now proposed have been necessitated not, as is so often the case, in any way by failure, but by the dramatic success of the British Travel Association in carrying cut its appointed task. I am sure that your Lordships would wish to join with me in paying tribute to the staff and many volunteer workers through whose efforts this success has been achieved.
Having said that, I must add that the real question is whether the proposed organisation goes far enough. The new Statutory Board should be able to play a more effective role than has been possible for B.T.A. in planning the development of tourist facilities and in co-ordinating the work of those many interests, such as the Countryside Commission and the Forestry Commission, which contribute their part to the country's increasing range of tourist services and attractions. At the same time, it is of paramount importance that the new Board should preserve the harmonious relations with all sectors of the travel trade which have been characteristic of B.T.A.'s operations.
The Association has not changed its view that overseas its promotion work, and within Britain the information services and the co-operation with the travel trade in organising tours and holidays in Britain, represent the key to the development of tourist traffic. It seems to me that the Government should confirm that these basic tourist functions are to be given their due priority. And here I would express the hope that the direction of the new Statutory Board is placed in the hands of people experienced in the industry, and that the heavy hard of bureaucracy is not allowed to blunt the edge of its efficiency. The Minister's statement gave no assurances in these

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vital matters. Instead, the Minister emphasised the hotel incentives scheme and the hotel registration scheme, which are a means to an end, but secondary tasks. The Hotel Development Incentive Scheme is a temporary measure to alleviate the growing burden of taxation on hotels. The registration scheme will need careful study, and the likely benefits will need to be more clearly established in relation to its cost, which will be considerable. Such a scheme could be carried out on a voluntary basis. After all, the success of the "Michelin Guide" in France is not based on statutory powers. It is disappointing to hear that the Government assume that the prime tasks of promotion, planning and co-ordination can all be carried out for a sum of about £3 million, which is approximately the amount of the present Treasury grant to the British Travel Association. Parenthetically, it may be noted that through the purchase of liquor and tobacco, and through purchase tax, foreign visitors contribute something of the order of £10 million per annum to the Revenue.
To secure more trade from abroad there must be more investment in marketing, not only in the countries where 24 overseas offices have already been established, but in additional countries where there are now new prospects of travel. Quite apart from promotion, the new organisation will have other duties in development and research, and in supporting regional tourist organisations. The British Travel Association has enjoyed substantial support from industry and this could well grow, but not if the Government's contribution towards the principal tasks is actually to be reduced. In the meantime, throughout 1969, the British Travel Association will continue its work and will assist the Government in establishing the new structure. It hopes to hand over to the new body what many of our competitors now consider to be one of the most efficient national tourist offices in the world.
Summing up, my Lords, my main intention has been to emphasise the urgency of taking a truly radical and constructive look at who contributes what towards our balance of payments. I cannot believe that this has yet been done. If it had, invisibles would have had a better deal. If the Government are
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to get their priorities right and cure our economic sickness—for that is what it is—they must look at one essential, the effect on balance of payments. At the moment, there is, unhappily, no evidence of success. Recent measures may help; but talk about underlying trends is little consolation if the end result continues to be one of deficit. For too long invisibles have tended to be taken for granted. As has already been said, more than once, to-day, they do not even qualify for the Queen's Award to Industry, which was specially created to encourage the export trade. There are signs that this attitude is changing, but the pace of change must quicken. For shipping, the noble Viscount, Lord Rochdale, and his Committee of Inquiry may help set the perspective right. For travel, the Government's new plan for a statutory authority shows that they are aware, albeit belatedly, of the importance of tourism's contribution towards our balance of payments. I hope that this debate may encourage the Committee on Invisibles to further its work, and the Government to pay practical heed to the balance-of-payments sectors that are successful.
7.3 p.m.
LORD ARWYN: My Lords, I must apologise for having been away from the Chamber for so long, but something very unexpected happened. I have missed the maiden speeches, but I shall look forward to reading them to-morrow.
My Lords, we all know that no economic war can be waged successfully without the means of assessing the strength and weakness of the opposing forces. I should like to describe one Pyrrhic victory of the taxman. It is a fact that it is more profitable for an individual, as well as a company, to exploit an invention in such a way that the monetary reward is not brought home here at all. So while many inventions are conceived here, care is taken that they are born and grow up and prosper outside this country. British, as well as foreign, patents get registered in the name of some Swiss or perhaps Bermudian company or in one of many countries. The chief beneficiaries can leave the country and enjoy a much lower rate of tax once they get there. These are some of our saddest "invisible exports". An amount of income is lost to the country which cannot

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be properly assessed, and it accumulates elsewhere.
Professor Trevor Roper once said that our taxmen seek to influence the phenomenon by changing the rules. But, my Lords, every time some tax loophole is "bunged up" another incentive is given, especially to patent owners, to leave the country, bag and baggage; so the question of "bunging up" the loophole becomes academic, and in his attempt to secure higher taxes the taxman loses the lot. The inventor finds it intolerable and moves overseas.
The Treasury should seek instead to alter the rules to suit the phenomenon. That which applies to the individual inventor applies to companies. Such a company can have a manufacturing subsidiary here working on a small margin of profit, or even a loss, by overcharging on materials and labour, and make its profits on its overseas sales company. So the increase in exports results in no net gain to the country in terms of foreign currency, but the foreign country gains through the subsidiary whose profits attract less tax. Believe me, my Lords, this is far from fanciful theorising. We must realise that we are, in these matters, not only in ordinary competition with other countries but with their tax systems in comparison with ours.
Many of us in your Lordships' House concerned with industry have been the victims of bland assurances by civil servants and academic economists that there is very little or no evidence of loss to the country by these means. This is but one instance that such matters are not susceptible to proof by evidence. All such "evidence" leaves the country with the setting up of schemes designed to safeguard the rewards of a good invention. But, my Lords, those professionals who advise us realise what goes on and, in the interests of our country, are much concerned about it. The tax authorities will react by seeking other ways to prevent these things from happening, but again, might it not be another Pyrrhic victory?
If it be a Briton's duty to be British and remain British, in not giving him the full benefit of his inventiveness or his flair for exploiting inventions, is he not faced with the problem of duty versus his own interests? Such people are too valuable to be lost; but unless and until
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their interests as individuals, or companies, are made to coincide with their duty, we shall continue to lose their wealth, and the reserves of the banks of other countries will mount up at our expense.
We want to emphasise that the exploitation of our national talent to invent deserves a major priority. I would go as far as to suggest that it is an urgent matter which we cannot neglect any further. I do not suggest, as yet, the setting up of a Royal Commission—heaven forbid!—or another Committee, but an investigation perhaps by an independent body, maybe a top-ranking industrial consultancy (they have been doing some work, as we know, within the precincts) empowered to recruit those executives in industry of the calibre such as there are in Beechams, where royalties have climbed in eight years to £6 million a year. There are several others, whom I need not mention. We need a comprehensive appraisal of how we can get the maximum benefit from our inventions. This is a rarely mentioned part of the economic war in which we are involved. The result from each sector is very important to our future.
My Lords, I have dealt with one. As we have been told by other speakers, there are many others. We export expertise, as we have also heard from various speakers to-day. Our various consulting engineers, architects and others are not encouraged to expand their consultancies by finding their tax bill is much greater here than if they were domiciled in the country where the money is earned. The whole position requires an entirely new assessment. My Lords, I think we need to say "To hell!" with precedents and our deep-rooted prejudices in every sphere, starting with the pattern of Treasury thinking.
7.10 p.m.
LORD NATHAN: My Lords, we are all grateful to the noble Lord, Lord Aldington, for having introduced this debate; but I am particularly grateful since it has thrown light in dark places—dark to many of your Lordships as to myself, dark to those outside this country. Over the past five years or so I have had the opportunity in America of meeting a wide variety of people in different areas, and it is extraordinary how little information gets through about the basic facts of our

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economy on matters such as our exports and imports. What is known is that they are in deficit. What is not known is how much we export. There is no information abroad as to what we produce in the way of services; and if this debate, coupled with the excellent Report, fills that gap, then that itself will have achieved a great purpose. I hope, too, that following upon this debate sonic consideration may be given to the presentation from time to time of our balance of payments position. It has been suggested that the reports instead of being monthly, should be three-monthly. Perhaps some consideration should be given to giving an overall picture, including invisibles which, as we have seen to-day, form a substantial and important part of the global picture.
The Report which we are debating today is on services, services paid for in foreign currencies or in sterling by people living abroad. I thought that it was a commonplace that, with the growth of wealth in an economy, there develops simultaneously an expanded requirement for services. There is, of course, the desire for enjoyment and the ability to pursue that enjoyment which takes the form of, for example, travel for fun.
But there is a further reason for the increase in the demand for services. The increasingly sophisticated organisation of international business necessarily involves an increase in the services, and in the sophistication of the services, to be provided. Banking, insurance, law, accountancy are but examples of fields in which increased services both in volume and in quality are required. We in this country are particularly well-qualified to provide these services, as is shown by the Report, and by the use of our services by people throughout the world. To build upon our past success seems to me an obvious course. To clamp down not merely by taxation and other disincentives, but also by creating an adverse public opinion to those providing these services must be contrary to the best interests of the country. By so doing it becomes increasingly difficult to recruit the quality of personnel required and nothing but the best quality will do at the top any more than it would in a manufacturing industry.
I personally would regard a boost to morale and therefore to recruiting as more important even than equality of
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treatment for tax purposes in other fields equally productive of foreign exchange, and I have noted that the noble Lord, Lord Crowther, also places the priorities in the same order. I regret that the noble Lord, Lord Balogh, is not here, but perhaps I may refer to his remarks when he said that the future of this country lies in technology and the development of technological industries. I agree that that is so, but I do not agree that we should go technological and cease to develop on the success which we already have in the expertise which we possess. We should do both and I see no conflict between the two.
I should now like to turn to what I hope are two constructive suggestions in regard to what your Lordships may feel are minor points which do not appear in the Report but which I feel are relevant to what we have been considering, particularly in connection with the field in which the noble Lord, Lord Geddes, is interested; namely, travel. In both the instances I should like to place before your Lordships I place in the forefront the emphasis on London (I think that London is what I mean rather than the United Kingdom for geographical and communications reasons) as even more of a world centre than it is at present. I believe that by so doing one can stimulate the requirement for services from this country which we are debating to-day and we can also stimulate our visible exports of goods. If we can make London the centre to which people from all over the world naturally come to meet together even more than they do at present, I believe that we shall achieve in some measure that end.
Some time ago there was a proposal for a Convention Centre to be built on the site of the Covent Garden Market. That proposal incorporated the suggestion of a large meeting hall with smaller meeting halls in one complex, coupled with three or four substantial buildings around it, one of which would be an hotel and the others a base for institutes of learning and other institutes dealing with particular topics. Whatever the rights or wrongs of that scheme—and I think it was turned down on planning grounds—it seems to me that such a centre would be an immense boon to London. I believe that it would draw people from all over the world to such

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a centre, properly equipped with television and radio facilities and all that is required in a modem Convention Centre. The United States is not ideal for a world centre for this purpose. It is a long way from Europe. We are not. London has the benefit of speaking the same language as the Americans and it has proximity to the Continent. It is a cross-roads in the world of air travel. Therefore I believe that the country would be well served by having such a centre and that it would be well worth spending money on developing such a centre here. I should be interested to know whether Government have any view on this and, if so, what it is. At one time, when the Covent Garden Market scheme was proposed, I believe they were concerned about this matter. They have already given support to the proposed International Press Centre in London which is progressing. This seems to me to be a move in the right direction to make London a real focal point.
The other suggestion I have to make is that the position of headquarter companies of international groups in London should be considered and reviewed. There are an increasing number of companies whose shareholders may be in one country or in many countries. These companies operate in many parts of the world, and many of them have set up and many more wish to set up a controlling co-ordinating company—a centre from which they will operate either world-wide or, in the case of American companies, they sometimes wish to have one in this country or on the Continent of Europe to govern their interests outside the United States. This is for them a convenience of communication. It would seem to me only of advantage to this country if London were regarded as the point where such headquarters companies should be established. Your Lordships would not wish me to say where they are at the moment; some are in London but many are not. Many of them are not here because of certain tax disadvantages, not only for the company itself but also for the senior people in it. I should therefore like to place before the Government the suggestion that some consideration be given to the encouragement of the establishment of headquarters companies in this country.
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Both the convention proposal aid that proposal are designed to attract to London the top people, the focus of the world.
7.21 p.m.
THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN): My Lords, perhaps I may start by thanking the noble Lord, Lord Aldington, for initiating this debate. It has certainly been a very successful debate in achieving the purpose of focusing our interest on the subject of invisible exports—not, I would most sincerely add, that Her Majesty's Government are not already interested; indeed, I think it is true to say that nobody who has been in Government could fail to be interested. The figures have always been available in particular forms—but I think this debate has been valuable from the point of view of focusing the interest of the country at large and of its industrial leaders lip on this extremely important topic. Before I go further, may I pay my tribute to two notable maiden speeches from the noble Earl, Lord Limerick, and the noble Lord, Lord Remnant. I am sure that we look forward to hearing further contributions from them in the future.
If one looks at this Clarke Report, which I join with other noble Lords in praising to the fullest extent, one faces the fact that, to put it in grossly oversimplified terms, we have here a different analysis of the invisible exports from that which has been given for a long time in the various Government publications. One has an industrial analysis instead of a functional analysis, and to this extent it is very important. At the same time, I think that in the enthusiasm—I was going to use the word "euphoria", but perhaps that is the wrong word—that has been expressed for this Report what is likely to be overlooked is the extraordinary complexity of attempting to analyse invisible exports under industrial headings—if I may use a term which does not quite fit, because there is no other term which I can think of. Functional heading analysis is easier and more accurate to achieve, and I hope that the Committee which is now sitting will, through its work, be able to refine the figures in a way that is called for in the Clarke Report itself.

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One of the results of the complexity of this fresh analysis here, and indeed of the whole subject of invisible exports, is that many of those who manage manufacturing companies have regarded the operations of the City, of the banking system, of the Treasury itself, as a sort of undisclosed mystery and have attempted personally to steer clear of it altogether, leaving it to their advisers to help them through these difficulties. One constantly hears—and I heard and felt it when I was in industry—that it is a rather dangerous mess with which to get oneself involved. It is a matter for professionals to guide one through it. It is this air of mystery, not generated deliberately by the City or anything like that, that has led to this peculiar attitude of lack of appreciation of the essential part played in our balance of payments affairs by invisible exports.
Those who earn invisible exports overseas have become very vociferous in recent years in deploring what they regard as this lack of interest, and at times they have gone so far as to suggest that the Government show a lack of interest. I do not think that is true. I think it is society as a whole that seems to do this. There has never been a time when the Treasury or the Chancellor has not been fully aware of the importance of this matter—and I am talking about the Treasury at all times, and Chancellors back through the years at least to the last war. The trouble has always been the difficulty of making simple but accurate statements about the contribution of the various types of activity.
If I may just take an example, I will take the case of export houses. The Clarke Report suggests, after making some quite large approximations, that they earn £26 million worth of invisible income each year, as a sort of average. I am in no way challenging the usefulness of export houses. How could I? They handle (to use another vague word) £1,000 million worth of exports every year. Some buy goods in the United Kingdom and sell them overseas. Some handle them on commission, and the invoices sent to the customers overseas include those commissions. Are those invisible earnings or are they simply part of the cost of direct exports? The Clarke Report has come down on the idea that they are part
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of the invisible earnings, but another way of looking at it would be to say that they are part of the cost of the physical exports that are going out. Certainly, if a manufacturer handled the negotiation and shipment himself, he would not consider that the cost of doing so constituted invisible earnings when included in the price charged to the customer. I am not questioning at all the validity of the Clarke Report. I am merely throwing up some of the complications of the conceptions surrounding the whole issue.
My Lords, if this is true of the rather simple business conducted by export houses, how much truer are these remarks of the much more complex operations conducted by banks, insurance companies, merchant banks, shipping companies, and so on? These really get into a stage where there are no clearly defined boundaries under which they can be discussed intelligently, one person with another. I think this is the reason why there is this—not lack of appreciation, but lack of understanding. I hope that the effort of the Committee that has now been set up will contribute to a deeper understanding than at present exists.
I must now turn to a subject which has been mentioned by the noble Lord, Lord Aldington, and others in this debate. I refer to this newspaper article. I did not particularly want to do so, but I am going to do so fairly rigorously. I have been handed a copy of it and the heading is:
"The Bank acts to check on investment flow to sterling area".
What has happened is that the Treasury have decided, as the Clarke Report people decided and as this new Committee have decided, that they want some more information about portfolio investment. This newspaper article carries that heading simply because the Treasury are seeking some information. The article goes on to say that:
"… the Government will now have—and presumably act on—detailed knowledge of the effect of the portfolio investment cost to the United Kingdom balance of payments".
The noble Lord, Lord Aldington, quite fairly, says: "Tell me what the Government are going to do". All of us in this House know that asking Governments their intentions about matters like that, about devaluation and so on, is asking questions which no Government in their senses would attempt to answer.

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I merely say that the Government have acted to get more information.
Then this same paper, a week ago last Friday, had the headline:
"France devalues the franc".
It did not apologise on the Saturday for a gross piece of misinformation. To my personal knowledge, a year ago this paper published a complete inversion of a statement of some importance which I had made. They were sent for the next day. They did not deny it, and they were asked to put me right in the eyes of those who thought I had behaved like a perfect fool. They published a clear statement without pointing out that they had put false words into my mouth. Subsequently, I wrote to the Editor and I said,
"This is an act of lack of integrity. Your paper is not honest."
He replied saying,
"These are very serious charges indeed which you have levelled at us. I will investigate them."
But, my Lords, in spite of a reminder from me a month later, that apparently he had still not investigated these serious charges, I have still not heard from him. Can we put up with a newspaper that has done these things and is doing them repeatedly, and raising these issues in the House?
We are all, in a way, "suckers". We politicians—if they must call us that—sometimes make remarks which are quite clear to each of us across the Floor of this House, and then some newspaper like this one puts a construction on them which starts a row and we get into a terrible discussion about the "gnomes" of the City, or something like that. But it is all started by a newspaper, not by us; and the public gaze upon us, squabbling over these stupid affairs, and our status is lowered. The real "nigger in the woodpile" is some of these members of the Press who like to make news, and who, if they are short of what they regard as good news, manufacture it. So much for that. I do not want to say any more about the Press but, as your Lordships can see, I am feeling rather "hot under the collar" on the subject.
Now let us turn to the analysis of this matter of overseas investments. During this debate a number of noble Lords
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have spoken about the size of our overseas investments—the noble Lore, Lord Aldington, the noble Earl, Lord Limerick, the noble Viscount, Lord Watkinson, the noble Lord, Lord Aberdare, and I think one or two others as well. It is difficult to keep a note of all the comments that everybody makes about everything. I have some figures here which I do not think are fully appreciated by everybody in this Howe, and I am going to bore your Lordships with a few statistics, if I may. Direct investment by the United Kingdom overseas—that is, direct investment by industry and the like—in the four years to 1967 runs like this: £263 million, £308 million. £276 million and £267 million. Total investment (that is, including portfolio investment and elsewhere) runs like this £396 million, £353 million, £303 million and £424 million. There has not been a falloff. But where the fall-off has occurred is in the net balance of inward and outward investment. That has been: £254 million, £117 million, £23 million and £29 million. That was the effect that had to be produced. It has been brought about largely, of course, by measures which have prevented our overseas investments from rising, as I think they would have risen substantially, and by a very big flow of inward investment into this country.
Now when the noble Viscount, Lord Watkinson, draws attention to the difficulties in which some firms find themselves in not being able to follow up, I sympathise. He knew I sympathised. I have been in this position myself. But let us not confuse this individual case, where somebody is stalled in plans which would be helpful to our indirect exports, with the general case that there is a tragedy going on in this country of a very severe limitation in overseas investment. In one way it might be better if it were a good deal more limited than it is at this moment of time. Bit let us realise, as the Government have repeatedly said, that this is intended as a temporary restriction to help what we hope is a temporary balance-of-payments situation. It is not a policy which we like pursuing.
We in the Government know very well that the revenue arising from past investment overseas is a very valuable part of our economy to-day. We have

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no wish to kill this off; but shortish-term measures must be taken. The figures of Professor Reddaway were quoted. I was surprised when I read it to realise that there might, by restricting investment, be a benefit to the United Kingdom balance of payments for a period of ten years. I thought it would be a much shorter period than that. I was amazed that it was such a long period. However, let us hope—and I think there is reason for hoping—that we can rapidly get into a balance-of-payments position which will enable us to take a more liberal attitude to the pursuit of overseas investment and the building-up of invisible exports to succour us when we run into trouble in the future, as they are helping us so much at the present time.
I should like to say a word about Government expenditure overseas. My noble friend Lord Beswick has already referred to this, but I think it is worth emphasising. There is a great deal of anxiety about the rate of Government expenditure here at home. I am not going to enter into that argument. I think it is over-emphasised. But when one looks at these figures of the rate of Government expenditure overseas one has to realise that this Government have done an extremely good job in this respect. In real terms, the amount has fallen—and we have yet to receive the benefit of the curtailment of our Forces in the Far East, a benefit which will take several years yet to arrive but which is in train, as we all know. So if these Government figures decline in the future, as I hope they will and as I think there is every evidence that they are going to do, then we shall see the net balance of invisible exports rise. That is a matter which should be emphasised in this debate.
I have a note here to the effect that the noble Lord, Lord Aberdare, drew attention to the idea, which I admit I had not heard before, of financing Government overseas investment, as it is called in the books—that is, aid and other types of capital exported by the Government—by drawing on a long-term loan from some international source. I hope I have understood him correctly. I shall certainly have this looked at. My immediate reaction is to suggest that if we were to finance our overseas aid, our loans and our grants, by these means, I doubt
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whether we should be able to tie aid as we do to-day; and if we were borrowing long and lending short in this way, and allowing these loans to be used for the import of goods from other countries. I am not so sure that in the long-term the deal would be helpful to us. It might be the other way round. I think that is the point which would most cause me to look very carefully indeed at this suggestion; but we will have it looked at. I must acknowledge the very kind remarks which the noble Lord made about me personally, for which I am extremely grateful.
The noble Lord, Lord Crowther, raised the question of E.C.G.D. and their resistance to the insurance of feasibility studies and consultancy projects overseas. I will undertake to have this matter looked at again. One knows that one of the chief barriers to this form of insurance is that normally the policy is used as a means to get money quickly from the bank, and if the policy is used in this way the bank must have recourse to somebody. Recourse cannot be given normally to a consultant firm, which seldom has any physical assets which would make it a viable matter. I think this is the chief barrier to E.C.G.D. insurance of nonphysical exports of this kind. But I undertake to have this matter re-investigated. I have not heard a lot about it recently, and I will see what we can do. If I have anything encouraging to say about it, I will write to the noble Lord.
A great deal has been said in this debate about hotels and tourism. The noble Lords, Lord Aldington, Lord Crowther, Lord Mancroft, Lord Geddes and Lord Nathan had something to say on the periphery of this subject, which I will come to in a moment. What is clear—and this remark might cover a great deal of the debate—is that very many people are against taxation, especially when it affects them. One might dare to make this remark: that this House is celebrated for the fact that for any particular debate it can call on a range of people closely associated with the subject which is under debate. There is one disadvantage to that, and it is that those who come from (in the case of this afternoon) areas associated with invisible exports come here not only to inform the House out of their experience but also as advocates for lower taxation for their own

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operations. I believe it would not matter what area we were discussing: if we had experts from an industry or from a profession, or whatever it may be, giving us their help in a debate, they would also be advocates for the relief of their particular profession from those forms of taxation or other matters which were felt to press upon them.
I always remember that when I ran factories in industry I was, in a very light way, a student of Keynes. I understood from Keynes that differential increases of payment to one sector of a large group constituted a differential reduction of pay to the rest of that group; they had gone down. This was very true of industry; and we came to the conclusion that the only way to give anybody an increase in pay was to get it agreed upon by all. This may sound an impossible undertaking, but it worked out very well indeed. It seems to me that if we could have everybody who through the years had taken part in debates and made pleas for some betterment of the lot of their profession or their type of business, meeting together so that they could all simultaneously make claims on the Government for a reduction of taxes or for more benefits, we should see where we stood in this matter; everybody would be claiming something, and all would then realise that, on the whole, the differential fairness of the current position was not quite as inequitable as it previously seemed. That, really, is my main reply to the many comments which have been made about the various forms of onerous tax which bear on various parts of our invisible export earners.
I think that on the whole hotels and tourism have done better than the rest. I look at the figures of the amounts provided to help them to stimulate their particular form of earnings and compare what is being spent—the noble Lord, Lord Geddes, referred to £3 million being available for the new Boards—with the £280 million of invisible earnings as a ratio to the amount I have to spend on physical exports at the Board of Trade in ratio to their £6,000 million. I think the noble Lord, Lord Geddes (he is associated with the British Tourist Board), knows that he is very lucky indeed. I draw a differential comparison. I am not suggesting that this is a lavish amount; it may be that we ought to
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spend more. But we must look at differentials in this matter.
While I am referring to the noble Lord, I should like to thank him for the welcome he has given to the recent Government statement about the changes proposed—and, indeed, the changes made necessary, I acknowledge, by the sheer success of the preceding institutions; or perhaps they are still existing. I am a little rusty on this. It is their success that has made these moves possible, and I am glad that the noble Lord welcomes them. May I add that we have no intention whatever of allowing the new statutory board to become unrealistic or over-bureaucratic. All boards are bureaucracies really; but they must be efficient, forward-looking, dynamic, business-like bureaucracies. I can assure noble Lords that this is our urgent desire in the selection of people. I suspect that the noble Lord, Lord Crowther, does not know how critical he can be at times.
THE LORD PRIVY SEAL (LORD SHACKLETON): He is not here.
LORD BROWN: My Lords, I shall not go on with my comment. The noble Lord, Lord Nathan, referred to the Covent Garden scheme. I will take note of what he said. I or somebody else will write to him about this. I am not briefed on this subject, and I should not like to attempt to answer at this stage. When the noble Lord referred to the idea of the City providing headquarters for some of these overseas companies who wanted to set up a centre to keep control of their international investments, I became quite excited. I thought, what a good idea! I thought he was going to impress on the City the idea of getting together and thinking about it. And then suddenly I heard him say that they will not do it unless the Government do something specific about tax. The idea of relieving individuals, I take it, or companies, of tax specifically to attract these to the City is something that could not be entertained. There are other and bigger reasons for dealing with tax than that. No doubt the City will take note of his remarks, and despite the handicaps of our present taxation system let us hope that Lord Nathan's dream will, at least partially, come true.

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My Lords, I was very surprised that nobody made any reference to civil aviation, one of the means of earning invisible currency that I think is possibly more likely to develop in the future than any other. The noble Lord, Lord Geddes, referred to the matter of the difficulty over the statistics of the shipping industry, and I am glad that he acknowledges the fact that the Government Central Statistical Office have indicated their full co-operation in attempting to get better statistics than are available. I wish them luck in their endeavours. The noble Lord referred to the fact that the British shipping industry, by the services it provided, was providing invisible exports to the extent of £450 million. I must say that I think this is something of an exaggeration. I do not know whether, in giving this figure, he has taken into account the costs of the shipping bought overseas or other forms of capital investment that go with it. I make these remarks not to throw doubt on the great value that the shipping industry is giving us in this country—nobody could question this—but to suggest that it does not do any good if any degree of euphoria is allowed to develop in support of the figures which are claimed for various sectors of the invisible exporters. There is beginning to emerge a slight touch of euphoria, a building up of figures. I think this a pity. We must keep our feet on the ground.
The noble Lord, Lord Terrington, raised three subjects. I think I have three unsatisfactory replies to give him, but nevertheless I shall give them. First, stamp duty. I am informed that certain provision was made in the Finance Act 1967 that relieved the situation a little; but that any further exemption would be too costly to the Revenue at the present time. The second subject was a proposal for an increase in the number of fixed interest securities free of tax to non-residents. I understand that, here again, recent Government issues have been on this basis. This recommendation will be borne in mind as regards other fixed-interest stocks. But noble Lords should be aware of a disadvantage in that the United Kingdom tax forgone would go to the non-resident's Government and not to the non-resident. The third point—one about which I know a
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good deal more—is the question of no par value shares. The Government have accepted the principle of no par value shares; but the question as to when we move on this matter is not so clear. The timing of legislation is not yet decided. I will leave the matter like that. I will not commit the Government to a definite date. The principle is acknowledged; and I hope that we shall be able to do something before the end of this Parliament.
My Lords, I could spend a great deal of time on the question of selective employment tax; but I am grateful to my noble friend Lord Balogh for drawing the attention of noble Lords to the fact that the reason for this tax being introduced was largely because the differential tax on services, as against goods, was considered to be much too low. I have been given figures which show that at one time the tax on services was as low as 2 per cent. and on goods as high as 40 per cent. I do not really know what these figures mean; they are the result of some very theoretical calculations. On the other hand, in the four years before S.E.T. was introduced, 1,100,000 people joined the labour force of this country. Of those, 140,000 joined industry; the rest went into services. At that time I was at the Board of Trade and was constantly faced with large concerns who were unable to quote for major engineering projects overseas. Why? Because they already had order books longer than the labour force they could acquire on the market. They were short of 400, 500 or 600 people and could not risk taking more contracts at that time because they could not be sure of getting the labour force. All I know is that figures like this were quoted at me. Within a few months of the introduction of S.E.T. I heard no more of that.
I think that S.E.T., despite all the criticism, has resulted in a slowing down of the rate at which the services grew and, therefore, the provision of rather more labour in the manufacturing industries. When we think of invisible exporters and and their groans about S.E.T. (I admit they are entitled to groan; anybody who thinks he is unfairly treated must speak out in our society) one may conclude that perhaps there is an element of unfairness in this.

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One has to remember that the service industries in this country cover a very much wider field than our invisible exporters. We all recognise that. They cover luxuries not so easy to come by in wealthier societies than ours. We have more help in our homes than is found in most American homes. We have more help than in many European homes where perhaps the incomes are larger. We have the luxury of a driver and a conductor on our buses when in many countries overseas only one person operates the bus; and we have all sorts of inefficiencies in our services and all sorts of lavish services in our retail trade and delivery systems that we must get rid of. One way of doing that is to tax them more heavily and make the taxes less able to be borne by the industry in question. This results in everybody looking afresh at their employment of labour to see whether they can do with fewer people, so that we can make use of more labour in other industries and export and help our balance of payments. I think that this is the case for S.E.T. I agree that it has been crudely applied. The manager of an American buying house in London, whose sole function was to purchase British goods and export them to America came to see me because his firm was being charged S.E.T. I thought that then I had reached the extreme case of unfairness.
But the difficulty is to segregate one type of service from another. One has to remember that it is commonplace to find firms being not only invisible exporters but invisible importers as well. It is extremely difficult to be able to segregate them and decide who should bear the tax and who should not. Serious studies have been made by the Government to discover whether we can discriminate further. I hope that we shall be able to do so in the future. I hope that the matter is not finished; studies are now going on. I acknowledge that there is some unfairness, but I do not think that the total case has been made out against S.E.T. I believe it to be a very sound form of taxation, and I say that with the utmost sincerity.
The noble Earl, Lord Limerick, made the point that the withdrawal of third country credit (if I may put it that way; I think we all recognised what is meant by that term) was a tragedy because the
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returns on it to those who were giving this credit was about 8 per cent. Here I wish to correct a possible mistaken impression. It may have yielded invisible earnings of £4 million in a year, or something of that order, but to the extent that this country's deposits were reduced by £50 million this country would have to replace them from overseas and interest would have to be paid on them. So if you take the total account, nationally, so to speak, instead of looking at it purely from the point of view of a city firm or the bank giving the credit, the figure is not 8 per cent. but a very much lower figure. This is hard on the people who have to start a traditional trade. I hope it is temporary and that we may get into a position where we can reintroduce this credit. But I think it right that it should have been curtailed in this way.
Finally, on the subject of the Queen's Award, I know that there must have been severe trepidation when it was introduced, because the singling out of part of the national effort for an Award in this way is an obvious form of discrimination which may raise all sorts of protest elsewhere. It was based on physical exports, direct exports of goods, because there are several features of direct exports which are different from other forms of exports, invisible exports. First, they are all invoiced and can be physically recognised. Secondly, most of the concerns that are exporting goods are not also large importers.
Very often invisible exporters may be putting up an extremely good show and producing a substantial margin of invisible exports. They may perhaps be earning two, three, four or five million pounds; but very often you will find that the two, three or four million pounds is the product of a very large import of invisibles as against a still larger export of invisibles. In other words, whereas the import content of manufactured goods averages somewhere between 10 per cent. and 15 per cent., the operations of the City, with all the substantial earning of overseas currency, are international in character and it is the margin that is valuable. If you look at the Clarke Report figures with the invisible imports and the invisible exports you find that they are two enormous figures with a very small difference. This difference is,

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however, of very great value to this country. In this situation it is more difficult to take invisible exports earned without netting them, and when you begin to net them you throw up the question whether you ought not to net also the physical exports of manufacturing industry. All these questions come up and have to be considered. At one stage the noble Viscount, Lord Watkinson, had a discussion with me about that. We discussed the complexities, and I agree about the unfairness.
One thing, for me, which has come out of this debate is the possibility that, whereas it would be difficult to extend the Queen's Award in its present form (though we shall be looking at it: I think that 1970 is the due date), one might devise some equally attractive insignia of excellent performance and award that. I hope that it would be left to a committee of some City people to decide who should award it, because I should be very reluctant to have anything to do with reaching decisions on a matter like that. I am quite sure that when it comes to making the Award there will be a fair amount 01' criticism. That is the sort of trouble that can be met, and I take that idea away from this debate.
My Lords, I must apologise because I am quite sure that I have failed to cover many of the questions that were asked, and many of the comments which were made. Noble Lords will realise, however, that this is a complex subject and that the hour is late; and I think that your Lordships would welcome my sitting down rather than going on to try to answer everything. I close by saying again that I am very grateful to the noble Lord, Lord Aldington, for initiating this debate.
7.58 p.m.
LORD ALDINGTON: My Lords, I should like, in two or three minutes, to express my thanks to all noble Lords who have taken part in this debate. I would start by expressing a special word of thanks to the noble Lord, Lord Beswick, who spoke in what I thought was a very good-humoured and helpful way. He got the debate going in a tone that was carried on right to the end. I should also like to thank the noble Lord, Lord Brown, for the cheery way in which he met some of the difficult balls that
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were bowled to him. I think he dealt with them in a fairly aggressive manner. I was not absolutely certain that he was right in all his replies. I think that if he looks carefully again at what he said about the point put by my noble friend Lord Limerick, he will rind that he has not got the answer quite right. I say this from my own experience, but I have not had a chance of talking to my noble friend.
Before I come to the two maiden speeches, there is one comment that I should like to make. Noble Lords opposite are really sensitive about what The Times says. I shall be interested to see what The Times makes of their speeches to-morrow morning. I have some experience of being misreported by The Times and other papers, and I know that it is absolutely infuriating. But I hope that the Government do not become too sensitive about what The Times says, otherwise I do not know which newspaper they are going to read.
LORD BROWN: The Financial Times.
LORD ALDINGTON: Very good. The noble Lord, Lord Robbins will be delighted to hear that. I understand that noble Lords opposite had to give up reading the Daily Mirror earlier in the year, and if they had to give up The Times, that would be very sad.
I am very grateful to the two noble Lords who have honoured with their maiden speeches a debate which I started. I cannot think of two speeches which have been more agreeably received in your Lordships' House or more delightfully delivered, with the modest authority of men who know exactly what they are talking about. I personally look forward very much to hearing much more from both noble Lords.
I think that the House will feel—and I think the noble Lord, Lord Brown, feels—that a powerful case was made out, in the way in which we meant it to be, for getting a better understanding of invisible earnings. This case was challenged, it seemed to me, by only one noble Lord who spoke—the noble Lord, Lord Balogh. I feel that the noble Lord has a defeatist approach to the future of invisible earnings, and if that were really the feeling of the House, we should have failed in what we set out to do. The noble Lord made the case that these

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invisible earnings arise out of our old Empire and that once the Empire is gone down go the invisible earnings. The statistics do not show that at all. I would refer the noble Lord to Table 7 in the Report, which shows the invisible credit per capita for the various countries in the world. On the noble Lord's analysis, one must assume that those at the top of the table are great imperialist countries. Let me read them out: "Norway, Switzerland, Netherlands, Denmark." I do not think of Zurich as the capital city of a great empire. So I trust that the noble Lord will re-think his defeatist approach. I much prefer the attitude of the noble Lord, Lord Nathan.
I hope that the noble Lord, Lord Balogh, will accept from me that a good man engaged in business to-day, whether in invisible or visible trade, does not take this rather analytical approach. If such men find that in something which was begun one way all the advantages they used to have are gone, they look round and find another way of doing it. I believe that that is what has been happening in the invisible earnings field. That is why these earnings have gone up, and that is why they will continue to go up. That is why we have heard cries of help from my noble friends Lord Tangley, Lord Terrington and Lord Remnant, who are looking to see how they can do even better, albeit for themselves, but certainly also for the country, in their portfolio investment in dollar countries and elsewhere. I hope that when the noble Lord has had time to consider what he said, he will have a more robust and optimistic view about these matters. I am afraid that I am a tremendous optimist about what can be done, and I had hoped to get some of your Lordships to follow me in that optimism. And I think that that was the general tone of the debate.
I should perhaps regret that nothing was said about oil this afternoon, but we
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cannot cover everything in a few hours. My noble friend Lord Watkinson made a perfect speech about direct investment overseas. This is a subject very dear to me, one which I have tried to study, but I cannot imagine the case for it being put more lucidly and more concisely than it was put by my noble friend, and I am afraid that, in spite of what the noble Lord, Lord Brown, said, I would still back my noble friend in a duel with him.
I sensed a cri de coeur from the noble Lord, Lord Crowther, who is an expert on hotels. His speech reminded me of a book I read when I was young, Odtaa, which, being interpreted, means "One damn thing after another." I think that was what he felt had happened to hotels since he first knew them. I think he has a good point about consultants and their overseas earnings, and the attitude of Government to them. We heard the noble Lord, Lord Geddes, on tourism, travel and shipping, and I cannot think of a better expert than him Others of my noble friends, and other noble Lords, made speeches on subjects about which they are acknowledged experts.
I take last, but not least, the speech of a man I regard as my noble friend—Lord Carron, whose speech will repay reading by everyone outside this House. From my knowledge of him I would say that if ever I wanted a man to blow away all the nonsense about human relations, I would send for him. He did, for me, explode the "vendetta" idea between City and Government in the simplest and most thorough way, and I thank him for it. I feel that the debate was worth while just to have those words put on record. With these words, my Lords, I would ask leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.
House adjourned at six minutes past eight o'clock.